SANJAY DANGI, MUMBAI V. DCIT CEN CIR 22 & 30, MUMBAI

ITA 6908/MUM/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4968 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 13-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Valuation report; Set aside
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO. 6908/MUM/2014 ASSESSMENT YEAR : 2011-12 SHRI SANJAY DANGI, 61, 6 TH FLOOR, TWINSTAR VENUS CO., OP.HSG.SOC. LTD., CUFFEE PARADE, COLABA, MUMBAI [PAN : AHSPD6986H] VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-22 & 30, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT B Y : SHRI N.R. SURESH , AR RESPONDENT B Y : SHRI R. MANJUNATHA SWAMY , CIT - DR DATE OF HEARING : 26 - 06 - 201 9 DATE OF PRONOUNCEMENT : 14 - 0 8 - 201 9 O R D E R PER RAJESH KUMAR, A.M: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-39 , MUMBAI, DATED 05-08-2014. 2. THE ONLY ISSUE RAISED BY ASSESSEE IN VARIOUS GRO UNDS OF APPEAL, IS AGAINST THE CONFIRMATION OF ADDITION OF RS.1,22,66,225/- BY THE CIT(A) AS MADE BY THE ASSES SING OFFICER (AO) TOWARDS UN-DISCLOSED JEWELLERY DECLARE D BY THE ASSESSEE DURING THE SEARCH PROCEEDINGS U/S 132 OF THE ACT. ITA NO. 6908/MUM/2014 : 2 : 3. THE FACTS IN BRIEF ARE THAT A SEARCH OPERATION U /S.132(1) OF THE INCOME TAX ACT (ACT) WAS CONDUCTED ON 03-12- 2010. ASSESSEE FILED THE ORIGINAL RETURN OF INCOME ON 30- 09-2011 DECLARING TOTAL INCOME AT RS.27,73,910/- WHICH WAS PROCESSED U/S.143(1) OF THE ACT. THEREAFTER, NOTICE U/S.153A OF THE ACT WAS ISSUED TO THE ASSESSEE TO FILE RETURN OF INCOME . DURING THE COURSE OF ASSESSMENT PROCEEDINGS AO NOTICED THAT , CERTAIN UNDISCLOSED JEWELLERY FOUND DURING THE COURSE OF SE ARCH ACTION AND OFFERED AS INCOME DURING SEARCH , WAS NOT O FFERED TO TAX IN THE RETURN FILED PURSUANT TO NOTICE U/S.153A OF THE ACT AND ACCORDINGLY, AO ISSUED A SHOW CAUSE NOTICE DT.07-03 -2013, REFERRING TO THE STATEMENT RECORDED U/S.132(4) OF THE ACT. THE AO OBSERVED THAT WHILE ANSWERING QUESTION NO.5, - THE ASSESSEE HAVE ADMITTED THAT ONE DIAMOND NECKLACE HAVING GROSS WEIGHT 95.200 GMS AND NET WEIGHT OF 82.500 GM S VALUED AT RS.1,22,66,225/- WAS PURCHASED DURING THE YEAR, OUT OF UNACCOUNTED CASH WHICH WAS OFFERED THE SAME FOR TAX ATION DURING SEARCH. HOWEVER, IN THE RETURN OF INCOME, TH E ASSESSEE HAS NOT DISCLOSED THE SAME AS INCOME. THE ASSESSEE REPLIED THE SAID SHOW CAUSE BY SUBMITTING THAT THE DIAMOND NEC KLACE WAS PURCHASED ON 07-04-2008 FROM M/S.RONAK GEMS PVT . LTD., AND PAYMENT FOR THE SAME WAS MADE FROM IDBI B ANK VIDE CHEQUE DT.07-04-2008 OF RS. 35,38,267/-. IT WAS ALSO STATED THAT DUE TO TREMENDOUS PRESSURE DURING THE C OURSE OF SEARCH, THE ASSESSEE COULD NOT MATCH THIS BILL WITH THE JEWELLERY INVENTORIZED. THE ASSESSEE ALSO MADE A WI THOUT PREJUDICE CLAIM THAT IN CASE ADDITION IS MADE, THE SAME CAN BE ONLY RS.90,00,000/- AND NOT AT RS.1,22,66,225/-. HO WEVER, THE REPLY OF ASSESSEE DID NOT FIND FAVOUR OF AO AND HE ADDED ITA NO. 6908/MUM/2014 : 3 : RS. 1,22,66,225/- BY HOLDING THAT IT IS NOTHING BUT AN AFTERTHOUGHT AND THUS, TREATED THE SAME AS UN-DISC LOSED INCOME BY FRAMING ASSESSMENT U/S.143(3) OF THE AC T DT.18- 03-2013. 4. IN THE APPELLATE PROCEEDINGS, LD. CIT(A) CONFIRM ED THE ADDITION, BY HOLDING THAT ASSESSEE HIMSELF HAD ADMI TTED THAT THE SAID DIAMOND NECKLACE WAS PURCHASED BY ASSESSEE IN THE CURRENT YEAR OUT OF UN-ACCOUNTED INCOME AND OFFERED THE SAME TO TAX HOWEVER THE SAME WAS NOT DECLARED IN THE RET URN FILED IN RESPONSE TO NOTICE U/S.153A OF THE ACT. THE CIT(A) ALSO NOTED THAT THE APPELLANT PRODUCED A BILL DT.03-04-2008 BE FORE THE AO EVIDENCING THE PURCHASE FROM M/S.RONAK GEMS PVT. LTD., SHOWING PURCHASE OF DIAMOND JEWELLERY FOR RS.35,33, 867/- BY MRS. ALPANA DANGI AND IT WAS FURTHER STATED THAT PA YMENT FOR THE SAME HAD BEEN MADE THROUGH CHEQUE OF IDBI BANK IN THE NAME OF MRS.ALPANA DANGI. ASSESSEE ALSO PRODUCED A VALUATION REPORT FROM MAHAVIR LODHA DT.04-04-2011,W HEREIN A NECKLACE WEIGHING 95.200 GRAMS, WITH NET WEIGHT OF 84.766 GRAMS HAD BEEN VALUED AT RS.98,16,744/-. THE CIT(A ) ALSO NOTED THAT ASSESSEE CONTENDED BEFORE THE AO THAT TH E SAID ASSET WAS REFLECTED IN THE WEALTH TAX RETURN OF MRS .ALPANA DANGI AND IN THE REMAND PROCEEDINGS BEFORE THE AO, IT WAS REPORTED THAT ON A COMPARISON BETWEEN THE BILL ISSU ED BY M/S.RONAK GEMS P. LTD., AND THE VALUATION REPORT OF THE DEPARTMENTAL VALUER DT.04-12-2010, THERE WERE DIFFE RENCES NOTICED. THE AO STATED THAT THOUGH THE TOTAL NUMBER OF DIAMONDS AS PER THE BILL AND THE VALUATION REPORT D ID TALLY (134 SMALL DIAMONDS + 27 BIG DIAMONDS) AND THOUGH T HE GROSS ITA NO. 6908/MUM/2014 : 4 : WEIGHT TALLY AT 95.200 GRAMS, THERE IS DIFFERENCE I N WEIGHT OF THE BIG DIAMONDS AND THE SMALL DIAMONDS. THE ASSESS EE STATED THAT THERE IS NO DIFFERENCE IN THE GROSS WEI GHT WITH BIG DIAMONDS AND SMALL DIAMONDS, BOTH ARE TALLIED AND A O SHOULD HAVE ACCEPTED THE EXPLANATION OF ASSESSEE. IT WAS ALSO STATED BEFORE THE CIT(A) THAT THE STATEMENT RECORDED U/S.1 32(4) OF THE ACT HAS NO EVIDENTIARY VALUE. HOWEVER, LD. CIT(A) HELD THAT ASSESSEE HAS FAILED TO DEMONSTRATE THAT EARLIER STA TEMENT WAS WRONG AND WAS GIVEN UNDER PRESSURE. LD. CIT(A) REL IED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF PU LLANGODE RUBBER PRODUCE CO. LTD., VS. STATE OF KERALA (1993) [91 ITR 18], WHEREIN IT WAS HELD THAT ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE AND ONUS LIES ON THE AS SESSEE TO ESTABLISH THAT THE STATEMENT MADE AT THE TIME OF SE ARCH WAS WRONG. THE LD CIT(A) HELD THAT THE ASSESSEE HAD FAILED TO DEMONSTRATE THAT THE STATEMENT MADE WAS WRONG AND F INALLY DISMISSED THE APPEAL OF ASSESSEE. 5. LD.AR VEHEMENTLY SUBMITTED BEFORE US THAT THE DISCLOSURE WAS MADE OF THE SAID DIAMOND JEWELLERY I N THE STATEMENT U/S.132(4) OF THE ACT, RECORDED DURING T HE SEARCH. HOWEVER, AT THE TIME OF FILING OF RETURN, WHEN THE ASSESSEE FOUND THAT SAME WAS DULY DISCLOSED IN THE WEALTH T AX RETURN OF HIS WIFE AND PAYMENT WAS MADE FROM THE BANK ACCO UNT OF THE ASSESSEE THAT WAS NOT OFFERED TO TAX IN THE RET URN FILED IN RESPONSE TO NOTICE U/S.153A OF THE ACT. LD.AR SUBM ITTED THAT THE SAID STATEMENT HAS NO EVIDENTIARY VALUE AS THE DISCREPANCY WAS DULY EXPLAINED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS IN THE REMAND PRO CEEDINGS. ITA NO. 6908/MUM/2014 : 5 : THE LD AR CONTENDED THAT EVEN THE AO ADMITTED THAT NUMBER OF BIG AND SMALL DIAMONDS WERE TALLY HOWEVER THERE WAS SOME DIFFERENCE IN THE WEIGHTS WHICH IS BOUND TO BE THER E AS THE DEPARTMENTAL VALUER VALUED THE JEWELLARY ON ESTIMAT ION BASIS.THE LD AR THEREFORE SUBMITTED THAT THE UNEX PLAINED DIAMOND JEWELLARY WAS FULLY EXPLAINED DURING THE AS SESSMENT PROCEEDINGS AND THEREFORE THERE IS NO QUESTION OF O FFERING THE SAME FOR TAXATION.IN DEFENSE OF HIS ARGUMENT, LD. A R RELIED ON A SERIES OF DECISIONS, AS UNDER: 1. INSTRUCTION F NO.286/2/2003IT (INV-II) CONFESSION O F ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATIONS; 2. COMMISSIONER OF INCOME TAX SALEM VS. S. KHADER KHAN SON (2012) 25 TAXMAN.COM 413 (SUPREME COURT); 3. COMMISSIONER OF INCOME TAX SALEM VS. S. KHADER KHAN SON (2008) 214 CTR 589 (MADRAS); 4. COMMISSIONER OF INCOME TAX, TRICHY VS. P. BALASUBRA MANIAN (2013) 354 ITR 116 (MADRAS); 5. PAUL MATHEW & SONS VS. COMMISSIONER OF INCOME TAX ( 2003) 129 TAXMANN 416 (KERALA); 6. PULLANGODE RUBBER PRODUCTS CO LIMITED VS. STATE OF KERALA (1973) 91 ITR 18; 7. ASSISTANT COMMISSIONER OF INCOME TAX VS. SAMAR KUMA R SEN (KOLKATTA TRIBUNAL) (ITA NO.952/KOL/2013) JUL 2016; 8. P R METRANI VS. COMMISSIONER OF INCOME TAX, BANGALO RE SUPREME COURT OF INDIA 157 TAXMANN 325; 9. M NARAYANAN & BROS VS. ASSISTANT COMMISSIONER OF IN COME TAX, SPECIAL INVESTIGATION CIRCLE SALEM 13 TAXMAN N.COM 49; ITA NO. 6908/MUM/2014 : 6 : 5.1. FINALLY LD.AR PRAYED THAT THE ORDER OF CIT(A) MAY BE SET ASIDE AND AO IS DIRECTED TO DELETE THE ADDITION AS THE DISCLOSURE IN THE SEARCH HAS BEEN DULY EXPLAINED WI TH REFERENCE TO BILLS AND VOUCHERS. 6. LD. DR HEAVILY RELIED ON THE ORDERS OF THE AUTHO RITIES BELOW AND SUBMITTED THAT THE DISCLOSURE WAS MADE BY THE ASSESSEE DURING THE COURSE OF SEARCH WHILE RECORDIN G STATEMENT U/S.132(4) OF THE ACT. LD. DR ALSO SUBMI TTED THAT THE NECKLACE WAS FOUND DURING THE COURSE OF SEARCH AND THE ASSESSEE ADMITTED THAT IT WAS BOUGHT DURING THE YEA R OUT OF UNDISCLOSED INCOME, HOWEVER, LATER ON ASSESSEE STAT ED THAT THE SAME WAS BOUGHT OUT OF THE DISCLOSED SOURCES AND TR IED TO EXPLAIN THE SAME WITH THE BILLS ISSUED BY THE SELLE RS AND PAYMENT DETAILS. THEREFORE, THE SAME IS AN AFTER TH OUGHT AND CANNOT BE ACCEPTED. HENCE, THE ORDER OF CIT(A) NEED S TO BE AFFIRMED. 7. AFTER HEARING BOTH THE PARTIES AND PERUSING MATE RIAL ON RECORD, WE OBSERVE THAT THE NECKLACE WAS FOUND DURI NG THE COURSE OF SEARCH U/S.132(4) OF THE ACT, WHICH WAS O FFERED AS UNDISCLOSED INCOME IN THE STATEMENT RECORDED U/S.13 2(4) OF THE ACT. HOWEVER, AT THE TIME OF FILING THE RETURNS IN RESPONSE TO NOTICE U/S.153A OF THE ACT , THE ASSESSEE DID NO T OFFER THE SAME TO TAX ON THE GROUND THAT THE SAID STATEMENT U /S.132(4) OF THE ACT WAS GIVEN UNDER TREMENDOUS PRESSURE AND MENTAL STRAIN WAS WRONG. THE SAID DIAMOND JEWELLERY STOOD DISCLOSED IN THE RETURN OF WEALTH OF MRS. ALPANA DANGI WIFE O F THE ASSESSEE. THE ASSESSEE ALSO PRODUCED SALE BILLS OF THE SELLER ALONG WITH PAYMENT DETAILS. THUS, THE ASSESSEE HAS COMPLETELY ITA NO. 6908/MUM/2014 : 7 : EXPLAINED THE PURCHASE OF JEWELLERY WITH REFERENCE TO BILLS, VOUCHERS AND PAYMENT DETAILS. UNDER THESE CIRCUMST ANCES, WE ARE NOT IN CONCLUSION WITH THE LD.CIT(A) THAT TH E NON DISCLOSURE WAS AN AFTER THOUGHT. IN OUR OPINION WHE RE ASSESSEE HAS OFFERED THE INCOME IN THE STATEMENT RE CORDED U/S.132(4) OF THE ACT BUT WHEN THE SAME IS EXPLAIN ED WITH REFERENCE PURCHASE BILLS AND PAYMENT DETAILS THEN T HE SAME CANNOT BE TREATED AS UN-DISCLOSED INCOME. THE CAS E OF ASSESSEE IS ALSO SQUARELY COVERED BY THE DECISION O F CIT VS. S.KHADER KHAN SON [300 ITR 157] (MADRAS), WHEREIN I T HAS BEEN HELD THAT THE STATEMENT HAS NO EVIDENTIARY VAL UE UNLESS CORROBORATING EVIDENCES ARE THERE TO SUPPORT THE SA ME. EVEN THE CASE OF ASSESSEE IS FULLY SUPPORTED BY THE INST RUCTION F.NO.286/2/2003IT(INV-II) ISSUED BY CBDT WHICH STA TES NO C ONFESSION OF ADDITIONAL INCOME DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATIONS TO BE TAKEN BY THE OFFICERS WITHOUT CREDIBLE EVIDENCES. IN VIEW OF ABOVE, THE O RDER PASSED BY CIT(A) IS WRONG AND CAN NOT BE SUSTAINED. ACCOR DINGLY WE IS SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION SO MADE. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 14.08.2019 SD/- SD/- ( RAM LAL NEGI ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /MUMBAI; /DATED : 14.08.2019 TNMM ITA NO. 6908/MUM/2014 : 8 : / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A), MUMBAI 4. / CIT, MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, //TRUE COPY// / (DY./ASST. REGISTRAR) , / ITAT, MUMBAI