Smt. Deepa Mittal, Kanpur V. Deputy Commissioner of Income Tax, Central Circle- I, Kanpur

ITA 581/LKW/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3596 (ITAT-LUCKNOW)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 08-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C. K. SINGH
• Keywords: Gift; Question of law
• Section: 132; 69B; 250; 201; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC , LUCKNOW BEFORE SHRI. A. D. JAIN, VICE PRESIDENT ITA NO. 581/LKW/2018 ASSESSMENT YEAR: 2016 - 17 SMT. DEEPA MITTAL 2A/220, AZAD NAGAR KANPUR V. DY. CIT CENTRAL CIRCLE 1 KANPUR T AN /PAN : AGZPM04 92K (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI C. K. SINGH, D.R. DATE OF HEARING: 19 0 2 201 9 DATE OF PRONOUNCEMENT: 22 0 2 201 9 O R D E R THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2016 - 17 AGAINST T HE ORDER OF THE LD. CIT(A) - IV, KANPUR, DATED 29/6/2018, TAKING THE FOLLOWING GROUNDS: - 1. THE AUTHORITIES BELOW HAVE ERRED IN LAW AND ON FACTS IN MAKING/SUSTAINING AN ADDITION OF RS.7,77,593/ - , ON ACCOUNT OF JEWELLERY FOUND DURING THE COURSE OF SEARCH, AS PER PARTICULARS GIVEN BELOW: - A) VALUATION OF JEWELLARY AS PER APPROVED VALUER'S REPORT OBTAINED BY THE AUTHORIZED OFFICERS : RS.24,70,024 B) VALUATION AS MENTIONED IN THE BALANCE SHEET : (RS.16,92,431) C) RESULTANT ADDITION : RS.7, 77,593 ITA NO.581/LKW/2018 PAGE 2 OF 6 2. LOOKING TO THE SIZE OF THE FAMILY, TO WHICH THE JEWELLARY IN QUESTION BELONGED NO FURTHER EVIDENCE WAS REQUIRED TO BE FURNISHED AND VIEW TO THE CONTRARY AS HAS BEEN BY THE AUTHORITIES BELOW IS WHOLLY ERRONEOUS AND NOT TENABLE EITHER ON F ACTS OR IN LAW. 3. SOURCE OF JEWELLARY STOOD FULLY EXPLAINED, KEEPING IN VIEW THE CIRCULAR ISSUES BY CBDT, WHICH WAS APPLICABLE FOR THE PURPOSES OF ASSESSMENT ALSO. 2 . THE ASSESSING OFFICER MADE THE ADDITION OF RS.7,77,593/ - , OBSERVING AS UNDER: - DUR ING THE COURSE OF SEARCH UNDER SECTION 132 AT THE ASSESSEE PREMISES JEWELLERY AMOUNTING TO RS.24,70,024/ - WAS FOUND, THE ASSESSEE WAS CONFRONTED WITH THE SAME DURING SEARCH BUT SHE COULD NOT PROVIDE ANY EXPLANATION FOR THE SAME. LATER, A SHOW CAUSE WAS ISS UED TO THE ASSESSEE SEEKING AN EXPLANATION OF THE JEWELLERY FOUND DURING THE SEARCH . THE ASSESSEE IN HER REPLY PROVIDED AN UNAUDITED BALANCE SHEET CONTAINING THE DETAILS OF THE JEWELLERY OWNE D BY HER WHOSE VALUE IS RS.16,92,431/ - . THEREFORE, THE DIFFERENC E OF THE SAME AMOUNTING TO J RS.7,77,593/ - IS ADDED BACK U/S 69B A S THE ASSESSEE HAS FILED INACCURATE PARTICULARS AND INVESTMENTS. 3 . BEFORE THE LD. CIT(A), ASSESSEE CONTENDED THAT JEWELLERY AND OTHER VALUABLES FOUND IN THE SEARCH WERE COVERED BY THE LIMITS PRESCRIBED BY THE C.B.D.T. THE LD. CIT(A) CONFIRMED THE ADDITION, HOLDING AS FOLLOWS: - CBDT CIRCULAR IS ONLY FOR THE SEIZURE OF JEWELLERY AT THE TIME OF SEARCH. IT DOES NOT MEAN THAT JEWELLERY TO THE EXTENT OF LIMIT AS PER CBDT CIRCULAR STANDS EXPLAINED. INDEED, THERE WAS NEED TO EXAMINE THE SOURCE OF S AID JEWELLERY AND APPELLANT WAS DUTY BOUND TO GIVE EVIDENCE OF SOURCE OF ACQUISITION OF SAID JEWELLERY. ITA NO.581/LKW/2018 PAGE 3 OF 6 IF NOT, IT IS UNDOUBTEDLY UNEXPLAINED. IN THE PRESENT CASE, APPELLANT COULD NOT EXPLAIN THE SOURCE OF JEWELLERY. THEREFORE, IN THE CONSIDERED OPINION OF THE UNDERSIGNED, A.O. HAS LIGHTLY MADE ADDITION AND SAME IS HEREBY CONFIRMED THUS, THESE GROUNDS OF APPEAL OF THE APPELLANT ARE DISMISSED. 4 . THE LD. A.R. OF THE ASSESSEE HAS REITERATED THE ASSESSEES STAND TAKEN BEFORE THE LD. CIT(A). ON THE OTHER HAND, THE LD. D.R. HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 5 . HEA R D. THE LD. CIT(A) DOES NOT DISPUTE THE APPLICABILITY OF C.B.D.T. CIRCULAR NO.1916 DATED 11/5/1994, WHICH PRESCRIBES THE LIMIT OF JEWELLERY NOT TO BE SEIZED. HE, HOWEVER, SAYS THAT DESPITE THIS CIRCULAR, THE SOURCE OF THE JEWELLERY STILL MUST BE EXPLAINED, WHICH THE PRESENT ASSESSEE HAS NOT BEEN ABLE TO DO. THE QUESTION IS, WHETHER THIS STAND TAKEN BY THE LD. CIT(A) IS CORRECT? 6 . IN CIT VS. S ATYA NARAIN PATNI, 46 TAXMANN.COM 440 (RAJASTHAN), REFERRING TO THE AFORESAID C.B.D.T. CIRCULAR NO.1816, DATED 11/5/1994, THE HON'BLE RAJASTHAN HIGH COURT HELD THAT SINCE THE JEWELLERY WAS FOUND TO BE WITHIN THE LIMIT PRESCRIBED BY THE C.B.D.T., NO ADDITI ON WAS JUSTIFIABLE. IT WAS ALSO HELD THAT THE CIRCULAR DOES NOT SPEAK ABOUT THE QUESTIONING OF THE SAID JEWELLERY ; THAT ONCE THE BOARD IS OF THE EXPRESS OPINION THAT THE SAID JEWELLERY CANNOT BE SEIZE D, IT S HOULD NORMALLY MEAN THAT ANY JEWELLERY, FOUND IN POSSESSION OF A MARRIED LADY TO THE EXTENT OF 500 GMS. , 250 GMS. PER UNMARRIED LADY AND 100 GMS . PER M ALE MEMBER OF THE FAMILY WILL ALSO NOT BE QUESTIONED ABOUT ITS SOURCE AND ACQUISITION ; THAT AT THE TIME OF WEDDING, THE DAUGHTER/DAUGHTER - IN - LAW RECEIVES GOLD ORNAMENTS / JEWELLERY A ND OTHER GOODS NOT ONL Y FROM THE PARENTAL SIDE , BUT IN - LAWS SIDE AS WELL AT THE TIME OF 'VIDAI' OR/AND AT THE TIME WHEN THE DAUGHTER - IN - LAW ENTERS THE HOUSE OF HER HUSBA ND; THAT T HEREAFTER ALSO, SHE CONTINUES TO RECEIVE SOME SMAL L ITEMS FROM VARIOUS OTHER CLOSE FRIENDS AND RELATIVES OF BOTH ITA NO.581/LKW/2018 PAGE 4 OF 6 THE SIDES , AS WELL AS ON THE AUSPICIOUS OCCASION OF BIRTH OF A CHILD , WHETHER MALE OR FEMALE , AND THE C . B . D . T, LOOKING TO SUCH CUSTOMS PREVAILING THROUGHOUT INDIA, IN ONE WAY OR THE OTHER, CAME OUT WITH THIS CIRCULAR AND IT SHOULD ALSO MEAN THAT TO THE EXTENT OF THE AFORESAID JEWELLERY, FOUND IN POSSESSION OF THE VARIOUS PERSONS, EVEN SOURCE CANNOT BE QUESTIONED ; THAT I T IS CERTAINLY 'STRIDHAN' OF THE WOMAN AND NORMALLY , NO QUESTION , AT LEAST TO THE SAID EXTENT , CAN BE MAD E. 7 . IN CIT VS. RATANLAL VYAPARILAL JAIN, 339 CTR 568 (GUJ.) ALSO, THE JUDGMENT WAS TO THE SAME EFFECT. IT WAS HELD AS UNDER: - 'THOUGH IT IS TRUE THAT THE CBDT CIRCULAR NO. 1916, DT. 11 TH MAY, 1994 LAYS DOWN GUIDELINES FOR SEIZ URE OF JEWELLERY AND ORNAMENTS IN THE COURSE OF SEARCH, THE SAME TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY WHICH WOULD GENERALLY BE HELD BY FAMILY MEMBERS OF AN ASSESSEE BELONGING TO AN ORDINARY HINDU HOUSEHOLD. THE APPROACH ADOPTED BY THE TRIBUNAL IN F OLLOWING THE SAID CIRCULAR AND GIVING BENEFIT TO THE ASSESSEE, EVEN FOR EXPLAINING THE SOURCE IN RESPECT OF THE JEWELLERY BEING HELD BY THE FAMILY IS IN CONSONANCE WITH THE GENERAL PRACTICE IN HINDU FAMILIES WHEREBY JEWELLERY IS GIFTED BY THE RELATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS, VIZ., MARRIAGES, BIRTHDAYS, MARRIAGE ANNIVERSARY AND OTHER FESTIVALS. THESE GIFTS ARE CUSTOMARY AND CUSTOMS PREVAILING IN A SOCIETY CANNOT BE IGNORED. THUS ALTHOUGH THE CIRCULAR HAD BEEN ISSUED FOR THE PURPOSE OF N ON - SEIZURE OF JEWELLERY DURING THE COURSE OF SEARCH, THE BASIS FOR THE SAME RECOGNIZES CUSTOMS PREVAILING IN HINDU SOCIETY. IN THE CIRCUMSTANCES, UNLESS THE REVENUE 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 CONSIDERING THE EXTENT OF JEWELLERY SPECIFIED UNDER THE SAID CIRCULAR TOBE A REASONABLE QUANTITY, CANNOT BE FAULTED WITH. IN THE CIRCUMSTANCES, IT IS NOT P OSSIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED ANY LEGAL ERROR SO AS TO GIVE RISE TO A QUESTION OF LAW. ITA NO.581/LKW/2018 PAGE 5 OF 6 8 . CIT VS. RATANLAL VYAPARILAL JAIN (SUPRA) HAS BEEN FOLLOWED BY THE AHMEDABAD BENCH OF THE TRIBUNAL, VIDE ORDER DATED 5/11/2015, IN ITA NO.2613/AHD /2009, FOR ASSESSMENT YEAR 2006 - 07. 9 . IN CIT VS. M/S GHANSHYAM DAS JOHRI LUCKNOW, VIDE ORDER DATED 25/10/2013, PASSED IN ITA NO.19 OF 2005 FOR THE BLOCK PERIOD FROM 1/4/1989 TO 8/7/1999, THE HON'BLE ALLAHABAD HIGH COURT HELD AS FOLLOWS: - REGARDING THE INV ESTMENT, IT APPEARS THAT THE SEIZED JEWELLERY WAS CLAIMED BY THREE LADIES NAMELY RUPALI RAST O GI, SMT SUNITA RASTOGI; AND SMT KAMNI RASTOGI. ALL THE LADIES BELONGED TO THE REPUTED FAMILIES AND THEY ARE MARRIED. AS PER TH E CBDT CIRCULAR DISCUSSED IN THE CASE OF SMT. PATI DEVI VS. ITO; 240 ITR 727 KAMATKA 500GM, JEWELLERY IS EXPECTED IN T HE POSSESSION OF A MARRIED LADY AND THAT MUCH OF ORNAMENTS CANNOT BE SEIZED. IF WE GO WITH THE CBDT CIRCULAR DATED 11.05.1994 AND THE RATIO LAID DOWN IN THE CASE OF SMT. PATI DEVI (SUPRA), THEN EACH LADY IS EXPECTED TO OWN 500 GM. ORNAMENTS. MOREOVER, PRIOR TO SEARCH, THE ENTIRE JEWELLERY WAS ALREADY DISCLOSED IN THE STATEMENT OF AFFAIRS ATTACHED TO THE REGULAR RETURNS FILED BY EACH LADY, AS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASSESSEE. WHEN IT IS SO, THEN THE SAME CANNOT B E TREATED UNDISCLOSED DURING THE BLOCK PERIOD. THUS, THE ENTIRE SEIZED JEWELLERY IS COVERED WITH THE AFORESAID CIRCULAR. WHEN IT IS SO, THEN THERE IS NO OCCASI O N TO MAKE ANY ADDITION. 10 . IN ASHOK CHADHA VS . ITO', 14 TAXMANN.COM 57 (DELHI), THE HON'BLE DELHI HIGH COURT ACCEPTED THE JEWELLERY OF 906.60 GMS. I N THE CASE OF MARRIED LADY EVEN WITHOUT DOCUMENTARY EVIDENCE, AS SRIDHAN . 11 . NO DECISION CONTRARY TO THE ABOVE DECISIONS HAS BEEN CITED BEFORE ME. 12 . IN VIEW O F THE ABOVE, THE GRIEVANCE OF THE ASSESSEE IS FOUND TO BE JUSTIFIED. IT IS ACCEPTED AS SUCH. THE JEWELLERY FOUND IN THE SEARCH ITA NO.581/LKW/2018 PAGE 6 OF 6 UNDISPUTEDLY BEING WITHIN THE PERMISSIBLE LIMIT AS PRESCRIBED BY THE C.B.D.T, THE SOURCE THEREOF IS NOT REQUIRED TO BE ENQUIRED INTO AND THE ADDITION MADE IS THUS UNSUSTAINABLE IN LAW. IT IS HEREBY DELETED. 13 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 / 02 /201 9 . SD/ - [ A. D. JAIN ] VICE PRESIDENT DATED: 22 ND FEBRUARY , 201 9 JJ: 1902 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR BY ORDER ASSISTANT REGISTRAR