Sh. Pradeep Sood, New Delhi V. ACIT, Faridabad

ITA 4264/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2824 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 14-06-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SHEFALI SWAROOP
• Keywords: Unexplained investment; Gift; Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SMT. BEENA A. PILLAI , JM ITA NO. 4264 /DEL/2014 : ASSTT. YEAR : 2007 - 08 SH. PRADEEP SOOD, 5 - P/6, NIT, FARIDABAD V S ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1 , FARIDABAD (APPELLANT) (RESPONDENT) PAN NO. A EZPS3313K ASSESSEE BY : SH. SOMIL AGARWAL, ADV. REVENUE BY : MRS. SHEFALI SWAROOP, CIT DR DATE OF HEARING : 14 .06 .201 7 DATE OF PR ONOUNCEMENT : 14 . 0 6 .201 7 ORDER PER N. K. SAINI, AM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 06.06 .2014 OF LD. CIT(A) (CENTRAL) , GURGAON . 2. THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE SUSTEN ANCE OF ADDITION OF RS.1,41,750/ - MADE BY THE AO ON ACCOUNT OF UNEXPLAINED JEWELLERY. 3 . DURING THE COURSE OF HEARING THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE VIDE ORDER DATED 21.04.2017 IN ITA NO. 42 65/DEL/2014 FOR THE ASSESSMENT YEAR 2007 - 08 IN THE CASE OF SH. NAVEEN SOOD VS ACIT, CENTRAL CIRCLE - 1, FARIDABAD. IT WAS ALSO STATED THAT THE ASSESSEE IS A REAL BROTHER OF SH. ITA NO. 4264 /DEL /201 4 PRADEEP SOOD 2 NAVEEN SOOD AND THE SEARCH TOOK PLACE SIMULTANEOUSLY IN THE RESIDENTIAL PREMISES OF THE ASSESSEE AS WELL AS SH. NAVEEN SOOD . C OPY OF THE AFORE SAID ORDER WAS FURNISHED WHICH IS PLACED ON RECORD. 4 . IN HER RIVAL SUBMISSIONS THE LD. CIT DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IT IS NOTICED THAT AN IDENTICAL ISSUE HAVING SIMILAR FACTS WAS A SUBJECT MATTER OF ADJUDICATION IN ITA NO. 4265/DEL/2014 FOR THE ASSESSMENT YEAR 2007 - 08 IN THE CASE OF BRO THER OF THE ASSESSEE SH. NAVEEN SOOD WHEREIN VIDE ORDER DATED 21.04.2017, THE RELEVANT FINDINGS VIDE PARA 6, GIVEN BY THE ITAT DELHI BENCH B , NEW DELHI READ AS UNDER: 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT FINDING GIVEN IN THE IM PUGNED ORDERS. OUT OF THE TOTAL JEWELLERY FOUND DURING THE COURSE OF SEARCH AMOUNTING TO RS. 61,30,213/ - , THE ONLY DISPUTE REMAINED WAS WITH REGARD TO THE JEWELLERY WEIGHING 971.700 GMS VALUED AT RS.11,23,055/ - IN THE HANDS OF ASSESSEE. THIS JEWELLERY WAS STATED TO BE BELONGING TO THE UNIT OF ASSESSEE S FAMILY, CONSISTING OF SELF, WIFE AND TWO DAUGHTERS. THE LD. ASSESSING OFFICER HAS GIVEN RELIEF TO THE EXTENT OF 800 GMS IN THE MANNER INCORPORATED ABOVE AND BALANCE JEWELLERY WEIGHING 171.700 GMS HAS BEEN TR EATED AS UNEXPLAINED INVESTMENT. THE ASSESSEE S MAIN CONTENTION BEFORE THE LEARNED CIT(APPEALS) AS WELL AS BEFORE US HAS BEEN THAT, IN VIEW OF THE CBDT S INSTRUCTION NO. 1916 DATED 11.5.1994 WHEREIN CERTAIN LIMIT HAS BEEN PROVIDED FOR MARRIED LADY (UPTO 50 0GMS); ITA NO. 4264 /DEL /201 4 PRADEEP SOOD 3 UNMARRIED LADY (UPTO 250 GMS); AND MALE (UPTO 100 GMS) WILL SUBSTANTIALLY COVER THE JEWELLERY WEIGHING AT 971.700 GMS. IN SUPPORT THE LD. COUNSEL HAS RELIED UPON THE JUDGMENT OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RATANLAL VYAPARILAL J AIN (SUPRA). WE FIND THAT HON BLE HIGH COURT HAS MADE VERY IMPORTANT OBSERVATION IN THIS REGARD, WHICH WAS FOR THE SAKE OF REFERENCE IS REPRODUCED HERE UNDER: - 9 .AS CAN BE SEEN FROM THE IMPUGNED ORDER OF THE TRIBUNAL, THE TRIBUNAL HAS REFERRED TO THE CB DT CIRCULAR NO. 1916 AND OBSERVED THAT IN AN EARLIER DECISION OF THE TRIBUNAL, THE TRIBUNAL S S' HAS ACCEPTED THE APPLICABILITY OF THE CIRCULAR AND HAS HELD THAT HAVING REGARD TO THE CIRCULAR AND SIZE OF THE FAMILY, THE ORNAMENTS TO THE EXTENT SPECIFIED IN THE CIRCULAR SHOULD BE ACCEPTED AS REASONABLE. THE TRIBUNAL, ACCORDINGLY, FOUND THAT THE JEWELLERY HELD BY THE ASSESSEE AND HIS FAMILY MEMBERS WAS WELL WITHIN THE LIMIT LAID DOWN UNDER THE CBDT CIRCULAR AND ACCORDINGLY, DELETED THE WHOLE ADDITION ON THE G ROUND THAT THE JEWELLERY HELD BY EACH OF THE FAMILY MEMBERS WAS BELOW THE LIMITS SPECIFIED IN THE SAID CIRCULAR. 10. THOUGH IT IS TRUE THAT THE CBDT CIRCULAR NO. 1916, DT. 11TH MAY, 1994 LAYS DOWN GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN THE CO URSE OF SEARCH, THE SAME TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE HELD BY FAMILY MEMBERS OF AN ASSESSEE BELONGING TO AN ORDINARY HINDU HOUSEHOLD. THE APPROACH ADOPTED BY THE TRIBUNAL IN FOLLOWING THE SAID CIRCULAR AND GIVING BE NEFIT TO THE ASSESSEE, EVEN FOR EXPLAINING THE SOURCE IN RESPECT OF THE JEWELLERY BEING HELD BY THE FAMILY IS IN CONSONANCE WITH THE GENERAL PRACTICE IN HINDU FAMILIES WHEREBY JEWELLERY IS GIFTED BY THE RELATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS , VIZ., MARRIAGES, BIRTHDAYS, MARRIAGE ANNIVERSARY AND OTHER FESTIVALS. THESE GIFTS ARE CUSTOMARY AND CUSTOMS PREVAILING IN A SOCIETY CANNOT BE IGNORED. THUS ALTHOUGH THE CIRCULAR HAD BEEN ISSUED FOR THE PURPOSE OF NON - SEIZURE OF JEWELLERY DURING THE COURS E OF SEARCH, THE BASIS FOR THE SAME RECOGNIZES CUSTOMS PREVAILING IN ITA NO. 4264 /DEL /201 4 PRADEEP SOOD 4 HINDU SOCIETY. IN THE CIRCUMSTANCES, UNLESS THE REVENUE SHOWS ANYTHING TO THE CONTRARY, IT CAN SAFELY BE PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STA NDS EXPLAINED. THUS, THE APPROACH ADOPTED BY THE TRIBUNAL IN CONSIDERING THE EXTENT OF JEWELLERY SPECIFIED UNDER THE SAID CIRCULAR TO BE A REASONABLE QUANTITY, CANNOT BE FAULTED WITH. IN THE CIRCUMSTANCES, IT IS NOT POSSIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED ANY LEGAL ERROR SO AS TO GIVE RISE TO A QUESTION OF LAW. THE AFORESAID JUDGMENT, THOUGH ACKNOWLEDGES THAT THE CBDT INSTRUCTION/CIRCULAR LAYS DOWN ONLY THE GUIDELINES OF SEIZURE OF JEWELLERY AND ORNAMENTS DURING THE COURSE OF SEARCH AND ALSO P ROVIDES QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE HELD BY THE FAMILY MEMBERS OF A ASSESSEE, HOWEVER, HAS LAID DOWN A VERY IMPORTANT PROPOSITION THAT THE SAID CIRCULAR SHOULD BE ACCEPTED FOR EXPLAINING THE SOURCE OF JEWELLERY ALSO BECAUSE, IT IS IN CON SONANCE WITH GENERAL PRACTICE IN HINDU FAMILY WHEREBY IT IS CUSTOMARY THAT JEWELLERY ARE GIFTED BY FAMILY MEMBERS, RELATIVES, FRIENDS, ETC. AT THE TIME OF SOCIAL FUNCTIONS LIKE MARRIAGE, BIRTHDAYS, MARRIAGE ANNIVERSARY AND OTHER FESTIVALS. THESE CUSTOMARY PRACTICES IN OUR SOCIETY CANNOT BE IGNORED. HERE IN THIS CASE, THE LD. ASSESSING OFFICER HAS ALREADY ALLOWED SUBSTANTIAL BENEFIT TO THE ASSESSEE BASED ON THE SAME APPROACH THAT IN A GIVEN FAMILY THIS MUCH AMOUNT OF JEWELLERY IS THERE. HOWEVE, HE HAS TAKEN THE QUANTITY OF JEWELLERY IN THE CASE OF ASSESSEE S WIFE AT 400 GMS, INSTEAD OF 500 GMS; SIMILARLY IN THE CASE OF DAUGHTERS HE HAS TAKEN 150 GMS EACH INSTEAD OF 250 GMS. IF ONE GOES BY THE LIMIT LAID DOWN BY THE CBDT INSTRUCTION IN THE CASE OF MARRIED WOMA N AND UNMARRIED WOMAN, THEN THE ASSESSEE WILL GET BENEFIT OF FURTHER QUANTITY OF JEWELLERY WHICH WILL GET COVERED UNDER THE SAID GUIDELINES THAT WILL FAR EXCEED 171.700 GMS ALSO. THUS, RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON BLE HIGH COURT, W E HOLD THAT EVEN THE ITA NO. 4264 /DEL /201 4 PRADEEP SOOD 5 REMAINING JEWELLERY OF 171.700 GMS VALUED RS. 1,98,314/ - CANNOT BE ADDED AS UNEXPLAINED AS IT WILL BE COVERED UNDER THE LIMIT OF QUANTITY PRESCRIBED BY CBDT INSTRUCTIONS. ACCORDINGLY, SAME IS DIRECTED TO BE DELETED. 6 . THE FACTS IN T HE PRESENT CASE ARE IDENTICAL TO THE FACTS INVOLVED IN THE AFORESAID REFERRED TO CASE OF SH. NAVEEN SOOD, THE ONLY DIFFERENCE IS THAT OUT OF THE JEWELLERY NOT SEIZED, FOUND DURING THE COURSE OF SEARCH , THE JEWELLERY WEIGHING 971.7 GMS WAS CONSIDERED IN THE HANDS OF BROTHER OF THE ASSESSEE AND THE JEWELLERY WEIGHING 862.5 GMS WAS CONSIDERED IN THE HANDS OF THE ASSESSEE, OTHERWISE THE FACTS ARE IDENTICAL. SO, RESPECTFULLY FOLLOWING THE AFORESAID REFERRED TO ORDER , THE ADDITION OF RS.1,41,750/ - MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS DELETED. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED . (O RD ER PRONOUNCED IN THE COURT ON 14 /0 6 /2017 ) SD/ - SD/ - (BEENA A. PILLAI ) (N. K. SAINI) JUDICIAL ME MBER ACCOUNTANT MEMBER DAT ED: 14 /06 /2017 *SUBODH* COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR