ACIT, New Delhi V. Raj Kumari Aggarwal, New Delhi

ITA 530/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65674 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-10-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 29-08-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUDESH GARGSR
• Assessee Lawyers: S P A GARWAL
• Keywords: Unexplained investment; Gift; Question of law; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI G.D.AGARWAL, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A .NO-530/DEL./2010 ASSESSMENT YEAR -2006-07 ACIT, VS. RAJ KUMARI AGGARWAL, CENT. CIRCLE 12, ROOM NO.-330, 81, ANAND LOK, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI-49. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SUDESH GARG,SR. DR RESPONDENT BY: SH. S.P.AGARWAL, ADV. DATE OF HEARING:-29.08.2012 DATE OF PRONOUNCEMENT:-12.10.2012 ORDER PER RAJPAL YADAV, JM THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT(A)-I, NEW DELHI DATED 12.11.2009 PASSED FOR AY 2006-07. 2. THE REVENUE HAS RAISED FOUR GROUNDS OF APPEAL OU T OF THEM, 1 & 4 ARE GENERAL IN NATURE. THEY DO NOT REQUIRE ANY SPECIFIC FINDIN G TO BE RECORDED HENCE THEY ARE REJECTED. IN GROUND NO 2 & 3, THE GRIEVANCE OF REV ENUE IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.1,89,983/- AN D RS.14,24,426/- WHICH WERE ADDED BY THE A.O ON ACCOUNT OF VALUE OF UNEXPLAINED JEWELLERY FOUND IN THE LOCKERS AT THE TIME OF SEARCH. I.T.A .NO-530/DEL./2010 2 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH & SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 09.12.2005. DURING THE COURSE OF SEARCH, IT REVEALS THAT ASSESSEE WAS HAVING TWO BAN K LOCKERS BEARING NOS.-477 & 501 WITH ALLAHABAD BANK, ANAND LOK, NEW DELHI. LOC KER NO. 501 WAS IN THE JOINT NAME OF ASSESSEE WITH HER HUSBAND, DR. S.P.AGARWAL. LOCKER NO. 477 WAS IN THE JOINT NAME OF THE ASSESSEE WITH HER SON SH. BIPIN A GARWAL. ON INSPECTION OF THE LOCKER, JEWELLERY HAVING 986.650 GRAMS VALUED AT 7, 45,658/- WAS FOUND IN LOCKER NO. 501. SIMILARLY, JEWELLERY OF 3134.400 GRAMS VA LUED AT RS.23,96,100/- WAS FOUND IN LOCKER NO-477. DURING THE ASSESSMENT PROC EEDINGS, LD. ASSESSING OFFICER HAS DIRECTED THE ASSESSEE TO EXPLAIN THE SOURCE OF ACQUISITION OF GOLD JEWELLERY FOUND IN THE LOCKERS. 4. THE ASSESSEE CONTENDED THAT IN LOCKER NO. 501, T OTAL JEWELLERY WAS FOUND 986.650 GRAMS. IT WAS VALUED AT RS. 7,45,658/-. H ER HUSBAND HAS FILED A REVISED RETURN AND OFFER A SUM OF RS. 5,64,675/- FOR TAXATI ON ON ACCOUNT OF INVESTMENT IN THE JEWELLERY FOUND IN THE LOCKER. IF THE RATE TAK EN FOR VALUING THE JEWELLERY AT THE TIME OF SEARCH IS APPLIEDCOMPLETED TO THE AMOUNT OF FERED BY HUSBAND THEN IT WOULD COME OUT THAT HE HAD COVERED 747.181 GRAMS OF JEWEL LERY. THE BALANCE IS 239.469 GRAMS HAVING VALUE OF RS. 1,89,983/-. IT SHOULD BE TREATED AS BELONGING TO HER HUSBAND BECAUSE MAJOR PART OF THE JEWELLERY HAS BEE N OWNED BY HIM. THE LD. A.O DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND C ONFIRMED THE ADDITION I.E VALUE OF RS. 7,45,658/-, THE TOTAL JEWELLERY FOUND IN THE LOCKER. I.T.A .NO-530/DEL./2010 3 ON APPEAL, LD. CIT(A) HAS DELETED THE ADDITION ON T HE GROUND THAT IT CAN BE ACCEPTED THAT THIS BALANCE JEWELLERY BELONGS TO DR. S.P.AGARWAL. 5. LD. DR WHILE IMPUGNING THE ORDER, THE LD. CIT(A) CONTENDED THAT LD. FIRST APPELLATE AUTHORITY HAS NOT ASSIGNED ANY REASON HOW THIS JEWELLERY BELONGS TO DR. S.P.AGARWAL. LD. CIT(A) HAS NOT CONSIDERED, WHETHE R ANY JEWELLERY WAS ALREADY CONSIDERED AS EXPLAINED IN THE HANDS OF DR. S.P.AGA RWAL WHILE DETERMINING HIS TAXABLE INCOME OR NOT. 6. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE COMPLETE DETAILS OF THE JEWELLERY FOUND AND HOW IT HAS BEEN ALLOCATED TO VARIOUS FAMILY MEMBERS WERE SUBMITTED BY THE ASSESSEE. IN THE ST ATEMENT RECORDED AT THE TIME OF SEARCH, IT WAS CONTENDED THAT JEWELLERY LYING IN TH E LOCKER BELONGS TO VARIOUS FAMILY MEMBERS. THE ASSESSEE ALSO RELIED UPON THE CIRCULAR ISSUED BY THE BOARD BEARING NO. 1916 DATED 11.05.1994. HE POINTED OUT THAT THIS CIRCULAR WAS ISSUED BY THE BOARD GUIDING ITS OFFICIALS NOT TO EFFECT SEIZU RE AT THE TIME OF SEARCH OF THE JEWELLERY FOUND AT THE TIME OF SEARCH, IF IT WAS CL AIMED THAT IT BELONGS TO A MARRIED LADY THAN UPTO THE 500 GRAMS OF JEWELLERY FOUND, SH OULD NOT BE SEIZED. SIMILAR YARDSTICK HAS BEEN PROVIDED UPTO THE 250 GRAMS PER UNMARRIED LADY AND 100 GRAMS PER MALE MEMBER OF THE FAMILY. HE FURTHER SUBMITTE D THAT THIS CIRCULAR HAS BEEN CONSIDERED BY THE TRIBUNAL AS WELL AS BY THE HON'BL E HIGH COURT AND IT WAS CONSIDERED AS A GUIDING FACTOR FOR TREATING THE JE WELLERY TO THIS EXTENT AS EXPLAINED, EVEN IF NO DOCUMENTARY EVIDENCE WAS SUBMITTED BY TH E ASSESSEE. IN SUPPORT OF HIS I.T.A .NO-530/DEL./2010 4 CONTENTION, HE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF ASHOK CHADDA VS ITO RENDERED IN ITA NO. 274/2011. AND JUDGEMENT OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS RATTAN LAL VYAPARI LAL JAIN REPORTED IN 339 ITR 351. HE PLACED ON RECORD COPIES OF BOTH TH ESE JUDGEMENTS. THE ASSESSEE ALSO FILED A PAPER BOOK CONTAINING 29 PAGES WHEREIN SHE HAS PLACED ON RECORD, COPY OF THE PANCHNAMA, HER STATEMENT RECORDED AT THE TIM E OF SEARCH, COPIES OF THE REVISED RETURN FILED BY DR. S.P.AGARWAL HIS ASSESS MENT ORDER FOR AY 2006-07 AND FAMILY CHART OF THE ASSESSEE. 7. IN LOCKER NO 477, JEWELLERY HAVING 3134.400 GRAM S, VALUED AT RS.23,96,100/- WAS FOUND. THE ASSESSEE CONTENDED T HAT SHE HAS OFFERED A SUM OF RS.5,64,675/- FOR TAXATION BENEFIT OF THIS AMOUNT T O BE GIVEN QUA, THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE JE WELLERY FOUND IN LOCKER NO- 477. SHE FURTHER CONTENDED THAT BENEFIT OF 500 GRA MS JEWELLERY BE GIVEN TO HER, AS PER THE BOARDS CIRCULAR. THE BALANCE JEWELLERY TO BELONGS TO OTHER FAMILY MEMBERS, NAMELY SH. BIPIN AGARWAL AND HIS WIFE SMT. RITU AGARWAL, SH. CHARCHIT AGARWAL AND HIS WIFE SMT. KANIKA AGARWAL (BOTH SONS AND DAUGHTERS-IN-LAW) AND THREE CHILDREN OF BOTH THE SONS. LD. A.O DID NOT A CCEPT ANY CONTENTION OF THE ASSESSEE. HE ONLY GAVE CREDIT OF 500 GRAMS JEWELLE RY AS PER BOARDS CIRCULAR AND THE VALUE OF THE BALANCE JEWELLERY AT RS.19,71,100/ - HAS BEEN ADDED TO HER INCOME. ON APPEAL, LD. CIT(A) HAS ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND DELETED THE ADDITION. I.T.A .NO-530/DEL./2010 5 8. LD. DR HAS REITERATED HIS CONTENTION, AS WERE RA ISED QUA, THE JEWELLERY FOUND IN LOCKER NO-501. HE POINTED OUT THAT THERE IS NO EVIDENCE ON THE RECORD TO SUGGEST THAT THE FAMILY MEMBERS WERE HAVING SOURCE OF TAXAB LE INCOME FOR ACQUIRING THIS JEWELLERY. THE CIRCULAR ISSUED BY THE BOARD IS FOR INTERNAL PURPOSE AND IT IS JUST A GUIDELINE FOR NOT AFFECTING THE SEIZURE. IT DOES N OT ABSOLVE THE ASSESSEE TO EXPLAIN THE SOURCE OF JEWELLERY OF EVEN 500 GRAMS ATTRIBUTE D TO EACH MARRIED LADY. THE ASSESSEE HAS TO EXPLAIN THE SOURCE OF THIS 500 GRAM S ALSO. 9. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. IN THE JUDGEMENT OF HON'BLE GUJARAT HIG H COURT RELIED UPON BY THE ASSESSEE, THE SCOPE OF THE CIRCULAR BEARING NO. 191 6 HAS BEEN CONSIDERED. IT IS TRUE THAT THIS CIRCULAR WAS ISSUED BY THE BOARD GUIDING ITS OFFICIALS NOT TO SEIZE GOLD JEWELLERY, IF IT IS FOUND TO THE EXTENT OF 500 GRA MS AND CLAIMED TO BE OF A MARRIED LADY. SIMILARLY, TO THE EXTENT OF 250 GRAMS CLAIME D TO BE BELONGING OF A UNMARRIED LADY AND 100 GRAMS CLAIMED TO BE BELONGING OF MALE MEMBER, THAN NO SEIZURE IS TO BE AFFECTED. THE TRIBUNAL IN THE PAST HAD ADOPTED AN APPROACH IN FOLLOWING THE CIRCULAR AND GIVING BENEFIT TO THE ASSESSEE EVEN IF EXPLAINING THE SOURCE IN RESPECT OF THE JEWELLERY BEING HELD BY THE FAMILY MEMBER. THE SIMPLE REASON FOR THIS IS THAT IN DAY-TO-DAY HUMAN LIFE, IT IS QUITE IMPOSSIB LE THAT EVERY INDIVIDUAL WOULD KEEP THE PURCHASE BILLS INTACT FOR A LONG PERIOD UN DER EXPECTATION THAT SOME INCOME TAX OFFICER WILL ASK FOR THIS BILL. SIMILARLY, ON CUSTOMARY OCCASIONS WHEN ORNAMENTS ARE GIFTED TO THE LADIES, NO WOULD ASK FO R PREPARATION OF GIFT DID ETC. I.T.A .NO-530/DEL./2010 6 WHICH HAS TO BE USED AS AN EVIDENCE. SMALL ITEMS W ERE RECEIVED AT DIFFERENT SOCIAL FUNCTIONS WITHOUT SUPPORTING ANY EVIDENCE. FACED WITH THIS SITUATION, TRIBUNAL ADOPTING A PRAGMATIC APPROACH CONSIDERED THAT IF JE WELLERY TO THE EXTENT MENTIONED IN THE CIRCULAR IS FOUND WITHOUT ANY EVIDENCE SUBST ANTIATING THE SOURCE THAN TO THAT EXTENT, THE JEWELLERY SHOULD BE TREATED AS EXPLAIN ED. THE OBSERVATION OF THE HON'BLE GUJARAT HIGH COURT IN THIS CONNECTION IS WO RTH TO READ :- AS CAN BE SEEN FROM THE IMPUGNED ORDER OF THE TRIB UNAL, THE TRIBUNAL HAS REFERRED TO THE CENTRAL BOARD OF DIREC T TAXES CIRCULAR NO. 1916 AND OBSERVED THAT IN AN EARLIER DECISION O F THE TRIBUNAL, THE TRIBUNAL HAS ACCEPTED THE APPLICABILITY OF THE CIRC ULAR AND HAS HELD THAT HAVING REGARD TO THE CIRCULAR AND SIZE OF THE FAMILY, THE ORNAMENTS TO THE EXTENT SPECIFIED IN THE CIRCULAR S HOULD BE ACCEPTED AS REASONABLE. THE TRIBUNAL, ACCORDINGLY, FOUND THAT THE JEWELLERY HELD BY THE ASSESSEE AND HIS FAMILY MEMBERS WAS WELL WIT HIN THE LIMIT LAID DOWN UNDER THE CENTRAL BOARD OF DIRECT TAXES CIRCUL AR AND, ACCORDINGLY, DELETED THE WHOLE ADDITION ON THE GROU ND THAT THE JEWELLERY HELD BY EACH OF THE FAMILY MEMBERS WAS BE LOW THE LIMITS SPECIFIED IN THE SAID CIRCULAR. THOUGH IT IS RUE THAT THE CENTRAL BOARD OF DIRECT T AXES CIRCULAR NO. 1916, DATED MAY 11,1994, LAYS DOWN GUIDELINES F OR SEIZURE OF JEWELLERY AND ORNAMENTS IN THE COURSE OF SEARCH, TH E SAME TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENER ALLY BE HELD BY THE FAMILY MEMBERS OF AN ASSESSEE BELONGING TO AN O RDINARY HINDU HOUSEHOLD. THE APPROACH ADOPTED BY THE TRIBUNAL IN FOLLOWING THE SAID CIRCULAR AND GIVING BENEFIT TO THE ASSESSEE, E VEN FOR EXPLAINING THE SOURCE IN RESPECT OF THE JEWELLERY BEING HELD B Y THE FAMILY IS IN I.T.A .NO-530/DEL./2010 7 CONSONANCE WITH THE GENERAL PRACTICE IN THE HINDU F AMILIES WHEREBY JEWELLERY IS GIFTED BY THE RELATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS, VIZ. MARRIAGES, BIRTHDAYS, MARRIAGE ANNI VERSARY AND OTHER FESTIVALS. THESE GIFTS ARE CUSTOMARY AND CUSTOMS P REVAILING IN A SOCIETY CANNOT BE IGNORED. THUS, ALTHOUGH THE CIRC ULAR HAD BEEN ISSUED FOR THE PURPOSE OF NON-SEIZURE OF JEWELLERY DURING THE COURSE OF SEARCH, THE BASIS FOR THE SAME RECOGNIZES CUSTOMS P REVAILING IN THE HINDU SOCIETY. IN THE CIRCUMSTANCES, UNLESS THE RE VENUE SHOWS ANYTHING TO THE CONTRARY, IT CAN SAFELY BE PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAINED. THUS, THE APPROACH ADOPTED BY THE TRIBUNAL IN CONSI DERING THE EXTENT OF JEWELLERY SPECIFIED UNDER THE SAID CIRCULAR TO B E A REASONABLE QUANTITY, CANNOT BE FAULTED WITH. IN THE CIRCUMSTA NCES, IT IS NOT POSSIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED A NY LEGAL ERROR SO AS TO GIVE RISE TO A QUESTION OF LAW. 10. IN THE LIGHT OF ABOVE DISCUSSION, LET US CONSIDER T HE FACTS OF THE PRESENT CASE. IN THE FIRST LOCKER TOTAL JEWELLERY WAS FOUND 986.6 50 GRAMS. DR. S.P.AGARWAL HAS PAID A TAX OF RS.5,64,675/- ON ACCOUNT OF UNEXPLAI NED INVESTMENT IN THE JEWELLERY FOUND IN THE LOCKER. AT THE TIME OF SEAR CH, THE JEWELLERY WAS VALUED @ RS. 755.74 PER GRAM. IF THIS RATE IS ADOPTED QUA, THE SURRENDERED AMOUNT THAN IT WILL TAKE CARE OF 747.181 GRAM. THE BALANCE IS 239 .469 GRAM. IT WAS CONTENDED THAT THIS JEWELLERY TO BE TREATED AS BELONGING OF D R. S.P.AGARWAL. LD. FIRST APPELLATE AUTHORITY HAS ACCEPTED THIS. IN ORDER TO ELIMINATE THE APPREHENSION RAISED BY THE LD. DR THAT DR. S.P.AGARWAL MIGHT HAV E INDEPENDENTLY CLAIMED THE I.T.A .NO-530/DEL./2010 8 BENEFIT OF CIRCULAR IN HIS ASSESSMENT, WE HAVE PER USED THE ASSESSMENT ORDER OF DR. S.P.AGARWAL FOR AY 2006-07 AVAILABLE ON PAGE 18 OF THE PAPER BOOK. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT REVEALS THAT HE HAS NOT CLAIMED BENEFIT OF CIRCULAR QUA ANY JEWELLERY. THEREFORE, ON THE BASI S OF THE CIRCULAR 100 GRAMS OUT OF 239.469 GRAMS IS TO BE TREATED AS EXPLAINED. IT MAY BE RELATED TO DR. S.P.AGARWAL. THE BALANCE 139.469 GRAM IS TO BE CON SIDERED AS UNEXPLAINED. VALUE OF THIS JEWELLERY TO BE ADDED IN THE INCOME O F THE ASSESSEE. THE ORDER OF LD. CIT(A) IS MODIFIED ON THIS POINT AND A.O IS DIRECTE D TO ADD VALUE OF 139.469 GRAMS @ RS. 755.74 PER GRAM. 11. WITH REGARD TO THE JEWELLERY FOUND IN LOCKERNO- 477 IS CONCERNED. THE TOTAL JEWELLERY IS 3134.400 GRAMS. THE ASSESSEE IS FOLLO WING MEMBERS IN THE FAMILY S.NO. NAME RELATIONSHIP SHARES IN GOLD (GRAMS) 1. SMT. RAJ KUMARI AGARWAL ASSESSEE 500 2. SH. BIPIN AGARWAL SON 100 3. SMT. RITU AGARWAL DAUGHTER-IN-LAW 500 4. SH. CHARCHIT AGARWAL SON 100 5. SMT. KANIKA AGARWAL DAUGHTER-IN-LAW 500 6. THREE MINOR CHILDREN 3@150=450 TOTAL 2150 VALUE OF JEWELLERY SURRENDERED BY ASSESSEE- 738.57 0 GRAMS IS RS. 5,64,674/-. THE TOTAL JEWELLERY TREATED TO BE EXPLAINED ONE I S 2888 GRAMS (ROUGHLY 2900 GRAMS). 12. IN VIEW OF THE ABOVE WORKING, THE ASSESSEE AT T HE MOST CAN CLAIM JEWELLERY TO THE EXTENT OF 2900 GRAMS AS EXPLAINED AS PER T HE CIRCULAR. THE VALUE OF THE I.T.A .NO-530/DEL./2010 9 REST OF THE JEWELLERY IS TO BE TREATED AS UNEXPLAI NED. LD. FIRST APPELLATE AUTHORITY HAS ERRED IN DELETING THE TOTAL VALUE OF JEWELLERY. THE ORDER OF LD. CIT(A) IS MODIFIED TO THE ABOVE EXTENT. LD. A.O IS DIRECTED TO ADD THE VALUE OF 234 GRAMS @ RS. 755 PER GRAM IN THE TOTAL INCOME OF THE ASSESSEE. THUS, THE TOTAL ADDITION REQUIRED TO BE MADE BY THE LD. ASSESSING O FFICER IS VALUE OF JEWELLERY I.E 139 GMS + 234 GMS BY TAKING THE VALUE AT 755 PER GM . 13. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.10.2012. SD/- SD/- (G.D.AGARWAL) (RAJPAL YADAV) VICE PRESIDENT JUDICIAL MEMBER DATED: 12/10/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI