P. goutham Chand, Bangalore V. DCIT, Bangalore

ITA 737/BANG/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9262 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 06-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 06-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K BIJU
• Assessee Lawyers: H N KHINCHA
• Keywords: Gift
• Section: 234B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.737/BANG/2016 (ASSESSMENT YEAR: 2012-13) ASSESSEE BY : SHRI. H. N. KHINCHA, CA REVENUE BY : SHRI. M. K. BIJU, JCIT DATE OF HEARING : 28.11.2016 DATE OF PRONOUNCEMENT : 06.12 .2016 ORDER PER GEORGE GEORGE K, JM : THIS APPEAL AT THE INSTANCE OF THE ASSESSEE, IS DIRECTED AGAINST THE ORDER OF THE CIT (A)-11, BANGA LORE. THE RELEVANT ASSESSMENT YEAR IS 2012-13. MR. P. GOUTHAM CHAND, SAI APARTMENTS NO. 201, 2 ND FLOOR, NO. 2, K. R. ROAD, BASAVANAGUDI, BENGALURU 560004. PAN : ABZPG3883D VS. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), BANGALORE. APPELLANT RESPONDENT ITA NO. 737/BANG/2016 PAGE 2 OF 13 2. THE ASSESSEE HAS, IN HIS GROUNDS OF APPEAL, RAIS ED TWO EFFECTIVE GROUNDS , NAMELY: (1) THAT THE AO HAD ERRED IN MAKING AN ADDITION OF RS.4,44,829/- TO THE RETURNED INCOME FOR THE ASSESSEE AND THE LEARNED CIT (A) HAD ERRED IN CONFIRMING THE SAME. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LAD APPLICABLE, THE ADDITION AS MADE/SUSTAINED WAS WHOLLY ERRONEOUS BOTH ON FACTS AND LAW AND IS TO BE DELETED; & (2) THAT THE INTEREST U/SS. 234A, 234B AND 234C OF THE ACT HAVING BEEN LEVIED ERRONEOUSLY IS TO BE DELETED. 3. BRIEFLY STATED, THE FACTS OF THE ISSUE ARE AS FOLLO WS: THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF PAWN BROKING AND MONEY LENDING. A SEAR CH AND SEIZURE OPERATION U/S 132 OF THE ACT WAS CONDUC TED IN THE CASE OF M/S. MANGALCHAND BANTHIA AND OTHERS ON 12.3.2012 AND, ACCORDINGLY, THE ASSESSEE WAS ALSO COVERED BY S. 132 R W S.153A DURING THE SEARCH. DU RING THE COURSE OF SEARCH IN THE CASE OF THE ASSESSEE, GOLD JEWELLERY TO THE EXTENT OF 3001.87 GMS, SILVER TO T HE EXTENT OF 62 KGS AND DIAMONDS OF 2.84 CTS WERE FOUND AND S EIZED. DURING THE COURSE OF POST SEARCH PROCEEDINGS, THE ITA NO. 737/BANG/2016 PAGE 3 OF 13 ASSESSEE HAD ADMITTED PERSONAL JEWELLERY TO THE EXT ENT OF 782 GMS IN THE HANDS OF GAUTHAMCHAND (HUF) AND ADOPTED THE RATE OF RS.2400/GM AND OFFERED RS.18,76 ,800/- TO TAX. OUT OF 62 KGS OF SILVER SEIZED, THE ASSESSE E OFFERED 40 KGS, ADMITTING AN AMOUNT OF RS.20 LAKHS [ 40 X RS.50,000] ON THIS COUNT. FOR THE BALANCE QUANTITY OF THE GOLD SEIZED, THE ASSESSEE STATED THAT OUT OF THE TO TAL GOLD JEWELLERY OF 3002 GMS, ABOUT 2100 GMS WAS EXPLAINED IN TERMS OF BOARDS INSTRUCTION NO.1916 DATED 11.5.199 4, THE DETAILS OF WHICH GIVEN BY THE ASSESSEE VIDE HIS LET TER DT.11.4.2014 IS AS UNDER: SL. NO. MEMBERS GMS 01 CREDIT TO BE GIVEN FOR SELF 200 02 SANTOSH KUMARI 500 03 G. NEERAJ KUMAR 200 04 G. ROHIT KUMAR 200 05 NEETHA 500 06 LABDHI 250 07 HUF 250 TOTAL 2100 ITA NO. 737/BANG/2016 PAGE 4 OF 13 IT WAS THE CASE OF THE ASSESSEE THAT AS HE BELONGS TO A MARWARI BUSINESS FAMILY AND AS PER CUSTOMS AND TRADITIONS, GOLD JEWELLERY OR SILVER ARTICLES WERE ACQUIRED ON VARIOUS OCCASIONS AND IN THE FORM OF GIFTS. HOWEVE R, THE CONTENTIONS AND SUBMISSIONS MADE BY THE ASSESSEE DU RING THE COURSE OF ASSESSMENT PROCEEDINGS WERE NOT ACCEP TED BY THE ASSESSING OFFICER FOR THE ELABORATE REASONS SET OUT BY HER IN THE ASSESSMENT ORDER UNDER DISPUTE AND, ACCORDINGLY, MADE THE FOLLOWING ADDITIONS ON THE RE TURNED INCOME: (I) UNEXPLAINED GOLD RS.57,59 ,120.98 (II) UNEXPLAINED SILVER 1 2,54,000.00 (III) RATE DIFFERENCE IN GOLD 1,51,708.00 (IV) RATE DIFFERENCE IN SILVER 2,80,000.00 TOTAL RS.74,44,829.00 4. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE WITH T HE CIT (A) FOR CONSIDERATION. AFTER HAVING CONSIDERED THE ASSESSEES SUBMISSION AND ALSO RELIANCE PLACED BY T HE ASSESSEE ON THE (I) BOARDS CIRCULAR NO.1916 DATED 11.5.1994 AND (II) THE RULING OF THE HONBLE JURISD ICTIONAL HIGH COURT IN THE CASE OF PATI DEVI REPORTED IN 240 ITR ITA NO. 737/BANG/2016 PAGE 5 OF 13 727, THE CIT (A), THE CIT (A) HAD UPHELD STAND OF T HE ASSESSING OFFICER FOR THE FOLLOWING REASONS: 14. IN THE APPELLANTS CASE ALSO, A STRONG RELIANC E ON CBDT INSTRUCTION HAS BEEN MADE. THE APPELLANT HAS NOT BROUGHT ANYTHING ON RECORD TO SUGGEST THAT HE OR HI S FAMILY MEMBERS HAVE RECEIVED GIFTS DURING ANY FUNCTION. A LL THE CONTENTIONS HAVE BEEN DEALT WITH BY THE ASSESSING O FFICER IN DETAIL IN HER ASSESSMENT ORDER. HUMBLY FOLLOWING T HE ORDER OF THE JURISDICTIONAL TRIBUNAL IN THE ABOVE MENTION ED CASE OF M. SUSHIL KUMAR [M.SUSHIL KUMAR V. DCIT IN ITA NO.644(BNG)/2015 DATED 30.12.2015]AND IN ABSENCE OF ANY EVIDENCE TO SUPPORT THE CONTENTION OF THE APPEL LANT, THE ADDITION MADE BY THE ASSESSING OFFICER IS UPHELD. 5. AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE US WI TH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, THE SUBMISSIONS MADE BY THE LEARNED COUNSEL FOR THE ASSESSEE ARE SUMMARIZED AS UNDER: - THAT THE AUTHORITIES BELOW HAVE ERRED IN NOT CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE PROPER APPRECIATION OF THE EXPLANATION, THERE BEING NO EXCESS GOLD JEWELLERY AND SILVER ARTICLES, THE ADDITION AS MADE IS TO BE DELETED; - THAT IN ANY CASE, THE ADDITION ON ERRONEOUS APPRECIATION OF FACTS ON APPLICATION OF PRINCIPLES OF LAW AND NOT FOLLOWING JUDICIAL PRECEDENT MAKES THE ADDITION BAD IN LAW AND LIABLE TO BE DELETED; - THAT IN ANY CASE, THE AO HAD ERRED IN MAKING THE ADDITIONS ON ACCOUNT OF RATE DIFFERENCE IN GOLD AND SILVER IN THE HANDS OF THE ASSESSEE. ON PROPER APPRECIATION OF FACTS, THE ADDITION AS MADE/SUSTAIN ED IS NOT WARRANTED IN THE HANDS OF THE ASSESSEE AND T HE SAME IS TO BE DELETED; AND ITA NO. 737/BANG/2016 PAGE 6 OF 13 - THAT IN ANY CASE AND WITHOUT PREJUDICE, THE VALUE AS ADOPTED FOR MAKING/SUSTAINING THE ADDITION IS EXCESSIVE. IN CONCLUSION, IT WAS SUBMITTED THAT THE AUTHORITIE S WERE NOT JUSTIFIED IN MAKING A HUGE ADDITION IN THE HANDS OF THE ASSESSEE WHICH DESERVES TO BE DELETED. 6. ON THE OTHER HAND, THE LEARNED DR PRESENT SUPPOR TED THE STAND OF THE AUTHORITIES BELOW AND, ACCORDINGLY , PLEADED THAT AS THERE WAS NO MERIT IN THE ARGUMENT OF THE ASSESSEES COUNSEL, THE ASSESSEES APPEAL REQUIRES TO BE DISMISSED. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS, PERUSED THE RELEVANT MATERIALS ON RECORD AND ALSO T HE RELIANCE PLACED BY THE ASSESSEE ON CASE LAWS FURNIS HED IN THE FORM OF A PAPER BOOK. IT WAS THE CONTENTION OF THE ASSESSEE THAT HE BELONGED TO A MARWADI BUSINESS FAM ILY AND IT WAS THE TRADITION OF THE MARWADI FAMILY TO R ECEIVE GOLD JEWELLERY AND SILVER ITEMS ON VARIOUS FESTIVE OCCASION ITA NO. 737/BANG/2016 PAGE 7 OF 13 AND OTHER OCCASIONS LIKE MARRIAGE, BETROTHAL, CHILD BIRTH ETC., IT WAS ALSO CONTENDED THAT IT WAS COMMON FOR EVERY HINDU WOMEN-FOLK TO HAVE/POSSESS GOLD, SILVER ORNAM ENTS ETC., WHICH, ACCORDING TO THE ASSESSEE, THE STATUS AND BACKGROUND OF THE FAMILY WILL BE GAUGED BASED ON T HE POSSESSION OF SUCH ORNAMENTS. AS COULD BE SEEN FRO M THE FINDINGS OF THE AO IN HER IMPUGNED ORDER UNDER DISP UTE THAT SHE HAD FAIRLY CONCEDED THE ASSESSEES SUBMISSION W ITH A RIDER [REFER: PARA 5 (A) OF THE ASST. ORDER] .THEREFORE ITS ONUS ON THE ASSESSEE TO KEEP THE ENTIRE RECEIPT S ACCOUNTED AND BE ABLE TO EXPLAIN THE SAME WHENEVER REQUIRED. BY INTERPRETING THE INSTRUCTIONS OF THE BOARD CONTAINED IN CIRCULAR NO.1916 DATED 11.5.1994, THE AO HAD STATED THAT THE CIRCULAR HIGHLIGHTS ONLY NON-SEIZURE OF CERTAIN MINIMUM AMOUNT OF GOLD JEWELLERY ONLY. NO WHERE THE CIRCULAR MENTIONS THE ASSESSEE IS IMMUNE FROM EXPLAINING THE TOTAL QUANTUM OF GOLD OR SILVER ITEM S FOUND. THE CIRCULAR CLEARLY STATES THE CERTAIN AMOUNT OF J EWELLERY NOT TO BE SEIZED AND CREDIT TO BE GIVEN TO MARRIED WOMEN IN THE FAMILY, UNMARRIED WOMEN AND MEN OF THE FAMILY. THIS ITA NO. 737/BANG/2016 PAGE 8 OF 13 CREDIT DOES NOT MEAN THE ASSESSEE SHOULD NOT EXPLAI N THE SOURCES FOR THE TOTAL QUANTUM AND ACCOUNT THE ENTIR E GOLD AND SILVER FOUND IN HIS BOOKS. HENCE, THE SUBMISSI ON GIVEN BY THE ASSESSEE IS REJECTED. [SOURCE: PARA 5(B) OF THE ASST. ORDER]. HOWEVER, ON A CAREFUL PERUSAL OF THE INSTRUCTIONS NO.1916 OF THE BOARD, WE FIND THAT THE ASSESSING OF FICER HAD NOT VERIFIED/EXAMINED TO ASCERTAIN (I) AS TO WH ETHER THE FAMILY MEMBERS OF THE ASSESSEE WERE WEALTH TAX ASSE SSES AND IF SO, (II) AS TO WHETHER THE GOLD JEWELLERY AN D ORNAMENTS FOUND DURING THE COURSE OF SEARCH WERE EX CESS OF THE GROSS WEIGHT ADMITTED IN THEIR WEALTH-TAX RE TURNS. FOR READY REFERENCE, THE OPERATIONAL PORTIONS OF TH E INSTRUCTION NO.1916 OF THE BOARD ARE REPRODUCED AS UNDER: INSTANCES OF SEIZURE OF JEWELLERY.THE FOLLOWING GUIDELINES ARE ISSUED FOR STRICT COMPLIAN CE: (I) IN THE CASE OF A WEALTH-TAX ASSESSEE, GOLD JEWELLER Y AND ORNAMENTS FOUND IN EXCESS OF THE GROSS WEIGHT DECLARED IN THE WEALTH-TAX RETURN ONLY NEED BE SEIZED; (II) IN THE CASE OF A PERSON NOT ASSESSED TO WEALTH-TAX GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS. PER MARRIED LADY, 250 GMS. PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER OF THE FAMILY NEED NOT BE SEIZED; (III) THE AUTHORIZED OFFICER MAY, HAVING REGARD TO THE STATUS OF THE FAMILY, AND THE CUSTOM SAND PRACTICES OF THE COMMUNITY TO WHICH THE FAMILY BELONGS AND OTHER CIRCUMSTANCES OF THE CASE, DECIDE TO EXCLUDE A ITA NO. 737/BANG/2016 PAGE 9 OF 13 LARGER QUANTITY OF JEWELLERY AND ORNAMENTS FROM SEIZURE. THIS SHOULD BE REPORTED TO THE DIRECTOR OF INCOME-TAX/COMMISSIONER AUTHORIZING THE SEARCH AT THE TIME OF FURNISHING THE SEARCH REPORT; (IV) IN ALL CASES, A DETAILED INVENTORY OF THE JEWELLERY AND ORNAMENTS FOUND MUST BE PREPARED TO BE USED FOR ASSESSMENT PURPOSES. 8. AT THE OUTSET, WE WOULD LIKE TO POINT OUT THAT T HE LETTER AND SPIRIT OF THE GUIDELINES ISSUED BY THE BOARD FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN COURSE OF SEA RCH HAD NOT BEEN ADHERED TO IN THE INSTANT CASE, PRESUM ABLY, EITHER AT THE TIME OF SEARCH OPERATION OR DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. 9. IN THE MEANWHILE, OUR REFERENCE IS DRAWN TO AN IDENTICAL ISSUE CONSIDERED BY THE EARLIER BENCH OF THIS TRIBUNAL IN THE CASE OF SHRI M.VIMAL KUMAR AND SRI M SANJAY KUMAR V. DCIT, CC 2(1), BANGALORE IN ITA NOS .642 & 643/BANG/2015 DATED 14.8.2015. AFTER DUE CONSIDERATION OF THE RIVAL SUBMISSIONS AND ALSO EXT ENSIVELY QUOTING THE RULING OF THE HONBLE GUJARAT HIGH COUR T IN THE CASE OF RATANLAL VYAPARILAL JAIN [339 ITR 351 (GUJ) ] ON A ITA NO. 737/BANG/2016 PAGE 10 OF 13 SIMILAR ISSUE, THE EARLIER BENCH HAD RECORDED ITS F INDINGS AS UNDER: 08. WE ARE THEREFORE OF THE OPINION THAT ASSESSEE CAN ALWAYS CLAIM EXCLUSION FROM UNDISCLOSED JEWELLERY T HE QUANTUM OF JEWELLERY MENTIONED IN THE SAID CIRCULAR . HOWEVER, THE CIRCULAR ALLOWS ONLY 100 GMS PER MALE MEMBER, 250 GMS FOR UNMARRIED LADY AND 500 GMS FOR MARRIED LADY IN THE FAMILY. THE LIST MENTIONED BY THE ASSESSEE CLAIMS 200 GMS EACH FOR HIMSELF AND HIS SO N AND 250 GMS FOR THE HUF. AS PER THE CIRCULAR WHAT COUL D BE GIVEN CREDIT FOR A MEMBER IS ONLY 100 GMS. NO CRED IT COULD BE GIVEN FOR HUF FOR THE SIMPLE REASON THAT AN HUF CANNOT WEAR ANY JEWELLERY BY ITSELF. IN OUR OPINIO N, THE MAXIMUM RELIEF THAT COULD BE GIVEN TO THE ASSESSEE IN ADDITION TO WHAT WAS GIVEN BY THE AO WAS 950 GMS. V IZ., 100 GMS FOR ASSESSEE, 100 GMS FOR ASSESSEES SON, 2 50 GMS FOR ASSESSEES DAUGHTER AND 500 GMS FOR ASSESSEES DAUGHTER-IN-LAW. CONTENTION OF THE LD. AR THAT STAT US OF THE ASSESSEE HAD TO BE CONSIDERED AND HIGHER RELIEF SHO ULD BE GIVEN CANNOT BE ACCEPTED FOR THE SIMPLE REASON THAT NOTHING WAS PRODUCED TO SHOW ANY SPECIAL SOCIAL STATUS ENJO YED BY THE ASSESSEE EXCEPT FOR STATING THAT THE ASSESSEE B ELONGED TO A MARWARI BUSINESS FAMILY. 10. ON AN IDENTICAL ISSUE, THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF SMT PATI DEVI V. INCOME-TAX O FFICER REPORTED IN (1999) 240 ITR 72 (KAR), HAD RULED AS U NDER: LEARNED COUNSEL FOR THE PETITION HAS BROUGHT T O MY NOTICE INSTRUCTION DATED MAY 11, 1994 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES BY WHICH 500 GMS OF G OLD JEWELLERY AND ORNAMENTS PER MARRIED LADY, 250 GMS P ER UNMARRIED LADY, 100 GMS PER MALE MEMBER OF THE FAMI LY WERE DIRECTED NOT TO BE SEIZED. THE INSTRUCTION ISSUED COULD ONLY BE RETROSPECTIVE IN THE SENSE THAT EVEN IF A SEIZURE IS MADE TO DAY IRRESPECTIVE OF THE DATE OF ACQUISITION OF GOLD JEWELLERY, THE BENEFIT HAS TO BE GIVEN TO T HAT EXTENT. IT IS NOT THE VALUE WHICH IS INCREASED BUT IT IS TH E WEIGHT ITA NO. 737/BANG/2016 PAGE 11 OF 13 WHICH IS CONSIDERED REASONABLE LOOKING TO THE SOCIA L CIRCUMSTANCES PREVAILING IN THE COUNTRY. . 11. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE I SSUE AS DELIBERATED UPON IN THE FORE-GOING PARAGRAPHS AND I N CONSONANCE WITH THE (I) INSTRUCTION NO.1916 OF THE CBDT; (II) THE FINDINGS OF THE EARLIER BENCH OF THIS TRIB UNAL (SUPRA); AND (III) THE RULING OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE ARE OF THE VIEW THAT THE ISSUE SHOULD B E RESTORED ON THE FILE OF THE AO FOR FRESH CONSIDERAT ION AS THE DETAILS FURNISHED BY THE ASSESSEES COUNSEL DURING THE COURSE OF HEARING BEFORE US AS WELL AS THE BREAK-UP OF 2100 GMS FURNISHED BY THE ASSESSEE VIDE HIS LETTER DATED 11.4.2012 [REFER: PARA 5 OF THE ASST. ORDER], IT CO ULD NOT BE ASCERTAINABLE AS TO WHETHER THE LADIES MENTIONED IN THE LIST FOR 2100 GMS ARE MARRIED LADIES OR NOT. HENCE, THE ASSESSEE SHOULD PRODUCE DETAILS AND EVIDENCES ON TH IS ASPECT AND THEREAFTER THE AO SHOULD QUANTIFY THE QU ANTUM OF JEWELLERY TO BE ACCEPTED PER LADY WHETHER 250 GM S OR 500 GMS AND THEN ALLOW BENEFIT TO THE ASSESSEE ACCORDINGLY. ITA NO. 737/BANG/2016 PAGE 12 OF 13 12. THE ASSESSEES SECOND GROUND IS NOT MAINTAINABL E AS LEVY OF INTEREST U/SS. 234A, 234B AND 234C OF TH E ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE. 13. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. SP 110/B/16 14. SINCE THE ASSESSEES APPEAL IS DISPOSED OF AS INDICATED SUPRA, ITS STAY PETITION NO.110/B/16 BECO MES INFRUCTUOUS AND, ACCORDINGLY, THE SAME IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 06-12-2016. SD/- SD/- (A. K. GARODIA) (GEORGE GEORGE K.) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : BANGALORE DATED : 06/12/2016 /NS/ ITA NO. 737/BANG/2016 PAGE 13 OF 13 COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A)-II BANGALORE 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT RE GISTRAR INCOME-TAX APPELLATE TRIBUNAL BANGALORE