Vijesh P. Jamdar, Bharuch V. The Income Tax Officer, Ward-4, Bharuch

ITSSA 49/AHD/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 1820 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-07-2017
• Assessment Year: 2003-2004
• Appeal Filed On: 20-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SMITHA V NAIR
• Assessee Lawyers: B T THAKKAR
• Keywords: Unexplained investment; Gift
• Section: 132; 271(1)(c); 2; 15; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH SURAT BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER IT(SS)A NO.49/AHD/2014 / ASSTT. YEAR: 2003-04 VIJESH JAMADAR DANDIA BAZAR BHARUCH. PAN : ACHPJ 7661 F VS. ITO, WARD-4 BHARUCH. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI B.T. THAKKAR, CA REVENUE BY : SMT.SMITHA V. NAIR, SR.DR / DATE OF HEARING : 14/11/2018 / DATE OF PRONOUNCEMENT: 11/12/2018 / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)- VI, BARODA DATED 22.10.2013 PASSED FOR THE ASSTT.YEAR 2003-04. 2. SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE LD.CI T(A) HAS ERRED IN CONFIRMING PENALTY OF RS.91,230/- IMPOSED UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT, 961. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH UNDER S ECTION 132 OF THE ACT WAS CARRIED OUT ON 17.1.2007. IN ORDER TO GIVE LOGICAL END TO THE SEARCH PROCEEDINGS A NOTICE UNDER SECTION 15 3A OF THE ACT WAS ISSUED TO THE ASSESSEE, AND SHE FILED HER RETUR N OF INCOME IT(SS)A NO.49/AHD/2014 2 UNDER SECTION 153 ON 13.3.2008 DECLARING TOTAL INCO ME AT RS.1,43,135/-, AS AGAINST RS.1,11,673/- DECLARED IN THE ORIGINAL RETURN FILED UNDER SECTION 139(1) OF THE ACT. TWO ADDITIONS WERE MADE TO THE TOTAL INCOME OF THE ASSESSEE VIZ. (A) U NACCOUNTED INVESTMENT IN JEWELLERY TO THE TUNE OF RS.4,02,987/ -; (B) DIFFERENCE OF RS.31,462/- IN THE ORIGINAL RETURN OF INCOME FILED UNDER SECTION 139(1) AND ONE FILED UNDER SECTION 15 3A OF THE ACT. THESE TWO AMOUNTS HAVE BEEN CONSIDERED FOR VISITING THE ASSESSEE WITH PENALTY. IT IS PERTINENT TO OBSERVE THAT SEARC H WAS CONDUCTED BEFORE JUNE, 2007 I.E. ON 17.1.2007 I.E. BEFORE 1 ST JUNE, 2007. THEREFORE, EXPLANATION 5 TO SECTION 271(1)(C) HAS BEEN INVOKED BY THE AO FOR VISITING THE ASSESSEE WITH PENALTY. AS FAR AS DIFFERENCE OF RS.31,462/- CONSIDERED BY THE AO FOR VISITING TH E ASSESSEE WITH PENALTY IS CONCERNED, WE ARE OF THE VIEW THAT SUCH AMOUNT COULD ONLY BE CONSIDERED IF DURING THE COURSE OF SEARCH A NY INCRIMINATING MATERIAL WAS FOUND REPRESENTING RECOVERY OF ANY MON EY, BULLION, JEWLLERY OR ANY VALUABLE ARTICLE OR THING. IF THE ASSESSEE ENHANCED HIS UNDISCLOSED INCOME IN RESPONSE TO THE NOTICE UN DER SECTION 153A THEN IPSO FACTO THAT AMOUNT WOULD NOT BE CONSIDERED FOR LEVYING OF PENALTY UNDER SECTION 271(1)(C). EXPLANATION 5 STIPULATES THAT THE ASSESSEE SHOULD BE FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THINGS. THIS EXTRA INCOME DECLARED BY THE ASSESSEE SHOULD BE COR RESPONDING TO THE RECOVERY OF THESE ITEMS I.E. ANY MONEY, BULLION JEWELLERY OR OTHER VALUABLE THINGS OR ARTICLES AND THEN ONLY DEE MING FICTION FOR CONCEALMENT OF INCOME SHOULD BE INVOKED UNDER EXPLANATION 5 TO SECTION 271(1)(C) OF THE ACT. NO SUCH THINGS HAS B EEN REFERRED BY THE AO, THEREFORE, PENALTY ON DIFFERENTIAL AMOUNT O F RS.31,462/- COULD NOT BE IMPOSED. IT(SS)A NO.49/AHD/2014 3 4. THE SECOND ITEM, WHICH HAS BEEN CONSIDERED BY TH E AO FOR VISITING THE ASSESSEE WITH PENALTY IS OF ADDITION O F RS.4,02,987/-. ACCORDING TO THE AO, A BILL SHOWING INVESTMENT IN J EWELLERY WAS FOUND. HENCE, ADDITION ON ACCOUNT OF UNEXPLAINED I NVESTMENT IN JEWELLERY WAS MADE. THE ASSESSEE HAS SUBMITTED THA T TOTAL WEIGHT OF JEWELLERY FOUND AT THE TIME OF SEARCH WAS 572 GRAMS, OUT OF WHICH 255.09 GRAM WAS PURCHASED, WHICH WAS A LREADY REFLECTED IN THE BOOKS. THERE ARE MARRIED LADIES I N THE FAMILY. THE CBDT HAS ISSUED CIRCULAR BEARING NO.1916 WHEREB Y IT HAS PROHIBITED ITS AUTHORIZED OFFICER FROM EFFECTING AN Y SEIZURE DURING THE COURSE OF SEARCH, IF GOLD ORNAMENTS WEIGHING 50 0 GRAMS WERE FOUND AND CLAIMED TO BE BELONGING TO THE MARRIED LA DY. THE OFFICER WAS NOT REQUIRED TO SEIZE THAT JEWELLERY. THESE GUIDELINES ARE ISSUED BY THE BOARD IN ORDER TO ADOPT A UNIFORM PROCEDURE. IT IS PERTINENT TO OBSERVE THAT IN DAY-TO-DAY LIFE IT WAS DIFFICULT TO MAINTAIN COMPLETE DETAILS WITH REGARD TO PURCHASES OF JEWLLERIES. IN OUR SOCIETY, WE KEEP JEWELLERY FOR A LONG TIME. SOMETIME, JEWELLERY PURCHASED 20 YEARS BACK WOULD BE FOUND WI TH MOST OF LADIES IN THE FAMILY HAVING SENTIMENTS AND DIGNITY ATTACHED TO THAT. THIS CIRCULAR OF THE CBDT WAS ISSUED FOR THE PURPOSE OF PROHIBITING THE AUTHORITIES NOT TO EFFECT THE SEIZU RE, BUT WAS ALSO CONSIDERED AS GUIDING FACTOR TO IDENTIFY AND EXCLUD E THAT IN CASE JEWELLERY TO THE EXTENT OF 500 GRAMS WAS FOUND DURI NG THE COURSE OF SEARCH AND CLAIMED TO BE BELONGING TO THE MARRIE D LADIES, THEN SOURCE OUGHT TO BE CONSTRUED TO BE AS EXPLAINED. FO R THIS PROPOSITION, WE FIND SUPPORT FROM THE JUDGMENT OF H ONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RATANLAL VYAPARIL AL JAIN, 339 ITR 351 (GUJ). WE WOULD QUOTE HERE THE RELEVANT PART O F THIS JUDGMENT FOR BETTER APPRECIATION OF THE ISSUE ON HA ND: IT(SS)A NO.49/AHD/2014 4 10. THOUGH IT IS TRUE THAT THE CENTRAL BOARD OF DI RECT TAXES CIRCULAR NO. 1916, DATED MAY 11,1994, LAYS DOWN GUI DELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN THE COURSE OF SEARCH, THE SAME TAKES INTO ACCOUNT THE QUANTITY OF JEWELLERY W HICH WOULD GENERALLY BE HELD BY THE FAMILY MEMBERS OF AN ASSES SEE BELONGING TO AN ORDINARY HINDU HOUSEHOLD. THE APPRO ACH ADOPTED BY THE TRIBUNAL IN FOLLOWING THE SAID CIRCULAR AND GIVING BENEFIT TO THE ASSESSEE, EVEN FOR EXPLAINING THE SOURCE IN RES PECT OF THE JEWELLERY BEING HELD BY THE FAMILY IS IN CONSONANCE WITH THE GENERAL PRACTICE IN THE HINDU FAMILIES WHEREBY JEWE LLERY IS GIFTED BY THE RELATIVES AND FRIENDS AT THE TIME OF SOCIAL FUNCTIONS, VIZ., MARRIAGES, BIRTHDAYS, MARRIAGE ANNIVERSARY AND OTHE R FESTIVALS. THESE GIFTS ARE CUSTOMARY AND CUSTOMS PREVAILING IN A SOCIETY CANNOT BE IGNORED. THUS, ALTHOUGH THE CIRCULAR HAD BEEN ISSUED FOR THE PURPOSE OF NON-SEIZURE OF JEWELLERY DURING THE COURSE OF SEARCH, THE BASIS FOR THE SAME RECOGNIZES CUSTOMS P REVAILING IN THE HINDU SOCIETY. IN THE CIRCUMSTANCES, UNLESS THE REVENUE SHOWS ANYTHING TO THE CONTRARY, IT CAN SAFELY BE PR ESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STANDS EXPLAINED. THUS, THE APPROACH ADOPTED BY THE TRIBUNAL IN CONSIDERING THE EXTENT OF JEWELLERY SPECIFIED UNDER THE SAID CIRCULAR TO BE A REASONABLE QUANTITY, CANNOT BE FAU LTED WITH. IN THE CIRCUMSTANCES, IT IS NOT POSSIBLE TO STATE THAT THE TRIBUNAL HAS COMMITTED ANY LEGAL ERROR SO AS TO GIVE RISE TO A Q UESTION OF LAW. 5. WE ARE CONSCIOUS OF THE FACT THAT WE ARE DEALING WITH PENALTY IMPOSED FOR AN ADDITION OF RS.4,02,987/- WHICH WAS ADDED ON ACCOUNT OF UNEXPLAINED INVESTMENT. TAXES ON THIS A DDITION OUGHT TO BE PAID BY THE ASSESSEE BECAUSE SHE HAS NOT CHAL LENGED THIS ADDITION. THE ISSUE BEFORE US IS, IF A SPECIFIC DE FENCE WAS NOT TAKEN BY THE ASSESSEE IN A QUANTUM PROCEEDINGS, CAN THAT DEFENCE NOW BE TAKEN FOR ABSOLVING HERSELF FROM LEVY OF PEN ALTY ? TO OUR MIND QUANTUM PROCEEDINGS AS WELL AS PENALTY PROCEED INGS ARE INDEPENDENT TO EACH OTHER. EVEN IF IN THE QUANTUM PROCEEDINGS AN ASSESSEE HAS AGREED FOR ADDITION, BUT HE HAS SOM E LEGAL DEFENCE AVAILABLE, THEN, ON THE BASIS OF THAT DEFEN CE HE CAN ABSOLVE HIMSELF FROM THE LEVY OF PENALTY. HAD THE ASSESSEE RELIED UPON THIS CIRCULAR AND CONTENDED BEFORE THE AO THAT ADDITION ON IT(SS)A NO.49/AHD/2014 5 ACCOUNT OF UNEXPLAINED INVESTMENT IN THE JEWELLERY BE NOT MADE, PROBABLY, ADDITION MIGHT NOT BEEN DONE. THEREFORE, CONSIDERING THE ABOVE CIRCULAR, CONSISTENT APPROACH BY THE ADJU DICATING AUTHORITY FOR NOT MAKING ADDITION, IF JEWLLERY TO T HE EXTENT OF 500 GRAMS HAS BEEN FOUND DURING THE COURSE OF SEARCH, A ND CLAIMED AS BELONGING TO THE MARRIED LADY, WE ARE OF THE VIEW T HAT IN THE PRESENT PENALTY PROCEEDINGS ASSESSEE COULD ABSOLVE HERSELF FROM THE LEVY OF PENALTY. THE ADDITION HAS ALREADY BEEN CONFIRMED AND THIS ORDER BE NOT CONSTRUED AS DISTURBING THE ADDIT ION. WE ARE INVOKING THE CIRCULAR FOR A LIMITED PURPOSE FOR NOT IMPOSING PENALTY UPON THE ASSESSEE. IN VIEW OF THE ABOVE DISCUSSION , WE ALLOW THIS APPEAL AND DELETE PENALTY. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 11 TH DECEMBER, 2018. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER