Shri Rajesh Dhalla, New Delhi V. ACIT, New Delhi

ITA 784/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86579 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 23-12-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY JAIN C AS
• Keywords: Salary income; Opportunity of being heard; Deemed to accrue or arise in india; Onus to prove
• Section: 143(3); 153A

Judgement Text

IN TH E INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI GEORGE GEORGE K. , JUDICIAL MEMBER AND SHRI T.S. KAPOOR , ACCOUNTANT MEMBER ITA NO . 784 / DEL / 20 13 ASSESSMENT YEAR : 20 10 - 11 SHRI RAJESH DHALLA 3174/33, BEADONPURA KAROL BAGH, NEW DELHI - 110005 VS. ACIT, CIRCLE - 33(1), NEW DELHI 110044 (PAN AAGPD 5743 D ) (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI RAKESH JOSHI, AND SHRI SANJAY JAIN, C.AS. RESPONDENT BY: SHRI PIYUSH JAIN , CIT, DR . ORDER PER SHRI GEORGE GEORGE K. , J M : 1. THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT (A) - XXVI, DELHI DATED 26.11.2012. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . 2. THE ASSESSEE HAS, IN HIS GROUNDS OF APPEAL, RAISED THE FOLLOWING TWO ISSUES, NAMELY: (1) THAT THE CIT (A) HAD ERRED IN CONFIRMING THE ADDITION OF RS.1,38,02,690/ - MADE U/S 69A OF THE ACT; & (2) THAT THE CIT (A) ERRED IN PARTLY CONFIRMING THE DISALLOWANCE OF THE EXPENSES MADE BY THE AO ON AN AD - HOC BASIS. 3. BRIEFLY STATED, THE FACTS OF THE ISSUES ARE AS UNDER: THE ASSESSEE, AN INDIVIDUAL, HAD DERIVED INCOME FROM SALARY, BUSINESS, AND PROFESSION AND FROM OTHER SOURCES . HE HAD FILED HIS RETURN OF INCOME ON ITA NO. 784 /DEL /20 13 2 10.11.2009, ADMITTING AN INCOME OF RS.3,48,556/ - . IN THE MEANWHILE, PROCEEDINGS U/S 153A OF THE ACT WERE INITIATED BY THE AO ON THE BASIS OF THE INFORMATION RECEIVED FROM THE DDIT (INV), JAMMU AS PER THE REQUISITION MADE U/S 132A OF THE ACT. IN COMPLIANCE TO THE NOTICE U/S 153A DATED 16.8.2010; THE ASSESSEE HAD FILED HIS RETURN OF INCOME, ADMITTING AN IDENT ICAL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE AO THAT THE SPECIAL INVESTIGATION UNIT [SIU] OF THE COMMERCIAL TAXES DEPARTMENT OF JAMMU SEIZED JEWELLERY ESTIMATED AT RS.1.20 CRORES U/S 67(5), 67 (10)(6) OF THE JAMMU & KA SHMIR VAT ACT, 2005 FROM THE ASSESSEE AS, ACCORDING TO SIU, THE CONSIGNMENT WAS NOT ACCOMPANIED BY ANY DOCUMENT. A WARRANT U/S 132A OF THE ACT WAS SERVED ON THE ADDL. COMMISSIONER OF COMMERCIAL TAXES (ADMN) JAMMU ON 7.8.2009 AND, ACCORDINGLY, THE JEWELLER Y WORTH OF RS.1,11,89,825/ - WAS HANDED OVER TO THE DEPARTMENT ON 3.5.2010 AND JEWELLERY WORTH RS.37,06,106/ - WAS RETAINED BY THE COMMERCIAL TAXES DEPARTMENT AS SECURITY U/S 67(1) OF THE J & K VAT ACT. AFTER VERIFYING THE DETAILS FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND FOR THE DETAILED REASONS RECORDED THEREIN, THE AO HAD CONCLUDED THE ASSESSMENT U/S 143(3) OF THE ACT DATED 29.12.2011 ON A TOTAL INCOME OF RS.1,42,39,309/ - THEREBY ADDING THE VALUE OF THE JEWELLERY AMOUNTING TO RS.1,38,02,690/ - [VALUE OF THE CONSIGNMENT WORTH RS.1.38 CRORES BUT NOT THE VALUE OF CONSIGNMENT AT THE TIME OF SEIZURE OF RS.1.48,95,931/ - ] AS INCOME OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE, AMONG OTHERS, WITH THE CIT (A). AFTER T AKING INTO ACCOUNT THE ELABORATE SUBMISSIONS MADE BY THE ASSESSEE, THE CIT (A) HAD CONFIRMED THE ADDITION OF RS.1,38,02,690/ - MADE BY THE AO FOR THE FOLLOWING REASONS: 6. (ON PAGE 9) ON PERUSAL OF THE DETAILS, IT IS SEEN THAT THE APPELLANT IS A DIRECTOR IN A COMPANY CALLED M/S. D - MINES TRADING CO. PVT. LTD WHICH IS ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF JEWELLERY. WHEN THE APPELLANT WAS IN JAMMU ON 30.7.2009 AND WAS TRAVELING BY AUTO - RICKSHAW, THE SALES TAX OFFICE RS INTERCEPTED THE AUTO - RICKSHAW AND ON SEARCH FOUND GOLD/DIAMOND ORNAMENTS. THE SEIZED JEWELLERY WAS ESTIMATED BY THE SALES TAX DEPARTMENT U/S 67(5), 67(10)(6) OF THE JAMMU & KASHMIR VAT ACT, 2005 AND ALSO BY THE APPROVED VALUER. AT THE TIME OF SEIZURE OF JEWELLERY, THE CONSIGNMENT WAS NOT ACCOMPANIED BY ANY DOCUMENT AS ENVISAGED U/S 67(2) OF J & K VAT ACT, 2005. S. 67(2) OF J & K VAT ACT, 2005, INTER ALIA STATES AS UNDER: .. ITA NO. 784 /DEL /20 13 3 6.1. WARRANT U/S 132(1) OF THE I.T. ACT 1961 DA TED 6.8.2009 WAS SERVED UPONTHE ADDL. CIT (ADMN), JAMMU ON 7.8.2009. THE APPELLANT FILED A PETITION BEFORE THE HON BLE HIGH COURT OF J & K AT JAMMU FOR RELEASE OF JEWELLERY. THE HON BLE H.C PASSED AN INTERIM ORDER ON 10.6.2011. IT WAS STATED IN THE SAID ORDER THAT THE APPELLANT DEPOSITED AN AMOUNT OF RS.34 LACS AS PENALTY IN TERMS OF S. 67(10) OF J & K VAT ACT, 2005 AND AN AMOUNT OF RS.2.76,053/ - AS PENALTY IMPOSED U/S 69(10) OF THE AFORESAID ACT. THE ORDER ALSO STATED THAT THE APPELLANT WAS REQUIRED TO PAY A SECURITY TO THE TUNE OF RS.37,50,672/ - WHICH IS A BANK GUARANTEE FOR RELEASE OF JEWELLERY. IN COMPLIANCE TO THE SAID INTERIM ORDER, DEPUTY COMMISSIONER OF COMMERCIAL TAXES (RECOVERY), JAMMU PASSED AN ORDER RELEASING THE JEWELLERY EQUIVALENT TO THE BANK GUARANTEE GIVEN AS SECURITY, AMOUNTING TO RS.37,50,672/ - . THE DY. COMMR. OF COMMERCIAL TAX (RECY) HANDED OVER THE JEWELLERY WORTH RS.1,38,02,690/ - ON 3.5.2010 TO THE I.T. DEPT. AND JEWELLERY WORTH RS.37,06,106/ - WAS RETAINED BY THE COMMERCIAL TAXES D EPT. AS AMOUNT OF SECURITY U/S 67(1) OF J & K VAT ACT, 2005. 6.2. SUBSEQUENTLY, THE APPELLANT MOVED AN APPLICATION U/S 132 B(1)(I) PROVISO TO S. 132B(1) REGARDING THE RELEASE OF JEWELLERY TO THE ITO, WARD 11(1), NEW DELHI. TILL DATE, THE SAID JEWELLERY SE IZED HANDED OVER TO THE DEPT. IS NOT RELEASED AND THE MATTER IS YET TO BE DECIDED AND IS SUB - JUDICE BEFORE THE HON BLE HIGH COURT, J & K, JAMMU. 6.3. FROM THE ABOVE FACTS, IT IS EVIDENT THAT AT THE TIME THE APPELLANT WAS INTERCEPTED HE WAS NOT IN POSSESSI ON OF ANY DOCUMENT LIKE SALE BILL, VOUCHERS, CERTIFICATE OF OWNERSHIP, WAY BILL ETC., TO SUBSTANTIATE THE GOLD/DIAMOND ORNAMENTS HE WAS CARRYING WITH HIM. THE SEIZED JEWELLERY WAS OUT OF THE BOOKS AND THE APPELLANT FAILED TO PRODUCE ANY DOCUMENTARY EVIDEN CE AT THAT TIME. THE STATEMENT OF SHRI RAJESH DHALLA WAS RECORDED BY THE INCOME - TAX DEPARTMENT ON 30.L0.2009 AND THE APPELLANT DID NOT DENY THE OWNERSHIP OF JEWELLERY WHICH HE SUBSEQUENTLY STATED THAT THE SEIZED JEWELLERY BELONGS TO THE COMPANY. VIDE DAT ED 18.11.2009; THE APPELLANT FILED AN APPEAL BEFORE THE APPELLATE AUTHORITY U/S 72 OF THE J & K VALUE ADDED TAX ACT 2008. THIS APPEAL IS PENDING TILL DATE. THE APPELLANT FURNISHED A COPY OF THE AFFIDAVIT OF ONE REYAR A BUCCH (ADVOCATE), S/O KH. M.A. BUCC H, R/O G 1, LANE NO.16, GREATER KAILASH JAMMU, COUNSEL FOR D - MINE TRADING CO. PVT. LTD WHEREIN HE STATED AS UNDER: THAT I HAVE SEEN THE INVOICES WHICH WERE SEIZED ALONG WITH THE GOODS ON 31.8.2009 IN THE FILES OF SIU . THAT I HAVE ALSO GIVEN THE COPIES O F THE INVOICES TO THE SIU BUT THOSE INVOICES HAVE BEEN REMOVED FROM THE FILE. 6.4. IT IS A POINT TO NOTE THAT ON THE DAY THE APPELLANT WAS INTERCEPTED, THE GOODS IN HIS POSSESSION WERE INVENTORIZED. HAD THE INVOICES WERE ACCOMPANIED WITH THE CONSIGNM ENT, THE OFFICERS WOULD HAVE GIVEN A COPY OF THE INVENTORIZED GOODS AND DOCUMENTS ITA NO. 784 /DEL /20 13 4 SEIZED AT THAT TIME ONLY. HOWEVER, IT IS SEEN THAT IN THE PRESENT CASE, THERE IS NO SUCH EVIDENCE PERTAINING TO THE SEIZURE OF THE DOCUMENTS. A PERUSAL OF THE AFFIDAVIT REV EALS THAT IT WAS MADE AFTER ALMOST ONE AND A HALF MONTH AFTER THE SEIZURE OCCURRED. THE CONTENTS ARE ALSO CONTRADICTING WHEREIN IT WAS STATED THAT THE SEIZED INVOICES ALONG WITH THE GOODS WERE SEEN BY THE APPELLANT S COUNSEL ON 31.7.2009 WHEN THE APPELLAN T WAS INTERCEPTED AND AGAIN IT WAS STATED THAT THE COUNSEL GAVE COPIES OF THE INVOICES TO SIU WHICH WERE FOUND REMOVED FROM THE FILE. FROM THIS, IT IS EVIDENT THAT IF THE INVOICES WERE SEIZED BY THE OFFICERS OF SIU WHERE WAS THE NECESSITY FOR THE COUNSEL TO GIVE THOSE INVOICES TO THE SIU AFTER THE SEIZURE? FROM THIS, I FIND THAT NO DOCUMENTS LIKE BILLS/INVOICES WERE FOUND IN THE POSSESSION OF THE APPELLANT ALONG WITH THE CONSIGNMENT ON THE DAY OF SEIZURE AND THE APPELLANT AND HIS COUNSEL MADE UP A STORY T O THROW THE BALL IN THE COURT OF THE SIU OFFICERS TO GET AWAY WITH THE UNPRECEDENTED DEED. I FIND IT ALSO STRANGE THAT A PRUDENT BUSINESSMAN WHO GOES BEYOND HIS JURISDICTION TO EXPAND HIS BUSINESS ACTIVITIES WOULD BE SO NAVE THAT HE WOULD NOT KEEP A COPY OF THE INVENTORY OF DOCUMENTS SO SEIZED BUT WOULD KEEP COPY OF THE INVENTORY OF THE GOODS SO SEIZED. VIDE AN AFFIDAVIT DATED 4.12.2009, THE APPELLANT STATED AS UNDER: THAT ON 31 ST OF JULY 2009 MY DIAMONDS STUDDED JEWELLERY WAS SEIZED BY DY. COMMISSIONER OF COMMERCIAL TAXES (RECOVERY) JAMMU SH. PAWAN KUMAR PARIHAR ALONG WITH ORIGINAL INVOICES. THAT I ALSO GAVE INVOICES TO THE SAID OFFICER AND THE ORIGINAL INVOICES AND THE PHOTOCOPIES OF THE INVOICES HAVE BEEN REMOVED FROM THE FILE WITH A MALA - FIDE INTENTI ON TO WEAKEN MY CASE. THAT I APPLIED FOR CERTIFIED COPIES OF INVOICES A MONTH BACK THROUGH REGISTERED POST BUT I HAVE NOT HEARD FROM THE SAID OFFICER NOR HAVE I RECEIVED THE CERTIFIED COPIES. 6.5.ON A PERUSAL OF THE ABOVE TWO AFFIDAVITS WHICH ARE ON DIFFE RENT DATES AND WITH A GAP OF FEW DAYS, I FIND THAT ALL THESE WERE SUBMITTED AFTER THE SEIZURE IN ORDER TO GIVE A CREDENCE AS THROUGH THE BILLS/INVOICES WERE AVAILABLE WITH THE APPELLANT ON 31.7.2009 WHICH IN REALITY IS A DIFFERENT VERSION. THERE IS NO REL ATION BETWEEN THE APPELLANT AND THE SAID DY. COMMISSIONER OF COMMERCIAL TAXES (RECY.) JAMMU SH. PAWAR KUMAR PARIHAR AND WHY WOULD ANYBODY DENY THE FACT OF SEIZURE OF BILLS/INVOICES, UNLESS THE APPELLANT S MOTIVE IS MALA - FIDE WITH AN ULTERIOR AIM TO GET HIS GOODS RELEASED BY ALL MEANS. THIS ACT BY THE APPELLANT IS AN AFTERTHOUGHT WHICH IS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE. ON PERUSAL OF THE DETAILS OF DOCUMENTS FURNISHED INTER - ALA APPLICATION U/S 132B(1), IT IS SEEN THAT THE APPELLANT FURNISHED VARI OUS DOCUMENTS PERTAINING TO HIM, BUT, HE FAILED TO FILE ANY CONFORMATION/EVIDENCE FROM THOSE PARTIES TO WHOM HE SUPPOSEDLY MADE SALES IN JAMMU PRIOR TO THE INTERCEPTION BY THE SALES TAX OFFICERS. IF THIS TRANSACTION WAS ITA NO. 784 /DEL /20 13 5 GENUINE, HE WOULD HAVE FURNISHED THE RELEVANT EVIDENCE BEFORE SALES TAX OFFICER ON THAT DAY ITSELF FROM THOSE PARTIES DOING BUSINESS IN JAMMU TO WHOM HE WAS TO DELIVER THE SEIZED GOLD/DIAMOND ORNAMENTS. SINCE THE APPELLANT COULD NOT PROVE THE GENUINENESS OF SALE OF GOODS, THE ASSESSING OFFI CER RIGHTLY TREATED THE ENTIRE VALUE OF THE SEIZED GOODS AMOUNTING TO RS.1,38,02,690/ - AS UNEXPLAINED JEWELLERY U/S 69A OF I.T. ACT, 1961 AND ADDED THE SAME AS DEEMED INCOME OF THE APPELLANT. AFTER REPRODUCING THE PROVISIONS OF S. 69A OF THE ACT VERBATIM [IN PARA 6. 6] THE CIT (A) HAD REASONED AS UNDER: IN THE PRESENT CASE, THE ONUS WAS ON THE APPELLANT TO PROVE THAT HE IS NOT THE OWNER OF THE GOLD/DIAMOND ORNAMENTS THAT WERE SEIZED BY THE SALES TAX OFFICER AT JAMMU. IT IS ALSO A POI NT TO NOTE THAT THE APPELLANT DERIVED INCOME FROM THE PARTNERSHIP BUSINESS WHICH WAS DECLARED BY HIM IN HIS RETURN. THE APPELLANT DID NOT FURNISH ANY COGENT EVIDENCE TO SHOW THAT HE IS NOT THE OWNER OF THE ORNAMENTS THAT WHICH SEIZED EITHER BEFORE THE SAL ES TAX OFFICER OR INCOME - TAX DEPARTMENT. IN VIEW OF THE ABOVE DISCUSSION, I FIND NO JUSTIFICATION IN INTERFERING IN THE ORDER PASSED U/S 143(3) DATED 29.12.2011 BY THE AO TREATING THE VALUE OF JEWELLERY SEIZED AMOUNTING TO RS.1,38,02,690/ - AS DEEMED INCOM E OF THE APPELLANT U/S 69A. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.1,38,02,690/ - IS HEREBY CONFIRMED. 4. AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE US WITH THE PRESENT APPEAL. DURING THE COURSE OF HEARING, THE LEARNED AR REITERATED WHAT HAS BEEN REPRESENTED BEFORE THE CIT (A). ON THE OTHER HAND, THE LD. DR SUPPORTED THE STAND OF THE INCOME - TAX AUTHORITIES. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD AND ALSO THE DOCUMENTARY EVIDENCES PRODUCED BY THE LD. AR IN THE FORM OF A PAPER BOOK. THE FACTS OF THE CASE AS EMERGED FROM THE RECORDS THAT THE ASSESS EE WAS INTERCEPTED BY THE OFFICER OF THE COMMERCIAL TAXES DEPARTMENT, JAMMU IN THE VICINITY OF JAIN BAZAAR, JAMMU AND ON VERIFICATION, THE ASSESSEE WAS IN POSSESSION OF DIAMOND STUDDED GOLD JEWELLERY. AS THE ASSESSEE, ACCORDING TO THE SALES TAXES AUTHORIT IES [STA], COULD NOT PRODUCE ANY SUPPORTING DOCUMENTS, THE JEWELLERY WAS SEIZED AND HIS STATEMENT WAS RECORDED BY THE STA AT JAMMU. AS PER THE WARRANT U/S 132A OF THE I.T. ACT, JEWELLERY WORTH OF RS.1,11,89,825/ - WAS HANDED OVER TO THE I.T. DEPARTMENT AND JEWELLERY WORTH OF RS.37,06,106/ - WAS RETAINED BY THE STA UNDER THE J & K VAT ACT, 2005. DURING THE ITA NO. 784 /DEL /20 13 6 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD, HOWEVER, CONTENDED THAT THE JEWELLERY WAS NOT BELONGED TO HIM, BUT, WAS BELONGED TO M/S. D MINES TRADIN G CO. PVT. LTD IN WHICH ADMITTEDLY HE IS A DIRECTOR. HE HAD, FURTHER, CONTENDED THAT AS THE BILLS HAVE BEEN ISSUED BY THE COMPANY AND DULY ACCOUNTED FOR IN ITS BOOKS OF ACCOUNT, STOCK REGISTER, THERE WAS NO REASON TO DISBELIEVE THE FACT THAT THE JEWELLERY BELONGED TO THE COMPANY. HOWEVER, THE AO MADE THE ADDITION OF RS.1,38,02,690/ - U/S 69A OF THE ACT ON THE GROUND THAT AT THE TIME OF SEIZURE OF JEWELLERY BY THE STA, JAMMU, THE ASSESSEE WAS NOT CARRYING ANY BILLS/INVOICES. THE CIT (A) HAD ALSO CONFIRMED THE ADDITION MADE BY THE AO ON THE GROUND THAT THAT THE ONUS WAS ON THE APPELLANT TO PROVE THAT HE IS NOT THE OWNER OF THE GOLD/DIAMOND ORNAMENTS THAT WERE SEIZED BY THE SALES TAX OFFICER AT JAMMU. IT IS ALSO A POINT TO NOTE THAT THE APPELLANT DERIVED I NCOME FROM THE PARTNERSHIP BUSINESS WHICH WAS DECLARED BY HIM IN HIS RETURN. THE APPELLANT DID NOT FURNISH ANY COGENT EVIDENCE TO SHOW THAT HE IS NOT THE OWNER OF THE ORNAMENTS THAT WHICH SEIZED EITHER BEFORE THE SALES TAX OFFICER OR INCOME - TAX DEPARTMENT . [PARA 6.6 OF CIT (A) S ORDER]. 5.1. IN THE MEANWHILE, OUR REFERENCE WAS DRAWN TO THE INTERIM ORDER PASSED BY THE HON BLE HIGH COURT OF JAMMU & KASHMIR IN OWP NO.867/2011 AND OMP NO.1189/2011 [TITLED D MINES TRADING COMPANY V. STATE OF J & K & ORS] DATED 10.6.2011, ACCORDING TO WHICH, SUBJECT TO THE FURNISHING OF BANK GUARANTEE TO THE TUNE OF RS.37,50,672/ - BEFORE THE RESPONDENT NO.3 [ THE DY. COMMR. OF COMMERCIAL TAXES (RECY) ] THE GOODS SEIZED BY THE STA WAS TO BE RELEASED . ON THE BASIS OF TH E BANK GUARANTEE FURNISHED, THE DY. COMMR. OF COMMERCIAL TAXES (RECY), JAMMU HAD ORDERED THE RELEASE OF SEIZED GOODS EQUAL TO THE AMOUNT OF SECURITY FURNISHED [PAGE A 13 OF PB AR]. 5.2. DURING THE COURSE OF HEARING, IT WAS CONTENDED THAT THE BILLS HAVE BEEN ISSUED BY D - MINES TRADING COMPANY PRIVATE LIMITED AND DULY ACCOUNTED FOR IN ITS BOOKS OF ACCOUNT, STOCK REGISTER ETC., IT WAS ALSO THE ASSERTION OF THE ASSESSEE THAT AS PER THE DIRECTIONS OF THE HON BLE HIGH COURT (SUPRA), THE JEWELLERY WAS RELEASED B Y THE STA BASED ON THE BANK GUARANTEE FURNISHED BY THE COMPANY. MOREOVER, IT WAS CONTENDED THAT THE EVIDENCES PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAVE NOT BEEN DULY CONSIDERED OR VERIFIED BY THE AO BEFORE CONCLUDING THE ASS ESSMENT. IT WAS, FURTHER, URGED THAT THE SEIZED JEWELLERY WAS NOT ITA NO. 784 /DEL /20 13 7 BELONGED TO HIM BUT TO THE COMPANY IN WHICH HE WAS A DIRECTOR. IT WAS, THEREFORE, ARGUED THAT SINCE THE COMPANY HAD COME FORWARD TO ACCEPT THE OWNERSHIP OF THE SEIZED JEWELLERY, THEN THE AO WAS NOT JUSTIFIED IN MAKING AN ADDITION IN THE HANDS OF THE ASSESSEE. FOR THIS PROPOSITION, THE ASSESSEE HAS PLACED RELIANCE ON THE FOLLOWING CASE LAWS: (I) MANGILAL AGARWAL (DEAD) THROUGH LRS V. ACIT 300 ITR 372 (RAJ); (II) CIT V. BAL KISHAN 190 CTR 344 (RAJ) ; (III) CIT V. VIGNESH KUMAR JEWELLERS 213 TAXATION 680 (MAD); (IV) VISHWANATH PRASAD V. ACIT 86 ITD 516 (ITAT, ALLAHABAD); (V) R.P.MONGA V. DCIT 82 TTJ 522 [ITAT, DELHI]; & (VI) CIT V. MOHINDERLALHARYANI 307 ITR 348 (DEL) 5.3. WE SHALL ANALYZE THE JUDGMENTS OF VARIOUS CO URTS AS RELIED ON BY THE ASSESSE AS UNDER: (I) MANGILAL AGARWAL (DEAD) THROUGH LRS V. ACIT 300 ITR 372 (RAJ) IT WAS HELD BY THE HON BLE COURT THAT THE VALUE OF SEIZED GOLD COULD NOT BE ASSESSED IN THE ASSESSEE S HANDS AS ITS EXPLANATION THAT THE SEIZED GOLD B ELONG TO CERTAIN PERSON WHO HAD ADMITTED THE OWNERSHIP, HAD BEEN ACCEPTED BY CEGAT. A MERE POSSESSION OF GOLD WOULD NOT LEAD TO THE PRESUMPTION OF OWNERSHIP. IF THE ASSESSEE DISCLAIMED THE OWNERSHIP, THE ONUS TO PROVE THE OWNERSHIP WOULD LIE WITH THE DEPA RTMENT. (II) IN THE CASE CIT V. BAL KISHAN (SUPR), THE HON BLE RAJASTHAN HIGH COURT HAD HELD THAT NO INTERFERENCE WAS REQUIRED WITH THE TRIBUNAL S ORDER AS THE CIT (A) AND THE TRIBUNAL HAD CONCURRENTLY FOUND THAT THE AO DID NOT HAVE EVID ENCE TO ARRIVE AT HIS CONCLUSION .. (III) THE HON BLE MADRAS HIGH COURT HAD, IN THE CASE OF CIT V. VIGNESH KUMAR JEWELLERS (SUPRA), HELD THAT THE AO MADE ADDITION ON ACCOUNT OF UNEXPLAINED JEWELLERY ETC., AND UNACCOUNTED SALES MERELY ON TH E BASIS OF THE REPORT OF THE DIRECTORATE OF REVENUE INTELLIGENCE. THOSE FINDINGS WERE REVERED BY THE TRIBUNAL. NO INDEPENDENT INQUIRIES MADE BY AO. NO CORROBORATIVE EVIDENCE WAS FOUND. NO ADDITION TO INCOME AS UNEXPLAINED JEWELLERY COULD BE MADE. 5.4 IN THIS CASE UNDISPUTED FACTS ARE THAT, ASSESSEE IS A DIRECTOR OF A COMPANY, WHICH IS ENGAGED IN THE MANUFACTURE AND SALE OF JEWELLARY. THIS FACT IS ALSO ITA NO. 784 /DEL /20 13 8 NOTED BY THE CIT(A) IN PARA 6 OF THE IMPUGNED ORDER. WHEN THE JEWELLARY WAS SEIZED BY THE SALE S TAX DEPARTMENT, THE COMPANY CAME FORWARD AND CLAIMED OWNERSHIP OF THE SAID JEWELLARY. THIS IS EVIDENT FROM THE PROCEEDINGS BEFORE THE SALE S TAX AUTHORITIES AND THE FILING OF THE WRIT PETITION BEFORE THE HON BLE J&K HIGH COURT, WHEREIN COMPANY D - MINES TRAD ING CO. PVT. LTD WAS THE PETITIONER. ON THE DIRECTION OF THE HON BLE HIGH COURT, THE COMPANY HAD FURNISHED THE BANK GUARANTEE AND ALSO PAID THE PENALTY AMOUNT IMPOSED BY THE STA, FOR THE RELEASE OF THE JEWELLARY SEIZED. FURTHER, COPY OF THE APPELLATE ORDER OF THE SALE S TAX AUTHORITY, CONFIRMING THE IMPOSITION OF PENALTY AMOUNTING TO RS.37.50 LAKHS UNDER THE J&K VAT ACT 2005, WHICH IS PLACED ON RECORD CLEARLY DEPICT S THE COMPANY AS THE PETITIONER. DURING THE COURSE OF ASSESSMENT PROCEEDING BEFORE THE INCOME TAX AUTHORITIES, THE COMPANY THROUGH ITS DIRECTOR HAD CLAIMED OWNERSHIP OF JEWELLARY (PAGE S 231 AND 232 OF THE P.B. OF A.R). WHEN COMPANY HAD CLAIMED OWNERSHIP OF THE JEWELLARY, MERE POSSESSION OF THE SAME BY THE ASSESSEE AT THE TIME OF ITS SEIZURE BY STA IS IMMATERIAL AS TO DETERMINE THE OWNERSHIP OF JEWELLARY. TO DETERMINE THE OWNERSHIP OF JEWELLARY NECESSARILY THE BOOKS OF ACCOUNT OF THE COMPANY ALSO NEEDS TO BE EXAMINED. 5. 5 . I T IS A FACT THAT THE AO HAD NOT VERIFIED AS TO WHETHER THE COMPANY D - MINES T RADING CO. PVT. LTD HAD RECORDED IN ITS BOOKS OF ACCOUNT THE TRANSACTION EFFECTED . TAKING INTO ACCOUNT THE FACTS OF THE MATTER, WE ARE OF THE VIEW THAT THE ISSUE IS TO BE EXAMINED AFRESH BY THE AO , F OR TH E LIMITED PURPOSE, TO VERIFY AS TO WHETHER , THE JEWE LLARY SEIZED IS RECORDED IN THE BOOKS OF ACCOUNT OF D - MINES TRADING CO. PVT. LTD . IF THE SEIZED JEWELLARY IS RECORDED IN THE BOOKS OF ACCOUNT OF THE COMPANY, NECESSARILY ASSESSEE S EXPLANATION THAT HE IS NOT THE OWNER OF THE JEWELLARY CANNOT BE SAID TO BE FALSE AND THEREFORE, ADDITION U/S 69A OF THE ACT IS NOT WARRANTED IN HIS HANDS. FOR THE ABOVE LIMITED EXAMINATION, THE MATTER IS RESTORED TO THE AO. THE ASSESSEE SHALL BE AFFORDED REASONABLE OPPORTUNITY OF BEING HEARD AND IF THE ITEMS OF JEWELLARY SEIZED I S FOUND RECORDED IN THE BOOKS OF ACCOUNTS OF THE COMPANY, THE ASSESSING OFFICER WILL DELETE THE SAME IN THE HANDS OF ASSESSEE. 6. WITH REGARD TO THE SECOND ISSUE RAISED BY THE ASSESSEE, NAMELY, PARTIAL CONFIRMATION OF DISALLOWANCE OF EXPENSES BY THE CIT (A), WE WOULD LIKE TO POINT OUT THAT AT THE TIME OF HEARING BEFORE US NO SPECIFIC SUBMISSION WAS PUT - FORTH BY THE LD. A R AND AS SUCH, THIS ISSUE HAS NOT BEEN ADJUDICATED. ITA NO. 784 /DEL /20 13 9 7. IN THE RESULT, THE ASSESSEE S APPEAL IS TREATED A S PARTLY ALLOWED FOR STATISTICAL PURPOSE. TH E ORDER IS PRONOUNCED IN THE OPEN COURT ON 9 TH JANUARY , 201 5 . SD/ - SD/ - ( T.S. KAPOOR ) ( GEORGE GEORGE K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH JANUARY , 201 5 . AKS/ - D.C OM COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST . REGISTRAR, ITAT, NEW DELHI