DCIT CEN CIR 36, MUMBAI V. RAFIQ MOHD. NAZIR SHAIKH, MUMBAI

ITA 465/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3392 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-05-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 20-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS RUPINDER BRAR
• Keywords: Gift
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN , JM ./I.T.A. NO. 465/MUM/2012 ( / ASSESSMENT YEAR :2009-10) THE ACIT/DCIT, CENTRAL CIRCLE-36, ROOM NO.11, AAYAKAR BHAVAN, M.K. MARG, MUMBAI- 400 020 / VS. RAFIQ MOHD. NAZIR SHAIKH, 101, PARK AVENUE, 69/29, CORNER ROAD, PALLI HILL, BANDRA(W), MUMBAI-400 050. ./PAN : AMYPS9759A ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : MRS. RUPINDER BRAR / RESPONDENT BY : NONE /DATE OF HEARING : 08.05.2013 / DATE OF PRONOUNCEMENT : 17.05.2013 / O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. CIT(A) 37- MUMBAI DATED 18.10.2011 WHEREBY HE DELETED THE ADDI TION OF RS. 13,36,977/- ITA NO.465 OF 2012 RAFIQ MOHD. NAZIR SHAIKH 2 MADE BY THE AO ON ACCOUNT OF UNEXPLAINED JEWELRY FO UND DURING THE COURSE OF SEARCH, BY RELYING ON THE CBDT CIRCULAR 1916 DATED 11.05.1994. 2. THE ASSESSEE IN THE PRESENT CASE, IS A PARTNER I N THE PARTNERSHIP FIRM WHICH IS ENGAGED IN CONSTRUCTION BUSINESS. THE SEARCH AND SE IZURE OPERATION UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED IN HI S CASE ON 24.02.2009. DURING THE COURSE OF SEARCH, GOLD AND DIAMOND JEWELLERY VA LUED TOTALLY AT RS.98,50,550/- WAS FOUND FROM THE RESIDENCE OF THE ASSESSEE. THE D IAMOND JEWELLERY SO FOUND WAS WORTH RS.29,90,970/- AND THE SAME WAS SURRENDER ED BY THE ASSESSEE AS HIS UNDISCLOSED INCOME. AS REGARDS THE GOLD JEWELLERY, IT WAS EXPLAINED BY THE ASSESSEE THAT THE SAME TO THE EXTENT OF RS.44,27,37 0/- WAS BELONGING TO ONE MIS.JUVERIA WHO WAS DEALING IN GOLD AND DIAMOND JEW ELLERY. THIS EXPLANATION OF THE ASSESSEE DULY SUPPORTED BY THE PURCHASE BILLS W AS ACCEPTED BY THE AO. AS REGARDS THE REMAINING JEWELLERY, THE ASSESSEE OFFER ED THE SAME AS HIS UNDISCLOSED INCOME TO THE EXTENT OF RS.4,40,664/- AND CLAIMED T HAT THE BALANCE GOLD JEWELLERY WAS BELONGING TO HIS FAMILY MEMBERS. IT WAS CLAIMED BEFORE THE AO THAT THE ASSESSEES FAMILY BELONGING TO A BUSINESS GROUP HAS A REASONABLY GOOD STATUS IN THE SOCIETY AND KEEPING IN VIEW THE BACKGROUND AND THE STATUS OF THE ASSESSEES FAMILY, THE BALANCE GOLD JEWELLERY OF RS. 1696.9 GM S SHOULD REASONABLY BE ALLOWED AS BELONGING TO THE SAID FAMILY. THIS EXPLANATION O F THE ASSESSEE WAS NOT FULLY ACCEPTED BY THE AO AND TREATING 500GMS OF THE JEWEL LERY AS STRIDHAN OF THE ASSESSEES WIFE AND MOTHER, THE BALANCE GOLD JEWELL ERY FOUND DURING THE COURSE OF SEARCH WAS HELD TO BE UNEXPLAINED BY THE AO. ACCORD INGLY THE VALUE THEREOF AMOUNTING TO RS.13,36,977/- WAS ADDED BY HIM TO TH E TOTAL INCOME OF THE ASSESSEE. 3. THE ADDITION MADE BY THE AO ON ACCOUNT OF ALLEGE D UNEXPLAINED JEWELLERY FOUND DURING THE COURSE OF SEARCH WAS DISPUTED BY T HE ASSESSEE IN AN APPEAL FILED ITA NO.465 OF 2012 RAFIQ MOHD. NAZIR SHAIKH 3 BEFORE THE LD. CIT(A) AND THE FOLLOWING SUBMISSIONS WERE MADE ON HIS BEHALF BEFORE THE LD. CIT(A) ON THIS ISSUE: 1) AT THE TIME OF SEARCH, THE FOLLOWING JEWELRY WA S FOUND AT HIS RESIDENCE. NAME TOTAL VALUE OF JEWELRY FOUND VALUE OF DIAMOND JEWELRY BELONGING TO WIFE OF PROPRIETARY CONCERN M/S JUVERIA RECORDED IN HER BOOKS AND NOT SEIZED. VALUE OF DIAMOND JEWELRY OFFERED TO TAX. VALUE OF GOLD JEWELRY SEIZED AND OFFERED TO TAX. NET WEIGHT OF GOLD JEWELRY FOUND. SHRI RAFIQ MOHD. NAZIR SHAIKH & FAMILY. 98,50,550/- 44,27,370/- 29,90,970/- 440,664/- 1696. 9 2. AT THE OUTSET, WE REITERATE THAT THE APPELLANT H AILS FROM A BUSINESS COMMUNITY AND BEING A MAN OF MEANS, HE AND HIS FAMI LY MEMBERS COULD HAVE POSSESSED 1850 GMS OF JEWELRY DATING FROM THE PERIO D OF HIS MARRIAGE TO THE BIRTH OF HIS CHILDREN TILL THE DATE OF SEARCH. 3. FURTHER, VIDE CIRCULAR NO. 1916, DATED 11.05.199 4, THE CENTRAL BOARD OF DIRECT TAXES HAS ISSUED GUIDELINES FOR SEIZURE O F JEWELRY, WHICH CLEARLY STATES THAT, IN CASE OF A PERSON NOT ASSESSED TO W EALTH TAX, GOLD JEWELRY AND ORNAMENTS TO THE EXTENT OF 500 GMS PER MARRIED LADY , 250 GMS. PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER OF THE FAMILY, NEE D NOT BE SEIZED. 4. THE APPELLANT AND HIS FAMILY MEMBERS COULD HAVE POSSESSED 1850 GMS OVER THE YEARS AS CAN BE BORNE BY THE FAMILY SIZE G IVEN HEREUNDER:- SR. NO. NAME OF THE FAMILY MEMBER ALLOWANCE PER ME MBER IN GMS. 1. MR. RAFIQUE MOHD. NAZIR SHAIKH (APAPELLANT) 100 2. MRS. SHERBANU NAZIR SHAIKH (APPELLANTS MOTHER) 500 3. MRS. JUVERIA RAFIQUE SHAIKH (APPELLANTS 500 ITA NO.465 OF 2012 RAFIQ MOHD. NAZIR SHAIKH 4 SPOUSE) 4. MISS. NABA RAFIQUE SHAIKH (APPELLANTS DAUGHTER) 250 5. MISS. LAIBA RAFIQUE SHAIKH (APPELLANTS DAUGHTER) 250 6. MR. TUBA RAFIQUE SHAIKH (APPELLANTS DAUGHTER) 250 TOTAL FAMILY HOLDING 1850 GMS 5. HENCE, HAVING REGARD TO THE STATUS OF THE FAMILY AND THE CUSTOMS AND PRACTICES OF THE COMMUNITY TO WHICH THE APPELLANT B ELONGS TO THE GOLD JEWELRY WEIGHING 1850 GMS COULD HAVE BEEN HELD BY THE APPEL LANT AND HIS FAMILY. HENCE THE ADDITIONS OF RS. 13,36,977/- BEING THE VA LUE OF 1350 GMS, AMOUNTS TO NOT ALLOWING THE ALLOWANCE FOR THE MALE MEMBERS, LADIES FOR 500 GMS AND THE CHILDREN, WHICH IS INCORRECT. 6. FURTHER WE ALSO ENCLOSE HEREWITH COPY OF ITA NO. 2343/ADH/2009 ORDER PASSED IN THE CASE OF SMT. NEETA SUDARSHAN AM IN VS. ACIT [(2011) 2011 TPI 621(ITAT-AHMEDABAD)] IN SUPPORT OF OUR ABO VE CLAIM. IN VIEW OF THE ABOVE FACTS, THE ADDITION OF RS.13,3 6,977/- MADE ON ACCOUNT OF GOLD JEWELRY BE DELETED IN TOTO AS THE ALLOWANCE FO R POSSESSION OF GOLD BY MALE MEMBERS AND CHILDREN OF THE FAMILY SHOULD BE CONSID ERED KEEPING IN MIND THE STATUS OF THE FAMILY. THE LD. CIT(A) FOUND MERIT IN THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND RELYING ON THE CBDT CIRCULAR NO. 1916 DATED 11.05.1 994 AS WELL AS THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V S. RATANLAL VYAPARILAL JAIN 235 CTR (GUJ), 568, HE TREATED THE BALANCE GOLD JEW ELLERY FOUND DURING THE COURSE OF SEARCH AS EXPLAINED AND DELETED THE ADDITION MAD E BY THE AO ON ACCOUNT OF UNEXPLAINED JEWELLERY. AGGRIEVED BY THE ORDER OF TH E LD. CIT(A), THE REVENUE HAS PROFFERED THIS APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, NONE HAS APPEA RED ON BEHALF OF THE ASSESSEE DESPITE THE FACT THAT THE DATE OF THE SAID HEARING WAS ANNOUNCED IN THE OPEN COURT AT THE TIME OF EARLIER HEARING HELD ON 17.01.2013 WHEN THE ASSESSEE SOUGHT ADJOURNMENT IN WRITING. THIS APPEAL OF THE REVENUE IS THEREFORE BEING DISPOSED OF ITA NO.465 OF 2012 RAFIQ MOHD. NAZIR SHAIKH 5 EXPARTE QUA, THE RESPONDENT ASSESSEE AFTER HEARING THE ARGUMENTS OF THE LD. DR AND PERUSING THE MATERIAL ON RECORD. THE ONLY CONTENTIO N THAT HAS BEEN RAISED BY THE LD. DR IS THAT THE CBDT CIRCULAR NO. 1916 DATED 11. 05.1994 LAYS DOWN CERTAIN GUIDE LINES FOR SEIZURE OF JEWELLERY FOUND DURING T HE COURSE OF SEARCH AND THE SAME CANNOT BE RELIED UPON TO TREAT THE JEWELLERY FOUND DURING THE COURSE OF SEARCH AS EXPLAINED, UNLESS THERE IS OTHER EVIDENCE TO CORROB ORATE THE EXPLANATION OF THE ASSESSEE AS REGARD THE SOURCE OF JEWELRY FOUND DURI NG THE COURSE OF SEARCH. IT IS HOWEVER OBSERVED THAT THIS ASPECT OF THE MATTER HAS ALREADY BEEN CONSENTED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. R ATANLAL VYAPARILAL JAIN (SUPRA) RELIED UPON BY THE LD. CIT(A) WHEREIN IT WAS HELD T HAT EVEN THOUGH THE CBDT INSTRUCTION NO. 1916 DATED 11.05.1994 LAYS DOWN GUI DELINES FOR SEIZURE OF JEWELLERY IN THE COURSE OF SEARCH, THE SAME TAKES I NTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH COULD GENERALLY BE HELD BY FAMILY M EMBERS BELONGING TO AN ORDINARY HOUSE HOLD. HONBLE GUJARAT HIGH COURT THE REFORE UPHELD THE APPROACH ADOPTED BY THE TRIBUNAL IN FOLLOWING THE SAID CIRCU LAR AND GIVING BENEFIT TO THE ASSESSEE, OBSERVING THAT THE SAME IS IN CONSONANCE WITH THE GENERAL PRACTICE IN THE INDIAN FAMILIES WHERE JEWELLERY IS GIFTED BY THE RE LATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS SUCH AS MARRIAGE, BIRTHDAYS AND OT HER FESTIVALS ETC. IN OUR OPINION, THE ISSUE INVOLVED IN THIS APPEAL OF THE REVENUE TH US IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RATANLAL VYAPARILAL JAIN AND RESPECTIVELY FOLLO WING THE SAME. WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) TREATING THE JEWEL LERY OF RS.13,36,997/- FOUND DURING THE COURSE OF SEARCH AS EXPLAINED, RELYING O N THE CBDT CIRCULAR NO. 1916 DATED 11.05.1994. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NO.465 OF 2012 RAFIQ MOHD. NAZIR SHAIKH 6 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 17 TH OF MAY.2013 ! ' # $ % 17 TH MAY.2013 & ' SD/- SD/- ( DR. S.T.M. PAVALAN) ( P.M.JAGTAP) ! ( / JUDICIAL MEMBER / ACCOUNTANT MEMBER ' ) MUMBAI; $ DATED 17 TH MAY/2013 . ( . . / ASHISH PS !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. * ( ) / THE CIT(A)-37, MUMBAI 4. * / CIT I, MUMBAI 5. +, & ((-. , -. , ' ) / DR, ITAT, MUMBAI H 6. & /0 1 / GUARD FILE. & / BY ORDER, + ( //TRUE COPY// ' / &( ) (DY./ASSTT. REGISTRAR) , ' ) / ITAT, MUMBAI