The DCIT, Central Circle-3,, Baroda V. Shri Rakesh S. Agrawal, Baroda

ITA 718/AHD/2018

AI Insights

The case involves multiple appeals by the Deputy Commissioner of Income-tax, Central Circle-3, Vadodara against various assessees including Shri Rakesh S. Agrawal and his family members, concerning assessments made following a search operation under section 132 of the Income Tax Act, 1961. The search revealed substantial jewelry and artworks, leading to additions in the assessees' incomes for unexplained investments. The CIT(A) largely deleted these additions, which the Revenue challenged in the Tribunal. The Tribunal's decision favored the assessees, aligning with the CIT(A)'s findings that the jewelry and artworks were either disclosed in wealth tax returns or could not be conclusively deemed unexplained investments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133681 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-08-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 21-03-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Unexplained investment; Sale consideration of property below Jantri Value; Gift; Business income; Cost of acquisition; Fair market value; Valuation report
• Section: 147; 68; 69; 132; 69C; 139; 153A; 69B; 69A; 20

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘बी’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFOREMRS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No. 718/Ahd/2018 नधा रणवष /Assessment Year: 2015-16 Deputy Commissioner of Income-tax, Central Circle-3, Vadodara Vs. Shri Rakesh S. Agrawal, Bayer ABS Ltd., 8 th Floor, ABS Tower, O.P. Road, Vadodara PAN : AAQPA 3487 P ITA No. 720/Ahd/2018 नधा रणवष /Assessment Year: 2015-16 Deputy Commissioner of Income-tax, Central Circle-3, Vadodara Vs. Smt. Madhavi V. Agrawal, 8 th Floor, ABS Tower, Old Padra Road, Vadodara PAN : AFZPK 1188 D ITA No. 726/Ahd/2018 नधा रणवष /Assessment Year: 2015-16 Deputy Commissioner of Income-tax, Central Circle-3, Vadodara Vs. Smt. Umadevi R. Agrawal, 61, Alkapuri Society, R.C. Dutt Road, Alkapuri, Vadodara PAN : ABLPA 2033 P ITA No. 728/Ahd/2018 नधा रणवष /Assessment Year: 2015-16 Deputy Commissioner of Income-tax, Central Circle-3, Vadodara Vs. Uttarayan Art Foundation, 61, Alkapuri Society, R.C. Dutt Road, Alkapuri, Vadodara PAN : AAATU 2081 R अपीलाथ / (Appellant) यथ / (Respondent) Assessee(s) by : Shri Milin Mehta, AR Revenue by : Shri Sudhendu Das, CIT-DR 2 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 स ु नवाई क तार ख/Date of Hearing : 03.08.2023 घोषणा क तार ख /Date of Pronouncement: 31.10.2023 आदेश/O R D E R PER BENCH: All these appeals filed by the Department arise out of orders passed by the learned Commissioner of Income-tax (Appeals)-12, Ahmedabad [hereinafter referred to as “CIT(A)” for short] against different assessees, but all against assessments framed consequent to search conducted on the assessee group u/s 132 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short]. 2. It was common ground that the issues involved in all these appeals were identical and interrelated, arising in the backdrop of the same facts, therefore all these appeals were taken up together for hearing and are being disposed of by this common order for the sake of convenience. 3. Briefly stated, search action u/s 132 of the Act was undertaken in the case of Shri Rakesh Agrawal Group on 12.02.2015. The search action included numerous residential and business premises of the assessee-group, including premises of the main assessee Shri Rakesh Agrawal, his family members and employees of the company M/s. Shiva Pharmachem Pvt. Ltd. During the course of search action, valuable items, namely jewelry, sculptures, paintings, artworks etc. were found. After seeking explanation from the assessee(s) regarding the source of the same and not being convinced with it, addition on account of unexplained investment in jewelry and artworks was made in the hands of the assessees before us. In the case of Shri Rakesh Agarwal, addition was also made on account of credits in foreign bank account with Merrill Lynch Bank. The details of the addition 3 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 made on account of the above in the hands of the different assessees are as under:- Name of the assessee Addition made on account of unexplained investment in Jewelry (in Rs.) Carry forward of business loss (in Rs.) Painting, Sculpture & artworks (in Rs.) Credit in foreign bank account (in Rs.) Shri Rakesh S. Agrawal 11,39,28,300 2,19,70,774 59,61,56,500 1,38,95,552 Smt. Madhavi V. Agrawal 1,76,15,680 - - - Smt. Umadevi R. Agrawal 14,82,488+ 7,36,19,716+ 8,96,000 18,25,000 - Uttarayan Art Foundation - - 27,31,71,900 4. The matter was carried in appeal before the ld. CIT(A) who deleted majority of the additions made; and, aggrieved by which the Revenue has come up in appeal before us. 5. We shall be adjudicating the appeals before us issue-wise since the additions arise on account of common search action undertaken in the different premises of the Rakesh Agarwal group including different lockers in banks, revealing jewelry and artworks which the assessee claimed belonged to different family members of the group/ Institutions and the Revenue alleges that the assessees were unable to explain the source of investment in the same. The Ld.CIT(A) has adjudicated the issues considering the explanation of the assessees both consolidately as a family and even individually for each assessee and therefore, these issues, in our considered opinion, need to be dealt with in a consolidated manner. 4 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 7. We shall first deal with the issue relating to addition made in the hands of the assesses before us on account of unexplained investment in jewellery. Issue No. 1 – Unexplained jewelry 8. Briefly stated, during search action on the Rakesh Agarwal group, the jewelry found from the residence and various lockers amounted in all to Rs.32,81,10,985/- as valued by the Registered Valuer of the Department and the details of the persons or places from where the jewelry was found is tabulated at page No. 3 of the assessment order as under:- Premises / Person Jewelry Found Residence at Bungalow Opp. Sairuchi Farm, Off. Sevasi Road, Vill. Khanpur, Baroda 11,88,02,038 Locker No. 1483, Bank of Baroda, Sayajigunj Branch, Baroda 2,04,77,303 Locker No. 907, Bank of Baroda, Alkapuri Branch, Baroda 7,51,02,204 Locker No.314, with HDFC, Productivity Road, Baroda 1,17,77,660 Locker No. 157 with R.B.S. Alkapuri, Baroda 1,34,14,920 Locker No. 430 with R.B.S. Alkapuri, Baroda 8,42,03,425 Locker No. 1091 with Bank of Baroda, Alkapuri Branch, Baroda 26,93,200 Chirag Shivabhai Patel, 6A, Shastri Nagar, Nizampura, Baroda 6,54,395 Locker No. 297 with IDBI Bank Race Course Branch, Baroda 9,85,840 Total 32,81,10,985 9. Shri Rakesh Agrawal claimed ownership of this gold and diamond jewelry of Rs.32.81 crores found, amongst the following; • family members including Shri Rakesh Agrawal, his wife Smt. Umadevi Agrawal, his two children namely Rahul and Vishal Agrawal and wife of Rahul and Vishal Agrawal namely Madhavi and Ruchika Agrawal. • Some jewellery was also attributed as owned by the mother and father of Shri Rakesh Agrawal i.e. Smt. Geetadevi Agrawal &Shri Shivbhagwan Agrawal. 5 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 • Further, the ownership claim of the jewelry was also made in the group company namely M/s. Tash Investment Pvt. Ltd. and M/s. Geetganga Investment Pvt. Ltd. 10. The total gross weight of jewellery found was 18,086 gms out of which almost all of gross weight 13496 gms was explained as owned and disclosed in the Wealth Tax Returns of assessees right upto the immediately preceding year i.e. AY 2015-16 based on valuation as per report of Registered Valuer of the group. The remaining was surrendered to tax in hands of Sh.Rakesh Agarwal as undisclosed investment. 11. The AO did not agree with the same finding that: • not all items disclosed in the wealth tax returns matched in weight description with that found during search. • That even vis a vis those which matched he found that in some cases their value determined by the Departmental Valuer was many more times declared by the assesses in their wealth tax return and accordingly held them to be different from that disclosed in the wealth tax returns. • He also held the jewellery in two lockers of Bank of Baroda were different from that disclosed in wealth tax returns ,since the last date of operation of the said two lockers was much prior to the date on which the Valuer of the assessee had allegedly physically verified them for valuation. Accordingly, he treated all the above unmatched and matched jewellery as unexplained in the hands of the different assesses. The matched jewelery treated as unexplained in the hands of assesses where disclosed in wealth tax returns and the unmatched jewellery in the hands of assessee 6 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 where found during search. The details relating to the quantum of jewellery added in the hands of each assessee and its bifurcation on the basis on which the addition was made is as under:- Name of assessee Total Addition on account of the jewellery Jewellery Matched with WTR Jewellery Umatched Shri Rakesh S. Agrawal 11,39,28,300/- Locker No.430 4,77,34,315 Locker No.907 14,82,488/- Locker No.314 29,53,820 23,52,422 Locker No.1483 1,01,84,130/- 5,30,40,537 Total 1,16,66,168/- Residence 4,92,211,125 Smt.Madhvi V. Agrawal 1,76,15,680/- Locker No.430 26,12,340/- Locker No.157 16,12,750 59,53,250 Total 1,01,78,300/- Residence 19,73,220/- Accepted as undisclosed Locker No.159 14,03,680/- Residence 40,60,440/- Smt.Umadevi R. Agrawal 14,82,488 Locker No.907 14,82,488 7,36,19,716/- L.No.907 Protective Addition 7,36,19,716 8,96,000/- L.No.430 8,96,000 12. Ld.CIT(A) however did not agree with the AO’s basis of making addition. He held that if the jewellery already declared in wealth tax returns matched in description and gross weight with that found during search and no other similar jewellery as disclosed in the wealth tax return was found during search, no adverse view could be taken against the assessee. As regards the jewelery found during search remaining unmatched he gave credit for the weight of unmatched jewelery disclosed in the wealth tax returns. The balance jewellery was confirmed as unexplained in the hands of different assesses. He rejected both the basis of the AO for making addition 7 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 of matched jewellery; of huge difference in valuation of jewellery by DVO as compared to that by the Registered Valuer of the assessee and the jewellery in two lockers found not to be operated during valuation ‘by Registered Valuer. Aggrieved by the same the department has come in appeal before us. 13. During the course of arguments made before us Ld.DR relied heavily on the order of the AO while the Ld.Counsel for the assessee relied on the order of the Ld.CIT(A). 14. We have heard both the parties and gone through the orders of the authorities below and also the documents referred to before us. On carefully going through the order of the Ld.CIT(A) we find that he has considered the aspect of jewellery found during search holistically, at the family level, noting certain facts relating to the same as under: 9.7 I have diligently perused the submission and the relevant Paper Book Vol-5 JWL on jewelry made on the Group. At the Group level out of total jewellery and ornaments found during the search of gross weight 18,085.700 gms comprising of gold weight 15,341.244 gms and diamond 2,532.950Ct., jewellery and ornaments of gross weight 9,397.650gms comprising of gold weight 8,016.330 gms and diamond 1,485.900 Ct. were matched in description and weight during the assessment proceedings (though rejected by the AO on account of his conclusion arising out of last operation of lockers in Bank of Baroda and huge difference in valuation of various items by the DVO as compare to earliervaluation of RV for the purpose of WT returns) leaving the total unmatched jewellery and ornaments of gross weight 8,688.050 gms consisting of gold weight 7,324.914 gms and diamond 1047.050 Ct. Further there is additional jewellery available as per the WT returns and valuations of the Group of gross weight 4,744.840 gms consisting of gold weighL 3387.497 gms and diamond 825.040 CL (This 3,387.497 gms of gold includes 2,271.147 gmsbelonging to Shri Rakesh Agrawal and 1,116.350 gms belonging to Smt. Madhavi Agarwal). The additional jewellery available as per to WT returns, shouldalsobegiven credit towards explaining the jewellery found during the search. Thus after giving credit of these unmatched but disclosed available jewellery, balance jewellery and ornaments required to be explained by the Group comes to gross weight 8 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 of 3,943.260 gms comprising of gold weight 3,937.147 gms and diamond 222.010 Ct. The jewellery and ornaments already admitted as unexplained and included in the IT return for A.Y.2015-16 pursuant to search of gross weight 2,026.810 gms (gold weight 2,201.528 gm and diamond 82.890 Ct.) valued at Rs.74,17,156/-in the hand of Shri Rakesh Agrawal. After a minor correction of (-) 9.200 gms (gold weight 61.189 gm less diamond 20.710 Ct.) in the case of Smt. Madhavi Agrawal, jewellery and ornaments of gross weight 1,925.60 gms comprising of gold weight 1,674.700 gm and diamond 159.830 Ct. remain to be explained in the hand of Smt. Ruchika Agrawal which will be separately dealt in the appeal order in the case of Smt.Ruchika Agrawal forA.Y.2015-16. 15. A perusal of the above reveals that the Ld.CIT(A) noted that out of jewellery found of 18,085.700 gms, most of it in weight was disclosed in wealth tax returns already filed by the assesses, being 15, 341.244 gms. The remaining he noted was either returned to tax as undisclosed in the hands of Rakesh Agarwal 2,026.810 gms, Madhavi Agarwal 1,925.60 gms and the balance to be explained in the hands of Ruchika Agarwal. These facts are not disputed by the Revenue. And have been demonstrated before us by way of letters filed during assessment proceedings to the above effect placed before us in voluminous paper books in the case of all the assesses. More significantly; • Working of jewellery declaration filed to the AO vide letter dated 30-04-2015, placed at P.B Page No.1-3,disclosing the above noted fact of most of the jewellery found during search being already disclosed in wealth tax returns and the balance being surrendered to tax. • The above declaration corroborated with Wealth tax returns filed to AO placed before us at P.B 15-57. 16. Besides, we have noted that the assessee filed details and evidences explaining that most of the jewellery found stood disclosed in wealth tax 9 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 returns. To this effect we have noted the following to be filed placed before us in paper book as under; 10 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 17. Taking note of all the above the Ld.CIT(A) held that as far as jewellery which matched in description and weight with wealth tax returns filed there was no question of treating them as undisclosed on any count whatsoever. He rejected the basis of difference in valuation of jewellery adopted by the 11 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 AO for treating such matched jewellery as undisclosed holding that as long jewellery matched in all respects , the jewellery found during search is that disclosed in wealth tax returns unless identical twin set of jewellery is found by the department . He considered it preposterous to treat matched jewellery as undisclosed . The valuation aspect was rejected by him noting that valuation of precious gems and stones is a matter of estimate of size, weight and quality and is not an exact science. His findings in this regard at para 9.2 - 9.4 of the order in the case of Madhavi Agarwal is as under: 9.2 Prima facie this over-sweeping conclusion of the AO cannot be held factually correct and legally tenable on the ground that if the jewellery already declared in the WT returns of various members of the family matched in description and gross weight (andeven net weight within practical limits of accuracy inestimation of weight of precious/semi precious stones studded in the ornaments) with therespective items of jewellery&ornaments found &inventorised on the date of search and no other similar/identical jewellery& ornaments discovered during the entire course of search conducted by the Department it will be preposterous on part of the Department to hold that the set of jewellery& ornaments found during search is different from the set of jewellery& ornaments declared in the WT returns and for that matter in the Valuation Report(s) of the Registered Valuer(s). Had there been twin or multiple sets of jewellery& ornaments of same descriptions and weight then how not even a single item of jewellery& ornaments was detected in duplicates/multiples? Having conducted the search in a case and covered multiple premises and numerous receptacles in the group cases, the convenience of balance has to be in favor of the person searched and any inference/conclusion against the person searched that nothing more has remained undiscovered by the Department. And in such a case any such presumption of separate sets of similar jewellery and ornaments as adopted by the AO should be based only on hard undisputed facts and not on mere surmises and conjectures. On the similar logic any jewellery& ornament only on the basis of its valuation by theDepartment’s Valuer on the date of search being significantly different (higher or lower) from the valuation by the Registered Valuer(s) of the appellant cannot be basis of concluding that there might be two sets of the jewellery& ornaments of same description and gross weight. 12 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 9.3 Valuation in case of precious gems and stones is a matter of estimate of size, height and quality and not an exact science and there may be tendency on part of the taxpayer to undervalue them for lower incidence of taxes. It is also possible specially in the case of significant size and high quality diamond and other precious stones/gems that if a piece of diamond is picked up raw at source then got cut and polished or even if a cut and polished diamond but acquired at source from grey market, the actual money invested would be much lower than the cost that would be normally charged by a jewellery showroom. In fact it is possible to come up with many more instances to explain the variation in valuation of previous gem/stone studded ornaments. 9.4 Thus I am of the considered view that jewellery& ornaments in the case of the Group should be tallied item to item on description and weight (found inventorised on date of search and valued by the Department’s Valuer with those disclosed by theappellant as per the valuation by his Registered Valuer and/or with bills/vouchers of the purchase if after the date of valuation by theRegistered Valuer) in the cases which do not fall under/covered by the CBDT’s Instruction No. 1916 of 1994 and the case laws related thereto rather than drawing adverse inferences as has been the case here. 18. With respect to the unmatched jewellery he held that it should be treated as belonging to the person who owns it up and not from whose possession it is found. And thereafter he also held that the unmatched jewellery found during search should be set off with the unmatched jewellery as per wealth tax return. His findings in this regard are at para 9.5 and 9.7 of the order in the case of Madhavi Agarwal as under: 9.5 For the purpose of addition on account of unexplained investment in unmatched/undisclosed jewellery, there can be two approaches. One approach can be that the claim of ownership by a person be accepted and the unmatched/undisclosed items out of those added to the total income of the claimant owner. Other approach can be that the unmatched / undisclosed item be treated as unexplained investment of theperson from whose possession the items were found. Two approaches should not be mixed and consistency of logic compromised. I am of the viewthatthefirst approach is appropriate. . . 13 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 9.7 I have diligently perused the submission and the relevant Paper Book Vol-5 JWL on jewelry made on the Group. At the Group level out of total jewellery and ornaments found during the search of gross weight 18,085.700 gms comprising of gold weight 15,341.244 gms and diamond 2,532.950Ct., jewellery and ornaments of gross weight 9,397.650gms comprising of gold weight 8,016.330 gms and diamond 1,485.900 Ct. were matched in description and weight during the assessment proceedings (though rejected by the AO on account of his conclusion arising out of last operation of lockers in Bank of Baroda and huge difference in valuation of various items by the DVO as compare to earliervaluation of RV for the purpose of WT returns) leaving the total unmatched jewellery and ornaments of gross weight 8,688.050 gms consisting of gold weight 7,324.914 gms and diamond 1047.050 Ct. Further there is additional jewellery available as per the WT returns and valuations of the Group of gross weight 4,744.840 gms consisting of gold weighL 3387.497 gms and diamond 825.040 CL (This 3,387.497 gms of gold includes 2,271.147 gmsbelonging to Shri Rakesh Agrawal and 1,116.350 gms belonging to Smt. Madhavi Agarwal). The additional jewellery available as per to WT returns, shouldalsobegiven credit towards explaining the jewellery found during the search. Thus after giving credit of these unmatched but disclosed available jewellery, balance jewellery and ornaments required to be explained by the Group comes to gross weight of 3,943.260 gms comprising of gold weight 3,937.147 gms and diamond 222.010 Ct. The jewellery and ornaments already admitted as unexplained and included in the IT return for A.Y.2015-16 pursuant to search of gross weight 2,026.810 gms (gold weight 2,201.528 gm and diamond 82.890 Ct.) valued at Rs.74,17,156/-in the hand of Shri Rakesh Agrawal. After a minor correction of (-) 9.200 gms (gold weight 61.189 gm less diamond 20.710 Ct.) in the case of Smt. Madhavi Agrawal, jewellery and ornaments of gross weight 1,925.60 gms comprising of gold weight 1,674.700 gm and diamond 159.830 Ct. remain to be explained in the hand of Smt. Ruchika Agrawal which will be separately dealt in the appeal order in the case of Smt.Ruchika Agrawal forA.Y.2015-16. 19. The Assessing Officer had held jewellery found in two lockers,i.e. locker No. 907 and 1091, to be unexplained for the reason that besides not matching with wealth tax returns , the investigation by the AO relating to the last date of operation of the two lockers revealed that they were last operated much before the date on which the Registered Valuer of the assessee had stated to have examined the jewelry contained therein and valued them in his valuation report furnished, i.e on 31.03.2012. As per the 14 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 Assessing Officer, the Registered Valuer Report submitted by the assessee and relied upon for the Wealth Tax Return purposes was dated 31.02.2012, but these lockers were found to be operated much before that date, i.e. in 2011 and 2007. Therefore, when this was put to one of the assessees in case of Umadevi Agrawal, she had stated that the report in 2012 had been prepared by the Registered Valuer on the basis of his report in 2009 when he had physically examined the jewelry and done the valuation and on the basis the assessee’s statement to him that nothing had been added to the jewelry since then. Therefore, the Assessing Officer took the date of valuation report of the valuer of the assessee to be 2009, but he gave a finding that locker no. 907 where majority of the jewelry of Rs.7.50 crores was found last operated on 14.11.2007 while locker No. 1091 was last operated on 08.02.2011. Accordingly, since locker no. 907 was not found to be operated in 2009 ,the Assessing Officer held that the jewelry reflected in the valuation report was not the same as that in the locker and treated the entire amount of jewelry contained in the said two lockers amounting to Rs.7,51,02,204/- and Rs.26,93,200/-, totaling in all to Rs.8,85,17,124/-, as undisclosed asset. 20. The Ld.CIT(A) has dismissed the case of the AO holding that if the locker was found to be last operated in 2011, then the jewellery found therein belonged to that year and could not be added as unexplained in the hands of the assessee for A.Y 2015-16, the impugned years before us. His findings in this regard are at para 9.6 of the order in the case of Madhavi Devi as under; 9.6 .Further in the context of the over sweeping conclusion arrived at by the AOover-emphasizing the last date of operation of lockers based on the Bank’s record and the huge difference in valuation of jewellery and ornaments by the Department’s Valuer on the date of search and valuation by the Registered Valuer for the purpose of Wealth-tax etc., it has to be noted that the jewellery 15 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 held unexplained out of the jewellery found should have been added in A.Y. (corresponding to the F.Y. in which the locker was last operated). These suchjewellery could not be added in the hands of Group in the AY 2015-16 and so also unmatched/unexplained jewellery should not be added in the hands of person in whose possession it was found disregarding the claimed ownership of family members and relatives. 21. He also noted that the conclusion of the jewellery in the aforestated lockers being unexplained was based on incorrect appreciation of facts.the fact noted by him from records before him was that locker no. 907 containing majority of the jewelry of Rs.7.5 cores was last operated on 08.02.2011 and, therefore, the contentions of the Assessing Officer that since this locker was last operated much before the date when the Registered Valuer had prepared his report in 2009 after physical verification of the contents was found incorrect.The certificate of the bank ,where these lockers were kept, that is of Bank of Baroda, reproduced at page no. 14 of the assessment order mentions the last date of operation of locker no. 907 as 08.02.2011 and that of locker No. 1091 as 14.11.2007. The Assessing Officer reproduced the said certificate in the order but thereafter he went on to reverse the dates of operation of both the lockers mentioning the last date of operation of locker No. 907 as that of locker No. 1091 given by the bank and vice versa. Even the attendance register of the Bank reproduced in the order mentions the said fact. The Ld.CIT(A) notes these facts at para 8.3 of his order in the case of Uma Devi Agarwal as under: “8.3 The assessment order has been carefully perused and the submissions of the appellant on these grounds/issues have been diligently considered. It is true and evident that the AO was misled by the forwarding letter of the BOB thai. Locker No.907 was last operated on 14/11/2007 (before the date of search) whereas as per the Bank's Daily Register of Renter's Attendance Sheet itself, this locker was earlier operated on 8/2/2011 also. The valuation report of the Government approved Registered Valuer (RV) being relied upon by the appellant and the family members can be possible (granting the jewellery & ornaments were last kept in the Locker No.907 after the valuation claimed).” 22. We see no reason to disagree with the ld. CIT(A). 16 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 The entire exercise of adjudicating the issue of unexplained jewellery can be divided into the following components – • Jewellery which matched with wealth tax returns in description & weight • Jewellery which did not match with wealth tax returns but was given credit by Ld.CIT(A) of weight of un matched jewellery of wealth tax return • Jewellery surrendered as unexplained by the assessee s themselves. 23. With respect to the findings of the Ld.CIT(A) on jewellery which matched in description and weight with the wealth tax returns, being 9,397.650 gms comprising of gold weight 8,016.330 gms and diamond 1,485.900 Ct., and no other jewellery of matching description being found during search, we are in complete agreement with him that that the only logical conclusion was that such jewelleries are to be taken as those disclosed in the Wealth Tax Returns only. We completely agree with ld. CIT(A) that it is preposterous to hold that such identical jewellery found during search as different from that disclosed in the Wealth Tax Returns when there is no jewellery found during search identical in all terms with that disclosed in the Wealth Tax Returns. The finding of the Ld.CIT(A) in this regard is very pertinent that having conducted search and covered multiple premises and numerous receptacles in the group cases, the convenience of balance has to be in favour of the person searched and the inference/ conclusion against the person searched is that nothing more has remained undiscovered by the Department. That any presumption of separate set of similar jewellery should be based on hard undisputed facts. 17 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 Having said so, we agree with the Ld.CIT(A), that any basis adopted by the AO for treating such matched jewellery as unexplained is unacceptable, be it higher valuation by DVO or non operation of locker in which it was kept. 24. Be that so we agree with the reasoning of the Ld.CIT(A) for rejecting higher valuation of jewellery by DVO as basis for treating matched jewellery as unexplained. Valuation is not an exact science, and in case of precious gems and stones, being a matter of estimate of size, weight and quality; there may be difference in valuation as submitted by two valuers. So also for jewellery found in two lockers, i.e. locker Nos. 907 and 1091, whose items otherwise tallied with that disclosed in the Wealth Tax Returns, we agree with the ld. CIT(A) that they cannot be treated as different from that disclosed in the Wealth Tax Returns for the reason that the lockers were not found to be operated when the valuation was done by the Registered Valuer of the assessees. 25. We have considered the facts relating to this aspect of two lockers and we find that the case of the Revenue broadly is that these lockers were last operated in 2007, but, as per the admission of the assessees during search, the valuation report prepared by the Registered Valuer dated 31.03.2012 was prepared on the basis of valuation done in 2009. The Revenue’s contention is that when the locker was last operated in 2007, there could be no possibility of valuation of jewelleries contained in these lockers done in 2009, and therefore, the jewellery found in these two lockers, though they tallied in terms of gross weight and description with that disclosed in the Wealth Tax Returns, were held to be different from those disclosed in the returns. 18 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 26. In this regard, we are in complete agreement with the ld. CIT(A) that if the case of the Revenue is that these two lockers were last operated in 2007, then in any case the jewelleries contained in these lockers could not be treated as unexplained investment for the impugned year i.e. AY 2015-16. Even otherwise, we find that the Ld.CIT(A) has correctly noted that the AO has based his findings on incorrect facts of the lockers last being operated in 2007. The Assessing Officer’s finding is based on a certificate obtained from the bank where these two lockers are maintained. The certificate is accompanied with the attendance register of 2007 and 2011. The certificate of the bank is reproduced at page no. 14 of the assessment order and the attendance register for locker operation is reproduced at page no. 15 and 16 of the assessment order in the case of Smt. Madhavi V. Agrawal. The facts relating to the issue are that, in locker No.907, jewelleries worth Rs.7,51,02,204/- as valued by DVO was found and in locker No. 1091 jewelleries worth Rs.26,93,200/- was found. The assessee had claimed all these jewelleries to be returned to Wealth Tax Returns of different assessees as per valuation report of the Registered Valuer dated 31.03.2012. The Registered Valuer had stated to have valued the jewellery after physically examining them. However, it was subsequently admitted by the assessees that on 31.03.2012 the keys of these two lockers were not available and, therefore, the Registered Valuer had certified their value on the basis of his certificate issued in 2009. The certificate of the bank submitting the last date of operation of these two lockers along with the daily register of operation of lockers as evidenced clearly demonstrates that locker No.907, which contained the substantial jewelleries, was last operated by Smt. Uma R. Agrawal on 08.02.2011. These facts find mention in the first paragraph of the bank’s certificate also. The Assessing Officer, however, has noted the last date of operation of locker No. 907 as 14.11.2007, on which date also this locker was operated by Smt. Uma R. Agrawal. But, the daily attendance 19 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 register also shows operation of this locker on 08.02.2011. Therefore, incorrectly noting the last date of operation of locker No.907 as in 2007, the Assessing Officer held that the Registered Valuer of the assessee could not have given a report in 2009 after physically examining the contents of the locker. Since, factually this locker was last operated in 2011; therefore, this basis of the Assessing Officer for rejecting the Registered Valuer’s Report is rightly found by the Ld.CIT(A) to be not correct. On the contrary, the assessee’s explanation of the contents in the locker being explained with that returned in the Wealth Tax Returns based on the Registered Valuer’s Report prepared in 2009 is substantiated with the fact that the locker was operated during that period. 27. Therefore, with respect to items of jewellery and ornaments which matched with the Wealth tax Returns both in weight and description to the extent of gross weight of 9397.65 gms as found by the Assessing Officer himself during the assessment proceedings, we endorse the finding of the ld. CIT(A) that no addition on account of unexplained investment can be made either on account of huge difference in valuation of the items by the DVO as compared to the Registered Valuer or on account of his conclusion of last operation of two lockers in Bank of Baroda. 28. With respect to the unmatched jewellery found during search, we agree with the Ld.CIT(A) that credit should be given of the unmatched jewellery disclosed in the Wealth Tax Returns. He has noted the unmatched jewellery found during search of gross weight of 8,688.050 gms comprising of gold weight 7,324.914 gms and diamond 1047.050 Ct. and the unmatched jewellery as per the Wealth Tax Returns of the Group, he has noted to be gross weight 47.44.840 gms consisting of gold weight 3387.497 gms and diamond 825.040 Ct. Jewellery purchased over years does normally undergo 20 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 changes in design and style due to renovation, exchange and repairs undertaken periodically. Disclosure in wealth tax returns coupled with copies of bills of purchase and bank statements showing payment through banking channels furnished by the assessee sufficiently evidence the fact of jewellery purchased over the years from disclosed sources. With nothing found by the department during search of such jewellery being converted into any other asset we do not find any infirmity in the Ld.CIT(A) giving credit of the same to the unmatched jewellery found during search. 29. As for the balance unexplained jewellery Ld. CIT(A) has, noted that the assessees themselves have admitted certain jewelleries as unexplained and included in their Income-tax Returns for the impugned year. He noted the same to be of gross weight of 2026.810 gms, comprising of gold weight 2201.528 gms and diamond 82.890 Ct., reducing the same from the balance jewelleries and ornaments required to be explained by the Group which came to gross weight 3,943.260 gms, comprising of gold weight 3,937.147 gms and diamond 2,026.810 Ct., he held that the unexplained jewellery remaining to be explained remained in the hands of Smt. Ruchika Agrawal entirely who is not an assessee before us. This finding of fact by the ld. CIT(A) has also remained uncontroverted before us. In effect, we uphold the order of the Ld.CIT(A) in the case of all the assessee before us deleting the addition of all the matched jewllery and the unmatched jewellery to the extent of jewllery remaining unmatched as disclosed in the wealth tax returns. 30. Issue No. 2 – Addition on account of unexplained Investments in artwork 31. Brief facts relating to the issue are that, during search, 3240 items of artworks were found. The same were valued by the Expert ArtAppraiser / 21 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 Valuer at Rs.87,29,68,900/-; out of same, seizure of artwork of value Rs.33,37,30,000/- was made. The assessee claimed that some of the artworks were purchased by him; out of which a few were fake/print of original. He contended that they were all evidenced by payments made through cheques for their purchases. The rest, he claimed, were gifted by artists who had participated in workshop conducted by him. The Assessing Officer was not satisfied with this explanation of the assessee stating the reason as there was no evidence of any workshop conducted by the assessee prior to the year 2007-08 when most of the artwork was claimed to have been gifted to the assessee and those claimed to be purchased by the assessee were found to be not duly substantiated. Further, his reasoning for rejecting the explanation of the assessee was also the fact that the Expert Valuer had assigned value to the artwork many more times than that claimed by the assessee to have costed him. He also noted that the assessee had gone back on his statement made during search relating to certain artworks originally claimed by Shri Rakesh Agrawal to be original painting & artwork and later on retracted as being fake and print of original only. Accordingly, he made addition on account of unexplained investment in artworks in the hands of the following assessees, based on their claim of the particular artwork belonging to them, as under:- (i) Shri Rakesh S. Agrawal - Rs.56,61,56,500/- (ii) M/s. Uttarayan Art Foundation - Rs.27,31,71,900/- (iii) Smt. Umadevi Rakesh Agrawal - Rs. 18,25,000/- 32. The ld. CIT(A), however, deleted the entire addition holding :- (a) that an artwork cannot be realistically and scientifically measured/valued; 22 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 (b) that it is purely a notional figure of valuation given by any Art Appraiser and, therefore, this valuation cannot be the basis for holding that the investment to the extent valued by the valuer was made in artwork so as to make addition on account of unexplained source of investment in the same in terms of Section 69B of the Act; (c) that even on merits, ld. CIT(A) found no case with the Department noting that the assessee was an art connoisseur and during search itself entire details of artworks owned by the assessee along with the basis of acquiring artworks, either by way of purchase or during workshop was made available in an excel-sheet. (d) That it was on the basis of this excel-sheet found with the assessee that the Department became aware of the art-pieces of the assessee; and,on the basis of the disclosure of source of acquiring these art- pieces, the Department had made further inquiries regarding the genuineness of the same. (e) That no incriminating material otherwise was found by the Department; and, this excel-sheet found from the assessee could not be treated as an afterthought for explaining the source of investment in the artworks. 33. During the course of hearing before us, ld. DR drew our attention to the Assessing Officer’s findingin making the addition in the hands of the assessees, while learned Counsel for the assessee relied on the order of the learned CIT(A). 34. We have heard both the parties and also gone through the orders of the authorities below. The issue pertains to addition made on account of the source of investment in artworks found with the assessees remaining unexplained to the satisfaction of the Assessing Officer. The total items of artworks found from the premises of the Group being 3240 items, including paintings and sculptures. The explanation of the assessee being that these were acquired either by way of purchase or were gifted to the assessee by artists during art workshops conducted by the assessee in its premises. The 23 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 basis with the Assessing Officer for treating the source of investment in these artworks as unexplained were:- i) the assessee was unable to substantiate its explanation of items being gifted to it during workshops; 35. The relevant findings of the Assessing Officer in this regard at paragraph no. 24.12(i) are as under:- “12.12 (i) On perusal of details filed by the assessee, it has been noticed that the items of paintings/sculptures are shown as acquired before 01.04.2008 i.e. prior to the period which is not assessable under Section 153A of the I.T. Act in the case of the assessee. Further, the assessee claimed that these artworks have been received "out of workshop" and the assessee used to conduct art workshops for the last 20 years and at the end of such workshops, the artists, who attended these art workshops used to give few of their complimentary artworks to him. Here it will be worthwhile to mention that during the assessment proceedings, the assessee was asked to give name and addresses of such painters and sculptures along with their time and date of arrival, duration and place of their stay, time and date of their departures and documentary evidences of their travelling to and fro. But the assessee could not provide any such detail. The assessee has also not provided any gift deeds in respect of such gifts neither as the time search nor during the assessment proceedings. Further, at the time of search operations at Uttarayan Art Foundation at Jaspur, no records of attendance of artists at the Art Centre were found. This goes on to prove that the assessee group has no evidences to support that the artworks have been received without any consideration.” ii) The Assessing Officer has also disbelieved assessees’ explanation of having purchased certain artworks in the absence of any details furnished with regard to the said transactions and purchase bills also not having been submitted in some cases and also noting the fact that in most of the cases,where the bills were furnished, the addresses of the sellers were not mentioned. He also disbelieved the explanation of the assesseesfor the reason that the cost of purchase 24 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 of these items was abnormally low as compared to the value estimated by the Valuer. His findings in this regard are contained in paragraph No. 24.12(ii) as under:- “24.12(ii).... In cases where artworks are claimed to be purchased from individuals, no details, except the name of the individual & the cheque number was provided. Further, it is important to mention here that only in very few cases, purchase bills have been submitted by the assessee but on most of such bill proper addresses of the sellers are not mentioned, mere mention of the name of the seller doesn't prove the identity of the seller. Furthermore, the purchase cost of the items mentioned on the bills is abnormally low in comparison to the value estimated by the valuer of that item. Few of the bills even do not have description of nature and size of art work, therefore, it cannot be proved that these payments have actually been made for the artworks, as claimed by the assessee.” 36. It is not denied the assessee’s explanation that certain artworks were gifted to it during workshops while others were purchased; and, the details of the items of artworks gifted along with date of conducting the workshops when they were gifted, as also the details with respect to the items purchased giving details of parties to whom they were purchased and the cheques through which the payments were made – all these details were maintained in an excel-sheet by the assessee which the Department lay its hands upon during the search conducted on the assessee. The ld. CIT(A) has given this finding in paragraph No. 76.13 of his order as under:- “....More so it has to be borne in mind that along with the artwork, the catalogue of these art works having all details related thereto was available at the searched premises in form of excel sheet and in the computer which were submitted before the Investigation Officer during the search proceedings.” And the Department has not controverted to the same. Further, before us, the learned Counsel for the assessee has filed a copy of the excel-sheet giving full details of the artworks, including the mode of acquisition and date of acquisition, which was found during search with the assessee. 25 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 Therefore, we agree with the ld. CIT(A) that these are not afterthought explanations given by the assessee, but the primary evidences found by the Department during the course of search itself which cannot be brushed aside as held by him at paragraph no. 76.13 of his order. The ld. CIT(A) has rightly noted that in the absence of any evidence contrary to that contained in the catalogue already existing, brought by the Revenue, and no incriminating material otherwise being found during search, no adverse inference could be drawn in the case of the artworks. 37. Having said so and having noted the fact the assessee had given all details with respect to the artworks which he claimed to have purchased from outside party, giving names of the parties, the amount paid to him and the cheques through which the payments were made, which details were found with the assessee during search itself, the substitution of the value of artworks with that as valued by the artwork valuer is not acceptable and, in this regard, we agree with ld. CIT(A) that the work of art has no market or exchange for dealing in the same and every art piece has a different value in the eyes of the buyer and the seller. Therefore, there could be no basis in determining the fair market value of artwork. That there can be no parity in determining the fair market value of artwork piece of jewellery or ornaments whose value of capable of being reasonable estimated basis of the weight of precious items used therein, but in the case of artwork its value is not determined on the basis of the cost involved in it, but the basis more on the value placed to its creativity which is immeasurable and varies from person to person and from time to time. We agree with the ld. CIT(A) that the value of artwork is only a notional figure of estimation at a given point of time only and, therefore, cannot be relied upon for determining the cost of investment made in the artwork. His findings in this regard at paragraph 76.2 to 76.8 are as under:- 26 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 “76.2 In context of search and jewellery and ornaments found/seized, the Department's Valuer makes the valuation on the date of search on which the price of metal gold, silver, platinum) is known and published and the price of precious stones (diamond, ruby, emerald, sapphire etc.) are also capable of reasonably comparable estimation. While the gross weight of a jewellery is accurately measurable (within the variance and sensitivity of the weighing device), the stone size etc. are estimated by the Valuer and the net weight of previous metal arrived at (after deduction of estimated weight of stone from gross weight of the jewellery). The value of precious stones is also reasonable standard (but not as standard, fixed and comparable as metal) based on size Le carat weight in standardized nomenclature of colour, clarity and cut of that stone. Thus, within the human variability in estimate of quality of stone, the jewellery are fairly, transparently and comparably evaluated and in normal circumstances the valuations of two valuers are expected to match within the given acceptable variation. It is also important to realize the metals and stones and thus the jewellery and ornaments has vast organized market and are transacted in huge quantity and large value every day. But the same is not true for artwork of any kind or genre. 76.3 In case of artwork, there is no ready market, no exchange/regulator and no well established commercial standard as in the case of metals and precious stones). An artwork is not valued on per sq. inches of painted/drawn area, on the type of surface le canvas/cloth/paper or the type of colour (i.e. oil paint, waterpaint, pastel, crayons etc.), on the number and amount of colour used, on the combination of various elements used therein, on the time spent by the artist etc. Similarly, a sculpture or ceramic work are not valued in terms of material, volume, weight or design or engravings. That is the material aspect. 76.4 Also the painting of say a rising/junior or unknown artist will not fetch even a fraction of price that a renowned artist can get if they are comparable in technique, finesse and quanlity to the eyes. Furthermore, we read in newspapers of various auctions by Sotheby's or Chistie's, art purchased for certain value (by a seller), valued and reserved price fixed (by the auctioneer) is sold at times at many times unexpected and unimaginable higher price and some at almost or below the reserve price and few are not sold at all. There are many many art work of renowned artists offered to sale or auction which do not find any buyer at all. Furthermore the art work is also made by an artist on his own inclination and while some may be for sale if possible but many of them are not for sale at all and remain private collection of the artist or any collector of art or of any investor in art. 76.5 Further there is no market or exchange for dealing in art work. We find minuscule art work in art exhibitions and in art galleries and read of some art work put to auction in newspaper or art circles. 27 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 76.6 The point of narrating some of these facts is that the art has no standardized commercial market, that the artworks are not often traded (and probably even not tradable and that value of an art is not that anybody can realistically and scientifically measure/value. One value is as per the artists, other various values are as per art experts & valuers and some other value is a quotation of a buyer, if an art work finds a buyer. As they say beauty lies in the eyes of the beholder, it should be admitted that value of art lies in the eyes, heart and pocket of the buyer. Thus the valuation of an art cannot be possible even by the best of art experts and valuers for the purpose of unearthing undisclosed income under the Income-tax Act in case the person fails to establish the date, means and amount of acquisition of art work estimated in his possession. Thus a value of an art work by an Art Valuer is only a notional figure of its estimated worth at a given point of time, at the best. There is no correlation between the value of the art piece as per Art Appraiser and the price of that art piece in eyes of potential buyer/collector. 76.7 Further, unlike jewellery and ornaments, artwork was normally not includedas asset or specified assets in the Wealth Tax Act and was not to be disclosed in the Wealth Tax Return. In addition to that if an artwork has been purchased from the artist or the gallery, only the purchase price can be shown as investment in the balance sheet at best and the artwork received as gift or out of workshop cannot be valued for the purpose of declaration in the balance sheet. 76.8 Also under the real income concept, only the cost of purchase can be material and relevant, only this can be the basis for evidencing being acquired out of disclosed sources or for treatment as undisclosed investment as the facts and circumstances may be and the amount based on any valuation however good, thorough or rechecked may be is mere notional figure towards its estimated worth and cannot be basis for treatment as undisclosed investment. It is the well settled principle that any addition to the total income can be only as stipulated under the Act whether on real basis or on deemed basis. Any notional value cannot be deemed to be income unless otherwise explicitly so provided under the IT Act.” 38. In view of the above, we find no infirmity in the findings of the ld. CIT(A) deleting the addition made on account of unexplained investment in artwork. 39. Issue No. 3 – Addition made on account of unexplained credits in Foreign Bank account and disallowance of set off of business loss - 28 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 40. The facts relating to the issue being that the assessee is found to be maintained a bank account in Merill Lynch Bank, New York during the course of search conducted on him. Notices were issued u/s 151A/142(1) of the Act and against which returns were filed for all the six assessment years prior to the year in which the search was conducted and also for the year of search i.e. AY 2015-16, which is impugned year before us. The assessee disclosed income in relation to the transactions disclosed in the foreign bank account under the head “business and profession”. For the first two years i.e. AY 2009-10 and 2010-11, he returned loss which was carried forward to the succeeding yeas and set off against the profits of business returned in the said years. In the assessments framed, the Assessing Officer disallowed the losses returned by the assessee in the AY 2009-10 and 2010-11 and made addition under Section 68 of the Act of the credit in the foreign bank account of the assessee. In the impugned year, therefore, before us the addition was made on account of the credit in the foreign bank account amounting to Rs.1,38,95,552/- and the assessee was also denied the benefit of set off of business loss of Rs.2,19,70,774/-. The ld. CIT(A) allowed the same. 41. Before us, the ld. Counsel for the assessee, at the outset itself, pointed out that an identical issue, which had arisen in the earlier years also in the case of Shri Rakesh S. Agrawal, has been adjudicated by the ITAT in assessee’s appeal for AYs 2009-10 to 2014-15 in IT(SS)A Nos. 88 to 92/Ahd/2018 vide order dated 22.04.2022 upholding the order of the ld. CIT(A) deleting the addition made under Section 68 of the Act and allowing the assessee’s claim of set off of business loss brought forward from earlier years. Copy of the order placed before us. The relevant part of the order allowing set off of losses at para 28-32 and deleting addition under section 68 of the Act at para 35 are as under: 29 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 “28. Having said so we find that in the facts of the present case, the assessments were not abated, and the claim of business losses admittedly emanated from incriminating material i.e the foreign bank account of the assessee. Income from incriminating material is to be considered after defraying all expenses that are incurred for earning such income. The decision of the Hon’ble apex court in the case of CIT vs Piara Singh 124 ITR 40(SC) is relevant for the same. The business losses therefore qualified as being in the nature of Income from incriminating material required to be assessed to tax in such cases. There is no provision of law, pointed out to us, debarring claim of expenses or losses emanating from incriminating material. To put it otherwise, there is no provision of law requiring only positive incomes emanating from incriminating material to be disclosed/added to the incomes of the assessee in assessment framed u/s 153A of the Act denying claim of expenses and losses emanating therefrom. The legislature, we are aware has debarred claim of losses/expenses against incomes assessed u/s 68/69/69A /69B/69C of the Act specifically so providing u/s 115BBE of the Act, which provides for levy of taxes at special rates on such incomes. SECTION 115BBE. Tax on income referred to in section 68 or section 69 or section 69A or section 69B or section 69C or section 69D. 3613[ 3614[(1) Where the total income of an assessee,- (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of- (i) the amount of income- tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent.; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).] (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance 3615[or set off of any loss] shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) 3616[and clause (b)] of sub-section (1).] 29. The returns filed u/s 153A of the Act disclosing losses emanating from incriminating material is therefore as per law to be treated as filed in returns u/s 139 of the Act and entitled to be set off against profits from such incriminating material in subsequent years. And to this extent of set off, they certainly do not qualify as fresh claim made in return filed u/s 153A of the Act, since they were necessarily to be disclosed at the same time and alongwith the positive incomes arising from the incriminating material. These losses cannot be considered in isolation from the profits to qualify as” fresh claim”, not originally claimed in the return filed u/s 139 of the Act. 30. We may clarify that set off of these business losses from any other income originally returned, other than profits from this business, would have qualified as a fresh claim and to which the assessee would not be entitled. The proceedings u/s 153A of the Act, being in consequence to search undertaken u/s 132 of the Act, cannot be utilized by the assessee to seek relief not claimed earlier. The proceedings are analogous to proceedings u/s 147 of the Act, as being for the benefit of the Revenue and not the assessee.The decision of the Hon’ble apex court in the case of CIT vs Sun Engineering Works Pvt. Ltd. (1992) 198 ITR 297 (SC) is relevant for the purpose. 31. Having held so, that the claim of losses emanating from incriminating material, made in returns filed u/s 153A of the Act are to be treated as filed u/s 139 of the Act and noting that the said returns undisputedly were filed within the stipulated time, the assessee, we hold, 30 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 was entitled to the benefit of carry forward and set off of the same in subsequent years, as per law. The findings of the Ld.CIT(A) in this regard are also upheld. 32. The order of the Ld.CIT(A) deleting the disallowance of losses and their carry forward and set off, in the assessment years before us, is therefore upheld. Ground of appeal No.1 of the Revenue is dismissed.” “35. We have heard both the parties. We see no reason to interfere in the order of the Ld.CIT(A) deleting the addition on account of credits in the foreign bank account of the assessee. The assessee, we have noted from the order of the Ld.CIT(A) ,filed all explanations regarding the credits in the bank account which were noted by the Ld.CIT(A) as relating to transactions in securities, dividend income, interest, distribution etc . The assessee also filed portfolio statements and calculation of profits and reconciled the figures in the bank statement with the profits /losses computed and returned in the income filed by the assessee u/s 153A of the Act. The assessee also filed evidences showing declaration of certain credits in the bank account, under the Black Money Act as also evidences of certain credits wrongly given being reversed subsequently by the Bank. Each and every entry was so explained by the assessee as having been duly accounted for and returned as business income or disclosed under the Black Money Act or wrongly credited and thus subsequently reversed by the Bank. After thoroughly examining these evidences and reconciliations, the Ld.CIT(A) has accepted the plea of the assessee that the said entries could not be taxed as unexplained ,having been returned as business income or explained otherwise. All these evidences were also filed before us in voluminous paper book. The Ld.DR was unable to point out any infirmity in the finding of the Ld.CIT(A). He was unable to point out any credit entry wrongly accepted by the Ld.CIT(A) as duly explained.” The ld. DR fairly agreed with the same. 42. In view of the same, the issue relating to the addition made on account of unexplained credit in foreign bank account and set off of brought forward business loss having been decided in favour of the assessee in the preceding years by the ITAT, and no distinguishing facts have been brought to our notice, there is no case with the Revenue challenging the same addition and disallowance in the case of the assessee for the impugned year before us i.e. AY 2015-16. There is no merit in the appeals of the Revenue on this count as well. 43. We shall now be dealing with each appeal before us. 31 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 44. Ground No.1 in ITA No.718/Ahd/2018, ground no.1 to 3 in ITA No.728/Ahd/2018 and the only ground raised in ITA No.720/Ahd/2018 are related to the issue of unaccounted jewellery found in the locker. These grounds raised in the respective appeals read as under: ITA No.720/Ahd/2018 “1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.1,62,12,000/- (Rs.1,01,78,340/- +Rs. 60,33,660/-) out of total addition made of Rs.1,76,15,680/- made on account of unexplained jewellery without considering the fact that the assessee could not explain the source of investment and also could not submit the documentary evidences regarding the source of jewellery like purchase bills, vouchers etc. ITA No.718/Ahd/2018 (1) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.11,39,20,300/- made on account of unexplained jewellery without considering the fact that the assessee could not explain the source of investment and also could not submit the documentary evidences regarding the source of jewellery like purchase bills, vouchers etc. ITA No.726/Ahd/2018 1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.14,82,488/- made on account of unexplained jewellery found from locker no.907 of Bank of Baroda without considering the fact that the assessee could not explain the source of investment and also could not submit the documentary evidences regarding the source of jewellery like purchase bills, vouchers etc. 2. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.8,96,000/- made on account of unexplained jewellery found from locker no.430 of Royal Bank of Scotland without considering the fact that the assessee could not explain the source of investment and also could not submit the documentary evidences regarding the source of unexplained jewellery like purchase bills, vouchers etc. 3. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.7,36,19,716/- made on account of unexplained investment in jewellery found and seized from locker no.907 on protective basis without considering the fact that the assessee could not explain the source of investment and also could not submit the documentary evidences regarding the source of unexplained jewellery like purchase bills, vouchers etc. 32 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 45. While dealing with the issue No.1 regarding unmatched jewellery in the foregoing paragraphs, we have upheld order of the Ld.CIT(A) in the case of all the assessee before us deleting the addition of all the matched jewllery and the unmatched jewellery to the extent of jewllery remaining unmatched as disclosed in the wealth tax returns. Therefore, all these identical grounds raised in the above appeals are dismissed. 46. Next common ground raised in appeals is Ground No.4 in ITA No.718/Ahd/2018, Ground No.4 in ITA No.726/Ahd/2018 and only ground no.1 in ITA No.728/Ahd/2018, which is relating to unexplained investment in painting, sculpture & art work. The relevant grounds are reproduced hereunder appeal-wise for clarity: ITA No.718/Ahd/2018 “(4) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition made on account of unexplained investment in painting, sculpture & Art work of Rs.59,61,56,500/- without considering the fact that the assessee failed to prove the identity of such artists from whom the paintings were received as gift and also the assessee could not prove the genuineness of such gift. Moreover, the assessee could not submit any documentary evidences of the items of paintings/sculptures which were received as gifts. The Ld.CIT(A) has also not appreciated the departmental Art Valuer/Appraiser's report based on which the addition was made.” ITA No.726/Ahd/2018 “On the facts and circumstances of the case and in law, the Ld.CIT(A) has deleting the addition made on account of unexplained investment in painting, sculpture & Art work of Rs.18,25,000/- by invoking provision of section 69B of the Act, without considering the fact that the assessee failed to prove the identity of such artists from whom the paintings were received as gift and also the assessee could not prove the genuineness of such gift. Moreover, the assessee could not submit any documentary evidences of the items of paintings/sculptures which were received as gifts. The Ld.CIT(A) has also not appreciated the departmental Art Valuer/ Appeaiser's report based on which the addition was made.” ITA No.728/Ahd/2018 “1. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition made on account of unexplained investment in painting, sculpture & Art work of Rs. 27,31,71,900/- without considering the fact that the 33 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 assessee failed to prove the identity of such artists from whom the paintings were received as gift and also the assessee could not prove the genuineness of such gift. Moreover, the assessee could not submit any documentary evidences of the items of paintings/sculptures which were received as gifts. The Ld. CIT(A) has also not appreciated the departmental Art Valuer/Appraiser's report based on which the addition was made.” 47. While dealing with the issue No.2 regarding addition on account of unexplained investment in art-work in the foregoing paragraphs, we have upheld order of the Ld.CIT(A) in the case of all the assessee before us finding no infirmity in the order of the ld.CIT(A) on the issue deleting the additions. Therefore, all these identical grounds raised in the above appeals are dismissed. 48. Now only ground remaining to be adjudicated is ground no.2 and 3 raised in ITA No.718/Ahd/2023. They read as under: “(2) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the disallowing the carry forward of business loss of Rs.2,19,70,774/- without considering the fact that the assessee had not claimed loss in the return of income filed u/s.139(1) of the I. T. Act,1961, but claimed losses when filed the return u/s.153A. (3) On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs.1,38,95,552/- made on account of unexplained credit in foreign bank account u/s.68 of the Act, without considering the fact that the addition was made by A.O. after due consideration, and also the assessee failed to give any documentary proof to explain the source of credit entries in the said bank account.” 49. While dealing with the issue No.3 regarding addition made on account of unexplained credits in foreign bank account and disallowance of set off of business loss in the foregoing paragraphs of this order, the following the order of the ITAT passed in favour of the assessee in the preceding years, and having found no merits in the challenge of the Revenue on the similar addition made in the impugned year i.e. Asst.Year 2015-16, we 34 ITA Nos. 718, 720, 726 & 728/Ahd/2018 GROUP cases of Rakesh Agrawal AY : 2015-16 have upheld the order of the ld.CIT(A). Therefore, this ground stands rejected. 50. In the result, all the four appeals filed by the Revenue are dismissed. Order pronounced in the open Court on 31 st October, 2023 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER