DCIT, Central Circle-25, V. Rabinder Kumar Dutta,

ITSSA 302/DEL/2003

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9304 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-05-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 27-04-2010
• Assessment Year: misc
• Appeal Filed On: 05-06-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K TIWARI
• Keywords: Unexplained investment; Gift; Retrospective amendment
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, NEW DELHI, BENCH H BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI R. C. SHARMA, ACCOUTANT MEMBER ITA(SS) NO. 302 /DEL/2003 (BLOCK PERIOD 01.04.1990 TO 28.04.2000) ACIT, CC-25, JANPATH, VS. SHRI RABINDRA KR. DUTTA, NEW DELHI. R/O 353, POCKET-A, SARITA VIHAR, NEW DEL HI (APPELLANT) (RESPONDENT) PAN / GIR NO. AAVPD1383N CO. NO. 27/DEL/08 (BLOCK PERIOD 01.4.90 TO 28.4.2000) SHRI RABINDRA KR. DUTTA, VS. ACIT, CC-25, R/O 353, POCKET-A, JANPATH, NEW DELHI. SARITA VIHAR, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI M.P. RASTOGI, SMT. LALITHA KRIS HNAMURTHY, CA RESPONDENT BY: SHRI V K TIWARI, CIT DR ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT(A) DATED 25.03.2003 PASSED FOR THE BLOCK PERIOD STARTING FROM 01.04.1990 AND ENDING ON 28.04.2000. ON RECEIPT OF THE NOTICE, THE ASSESSEE HAS FILED CROSS OBJECTION BEARING NO.2 7/DEL/2008. IN IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 2 THE CROSS OBJECTION THE ASSESSEE HAS PLEADED THAT T HE ASSESSMENT ORDER DATED 28.06.2002 PASSED BY THE LD. ACIT IS WI THOUT JURISDICTION AND BARRED BY LIMITATION AS PROVIDED U /S 158BE OF THE I. T. ACT, 1961. 2. THE REGISTRY HAS POINTED OUT THAT THE CROSS OBJE CTION IS TIME BARRED BY 594 DAYS. THE ASSESSEE HAS FILED APPLICAT ION FOR CONDONATION OF DELAY. HOWEVER, CONSIDERING THE GRO UNDS RAISED IN THE CROSS OBJECTION, WE ARE OF THE OPINION THAT SUCH TYPE OF ARGUMENT CAN BE RAISED EVEN WITHOUT FILING THE CROS S OBJECTION. THE ASSESSEE CAN ALWAYS DEFEND THE ORDER OF THE CIT (A) WITH THE HELP OF RULE 27 OF THE ITAT RULES ON THE GROUND WHI CH HAS BEEN DECIDED AGAINST HIM. THE QUESTION WHETHER THE ASSE SSMENT ORDER WAS PASSED WITHIN THE LIMITATION OR NOT CAN BE DECI DED EVEN ON THE ORAL ARGUMENTS OF THE RESPONDENTS WITH THE HELP OF THE FACT & CIRCUMSTANCES AVAILABLE ON THE RECORD. CONSIDERING THESE ASPECTS WE PERMIT THE LD. COUNSEL FOR THE ASSESSEE TO RAISE THIS ARGUMENT EVEN WITHOUT THE HELP OF THIS CROSS OBJECT ION. 3. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT A SEARCH WAS CARRIED OUT ON 28.04.2000. THE ASSESSME NT HAS BEEN COMPLETED ON 28.06.2002. AS PER SECTION 158BE THE ASSESSMENT WAS TO BE COMPLETED WITHIN TWO YEARS FROM THE END O F THE MONTH FROM THE EXECUTION OF LAST AUTHORIZATION OF SEARCH WARRANT. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE WHERE SEARCH WAS CARRIED ON 28,4,2000, ONE CUPBOARD AND A LOCKER WER E PUT UNDER RESTRAINT ORDER U/S 132(3) OF THE I. T. ACT. THE R ESTRAINT ORDER WAS IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 3 LIFTED ON 20.06.2006 AND THE DEPARTMENT IS COUNTING THE LIMITATION FROM JUNE 2006 WHEN THIS PROHIBITION ORDER WAS LIFT ED. HE TOOK US THROUGH PAGE 7 OF THE 2 ND PAPER BOOK WHEREIN ANNEXURE 3 IS AVAILABLE. HE POINTED OUT THAT CUPBOARD ON WHICH P ROHIBITION ORDER WAS PLACED ON 28.04.2000 WAS EXAMINED BY THE AUTHORIZED OFFICERS AND THEY FOUND CERTAIN FOREIGN CURRENCY AS WELL AS CHEQUES. THERE WAS NOTHING, WHICH REQUIRES TO BE I NVESTIGATED FROM THIS CUPBOARD, WHICH CAN AUTHORIZE THEM TO PUT PROHIBITORY ORDER. HE FURTHER CONTENDED THAT ON 20.6.2000, TH E PANCHNAMAS WERE DRAWN AFTER EXECUTING THE WARRANT IN RESPECT O F THE CUPBOARD AS WELL AS THE LOCKER. THE AUTHORIZED OFF ICERS IN THESE PANCHNAMAS ARE SHRI R P MEENA, SHRI PANKAJ SAXCENA. THEY WERE NOT THE AUTHORIZED PERSONS WHEN SEARCH WARRANT WAS ISSUED. THE JOINT DIRECTOR (INVESTIGATION) HAS AUTHORIZED THESE PERSON TO CARRY OUT THE INVESTIGATION IN RESPECT OF THE CUP BOARD A S WELL AS THE LOCKER. SHRI RASTOGI LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT SECTION 132 CONTEMPLATES CARRYING OUT OF ANY SEARCH IF THE DIRECTOR GENERAL OR DIRECTOR WAS SATISFIED ON THE B ASIS OF THE INFORMATION POSSESSED BY THEM THAT A SEARCH IS REQU IRED TO BE CARRIED OUT ON ANY PERSON. THE JOINT DIRECTOR HAS OBSERVED THAT THIS AUTHORIZATION IS IN CONTINUATION OF THE SEARCH PROCEEDINGS CARRIED OUT ON 28.04.2000. ACCORDING TO THE LD./ C OUNSEL FOR THE ASSESSEE, SINCE AUTHORIZATION HAS BEEN ISSUED BY A NEW OFFICER, IT SHOULD BE HIS SATISFACTION BEFORE ISSUANCE OF SUCH AUTHORIZATION. ON THE BASIS OF THE REASONS RECORDED AND CONSTRUED BY THE DIRECTOR GENERAL WHILE ISSUING THE 1 ST AUTHORIZATION TO CARRY OUT A IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 4 SEARCH SHOULD HAVE NOT BEEN MADE THE BASIS BY THE J OINT DIRECTOR. HENCE LIMITATION FROM THIS AUTHORIZATION OUGHT TO BE NOT TAKEN BECAUSE THE COGNIZANCE TO THIS AUTHORIZATION IS NOT REQUIRED TO BE. IF THAT BE SO TAKEN THEN SEARCH IS TO BE CON STRUED AS CONCLUDED ON 28.04.2000 AND ASSESSMENT ORDER IS PAS SED AFTER EXPIRY OF THE LIMITATION OF TWO YEARS. IN SUPPORT OF HIS CONTENTION, HE RELIED UPON 192 ITR 436, 292 ITR 444 AND 175 TAX MAN 01. FOR THIS PROPOSITION THE JOINT DIRECTOR OUGHT TO HAVE FORMED HIS OPINION ON THE BASIS OF INFORMATION POSSESSED BY HIM AND SHOUL D HAVE NOT AUTHORIZED THE OFFICERS ON THE BASIS OF THE OPINION FORMED BY THE DIRECTOR BY ISSUING ORIGINAL AUTHORIZATION HE RELIE D UPON THE DECISION OF GUJARAT HIGH COURT REPORTED IN 307 ITR 115 AND THE DECISION OF HON'BLE HIGH COURT OF CALCUTTA REPORTED IN 226 CTR 84. 4. THE LD. D.R. ON THE OTHER HAND CONTENDED THAT VI DE FINANCE ACT 2009, ADDITIONAL DIRECTOR AND ADDITIONAL COMMIS SIONER, JOINT DIRECTOR AND JOINT COMMISSIONER HAVE BEEN AUTHORIZE D TO ISSUE SUCH AUTHORIZATION. THIS AMENDMENT HAS COME WITH R ETROSPECTIVE EFFECT FROM 01.06.1994. HENCE, IF AUTHORIZATION HA S BEEN ISSUED BY THE JOINT DIRECTOR THEN IT IS A VALID AUTHORIZATION . THE DEPARTMENT IS NOT SUPPOSED TO DISCLOSE THE INFORMATION FORMING SU CH A BELIEF TO ISSUE THE AUTHORIZATION TO THE ASSESSEE. HE ALSO P OINTED OUT THAT OTHERWISE ALSO THERE WAS SUFFICIENT INFORMATION WIT H THE DEPARTMENT AS SEARCH HAS ALREADY BEEN CONDUCTED. P ROHIBITORY ORDERS WERE PUT ON A CUPBOARD AS WELL AS LOCKER. T HESE WERE REQUIRED TO BE OPERATED. THE JOINT DIRECTOR HAS BE EN EMPOWERED IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 5 TO ISSUE SUCH AUTHORIZATION. HE HAS ISSUED THE SAM E ON THE BASIS OF SUCH INFORMATION. THERE IS NOTHING UNUSUAL IN HIS ACT AND CONDUCT. HE FURTHER CONTENDED THAT SUCH TYPE OF ISSUANCE CAN NOT BE CHALLENGED BEFORE THE TRIBUNAL AND FOR BUTTRESSING HIS CONTENTION HE RELIED UPON THE DECISION OF ITAT IN THE CASE OF PROMAIN VS DCIT 95 ITD 489. ACCORDING TO THE LD. D.R. THE TRIBUNAL HAS HELD THAT VALIDITY OF THE SEARCH CANNOT BE DECIDED BY THE TRI BUNAL. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORDS CAREFULLY. THE SEARCH HAS BEEN CARRIED OUT AT THE PREMISES OF THE ASSESSEE. ABOUT THE VALIDITY O F THE AUTHORIZATION ISSUED FOR THE SEARCH CARRIED OUT ON 28.04.2000, ASSESSEE DID NOT RAISE ANY DISPUTE. THE ONLY ARGUM ENT THE LD. COUNSEL FOR THE ASSESSEE RAISED IS THAT THE JOINT D IRECTOR IS A NEW OFFICER AND UNLESS SOME INFORMATION WAS POSSESSED B Y HIM, HE COULD NOT ISSUE THE AUTHORIZATION FOR OPERATING THE LOCKER AND THE CUPBOARD ON THE BASIS OF THE INFORMATION CONSIDERED BY THE DIRECTOR WHILE ISSUING ORIGINAL AUTHORIZATION. WE DO NOT FIND ANY MERIT IN THIS CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE BECAUSE AFTER THE RETROSPECTIVE AMENDMENT IN THE AC T, A CONCURRENT POWER HAS BEEN INFUSED BETWEEN THE DIREC TOR AS WELL AS THE JOINT DIRECTOR. THE JOINT DIRECTOR CAN ALSO EXERCISE SUCH A POWER. MORE SO, THE INFORMATION WAS ALREADY ON THE RECORD BECAUSE IN EXECUTION OF EARLIER AUTHORIZATION PROHI BITORY ORDERS WERE PUT ON THE LOCKER AS WELL AS CUPBOARD WERE REQ UIRED TO BE INSPECTED. TO OUR MIND, THERE WAS SUFFICIENT INFORM ATION FOR IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 6 EXERCISING SUCH A POWER. OTHERWISE ALSO AS PER THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF PROMAI N, THE TRIBUNAL IS NOT EMPOWERED TO GO INTO ALL THESE ISSUES. THEREFO RE, THE PRELIMINARY OBJECTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS REJECTED AND THE CROSS OBJECTION IS DISMISSED. 6. IN THE APPEAL OF THE REVENUE THE 1 ST GRIEVANCE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1.3 7,686/-. THE BRIEF FACTS OF THE CASE ARE THAT THE ADDITION WAS MADE BY THE A.O. ON THE GROUND THAT DURING THE COURSE OF SEARCH LOOSE P APERS WERE FOUND WHICH WERE INVENTORIED AS ANNEXURE A-4. FROM THE PERUSAL OF PAGES 12-13 OF ANNEXURE A-4 IT REVEALED THAT THE ASSESSEE HAS CARRIED OUT CERTAIN REPAIRS OF HOUSE PROPERTY AT PO CKET A-353 SARITA VIHAR NEW DELHI. ON THE BASIS OF SUCH DOCUM ENTS HE MADE AN ADDITION OF RS.1,37,686/-. BEFORE THE LD. CIT(A ) IT WAS CONTENDED BY THE ASSESSEE THAT HE HAS NEVER CARRIED OUT ANY REPAIRS. IT WAS JUST A ROUGH ESTIMATE TAKEN FROM T HE CONTRACTOR TO CARRY OUT THE REPAIR. THE ASSESSEE HAD OBTAINED TH E REPORT FROM THE GOVERNMENT APPROVED VALUER WHO INSPECTED THE PR EMISES OF THE ASSESSEE AND HAS GIVEN THE CERTIFICATE THAT NO ADDITION OR ALTERATION HAS BEEN CARRIED OUT IN THE SAID PREMISE S. THIS REPORT WAS CONFRONTED TO THE A.O. AND HIS COMMENTS WERE CA LLED FOR. THE LD. CIT(A) WAS SATISFIED WITH THE EXPLANATION O F THE ASSESSEE THAT NO REPAIR HAS BEEN CARRIED OUT AT THE PREMISES OF THE ASSESSEE AND THEREFORE, HE DELETED THE ADDITION. IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 7 7. ON DUE CONSIDERATION OF THE FACTS & CIRCUMSTANCE S OF THE CASE, WE ARE OF THE OPINION THAT HE ASSESSEE HAS ES TABLISHED ON THE RECORD THAT HE HAS NOT MADE ANY ALTERATION/CHAN GE IN THE FLAT ALLOTTED BY DDA. THERE IS NO APPROVAL AVAILABLE ON THE RECORD GIVEN BY THE DDA FOR CARRYING OUT THE ALTERATION IN THE FLAT. MOREOVER, THE VALUER HAS GIVEN A CERTIFICATE THAT N O CHANGE HAS BEEN MADE. THUS, THE FACTS PERSUADE US TO DRAW INF ERENCE THAT NARRATION AT PAGES 12 13 MAY BE IN RESPECT OF THE ESTIMATION OF EXPENSES REQUIRED TO BE INCURRED FOR CARRYING OUT T HE ACTUAL REPAIRS / CHANGE. THE LD. CIT(A) HAS RIGHTLY DELET ED THE ADDITION AND NO INTERFERENCE IS CALLED FOR. 8. IN GROUND NO.2, THE GRIEVANCE OF THE REVENUE IS THAT THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OFRS.9,83 ,200/- MADE ON ACCOUNT OF INTEREST AND THE BROKERAGE. 9. THE BRIEF FACTS OF THE CASE ARE THAT ON SCRUTINY OF THE SEIZED MATERIAL, PAGE 38 OF ANNEXURE A3 THE A.O. FOUND THE FOLLOWING NOTING:- PAGE NO. 38 OF ANNEXURE A-3 CONTAINS CERTAIN ENTRIE S WHICH READ AS FOLLOWS :- INTEREST FROM 01-01-1999 TO 31-3-1999 RS. 55,000 (RS. 18,333 X 3) BROKERAGE @ 2% ON RS. 9,10,000 RS. 18,200 RS. 73,200 LESS: BOOKING MONEY WITH YOU RS. 20,000 IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 8 SENT IN CASH RS. 53,200 10. THERE IS A NARRATION OF RS.9.10.000 ON WHICH BR OKERAGE @ 2% HAS BEEN COMPUTED AT RS.18,200/-. THE A.O. FORMED AN OPINION THAT THE ASSESSEE HAD EARNED INTEREST INCOME AND BR OKERAGE. HE HAS FORMED THE OPINION THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF RS.9,10,000/- UPON WHICH HE HAS CHARGED B ROKERAGE @ 2%. ACCORDING TO THE A.O., THE ASSESSEE HAD EARNED INTEREST AND BROKERAGE ON ACCOUNT OF CERTAIN FUNDS MADE AVAILABL E TO SOME PARTIES. THE CASE OF THE ASSESSEE IS THAT THESE P APERS RELATE TO THE PROPERTY OF HIS BROTHER-IN-LAW SHRI MITRA. HE SEN T THESE PAPERS FOR TAKING THE OPINION OF THE ASSESSEE. ULTIMATELY THE PROPERTY WAS SOLD IN MAY 2001 FOR A CONSIDERATION OF RS.9,60,000 /-, THE ASSESSEE HAS PRODUCED THE SALE DEED OF THE PROPERTY COMPRISE D AT 33 ELLIOT ROAD, CALCUTTA. THE LD. CIT(A) WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AND HELD THAT THESE PAPERS DO NOT B ELONG TO THE ASSESSEE. 11. WITH THE ASSISTANCE OF LD. REPRESENTATIVES WE H AVE GONE THROUGH THE ORDERS OF THE A.O. AND AS WELL AS LD. C IT(A). WE HAVE ALSO PERUSED THE COPY OF THE SALE DEED AVAILABLE AT PAGES 23-28 OF PAPER BOOK WHEREIN UNDIVIDED SHARE WAS SOLD FO R A CONSIDERATION OF RS.4,80,000/-. THE MEMORANDUM OF CONSIDERATION HAS BEEN PLACED AT PAGE 29. TAKING INTO CONSIDERA TION THESE ASPECTS COUPLED WITH THE FINDINGS OF LD. CIT(A), WE ARE OF THE OPINION THAT THE NARRATION MADE IN PAGE 38 OF ANNEX URE A-3 DOES IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 9 NOT BELONG TO THE TRANSACTIONS OF THE ASSESSEE AND THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. 12. IN GROUND 3 THE GRIEVANCE OF THE REVENUE IS THA T THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.45, 600/-. THE ADDITION WAS MADE BY THE A.O. ON THE BASIS OF NOTIN G AVAILABLE AT PAGE 44 OF THE ANNEXURE A-3. ACCORDING TO THE A.O. THE NOTING ON THIS PAGE INDICATES THAT RS.80,000/- WAS GIVEN A S LOAN BY THE ASSESSEE ON 22.12.1994 TO M/S. CENTEX (INDIA) ENGIN EERS LTD. @ 15% P.A. ON PAGE 43 THE CALCULATION OF INTEREST @ 24% CAME TO RS.52,800/- TILL 1SST OCTOBER 1997, WHEREAS ASSESSE E HAS DISCLOSED INTEREST OF RS.32,.868/- TILL 31.03.1997. THE A.O. ALSO BROUGHT TO TAX THE DIFFERENCE OF INTEREST @ 9% ON RS.80,000/-FROM 27/12/1994 TO 28/04/2000 AMOUNTING TO RS.45,600/-. THE CASE OF T HE ASSESSEE IS THAT NOTHING HAS BEEN RECEIVED FROM CENTEX INDIA E NGINEERS LTD. THEY HAVE CONFIRMED THAT NO INTEREST HAS BEEN PAID TO THE ASSESSEE AS CONCLUDED BY THE A.O., THE LD. CIT(A) H AS DELETED THE ADDITION. 13. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS A ND GONE THROUGH THE RECORDS CAREFULLY. ACCORDING TO THE A. O. ASSESSEE OUGHT TO HAVE SHOWN INTEREST @ 24% P.A. ON THE SUM OF RS.80,000/- WHEREAS HE HAS SHOWN INTEREST RECEIVED @ 15% P.A. THE ASSESSEE HAS PROVED ON THE RECORD THAT INTEREST WAS ONLY @ 1 5% P.A. THE INTEREST RECEIVABLE @ 24% WAS ONLY A PROVISION AND HE HAS NOT RECEIVED IT ACTUALLY. THE CERTIFICATE OF PAYER HAS BEEN FILED BY THE ASSESSEE AND THE A.O. DID NOT ENQUIRE INTO THE ISSU E FURTHER EXCEPT IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 10 RELYING UPON THE PAPERS. WE DO NOT FIND ANY ERROR IN THE ORDER OF LD. CIT(A) AND HENCE THIS GROUND IS REJECTED. 14. IN THE NEXT GROUND OF APPEAL THE GRIEVANCE OF T HE REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,81,456/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELL ERY. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE THR OUGH THE ORDERS OF THE A.O. AS WELL AS THE CIT(A). THE AREA OF DISPUTE BETWEEN THE ASSESSEE AND THE A.O. WAS IN RESPECT OF JEWELLERY POSSESSED BY THE ASSESSEE AND FOUND DURING THE COUR SE OF SEARCH IS THAT AS PER THE ASSESSEE JEWELLERY WAS RECEIVED AT THE TIME OF MARRIAGE AND IT WAS HELD BY HIS WIFE FOR A LONG PER IOD. THE A.O. WAS NOT SATISFIED WITH THE EXPLANATION. THE ASSESS EE HAS FILED VALUATION CERTIFICATE OF A GOVERNMENT-APPROVED VALU ER WHO OPINED THAT JEWELLERY FOUND DURING THE COURSE OF SE ARCH WAS TRADITIONAL JEWELLERY AND ABOUT 30 YEARS OLD. THE CIT(A) WAS SATISFIED WITH THIS EXPLANATION AND HELD THAT THE J EWELLERY WAS RECEIVED BY THE WIFE OF THE ASSESSEE AT THE TIME OF MARRIAGE AND OTHER SOCIAL OCCASIONS. TAKING INTO CONSIDERATION THIS FINDING OF FACT WE DO NOT SEE ANY REASON TO INTERFERE IN IT. THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THE JEWELLERY FOUND DURI NG THE COURSE OF SEARCH AND TREATED BY THE A.O. AS UNEXPLAINED, IS T HAT IT WAS RECEIVED AS A GIFT ON THE DEATH OF HIS GRAND PARENT S AS WELL AS THESE WERE RECEIVED ON THE OCCASION OF MARRIAGE AND GOVERNMENT APPROVED VALUER HAS CERTIFIED THE AGE OF JEWELLERY AS 30 YEARS OLD. HE TERMED THEM AS TRADITIONAL JEWELL ERY. IN VIEW OF IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 11 THE ABOVE FACTS, WE ARE OF THE OPINION THAT THE ASS ESSEE HAS EXPLAINED SOURCE OF JEWELLERY. THIS GROUND OF APPE AL IS REJECTED. 15. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS.21,60,000/-. 16. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE WAS EXECUTIVE DIRECTOR OF M/S. TOSCANA (NEPAL) PVT. LTD. KATMANDU FOR THE PERIOD SEPTEMBER 1994 TILL DECEMBER, 96 HIS GROSS EMOLUMEN TS DURING THE ABOVE SAID PERIOD WERE ONLY RS. 21,60,000/-. OUT OF THE SAID AMOUNT A SUM OF RS. 7,65,000/- WAS REMITTED TO THE BANK ACCOUNT AT ANZ GRINDLAYS BANK, BANGALORE. A SUM OF RS. 80,0 00/- WAS STATED TO BE GIVEN AS LOAN TO M/S. CENTEX (INDIA) ENGINEER S PVT. LTD. AS DISCERNABLE FROM PAGES NO. 43 TO 44 OF ANNEXURE A F OUND AT THE TIME OF SEARCH. THE LD. AO DIRECTED THE ASSESSEE TO FURNISH THE LETTER OF APPOINTMENT, PASSPORT SHOWING NEPAL VISIT , EVIDENCES FOR TAX PAID ALONGWITH CERTIFICATE FROM THE NEPAL TAX A UTHORITIES, TOTAL EMOLUMENTS RECEIVED AND BANK STATEMENT OF NEPAL AN Z GRINDLAYS BANK . ACCORDING TO THE AO THE ASSESSEE H AD STATED THAT HE HAS LOST PAPERS RELATING TO INCOME TAX FILI NG IN NEPAL DURING ITS HIS TRANSIT TO INDIA FROM NEAL. HE HAS FILED HIS AFFIDAVIT. TO IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 12 SUBSTANTIATE HIS EMPLOYMENT ABROAD THE ASSESSEE HAS FILED DOCUMENTS LIKE CONFIRMATION FROM THE EMPLOYER APPOI NTMENT LETTER, CONFIRMATION FROM THE LABOUR DEPARTMENT OF NEPAL REGARDING HIS EMPLOYMENT WITH M/S. TOSCANA (NEPAL) PVT. LIMITED AND CHART SHOWING TOTAL RECEIPT OF SALARY AND EMOLU MENTS OF RS. 21,60,000/-. THE AO HAS MADE THE ADDITION OF THIS A MOUNT ON THE GROUND THAT ASSESSEE HAS FILED HIS RETURN OF INCOME WITH THE BANGALORE INCOME TAX AUTHORITIES DISCLOSING PENSION INCOME, INTEREST INCOME AND DIVIDEND INCOME. HE PAID THE TAX THEREON. HOWEVER THE RETURNS FILED IN INDIA WERE FILED BY TH E ASSESSEE IN THE CAPACITY OF RESIDENT AND THERE WAS NO MENTION OF IN COME RECEIVED IN NEPAL NOR TAXES PAID IN NEPAL WERE SHOW N. ON ACCOUNT OF THIS FAILURE AO HAS MADE THE ADDITION. 17. LD. CIT(A) HAS DELETED THE ADDITION ON THE GROU ND THAT ASSESSEE REMAINED OUT OF INDIA FROM 23 RD SEPTEMBER 1994 TO JUNE 1996. THUS IN F.Y. 1994-95 AND 1995-96 THE STATUS O F THE ASSESSEE WAS NON RESIDENT AS HE STAYED OUTSIDE INDIA WITH MO RE THAN 182 DAYS IN EACH YEAR. LD. CIT(A) HAS ALSO FOUND THAT T DS WAS DEDUCTED BY M/S. TOSCANA (NEPAL) PVT. LTD. AND IT WAS DEPOSITED IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 13 WITH THE NEPAL GOVT. THIS HAS BEEN DISCERNABLE FROM THE PAYSLIP ISSUED BY THE EMPLOYER. THE FINDING OF LD. CIT(A) R ECORDED IN PARAGRAPH NO. 8.3 READ AS UNDER :- 8.3 I HAVE CONSIDERED THE FACTS OF THE CASE. THE C ORRECT STATUS OF THE ASSESSEE HAS TO BE LOOKED INTO, EVEN IF NO C LAIM OF NON- RESIDENT WAS MADE AT THE TIME OF FILING OF THE RETU RN IN VIEW OF THE CASE LAW RELIED UPON BY THE ASSESSEE. FROM THE FACT S OF THE CASE IT IS NOTED THAT THE ASSESSEE REMAINED OUT OF INDIA FROM 23 RD SEPTEMBER, 1994 TO JUNE 1996 AS STATED IN THE WRITT EN SUBMISSION. THUS FOR FINANCIAL YEARS 1994-95 AND 1995-96, THE S TATUS OF THE ASSESSEE WAS NON-RESIDENT AS HE STAYED OUTSIDE INDI A FOR MORE THAN 182 DAYS IN EACH YEAR FOR EMPLOYMENT AND FOR F.Y. 1996-97 AS RESIDENT BUT NOT ORDINARILY RESIDENT AS HE WAS NON-RESIDENT FOR TWO SUCCESSIVE YEARS. HENCE, THERE IS NO JUSTIFICAT ION FOR BRINGING TO TAX THE INCOME EARNED FROM SALARY IN NEPAL IN TH ESE TWO YEARS. THE ADDITION OF RS. 21,60,000/- IS DELETED. 18. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HA VE GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS ESTA BLISHED THAT A SUM OF RS. 21,60,000/- WAS RECEIVED BY HIM AS A SAL ARY IN NEPAL. THIS AMOUNT WAS SUBJECT TO TDS IN NEPAL. THE ONLY R EASON ASSIGNED BY THE AO IN THE ASSTT. ORDER FOR TAXING THIS AMOUN T IS THAT IN THE RETURN FILED BY THE ASSESSEE IN INDIA HE FAILED TO DISCLOSE THE DETAILS OF THESE AMOUNTS AND ALSO FAILED TO DISCLOSE HIS ST ATUS . BOTH THESE ASPECTS HAVE DULY BEEN CONSIDERED BY THE LD. CIT(A) IN THE IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 14 FINDING EXTRACTED SUPRA. THE AO HAS TO FIRST ESTABL ISH HOW THIS AMOUNT IS TAXABLE IN THE HANDS OF ASSESSEE IN INDIA BECAUSE IT WAS NOT EARNED BY ASSESSEE IN INDIA RATHER IT WAS IN NE PAL AND IT HAS ALSO BEEN SUFFERED TAX IN NEPAL. THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. THIS GROUND OF APPEAL IS ALSO REJECT ED. 19. GROUND 6 IN THIS GROUND OF APPEAL GRIEVANCE OF REVENUE IS THAT LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 52,950/-. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE COU RSE OF SEARCH FOLLOWING WAS FOUND AT THE RESIDENCE OF THE ASSESSE E :- A) US$ 550 AS PER ANNEXURE 0-1 B) POUND STERLING DATED 20.6.2000 C) US$ 900 TRAVELLERS CHEQUE AS PER ANNEXUER 0- 2 DATED 20.6.2000 20. IN ORDER TO EXPLAIN AVAILABILITY OF FOREIGN EXC HANGE AT THE RESIDENTIAL PREMISES IT WAS CONTENDED BY THE ASSESS EE THAT HE WENT ABROAD IN MAY 1994. THE TRAVELLERS CHEQUE OF D OLLARS 1600 WAS PURCHASED BY HIM ON 4 TH MAY1994, FOR MEETING HIS EXPENSES, FROM THE BANK IN BANGLADESH. HE HAS STAYED THERE. O NE OF HIS FRIEND MR. MOHD. ABDUL MALIQUE GIFTED US$1000 TO H IS WIFE FOR INCIDENTAL EXPENSES, SHOPPING ETC. THE FOREIGN CURR ENCY OF DOLLARS IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 15 515 AND POUNDS 144 WAS BALANCE OUT OF THE GIFTED AM OUNT. A COPY OF THE CERTIFICATE FROM THE SAID DONOR WAS AL SO FILED. WITH REGARD TO TRAVELLERS CHEQUE OF US$ 900, IT WAS STAT ED THAT TRAVELLING CHEQUE OF US$900 FOUND AT THE RESIDENCE WAS OUT OF THE TRAVELLING CHEQUE OF 1600$ PURCHASED BY HIM. ACCORDING TO THE ASSESSEE AS PER RBI GUIDELINES, FOREIGN EXCHANGE OF US$2000 AND OR ITS EQUIVALENT CURRENCY CAN BE RETAINED BY THE ASSESSEE FOR PERSONAL USE OR FOR NUMISMATICS PURPOSES. THE ENFORCEMENT D IRECTOR HAS ALSO ACCEPTED THE EXPLANATION OF THE ASSESSEE AND A LSO ADMITTED THE SOURCE OF FOREIGN CURRENCY. THE AO HAS HELD THA T ASSESSEE MAY BE ABLE TO EXPLAIN POSSESSION OF FOREIGN EXCHAN GE LEGALLY. HE FAILED TO EXPLAIN THE SOURCE OF INVESTMENTS. IN THI S WAY HE MADE AN ADDITION OF RS. 52,950/- AS UNDISCLOSED INCOME F OR F.Y. 1992-93. THE LD. CIT(A) HAS DELETED THE ADDITION ON THE GRO UND THAT ASSESSEE MUST HAVE SPENT THE FOREIGN EXCHANGE P URCHASED DURING THE ABROAD TRIPS HE HAS UNDERTAKEN . THE ENF ORCEMENT DIRECTOR HAS CONSIDERED THE EXPLANATION OF THE ASSE SSEE AND HAS ORDERED FOR RELEASE OF SEIZED FOREIGN CURRENCY. IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 16 21. WITH THE ASSISTANCE OF LD. REPRESENTATIVE WE HA VE GONE THROUGH THE RECORD CAREFULLY. IT HAS EMERGES OUT FR OM THE RECORD THAT FOREIGN CURRENCY WAS PURCHASED FROM THE ACCOUN T AFTER TAKING APPROVAL AND THE PURCHASE OF FOREIGN CURRENC Y FOUND TO BE IN ORDER BY THE ENFORCEMENT DIRECTOR. THEREFORE SUC H TYPE OF ADDITION CANNOT BE MADE IN THE BLOCK PERIOD. BANK A CCOUNTS FROM WHERE SEIZED CURRENCIES WERE PURCHASED WERE I N THE KNOWLEDGE OF THE DEPARTMENT. IT COULD HAVE INVESTIG ATED THESE ISSUES IN THE REGULAR ASSESSMENT PROCEEDINGS. LD. C IT(A) HAS APPRECIATED THE FACTS AND CIRCUMSTANCES IN RIGHT PE RSPECTIVE AND WE DO NOT FIND ANY ERROR IN IT. 22. IN THE RESULT APPEAL OF THE REVENUE AND CROSS O BJECTION OF THE ASSESSEE ARE REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.5.2010. (R.C. SHARMA) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21.5.2010 VEENA IT(SS) NO. 302/DEL/03 BLOCK PERIOD 1 .4.1990 TO 28.4.2000 17 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI