Murlidhar T. Tilpani, Mumbai V. DCIT, Central Circle 20, Mumbai

ITSSA 186/MUM/2004

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8361 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 12-05-2011
• Assessment Year: misc
• Appeal Filed On: 05-04-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINHA
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Gift; Search and seizure; Opportunity of being heard; Valuation report
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, C, MUMBAI BEFORE S/SHRI D.K.AGARWAL (JM) AND RAJENDRA SINGH ( A.M ) IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) MURLIDHAR T TILWANI 21,VEENA BEENA, GROUND FLOOR, OPP. RAILWAY STATION BANDRA (W), MUMBAI-400050 PAN:AADPT6134H DCIT, CENTRAL CIRCLE 20, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 APPELLANT V/S RESPONDENT APPELLANT BY : SHRI M SUBRAMANI AN RESPONDENT BY : SHRI AJIT KUMAR SIN HA O R D E R PER D.K.AGARWAL (JM) THESE TWO APPEALS PREFERRED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS DATED 28.1.20 04 AND 10.12.2007 PASSED BY THE LEARNED COMMISSIONER OF IN COME TAX (A) FOR THE ASSESSMENT PERTAINING TO THE BLOCK PERIOD 1.4.1988 TO 19.8.1998. BOTH THESE APPEALS ARE DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IT(SS)A NO.186/MUM/2004 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE AN INDIVIDUAL ENGAGED IN THE BUSINESS OF GARMENTS. A SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE INCOME IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) 2 TAX, 1961 (THE ACT) WAS CARRIED ON 19.8.1998 AT T HE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. IN RESPONSE TO THE NOTICE ISSUED UNDER SECTION 158BC O F THE ACT, THE ASSESSEE FILED RETURN FOR THE BLOCK PERIOD DECLARING TOTAL UNDISCLOSED INCOME AT RS.NIL. DURING THE AS SESSMENT PROCEEDINGS, THE AO OBSERVED THAT DURING THE COURS E OF SEARCH JEWELLERY VALUED AT RS.10,56,993/- (RS.3,3 0,906/- FROM RESIDENCE + RS.7,26,087/- FROM BANK LOCKER NO. 233 OF RAJASTHAN BANK LTD, PALI HILL ROAD, BANDRA (W), MUM BAI) WAS FOUND. THE ASSESSEE WAS ASKED TO EXPLAIN TH E SOURCE OF JEWELLERY FOUND DURING THE COURSE OF SEARCH. T HE ASSESSEE VIDE HIS LETTER DATED 19.12.1999 APPEARING AT PAGE 26 OF THE ASSESSEES PAPER BOOK EXPLAINED AS UNDER : 2. JEWELLERY VALUE OF RS.1056993 WAS FOUND AT 23, NEW MILAN CHS LTD AND LOCKER NO.233 OF BANK OF RAJASTHAN LTD BELONGS TO FOLLOWING PERSON: RENU TILWANI, MYSELF MURLIDHAR TILWANI AND MAHAK M.TILWANI AND PARTLY OF ANITA N. PARYANI {RENU TILW ANIS SISTER WHO STAYS IN THANE {E} WITH HER MOTHER AND BROTHER WHO DIED ON 2/1/1999} & ALSO PARTLY OF MEEN A N.PARYANI SISTER OF RENU TILWANI {NEE MEENA R. KHA NNA MARRIED ON 24.11.97} WHO STAYS IN KHAR {W} ALONG WI TH HER IN-LAWS LOCKER WAS OBTAINED IN THE JOINT NAME OF RENU TIL WANI AND MEENA PARYANI KINDLY GIVE US INVENTORY OF JEWELLERY TO DETERMINE ITEM OF EACH ONE. THE SAME WAS NOT DECLARED TO IT DEPARTMENT IN RETUR NS OF RENU M. TILWANI PAN NO.DC/CIR 27{1}/274-R & MURLIDHAR T.TILWANI PAN NO.16{4}/333-M IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) 3 BECAUSE JEWELLERY WAS PERSONEL & KEPT OUTSIDE THE BOOKS THE AO AFTER REPRODUCING THE ASSESSEES EXPLANATION AS ABOVE EXTRACTED THE VALUATION REPORT OF THE GOLD, D IAMOND AND JEWELLERY AT PAGES 3 AND 4 OF THE ASSESSMENT O RDER TOTALING TO RS.8,27,202/-. THE AO IN THE ABSENCE O F ANY LIST OF BIFURCATION OF THE JEWELLERY BELONGING TO WHICH PERSON, THE SOURCE OF INVESTMENT, CONFIRMATION LETTER FROM THE CONCERN PERSONS, KEEPING IN VIEW THAT THE ASSESSEE HAS FAI LED TO PRODUCE THE PERSONS FOR CROSS-EXAMINATION AND IN THE ABSENCE OF VALUATION REPORT HELD THAT THE JEWELLERY VALUED AT RS.8,39,619/- IS UNEXPLAINED AND HENCE HE ADDED TH E SAME UNDER SECTION 69A OF THE ACT. APART FROM THIS THE A O HAS ALSO MADE THE ADDITION OF RS.1,12,100/- IS ACCOUNT OF R ENOVATION WORK AND ACCORDINGLY COMPLETED THE ASSESSMENT AT AN INCOME OF RS.9,51,719/- VIDE ORDER DATED 29.8.2000 PASSED UNDER SECTION 158BC OF THE ACT. 3. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X(A) FOLLOWING THE CBDT CIRCULAR NO.1916 DATED 11.5.1994 DIRECTED THE AO THAT THE GOLD ORNAMENTS FOUND DURING THE CO URSE OF SEARCH TO THE EXTENT STIPULATED BY THE BOARD BE TR EATED AS EXPLAINED. WITH REGARD TO THE DIAMOND JEWELLERY, T HE LEARNED COMMISSIONER OF INCOME TAX (A) HELD THAT SINCE THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF SUCH JEWEL RY THE SAME MAY BE TREATED AS UNEXPLAINED. WITH REGARD TO THE IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) 4 ADDITION OF RENOVATION EXPENSES OF RS.1,12,100/-, T HE LEARNED COMMISSIONER OF INCOME TAX (A) IN THE ABSENCE OF AN Y MATERIAL OR INFORMATION FOUND DURING THE COURSE OF SEARCH DELETED THE SAME AND ACCORDINGLY PARTLY ALLOWED THE APPEAL. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (A), THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE VALIDI TY OF THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) WITHOUT GIVING THE FULL AND PROPER OPPORTUNITY OF B EING HEARD TO THE ASSESSEE, ERRED IN NOT DISPOSING OF GROUND N OS.2.2 AND 2.3 RAISED BEFORE HIM, SUSTAINING THE ADDITION OF G OLD AND DIAMOND JEWELLERY AND LEVY OF INTEREST UNDER SECTIO N 158BFA(1) OF THE ACT. 5. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTSET, SUBMITS THAT THE BANK LOCK ER NO.233 WAS NOT IN THE NAME OF THE ASSESSEE WHICH IS ALSO E VIDENT FROM THE PUNCHANAMA APPEARING ON THE PAGE 18 OF THE ASSESSEES PAPER BOOK TO SHOW THAT THE LOCKER WAS IN THE NAME OF MRS. RENU TILWANI (ASSESSEES WIFE) AND MRS . MEENA PARYANI (SISTER OF ASSESSEES WIFE), THEREFORE NO A DDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. HE FURTHER SUBMITS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE ASKED THE AO TO GIVE INVENTORY OF JEWELLE RY TO IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) 5 DETERMINE THE ITEMS OF EACH ONE BUT THE AO HAS NO T FURNISHED THE SAME. HE FURTHER SUBMITS THAT BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (A), THE ASSESSE E HAS FILED DETAILS OF GOLD JEWELLERY FOUND, PARTY-WISE D ETAILS OF GOLD JEWELLERY, CONFIRMATION CERTIFICATE OF THE ASSESSEE , HIS SON MAHEK TILWANI, AFFIDAVIT OF THE ASSESSEE, CONFIRMAT ION CERTIFICATE AND AFFIDAVIT OF MRS.RENU TILWANI, CON FIRMATION CERTIFICATE AND AFFIDAVIT OF MS.ANITA PARYANI, CON FIRMATION CERTIFICATE AND AFFIDAVIT OF MEENA R. KHANNA, COPY OF LETTER BY MEENA R. KHANNA TO THE BANK AND CERTIFICATE I SSUED BY THE BANK APPEARING AT PAGES 37 TO 55 OF THE ASSESSE ES PAPER BOOK TO PROVE THAT THE JEWELLERY IS BELONGIN G TO VARIOUS FAMILY MEMBERS OF THE ASSESSEE. HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX (A) AFTER RECORD ING THE ASSESSEES SUBMISSIONS AT PAGE 3 OF THE APPELLATE O RDER HAS NOT CONSIDERED /EXAMINED THE SAME. HE FURTHER SUB MITS THAT SINCE THE AO AND THE LEARNED COMMISSIONER OF I NCOME TAX (A) HAVE NOT PROVIDED PROPER OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE TO PROVE THAT THE JEWELLERY IS BELO NGING TO VARIOUS FAMILY MEMBERS OF THE ASSESSEE, THEREFORE, IN THE INTEREST OF JUSTICE THE ISSUE MAY BE SET ASIDE TO T HE FILE OF THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE D OCUMENTARY EVIDENCE FILED BY THE ASSESSEE. IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) 6 6. ON THE OTHER HAND, THE LEARNED DR WHILE RELYING ON THE ORDER OF THE AO AND THE LEARNED COMMISSIONER OF IN COME TAX(A) SUBMITS THAT HE HAS NO OBJECTION IF THE ISSU E IS SET ASIDE TO THE FILE OF THE AO. 7. HAVING CAREFULLY HEARD THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON REC ORD, WE FIND THAT DESPITE OF THE FACT THAT THE ASSESSEE HA S MADE REQUEST TO THE AO VIDE LETTER DATED 19.12.1999 TO GIVE INVENTORY OF JEWELLERY TO DETERMINE THE ITEMS OF E ACH ONE, THE AO HAS NOT PROVIDED ANY SUCH DETAILS TO THE AS SESSEE. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (A) T HE ASSESSEE HAS FILED ALL THE DETAILED CONFIRMATIONS A ND AFFIDAVITS OF THE FAMILY MEMBERS APPEARING AT PAGES 37 TO 55 OF THE ASSESSEES PAPER BOOK. HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX (A) AFTER RECORDING THAT THE ASSESSEE HAS STATED THAT THE JEWELLERY BELONGED TO VARIOUS FAMILY MEMBERS. THE ASSESSEE HAS FURNISHED AN ITEM- WISE LIST OF JEWELLERY WHEREIN IT IS CLAIMED THAT THE J EWELLERY WAS RECEIVED AS GIFTS ON VARIOUS OCCASIONS SUCH AS WED DING, ANNIVERSARY, BIRTHDAY ETC. THE ASSESSEE HAS ALSO FI LED AFFIDAVITS OF VARIOUS FAMILY MEMBERS CLAIMING THE O WNERSHIP OF THE JEWELLERY HAS NEITHER EXAMINED THE AFFIDAVITS FILED BY THE ASSESSEE NOR PROVIDED ANY OPPORTUNITY OF BE ING HEARD TO THE ASSESSEE TO PROVE HIS CASE THAT THE JEWELLER Y IS IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) 7 BELONGING TO VARIOUS MEMBERS OF THE FAMILY. THIS BEING SO AND IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE DOCUMENTARY EVIDENCE FILED BY THE ASSESSEE WAS CON SIDERED BY THE LEARNED COMMISSIONER OF INCOME TAX (A) , W E ARE OF THE VIEW THAT THE LEARNED COMMISSIONER OF INCOME TA X (A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION MADE B Y THE AO. THEREFORE, IN THE INTEREST OF JUSTICE AND KEEPING I N VIEW THAT THE ASSESSEE, FOR THE FIRST TIME, HAS FILED DOCUMEN TARY EVIDENCE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (A), WE, IN THE INTERESTS OF JUSTICE, CONSIDER IT FAIR AND REASONABLE THAT THE MATTER SHOULD GO BACK TO THE F ILE OF THE AO AND ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK T HE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME A FRESH AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. ALL THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE PARTLY ALLOWED FOR STATISTIC AL PURPOSE. IT(SS)A NO.24/MUM/2008 8. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIREC TED AGAINST THE SUSTENANCE OF PENALTY IMPOSED BY THE AO UNDER SECTION 158BFA(2) OF THE ACT. 9. SINCE THE QUANTUM APPEAL VIDE FINDING RECORDED IN PARAGRAPH 7 OF THIS ORDER HAS BEEN RESTORED BACK TO THE FILE IT(SS)A NO.186/MUM/2004 AND IT(SS)A NO.24/MUM/2008 (BLOCK PERIOD -1.4.1988 TO 19.8.1998) 8 OF THE AO, THEREFORE, IN THE INTERESTS OF JUSTICE , WE CONSIDER IT FAIR AND REASONABLE THAT THIS ISSUE MAY ALSO BE RESTORED BACK TO THE FILE OF THE AO AND ACCORDINGLY, WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS AC COUNT AND SEND BACK THE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH AND IN ACCORDANCE WITH LAW AFTER PROVID ING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THE GROUNDS TAKEN BY THE ASSESSEE ARE THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 10. IN THE RESULT, THE ASSESSEES APPEALS STAND PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MAY,2011. SD SD (RAJENDRA SINGH ) (D.K.A GARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 20 TH MAY, 2011 SRL:12511 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILED. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI