RAKESH GARG, GHAZIABAD V. DCIT, CENTRAL CIRCLE- 27, NEW DELHI

ITA 6211/DEL/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2842 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 06-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PARAMITA TRIPATHY
• Assessee Lawyers: RAJ KUMAR CA SH SUMIT GOEL
• Keywords: Salary income; Source of fund; Reasonable cause
• Section: 132

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F : NEW DELHI BEFORE SHRI SUDHANSHU SRIVASTAVA , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 6211 /DEL/201 7 A Y 2013 - 14 RAKESH GARG II - F, 114, NEHRU NAGAR, GHAZIABAD U. P. - 201002 VS DCIT CC - 27, NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJ KUMAR , CA SH. SUMIT GOEL, CA RESPONDENT BY: SMT. PARAMITA TRIPATHY CIT DR DATE OF HEARING 15 /01/2018 DATE OF PRONOUNCEMENT 2 1 /03/2018 O R D E R PER PRASHANT MAHARISHI, ACCOUNTANT MEMBER 1 . THIS APPEAL IS FILED BY ASSESSEE , AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS ) - 29, NEW DELHI D ATED 3 1 / 0 8 / 201 7 WHEREIN THE ADDITION MADE BY THE LD. ASSESSING OFFICER VIDE ORDER U/S 143 (3) OF THE ACT DATED 29.03.2015 HAS BEEN CONFIRMED. 2 . FOLLOWING GROUNDS OF APPEAL ARE RAISED : I . THAT LD. CIT (A) ERRED IN PASSING EX - PARTE ORDER ON THE GROUND OF NON 2 APPEARANCE SINCE NONE OF THE NOTICES HAVE BEEN ISSUED AT ANY OF FIRST TWO SPECIFIC ADDRESSES AS GIVEN IN COLUMN 12 OF FORM - 35 AND, NONE OF THE NOTICES HAVE BEEN RECEIVED/IN THE KNOWLEDGE OF THE ASSESSEE, HENCE THE ASSESSEE WAS PREVENTED BY A REASONABLE CAUSE FROM APPEARING ON THE DATES FIXED FOR HEARING. II . THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS NO JUSTIFICATION IN NOT ACCEPTING THE SOURCE FOR ACQUIRING JEWELLERY OF RS.70,00,000/ - , WHILE, THE SAME SOURCE STANDS ACCEPTED FOR BALANCE JEWELLERY OF RS.78,96,981/ - . III. WITHOU T PREJUDICE, THE FINDINGS IN RESPECT OF ADDITION OF RS.70,00,000/ - ARE SELF CONTRADICTORY AS MUCH AS, ON ONE HAND THE A.O. HELD THAT IT IS NOT POSSIBLE TO PURCHASE THIS JEWELLERY IN A.Y.2013 - 14, ON THE OTHER HAND, SHE HAS MADE ADDITION OF RS.70,00,000/ - F OR SAID JEWELLERY IN A.Y.2013 - 14 ITSELF. IV. THAT UNDER THE FACTS AND CIRCUMSTANCES, ADDITION OF RS. 15,903/ - FOR SPECIAL BENCH INTEREST IS UNWARRANTED. 3 . THE BRIEF FACTS OF THE CASE IS THAT SEARCH U/S 132 OF THE ACT WAS CARRIED OUT ON 23.08.2012 IN LAND CRAFT GROUP OF CASES. THE ASSESSEE IS ONE OF THE MEMBER OF THAT GROUP. ASSESSEE IS DRIVING INCOME FROM SALARY , CAPITAL GAINS AND INCOME FROM OTHER SOURCES. DURING THE SEARCH JEWELERY WORTH RS.2,02,96,981/ - WAS FOUND AND OUT OF THAT JEWELERY OF RS. 96 , 25,178/ - WAS SEIZED. THE ASSESSEE EXPLAINED THAT IF THE CBDT INSTRUCTION NO. 1916 DATED 11.05.94 IS APPLIED THAN TOTAL 1800 GRM CAN BE EXPLAINED. FOR THIS ASSESSEE SUBMITTED THAT FROM RAK ESH GARG ASSESSEE WAS HAVING THE CASH DISCLOSED OF RS. 11,56,01,765/ - WHICH IS SURRENDERED U/S 132 (4) OF THE ACT MAY BE GRANTED AS APPLICATION OF THAT INCOME. THE LD. ASSESSING OFFICER AFTER CONSIDERING THE ARGUMENTS OF THE ASSESSEE HELD THAT NO PERSON UND ER NORMAL CIRCUMSTANCES IS EXPECTED TO PURCHASE SUCH A HUGE JEWELERY. 3 HE THEREFORE, CONFIRMED THE ADDITION OF RS. 70,00,000/ - OUT OF THE ABOVE AMOUNT. 4 . THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT (A). THE LD. CIT (A) CONFIRMED THE ABOVE ADDITION HO LDING THAT SINCE SOURCE OF INVESTMENT IN THE EXCESS JEWELLERY FOUND REMAINED UN - EXPLAINED , THEREFORE, THE ADDITION IS MADE CORRECTLY. THEREFORE, THE ASSESSEE IS IN APPEAL BEFORE US. 5 . THE LD. AR SUBMITTED THAT LAND CRAFT HAS SURRENDERED CASH OF RS. 11.16 CR ORES U/S 132 (4) WHICH IS ACCEPTED. FURTHER OUT OF THIS CASH OF RS. 9.27 CRORES WAS AVAILABLE WITH THE ASSESSEE AND OUT OF THIS THE ASSESSEE HAS UTILIZED RS. 1,48,96,981/ - FOR ACQUIRING THE JEWELRY OF 4965.660 GMS. T HIS CASH WAS RETURNED BACK BY THE ASSESSEE TO LANDCRAFT IN FOUR INSTALLMENTS. THESE TRANSACTIONS ARE ACCEPTED BY REVENUE. HE SUBMITTED THAT THE ASSESSEE HAS ALSO RETURNED THE BALANCE CASH TO THE LAND CRAFT AND THE ASSESSING OFFICER HAS NOT DISPUTED THE AVA ILABILITY OF CASH WITH THE ASSESSEE. IN THE END HE SUBMITTED THAT WHEN THE SOURCE HAS NOT BEEN DOUBTED THE JEWELRY FOUND , IS AN APPLICATION OF THAT SOURCE THE ADDITION CANNOT BE MADE. HE SUBMITTED THAT OUT OF THE TOTAL ADDITION OF TOTAL JEWELERY OF RS. 14 896981/ - , T HE ASSESSING OFFICER HAS ACCEPTED THE SOURCE WITH RESPECT TO RS. 78,96,981/ - AND BELIEVE D IT TO BE EXPLAINED BUT HE DID NOT BELIEVE THE BALANCE OF RS. 70,00,000/ - WHICH HAS THE SAME 4 SOURCE. IN VIEW OF THIS HE SUBMITTED THAT THERE IS NO BASIS WI TH THE ASSESSING OFFICER FOR MAKING THIS ADDITION. HE FURTHER STATED THAT THE LD. CIT (A) HAS WITHOUT GIVING ANY REASON CONFIRMED THE ADDITION. 6 . THE LD. DR VEHEMENTLY RELIED ON THE ORDER OF THE LD. ASSESSING OFFICER AND CIT (APPEALS). 7 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE FACT SHOWS THAT DURING THE COURSE OF SEARCH 6765.660 GMS OF JEWELERY WAS FOUND FROM THE VARIOUS LOCKERS AND HOME OF THE ASSESSEE. THE LD. ASSESSING OFFICER GRANTED THE DEDUCTIONS OF 1800 GMS AS PER CBDT INSTRUCTION NO. 1916 DATED 11.05.1994. FOR THE BALANCE 4965.660 GMS THE LD. ASSESSING OFFICER PARTIALLY ACCEPTED THE EXPLANATION OF THE ASSEESEE THAT CASH SURRENDERED BY LAND CRAFT DEVELOPERS PRIVATE LTD., WAS AVAILABLE WITH THE ASSESSEE AND THEREFORE OUT OF RS. 1,48,96,981/ - THE ADDITION OF ONLY RS.70,00,000/ - WAS MADE. THE LD. ASSESSING OFFICER BELIEVE D THAT NO PERSON UNDER NORMAL CIRCUMSTANCES WILL PURCHASE SUCH HUGE JEWERLLERY DURING ONE YEAR. THEREFORE, ADDITION HAS BEEN MADE BY THE ASSESSING OFF ICER ONLY ON THE BASIS OF THE PRESUMPTION THAT NORMALLY NO PERSON BUYS SUCH JEWELLERY. HOWEVER, THE ASSESSING OFFICER HAS ACCEPTED THE BALANCE OUT OF RS. 1,48,96,981/ - AS EXPLAINED JEWERLERY CONSIDERING AVAILABILITY OF THE FUNDS ON THE SAME PRINCIP LE HOLDI NG THAT CASH WAS AVAILABLE WITH THE ASSESSEE OF RS. 9.66 CRORES. IN THE PRESENT CASE SOURCE OF FUND IS MUCH MORE THAN AMOUNT OF 5 INVESTMENT IN PURCHASE OF JEWELERY , W E DO NOT FIND ANY JUSTIFICATION FOR UPHOLDING ADDITION PARTIALLY WHEN PART OF THE JEWELERY FOUND IS ACCEPTED BY THE ASSESSING OFFICER. FURTHERMORE THE LD. ASSESSING OFFICER ALSO HAS NOT DISPUTED THE TRANSACTION MADE BETWEEN THE ASSESSEE AND THE LAND CRAFT DEVELOPERS PRIVATE LTD., THEN THE ADDITION SUSTAINED LD. CIT (APPEALS) OF RS. 70,00,000/ - IS INCORRECT. 8 . IN VIEW OF THIS WE REVERSE THE FINDING OF THE LD. CIT (APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 70,00,000/ - ON ACCOUNT OF UNEXPLAINED JEWELERY. 9 . IN THE RESULT GROUND NO. 3 OF THE APPEAL IS ALLOWED. NO OTHER GROUNDS WERE PRESSED AND HENCE SAME WERE DISMISSED. 10 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED . 11 . ORDER PRONOUNCED IN THE OPEN COURT ON 2 1 .03.2018 . S D / - S D / - ( SUDHANSHU SRIVASTAVA ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 1 /03/2018 *NEHA* COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 6 1. DRAFT DICTATED ON 21 .0 3 .2018 PS 2. DRAFT PLACED BEFORE AUTHOR 21 .0 3 .2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 2 1 . 0 3 . 2 0 1 8 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 2 1 . 0 3 . 2 0 1 8 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 2 1 . 0 3 . 2 0 1 8 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 1 . 0 3 . 2 0 1 8 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.