Sachin Vasantraso Sankpal, Kolhapur V. Assistant Commissioner of Income-Tax, Circle 1(1), Pune

ITSSA 121/PUN/2022

AI Insights

The case involves Sachin Vasantraso Sankpal, who appealed against the order of the Commissioner of Income Tax (Appeals), Pune-11, which confirmed an addition of Rs.3,10,000 to his income for the assessment year 2018-19 under section 69 of the Income Tax Act, 1961, citing unexplained investments. The addition was based on gold biscuits weighing 100 grams, valued at Rs.3,10,000, found during a search operation. The assessee claimed these were converted from his family's gold jewelry, a claim initially not substantiated during the assessment proceedings. The Tribunal noted the presence of a 'Movable Property Return' document during the search, which was not considered by the lower authorities, and remanded the case for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134296 (ITAT-PUNE)
• Duration Of Justice: 3 month(s) 3 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 25-12-2022
• Other Referred Cases: CIT vs Satyanarayan Patni, Ghanshyamdas Johri vs CIT, Ankit Manubhai Kachadiya vs DCIT, Ramprakash Mahwar vs DCIT, V.G.P. Ravidas vs ACIT, Nemchand Daga vs ACIT, A. Ramalingam vs ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Opportunity of being heard
• Section: 69; 132; 143(3); 153A

Judgement Text

आयकर अपीलीय अिधकरण “बी” Ɋायपीठ पुणेमŐ। IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “B” :: PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / IT(SS)A No.121/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year :2018-19 Sachin Vasantraso Sankpal, Plot No.3, R.S.No.740/1, Shri Krishna Colony, Sambhaj Nagar Stand Road, Kolhapur – 416007. PAN: AOHPS 2859 E V s The ACIT, Circle-1(1), Pune. Appellant/ Assessee Respondent /Revenue Assessee by Shri C.V.Deshpande – AR Revenue by Shri M.G.Jasnani – DR Date of hearing 10/02/2023 Date of pronouncement 29/03/2023 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assessee is directed against the order of ld.Commissioner of Income Tax(Appeals), Pune-11, dated 27.10.2022 emanating from assessment order dated 25.09.2021 under section 153A r.w.s 143(3)of the I.T.Act, 1961 for the A.Y.2018-19. The Assessee has raised the following grounds of appeal: “1. On the facts and in the circumstances of the case and in law the lower authorities erred in making addition of Rs.3,10,000/- by invoking provisions of section 69 of the I T Act 1961 for unexplained investments. Rs.96,367/-. 2. On the facts and in law the lower authorities have erred in passing the assessment order U/s 143(3) r.w.s. 153A of the Income IT(SS)A No.121/PUN/2022 Sachin Vasantraso Sankpal [A] 2 Tax Act 1961, wherein fact the during the search operation no incriminating material was found by the search party for the instant unabated assessment year. Thus the order passed by the assessing officer is without jurisdiction and bad in law The said assessment order being bad in law needs to be quashed in the interest of natural justice and relief be granted to the assessee. Rs.96,367/-.” Brief facts of the case : 2. There was a search under section 132 of the Act in the case of Ser Senapati Santaji Ghorpade Sugar Factory Pvt. Ltd., on 25.07.2019 by Investigation Wing, Pune. Warrant of authorization under section 132 was also issued in the case of assessee Shri Sachin Vasantrao Sankpal. A notice dated 05.02.2021 under section 153A of the Act was issued and served on the assessee. Assessee in response to notice under section 153A filed return of income on 22.09.2021 declaring total income of Rs.6,18,090/-. It is mentioned in the assessment order that during the search Gold Biscuits weighing 100gms were found & seized, valued at Rs.3,10,000/-. The assessee declared the same as its unaccounted income during the search. During the assessment proceedings, assessee submitted that assessee had converted his family’s gold jewellery into gold biscuit in order to deposit it in Gold Monetization Scheme. The Assessing Officer(AO) in the assessment order mentioned that assessee had not filed any proof to substantiate his claim that gold ornaments were converted into gold biscuits. The AO rejected assessee’s claim and made an addition under section 69 of Rs.3,10,000/-. Aggrieved by IT(SS)A No.121/PUN/2022 Sachin Vasantraso Sankpal [A] 3 the same, assessee filed an appeal before the ld.CIT(A)-11, Pune.The relevant portion of ld.CIT(A)’s order reproduced here as under : “5. During the appellate proceedings, the appellant has reiterated his submission made before the Assessing Officer. In addition to this, the appellant has filed a receipt dated 29/08/2019 issued by M/s Mayur Jewellers, Mumbai in support of its claim of melting old jewellery into pure gold. The appellant has also relied on CBDT Circular No. 1916 dated 11/05/1994 as well as following case laws: CIT vs Satyanarayan Patni 41 taxmann.com 440. Ghanshyamdas Johri 41 taxmann.com 295 (Allah. HC). Ankit Manubhai Kachadiya vs DCIT 131 taxmann.com 304 (ITAT Surat). Ramprakash Mahwar vs DCIT 115 taxmann.com 241 (ITAT Jaipur). 6. I have considered the facts of the case and the submissions made by the appellant. It is an undisputed fact that pure gold weighing 100 gms in the form of goldbars were found and seized from the bank lockers of the assessee. When confrontedduring the search, the appellant admitted that the said gold was acquired out of his undisclosed income. However, the appellant has submitted that the said gold bars were obtained after melting the old gold jewellery and since the weight was only 100gms, same is within the threshold limit prescribed by the CBDT. The said submission of the appellant cannot be accepted because of the following reasons: i) The receipt issued by M/s Mayur Jewellers was not filed during the assessment proceedings. Even otherwise, the said receipt is dated 29/08/2019 which is much after the end of the assessment year under consideration as well as the date of search which is 25/07/2019. Therefore, not much reliance can be placed on the said receipt. ii) The CBDT Instruction is only regarding the jewellery/ornaments and not regarding pure gold found during the search. iii) The CBDT Insytruction is only for seizure of gold jewellery during the search operation. However, it does not absolve the assessee from explaining the source of acquisition of such jewellery and the assessee is expected to explain the source for acquisition of jewellery found during the course of search operation. This position has been held IT(SS)A No.121/PUN/2022 Sachin Vasantraso Sankpal [A] 4 in following case laws: • V.G.P. Ravidas vs ACIT 51 taxmann.com 16 (Madras HC) • NemchandDaga vs ACIT 1 SOT 515 (Delhi ITAT) • A. Ramalingam vs ITO (ITA NO. 591/Mds/2016) (ITAT Chennai) The ratio laid down by above case laws is squarely applicable to the facts of the present case wherein the appellant is required to explain the source of gold found and seized during the search operation. iv) During the search operation, in the statement recorded on oath, the appellant admitted that the said gold was acquired out of its undisclosed income. It is well settled legal principle that the statement recorded during the search operation is admissible as evidence unless it is proven wrong. In the present case, the said statement has not been successfully retracted by the appellant and accordingly, the said statement can be used as evidence. 7. In view of the above discussion, the addition of Rs 3,10,000/- made by the Assessing Officer is upheld. The grounds no. 1 to 4 raised by the appellant are DISMISSED.” 4. Aggrieved by the ld.CIT(A)’s order, assessee filed appeal before this Tribunal. Submission of ld.Authorised Representative(ld.AR) : 5. The ld.AR submitted that assessee belongs to the family who have substantial gold jewellery. The ld.AR submitted that assessee’s wife is a Senior Government Officer, she is Assistant Sales Tax Commissioner. She had filed her moveable property details to the State Government. The ld.AR filed copy of assessee’s wife’s moveable property return for year 2011. The ld.AR explained that as per the assessee’s wife’s moveable property return, she was having IT(SS)A No.121/PUN/2022 Sachin Vasantraso Sankpal [A] 5 gold of 120 Tolas. The said copy of moveable property return was found during the search as evidenced by the Seal of the Assistant Director of Income Tax, Investigation and signatures of the witnesses with date 26.07.2019. The ld.AR submitted that part of the said jewellery was converted into gold biscuits. Submission of ld.Departmental Representative(ld.DR) : 6. The ld.DR relied on the order of the Lower Authorities. The ld.DR submitted that copy of the moveable asset return filed by the ld.AR were never produced before the Lower Authorities. The ld.DR also submitted that assessee voluntarily admitted undisclosed income of Rs.3,10,000/-. Therefore, addition may kindly be upheld. Findings and Analysis : 7. It is a fact that the Gold Biscuits weighing 100 gms were seized from the bank locker of the assessee as mentioned by ld.CIT(A) in his order. During the search, assessee admitted it as undisclosed income. However, subsequently, assessee claimed that his family’s jewellery had been converted into gold biscuits. Before us, assessee had filed copy of the “Moveable property return” claimed to have been filed by his wife Mrs.Siddhi Sachin Sankpal, who is Assistant Sales Tax Commissioner in Govt. of Maharashtra. We have perused the said moveable property return. It is observed IT(SS)A No.121/PUN/2022 Sachin Vasantraso Sankpal [A] 6 that the said moveable property return contains signature of Mr.Amit Kumar Khatavkar, Assistant Director of Income Tax, Investigation with stamp and seal, signatures of two witnesses along with dated 26.07.2019. Therefore, it explains that said moveable property return was found during the search. On perusal of the said “Movable Property Return” it is observed that assessee’s wife has admitted having Gold of 120 tola which means she has admitted having gold of 1200 grams. The said ‘movable property return’ only mentioned the word “gold” and does not mention “the form”. However, from the assessment order and ld.CIT(A)’s order, one cannot understand what were the exact quantity of gold found during the search. We also could not understand whether any statement was recorded either of the assessee or his wife with reference to the said moveable property return. It is a fact that no reference is made by the assessee to the said moveable property return while making submission before the Lower Authorities. However, we cannot overlook the fact that said document was found during the search and it mentions that assessee’s wife was having 120 tola gold. It means the said document was available with the Lower Authorities, as it was found during the search. However, Lower Authorities have not made any reference to the said document. In these facts and circumstances, we are of the opinion that the assessment order passed under section IT(SS)A No.121/PUN/2022 Sachin Vasantraso Sankpal [A] 7 153A r.w.s 143(3) needs to be set-aside to the Assessing Officer for denovo adjudication in the light of the moveable property return of the assessee’s wife which was found during the search. Accordingly, the assessment is set-aside to the Assessing Officer and AO shall provide opportunity of being heard to the assessee. The Assessing Officer shall limit the adjudication only with reference to impugned addition of Rs.3,10,000/- which is subject matter of appeal. Accordingly, Ground No.1 of the assessee is allowed for statistical purpose. Ground No.2 – Legal Ground : 8. Vide Ground No.2 assessee has challenged validity of assessment order passed under section 143(3) r.w.s. 153A of the Act. In this case, there is no doubt that warrant of authorization for carrying out search under section 132 was issued in the name of assessee, i.e. Sachin Vasantraso Sankpal. The ld.AR has not pleaded that there was no warrant of authorization in the case of the assessee. The section 153A provides for procedure for assessment in the case of assessee in whose case search under section 132 was carried out. In this case, search under section 132 was carried out in the case of assessee, the AO has rightly invoked provisions of section 153A of the Act. In this case, there is a seizure of Gold. Thus, incriminating material was found and seized. Therefore, legality of the order under IT(SS)A No.121/PUN/2022 Sachin Vasantraso Sankpal [A] 8 section 153A r.w.s. 143(3) of the Act passed in the case of assessee is uphold. However, qua addition we have already set-aside the addition of Rs.3,10,000/- to the Assessing Officer for denovo adjudication. Accordingly, Ground No.2-Legal Ground raised by the assessee is dismissed. 9. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 29 th March, 2023. Sd/- Sd/- (S.S.GODARA) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 29 th Mar, 2023/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. 5. िवभागीयᮧितिनिध, आयकर अपीलीय अिधकरण, “बी” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.