SHRI PANKAJ LADHA, KOTA V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOTA

ITA 365/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9106 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 18-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.C. GUPTA ACIT
• Keywords: Unexplained investment; Search and seizure; Reassessment proceedings
• Section: 274; 69A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 365/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2016-17 SHRI PANKAJ LADHA 20A, TALWANDI, KOTA. CUKE VS. THE DCIT, CENTRAL CIRCLE, KOTA. TOLFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAHPL 8294 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV.) SHRI DEVANG GAR GIEYA (ITP) JKTLO DH VKSJ LS @ REVENUE BY : SHRI K.C. GUPTA (ACIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 29/07/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 03/08/2020 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF LD. CIT(A)-II, UDAIPUR DATED 26.12.2018 FOR THE ASSESSM ENT YEAR 2016-17 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPEAL:- THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACT S OF THE CASE IN CONFIRMING THE ADDITION OF RS. 1,50,000/-MADE BY TH E LD. AO ON ACCOUNT OF UNEXPLAINED JEWELLERY. THE ADDITION SO M ADE AND ITA NO.365/JP/2019 SHRI PANKAJ LADHA VS. DCIT 2 CONFIRMED BY THE LD. CIT(A), KOTA BEING CONTRARY TO THE PROVISIONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 2. THE LD AR SUBMITTED THAT A SEARCH AND SEIZURE OP ERATION U/S 132(1) OF THE ACT WERE CARRIED OUT ON 02-07-2015 AT THE RESIDENTIAL PREMISES OF THE ASSESSEE SITUATED AT KOTA. DURING T HE SEARCH OPERATIONS, JEWELLERY INCLUDING GOLD AND SILVER ITE MS, SILVER COINS, ETC. WERE FOUND IN THE LOCKER BEING OPERATED BY SMT. SAV ITRI DEVI, MOTHER OF THE ASSESSEE AND INVENTORIED BY THE INCOME TAX DEPA RTMENT. THE SAME WERE GOT VALUED BY THE AUTHORIZED DEPARTMENTAL VALU ER, SHRI KAMAL KANT PAREKH ON 03-07-2015 AS UNDER:- ANNEXURE GROSS WEIGHT NET WEIGHT VALUE (AS PER DEPARTMENTAL VALUER) J - 1 PANKAJ LADHA GOLD 1480.500 1240.900 33,00,792/ - SILVER ITEM AND COINS 5.790KG 4.971 KG 4,22,108/ - TOTAL 37,22,900/ - HOWEVER, AS PER AO, THE ABOVE CHART DOES NOT SHOW T HE CORRECT PICTURE WHICH SHOULD BE READ AS UNDER:- ANNEXURE GROSS WEIGHT NET WEIGHT VALUE (AS PER DEPARTMENTAL VALUER) J - 1 PANKAJ LADHA GOLD 1480.500 1240.900 33,00,792/ - SI LVER ITEM 5.790KG 4.971 KG 3,22,108/ - AND COIN ITEM 2.503KG 2.503 KG TOTAL 8.239KG 7.474KG 37,22,900/ - ITA NO.365/JP/2019 SHRI PANKAJ LADHA VS. DCIT 3 WHEN THE AR/ASSESSEE WAS ASKED FOR THE SOURCE OF JE WELRY FOUND, IT WAS STATED THAT THE IMPUGNED JEWELLERY BELONGS TO T HE FAMILY MEMBERS AND ALSO SUBMITTED THE WEALTH TAX RETURNS FILED BY APPELLANT AND SMT. SAVITRI LADDHA, MOTHER OF ASSESSEE ALONG WITH A CH ART OF OWNERSHIP OF SUCH JEWELLERY TO THE AO. THE AO WAS HOWEVER NOT SA TISFIED WITH THE REPLY OF THE ASSESSEE AND HELD AS UNDER: FROM PERUSAL OF ABOVE TABLE, IT IS NOTICED THAT ASS ESSEE AND SMT. SAVITRI LADDHA (HIS MOTHER) HAS DECLARED GOLD JEWEL LERY WEIGHING 490 GRAM IN THE ASSESSMENT YEAR 1992-93. ASSESSEE H AS FILED AFFIDAVITS OF HIS FAMILY MEMBERS BUT NO SUPPORTING DOCUMENTS SUBMITTED TO SUBSTANTIATE HIS CLAIM. CONSIDERING TH E REPLY OF THE ASSESSEE AND TAKEN INTO CONSIDERATION TO THE CUSTOM S OF THE SOCIETY, I HOLD THAT IT WILL BE FAIR AND REASONABLE TO ACCEPT DISCLOSED NET GOLD JEWELLERY 900 GRAM, INCLUDING DE CLARED IN WEALTH TAX RETURNS. BALANCE GOLD JEWELLERY WEIGHING 340.900 GRAM (1240,900-900) IS TREATED AS UNEXPLAINED AND V ALUE OF THIS IS WORKED OUT AT RS,9,06.794/- (340.900*2660). SILV ER ITEMS AND JEWELLERY VALUING AT RS, 1,50,000/- IS TREATED AS U NEXPLAINED. THUS TOTAL ADDITION IS WORKED OUT AT RS.10,56,794/- AND SAME IS ADDED IN TAXABLE INCOME OF THE ASSESSEE U/S 69A OF THE IT ACT, 1961. I AM SATISFIED THAT, PENALTY PROCEEDINGS ARE REQUIRED TO BE INITIATED U/S 271AAB(1)(C) BECAUSE ASSESSEE HAS UND ISCLOSED INCOME. THEREFORE, PENALTY U/S 274 R.W.S. 271AAB(1) (C) IS INITIATED FOR HER UNDISCLOSED INCOME 3. IN THE FIRST APPEAL, LD. CIT(A) DELETED THE ADDI TION RELATING TO THE GOLD JEWELLERY, HOWEVER, THE IMPUGNED ADDITION OF R S. 1.50 LAKHS ITA NO.365/JP/2019 SHRI PANKAJ LADHA VS. DCIT 4 RELATING TO SILVER ORNAMENTS JEWELLERY AND COINS WA S CONFIRMED IN THE FOLLOWING WORDS:- 7.3 2 FURTHER, REGARDING SILVER JEWELRY OF 4.971 K G (VALUED @ RS. 35,900/- PER KG) AT RS.1,78,459/- AND SILVER COINS VALUING RS.1,43,65O/-, FOUND DURING SEARCH, I FIND THAT THE ASSESSEE HAS NOT GIVEN ANY REPLY REGARDING SOURCE OF INVESTMENT THEREIN. HOWEVER, THE AO HAS, CONSIDERING THE OVERALL FACTS, FAIRLY TREATED INVESTMENT OF RS.1,72,1O8/- AS EXPLAINED AND TAKEN UNEXPLAINED INVESTMENT IN SILVER COINS AND JEWELLERY AT ONLY RS .1.50,000/-. THE OF THE A.O IS FOUND TO BE 3 REASONABLE AND ACCORDIN GLY. ADDITION OF RS. 1,50,0O0/-, IS HEREBY SUSTAINED. THE GROUND OF APPEAL IS THUS ALLOWED. 4. IN THE ABOVE FACTUAL MATRIX, IT WAS SUBMITTED BY THE LD AR THAT GOLD & SILVER ORNAMENTS, JEWELLERY AND COINS ALL WE RE FOUND FROM THE LOCKER OF SMT. SAVITRI DEVI, MOTHER OF THE ASSESSEE . THEREFORE, THE IMPUGNED ADDITION CANNOT BE MADE IN THE HANDS OF TH E ASSESSEE WITHOUT ANY VALID REASON PARTICULARLY WHEN SHE IS A SEPARATE ASSESSEE. IT WAS SUBMITTED THAT THE ENTIRE GOLD AND SILVER JEWEL LERY AND COINS BELONGS TO SIX FAMILY MEMBERS AND THIS FACT WAS DUL Y SUBMITTED BEFORE THE ASSESSING OFFICER. IN SUPPORT, THE ASSESSEE FIL ED THE DETAILS OF SUCH GOLD AND SILVER JEWELLERY AND COINS BELONGING TO EA CH OF THE FAMILY MEMBERS AND EVEN THEIR AFFIDAVITS WERE ALSO SUBMITT ED BEFORE THE ASSESSING OFFICER HOWEVER, THE SAME WERE NOT CONSID ERED BY THE ASSESSING OFFICER AS WELL AS BY THE LD. CIT(A). IT WAS FURTHER SUBMITTED THAT BOTH THE WITNESSES SHRI ANIL MUNDRA AND SHRI H ARISH SHARMA CLEARLY CONFIRMED THESE FACTS VIDE THEIR SEPARATE LETTERS D ATED 13.02.2018 & ITA NO.365/JP/2019 SHRI PANKAJ LADHA VS. DCIT 5 10.02.2018. FURTHER, THE LD. CIT(A) HERSELF ADMITTE D SIMILAR EXPLANATION WITH RESPECT TO THE GOLD ORNAMENTS HOWEVER, SHE HAS COMPLETLY IGNORED THIS FACT WHEN IT COME TO SILVER JEWELLERY AND COIN S. FURTHER, IT WAS SUBMITTED THAT THE ASSESSEE IN HIS STATEMENT RECORD ED U/S 132(1) OF THE ACT IN REPLY TO QUESTION NO. 2 AS STATED THAT THE S ILVER ITEMS BELONGS TO THE FAMILY MEMBERS. IT WAS FURTHER SUBMITTED THAT T HE AO HAS DETERMINED THE FIGURE OF RS. 1,50,000/- BASED ON BL IND ESTIMATION. IT APPEARS THAT HE HAS CONFIRMED THE RELIEF ONLY W.R.T THE WEALTH TAX RETURNS OF MOTHER SMT SAVITRI LADHA AND PANKAJ LADH A. IT WAS SUBMITTED THAT PANKAJ LADHA HAVING ALREADY DECLARED WHATEVER SILVER JEWELRY/COINS HE POSSESSED, HENCE THERE WAS NO OCCA SION FOR MAKING ANY ADDITION. OTHERWISE ALSO, WHEN THE AO HAD NOT D ISPUTED THE POSSESSION OF THE ORNAMENTS BY THE FAMILY MEMBERS, THE ADDITION OF THE SILVER JEWELRY & COINS COULD NOT BE ADDED IN THE HA NDS OF THE ASSESSEE ALONE AND MORE PARTICULARLY WHEN CIT(A) ACCEPTED A SIMILAR EXPLANATION W.R.T. THE GOLD ORNAMENTS. 5. IT WAS SUBMITTED THAT THERE APPEARS A NON-APPLIC ATION OF MIND ON THE PART OF THE LOWER AUTHORITIES IN AS MUCH AS THE VALUER HAS NOT GIVEN THE NATURE OF THE COINS NOR THEIR WEIGHT. HE SIMPLY ESTIMATED THE VALUE AT RS. 1,43,650/-. THE AO CONSIDERED THE FIGURE OF RS 4,22,108/- AS AGAINST THE AMOUNT OF RS. 3,22,108/- ESTIMATED BY T HE VALUER. THE AUTHORITIES BELOW DID NOT APPRECIATE THAT THESE ARE JARSHAI AND NOT ORDINARY SILVER COINS PURCHASED IN THE YEARS OF SEA RCH BUT CONTINUED WITH THE FAMILY SINCE LAST SEVERAL YEARS AND GOT AC CUMULATED. SHRI RAJARAM, FATHER OF THE ASSESSEE CATEGORICALLY AFFIR MED THAT HE HAS BEEN COLLECTING COINS SINCE LAST 50 YEARS AS A HOBBY OUT OF HIS OWN INCOME. ITA NO.365/JP/2019 SHRI PANKAJ LADHA VS. DCIT 6 6. IT WAS FURTHER SUBMITTED THAT THE BENEFIT OF THE CBDT CIRCULAR NO. 1916 DATED 11-05-1994 SHOULD ALSO BE GIVEN TO THE A PPELLANT IN THE SENSE THAT THE CIRCULAR RECOGNIZES THE HABIT OF POS SESSING GOLD IN THE INDIAN SOCIETY THEREFORE, SOME AMOUNT OF SILVER ORN AMENT IS ALWAYS KEPT BY THE INDIAN FAMILIES AND ONCE THE FAMILY MEMBERS HAS ALREADY AFFIRMED THROUGH THE POSSESSION OF THE SILVER ORNAM ENTS AND COINS, THE AUTHORITIES BELOW MUST HAVE ACCEPTED THE SAME. HENC E THE ENTIRE IMPUGNED ADDITION MAY PLEASE BE DELETED. 7. PER CONTRA, THE LD. DR DRAWN OUR REFERENCE TO TH E FINDINGS OF THE LD CIT(A) AT PARA 7.3.2 OF HER ORDER WHEREIN THE AO S ACTION OF TREATING RS 1,72,108 AS EXPLAINED AND REMAINING AMOUNT OF RS 1,50,000/- AS UNEXPLAINED HAS BEEN HELD REASONABLE BY THE LD CIT( A), IT WAS SUBMITTED THAT GIVEN THAT THE ASSESSEE HAS FAILED T O EXPLAIN THE SOURCE OF INVESTMENT IN SILVER JEWELLERY AND COINS AND THE ASSESSEE HAS ALREADY BEEN PROVIDED APPROPRIATE RELIEF BY THE AO AND NO F URTHER RELIEF MAY BE PROVIDED. HE ACCORDINGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE STATEMENT RECORDED U/S 132(4), THE ASSESSEE IN RESPONSE TO QUESTION NO. 28 WHERE HE WA S ASKED TO EXPLAIN THE SOURCE OF GOLD JEWELLERY WEIGHING 1240.90 GRAMS AND SILVER JEWELLERY/UTENCILS WEIGHING 4.971 KGM HAS STATED TH AT GOLD AND SILVER JEWELLERY AND UTENCILS SO FOUND DURING THE COURSE O F SEARCH HAD BEEN RECEIVED/PURCHASED ON THE OCCASION OF MARRIAGE OF H IS PARENTS, HIS OWN MARRIAGE AND THEREAFTER, ON BIRTH OF HIS CHILDREN A ND VARIOUS OTHER SOCIAL ITA NO.365/JP/2019 SHRI PANKAJ LADHA VS. DCIT 7 OCCASIONS FROM TIME TO TIME. THE REGISTERED VALUER IN HIS REPORT DATED 3.07.2015 HAS VALUED THE SAME AT RS 3,22,108/-. TH E ASSESSING OFFICER SOUGHT ASSESSEES EXPLANATION DURING THE COURSE OF REASSESSMENT PROCEEDINGS AND THEREAFTER, ARRIVED AT A FIGURE OF RS 1,50,000/- AS UNEXPLAINED INVESTMENT IN SILVER ITEMS AND JEWELLER Y AND BROUGHT THE SAME TO TAX. THE AO HAS NOT SPECIFIED THE BASIS OF ARRIVING AT THE SAID FIGURE, HOWEVER, ON PERUSAL OF THE VALUERS REPORT DATED 3.07.2015 AND OTHER MATERIAL ON RECORD, WE FIND THAT HE HAS GIVEN CREDIT OF RS 143,650 IN RESPECT OF 221 SILVER COINS AS WELL AS RS 28,325 /- TOWARDS SILVER UTENCILS AND HAS THEREAFTER, ARRIVED AT A FIGURE OF RS 150,133/- AND HELD THE SAID FIGURE (AFTER ROUNDING OFF) AS UNEXPLAINED INVESTMENT IN THE HANDS OF THE ASSESSEE. HOWEVER, WE FIND THAT HE HA S FAILED TO CONSIDER TWO KEY ASPECTS. FIRSTLY, THE SILVER JEWELLERY SO FOUND BELONGS TO ALL THE FAMILY MEMBERS AS STATED BY THE ASSESSEE IN HIS STA TEMENT RECORDED U/S 132(4) OF THE ACT. A FACT, WHICH SEEM TO HAVE BEEN ACCEPTED BY THE AO, WHERE HE HAS GIVEN CREDIT OF SILVER COINS BELON GING TO RAJARAM LADHA AND SAVITRI LADHA AS WELL AS SILVER UTENCILS BELONGING TO SAVITRI LADHA AND ALSO FAIRLY ACCEPTED BY THE LD CIT(A) WHE RE SHE HAS ACCEPTED THE ASSESSEES EXPLANATION REGARDING GOLD JEWELLERY SO FOUND DURING THE COURSE OF SEARCH ALONG WITH SILVER JEWELLERY/ITEMS. THEREFORE, ONCE IT IS ACCEPTED THAT THESE ITEMS BELONG TO ALL FAMILY MEMB ERS AND WHERE THE ASSESSEE HAS THEREAFTER GIVEN SPECIFIC DETAILS REGA RDING SUCH ITEMS IDENTIFIED TO EACH OF THE INDIVIDUAL MEMBERS AS PER HIS SUBMISSIONS DATED 18.08.2017, THE REMAINING ITEMS SHOULD THEREF ORE BE ACCEPTED AS BELONGING TO RESPECTIVE FAMILY MEMBERS AND NOT JUST THAT OF THE ASSESSEE ONLY. SECONDLY, THE ASSESSEE AND HER MOTH ER HAVE ALREADY DECLARED SILVER JEWELLERY ITEMS IN THEIR RESPECTIVE WEALTH TAX RETURNS ITA NO.365/JP/2019 SHRI PANKAJ LADHA VS. DCIT 8 WHICH NEED TO BE CONSIDERED. IN CASE OF ASSESSEE, HE HAS DECLARED 0.5 KGS OF SILVER IN HIS WEALTH TAX RETURN FOR A.Y 92-9 3 AND TO THAT EXTENT, THE SAME STAND EXPLAINED. THEREFORE, AS AGAINST 1.4 80 KGS OF SILVER ITEMS BELONGING TO THE ASSESSEE, HE HAS ALREADY DEC LARED 0.5 KGS OF SILVER IN HIS WEALTH TAX RETURN FOR A.Y 92-93. THE POSSESSION OF REMAINING 0.98 KGS OF SILVER ITEMS OVER THE PERIOD OF 24 YEARS AND GIVEN THE SOCIETAL CUSTOMS OF ACCEPTING/BUYING SUCH ITEMS ON OCCASION OF BIRTH AND OTHER SOCIAL FUNCTIONS SEEMS REASONABLE A ND THE ADDITION SUSTAINED BY THE LD CIT(A) IS HEREBY DELETED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2020. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/08/2020. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PANKAJ LADHA, KOTA. 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE, KOTA. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 365/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR