SHRIMATI SAKSHI SABHARWAL, JALANDHAR V. ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2, JALANDHAR

ITA 98/ASR/2020

AI Insights

The case involves Smt. Sakshi Sabharwal, who appealed against the order of the Commissioner of Income Tax (Appeals) confirming an addition of Rs. 10,01,500/- to her income for the Assessment Year 2017-18. The addition was made by the Assessing Officer under section 69B of the Income Tax Act, treating the silver articles of 22 kgs as unexplained investment. The appellant argued that these articles were received as gifts at her marriage in 2004 and had been previously assessed under the Wealth Tax Act. The Tribunal examined the submissions, including the Wealth Tax assessments for the years 2013-14, 2014-15, and 2015-16, and found no basis for the addition in the year 2017-18.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 114385 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-03-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 23-02-2020
• Laws Referred To: Income Tax Act, 1961, Wealth Tax Act, 1957
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Principle of natural justice
• Section: 132; 15; 143(3); 69B; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (VIRTUAL COURT) BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER I.T. A. No. 98/Asr/2020 Assessment Year: 2017-18 Smt. Sakshi Sabharwal, 337-338, New Jawahar Nagar, Jalandhar [PAN: BAJPS 4935C] (Appellant) V. ACIT, Central Circle-2, Jalandhar (Respondent) Appellant by : Sh. Ashray Sarna, CA Respondent by : Sh. Girish Bali, CIT DR Date of Hearing : 20.03.2023 Date of Pronouncement : 30.03.2023 ORDER Per Dr. M. L. Meena, AM: The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-5, Ludhiana dated 21.10.2019 in respect of Assessment Year 2017-18. ITA No. 20/Asr/2020 Sakshi Sabharwal v. ACIT 2 2. The assessee has raised the following grounds of appeal: “1. That the order passed by the Hon’ble CIT(A) dated 21.10.2019 is against the law and facts of the case. 2. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in framing the impugned assessment order u/s 143(3) and without complying with the mandatory conditions u/s 143/153D/153 as envisaged under the Income Tax Act, 1961. 3. That having regard to the facts and circumstances of the case, Hon’ble CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer erred in law in making addition to the extent of Rs. 10,01,500/- on account of jewellery u/s 69B of the Act by treating the same as unexplained investment, without considering the submissions of the assessee and without observing the principles of natural justice. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.” 3. During the scrutiny proceedings 143(3)/153A, the Assessing Officer (In short “the AO”) being not satisfied with the submission of the appellant, made an addition to the extent of Rs. 10,01,500/- on account of unexplained investment in Silver articles of 22 kgs u/s 69B of the Act by treating the same as unexplained investment in respect of the Assessment Year 2017-18. 4. The assesse being aggrieved, went in appeal before the Ld. CIT(A) who has confirmed the addition by observing as under: ITA No. 20/Asr/2020 Sakshi Sabharwal v. ACIT 3 “The facts of the case, basis of addition made by the AO and arguments of the AR during the course of appellate proceedings have been considered. The AR has argued that the diamond jewellery came to assessee on the occasion of Nupur & Kunal marriage and the assessee was having sufficient funds with her family to make investment in Diamond jewellery as the said investment was made by her father-in-law Sh. Rakesh Sabharwal by withdrawing the cash out of his saving bank account. It was also submitted that the AO did not ask the assessee to produce bills of purchase of jewellery at the time of assessment. The AR has also argued that the principal of natural justice demands that various evidence furnished by the assessee are required to be considered before adjudicating the issue under consideration and the AR has filed an application under Rule 46A along with the documentary evidence which was sent to the AO for comments. In the remand report, it is commented by the AO that for verification of bills, summons were issued u/s 131, however the Inspector of Income Tax deputed for the service of summons has reported that the firm has been closed from last 7 to 8 years and in view of the above authenticity of the bills cannot be ascertained. It is also mentioned that however on comparing contents of bills produced with the jewellery as per the Panchnama, there are slight variations which the assessee has explained due to loss in weight on account of wear & tear. In the rejoinder on the report of the AO, the AR has submitted that non-compliance from the third party does not lead to the conclusion that the claim of the assessee is not genuine and argued that the assessee had produced the original bills during the remand proceedings and the appellate proceedings. It is also submitted that the bank account along with photocopy of the marriage card were filed. A perusal of the bank account shows that there are withdrawals of Rs. 5 lacs each on 20.10.2007 and 22.10.2007 through self-cheque from bank account of Sh. Rakesh Sabharwal maintained with Axis Bank and the assessee has enclosed Bill No. 248 & 249 both dated 23.10.2007 of M/s. N. K. Satyam Jewellers, Jalandhar in the name of Sh. Rakesh Sabharwal showing purchase of Diamond Jewellery. On perusal of the bills & ITA No. 20/Asr/2020 Sakshi Sabharwal v. ACIT 4 details mentioned thereon, they does not appear to be non-genuine and the existence of the jeweler has also not been doubted by the AO in the remand report where it is mentioned that the firm has been closed for 7 to 8 years meaning thereby that it was in existence during the period relating to which the bills have been produced by the assessee (i.e. October, 2007). The bank account of Sh. Rakesh Sabharwal shows withdrawal of the cash and on the basis of the documents filed, the source of diamond jewellery is explained. However, no bills/documents have been filed in support of acquisition of silver articles weighing 22kgs which was claimed to have been given by the assessee's parents at the time of her marriage in 2004. Hence, the source of acquisition of the silver weighing 22Kgs., valuing Rs. 10,01,500/-remains unexplained. Hence, the addition to the extent of Rs. 10,01,500/- on account of silver articles is sustained and the appellant gets relief of the balance amount.” 5. The Ld. Counsel submitted that the Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. Assessing Officer in framing the impugned assessment order u/s 143(3) by making addition to the extent of Rs. 10,01,500/- on account of jewellery u/s 69B of the Act by treating the same as unexplained investment, without considering the submissions of the assessee in violation of the principles of natural justice. He filed a brief synopsis which reads as under: “It is submitted that Ld. AO made addition of Rs.10,01,500/- on account of unexplained investment in Silver articles of 22 kgs in the AY 2017-18, This addition was confirmed by the Hon’ble CJT(A), Ludhiana. Sir, it is submitted that Assessment under Wealth Tax Act, 1957 has been completed u/s 18(1)(c) and the silver articles of 22 kgs have already been assessed for the AY 2013-14, AY 2015-16 and AY 2014-15, Copy of ITA No. 20/Asr/2020 Sakshi Sabharwal v. ACIT 5 order and other relevant information is enclosed herewith. Thus no addition could be made for the AY 2017-18 on account of investment in Silver Articles of 22kgs when the same have been assessed for previous years. Sir, it is submitted that considering the above orders it is requested that no addition should be made in the hands of assessee for the year under consideration.” 6. Per contra, the Ld DR although supported the impugned order, however, he has failed to rebut the contention raised by the counsel. 7. Heard rival contentions, perused the material on record, impugned order, written submission and case law cited before us. Admittedly, the disputed silver articles weighing 22kgs was claimed to have been received by the appellant from her parents at the time of her marriage in 2004. However, the Ld. CIT(A) observed that since, no bills/documents have been filed in support of such acquisition and hence, the source of acquisition of the silver weighing 22Kgs., valuing Rs. 10,01,500/-remains unexplained. The Ld. AR contended that the required details including bills and documents have been filed in support of such acquisition as evident from the fact that a reference of such document is made in the remand report of the AO. Therefore, the allegation of the Ld. CIT(A) was factually incorrect. ITA No. 20/Asr/2020 Sakshi Sabharwal v. ACIT 6 8. It is evident from the Assessment Order of the Wealth Tax Officer (In Short “The WTO”) made u/s 18(1)(c) Wealth Tax Act, 1957 in the case of appellant wherein the silver articles of 22 kgs have been assessed for the Assessment Year 2013-14, and continued in the following AY 2014-15 and AY 2015-16. Under the facts and circumstances, no addition would be called for the Assessment Year 2017-18 on account of investment in Silver Articles of 22kgs per se. Copy of relevant part of the order and document is reproduced below: “The assessee is an individual who was not assessed to wealth tax earlier. A search operation was conducted u/s 132 of the Income Tax Act, 1961 on 08.09.2016 at the residence of the assessee and her lockers, during the course of which she was found to be possessing gold jewellery of substantial amount as per Panchnama prepared. Further, she was found to be owing immovable properties of the value of Rs.29,60,000/-. On the basis of information in his possession that net taxable wealth of the assessee during as on the relevant valuation date, exceeded the amount n o t chargeable to fax, the Assessing Officer recorded reasons, to believe that wealth amounting to Rs.70,78,285/- had escaped assessment represented by the jewellery and investment made by her in immovable properties found belonging to her and initiated proceedings u/s 17(1) of the Wealth Tax Act, 1957 (for short ‘the Act’) by issuing a notice under that section on 16.03.2020 after obtaining statutory approval from the Joint Commissioner of Wealth T a x, Central Range, Jalandhar. In response to this notice, return of net wealth was filed by her on 02.11.2020 declaring total wealth at Rs.37,30,510/. Notices u/s 16(1) and 16(2) of the Act dated 05.11.2020 were issued to the assessee, in response to which the assessee through his authorized representative, filed reply and justification of the amount of wealth declared in the return. In his submissions, the Id AR stated that in the reasons recorded, the AO had adopted the value of gold silver and Diamond as on the d a te o f se a rch wh e re a s th e va lu e wa s to b e ta ke n a t th e ra te o f p re l va il in g o n th e va lu a tio n d a te o f 3 1 .0 3 .2 0 1 3 a n d ITA No. 20/Asr/2020 Sakshi Sabharwal v. ACIT 7 th a t th e in ve stm e n t wa s m a d e b y th e a s se sse e i n a c qu i rin g a g ricu ltu ra l la n d wh ich d id n o t f a ll wit h in th e d e fin itio n o f ‘A sse t’ a s p e r th e W e a lth T a x A ct, 1 9 5 7 . On verification, his submissions were found correct. After verification, net wealth declared by the assessee in her return at Rs. 37,30,510/- i s accepted as such. Since the assessee has failed to disclose her taxable wealth by filing a return u/s 14 or 15 of the Act, penalty proceedings u/s I8(1)(c) of the Act have been initiated separately for concealing t he particulars of wealth. 2. Assessed as above. Charge interest u/s 17B of the Act. Give credit of prepaid taxes. Issue demand notice and show cause notice for penalty.” ITA No. 20/Asr/2020 Sakshi Sabharwal v. ACIT 8 9. In the above view of the matter, we hold that grievance of the appellant is found to be justified. We, therefore hold that the impugned order of the Ld. CIT(A) is infirm and perverse to the facts on record and accordingly, the addition of Rs. 10,01,500/- is deleted. 10. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 30.03.2023 Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr./P.S.* Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order