ACIT, Faridabad V. Sh. S.C. Verma, New Delhi

ITA 3757/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8015 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 18-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 20-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEV JYOTY DASS
• Keywords: Unexplained investment; Source of fund
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G : NEW DELHI BEFORE SHRI R.S. SYAL, AM & MS SUCHITRA KAMBLE, JM ITA NO.3763/DEL/2012 ASSESSMENT YEAR : 2010-11 S.C. VERMA, H.NO.34, 1 ST FLOOR, GREATER KAILASH-I, NEW DELHI. PAN: AAEPV1937D VS. ACIT, CENT. CIRCLE 1, FARIDABAD. ITA NO.3757/DEL/2012 ASSESSMENT YEAR : 2010-11 ACIT, CENT. CIRCLE 1, FARIDABAD VS. S.C. VERMA, H.NO.34, 1 ST FLOOR, GREATER KAILASH-I, NEW DELHI. PAN: AAEPV1937D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPAK KAPOOR, ADVOCATE DEPARTMENT BY : SHRI DEV JYOTY DASS, CIT, DR DATE OF HEARING : 18.05.2016 DATE OF PRONOUNCEMENT : 18.05.2016 ORDER PER R.S. SYAL, AM: THESE TWO CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE CIT( A) ON 25.5.2012 IN RELATION TO THE ASSESSMENT YEAR 2010-11. ITA NOS.3757 & 3763/DEL/2012 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE WAS SUBJECTED TO A SEARCH ACTION U/S 132(1) AT HIS RESIDENTIAL PR EMISES. DURING THE COURSE OF SEARCH, CERTAIN CASH, JEWELLERY AND OTHER DOCUME NTS WERE FOUND. TOTAL JEWELLERY WEIGHING 2327.6 GMS. VALUED AT RS.41,67,8 37/- WAS FOUND FROM THE ASSESSEE AND HIS FAMILY MEMBERS, DETAILED AS U NDER:- I) JEWELLERY BELONGING TO SMT. NEELAM VERMA W/O SH. SUBASH CHANDER VERMA FROM THE RESIDENCE AT N-34, 1 ST FLOOR, GK PART I, N DELHI. RS.13,87,056/- II) LOCKER NO.727 ALAKNANDA VAULTS PVT. LTD., N DELHI BELONGING TO SMT. NEELAM VERMA RS.8,22,520/- III) LOCKER NO.726 ALAKNANDA VAULTS PVT. LTD., N DELHI BELONGING TO SMT. SHILPA VERMA W/O SH. SUMIT VERMA RS.7,11,205/- IV) BED ROOM OF SMT. SHILPA VERMA W/O SH. SUMIT VERMA RS.12,47,056/- TOTAL RS.41 ,67,837/- 3. THE AO NOTICED THAT THE ASSESSEE IN RESPONSE TO QUESTION NO. 2 IN THE STATEMENT OF RECORDED DURING THE COURSE OF SEARCH, SUBMITTED THAT JEWELLERY WEIGHING 2327.6 GMS. BELONGED TO HIMSELF, HIS MOTHE R, HIS SON, HIS WIFE AND DAUGHTER-IN-LAW. SINCE THE ASSESSEE COULD NOT F ILE ANY EVIDENCE ABOUT THE JEWELLERY BELONGING TO HIS FAMILY MEMBERS BY ME ANS OF ANY WEALTH TAX ITA NOS.3757 & 3763/DEL/2012 3 RETURN, ETC., THE AO MADE ADDITION FOR THE ENTIRE V ALUE OF JEWELLERY FOUND DURING THE COURSE OF SEARCH AT RS.41,66,837/-. THE LD. CIT(A) EXCLUDED FROM CONSIDERATION THE JEWELLERY BELONGING TO THE A SSESSEES SON AND DAUGHTER-IN-LAW WHICH WAS FOUND FROM THEIR EXCLUSIV E BED ROOM AND LOCKER. HE TOOK UP THE REMAINING AMOUNT OF JEWELLE RY FOUND FROM THE ASSESSEES BED ROOM AND LOCKER BELONGING TO HIS WIF E. SUCH JEWELLERY TOTALED AT 1236.80 GMS. BY ALLOWING BENEFIT OF INST RUCTION NO.1916 DATED 11.5.94, THE LD. CIT(A) HELD THAT JEWELLERY TO THE TUNE OF 136.800 GMS [1236.80 GMS MINUS 1100 GMS (500 GMS EACH FOR THE ASSESSEES WIFE AND MOTHER AND 100 GMS FOR THE ASSESSEE)] WAS UNACCOUNT ED. THAT IS HOW ADDITION WAS RESTRICTED TO 136.90 GMS, WHICH, AS PE R THE ASSESSEES CALCULATION, AMOUNTS TO RS.2,44,897/-. BOTH THE SI DES ARE IN APPEAL ON THEIR RESPECTIVE STANDS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE FIRST ISSUE TAKEN UP BY TH E LD. DR IS ABOUT THE EXCLUSION BY LD. CIT(A) FROM CONSIDERATION IN THE H ANDS OF THE ASSESSEE, THE JEWELLERY FOUND FROM THE BED ROOM OF THE ASSESS EES SON AND LOCKER OF HIS DAUGHTER-IN-LAW. WE HAVE NOTICED THAT TOTAL JEW ELLERY OF 2327.600 GMS ITA NOS.3757 & 3763/DEL/2012 4 WAS FOUND FROM THE BED ROOMS OF THE ASSESSEE AND HI S SON AND TWO LOCKERS, VIZ., ONE IN THE NAME OF THE ASSESSEES WIFE AND TH E OTHER IN THE NAME OF THE ASSESSEES DAUGHTER-IN-LAW. IN RESPONSE TO QUESTIO N NO. 3, DURING THE COURSE OF STATEMENT RECORDED U/S 132(4), THE ASSESS EE SUBMITTED THAT HIS WIFE WAS EMPLOYED WITH NATIONAL INSURANCE COMPANY A ND HIS SON SHRI SUMIT VERMA WAS EMPLOYED WITH M/S RELIGARE INSURANC E GROUP WITH ANNUAL INCOME OF RS.7 LAC. THE ASSESSEE ALSO SUBMIT TED THAT HIS DAUGHTER- IN-LAW, MRS. SHILPA, WAS WORKING WITH M/S STERIA AN D DRAWING A SALARY OF RS.8 LAC PER ANNUM. THIS SHOWS THAT THE ASSESSEES SON AND DAUGHTER-IN- LAW WERE HAVING THEIR SEPARATE SOURCES OF INCOME. THE SEARCH WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF THE ASSESS EE IN HOUSE NO. 34, FIRST FLOOR, GREATER KAILASH-I, NEW DELHI, WHEREIN ALL TH E FAMILY MEMBERS WERE LIVING JOINTLY, ALBEIT IN SEPARATE ROOMS. IT IS AN ADMITTED POSITION THAT NO SEPARATE ASSESSMENTS HAVE BEEN MADE FOR THE OTHER F AMILY MEMBERS. IT IS FURTHER SEEN THAT THE ASSESSEE AT NO STAGE ADMITTED THAT THE ENTIRE JEWELLERY BELONGED TO HIM ALONE. AU CONTRAIRE, HE SPECIFICALLY SUBMITTED THAT THE JEWELLERY BELONGED TO ALL THE FAMILY MEMBERS. THE FACTUM OF THE ASSESSEES DAUGHTER-IN-LAW, A WORKING WOMAN, HAVING HER OWN SEPARATE ITA NOS.3757 & 3763/DEL/2012 5 LOCKER, AMPLY GOES TO PROVE THAT SHE WAS KEEPING HE R JEWELLERY SEPARATE FROM THAT OF THE LARGER FAMILY. PRESENTLY, WE ARE DEALING WITH THE ASSESSMENT OF THE ASSESSEE. IT IS, BUT, NATURAL TH AT THE UNEXPLAINED JEWELLERY, IF ANY, BELONGING TO THE ASSESSEES SON AND DAUGHTER-IN-LAW, BOTH OF WHOM ARE SEPARATELY ASSESSED TO TAX, CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE. IN OUR CONSIDERED OPINION, THE LD . CIT(A) WAS FULLY JUSTIFIED IN EXCLUDING FROM CONSIDERATION THE VALUE OF JEWELLERY FOUND IN THE BED ROOM AND LOCKER OF THE ASSESSEES DAUGHTER- IN-LAW. THE IMPUGNED ORDER IS, THEREFORE, UPHELD PRO TANTO . 5. THE NEXT ISSUE IS ABOUT THE APPLICABILITY OR OTH ERWISE OF INSTRUCTION NO.1916 DATED 11.5.1994. AS PER THIS CBDT INSTRUCT ION, NO SEIZURE OF JEWELLERY CAN BE MADE UPTO 500 GMS BELONGING TO A M ARRIED LADY, 250 GMS. BELONGING TO UNMARRIED GIRLS AND 100 GMS BELONGING TO MALES. THE LD. CIT(A) DELETED THE ADDITION TO THE EXTENT OF 1100 G MS FROM THE TOTAL JEWELLERY BELONGING TO THE ASSESSEE BY RELYING ON T HIS INSTRUCTION. THE LD. DR VEHEMENTLY CONTENDED THAT SUCH AN INSTRUCTION IS RELEVANT ONLY FOR SEIZURE AT THE TIME OF SEARCH AND HENCE CANNOT BE A PPLIED IN THE CONTEXT OF ADDITION. HE TRIED TO FORTIFY HIS VIEW BY RELYING O N THE JUDGMENT OF THE ITA NOS.3757 & 3763/DEL/2012 6 HONBLE MADRAS HIGH COURT IN THE CASE OF VGP RAVIDAS VS. ACIT (2014) 51 TAXMANN.COM 16 (MAD). 6. THERE IS NO DISPUTE ON THE FACT THAT THE HON BLE MADRAS HIGH COURT IN THE AFORENOTED CASE HAS HELD THAT THE INSTRUCTION N O.1916 ISSUED BY THE BOARD CANNOT BE CONSIDERED FOR MAKING ADDITION ON A CCOUNT OF UNEXPLAINED INVESTMENT. HOWEVER, WE FIND THAT THIS INSTRUCTION HAS BEEN HELD TO BE APPLICABLE IN THE CONTEXT OF MAKING ADDITION U/S 69 A/69B BY THE HONBLE RAJASTHAN HIGH COURT IN CIT VS. SATYANARAIN PATNI (2014) 366 ITR 325 (RAJ) . SIMILAR VIEW WAS EARLIER TAKEN BY THE HONBLE RAJ ASTHAN HIGH COURT IN CIT VS. KAILASH CHAND SHARMA (2015) 146 TAXMANN 37 6 (RAJ). THE HONBLE KARNATAKA HIGH COURT IN SMT. PATI DEVI VS. ITO AND ANOTHER (1999) 240 ITR 727 (KAR.) HAS HELD THAT CBDT INSTRUCTION DATED 11 MAY, 1994 DIRECTING THE AUTHORITIES NOT TO SEIZE SPECIFI ED QUANTITIES OF GOLD JEWELLERY APPLIES QUA THE ADDITION AS WELL. THE HONBLE GUJARAT HIGH COURT CIT VS. RATAN LAL VYAPARI LAL JAIN (2011) 339 ITR 3 51 (GUJ) HAS ALSO HAS HELD THAT INSTRUCTION NO.1916 CAN BE SAFEL Y APPLIED IN PRESUMING THAT THE SOURCE TO THE EXTENT OF JEWELLERY STATED I N THE CIRCULAR STANDS EXPLAINED. WE DO NOT DIRECTLY FALL UNDER JURISDICT ION OF ANY OF THE ABOVE ITA NOS.3757 & 3763/DEL/2012 7 HIGH COURTS HOLDING FOR OR AGAINST THE APPLICABILIT Y OF THIS INSTRUCTION IN THE CONTEXT OF MAKING ADDITION AS WELL. THUS, IT IS APPARENT THAT THE PREDOMINANT VIEW OF THE HONBLE HIGH COURTS IS IN F AVOUR OF APPLYING THE MANDATE OF INSTRUCTION IN TREATING THE EXPLANATION OF JEWELLERY AS JUSTIFIED. GOING WITH THE MANDATE OF THE HONBLE RAJASTHAN HIG H COURT, HONBLE KARNATAKA HIGH COURT AND HONBLE GUJARAT HIGH COURT , WE HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN TREATING THE JEWELLERY WEIGHING 1100 GMS AS EXPLAINED OUT OF TOTAL JEWELLERY OF 1236.80 GMS. 7. THE LD. AR RELIED ON THE JUDGMENT DATED 27. 7.2011 OF THE HONBLE DELHI HIGH COURT IN ASHOK CHADDHA VS. ITO ( A COPY PLACED ON RECORD) TO ARGUE THAT THE REMAINING ADDITION BE ALSO DELETED. IN THAT CASE, JEWELLERY WEIGHING 906.900 GMS WAS FOUND AND THE AO ACCEPTED ONLY 400 GMS. AS EXPLAINED. ADDITION WAS MADE FOR THE REMAINING JEWE LLERY TO THE EXTENT OF 506.900. THE HONBLE HIGH COURT TREATED THE ENTIRE JEWELLERY EXPLAINED BY CONSIDERING THAT HOLDING OF SUCH A JEWELLERY COULD NOT BE CONSIDERED AS EXCESSIVE ` IN THE PECULIAR FACTS OF THIS CASE . THIS JUDGMENT DOES NOT LAY DOWN A UNIVERSAL LAW THAT ANY WEIGHT OF JEWELLERY CAN BE TREATED AS EXPLAINED IN ALL THE CIRCUMSTANCES. WE HAVE NOTED T HAT THE JUDGMENT WAS ITA NOS.3757 & 3763/DEL/2012 8 RENDERED ONLY IN THE PECULIAR FACTS AS WERE OBTAINI NG IN THAT CASE. MOREVOER, IN THAT CASE, THE AO DID NOT APPLY THE MA NDATE OF THE INSTRUCTION FOR TREATING SOME JEWELLERY AS EXPLAINED. HE ARBITR ARILY CONSIDERED 400 GMS AS EXPLAINED. WE ARE UNABLE TO COUNTENANCE THE CONT ENTION OF THE LD. AR FOR TREATING THE REMAINING 136.90 GMS JEWELLERY AS ALSO EXPLAINED BECAUSE THE ASSESSEE HAS NOT LED ANY EVIDENCE TO DEMONSTRAT E THE SOURCE OF INVESTMENT IN JEWELLERY TO THIS EXTENT. MOREOVER, W HEN WE APPLY THE MANDATE OF INSTRUCTION NO.1916 AND TREAT JEWELLERY TO THE TUNE OF 1100 GMS. AS EXPLAINED WITHOUT THERE BEING ANY POSITIVE EVIDENCE, ANY JEWELLERY OVER AND ABOVE THAT CAN BE TREATED AS EXPLAINED ONL Y IF THE ASSESSEE LEADS SOME POSITIVE EVIDENCE ABOUT THE DECLARED SOURCE OF SUCH EXCESS INVESTMENT IN GOLD JEWELLERY. WE, THEREFORE, AFFI RM THE VIEW TAKEN BY THE LD. CIT(A) IN TREATING JEWELLERY TO THE EXTENT OF 1 36.800 GMS AS EXPLAINED. IN THE ULTIMATE ANALYSIS, THE IMPUGNED ORDER IS UPH ELD. ITA NOS.3757 & 3763/DEL/2012 9 8. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.05.201 6. SD/- SD /- ; [SUCHITRA KAMBLE] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 18 TH MAY, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.