MONISHA R. JAISING, MUMBAI V. DCIT CEN CIR 24 & 26, MUMBAI

ITA 7579/MUM/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1822 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 18-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITRA
• Assessee Lawyers: YOGESH A THAR
• Keywords: Unexplained investment; Income from undisclosed sources; Search and seizure; Principle of natural justice; Source of fund; Valuation report
• Section: 143(3); 153A; 132

Judgement Text

B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 7579 / MUM/2014 ( / ASSESSMENT YEAR : 2011 - 12 ) MONISHA R. JAISING, 20/21B, CHAND T ERRACES, ST. ANDRES ROAD, BANDRA (W), MUMBAI - 400050 / V. DCIT CEN CIR 24 & 26 AAYAKAR BHAVAN M.K. ROAD, MUMBAI - 400020 ./ PAN : ADRPJ4593R ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI. YOGESH A. THAR REVENUE BY : SHRI. S.K. MITRA (DR) / DATE OF HEARING : 04.09 .2018 / DATE OF PRONOUNCEMENT : 22 .11 .2018 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER: THIS APPEAL, FILED BY ASSESSEE , BEING ITA NO. 7579/MUM/2014 , IS DIRECTED AGAINST APPELLATE ORDER DATED 15 .09.2014 PASSED BY LEARNED COMMISS IONER OF INCOME TAX (APPEALS) - 39 , MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR (AY) 2011 - 12 , THE APPELLATE PROCEEDINGS HAD ARISEN BEFORE LEARNED CIT(A) FROM ASSESSMENT ORDER DATED 28.03.2013 PASSED BY LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO) U/S 143(3) OF THE INCOME - TAX ACT, 1961 (HERE INAFTER CALLED THE ACT) FOR AY 2011 - 12 . 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME - TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER: - I.T.A. NO.7579/MUM/2014 2 GROUND I: ADDITION OF RS.8,70,740/ - ON ACCOUNT OF JEWELLERY SEIZED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE DEPUTY COMMISSIONER OF INCOME TAX, RANGE - 24 & 26, MUMBAI ('THE AO') OF ADDING A SUM OF RS. 8,70,740/ - ON ACCOUNT OF JEWELLERY SEIZED. 2. SHE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT: A . VARIOUS DISCREPANCIES HAVING BEEN NOTICED IN VALUATION REPORT OF THE DEPARTMENTAL VALUER, THE CREDIBILITY OF THE VALUATION WAS ITSELF IN DOUBT AN D THUS THE VALUATION OF THE DEPARTMENTAL VALUER ITSELF CANNOT BE ADOPTED. B . THE JEWELLARY SEIZED IS NOT A NEW JEWELLERY BUT HAVE BEEN REMADE OUT OF OLD ITEMS. 3. THE APPELLANT THEREFORE, PRAYS THAT THE ADDITION ON ACCOUNT OF JEWELLERY SEIZED BE DELETED. GROUND II: VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO OF ADDING A SUM OF RS. 2,67,401 UNDER THE HEAD 'INCOME FROM HOUSE PROP ERTY' WITHOUT GIVING A FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE APPELLANT AND THEREBY VIOLATING THE PRINCIPLES OF NATURAL JUSTICE. 2 . THE APPELLANT PRAYS THAT THE ORDER OF THE AO BE STRUCK DOWN AS BAD IN LAW. WITHOUT PREJUDICE TO GROUND II GROUND III: ADDITION OF RS. 2,67,401/ - AS ANNUAL VALUE MADE AS ANNUAL VALUE UNDER THE HEAD INCOME FROM HOUSE PROPERTY' 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO OF ADDING A SUM OF RS. 2,67,401 AS ANNUAL VALUE UNDER THE PROVISIONS OF SECTION 23(1 )(A) OF THE ACT; I.T.A. NO.7579/MUM/2014 3 2 . SHE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT THE PROPERTIES AT PEACE HAVEN AND RACHNA APT. HAD BEEN VACANT THROUGHOUT THE PREVIOUS YEAR AND THEREFORE, ITS VALUE WAS TO BE ADOPTED AS NIL IN VIEW OF THE PROVISIONS OF SECTION 23(1 )(C); 3 . THE APPELLANT, PRAYS TH AT THE ADDITION OF RS. 2,67,401/ - AS ANNUAL VALUE BE DELETED. WITHOUT PREJUDICE TO GROUND III GROUND IV: 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN TREATING 8% OF THE COST OF INVESTMENTS AS THE ANNUAL VALUE OF THE PROPERTY. 2 . SHE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT ANNUAL VALUE OF THE PROPERTY IS TO BE DETERMINED ON THE BASIS OF STANDARD RENT OR MUNICIPAL RATEABLE VALUE. 3 . THE APPELLANT, PRAYS THAT THE ANNUAL VALUE OF THE PROPERTY BE RESTRICTED TO THE EXTENT OF MUNICIPAL RATEABLE VALUE. WITHOUT PREJUDICE TO GROUND III & IV GROUND V: 1 . EVEN ASSUMING (WITHOUT ACCEPTING) THAT AN AD - HOC AMOUNT ON THE BASIS OF COST OF INVESTMENT IS TO BE TREATED AS ANNUAL VALUE, THEN ALSO RATE OF 8% ADOPTED IS EXCESSIVE AND UNREASONABLE UNDER THE CIRCUMSTANCES. 2 . THE APPELLANT, PRAYS THAT THE RATE OF 8% BE APPROPRIATELY REDUCED. GROUND VI: DISALLOWA NCE OF A SUM OF RS. 58,011 OUT OF VEHICLE / TELEPHONE EXPENSES. 1 . ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO OF ADDING A SUM OF RS. 58,011 BEING 10% OF THE TOTAL VALUE OF VEHICLE AND TELEPHONE EXPENSES CLAIMED; 2 . HE FAILED TO APPRECIATE AND OUGHT TO HAVE HELD THAT ADDITION IS NOT JUSTIFIED IN VIEW OF THE FACT THAT THE I.T.A. NO.7579/MUM/2014 4 ENTIRE EXPENSES HAD BEEN EXPENDED FOR THE PURPOSE OF BUSINESS AND NO PART OF THE SAME IS PERSONAL IN NATURE. 3 . THE APPELL ANT, PRAYS THAT THE AFORESAID ADDITION BE DELETED. WITHOUT PREJUDICE TO GROUND V GROUND VII: 1 . EVEN ASSUMING (WITHOUT ACCEPTING) THAT AN AD - HOC AMOUNT HAS TO BE DISALLOWED FOR PERSONAL USE, THEN ALSO RATE OF 10% ADOPTED IS WITHOUT ANY BASIS, EXCESSIVE AN D UNREASONABLE UNDER THE CIRCUMSTANCES. 2 . THE APPELLANT, PRAYS THAT THE RATE OF 10% BE APPROPRIATELY REDUCED. GROUND VIII: GENERAL THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY/ALL OF THE ABOVE GROUNDS OF APPEAL. 3 . THE ASSESSEE HAS RAISED AS MANY AS EIGHT GROUNDS IN APPEAL FILED WITH TRIBUNAL IN ITA NO. 7579/MUM/2014 FOR AY 2011 - 12. T HE BRIEF BACKGROUND OF THE APPEAL IS THAT A SEARCH OPERATION U/S. 132 OF THE INCOME - T AX ACT, 1961 WAS CONDUCTED BY R EVENUE ON 30.11.201 0 AT THE RESIDENTIAL/BUSINESS PREMISES OF SHRI SAMIR BHOJWANI GROUP OF CASES AND THE ASSESSEE WAS ALSO COVERED IN THE SAID SEARCH OPERATIONS . THE ASSESSEE IS A FASHION DESIGNER AND CARRIE S ON MANUFACTURING AND SALE OF DESIGNER GARMENTS THROUGH HER PROPRIET ARY CONCERN , M/S AZZURA INTERNATIONAL. 4. COMING TO GROUND NO. II RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL , THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT THE SAID GROUND OF APPEAL IS NO T BEING PRESSED AN D PRAYER IS MADE BY LEARNED COUNSEL FOR THE ASSESSEE BEFORE THE BENCH FOR DISMISSAL OF THE SAID GROUND NO. II AS NOT BEING PRESSED. THE LD. DR RAISED NO OBJECTION TO THE DISMISSAL OF GROUND NO. II RAISED BY THE ASSESSEE . A FT ER HEARING BOTH THE PARTIES , WE ORDER I.T.A. NO.7579/MUM/2014 5 DISMISSAL OF GROUND NO. II RAISED BY THE ASSESSEE IN ITS APPEAL FILED WITH THE TRIBUNAL AS NOT BEEN PRESSED . WE ORDER ACCORDINGLY. 5. COMING TO GROUND NO. III RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE MADE P RAYER BEFORE THE BENCH THAT THIS GROUND NO III IS TO BE DECIDED AGAINST THE ASSESSEE. SINCE THE LD. COUNSEL FOR THE ASSESSEE CONCEDED THAT THIS GROUND NO. III RAISED IN ITS APPEAL BEFORE THE TRIBUNAL IS TO BE DECIDED AGAINS T THE ASSESSEE, THE LD . DR RAISED NO OBJECTION TO ADJUDICATION OF GROUND NO. III AGAINST THE ASSESSEE . A FTER HEARI NG BOTH THE PARTIES WE DECIDE GROUND NO. III RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL AGAINST THE ASSESSEE ON THE G ROUNDS THAT THE LD. COUNSEL FOR THE ASSESSEE HAS CONCEDED BEFORE THE BENCH THAT THIS GROUND RAISED BY THE ASSESSEE IN ITS APPEAL IS TO BE DECIDED AGAINST THE ASSESSEE . WE ORDER ACCORDINGLY 6. COMING TO GROUND NO. IV AND V RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT THESE TWO GROUNDS ARE NOT PRESSED AND PRAYER IS MADE BY LEARNED COUNSEL FOR THE ASSESSEE FOR DISMISSAL OF GROUND NO. IV AND V AS NOT BEEN PRESSED . THE LD. DR RAISED NO OBJECTION TO THE DISMISSAL OF THE GROUND NO. IV AND V RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL AS NOT BEEN PRESSED. A FTER HEARING BOTH THE PARTIES , WE HEREBY DISMISS GROUND NO. IV AND V RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL AS NOT BEEN PRESSED. WE ORDER ACCORDINGLY. 7. COMING TO GROUND NO. VI AND VII RAISED BY THE ASSESSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL, T HE LD. COUNSEL FOR THE ASSESSEE MADE THE PRAYER THAT THESE TWO GROUNDS ARE TO BE DECIDED AGAINST THE ASSESSEE KEEPING IN VIEW PRECEDING YEAR (S) APPELLATE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 7577 & 7578/MUM/2014 AY 2009 - 10 AND 2010 - 11 RESPECTIVELY , VIDE COMMON APPELLATE ORDER DATED 15.09.2017 KEEPING IN VIEW JUD ICIAL DISCIPLINE . THE LD. DR RAISED NO I.T.A. NO.7579/MUM/2014 6 OBJECTIO N FOR DECIDING THESE TWO GROUNDS VI AND VII RAISED BY THE ASSESSEE IN ITS APPEAL AGAINST THE ASSESSEE . AFTER HEARING BOTH THE PARTIES AND KEEPING IN VIEW ALSO THAT LD. COUNSEL FOR THE ASSESSEE HAS CONCEDED BE FORE THE BENCH THAT THESE TWO GROUNDS NAMELY VI AND VII ARE TO BE DECIDED AGAINST THE ASSESSEE, WE DECIDE THESE TWO GROUNDS AGAINST THE ASSESSEE . THE ASSESSEE FAILS ON THESE TWO GROUNDS. WE ORDER ACCORDINGLY. 8. COMING TO GROUND NO. VIII RAISED BY THE ASSE SSEE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL WHICH IS GENERAL IN NATURE AND DOES NOT REQUIRE SEPARATE ADJUDICAT ION AND IS HEREBY DISMISSED AS GENERAL IN NATURE. WE ORDER ACCORDINGLY. 9. NOW , WE ARE LEFT WITH ONLY ONE EFFECTIVE GROUND RAISED BY THE ASSESS EE IN MEMO OF APPEAL FILED WITH THE TRIBUNAL VIZ. GROUND NO. I WHICH CHALLENGE S ADDITION OF RS. 8,17,740/ - MADE ON ACCOUNT OF JEWELLERY SEIZED DURING THE COURSE OF SEARCH OPERATIONS U/S 132 OF THE 1961 ACT CONDUCTED BY REVENUE ON 30.11.2010. 10 . THE AO OBSERVED DURING ASSESSMENT PROCEEDINGS THAT DU RING THE COURSE OF SEARCH AND SEIZURE OPERATIONS CONDUCTED BY REVENUE U/S 132 OF THE 1961 ACT, FROM THE PREMISES 20 TH FLOOR, CHAND TERRACES, SAINT ANDREWS ROAD, OPPOSITE HOLY FAMILY HOSPITAL, BANDRA (W) ,MUMBAI AND LOCKER NO. 138, PNB, BANDRA (W), MUMBAI, JEWELLERY WORTH RS. 9,10,340/ - OUT OF TOTAL JEWELLERY FOUND DURING SEARCH WORTH RS. 53,01,170/ - WAS SEIZED FOR WANT OF EVIDENCES. THE ASSESSEE WAS SHOW CAUSE D BY AO VIDE NOTICE DATED 02.07.2012 TO EXPLAI N AS TO WHY JEWELLERY OF RS. 9,10,340/ - BE NOT TREATED AS UNEXPLAINED INVESTMEN T U/S. 69A OF THE 1961 ACT. THE ASSESSEE IN RESPONSE TO SCN DATED 02.07.2012 SUBMITTED BEFORE THE AO AS UNDER: - AT THE TIME OF SEARCH CASH OF RS. 2,64,800 WAS FOUND FROM MY RE SIDENCE. CASH FOUND WAS NOT SEIZED. CASH FOUND REPRESENTED CASH ON HAND AS PER BOOKS OF ACCOUNTS OF MY PROPRIETOR CONCERN M/S AZZURRA INTERNATIONAL. I.T.A. NO.7579/MUM/2014 7 JEWELLERY FOUND AT MY RESIDENCE AND AT MY LOCKER HAS BEEN INVENTORISED AND VALUED BY MR. SURAJ RATAN AGRA WAL, REGISTERED VALUER WHO WAS REPRESENTING THE DEPARTMENT. AS PER VALUATION REPORT DATED 30.11.2010, VALUE OF JEWELLERY FOUND AT MY RESIDENCE WAS RS. 31,13,580 AND AS PER VALUATION REPORT DATED 18.12.2010 VALUE OF JEWELLERY FOUND AT MY LOCKER WAS RS. 21,8 7,590. I WOULD LIKE TO DRAW YOUR ATTENTION TO THE FACT THAT SEVERAL ITEMS OF ARTIFICIAL JEWELLERY HAVE BEEN CONSIDERED TO BE REAL JEWELLERY AND ACCORDINGLY THE VAL UATION AS DONE IS EXCESSIVE. INF ACT, WHEN THIS WAS POINTED BY ME TO THE VALUER HE HAS STATED THAT HOUSEHOLD ARTICLES WEIGHING 2KGS WHICH WERE NOT OF SILVER HAVE BEEN CONSIDERED TO BE OF SILVER AND CERTAIN ITEMS WHICH ARE NOT GOLD ITEMS HAVE BEEN CONSIDERED TO BE GOLD ITEMS. AS PER THE VALUER, THE VALUATION WOULD THUS BE REDUCED BY RS. 3,32,600. TH E SEARCH PARTY HAD COMPARED EACH OF THE ITEMS FOUND WITH THE ITEMS AS PER MY WEALTH - TAX RETURNS / AS PER VALUATION REPORT OF THE APPROVED VALUER WHICH VALUATION WAS D ONE AT THE TIME OF SEARCH ON MR. RAVI JAISING, MY HUSBAND, ON 16.11.1999. THE ITEMS FOUND WHICH WERE MATCHING WITH EITHER OF THESE HAVE NOT BEEN SEIZED. VALUE OF ITEMS OF JEWELLERY WHICH HAVE BEEN SEIZED IS RS. 9,10,340. I SUBMIT THAT THE ITEMS OF JEWELLERY SEIZED REPRESENT TO A GREAT EXTENT ITEMS WHICH HAVE BEEN REMADE OUT OF OLD ITEMS OF JEWE LLERY BELONGING TO ME.' 11 . THE AO REJECTED THE AFORESAID CONTENTION S OF THE ASSESSEE AS THE ASSESSEE FAILED TO PRODUCE ANY EVIDENCES TO SUBSTANTIATE ITS CONTENTIONS. THE AO DISBELIEVED THE CONTENTION OF THE ASSESSEE THAT THIS JE WELLERY OF RS. 9,10,340/ - WAS REMAKE O F OLD ITEMS OF JEWELLERY BELONGING TO HER AS THE AO CONSIDERED THE SAME TO BE AFTERTHOUGHT AND CONSEQUENTLY ADDITION S WERE MADE TO THE TUNE OF RS. 9,10,340/ - U/S. 69A OF THE ACT AS AN UNEXPLAINED INVESTMENTS IN THE JEWELLERY , VIDE ASSESSMENT ORDER DATED 28.03.2013 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT . 1 2 . AGGRIEVED BY THE ASSESSMENT ORDER DATED 28.03.2013 PASSED BY THE AO U/S 143(3) OF THE 1961 ACT, THE ASSESSEE FILED FIRST APPEAL WITH LEARNED CIT(A). THE ASSESSEE FURNISHED PAPER BOOK CONTAINING VALUATION REPORT OF DATED 30.11.2010 AND 18.12.2010 . THE ASSESSEE ALSO FURNISHED LETTER DATED 18.12.2010 WRITTEN BY SHRI. SURAJ RATAN AG RAWAL, DEPARTMENTAL VALUER TO DDIT (INV) . THE ASSESSEE SUBMITTED I.T.A. NO.7579/MUM/2014 8 BASED ON THE SAID LET T ER THAT THERE WERE S OME DISCREPANCIES IN THE VALUATION AND THEREFORE CREDIBILITY OF VALUATION IS IN DOUBT. IT WAS POINTED OUT BY THE ASSESSEE FROM LETTER DATED 18.12.2010 WRITTEN BY THE DEPARTMENTAL VALUER BEFORE THE LEARNED CIT(A) THAT GOLD JEWELLERY WORTH RS. 39,600/ - IS AN ITEM OF ARTIFICIAL JEWELLERY AND HENCE THE SAME CANNOT BE INCLUDED IN THE TOTAL INCOME. THE ASSESSEE ALSO EXPLAINED BEFORE LEARNED CIT(A) THAT ITEMS OF JEWELLERY WHICH WERE SEIZED WERE RE - MADE OUT OF ITEM OF OLD JEWELLERIES AND HENCE ADDITION CANNOT BE SUSTAINED AND NEED TO BE DELETED. 13 . THE LD. CIT(A) CONFIRM ED THE BALANCE ADDITION S TO THE TUNE OF RS.8,70,740/ - MADE BY THE AO ON ACCOUNT OF SEIZED JEWELLERY AFTER GIVING RELIEF OF RS. 39,600/ - ON ACCOUNT OF ARTIFICIAL JEWELLERY BY HOLDING AS UNDER , VI DE APPELLATE ORDER DATED 15.09.2014 PASSED BY LEARNED CIT(A) : - 5.3 I HAVE CONSIDERED THE FACTS OF THE CASE, THE FINDINGS OF THE A.O. AND THE SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS MADE A SUBMISSION THAT MANY OF THE ITEMS OF SEIZED JEWELLERY HAD BEEN REMADE OUT OF OLD ITEMS. THE SAID SUBMISSION CANNOT BE ACCEPTED FOR WANT OF EVIDENCE. HOWEVER, THERE IS MERIT IN THE CONTENTION OF THE APPELLANT THAT THE ITEM OF JEWELLERY MENTIONED AT S.NO. 1 OF LIST OF THE ITEMS SEIZED (PLACED AT PAGE 9 OF THE PAPER BOOK) BEING ONE BRACELET WITH STONE HAVING GROSS AND NET WEIGHT OF 22 GMS, AND VALUED AT RS. 39,60 0/ - CANNOT BE INCLUDED IN THE TOTAL INCOME BEING ARTIFICIAL GOLD PLATED JEWELLERY. IT IS SEEN THAT THE VALUER, AS PER THE LETTER DATED 18.12.2010, HAS MENTIONED THAT THE SAID ITEM IS ACTUALLY GOLD PLATED (PAGE 5 OF PAPER BOOK). IN THE CIRCUMSTANCES, THE AD DITION MADE BY THE A.O. IS REDUCED BY A SUM OF RS, 39,6 00/ - ; IN THE RESULT RS. 8,70,740/ - IS SUSTAINED. 14 . STILL AGGRIEVED BY THE DECISION OF LEARNED CIT(A) , TH E ASSESSEE HAS COME IN APPEAL BEFORE THE TRIBUNAL . THE LD. COUNSEL FOR THE ASSESSEE OUT RI GHT LY SUBMITTED THAT NOTHING INCRIMINATING WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS CONDUCTED BY REVENUE U/S 132 OF THE 1961 ACT AGAINST ASSESSEE ON 30.11.2010. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PARA NUMBER 6 I.T.A. NO.7579/MUM/2014 9 OF TH E AO ORDER AND PARA 5.3 OF LD. CIT(A) APPELLATE ORDER TO CONTEND THAT ADDITIONS TO THE TUNE OF RS. 8,70,740/ - IS FINALLY CONFIRMED /UPHELD BY LD. CIT(A) ON ACCOUNT OF JEWELLERY SEIZED DURING THE COURSE OF SEARCH OPERATIONS ON THE GROUNDS THAT THE ASSE SSEE IS NOT ABLE TO RECONCILE THE SAID JEWELLERY WITH EVIDENCES . THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS CONSISTENTLY DECLARING HIGH INCOME IN THE R ETURN OF INCOME FILED WITH THE R EVENUE WHICH REFLECTS FINANCIAL STATUS OF THE ASSESSEE. THE ASSESSEE IS A FASHION DESIGNER AND CARRIES ON MANUFACTURING AND SALE OF DESIGNER GARMENTS THROUGH HER PROPRIETARY CONCERN, AZZURA INTERNATIONAL. INCOME TAX RETURN E D FOR AY 2007 - 08 TO 2011 - 12 ALONG WITH COMPUTATION OF INCOME AND ASSESSMENT ORDER S PAS SED BY THE AO U/S. 143(3) R.W.S 153A OF THE 1961 ACT ARE PLACED IN SEPARATE / SUPPLEMENTARY PAPER BOOK / PAGE NO. 1 TO 28 FILED WITH THE TRIBUNAL . T HE INCOME DECLARED IN THE RETURN OF INCOME FILED BY THE ASSESSEE FOR FOLLOWING ASSESSMENT YEARS VIZ. AY 2007 - 08 TO 2011 - 12 , IS AS UNDER: - ASSESSMENT YEAR INCOME DECLARED IN RS. 2011 - 12 RS. 1,69,15,736/ - 2010 - 11 RS. 1,13,6 9,084/ - 2009 - 10 RS. 1,14,27,466/ - 2008 - 09 RS. 44,76,943/ - 2007 - 08 RS. 54,37,340 / - THE CLAIM IS MADE BY LEARNED COUNSEL FOR THE ASSESSEE BEFORE THE TRIBUNAL THAT THE JEWELLERY IS RECYCLE D JEWELLERY WHICH WAS REMADE OUT OF OLD JEWELLERY OVER A PERIOD OF TIME AND THE ASSESSEE IS ALSO SHOWING CONSISTENTLY HIGH INCOME OVER A PERIOD OF TIME. IT IS ALSO CLAIMED THAT THE ASSESSEE IS A MARRIED WOMEN.IT IS CLAIMED THAT ON THE TOUCHSTONE OF PREPONDERANCE OF PROBABILITIES , THE SAID JEWELL ERY SHOULD BE ALLOWED TO BE SOURCED FROM KNOWN SOURCES AND ADDITION S MADE BY AUTHORITIES BELOW SHOULD BE DELETED . 15 . THE LD. DR SUBMITTED THAT IT I S A CASE OF SEARCH AND SEIZURE OPERATIONS CONDUCTED BY THE REVENUE U/S 132 AGAINST THE ASSESSEE ON I.T.A. NO.7579/MUM/2014 10 30.11.2010 WHEREIN JEWELLERY WHICH COULD NOT BE RECONCILED WITH WEALTH TAX RET URNS AS WELL OTHER EVIDENCES WERE SEIZED AND ADDITION S WERE MADE BY THE AUTHORITIES BELOW A S THE ASSESSEE IS NOT ABLE TO EXPLAIN THE SOURCES OF THE JEWELLERY FOUND IN EXCESS FROM HER POSSESSION AND ADDITION S SHOULD BE CONFIRMED. 1 6 . WE HAVE CONSIDERED RIVAL CONTENTION AND PERUSED THE MATERIAL ON RECORD INCLUDING PAPER BOOKS FILED BY THE ASSESSEE. W E HAVE OBSERVED THAT THE ASSESSEE IS FASHION DESIGNER ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF DESIGNER GARMENTS THROUGH HER PROPRIETARY CONCERN , M/S AZZURA INTERNATIONAL . THERE WAS A SEARCH AND SEIZURE OPERATIONS CONDUCTED BY REVENUE U/S 132 OF THE 1961 ACT ON 30.11.2010 ON SAMIR BHOJWANI GROUP OF CASES. THE ASSESSEE WAS ALSO COVERED IN THE SAID SEARCH OPERATIONS CONDUCTED BY REVENUE ON 30.11.2010 U/S 132 OF THE 1961 ACT . D URING THE CO URSE OF SEARCH OPERATIONS CONDUCTED ON PREMISES 20 TH FLOOR,CHAND TERRACES , SAINT ANDREWS ROAD, OPPOSITE HOLY FAMILY HOSPITAL BANDRA(W), MUMBAI AND LOCKER NO. 138, PNB, BANDRA(W), MUMBAI , CERTAIN JEWELLERIES WERE FOUND WORTH TO THE TUNE OF RS. 53,01,170/ - OUT OF WHICH JEWELLERY WORTH RS. 9,10,340/ - WAS SEIZED. THE ASSESSEE WAS NOT ABLE TO RECONCILE THIS SEIZED JEWELLERY WITH ITS WEALTH TAX RETURNS AS WELL FROM VALUATION REPORTS PREPARED AT THE TIME OF EARLIER SEARCH ON HER HU SBAND ON 16.11.1999 AND FURTHER NO CORROBORATORY EVIDENCE WERE FILED BY THE ASSESSEE TO SUBSTANTIATE HER CONTENTION THAT THE SAID JEWELLERY WAS DISCLOSED JEWELLERY FROM DECLARED SOURCES, WHICH LED TO THE ADDITIONS BEING MADE BY THE AO. THE ASSESSEE MADE A PLEA THAT THESE UNEXPLAINED JEWELLERY WERE RECYCLED AND REMADE FROM OLD JEWELLERY FROM TIME TO TIME . BUT, DUE TO NO EVIDENCES BROUGHT FORWARD BY THE ASSESSEE CORROBORATING AND SUBSTANTIATING THE ACQUISITION /REMAKE OF THIS JEWELLERY TO THE TUNE OF RS. 9, 10,340/ - , THE AO MADE AN ADDITIONS OF RS. 9,10,340/ - U/S 69A OF THE 1961 ACT AS AN UNEXPLAINED INVESTMENT IN SEIZED JEWELLERY . THE LEARNED CIT(A) GAVE RELIEF TO THE TUNE OF RS. 39,600/ - ON ACCOUNT OF ARTIFICIAL JEWELLERY I.T.A. NO.7579/MUM/2014 11 BEING ADDED TO THE INCOME OF THE A SSESSEE BASED ON A LETTER DATED 18.12.2010 WRITTEN BY DEPARTMENTAL REGISTERED VALUER WHILE THE REMAINING ADDITIONS TO THE TUNE OF RS. 8,70,740/ - ON ACCOUNT OF SEIZED JEWELLERY WERE CONFIRMED BY LEARNED CIT(A). NOW , THE ASSESSEE HAS MADE A N CLAIM THAT SHE IS A MARRIED WOMEN REGULARLY ASSESSED TO INCOME - TAX AND ENGAGED IN DESIGNING OF GARMENTS WHICH ARE MANUFACTURED AND SOLD BY HER . THE ASSESSEE HAS CLAIMED THAT THESE JEWELLERIES VALUED TO THE TUNE OF RS. 8,70,740/ - WERE RE - MADE BY RECYCLING OF OLD JEWELL ERY OVER A PERIOD OF TIME . IT IS THE CLAIM OF THE ASSESSEE THAT SHE IS CONSISTENTLY DECLARING HIGH INCOME IN ITS RETURN OF INCOME FILED WITH REVENUE AS DETAILED BELOW : - ASSESSMENT YEAR INCOME DECLARED IN RS. 2011 - 12 RS. 1,69,15,736/ - 2010 - 11 RS. 1,13,6 9,084/ - 2009 - 10 RS. 1,14,27,466/ - 2008 - 09 RS. 44,76,943/ - 2007 - 08 RS. 54,37,340 / - IT IS ALSO CONTENDED THAT NO OTHER INCRIMINATING MATERIAL WERE FOUND AND SEIZED DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS CONDUCTED BY REVENUE WHICH COULD EVIDENCE THAT THERE IS ANY OTHER UNDISCLOSED SOURCES OF INCOME OF THE ASSESSEE. THE ASSESSEE HAS ALSO MADE A CLAIM THAT FACTORS LIKE THAT SHE BEING MARRIED WOMEN HAVING DECLARED HIGHER INCOME, THAT SHE IS FASHION DESIGNER, THAT IT IS RECYCLED JEWELLERY BE ALSO CONSIDERED WHILE ADJUDICATING THIS ISSUE ON THE TOUCHSTONE OF PREPONDERANCE OF PROBABILITIES. NOW UNDER THE SE FACTUAL MATRIX OF THE CASE AND ALSO KEEPING IN VIEW THAT IT IS SEARCH CASE WHEREIN JEWELLERY TO THE TUNE O F RS. 8,70,740/ - WHICH COULD NOT BE RECONCILED WITH THE WEALTH TAX RETURNS AS WELL APPROVED VALUER REPORT PREPARED ON 16.11.1999 AT THE TIME OF SEARCHES CONDUCTED ON THE HUSBAND OF THE ASSESSEE, WE HAVE TO ADJUDICATE THIS ISSUE . THE INCOME TAX ACT,1961 IS NOT GOVERNED BY STRICT RULES OF EVIDENCE AND IT IS THE PREPONDERANCE OF PROBABILITIES OF EVENTS IN ITS NORMAL COURSE OF HAPPENING GOVERNS THE FASTENING OF LIABILITY UNDER THE 1961 ACT I.T.A. NO.7579/MUM/2014 12 SUBJECT OF COURSE TO THE SPECIFIC STIPULATIONS AS ARE CONTAINED IN THE PROVISIONS OF THE 1961 STATUTE. THE ASSESSEE IS A MARRIED WOMEN ENGAG ED IN THE BUSINESS AS FASHION DESIGNER AND WAS MANUFACTURING AND SELLING GARMENTS . IT IS ALSO SEEN THAT THE ASSESSEE HAVING SUBSTANTIAL JEWELLERY VALUING RS. 53.01 LACS WHICH WAS FOUND DURING THE COURSE OF SEARCH OPERATIONS FROM HER POSSESSION. THE JEWELLERY WORTH RS. 44.30 LACS STOOD EXPLAINED AND DISPUTE NOW REMAINS WITH RESPECT TO JEWELLERY WORTH RS. 8.71 LACS ONLY . THIS IS EXPLAINED TO BE RECYCLED JEWELLERY REMADE OUT OF OLD JEWELLERY OVER A PERIOD OF TIME . IT IS OF COMMON KNOWLEDGE THAT INDIAN WOMEN HAVE SPECIAL FLAVOUR FOR JEWELLERY WHICH IS ALSO EVIDENT FROM THE FACT THAT INDIA IS LARGEST IMPORTER OF GOLD AND IT IS ALSO NOT UNCOMMON IN INDIA AMONG LADIES TO RECYCLE OLD JEW ELLERIES TO REMAKE INTO NEW JEWELLERY OF LATEST TRENDS AND DESIGN OR TO EXCHANGE OLD JEWELLERY WITH NEW JEWELLERY OF LATEST TRENDS AND DESIGN . THE ASSESSEE IS A FASHION DESIGNER AND IT IS QUITE OBVIOUS FOR HER THAT SHE HAS TO KEEP HERSELF DRESSED WITH LATE ST TREND/DESIGN OF GARMEN TS /CLOTHS AS WELL JEWELLERY . IT IS ALSO QUITE OBVIOUS THAT EVERY TIME TO HAVE LATEST TREND AND DESIGN JEWELLERY , TAXPAYER CANNOT GO ON BUYING NEW JEWELLERY WHICH ENTAILED FRESH INVESTMENTS AS IS IS VERY EXPENSIVE TO BUY JEWELL ERY , AND IT IS ALSO NOT UNCOMMON IN INDIA FOR TAX - PAYERS TO EXCHANGE OLD JEWELLERY WITH NEW JEWELLERY AND TO RECYCLE THE OLD JEWELLERY WITH NEW JEWELLERY BY PAYING MAKING CHARGES. THE ASSESSEE IS IN HIGH INCOME - TAX BRACKET AND IS CONSISTENTLY DECLARING HI GH INCOME A ND PAYING HIGH TAXES. THE CHART OF HER INCOME FOR FIVE YEARS ARE ENCLOSED ABOVE. THE INCOME DECLARED FOR IMPUGNED ASSESSMENT YEAR 2011 - 12 IS RS. 1.69 CRORE WHILE FOR PRECEDING YEAR AY 2010 - 11 IS RS.1.14 CRORES AND FOR AY 2009 - 10 IS RS. 1.14 CRO RES. THE UNEXPLAINED INVESTMENT IN JEWELLERY IS AN AMOUNT OF RS.8,70,740/ - WHICH ALSO IT IS CLAIMED IS JEWELLERY REMADE OVER NUMBER OF YEARS. THUS, THIS UNEXPLAINED INVESTMENT IS A SMALL AMOUNT VIS - A - VIS HIGH INCOME DECLARED BY THE ASSESSEE. NO OTHER INC RIMINATING MATERIAL WAS FOUND DURING THE SEARCH OPERATION WHICH COULD EVIDENCE THAT THE ASSESSEE HAS ANY UNDISCLOSED SOURCES OF INCOME WHICH WERE HIDDEN I.T.A. NO.7579/MUM/2014 13 FROM REVENUE. NO OTHER INCRIMINATING MATERIAL IS BROUGHT ON RECORD BY REVENUE TO CONTEND THAT THESE SEI ZED JEWELLERIES WERE PURCHASED OUT OF ANY UNDISCLOSED INCOME EXCEPT THAT THE ASSESSEE COULD NOT BRING ON EVIDENCE TO JUSTIFY/SUBSTANTIATE ITS ACQUISITION. THUS, ON THE TOUCHSTONE OF PREPONDERANCE OF PROBABILITIES KEEPING IN VIEW THE CUMULATIVE IMPACT OF PECULIAR FACTUAL MATRIX SURROUNDING THIS CASE AS DISCUSSED ABOVE AND ALSO KEEPING IN VIEW SMALLNESS OF THE AMOUNT VIS - A - VIS INCOME DECLARED BY THE ASSESSEE OVER A PERIOD OF TIME , WE HOLD THAT THE ADDITIONS AS MADE BY THE AO AND CONFIRMED BY LEARNED CIT(A) TOWARDS UNEXPLAINED INVESTMENT IN JEWELLERY TO THE TUNE OF RS. 8,70,740/ - IS NOT SUSTAINABLE IN THE EYES OF LAW AND WE ORDER DELETION OF THIS ADDITION AS WAS MADE BY THE AO AND CONFIRMED BY LEARNED CIT(A) . WE A DJUDICATE THIS GROUND IN FAVOUR OF THE ASSESS EE . WE ORDER ACCORDINGLY. 1 7 . IN THE RESULT APPEAL OF THE ASSESSEE IN ITA NO.7579/MUM/204 FOR AY 2011 - 12 IS PARTLY ALLOWED A S INDICATED ABOVE. ORDER PRONO UNCED IN THE OPEN COURT ON 2 2 .11 .2018. 2 2 .11 .2018 S D / - S D / - (MAHAVIR SINGH) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 2 2 .11 .2018 NISHANT VERMA SR. PRIVATE SECRETARY COPY TO 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) CONCERNED, MUMBAI 4 . THE CIT - CONCERNED, MUMBAI I.T.A. NO.7579/MUM/2014 14 5 . THE DR BENCH, 6 . MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI