SHRIPAL S. MORAKHIA, MUMBAI V. DCIT CC-22, MUMBAI

ITA 4484/MUM/2009

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 6117 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 16-11-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 29-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SONGATE
• Keywords: Search and seizure; Valuation report
• Section: 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER. I.T.A. NO. 4484/MUM/2009. ASSESSMENT YEAR : 2004-05. SHRIPAL S. MORAKHIA, DY. COMMISSIONER OF INCOME-TAX, C/O IDREAM PRODUCTION P. LTD., VS. CENTRAL CIRCLE.22, 161, STARCITY, 2 ND FLOOR, MUMB AI. MANMALA TANK ROAD, MAHIM (W), MUMBAI-400016. PAN AGCPM5698Q APPELLANT. RESPONDENT. APPELLANT BY : SHRI HIRO RAI. RESPONDENT BY : SHRI D. SONGATE.. O R D E R PER J. SUDHAKAR REDDY, A.M. : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE CIT (CENTRAL)(APPEALS) -IV, DATED 30-06-2009 WHEREIN TH E PENALTY LEVIED U/S 271(1)(C) OF THE ACT ON THE ASSESSEE BY THE AO, WAS CONFIRMED BY THE FIRST APPELLATE AUTHORITY. 2 2. FACTS IN BRIEF: THERE WAS A SEARCH AND SEIZURE ACTION U/S 132 OF T HE ACT ON THE ASSESSEE AND OTHER GROUP MEMBERS ON 02-08-2003. A SEARCH WAS FIN ALLY CONCLUDED ON 06-09- 2003. DURING THE SEARCH CERTAIN GOLD AND DIAMOND JE WELLERY WAS FOUND IN THE LOCKER WHICH WAS INVENTORIZED AS PER PANCHANAMA DA TED 02-08-2003. THE ASSESSEE WAS ASKED TO EXPLAIN THE ABOVE JEWELLERY. THE ASSESSEE FURNISHED EXPLANATION FOR JEWELLERY WITH SUPPORT OF VALUATION REPORT DATED 31-03-2000 IN HIS CASE AS WELL AS A VALUATION REPORT DATED 31-03-2000 IN THE CASE OF HIS WIFE SMT.KALPANA MORAKHIA AS WELL AS IN THE CASE OF HIS MINOR DAUGHTER AMI MORAKHIA WHOSE WEALTH IS CLUBBED WITH THE ASSESSEES WEALTH. THERE WAS YET ANOTHER VALUATION REPORT DATED 31-03-2000 OF AMI FAMILY TRU ST, SOLE BENEFICIARY AMI MORAKHIA AND ALSO VARIOUS PURCHASE AND MAKING BILLS . THE AO ACKNOWLEDGED THAT THE ABOVE VALUATION REPORTS WERE FILED WITH THE WEA LTH-TAX RETURNS OF THE RESPECTIVE YEARS. CERTAIN JEWELLERY AND DIAMOND ITEMS COULD NO T BE RECONCILED BY THE ASSESSEE. THE VALUE OF THESE ITEMS WAS RS.7,32,875/ -. THE LIST IS GIVEN AT PAGE 2 OF THE ASSESSMENT ORDER. THUS THE AO, OUT OF THE TOTAL GOLD AND JEWELLERY OF RS.1,12,61,242/-, CAME TO A CONCLUSION THAT CERTAIN JEWELLERY TO THE TUNE OF RS.7,32,875/- COULD NOT BE PROPERLY RECONCILED AND EXPLAINED. HE MADE AN ADDITION. DUE TO THE SMALLNESS IN AMOUNT, THE ASSES SEE DID NOT CARRY THE MATTER IN APPEAL. THEREAFTER THE PENALTY WAS LEVIED AND THE F IRST APPELLATE AUTHORITY CONFIRMED THE SAME. 3. WE HAVE HEARD MR. HIRO RAI, LEARNED COUNSEL FOR THE ASSESSEE AND SHRI D. SONGATE, LEARNED DR. 3 4. THE LEARNED COUNSEL MR. HIRO RAI POINTED OUT THA T THE NET GOLD DECLARED IN THE VALUATION REPORT DATED 31-03-2000 WAS 8709.200 GRAMS IN THE HANDS OF ALL THE PARTIES INVOLVED. HE POINTED OUT THAT THE ASSESSEE HAS DECLARED 8709.200 GRAMS GOLD JEWELLERY IN ITS EARLIER WEALTH-TAX RETURN AND WHEREAS DURING THE COURSE OF SEARCH THE REVENUE COULD FIND ONLY 8386.400 GRAMS GOLD AND JEWELLERY. HE SUBMITTED THAT DURING THE QUANTUM ADDITION, TO AVOI D PROTRACTED LITIGATION, THE ASSESSEE DID NOT DISPUTE THE MATTER, BUT IN THE PEN ALTY PROCEEDINGS THE ASSESSEE ARGUES THAT HE DOES NOT HAVE EXCESS GOLD AS CLAIMED BY THE REVENUE, BUT WAS ONLY NOT ABLE TO RECONCILE CERTAIN SMALL ITEMS WITH THE VALUATION REPORT. 5. THE LEARNED DR SUPPORTS THE ORDERS OF THE REVENU E AUTHORITIES AND SUBMITS THAT THE ASSESSEE CONCEALED PARTICULARS BY NOT FILI NG EXACT DETAILS OF JEWELLERY. THUS THE PENALTY WAS RIGHTLY TO BE CONFIRMED. 6. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E ASSESSEE HAS, IN VARIOUS HANDS I.E. AMI MORAKHIA, KALPANA MORAKHIA, SRIPAL MORAKHIA ETC. HAVE DECLARED GOLD OF 8709.200 GRAMS ALONG WITH VALUATION REPORTS , IN THE WEALTH-TAX RETURNS. THE REVENUE HAS FOUND MUCH LESSER GOLD DURING THE COUR SE OF SEARCH AND SEIZURE. THUS WE ARE CONVINCED WITH THE ARGUMENT OF MR. HIRO RAI THAT THIS IS A CASE OF FAILURE TO RECONCILE THE GOLD AND JEWELLERY ITEMWISE TO A MINO R EXTENT OF RS.7,32,000/- OUT OF GOLD JEWELLERY OF RS.1,12,61,000/-. THUS THIS IS N OT A CASE OF CONCEALMENT OR 4 FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE , THEREFORE, QUASH THE PENALTY LEVIED U/S 271(1)(C). 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD DEC., 2010. SD/- SD/- (V. DURGA RAO) (J. SUDHAKAR REDDY) JUDICIAL MEMBER. ACCO UNTANT MEMBER MUMBAI, DATED: 3 RD NOV., 2010. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, E-BENCH (TRUE COPY) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI B ENCHES, M UMBAI.