RAJESH SINGHVI, JAIPUR V. Assistant Commissioner of Income-tax, Central Circle-1, Udaipur, UDAIPUR

ITA 390/JODH/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8368 (ITAT-JODHPUR)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2024
• Assessment Year: 2017-2018
• Appeal Filed On: 20-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Source of fund
• Section: 143(3); 142(1); 250; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR. BEFORE: DR. S. SEETHALAKSHMI, JJUDICIAL MEMBER & SHRI RATHOD KAMLESH JAYANTBHAI, ACCOUNTANT MEMBER I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 Sh. Rajesh Singhvi 5 th Floor Rajesh Rayon Bhavan, Kalbadevi Mumbai [PAN: APHPS 8337 L] (Appellant) Vs. Assistant Commissioner of Income-tax, Central Circle-01, Udaipur (Respondent) Appellant by Sh. Sakar Sharma, CA Respondent by Smt. Alka Rajvanshi Jain, CIT-DR Date of Hearing 30.01.2024 Date of Pronouncement 07.03.2024 ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by assessee is arising out of the order of the Commissioner of Income Tax (Appeals)- Udaipur 02 dated 18/09/2023 [here in after ‘CIT(A)’ ] for assessment year 2017-18 which in turn arise from the order dated 10.12.2018 passed under section 143(3) of the ACIT, Central Circle-01, Udaipur. 2. In this appeal, the assessee has raised following grounds: - I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 2 “1. The Ld. CIT(A) erred on facts and in law in upholding addition of Rs. 3,86,552/- on account of jewellery found in Bank Locker u/s 69A r.w.s 115BBE of the Act even though appellant was not owner of the jewellery so found. 2. The Ld. CIT(A) erred on facts and in law in not appreciating that higher rate of taxation i.e. @ 60% is not applicable in the case of appellant qua assessment year under consideration u/s 115BBE in as much as provisions of section 69A have been incorrectly invoked in the case of appellant.” 3. Succinctly, the fact as culled out from the records is that search and seizure proceedings were carried out at the premises of the assessee on 18.09.2016 as per warrant of authorization issued by Director General of Income-tax (Inv.). Jaipur. The assessee has filed return of income electronically on 31.10.2017 vide acknowledgement No. 281091851311017 at total income of Rs. 42,06,210/-. 3.1 The case was selected for scrutiny assessment and notice U/s 143(2) of the Income Tax Act was issued on 23.08.2018 which was duly served upon the assessee. Subsequently, during the course of assessment proceedings, notices u/s. 142(1) of the Act were also issued to the assessee on requiring him to produce/explain/furnish various information as specified therein and placed on record. 3. 2 It is submitted by the assessee that he derives Salary income, also derives Interest Income from saving bank and share of profit & I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 3 remuneration from partnership firm M/s. Green Tech and M/s. Green Tech Intelligent Transportation System LLP. During the course of assessment proceedings, the relevant details for the issues involved have been called for and after verification, the relevant details as submitted by the assessee are placed on record. 3.3 During the assessment proceedings, the assessment order u/s 143(3) of Income Tax Act, 1961 was passed by the AO at assessed income of Rs. 65,13,680/- on 10.12.2018 after making addition of Rs. 3,86,552/- on account of unexplained investment in jewellery, Rs. 19,17,692/- on account of unexplained investment in jewellery and Rs. 3,225/- on account of interest on Income tax refund. The fact related to the addition is that bank locker of the assessee was operated on 02-11- 2016 wherein jewellery weighting 141.10 gms valued at Rs. 3,86,552/- was found and seized as per annexure JS-1 appearing at Page 12 of PB. Statement u/s 132(4) of the assessee was also recorded at the time of opening of bank locker where in assessee admitted total jewellery weighing 941.10 gms [800 gms as claimed to be taken out from the bank locker and 141.10 gms found in the bank locker at the time of its operation in the presence of income-tax officials. The Assessing Officer, thereafter, taxed jewellery of Rs. 3,86,552/- weighing 141.10 gms which I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 4 was physically found and also Rs. 19,17,692/- with reference to about 700 gms of jewellery which assessed claimed as taken out from the bank locker a day prior to the date of search and kept in the kitchen in sugar container u/s 69A r.w.s. 115BBE of the Act vide para 4.5 & 6 of assessment order passed u/s 143(3) dated 10-12-2018. 4. Aggrieved from the order of AO, the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: “4.3 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The AO made addition because source of the jewellery seized and as accepted by the appellant during search proceedings at the time of search remain unexplained. The appellant has taken following arguments against the addition made by the AO- 1. With regard to addition of Rs. 3,86,552/- the appellant argued that the jewellery is belonging to Ms. Vibha Singhavi wife of the appellant. Still addition is made in the hands of the appellant. 2. With regard to addition of Rs. 19,17,692/- the appellant stated that the addition is only based on the statement and not on the basis of item- wise weighment. As per appellant in the statement the jewellery was stated to be from 700 gms to 1000 gms in reply to different questions. 3. The appellant argued that the jewellery is within the limit prescribed by the CBDT Instruction dated 11.05.1994 and source need not be explained. The appellant has also relied upon various judgements in support of his arguments. I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 5 4. As per appellant the jewelry at the time of search comes to 1051 gms out of which 950 gms is liable to be exempted. 5. Jewellery weighing 500 gms was available as per wealth tax return of Rajesh Gulabchand Singhavi (HUF). With regard to the jewellery found during the search which is in addition to the jewellery seized, para no. 4.4 of the assessment order is important. The AO mentioned that family of the assessee consists of assessee himself, his wife and as per Boards instruction credit of gold jewellery can be given only to the extent of 1300 gms only. The AO noted that during the course of search proceedings after giving due credit of said instruction, the authorized officer seized jewellery worth Rs. 3,86,552/- as the appellant failed to explain nature and source of the jewellery. From perusal of the above para, it is evident that the jewellery as per the limit prescribed by the CBDT Circular was not seized and the seized jewellery is over and above the limit prescribed by the CBDT. There is no confusion over this fact. The appellant has not controverted this finding of the AO. In view of this the argument of the appellant that no benefit of CBDT instruction was given is found to be incorrect. The AO has relied upon the judgement of Hon'ble Madras High Court in the case of V. G. P. Ravidas V. ACIT (2014) 51 taxman.com 16 but without prejudice to the above reliance placed the AO has considered the fact that the appellant has been allowed the benefit of CBDT instruction by the authorized officer while making the seizure of jewellery. Hence, the argument of the appellant that the AO has not considered CBDT Instruction No. 1916 dated 11.05.1994 as well as decision of Hon'ble Rajasthan High Court in case of CIT, Alwar vs. Satya Narayan Patni (2014) 106 DTR 426, 269 ITR 466 (Raj.H.C.) is not found to be correct with regard to addition of jewellery of 141 gms amounting to Rs. 3,86,522/- found from locker which was seized during the search proceedings. The addition made to that extent is therefore found to be justified and confirmed. However, AO has not mentioned that the addition made of 700 gms amounting to Rs. 19,17,692/- is in addition to the jewellery found but not seized during the search at the residence of the appellant. Therefore, this addition is not justified as this jewellery is within the limit prescribed by the CBDT instruction and as held by Hon'ble Rajasthan High Court in the case of Satya Narayan Patni (Supra) that such jewellery within the limit will also not be questioned about its source and acquisition. In view of the decision relied upon by the appellant, the addition made by the AO to the extent of Rs. 19,17,692/- is not found to be sustainable. With regard to argument of the appellant that jewellery is belonging to Ms. Vibha Singhavi wife of the appellant and addition is made in the hands of the appellant it is stated that the addition is with regard to source of acquisition of I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 6 jewellery. If the appellant was able to explain that the jewellery was acquired by wife of the appellant from her explained sources of income the assessment would have been in the hands of her wife. However, the appellant has not explained any such source of acquisition by wife of the appellant. Therefore, the assessment is correctly made in the hands of the appellant by the AO. The appellant might have acquired for his family members and credit of same has already been given as per CBDT instruction by the AO. With regard to argument that the jewellery of 700 gms is added as per statement and not as per actual weight. This figure is taken from the statement of the appellant by the AO. The statement is taken under oath and the appellant himself agreed to this figure, hence, the basis of figure is not disputable. The appellant also argued that as per appellant the jewelry at the time of search comes to 1051 gms out of which 950 gms is liable to be exempted. However, as per AO the authorized officer already considered credit of 1300 gms as per CBDT instruction. The AO has drawn conclusion on the basis of the statement recorded u/s 132(4) of the appellant according to which jewellery was withdrawn by the appellant from the locker. Both of these facts are on the basis of statement recorded during the search proceedings and seizure made by the search team. There must be jewellery found on person which is considered by the search team within the limit prescribed by the CBDT in addition to the admission in the statement. It is understood that no seizure was made from house of the appellant and therefore, the AOs noting that credit of jewellery to the extent of CBDT instruction was provided to the appellant is found to be correct. The claim of the appellant is different in his reply. At one place it is 1051 gms. In same para 8 of reply the appellant mentions that the gross weight of the jewellery found comes to 841 gms. Therefore, the argument of the appellant is not found to be reliable and rejected. With regard to Jewellery weighing 500 gms available as per wealth tax return of Rajesh Gulabchand Singhavi (HUF) there is no such mention in the statement recorded during the search. In the absence of specific jewellery found and claimed to be belonging to HUF, the claim made later on is not an acceptable claim as this is considered as afterthought only. In the absence of no such claim made during the search proceedings, it can be presumed that this Jewellery was not available at the time of search proceedings. Therefore, such claim made by the appellant is not found to be acceptable. The appellant has also argued that since there was no seizure and no list of jewellery found at the residence was furnished and hence no Incriminating material is found. The argument of the appellant are found to be incorrect and not acceptable. In the statement recorded during the search, the appellant himself accepted existence of jewellery. Further, there must be jewellery on person. Therefore, considering the fact that the jewellery found at home was within the limit prescribed by CBDT the jewellery found in the locker I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 7 was seized. The reliance by the appellant on various decisions with regard to Incriminating material are not found to be relevant as the order made by the AO for this year is u/s 143(3) and not 153A. Further, there is seizure of unexplained jewellery in the case of appellant. Therefore, the argument of the appellant are not found to be acceptable. In view of above discussion, the addition made by the AO of Rs. 3,86,552/- is upheld and addition of Rs. 19,17,692/- is deleted. The appellant failed to explain the source of jewellery of Rs. 3,86,552/- which was seized during the search. Therefore, the jewellery is rightly taxed by the AO u/s 69A. The appellant has relied upon the judgements where excess stock found was treated as business income. However, these decisions are not applicable on the facts of the appellant as the jewellery found during the search was not business stock of the appellant. Therefore, the charging of tax u/s 115BBE by AO is found to be as per provisions of the Income Tax Act and accordingly confirmed. This ground of appeal is treated as partly allowed.” 5. As the appeal of the assessee was partly allowed the assessee prefer the present appeal for the sustained addition of Rs. 3,86,552/-. In support of the ground so take the ld. AR of the assessee submitted that only 141.10 gms of jewelry was found during search and remaining jewellery is estimated at 700 gms based on the statement of assessee recorded at the time of operation of bank locker wherein assessee claimed that he had stated in statement recorded at his residence on 18- 09-2016 that jewellery of about 5 gms on the body of assessee’s wife was stated. However, this fact is nowhere appears in the statement dated 18-09-2016. Ld. AR by placing reliance on the judgment of Hon’ble Telangana and Andhra Pradesh High Court in the case of CIT vs Naresh Kumar Agarwal (2014) 369 ITR 171 (AP) submitted that I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 8 circumstances in which admission is extracted from the searched person is well known and taken cognisance by the Court. Therefore, no reliance could be placed on the statement recorded u/s 132(4) dated 02-11-2016 which is in absolute contradistinction to the statement recorded u/s 132(4) on 18-09-2016. No physical verification of jewellery claimed to be lying at residence was done. No reasons have been stated as to why bank locker was opened almost two months after the date of search at residence and despite search of residential house why no jewellery could be detected by the search party. Ld. A/R further submitted that parents of wife of assessee were also submitted to search at Beawer on 16-09-2016 and either during search or during assessment no jewellery claimed to be belonging to the wife of the assessee was claimed by them. The ld. AR of the assessee in support thereof place copy of assessment order passed u/s 143(3) dated 10-12-2018 by the same AO who also framed assessment in the case of assessee. The ld. AR of the assessee referred to para 7 of the assessment order to submit that wife of assessee’s very well can claim exemption with reference to CBDT Instruction No. 1916 dated 11-05-1994 only for the assessee, assessee’s wife, son, daughter in law and grandson and not with reference to the assessee’s wife ornaments. The ld. AR of the assessee further submitted that onus u/s 69A is on the AO to establish that I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 9 assessee owned jewellery weighing 700 gms in addition to the jewellery weighing 141.10 gms found and seized from the bank locker which he failed to establish. Therefore, only 141.10 gms of jewellery alone ought to have been considered. Without prejudice to this, Ld. AR of the assessee further submitted that even if statement is considered adverse to the assessee and that it was onus of assessee to explain the source of such investment, still no addition u/s 69A is warranted because HUF of assessee had disclosed 500 gms of jewellery in wealth tax return furnished which ld. CIT(A) has not considered. The ld. AR of the assessee further submitted that against total jewellery of 841.10 gms [i.e. 700 gms + 141.10 gms], assessee is entitled to the following credits in terms of CBDT Instruction No. 1916 dated 11-05-1994 when credit for assessee’s mother is not considered being having one residence at Bombay where her jewellery was claimed to be lying: Particulars Qty Jewellery disclosed in wealth tax return of assessee’s HUF 500.00 Assessee 100.00 Assessee’s Wife 500.00 Assessee’s daughter 250.00 Assessee’s son 100.00 Total 1450.00 I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 10 Further, even of HUF’s declared jewellery is excluded, still assessee’s is entitled to credit to the extent of 950.00 Gms against which only 841.10 gms of jewellary was claimed by assessee including actual physically found jewellery of 141.10 gms. Accordingly, the ld. AR of the assessee submitted that addition sustained by the ld. CIT (A) is not justified and therefore, the present appeal of the assessee. 6. Per contra, the ld. DR representing the revenue supported the finding recorded in the order of the ld. CIT (A) and submitted that assessment order passed in the case of assessee’s father in law Shri Hukmichand Jain on which assessee has placed reliance in support of the contention that no credit for the jewellery of wife was claimed by them is not coming out from the said order. 7. We have heard the rival contentions and perused the material placed on record. The bench noted at the time of opening of bank locker 141.10 gms of jewellery was found during search jewellery of 700 gms estimated to be lying at the residence of the assessee. While search action at the residence of the assessee, no jewellery was found at his residence. Fact of existence of any such jewellery came on record only through statement recorded at the time of operation of the bank locker I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 11 this indicate that assessee was forced to admit some jewellery and even after such admission no attempt was made to physically examine any such jewellery at the residence of the assessee. We also find that father of assessee’s wife Shri Hukmi Chand Jain has not claimed any credit in relation to his daughter [i.e. assessee’s wife] in his assessment. Therefore, jewellery if any of assessee’s daughter lying at his mother’s residence has already been considered in the hands of his father. Though assessee had declared about 500 gms of jewellery in wealth tax return of HUF, no credit for the same is has been granted. Further, against the total assessed quantity of 841.10 gms, assessee is entitled for credit of 950 gms as per Board’s Circular [ 500 gm for assessee’ wife, his daughter 250 gm and assessee’s son 100 gms and 100 gms for assessee]. As against the eligible 950 gms the total found quantity is 841.10 gms therefore, no addition is required to be made in the hands of the assessee considering the CBDT guideline and therefore, we direct the to delete the addition of Rs. 3,86,552/-. Based on this observation the ground no. 1 raised by the assessee is allowed. 8. Ground no. 2 raised by the assessee is charging of tax at higher rate on the addition so made. Since we have in ground no. 1 deleted the I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 12 addition the ground no 2 raised by the assessee becomes educative in nature. In the result the appeal of the assessee is allowed. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) Judicial Member Accountant Member Ganesh Kumar, PS (On Tour) Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order I.T.A. No. 390/Jodh/2023 Assessment Year: 2017-18 13 Date Initial 1. Draft dictated on Sr.PS/PS 2. Draft placed before author Sr.PS/PS 3. Draft proposed & placed before the Second Member JM/AM 4. Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr. P.S./P.S. Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8. Date on which file goes to the Head Clerk 9. Date on which file goes to the AR 10. Date of dispatch of Order