INDU PATEL, MUMBAI V. DCIT CEN CIR 42, MUMBAI

ITA 728/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8281 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 05-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 29-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V KRISHNAMOORTY
• Assessee Lawyers: A H DALAL
• Keywords: Unexplained investment; Gift; Opportunity of being heard; Valuation report
• Section: 148; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , ! '#$% , & ' BEFORE S/SHRI DINESH KUMAR AGARW AL AND N.K. BILLAIYA, AM ./I.T.A. NO. 728/MUM/2010 ( ( ( ( ( / ASSESSMENT YEAR : 2007-08 MRS INDU PATEL, KANCHANG JUNGA, 72, PEDDAR ROAD, MUMBAI-400 026 / VS. THE DCIT, CENT. CIR-42, MUMBAI ) & ./ *+ ./PAN/GIR NO. : AAIPP9415A ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI A.H. DALAL -.), 0 / / RESPONDENT BY : SHRI V. KRISHNAMOORTY 0 1& / DATE OF HEARING : 05.11.2012 23( 0 1& / DATE OF PRONOUNCEMENT :07.11.2012 4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-38 DT. 17.11.2009 PERTAINING TO ASSESSMENT Y EAR 2007-08. 2. THE ASSESSEE HAS RAISED FOLLOWING SUBSTANTIVE GR OUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN L AW, THE LD. CIT(A) ERRED IN DISMISSING THE FIRST GROUND OF APPEAL SO FAR IT RELATES TO SEIZURE OF CASH TO THE TUNE OF RS. 7,13,500/- LYING IN LOCKER EVEN THOUGH ALL NECESSAR Y EVIDENCE WAS SUBMITTED ON RECORD. ITA NO. 728/M/10 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN LA W, THE LD. CIT(A) ERRED IN DISMISSING THE GROUND OF APPEA L ON ACCOUNT OF ADDITION OF RS. 56,44,802/- BEING THE AL LEGED UNDISCLOSED INCOME. 3. A SEARCH U/S. 132 OF THE ACT WAS CONDUCTED ON TH E RESIDENTIAL PREMISES OF THE DIRECTORS OF M/S. VAMA APPARELS (I) PVT. LTD . WHERE THE ASSESSEE IS STAYING WITH HER FAMILY MEMBERS. DURING THE COURSE OF THE SEARCH PROCEEDINGS, CASH AMOUNTING TO RS. 7,13,500/- WAS F OUND IN THE LOCKER NO. 376 OF CENTRAL BANK OF INDIA, BABULNATH ROAD, MUMBA I WHICH WAS SEIZED. THE ASSESSEE WAS ASKED TO EXPLAIN THE CASH FOUND IN THE SAID LOCKER. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE SAID AMOUNT OF RS. 7,13,500/- IS OUT OF CASH WITHDRAWN AMOUNTING TO RS. 9 LACS FROM HER SAVING BANK A/C NO. 9648 WITH UNION BANK OF INDIA, PEDDAR ROAD BRANCH ON 16. 12.2004. THE AMOUNT WAS KEPT IN THE LOCKER FOR THE PURPOSE OF UTILIZING THE SAME FOR FUTURE EMERGENCY TREATMENT OF ASSESSEES AILING HUSBAND. THE SAID CONTENTION OF THE ASSESSEE DID NOT FIND FAVOUR WITH THE AO WHO WA S OF THE OPINION THAT RS. 9 LAKHS WAS WITHDRAWN ON 16.12.2004 AND CASH FOUND IN THE LOCKER WAS ON 27.6.2006. THEREFORE, IT COULD NOT BE POSSIBLE TO CARRY SUCH HUGE SUM FOR ALMOST ONE AND HALF YEARS WHEN THE ASSESSEE IS OPER ATING SEVERAL BANK ACCOUNTS. AS THE EXPLANATION GIVEN BY THE ASSESSEE WAS REJECTED BY THE AO, AN AMOUNT OF RS. 7,13,500/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S.69 OF THE ACT. 4. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A) BUT WITHOUT ANY SUCCESS. THE LD. CIT(A) THUS HELD THAT ON PERUSAL ON THE OTHER DETAILS ALSO, IT IS SEEN THAT THE APPELLANT HAD NOT FILED ANY CASH FLOW STATEMENT ALONGWITH RETURN OF INCOME TO SUPPORT HER CONTENTI ON THAT THE AMOUNT WITHDRAWN FROM THE SAVINGS BANK ACCOUNT AT RS. 9 LACS WAS AVAILABLE AS CASH IN HAND AND WAS NOT EXPENDED. THEREFORE, THE APPEL LANTS EXPLANATION TO COVER UP THE CASH FOUND IN THE LOCKER AMOUNTING TO RS. 7,13,500/- OUT OF WITHDRAWALS MADE ON 16.12.2004 DOES NOT SOUND CONVI NCING. THE AO HAD RIGHTLY OBSERVED THAT THE CASH IN HAND WAS NOT SUPP ORTED BY STATEMENT OF ITA NO. 728/M/10 3 ACCOUNT FILED ALONGWITH THE RETURN OR BY THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. THEREFORE, THE AOS ACTION IN TREAT ING THE CASH AT RS. 7,13,500/- AS UNEXPLAINED WAS JUSTIFIED AND IS HERE BY CONFIRMED. 5. BEFORE US, THE COUNSEL FOR THE ASSESSEE REITERAT ED WHAT WAS SUBMITTED/ARGUED BEFORE THE LOWER AUTHORITIES. IT I S THE SAY OF THE ASSESSEE THAT THE CASH WAS KEPT IN THE LOCKER SO THAT IT CAN BE USED AT THE TIME OF EMERGENCY FOR THE MEDICAL TREATMENT OF ASSESSEES H USBAND. THIS SUBMISSION DEFIES ALL LOGIC AS THE BANK LOCKER COULD NOT HAVE BEEN OPERATED AT THE WEE HOURS OF THE NIGHT. FURTHER, WHEN THE ASSESSEE IS O PERATING BANK ACCOUNTS, IT WOULD BE MORE LOGICAL TO PARK THE SUM IN THE BANK A CCOUNT SO THAT IT CAN BE USED FROM ANYWHERE THROUGH ELECTRONIC BANKING. THU S WE DO NOT FIND ANY LOGIC OR REASONING IN THE SUBMISSIONS OF THE COUNSE L. MOREOVER THE ASSESSEE HAS GROSSLY FAILED IN SUBSTANTIATING THE POSSESSION OF THE SUM OF RS. 7,13,500/-. THEREFORE, WE DO NOT FIND ANY REASON T O INTERFERE WITH THE FINDINGS OF THE LOWER AUTHORITIES. GROUND NO. 1 IS ACCORDINGLY DISMISSED. 6. GROUND NO. 2 RELATES TO THE ADDITION OF RS. 56,4 4,802/- BEING ALLEGED UNDISCLOSED INCOME. 7. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO INFORMED THE ASSESSEE VIDE LETTER DT. 24.10.2008 THAT THE JEWELL ERY WORTH RS. 60,76,578/- WILL BE ADDED AS UNEXPLAINED INVESTMENT. THE ASSES SEE FILED A DETAILED REPLY WHICH HAS BEEN CONSIDERED BY THE AO WHEREIN THE AO REJECTED THE CLAIM OF THE ASSESSEE THAT THE JEWELLERY HAS BEEN PROPERLY D ISCLOSED IN THE WEALTH TAX ASSESSMENT OF A.Y. 1973-74 AND 1974-75. HOWEVER, T HE AO AGREED TO ACCEPT THE JEWELLERY DECLARED IN WEALTH TAX RETURN FOR A.Y . 2004-05 FILED ON 27.10.2004 AND DISCARDED THE WEALTH DECLARED IN WEA LTH TAX RETURN FILED ON 31.3.2008 IN RESPONSE TO NOTICE U/S. 17 OF THE WEAL TH TAX ACT WHICH IS AFTER SEARCH. 8. AFTER CONSIDERING THE FACTS AND SUBMISSIONS OF T HE ASSESSEE, THE FOLLOWING JEWELLERY SHOWN WERE ADDED AS UNEXPLAINED INVESTMENT: ITA NO. 728/M/10 4 1) JEWELLERY FOUND IN LOCK NO. 376, CENTRAL BANK OF INDIA, BABULNATH BRANCH - RS. 44, 92,720/- 2) JEWELLERY FOUND AT RESIDENCE -RS. 3,23,650 /- 3) JEWELLERY FOUND IN LOCKER NO. B-246 HSBC PEDDAR ROAD BRANCH -RS. 8,28,432/- -------------------- TOTAL -RS. 56,44,802/- ========= 9. THE ASSESSEE STRONGLY AGITATED THIS MATTER BEFOR E THE LD. CIT(A). IT WAS STATED THAT THE JEWELLERY FOUND IN LOCKER NO. 3 76, CENTRAL BANK OF INDIA BELONGED TO SHRI SHIRISH PATEL, NEPHEW OF ASSESSEE S HUSBAND WHICH CLAIM WAS SUPPORTED BY THE AFFIDAVIT OF SHRI SHIRISH PATE L. HOWEVER, THE LD. CIT(A) DID NOT ACCEPT THE SUBMISSIONS OF THE APPELLANT AND HELD AS UNDER: THE AFFIDAVIT OF SHRI SHIRISH PATEL SPEAKS ONLY AB OUT TWO PAIRS OF SINGLE DIAMOND EAR RINGS. FURTHER THE CLAIM OF THE ASSESSEE IS NOT SUBSTANTIATED WITH ANY EVIDENCE SUCH AS WEALTH TAX RETURN OF MR. SHIRISH PATEL OR ANY OTHER EVIDENCES TO ESTABLISH THAT IT BELONGS TO HIM. HE WAS ALSO NOT PRODUCED AS HE IS STAYING OUT SIDE INDIA AND A NON-RESIDENT. THUS, THE FOLLOWING JEWELLERY WILL B E ADDED IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED INVESTMENT IN JEWELL ERY. SIMILARLY JEWELLERY FOUND IN LOCKER NO. B-246 HSBC BANK PEDDA R ROAD, SR. NO. 8 OF THE INVENTORY BEING A DIAMOND EAR RING OF 5.5 C ARATS VALUED AT RS. 8,28,432/- CLAIMED TO BE BELONGING TO SHRI SHIRISH PATEL WILL BE ADDED IN THE HANDS OF THE ASSESSEE FOR THE REASON STATED ABOVE. FURTHER ITEM NO. 9,10,11 VALUED AT RS. 35,900/-, RS. 26,900/ - AND RS. 8,550/- TOTALING TO RS. 71,350/- ARE NOT COVERED BY JEWELL ERY VALUATION REPORT ON THE BASIS OF WHICH W.T. RETURN WAS FILED FOR A.Y . 2004-05, 2005-06. ASSESSEE CLAIMED THE SAME AS RECEIVED AS GIFTS WILL ALSO BE ADDED AS UNEXPLAINED INVESTMENT TOTALING TO RS. 8,99,782/- ( RS. 8,28,432 + RS. 71,350). OUT OF JEWELLERY AT THE RESIDENCE AND ON COMPARING THE VALUATION REPORT OF DINESH N. SALVI DT. 28.4.2006. THE ITEMS OF SR. NO. 18,22,23,24,25A,25B ARE NOT REFLECTED IN THE VALUAT ION REPORT OF M/S. NARESH V SHAH. ON THE BASIS OF WHICH ASSESSEE FILE D W.T. RETURN FOR A.Y. 2004-05 AND A.Y. 2005-06. THUS, THE TOTAL VAL UE OF THE SAME IS ALSO ADDED IN THE HANDS OF THE ASSESSEE AS UNEXPLAI NED INVESTMENT IN JEWELLERY AMOUNTING TO RS. 3,23,650/-. ITA NO. 728/M/10 5 THUS THE FOLLOWING JEWELLERY SHOWN BELOW ADDED AS U NEXPLAINED INVESTMENT. 1) JEWELLERY FOUND IN LOCK NO. 376, CENTRAL BANK OF INDIA, BABULNATH BRANCH - RS. 44, 92,720/- 2) JEWELLERY FOUND AT RESIDENCE -RS. 3,23,650 /- 3) JEWELLERY FOUND IN LOCKER NO. B-246 HSBC PEDDAR ROAD BRANCH -RS. 8,28,432/- -------------------- TOTAL -RS. 56,44,802/- ========= 10. THE CIT[A] FURTHER OBSERVED THAT THE AO HAS MIS SED OUT TO MAKE THE ADDITION OF RS. 71,350/- IN THE COMPUTATION OF INCO ME AND ACCORDINGLY DIRECTED THE AO TO REVISE THE COMPUTATION OF INCOME BY INCLUDING THE ADDITION MADE AT RS. 71,350/-. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE DRE W OUR ATTENTION TO THE NOTICE U/S. 148 ISSUED FOR THE YEAR UNDER CONSIDER ATION AND POINTED OUT THAT THE AO HAS REOPENED THE ASSESSMENT FOR THE REASONS THAT THE ASSESSEE HAS NOT DECLARED JEWELLERY OF RS. 13,58,990/- FOUND DUR ING THE SEARCH OPERATION IN HER WEALTH TAX RETURN. FURTHER, THE VALUE OF JEWEL LERY OF RS. 71,350/- AS DISCUSSED IN THE ORIGINAL ASSESSMENT ORDER AND POIN TED OUT BY THE LD. CIT(A) HAS ALSO TO BE TAKEN INTO CONSIDERATION FOR THE PUR POSE OF TAXATION. ACCORDING TO THE AO, THIS HAS RESULTED IN UNDER ASSESSMENT OF INCOME OF RS. 14,30,340/- 12. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOW ER AUTHORITIES AND ALSO REASONS RECORDED U/S. 148(2) BEFORE ISSUE OF NOTICE U/S. 148(1) OF THE ACT. IN OUR HUMBLE OPINION, THE ENTIRE ISSUE REQUIRE FURTHE R VERIFICATION AT THE ASSESSMENT STAGE, AS THE ASSESSMENT HAS BEEN REOPEN ED. THEREFORE, IN THE INTEREST OF JUSTICE, WE RESTORE THE ENTIRE ISSUE IN VOLVING THE ADDITIONS ON ACCOUNT OF JEWELLERY BACK TO THE FILE OF AO. THE A O IS DIRECTED TO RE-EXAMINE THE SUBMISSIONS OF THE ASSESSEE IN THE LIGHT OF THE AFFIDAVIT OF SHRI SHIRISH ITA NO. 728/M/10 6 PATEL, WHICH IS ALREADY PART OF THE ASSESSMENT RECO RDS. NEEDLESS TO MENTION THAT THE AO SHOULD GIVE A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO. 2 IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 5 16 51 70 89: 4 ;1 0 *1 <$ ORDER PRONOUNCED IN THE OPEN COURT ON 5.11.2012 . 4 0 3( & = > 6 7.11.2012 3 0 ? SD/- SD/- (DINESH KUMAR AGARWAL ) ( N.K. BILLAIYA ) / JUDICIAL MEMBER & / ACCOUNTANT MEMBER MUMBAI; > DATED 5/11/2012 . . ./ RJ , SR. PS 4 4 4 4 0 00 0 -1' -1' -1' -1' '(1 '(1 '(1 '(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. @ ( ) / THE CIT(A)- 4. @ / CIT 5. 'A? -1 , , / DR, ITAT, MUMBAI 6. ? B / GUARD FILE. 4 4 4 4 / BY ORDER, .'1 -1 //TRUE COPY// 8 88 8 / < < < < * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI