Rajendra Prasad Mody. , Kolkata V. DCIT, C.C-1(4), KOLKATA. , Kolkata

ITSSA 174/KOL/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 3358 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-03-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-01-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 06-11-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Valuation report
• Section: 132; 250

Judgement Text

आयकर अपीलȣय अͬधकरण, कोलकाता पीठ ‘ए’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA Before Shri Sanjay Garg, Judicial Member and Rajesh Kumar, Accountant Member I.T(SS).A No.174/Kol/2023 Assessment year: 2015-16 Rajendra Prasad Mody.................................... ..............................Appellant 27, R.N. Mukherjee Road, Kolkata-1. [PAN: AEAPM3610A] vs. DCIT, CC-1(4), Kolkata......................................................................Respondent Appearances by: Shri Rajeeva Kumar, appeared on behalf of the appellant. Shri S. Datta, CIT-Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : January 04, 2024 Date of pronouncing the order : March 20, 2024 आदेश / ORDER संजय गग[, ÛयाǓयक सदèय ɮवारा / Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the order dated 06.10.2023 of the Commissioner of Income Tax (Appeals)-20, Kolkata [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. The assessee, in this appeal, has agitated against the confirmation of addition of Rs.1,71,10,702/- made by the Assessing Officer in respect of value of two items of jewellery marked as RPM/7 & RPM/8, seized during the course of search action in the case of the assessee. 3. The brief facts of the case are that a search and seizure action was conducted in the residential, office and factory premises of Hindusthan Group at Kolkata, Hooghly, New Delhi & Gujarat on 23.12.2014 and I.T(SS).A No.174/Kol/2023 Assessment year: 2015-16 Rajendra Prasad Mody 2 subsequent dates. Lockers belonging to the various persons of this group were also covered u/s 132 of the Act. During the course of search in the case of the assessee, certain items of jewellery were seized from the lockers. Though, the Assessing Officer get satisfied with the explanation given by the assessee relating to the source etc. of most of the items but he did not get satisfied in respect of three items of jewellery marked as RPM/7, RPM/8 & RPM/9. The assessee submitted before the Assessing Officer that the aforesaid three items of jewellery were purchased in the year 2011 and were duly shown in his wealth tax return for the year ending 31.03.2011, 31.03.2012 & 31.03.2014. However, the Assessing Officer observed that the description of the aforesaid three items of jewellery as mentioned in the wealth tax return did not match with the description as given in the Departmental Valuer’s Report. He also observed that there was a difference in the valuation given by the assessee as compared to the valuation given of the aforesaid items by the departmental valuer. He took the value given by the departmental valuer and made the addition in respect of value given by the departmental valuer at Rs.3,10,59,254/-. 4. In first appeal, the ld. CIT(A) observed that though the description mentioned in the wealth tax return relating to the items marked as RPM/7 & RPM/8 did not match with the jewellery found during the course of search action, however, he observed that the description of item marked as RPM/9 did match with the valuation report as well as wealth tax return. He observed that in this case, two valuation reports were obtained, the gross weight of the jewellery marked as RPM/9 was the same as per both the valuation reports and underlying material was also same and description of the jewellery item was almost same in both the valuation reports. He observed that the items marked as RPM/9 I.T(SS).A No.174/Kol/2023 Assessment year: 2015-16 Rajendra Prasad Mody 3 tallied with the wealth tax return for the assessment year 2015-16. He accordingly deleted the addition in respect of the value of the item marked as RPM/9. He, however, confirmed the addition in respect of the two items of jewellery marked as RPM/7 & RPM/8 to the extent of Rs.1,71,10,702/-. Being aggrieved by the said order of the CIT(A), the assessee has come in appeal before us. 5. We have heard the rival contentions and gone through the record. The ld. counsel for the assessee has submitted that even the description of the items marked as RPM/7 & RPM/8 duly matched with the wealth tax returns filed by the assessee. He, in this respect, has submitted that admittedly, the gross weight of the aforesaid items of jewellery and weight of diamond embedded in it duly tallied. He has further submitted that the item of jewellery marked as RPM/7 was remade in the year 2011-12 relevant to assessment year 2012-13. In this respect, the ld. counsel for the assessee has relied upon the valuation report along with copy of wealth tax returns for assessment year 2012-13, 2013-14 & 2014-15. The ld. counsel has further submitted that item marked as RPM/8 was remade in gold removing white metal vide bill no.23/2014- 15 dated 06.08.2014. He has submitted that the aforesaid difference in description of the said items was due to aforesaid factors, however, the gross weight of the metal and the diamonds duly tallied. The ld. counsel has further submitted that the valuation reports given by the department valuer were defective and that exaggerated value of the item has been given in the said report. That the assessee after the first valuation report in which the value of the three items was given at Rs. 3,10,59,254/-, moved several letters to the ld. PCIT for revaluation of the aforesaid items. That in the revaluation report given by the departmental valuer, the value of the items as on 24.06.2022 was mentioned at I.T(SS).A No.174/Kol/2023 Assessment year: 2015-16 Rajendra Prasad Mody 4 Rs.2,01,14,724/-. The ld. counsel has further submitted that the value of the said items of jewellery as on 24.12.2014 would have been much lower than the value shown by the departmental valuer as on 24.06.2022. The ld. counsel has further submitted that there are various factors which influence the value of the diamond jewellery such as cut, carat, colour and clarity. That on account of minor variations in weight, colour, cut and clarity, the value of the diamond varies. He has submitted that there were numerous small diamonds embedded in the jewellery and there was no scientific method applied by the departmental valuation officer to value the aforesaid two items of jewellery. The ld. counsel has further submitted that the jewellery marked as RPM/8 was purchased by the assessee for Rs.3,09,252/- from M/s. R.K. Jewellers, Kolkata vide bill no.1/2011-12 dated 09.04.2011. The payment was made through banking channel. The item was originally made in white metal which was remade in gold vide bill dated 06.08.2014. That the only difference pointed out by the Assessing Officer as well as the CIT(A) was that in the valuation report, the item has been given as diamond embedded in gold, whereas, in the wealth tax return and valuation report of 2014, it was mentioned that the diamonds were embedded in white metal. The ld. counsel, in this respect, has relied upon the bills of purchases of items as well as bills relating to the remake of the aforesaid items. The ld. counsel has further submitted that item marked as RPM/7 was a piece of ring studded with diamond which was remade in the year 2011-12 relevant to assessment year 2012-13. He has submitted that the description of the item duly tallied and that the minor difference in gross weight of 0.440 gram was attributable to weighing error. He has further submitted that the weight of diamond cannot be accurately done unless the diamond is removed from the item of jewellery. The minor difference of weight of item of 0.020 carat occurred I.T(SS).A No.174/Kol/2023 Assessment year: 2015-16 Rajendra Prasad Mody 5 in value was due to the aforesaid factor. He has further submitted that in case of item marked as RPM/8, the difference of gross weight was only of 0.05 gram. The ld. counsel for the assessee in this respect has relied upon the copies of the purchase bills, the labour charges bills for remake of the items, the wealth tax returns etc. 6. The ld. DR, on the other hand, has relied upon the order of the CIT(A). 7. It is to be noted here that subject to the minor differences pointed out by the assessee, the description of the items marked as RPM/7 & RPM/8 has been mentioned in the wealth tax returns. Even, if there are some variations in the description still the entire value of the aforesaid items would not be added but only the difference of value on account of variation found could have been added. It is not the case of the department that items marked as RPM/7 & RPM/8 are in addition to the items of jewellery duly disclosed in the wealth tax returns and valuation reports attached thereto. It is also noted that the valuation method of the departmental valuation officer is not accurate as there was a difference of more than Rs.1 crore in the two valuation reports given by the departmental valuer in respect of three items of jewellery. The ld. AR has pointed out the various minute factors which influence the value of the diamond in a jewellery. The value has been done by the valuation officer of the diamonds while they are embedded in the jewellery and the variation in the value of the same was likely to happen. The ld. AR also duly explained that the aforesaid two items were remade and on account of that, there was minor variation in the description, however, the number and weight of the diamonds and the weight of the metal almost tallied. In view of the above discussion, we do not find justification on the part of the lower authorities in making the impugned addition. I.T(SS).A No.174/Kol/2023 Assessment year: 2015-16 Rajendra Prasad Mody 6 Moreover, as discussed above, these two items of jewellery marked as RPM/7 & RPM/8 were not in addition to the items disclosed by the assessee in the wealth tax return. Therefore, the addition has been made on account of minor variations relating to the description and weight as mentioned in the wealth tax return and as compared to the report of the department valuation officer. As discussed above, there was a huge difference in value in the two reports given by the departmental valuer of the same items. In view of this, the impugned order of the CIT(A) is set aside and the addition made by the Assessing Officer is ordered to be deleted. 8. In the result, the appeal of the assessee stands allowed. Kolkata, the 20 th March, 2024. Sd/- Sd/- [Rajesh Kumar] [Sanjay Garg] लेखा सदèय /Accountant Member ÛयाǓयक सदèय /Judicial Member Dated: .03.2024. RS Copy of the order forwarded to: 1. Rajendra Prasad Mody 2. DCIT, CC-1(4), Kolkata 3. CIT(A)- 4. CIT- , 5. CIT(DR), //True copy// By order Assistant Registrar, Kolkata Benches