SMT. KAMAL GANDHI, NAWANSHEHAR V. A.C.I.T, CENTRAL CIRCLE- II, JALANDHAR

ITA 458/ASR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1439 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-08-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 05-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: BHAGAT
• Keywords: Gift
• Section: 142(1); 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. NO. 458/(ASR)/2017 ASSES SMENT YEAR: 2010-11 KAMAL GANDHI, BHATTI COLONY, CHANDIGARH ROAD, NAWANSHAHAR [PAN: ADWPG 0708N] VS. ASST. C.I.T., CENTRAL CIRCLE-II, JALANDHAR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. M. R. BHAGAT & RAJIN DER KUMAR CHOPRA RESPONDENT BY: SMT. PARWINDER KAUR, CIT-DR DATE OF HEARING: 07.08.2018 DATE OF PRONOUNCEMENT: 28.08.2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-5, LUDHIANA ( CIT(A) FOR SHORT) DATED 21.04.2017, CONFIRMING THE LEVY OF PENALTY U/S. 271 (1)(C) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER), FOR ASSESSMENT YEAR ( AY) 2010-11 BY THE ASSESSING OFFICER VIDE HIS ORDER DATED 26.03.2014. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSE SSEE WAS SUBJECT TO SEARCH U/S. 132 OF THE ACT AT HER RESIDENCE (AT BHATTI COLONY, NAWANSHAHAR) ON 18.02.2010, WHEREAT (GOLD & DIAMOND) JEWELLERY VALUED AT RS.19. 29 LACS WAS FOUND, AND THE ASSESSEE ACCORDINGLY QUESTIONED ABOUT THE SOURCE TH EREOF IN THE ENSUING ASSESSMENT PROCEEDINGS, INITIATED (AS IT APPEARS) BY ISSUE OF NOTICE U/S. 142(1) ON 23.02.2011. ITA NO. 458/ASR/2017 (AY 2010-11) KAMAL GANDHI V. ASST. CIT 2 THE ASSESSEE EXPLAINED THE SAME TO BE HER STREEDHAN , FOR WHICH A CREDIT OF RS.6 LACS WAS ALLOWED BY THE ASSESSING OFFICER (AO), MAKING A N ADDITION FOR THE BALANCE RS.13.29 LACS VIDE ORDER U/S. 144 DATED 28.12.2011. IN APPEAL, THE LD. CIT(A) ALLOWED A FURTHER RELIEF OF RS.8.29 LACS ON THE BAS IS THAT THERE WERE, APART FROM THE ASSESSEE, TWO OTHER LADIES IN THE HOUSE, RESIDING A S A PART OF THE JOINT FAMILY, WITH NO FURTHER JEWELLERY HAVING BEEN FOUND DURING SEARC H FROM THE RESIDENCE (OR OTHERWISE), SUSTAINING AN ADDITION OF RS.5 LACS, WH ICH WAS NOT CHALLENGED FURTHER BY THE ASSESSEE. IN PENALTY PROCEEDINGS, INITIATED AT THE CONCLUSION OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE RELIED ON THE BOARD INSTRUCTION NO. 1916 DATED 11.05.1994, ALLOWING 500 GM. (OF GOLD JEWELLE RY) FOR EACH MARRIED LADY. THE SAME DID NOT FIND FAVOUR WITH THE AO AS THE SAID IN STRUCTION WAS ONLY FOR THE PURPOSE OF REGULATING THE SEIZURE DURING SEARCH, AN D COULD NOT BE INTERPRETED TO IMPLY THAT JEWELLERY TO THAT EXTENT IS TO BE CONSID ERED AS EXPLAINED. PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED WORKING TO RS.6 0,293, PENALTY WAS LEVIED AT RS.61,000/- WHICH STOOD CONFIRMED IN FIRST APPEAL, FURTHER ADDING THAT EXPLANATION 5 TO SECTION 271(1)(C) WAS ATTRACTED. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. THE SUBSTANTIAL RELIEF ALLOWED BY THE REVENUE IN Q UANTUM PROCEEDINGS HAS BEEN BY ACCEPTING THE ASSESSEES CONTENTION OF THE JEWELLERY SEIZED TO BE A PART OF HER STREEDHAN, WITH THERE BEING IN FACT THREE LADIE S (OF THE JOINT FAMILY) RESIDING AT THE RESIDENCE SEARCHED AND, ADMITTEDLY, NO FURTHER JEWELLERY BEING FOUND DURING SEARCH. THAT IS, BY REGARDING JEWELLERY FOUND AS BE LONGING TO, APART FROM THE ASSESSEE, TWO OTHER LADIES IN THE HOUSE, STATED TO BE THE ASSESSEES MOTHER-IN-LAW AND DAUGHTER-IN-LAW. STREEDHAN IS THE PROPERTY ACQUIRED BY A MARRIED LADY OUT OF THE SAVINGS EFFECTED FROM THE MONEY SHE GETS FROM HER SPOUSE (O R ANY OTHER MALE MEMBER, AS ITA NO. 458/ASR/2017 (AY 2010-11) KAMAL GANDHI V. ASST. CIT 3 KARTA OF THE HUF) FOR RUNNING THE HOUSEHOLD OR FOR HER PERSONAL MAINTENANCE. CLEARLY, THERE COULD BE NO STANDARDIZATION WITH REG ARD THERETO, WHICH WOULD DEPEND UPON THE AMOUNT PROVIDED TO THE LADY FOR THE PURPOS E, AND FOR THE PERIOD FOR IT IS, VIZ., 5 YEARS, 10 YEARS, ETC. FURTHER, ANY OTHER AS SET/S ACQUIRED OUT OF STREEDHAN AFTER MARRIAGE WOULD ALSO NEED TO BE TAKEN INTO ACCOUNT F OR THE PURPOSE, IF ONE WERE TO ARRIVE AT A REASONABLE ESTIMATE OF HOW MUCH JEWELLE RY COULD, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, BE ASCRIBED TO HER STREE DHAN AND AVAILABLE WITH HER AT THE RELEVANT TIME. NO INFORMATION REGARDING ANY OF THES E ASPECTS HAS BEEN FURNISHED BY THE ASSESSEE WHILE CLAIMING THE JEWELLERY FOUND DUR ING SEARCH TO BE HER STREEDHAN. THE SAME COULD ALSO INCLUDE JEWELLERY RECEIVED AS G IFT ON THE OCCASION OF HER MARRIAGE OR OTHER FAMILY FESTIVALS, ON WHICH AGAIN THERE IS NO INFORMATION AND, LIKE- WISE, EXCLUDE THAT GIFTED BY HER. IN OTHER WORDS, T HE ASSESSEES EXPLANATION, WITHOUT ANY SUPPORTING MATERIAL AND, IN FACT, WITHOUT ANY C ONTENTION TO THAT EFFECT, IS NO MORE THAN A BALD CLAIM/STATEMENT. THE REVENUE THERE FORE HAS BEEN, AS STATED IN THE PENALTY ORDER ITSELF, LIBERAL IN ALLOWING CREDIT FO R STREEDHAN AT RS.6 LACS. AT THE SAME TIME, WITHOUT DOUBT, THERE IS NOTHING T O SHOW THAT THE JEWELLERY FOUND WAS FROM THE ASSESSEES ROOM, I.E., HER POSSE SSION, FOR WHICH WE HAVE ALSO PERUSED THE MATERIAL ON RECORD. THERE ARE TWO MORE LADIES IN THE HOUSE TO WHOM THEREFORE JEWELLERY COULD THEREFORE EQUALLY BELONG, I.E., AS CONTENDED. NO DOUBT THE BURDEN IS ON THE ASSESSEE TO SHOW WHICH OF THE SPEC IFIC ITEMS OF JEWELLERY BELONG TO WHOM, I.E., AMONGST THE THREE LADIES, OR EVEN TH E GENTS, AS FURTHER CLAIMED. HOWEVER, THAT COULD ONLY BE WHERE THE REVENUE FIRST DISCHARGES ITS ONUS BY SHOWING THAT THE JEWELLERY BELONGED ONLY TO THE ASS ESSEE. AT THE COST OF REPETITION, JEWELLERY STANDS FOUND FROM THE ASSESSEES RESIDENC E, WITH THERE BEING NOTHING ON RECORD TO SHOW AS TO HOW MUCH OF IT WAS FROM THE AS SESSEEES ROOM OR HER POSSESSION, AND THAT FROM OTHER TWO LADIES OF THE H OUSE. HOW COULD, THEN, EXPLANATION 5A APPLY TO THE ASSESSEE QUA THE ENTIRE JEWELLERY? WE ARE CONSCIOUS ITA NO. 458/ASR/2017 (AY 2010-11) KAMAL GANDHI V. ASST. CIT 4 THAT THE CONTROL AND POSSESSION, ONLY WHICH WOU LD JUSTIFY THE INFERENCE OF THE JEWELLERY FOUND IN SEARCH AS BELONGING TO THE ASSES SEE, CANNOT BE CONFINED TO MEAN ONLY THAT RECOVERED FROM THE ASSESSEES ROOM OR LOC KER, ETC.; THE MATTER BEING FACTUAL, SO THAT IT HAS TO BE DETERMINED IN THE CON SPECTUS OF THE FACTS AND CIRCUMSTANCES OF THE CASE. THE REVENUE HAS, HOWEVER , APART FROM PRESUMING THE JEWELLERY FOUND TO BE OF THE ASSESSEE, WHO APPEARS TO BE THE MAIN LADY OF THE HOUSE, DONE PRECIOUS LITTLE TO LEAD THE PRESUMPTION IN LAW OF THE JEWELLERY FOUND BEING SOLELY THE ASSESSEES, AS BY QUESTIONING HER OR OTHER MEMBERS OF THE HOUSEHOLD ON THE VARIOUS ASPECTS OF THE MATTER AT T HE TIME OF SEARCH OR EVEN LATER. IT IS THIS THAT THEREFORE LED IT TO ALLOW HER RELIEF, I.E., ON THE ASSESSEE, EVEN WITHOUT SPECIFYING ANY PARTICULAR JEWELLERY, CONTENDING THA T FOUND (AND ASCRIBED TO HER) AS ALSO INCLUDING THAT BELONGING TO THE OTHER TWO OTHE R LADIES OF THE HOUSE. FURTHER, IN THIS REGARD, WE MAY CLARIFY; THE LD. CO UNSEL DURING HEARING CONTENDING THAT EXPLANATION 5 TO SECTION 271(1)(C), ALLUDED TO BY THE LD. CIT(A) , IS NOT APPLICABLE AS THE SEARCH WAS AFTER 31.05.2007, AND EVEN AS OBSERVED DURING HEARING, THAT WOULD BE WHOLLY INCONSEQUENTIAL AS EXPLANATION 5A , A PARI MATERIA PROVISION, APPLICABLE TO SEARCHES AFTER 31.05.2007, WOULD STAND ATTRACTED, WHICH IN FACT IS MORE STRINGENT THAN EXPLANATION 5 . BEING A PART OF THE PROVISION, IT NEED NOT BE SPECIFICALLY INVOKED, AS CLARIFIED IN K.P. MATHUSUDHANAN V. CIT [2001] 251 ITR 99 (SC); HARISH P. MASHRUWALA V. ASST. CIT [2011] 9 ITR (TRIB) 752 (MUM) (SB). WHY, IN THE ABSENCE, I.E., ASSUMING SO, OF EXPLANATION 5/5A , IT IS EXPLANATION 1 READ WITH EXPLANATION 4 THAT WOULD STAND ATTRACTED, TO THE SAME EFFECT. TH E ASSESSEE DOES NOT REFUTE THE SAME; IN FACT, RENDERING AN EXP LANATION AS TO THE ENTIRE JEWELLERY BEING HER STREEDHAN AND AS BELONGING TO OTHER TWO L ADIES, WHICH STANDS ACCEPTED BY THE REVENUE IN PART. THE FINDING OF THE RELEVANT AS SET (GOLD AND DIAMOND JEWELLERY) IN THE PRESENT CASE, AS BEING THE ASSESSEES PROPER TY, COULD, U/S. 69B, HOWEVER, BE VALIDLY INVOKED BY THE REVENUE ONLY WHERE THE SAME STANDS FOUND FROM HER ITA NO. 458/ASR/2017 (AY 2010-11) KAMAL GANDHI V. ASST. CIT 5 POSSESSION, AS FROM HER ROOM, LOCKER, ETC. OR, EVEN OTHERWISE, SHOWN TO BE UNDER HER CONTROL. AN EXPLANATION COULD ONLY FOLLOW A FIN DING AS TO THE RELEVANT ASSET/S AS BELONGING TO THE ASSESSEE. THE ISSUE, WE MAY CLARIF Y, IS NOT IF THE ASSESSEE OWNS ANY JEWELLERY, WHICH SHE ADMITTEDLY DOES, BUT AS TO WHAT EXTENT? THIS IS AS, APART FROM OTHER FAMILY MEMBERS, THERE ARE TWO LADIES IN THE HOUSE WHO COULD ALSO HAVE STREEDHAN OR OTHERWISE OWN THE JEWELLERY FOUND. THE ALLOWANCE OF A PART RELIEF BY THE REVENUE IN QUANTUM PROCEEDINGS ON THAT GROUND I S, AGAIN, WITHOUT ANY BASIS IN FACTS, AND MERELY A GUESS WORK. THE PRIMARY ONUS ON THE REVENUE BEING NOT DISCHARGED, WHILE JEWELLERY TO SOME EXTENT ACCEPTED AS BEING THE ASSESSEES STREEDHAN, NO CASE FOR LEVY OF PENALTY IS, UNDER TH E CIRCUMSTANCES, MADE OUT. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON AUGUST 28, 20 18 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 28.08.2018 /GP/SR. PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: KAMAL GANDHI, BHATTI COLONY, CHANDIGARH ROAD, NAWANSHAHAR (2) THE RESPONDENT: ASST. C.I.T., CENTRAL CIRCL E-II, JALANDHAR (3) THE CIT(APPEALS)-5, LUDHIANA (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER