Smt. Satya Bhalla, New Delhi V. ACIT, Faridabad

ITA 5714/DEL/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7551 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 26-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Assessee Lawyers: DR RAKESH GUPTA; SOMIL AGGARWAL ADVS
• Keywords: Unexplained investment; Search and seizure; Deemed to accrue or arise in india
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC - 1 , NEW DELHI BEFORE SH. N. K. SAINI, A CCOUNTANT M EMBER IT A NO. 5714 /DEL/2015 : ASSTT. YEAR : 2006 - 07 SMT. SATYA BHALLA, H. NO. 1073, SECTOR - 15, FARIDABAD VS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, FARIDABAD (APPELLANT) (RESPONDENT) PAN NO. A BIPB1562H ITA NO. 5715/DEL/2015 : ASSTT. YEAR : 2006 - 07 SMT. DEEPIKA BHALLA, H. NO. 1073, SECTOR - 15, FARIDAB AD VS ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 1, FARIDABAD (APPELLANT) (RESPONDENT) PAN NO. ABIPB1562H ASSESSEE BY : DR. RAKESH GUPTA & SOMIL AGGARWAL , ADVS. REVENUE BY : SH. V. R. SONBHADRA , SR. DR DATE OF HEARING : 26 . 05 .201 6 DATE OF PRONOUNCEMENT : 30 .05 .201 6 ORDER THESE TWO APPEAL S BY THE ASSESSEES ARE DIRECTED AGAINST THE SEPARATE ORDERS EACH DATED 11.09.2015 OF LD. CIT(A) - III, GURGAON. 2. COMMON ISSUE IS INVOLVED IN BOTH THESE APPEALS WHI CH WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIEN CE AND BREVITY. IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 2 3. FIRST I WILL DEAL WITH THE APPEAL IN ITA NO. 5715/DEL/2015 IN THE CASE OF SMT. DEEPIKA BHALLA. THE GRIEVANCE OF THE ASSESSEE IN T HIS APPEAL RELATES TO THE CONFIRMATION OF PENALTY OF RS.2,00,000/ - U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 4 . FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT MANAV RACHNA EDUCATIO N SOCIETY OF CASES ON 04.08.2005. ACCORDINGLY, THE RESIDENTIAL PREMISES OF THE ASSESSEE WERE ALSO SEARCHED ON THE SAID DATE , AS THE HUSBAND OF THE ASSESSEE WAS THE TRUSTEE IN THE SAID SOCIETY. DURING THE COURSE OF SEARCH OPERATION , CERTAIN DOCUMENTS WERE S EIZED FROM THE RESIDENTIAL PREMISES OF SH. O. P. BHALLA FATHER - IN - LAW OF THE ASSESSEE. A JEWELLERY VALUING RS.11,06,711/ - WAS FOUND FROM THE BED ROOM OF THE ASSESSEE OUT OF WHICH JEWELLERY VALUING RS.6,14,717/ - WAS SEIZED. THE AO MADE THE ADDITION OF RS.5, 57,375/ - BY OBSERVING IN PARA S 8 & 9 OF THE ASSESSMENT ORDER DATED 27.12.2007 AS UNDER: 8. IN VIEW OF ABOVE FACTS AND LEGAL POSITION AND ALSO CONSIDERING THE ASSESSEE S REPLY, THE WORKING OF UNEXPLAINED INVESTMENT IN JEWELLERY IS GIVEN AS UNDER: - GOLD D IAMOND TOTAL JEWELLERY 793.600 GMS 4,09,386 6,78,375 LESS: JEWELLERY PURCHASED ON 20.3.2005 BY PRASHANT BHALLA 2,05,000 BALANCE 793.600 GMS 4,09,386 4,73,375 IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 3 OUT OF ABOVE GOLD JEWELLERY OF 793.600 GMS THE FOLLOWING JEWELLERY ARE REDUCED ON ACCOU NT JEWELLERY RECEIVED AT THE TIME OF MARRIAGE AND OTHER OCCASION BY MRS. DEEPIKA BHALLA 300.000 GMS JEWELLERY TREATED AS OWNED BY SH. PRASHANT BHALLA HUSBAND OF THE ASSESSEE. 100.000 GMS JEWELLERY OWNED BY FEMALE CHILD 200.000 GMS BY MA LE CHILD 100.000 GMS. TOTAL 700.000 GMS. REMAINING GOLD JEWELLERY WEIGHING 93.60 GMS. VALUED AT RS.84,000/ - (@ RS.900 PER GMS.) AND DIAMOND JEWELLERY VALUED OF RS.4,73,375/ - ARE TREATED AS UNEXPLAINED AND ADDED TO ASSESSEE S TAXABLE INCOM E. ACCORDINGLY, AN ADDITION OF RS.5,57,375/ - (84,000 GOLD JEWELLERY + 4,73,375 DIAMOND JEWELLERY) IS MADE AS UNEXPLAINED INVESTMENT OF THE ASSESSEE U/S 69A. 9. IN VIEW OF ABOVE CIRCUMSTANCES, THE DIAMOND JEWELLERY OF 9.90 CT VALUED AT RS.5,57,375/ - IS ADD ED TO ASSESSEE S TAXABLE INCOME FOR THE ASSESSMENT YEAR 2006 - 07 AS UNEXPLAINED INVESTMENT U/S 69A OF THE INCOME TAX ACT. I AM SATISFIED THAT THE ASSESSEE HAS CONCEALED/FURNISHING INACCURATE PARTICULARS OF HER INCOME TO THE EXTENT OF RS.5,57,375/ - . THE PROV ISIONS OF PENALTY PROCEEDINGS U/S 271 (1)(C) ARE CLEARLY ATTRACTS ON THIS ADDITION OF RS.5,57,375/ - . INCOME DECLARED IN THE RETURN 5,63,810 ADDITION AS DISCUSSED ABOVE 1,23,000 ADDITION AS DISCUSSED 5,57,375 TOTAL TAXABLE INCOME 12,44,18 5 ASSESSED: ISSUE NECESSARY FORMS. CHARGE INTEREST U/S 234B & 234C OF IT ACT. ISSUE PENALTY NOTICE U/S 271(1)(C) OF THE IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 4 I.T. ACT FOR CONCEALING/WRONG/INACCURATE PARTICULARS OF INCOME OF RS.6,80,375/ - (1,23,000 + 5,57,375) 5. THE ASSESSEE CARRIED THE MATT ER TO THE LD. CIT(A) WHO DELETED THE ADDITION OF RS.84,000/ - MADE IN RESPECT OF GOLD JEWELLERY AND SUSTAINED THE ADDITION OF RS.4,73,375/ - ON ACCOUNT OF DIAMOND JEWELLERY. THEREFORE, T HE AO INITIATED THE PENALTY U/S 271(1)(C) OF THE ACT BY CONSIDERING THIS FACT THAT THE ADDITION WAS CONFIRMED BY THE LD. CIT(A) AND ACCORDINGLY PENALTY OF RS.1,44,860/ - WAS LEVIED U/S 271(1)(C) OF THE ACT. 6. THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO SUSTAINED THE PENALTY IN RESPECT OF THE ADDITION OF RS. 2,00,00 0/ - WHICH WAS RESTRICTED BY THE ITAT OUT OF THE ADDITION OF RS.4,73,375/ - BY OBSERVING IN PARA 8 OF THE IMPUGNED ORDER AS UNDER: (I) THE APPELLANT HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF ACQUIRING DIAMOND AND GOLD JEWELLERY WEIGHING 93.60 GMS VALUED A T RS.5,57,375/ - FOUND WITH HER IN THE SEARCH OPERATION CONDUCTED. DURING ASSESSMENT PROCEEDINGS AND THIS AMOUNT OF RS.5,57,375/ - WAS ADDED TO THE INCOME OF THE ASSESSEE BY THE AO. (II) THE HON BLE ITAT HAS NOT ACCEPTED THE ARGUMENTS OF APPELLANT EXPLAININ G THE SOURCE OF ACQUIRING DIAMOND JEWELLERY AND THE SAME ARGUMENT HAVE BEEN TAKEN UP IN THE APPELLATE PROCEEDINGS ALSO WITH IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 5 REGARD TO PENALTY IMPOSED. HOWEVER, THE HON BLE ITAT HAS RESTRICTED THE ADDITION TO RS.2,00,000/ - . (III) IT HAS BEEN HELD BY THE HO N BLE ITAT THAT IN THE GIVEN FACTS AND CIRCUMSTANCES, I.E. VDIS DECLARATION AND ASSESSEE SEARCH STATEMENT AT THE MOST, THE DIAMONDS WHICH ARE SITUATED IN THE GOLD JEWELLERY MAY BE HELD TO BE JUSTIFIED. THUS WITH REGARD TO JEWELLERY AMOUNTING RS.2,00,000/ - , THE APPELLANT HAS NOT BEEN ABLE TO OFFER ANY EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE JEWELLERY OR THE EXPLANATION OFFERED BY THE APPELLANT IS NOT SATISFACTORY AND THIS JEWELLERY IS DEEMED INCOME OF THE APPELLANT. (IV) THE EXPLANATIO N 5A TO SECTION 271(1)(C) OF THE A CT THUS WOULD APPLY AGAINST THE ASSESSEE FOR LEVY OF PENALTY AND IT WOULD BE A CASE OF DEEMED CONCEALMENT OF THE PARTICULARS OF INCOME OR FURNISHING INACCURATE PARTICULARS OF INCOME. IN VIEW OF THE ABOVE, THE AO WAS JUSTI FIED IN IMPOSING PENALTY. HOWEVER, THE AO IS DIRECTED TO RESTRICT PENALTY ON UNDISCLOSED INVESTMENT IN JEWELLERY AT RS.2,00,000/ - ONLY. 7. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORI TIES BELOW AND FURTHER SUBMITTED THAT THE ADDITION SUSTAINED BY THE ITAT WAS ONLY ON ESTIMATE BASIS. HE REFERRED TO PAGE NOS. 33 TO 38 OF THE ASSESSEE S COMPILATION WHICH IS THE COPY OF THE ORDER PASSED BY THE ITAT IN ITA NO. 550/DEL/2010 VIDE ORDER IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 6 DATED 31.03.2011. IT WAS FURTHER SUBMITTED THAT THE DIAMOND JEWELLERY WAS STUDDED IN THE GOLD AND IT HAD BEEN ACCEPTED BY THE AO THAT THE JEWELLERY WAS RECEIVED BY THE ASSESSEE AT THE TIME OF MARRIAGE AND OTHER OCCASIONS. IT WAS FURTHER SUBMITTED THAT OUT OF TOT AL JEWELLERY WEIGHING 793.600 GMS, T HE AO HIMSELF ACCEPTED THE GOLD JEWELLERY WEIGHING 700 GMS AND THE REMAINING JEWEL L ERY WEIGHING 93.600 GMS WAS ACCEPTED BY THE LD. CIT(A) WHO DELETED THE ADDITION IN RESPECT OF THE GOLD JEWELLERY. IT WAS EMPHASIZED THAT THE DIAMOND WERE STUDDED IN THE GOLD JEWELLERY AND WERE NOT PART OF THE SEPARATE JEWELLERY . THEREFORE, THE ADDITION OF RS.2.00 LACS ALTHOUGH WAS SUSTAINE D BY THE ITAT ON ESTIMATE BASIS, H OWEVER, NOTHING WAS CONCEALED BY THE ASSESSEE NOR THE WRONG PARTICULA RS OF INCOME WERE FURNISHED. THEREFORE, THE PENALTY U/S 271(1)(C) OF THE ACT WAS NOT LEVIABLE. 8. IN HIS RIVAL SUBMISSIONS THE LD. DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE DID NOT DISCLOSE THE DIAM OND JEWELLERY NOR THE SOURCE OF SAID JEWELLERY WAS DISCLOSED. THEREFORE, THE INCOME SUSTAINED UP TO THE LEVEL OF THE ITAT WAS THE CONCEALED INCOME OF THE ASSESSEE AND THE PENALTY WAS RIGHTY LEVIED BY THE AO U/S 271(1)(C) OF THE ACT WHICH HAS BEEN SUSTAINED BY THE LD. CIT(A). IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 7 9. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) SUSTAINED THE PENALTY IN RESPECT OF THE ESTIMATED ADDITION OF RS.2,00,000/ - WHICH WAS RESTRICTED BY THE ITAT BY OBSERVING IN PARA 11 OF THE ORDER DATED 31.03.2011 IN ITA NO. 550/DEL/2010 WHICH READ AS UNDER: 11. IN OUR VIEW, IN THE GIVEN FACTS AND CIRCUMSTANCES, I.E. VDIS DECLARATION AND ASSESSEE SEARCH STATEMEN T AT THE MOST, THE DIAMONDS WHICH ARE STUDDED IN THE GOLD JEWELLERY MAY BE HELD TO BE UNEXPLAINED. SINCE NO DETAILS OF DIAMONDS HAVE BEEN ARGUED BY ASSESSEE BEFORE US AND THE AMOUNT BEING SMALL, IT WILL NOT BE DESIRABLE OF JUSTICE TO SET ASIDE THE ISSUE AG AIN TO AO. IN THESE FACTS AND CIRCUMSTANCES, ENDS OF JUSTICE WILL BE MET IF AN ADDIT ION OF RS.2,00,000/ - (RUPEES TWO LAKHS) ON ESTIMATED BASIS ATTRIBUTABLE TO STUDDED DIAMONDS IS RETAINED FOR ADDITION PURPOSES. ASSESSEE GETS PART RELIEF. 10. FROM THE A BOVE OBSERVATION OF THE ITAT, IT IS CLEAR THAT THE ADDITION SUSTAINED WAS AN ESTIMATED ONE. I T IS WELL SETTLED THAT IF THE ADDITION IS SUSTAINED ON ESTIMATE BASIS IT CANNOT BE SAID THAT THE ASSESSEE CONCEALED THE INCOME OR FURNISHED INACCURATE PARTICULARS OF INCOME IN RESPECT OF THE ESTIMATED ADDITION. THEREFORE, THE PENALTY WAS NOT LEVIABLE U/S 271(1)(C) OF THE ACT. FURTHERMORE, IN THE PRESENT CASE, THE AO HIMSELF IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 8 ACCEPTED THE GOLD JEWELLERY IN WHICH THE DIAMOND WERE STUDDED TO THE EXTENT OF 700 GMS OUT OF THE 793.600 GMS JEWELLERY FOUND DURING THE COURSE OF SEARCH AND THE LD. CIT(A) ACCEPTED THE REMAINING JEWELLERY OF 93.600 GMS AGAINST WHICH THE DEPARTMENT HAD NOT PREFERRED ANY APPEAL . IN OUR OPINION, WHEN THE GOLD JEWELLERY IN WHICH THE DIAMOND S WERE STU DDED HAS BEEN ACCEPTED BY THE DEPARTMENT AS THE JEWELLERY RECEIVED AT THE TIME OF MARRIAGE OR OTHER OCCASION, THEN , IT CANNOT BE SAID THAT THE DIAMOND STUDDED IN THE SAID JEWELLERY WERE OUT OF THE UNDISCLOSED INCOME OF THE ASSESSEE. IT IS WELL SETTLED THAT THE ASSESSMENT PROCEEDINGS AND THE PENALTY ARE TWO DIFFERENT AND DISTINCT PROCEEDINGS AND THAT THE ADDITION MADE IN THE ASSESSMENT MAY BE RELEVANT BUT NOT A CONCLUSIVE PROOF OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THERE FORE, CONSIDERING THE TOTALITY OF THE PECULIAR FACTS OF THE PRESENT CASE, I AM OF THE VIEW THAT THE PENALTY U/S 271(1)(C) OF THE ACT, SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED, PARTICULARLY WHEN THE DEPARTMENT HAD ACCEPTED THE GOLD JEWELLERY IN WHICH T HE DIAMOND WERE STUDDED. ACCORDINGLY, THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS SET ASIDE AND THE PENALTY SUSTAINED U/S 271(1)(C) OF THE ACT IS DELETED. IT A NOS. 5714 & 5715/DEL/2015 SATYA & DEEPIKA BHALLA 9 11. AS REGARDS TO THE APPEAL OF SMT. SATYA BHALLA IN ITA 5714/DEL/2015 IS CONCERNED. THE FACTS A RE SIMILAR AS WERE INVOLVED IN THE CASE OF SMT. DEEPIKA BHALLA, THE ONLY DIFFERENCE IS THAT THE ADDITION SUSTAINED IN THIS CASE WAS OF RS.3,23,900/ - ON ACCOUNT OF DIAMOND JEWELLERY INSTEAD OF RS.2,00,000/ - SUSTAINED IN THE CASE OF SMT. SATYA BHALLA (SUPRA) . THEREFORE, T HE FINDINGS GIVEN IN THE FORMER PART OF THIS ORDER SHALL APPLY MUTATIS MUTANDIS IN RESPECT OF THIS APPEAL IN ITA NO. 5714/DEL/2015. ACCORDINGLY, THE PENALTY LEVIED BY THE AO AND SUSTAINED BY THE LD. CIT(A) U/S 271(1)(C) OF THE ACT IS DELETED. 12 . IN THE RESULT, THE APPEAL S OF THE ASSESSEE S ARE ALLOWED . ( ORDER PRON OUNCED IN THE COURT ON 30 /05/2016 ) SD/ - (N. K. SAINI) ACCOUNTANT MEMBER DATED: 30 /05/2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR