Santosh Kumar Kedia , Indore V. ACIT Central -1, Indore

ITA 55/Ind/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9300 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 09-03-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Valuation report; Set aside
• Section: 69; 143(3)

Judgement Text

Shri Manish Kumar Kedia, Indore & others 1 आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA No.53/Ind/2021 Assessment Year:2018-19 Shri Manish Kumar Kedia, Indore बनाम/ Vs. ACIT (Central)-1, Indore (Appellant) (Respondent ) P.A. No.ADUPK6439N ITA No.54/Ind/2021 Assessment Year:2018-19 Smt. Chanda Devi Kedia, Indore बनाम/ Vs. ACIT (Central)-1, Indore (Appellant) (Respondent ) P.A. No.AKYPK9720H ITA No.55/Ind/2021 Assessment Year:2018-19 Shri Santosh Kumar Kedia, Indore बनाम/ Vs. ACIT (Central)-1, Indore (Appellant) (Respondent ) P.A. No.AKWPK5049B Assessees by Shri V.N.Dubey & Ibrahim Kannodwala, Advocates Revenue by Shri P.K. Mitra, CIT-DR Date of Hearing: 21.01.2022 Date of Pronouncement: 07.02.2022 Shri Manish Kumar Kedia, Indore & others 2 आदेश / O R D E R PER BENCH The above captioned appeals filed at the instance of the Assessees and Revenue and cross objection by assessee for Assessment Year 2018-19 are directed against the separate orders of Ld. Commissioner of Income Tax(Appeals) (in short ‘Ld.CIT]-3, Bhopal all dated 18.01.2021 which are arising out of the orders u/s 143(3) of the Income Tax Act 1961(In short the ‘Act’) dated 26.12.2019 framed by ACIT (Central-1, Indore. Common grounds have been raised by the above assessees with regard to upholding the additions of Rs.37,93,608/- each in the total income of the respective assesse(s) (i.e. 1/3 rd of the jewellery/ornaments of Rs.1,13,80,825/- seized during course of search). 2. Both the parties submitted that case of Shri Manish Kumar Kedia is the lead case and facts and circumstances of remaining two cases i.e. Smt. Chardra Devi Kedia & Shri Santosh Kumar Kedia are identical to the case of Shri Manish Kumar Kedia and as such, the decision taken in the case of Shri Manish Kumar Kedia shall prevail both the aforesaid Shri Manish Kumar Kedia, Indore & others 3 cases. Thus, we take the case of Shri Manish Kumar Kedia at first and the assessee’s appeal relates to confirmation of addition of jewellery of Rs. 37,93,608/- (being 1/3 rd of amount of the Jewellery seized during the course of search confirmed in the hand of the assessee apart from confirmation of 1/3 rd each in the hand of his parents namely, Shri Santosh Kumar Kedia and Smt. Chanda Devi Kedia, whose appeals bearing ITA No. 55/Ind/2021 and ITA No. 54/Ind/2021, respectively) in respect of alleged unexplained jewellery u/s 69 of the I.T. Act found during search. Facts as culled out from the record of the Revenue Authorities are that the ld. Assessing Officer an addition of Rs. 37,93,608/- on account of unexplained investment u/s 69 r.w. 115 BBE of the Act, in the total income of the assessee in respect of alleged unexplained Jewellery (i.e. 1/3 rd of the Jewellery of Rs.1,13,80,825/- seized during course of search). The Assessing Officer made addition on the ground that the items specified in the bills do not exactly match with the item found during the course of search. However, the assessee submitted that over the period of time, items of gold jewellery keep on changing because of remaking and therefore, gross weight of gold jewellery found in course of search should be taken as Shri Manish Kumar Kedia, Indore & others 4 explained to the extent of gross weight of gold jewellery as per bills/invoices or valuation report already accepted when filed by the assessee. The explanation in respect of jewellery found vis-à-vis the jewellery of which source was filed, as appearing in the impugned order of Ld. CIT(A) at page 18 of the order. Before learned CIT(A), the assessee had submitted the statement along with relevant document/evidences and tried to explain each and every individual items of jewellery. However, the Ld. CIT(A) rejected all the submissions/representations/evidences and confirmed the addition in respect of the jewellery held by assessee along with its family members. 3. Being aggrieved, the assessee is before this Tribunal. Before us, learned Counsel for the assessee reiterated the submissions made before the Revenue Authorities and submitted that the addition under question made by the Ld. AO and upheld by the Ld. CIT (A) is arbitrary, merely based on incorrect presumptions and devoid of any merits as the Assessing Officer/learned CIT(A) failed to consider the explanation about the source of acquisition of jewellery merely on the ground that the items specified in the bills do Shri Manish Kumar Kedia, Indore & others 5 not exactly match with the item found during the course of search neglecting the position that over the period of time, items of gold jewellery keep on changing because of remaking and therefore, gross weight of gold jewellery found in course of search should be taken as explained to the extent of gross weight of gold jewellery as per bills/invoices or valuation report already accepted when filed by the assessee. 4. Per contra, ld. CIT-DR relied upon the orders of the Revenue Authorities and submitted that the assessee failed to explain the source of the jewellery. 5. We have considered rival contentions and gone through the material available on record. We find that the learned CIT(A) decide the issue as under: “4.5 Ground No. 5&6 for AY 2018-19: -Through these grounds of appeal, the appellant has challenged the addition of Rs.37,93,608/- on account of unexplained jewellery. During the course of search jewellery amounting to Rs.2,63,83,523/- was found from the premises and bank locker of the appellant out of which jewellery amounting to Rs.1,13,80,825/- was seized. The AO during the course of assessment proceedings required the assessee to explain the source of acquisition of jewellery. The AO after considering reply of the assessee did not find the same acceptable and stated that no satisfactory explanation has been given by the appellant in support of his claim and has treated jewellery of Rs.1,13,80,825/- as unexplained and made addition of Rs.37,93,608/- being 1/3 rd share of appellant. Shri Manish Kumar Kedia, Indore & others 6 4.5.1 I have considered facts of the case, plea raised by the appellant and findings of the AO. The appellant before me has claimed that the total jewellery found during the course of search was 5575.95 grams which include gold jewellery 5305.75 grams, diamonds 349.23 carat, stones/others 110 carat and silver 12906 gms. The appellant submitted that out of entire jewellery 1561.23 gms was purchased and in support has filed various bills and vouchers. On perusal of bills and vouchers it was found that the appellant has failed to reconcile the items mentioned in bills and vouchers with inventory of jewellery prepared during search. The appellant has also claimed ancestral jewellery 1500 gms for which no documentary evidences such as will etc. has been filed. The AO has already provided setoff of jewellery purchased by appellant out of disclosed sources, VDIS scheme and received through will. Therefore, in absence of any fresh documentary evidence in record, I do not find any infirmity in order passed by the AO and thus, addition made by the AO amounting to Rs.37,93,608/- is confirmed. Therefore, appeal on this ground is Dismissed.” 6. On perusal of record available before us, the details of the Jewellery and ornaments having the net weight of the gold of 5305.75 gms, diamond of 349.23 carats & other valuable stones of 110 carats and silver utensils/articles aggregating to 12.906 kgs found during course of search are summarized as under: SN. Particulars Weight Weight Remark (Found) (Explained) 1 Gold 5305.75 GM 5136.30 GM Minor difference on account of weight/other Shri Manish Kumar Kedia, Indore & others 7 7. We find that it is the case of a business family of repute wherein their forefathers were assessees even prior to independence and associated with leading industrial conglomerates as promoter director for over the years and the jewellery and ornaments under question is family jewellery / ornaments which is either inherited from Will of grandfather late Shri Narayan Das Kedia dated 17.7.1969 or purchased/acquired by the family members time to time over the years (apart from the Jewellery/ornaments disclosed under VDIS 1997 or jewellery received by the Soniya Kedia w/o Manish Kumar Kedia from her grandmother vide 1.5.2007 by way of gift), as explained and substantiated by the assesse with relevant documents. We find that the total Jewellery and ornaments of the value as arrived by Department of Rs 2,83,23,743/ (1,69,42,918 + 1,13,80,825) having the weight of the gold of 5305.75 gms, diamond of 349.23 carats & other valuable stones of 110 carats and silver utensils/articles aggregating to 12.906 kgs found Error 2 Diamonds 349.23 Carats 351.06 Carats 3 Other Valuable Stones 110 Carats 125.89 Carats 4 Silver 12906 GM 16060 GM Shri Manish Kumar Kedia, Indore & others 8 during course of search (including the jewellery under question of Rs 1,13,80,825/ seized by the department), was fully substantiated and explained by the assessee along with documentary evidences as narrated hereinabove. 7. Having gone through the submissions and material available on record, we find that before the Revenue Authorities the assessee has explained and substantiated the above details of the jewellery with relevant document/evidences but the Revenue Authorities did not appreciate the explanation about the source of acquisition of jewellery merely on the ground that the items specified in the bills do not exactly match with the item found during the course of search. But, we are of the view that the Revenue Authorities failed to appreciate the fact that over the period of time, items of gold jewellery keep on changing because of remaking and therefore, gross weight of gold jewellery found in course of search should be taken as explained to the extent of weight of jewellery as per bills/invoices or valuation report as submitted by the assessee. Thus, we are of the view that the gross-weight of the jewellery shown by the assessee in the bills and invoices produced before the Assessing Officer Shri Manish Kumar Kedia, Indore & others 9 explaining the source of the jewellery should have been accepted as disclosed and explained by the assesse as against pin-pointing mismatch in some of items of jewellery in a case where the assessee had explained total quantity of Gold found (of about 5kg) and the total diamonds of about 350 carats found as well as silver utensils and other valuable stones found during course of search. Our view is supported by the following judicial pronouncements: i. ITAT bench at Kolkata in the matter of DCIT v. Raj-Kumar Saraogi arising out of ITA No.1776/Kol/2012 & IT(SS) No.97/Kol/2013. ii. ITAT Ahmedabad Bench in the matter of D.C.I.T. v. Meena G. Agarwal MANU/IB/0255/2015 iii. ITAT bench at Ahmedabad in the matter of Liza Girish Shah v. DCIT, in ITA No. 2516 and 2685/Ahd/2010 iv. The Hon’ble Apex Court in the case of CIT v. Simon Carves Ltd. MANU/SC/0218/1976[1976] 105 ITR 212, v. ACIT v. Kanchan Bhalla MANU/ID/0036/2021 decided by the ITAT Bench at New Delhi. 8. From the ratio laid down in the aforesaid judicial pronouncements, we find that that items of jewellery are often subjected to remaking on account of changing fashion and designs and in Indian society, the yellow metal and diamond has assumed lot of significance for ladies which is a status symbol and they buy it or convert the jewellery as per the prevailing fashion. There has no gainsaying that fashion keeps on changing and, accordingly, the jewellery is re- Shri Manish Kumar Kedia, Indore & others 10 modeled from time to time according to the prevailing fashion and under the facts and circumstances of the case, exactly matching of the items of jewellery found at the time of search is putting an onerous task on assessee to prove something impossible, and assessee cannot be as bed to prove something which is beyond its control. Further, it is well settled in a plethora of judgments of various Courts that jewelleries found during the course of search should be seized only after compliance of the CBDT Instruction No. 1916 and no addition should be made by the AO in respect of declared/explained jewelleries. The case of the present assessee squarely fits within the four corners of clause (iii) CBDT Instruction No. 1916 which provides that “The authorized officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure”. Reliance is placed on the decision of ITAT Mumbai in the matter of Nawaz Singhania Vs. DCIT (ITAT Mumbai) IT Appeal No. 3979 (MUM). Of 2017 ̧ wherein clause (iii) of the CBDT Information No. 1916 had been taken up for consideration holding that a CBDT Circular which has a Shri Manish Kumar Kedia, Indore & others 11 binding force, having deliberately being ignored during the assessment itself tantamounts to a defect in the order of AO and the Ld. CIT(A) has further erred in confirming the addition made by the Ld. AO on depriving appellant from the benefits under the aforementioned CBDT Circular No. 1916. However, we find that in the instant case, the Assessing Officer failed to appreciate the status of the assesse family and unjustifiably made an addition of entire Jewellery amounting to Rs.1,13,80,825/- seized by the department during course of the search. Thus, in view of facts and circumstances of the case in the light of the judicial pronouncements (supra), we find that the assessee had substantially explained the entire quantity/weight of gold, diamonds, silver and other valuable stones found during the course of search and therefore, the ld. Assessing Officer/learned CIT(A) was not justified in making/confirming the ad hoc addition in respect the jewellery seized by the department. Hence, we set aside the orders of the Revenue Authorities on this issue and delete the addition on this issue. Accordingly, grounds on this issue raised in the appeals of the present assessees stand allowed. Shri Manish Kumar Kedia, Indore & others 12 9. In result, appeals of present assessees bearing ITA Nos.53 to 55/Ind/2021 are allowed. Order was pronounced as per Rule 34 of I.T.A.T., Rules 1963 on 07.02.2022. Sd/- (MAHAVIR PRASAD) Sd/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore; दनांक Dated : .2022 !vyas! Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore