Sh. Ravi Bhushan Khurana, New Delhi V. ACIT, Faridabad

ITA 4267/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97025 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 08-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN RAWAL
• Keywords: Gift; Search and seizure; Opportunity of being heard; Question of law
• Section: 143(3); 142(1)

Judgement Text

1 IN THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC - 2 : NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 4267 /DEL/201 4 A.Y. : 2007 - 08 SH. RAVI BHUSHAN KHURANA, VS. ACIT, CC - 1, RRA TAXINDIA, FARIDABAD D - 28, SOUTH EXTENSION, PART - I, NEW DELHI 110 049 (PAN : AJAPK5922A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SOMIL AGARWAL, ADV. DEPARTMENT BY : SH. ROBIN RAWAL, SR. DR DATE OF HEARING : 08 - 07 - 2015 DATE OF ORDER : 24 - 08 - 2015 O R D E R PER H.S. SIDHU, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - V, NEW DELHI DATED 6 . 6 .201 4 PERTAINING TO ASSESSMENT YEAR 2007 - 08 . 2. T HE GROUNDS OF APPEAL READ AS UNDER: - I) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS. 86,000/ - ALLEGEDLY ON ACCOUNT OF UNEXPLAINED JEWELLERY. 2 (II) THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 86,000/ - IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. (III) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW IN UPHOLDING THE ACTION OF THE AO IN MAKING AN ADDITION OF RS. 50,000/ - ALLEGEDLY ON ACCOUNT OF UNEXPLAINED CASH. (IV) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN PASSING THE IMPUGNED ORDER WITHOUT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD. V) THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF AO IN MAKING THE IMPUGNED ADDITION S ARE BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. VI) THAT THE APPELLANT CRAVES THE LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL AT ANY STAGE AND ALL THE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. 3. THE BRIEF FACTS OF THE CA S E ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE RESIDENTIAL PREMISES OF SH. RAVI BHUSHAN KHURANA ON 16.1.2007. SH. R.B. KHURANA IS THE DIRECTOR IN M/S ERGO AUTO LTD. DOCUMENTS INVENTORISED AS ANNEXURE A - 1 TO A - 6, CPU AND A - 1 TO A - 5, CPU W ERE SEIZED / IMPOUNDED FROM RESIDENTIAL PREMISES. CASH OF RS. 1,12,890/ - AND JEWELLERY WEIGHTING 1388 GRAMS 3 VALUED AT RS. 13,91,138/ - WERE FOUND. ON 21.1.2008, A NOTICE U/S. 142(1) WAS ISSUED AND DULY SERVED UPON THE ASSESSEE ASKING TO FILE HIS RETURN OF INCOME. IN RESPONSE TO NOTICE U/S. 142(1), THE ASSESSEE FILED THE RETURN OF INCOME ON 29.1.2008 DECLARING A TOTAL INCOME OF RS. 5,16,590/ - . NOTICES U/S. 142(1) AND 143(2) DATED 09.5.2008 ALONG WITH QUESTIONNAIRE WERE ISSUED AND DULY SERVED UPON THE ASSE SSEE ON 15.5.2008 FIXING THE DATE OF HEARING ON 23.5.2008. ASSESSEE S AUTHORIZED REPRESENTATIVE ATTENDED THE ASSESSMENT PROCEEDINGS FROM TIME TO TIME AND CASE WAS DISCUSSED. 3.1 DURING THE COURSE OF SEARCH OPERATION, JEWELLERY WEIGHTING 1388 GRAMS VAL UED AT RS. 13,91,138/ - WAS FOUND AND ACCORDINGLY, THE ASSESSEE WAS ASKED TO FILE THE REPLY. ASSESSEE IN HIS REPLY SUBMITTED THAT TOTAL JEWELLERY THAT WAS FOUND AT THE TIME OF SEARCH VALUED AT RS. 13,91,138/ - (WEIGH BEING AROUND 1388 GRAMS). AO OBSERVED T HAT A JEWELLERY OF 463 GRAMS BELONGS TO THE SON / DAUGHTER IN LAW OF THE ASSESSEE, MR. GAURAV KHURANA/ MRS. SHALINI KHURANA. THEY HAD GONE TO CANADA AND THE JEWELLERY BELONGING TO THEM WAS KEPT IN THE LOCKER OF THEIR PARENTS, ALONGWITH COMPLETE DETAILS AND WEIGHT OF EACH ITEM MENTIONED ON THE LETTER HEAD OF THEIR BUSINESS FIRM M/S VOGUE APPARELS. AFTER THROUGH THE DETAILS OF JEWELLERY LYING IN THE LOCKER, GOLD BANGLES (4 NOS.) WEIGHTING 33 GRAMS AND GOD SET 53 GRAMS WAS IN THE NAME OF SH. RB KHURANA. TH E JEWELLERY WEIGHTING 86 GRAMS (33 + 53 GRAMS) VALUED AT RS. 86,000/ - @ RS. 1000/ - PER GRAM TREATED THE JEWELLERY OF SH. RAVI BHUSHAN KHURANA. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO GIVE SOURCE OF ABOVE JEWELLERY OF 86 GMS. SINCE ASSESSEE HAS NOT FURNISHED ANY DETAILS / SOURCE OF ACQUISITION OF JEWELLERY TO THE EXTENT OF 86 GMS. AO ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED 4 INVESTMENT IN JEWELLERY VIDE ORDER DATED 28.11.2008 PASSED U/S. 143(3) OF THE INCOM E TAX ACT, 1961. 5 . AGGRIEVED BY THE AO S ORDER, A SSESSEE APPEAL ED BEFORE THE LD. COMMISSIONER OF INCOME TAX (A) , WHO CONFIRMED THE ASSESSING OFFICER S ORDER VIDE HIS IMPUGNED ORDER DATED 6.6.2014. 6 . AGAINST THE ABOVE ORDER THE ASSESSEE IS IN A PPEAL BEFORE THE TRIBUNAL. 7 . LD. COUNSEL OF THE ASSESSEE REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND STATED THAT THE JEWELLERY IN QUESTION IS COVERED BY THE CBDT INSTRUCTIONS NO. 1916, DATED 11.5.1994, HENCE, THE ADDITION MADE ON THIS ACCOUNT MAY BE DELETED. HE ALSO FILED THE VARIOUS COPIES OF THE HIGH COURT DECISION AND VARIOUS DECISIONS OF THE TRIBUNAL WHICH COVERS THE CASE OF THE ASSESSEE. 8 . ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9 . I HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT S RELIED UPON. I FIND CONSIDERABLE FORCE IN THE ASSESSEE S SUBMISSIONS THAT ASSESSEE IS ENTITLED FOR 100 GRAMS JEWELLERY IN VIEW OF THE CBDT CIRCULAR NO. 1194 AND THEREFORE, THE SAID JEWELLERY OF 86 GRAMS DESERVE TO BE TREATED TO BE COVERED UNDER THAT INSTRUCTIONS. I FIND SUPPORT FROM THE VARIOUS CASE LAWS OF THE HON BLE COURT AND AS WELL AS ITAT INCLUDING THE ONE CIT VS. RATANLAL VYAPARILAL JAIN (2010) 45 DTR 290 (GUJ.)/ (20 11) 339 ITR 0351 OF THE HON BLE HIGH COURT OF GUJARAT. THE RELEVANT PARA NO. 9 & 10 OF THE JUDGMENT/ ORDER DATED 19.7.2010 ARE FOCUSED HEREUNDER TO FACILITATE READY REFERENCE: - 5 9. AS CAN BE S ORDER OF THE TRIBUNAL, THE TRIBUNAL HAS REFERRED TO THE CBDT CIRCULAR NO. 1916 AND OBSERVED THAT IN AN EARLIER DECISION OF THE TRIBUNAL, THE TRIBUNAL HAS ACCEPTED THE APPLICABILITY OF THE CIRCULAR AND HAS HELD THAT HAVING REGARD TO THE CIRC ULAR 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 T HE CBDT CIRCULAR AND ACCORDINGLY, DELETED THE WHOLE ADDITION ON THE GROUND 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 CB D T CIRCULAR NO. 1916, DT. 11TH MAY, 199 4 LAYS DOWN GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN THE COURSE 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 APPROA CH ADOPTED BY THE TRIBUNAL IN FOLLOWING THE SAID CIRCULAR AND GIVING BENEFIT 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 B EEN ISSUED FOR THE PURPOSE OF NON - SEIZURE OF JEWELLERY DURING THE COURSE OF SEARCH, THE BASIS FOR THE SAME RECOGNIZES CUSTOMS PREVAILING IN HINDU SOCIETY. IN THE 6 CIRCUMSTANCES, UNLESS THE REVENUE SHOWS ANYTHING TO THE CONTRARY, IT CAN SAFELY BE PRESUMED TH AT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS 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 AN, LEGAL ERROR SO AS TO GIVE RISE TO A QUESTION OF LAW. 9 .1 IN THE BACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT RELIED UPON, THE ISSUE IN DISPUTE IS COVERED BY T HE AFORESAID DECISION OF THE HON BLE HIGH COURT OF GUJARAT DECISION, THEREFORE, RESPECTFULLY FOLLOWING THE SAME DECISION, I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE BY DELETING THE ADDITION IN DISPUTE. 10 . A S REGARDS TO THE A DDITION OF ` 50,000/ - ON ACCOUNT OF UNEXPLAINED CASH. 1 1 . ON THIS ISSUE, DURING THE COURSE OF ASSESSMENT THE AO NOTED THAT DURING THE COURSE OF SEARCH OPERATION, A CASH OF RS. 1,12,890/ - WAS FOUND FROM THE RESIDENCE OF THE ASS ESSEE. A STATEMENT OF SH. RAVI BHUSHAN KHURANA WAS RECORDED ON 16.1.2007 DURING THE COURSE OF SEARCH. IN THIS STATEMENT, HE HAS STATED THAT THE CASH OF RS. 1,12,890/ - FOUND, ACTUALLY RELATE TO RS.50,000/ - WITHDRAWAL FROM HIS SAVING ACCOUNT WITH ICCI BAN K IN DECEMBER, 2006 AND REST BELONG TO MY WIFE S SAVINGS OUT OF THE POCKET/KITCHEN EXPENSES AND OTHER HOUSE HOLD EXPENSES BEING GIVEN BY ME TO HER FROM TIME TO TIME. AO NOTED THAT THE ASSESSEE HAS STATED THAT HE HAS WITHDRAWN A SUM OF RS. 2,60,000/ - IN TH E MONTH OF AUGUST - SEPTEMBER, 2006 AND THE CASH OF RS. 1,12,890/ - 7 WAS AVAILABLE WITH HIM AS ON THE DATE OF SEARCH OUT OF THE CASH WITHDRAWALS OF RS. 2,60,000/ - . AO DID NOT ACCEPT THE EXPLANATION GIVEN BY THE ASSESSEE, AS THE ASSESSEE HAS NOT GIVEN THE PURPOSE OF WITHDRAWALS OF CA S H OF RS. 2,60,000/ - AND HE HAS OBSERVED THAT IT WILL BE APPROPRIATE TO ACCEPT A SUM OF RS. 62,890/ - AS KEPT FOR PERSONAL NEEDS OUT OF CASH WITHDRAWALS/ SAVINGS TIME TO TIME. A SUM OF RS.50,000/ - WAS TREATED AS AN UNEXPLAINED MONEY OF THE ASSESSEE DURING THE YEAR. 1 2 . UPON ASSESSEE S APPEAL ON THIS ISSUE, LD. COMMISSIONER OF INCOME TAX (A) CONFIRMED THE ASSESSING OFFICER S ACTION. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD. CIT(A), ASSESSEE APPEALED BEFORE THE TRIBU NAL. 1 3 . LD. COUNSEL OF THE ASSESSEE REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL AND STATED THAT ASSESSEE WITHDREW A SUM OF RS. 2,60,000/ - FROM HIS BANK ACCOUNT AND THE CASH FOUND AT THE TIME OF SEARCH WAS SOUGHT TO BE EXPLAINED FROM SUCH WITHDRAWAL MADE BY THE ASSESSEE. 1 4 . ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 1 5 . I HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED . I FIND CONSIDERABLE COGENCY IN THE ASSESSEE S SUBMISSIONS THAT ASSESSEE WITHDREW A SUM OF RS. 2,60,000/ - FROM HIS BANK ACCOUNT AND THE CASH FOUND AT THE TIME OF SEARCH WAS SOUGHT TO BE EXPLAINED FROM SUCH WITHDRAWAL MADE BY THE ASSESSEE. I ALSO FIND THAT AO ACCEPTS THE EXPLANATION OF THE ASSESSEE BUT IN PART WI THOUT ANY BASIS, MATERIAL OR EVIDENCE. I ALSO NOTE THAT THE ASSESSEE AND HIS WIFE ARE AGED PERSONS AND THEREFORE, TO KEEP THIS MUCH OF AMOUNT AT ANY GIVEN 8 POINT OF TIME WAS NOT SOMETHING WHICH WAS IMPOSSIBLE. THEREFORE, IN MY CONSIDERED OPINION THE C ASH FOUND WAS SO REASONABLE THAT NO PART OF IT COULD BE TREATED AS UNEXPLAINED. IN VIEW OF ABOVE, I CANCELLED THE ORDERS OF THE AUTHORITIES BELOW AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE BY DELETING THE ADDITION IN DISPUTE. 1 6 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE O PEN C OURT ON 24 / 8 /201 5 . S D / - [ H.S. SIDHU ] JUDICIAL MEMBER DATE: 24 / 8 /201 5 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES