Shri Ankit Manubhai Kachadiya, Surat V. The Deputy Commissioner of Income Tax, Central Circle-2, Surat

ITSSA 62/AHD/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5472 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MITISH S MODI
• Keywords: Capital asset converted into stock in trade; Search and seizure
• Section: 143(3); 250; 69A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM ./ IT(SS)A NO.62/AHD/2017 ( [ [ / ASSESSMENT YEAR: (2013-14) (VIRTUAL COURT HEARING) SHRI ANKIT MANUBHAI KACHADIYA, 128, MAMTA PARK SOCIETY-1, VARACHHA ROAD, SURAT. V S. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, SURAT. ./ ./PAN/GIR NO.: AYUPK 8096 N (ASSESSEE) (RESPONDENT) ASSESSEE BY : SHRI MITISH S.MODI - CA RESPONDENT BY : SHRI RITESH MISHRA CIT(DR) / DATE OF HEARING : 02/07/2021 / DATE OF PRONOUNCEMENT : 13/09/2021 / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2013- 14, IS DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-4, SURAT, DATED 13.12.2016, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER, UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, DATED 18.03.2015. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL IN LAW, THE CIT (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE LEARNED DY. CIT, CENTRAL CIRCLE 2, SURAT (FOR THE SAKE OF BREVITY THE AO) IN MAKING ADDITION OF RS.1,36,406/- U/S 69A OF THE ACT FOR THE ALLEGED UNEXPLAINED JEWELLERY, PURELY ON PRESUMPTIONS, ASSUMPTIONS AND ALLEGATIONS AND MUCH LESS, IN THE ABSENCE OF ANY MATERIAL CONTRARY TO THE SUBMISSIONS, EXPLANATIONS WITH EVIDENCES FURNISHED, IS WITHOUT JURISDICTION, PERVERSE BAD IN LAW AND LIABLE TO BE QUASHED. (2) YOUR APPELLANT FURTHER RESERVES HIS RIGHT TO ADD, ALTER MODIFY OR TO AMEND ANY OF THE AFORESAID GROUNDS BEFORE OR AT THE TIME OF HEARING OF AN APPEAL. 2 IT(SS)A NO.62/AHD/2017 FOR A.Y. 2013-14 SHRI ANKIT MANUBHAI KACHADIYA IT IS THEREFORE, RESPECTFULLY SUBMITTED THAT TAKING INTO ACCOUNT VARIOUS SUBMISSIONS WRITTEN AS WELL AS ORAL MADE IN THE COURSE OF ASSESSMENT PROCEEDINGS/APPEAL PROCEEDINGS BEFORE THE CIT (APPEALS) AND THE AO THROUGH THE WRITTEN SUBMISSIONS, THE ENTIRE ADDITION OF RS.1,36,406/- RESPECTIVELY OUGHT TO HAVE BEEN DELETED IN TO ESPECIALLY IN VIEW OF THE APPELLANTS VARIOUS SUBMISSIONS WITH AO INCLUDING THE WRITTEN SUBMISSION DTD. 30-11-2016 FILED WITH THE CIT (APPEALS), WHICH FORM PART OF STATEMENT OF FACTS ALONG WITH VARIOUS SUBMISSIONS TO BE FILED BEFORE HON'BLE ITAT, AHMEDABAD AND THE APPEAL OF THE APPELLANT TO BE ALLOWED IN FULL AS PRAYED FOR. 3. BRIEF FACTS OF THE ISSUE IN DISPUTE ARE STATED AS UNDER. DURING THE COURSE OF SEARCH PROCEEDINGS, JEWELLERY WORTH RS. 18,98,452/- WAS FOUND FROM M/S M.D. INFRA DEVELOPERS, 128- MAMTA PARK SOCIETY-I, NEAR KAPODRA, VARACHHA, SURAT. OUT OF WHICH DIAMOND JEWELLERY WORTH RS.1,36,406/- BELONGS TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO PRODUCE THE SOURCE OF PURCHASE OF JEWELRY FOUND DURING THE COURSE OF SEARCH, VIDE ASSESSING OFFICER`S LETTER DATED 13-01- 2015. THE ASSESSEE HAS NOT SUBMITTED ANY DETAILS IN THIS REGARD, THEREFORE, THE SAID AMOUNT OF RS.1,36,406/- WAS TREATED AS UNEXPLAINED JEWELLERY BY THE ASSESSING OFFICER UNDER SECTION 69A OF THE INCOME TAX ACT. 4. AGGRIEVED, THE ISSUE WAS TAKEN UP BEFORE THE FIRST APPELLATE AUTHORITY FOR RELIEF. HOWEVER, LD.CIT(A), HAS CONFIRMED THE ACTION OF ASSESSING OFFICER. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. THE CRUX OF THE CONTROVERSY BEFORE US IS THAT WHETHER ASSESSEE`S CLAIM FALLS WITHIN THE AMBIT OF CBDTS INSTRUCTION NO. 1916 DATED 11.05.1994? THEREFORE, BEFORE WE PROCEED TO ADJUDICATE THE ISSUE, IT WOULD BE APPROPRIATE TO NOTE THE GUIDELINES MENTIONED IN CBDT INSTRUCTION NO. 1916 DATED 11.05.1994, WHICH IS REPRODUCED BELOW FOR READY REFERENCE: INSTRUCTION NO. 1916, DATED 11-05-1994 SECTION 132 OF THE INCOME TAX ACT, 1961 SEARCH AND SEIZURE GENERAL GUIDELINES FOR SEIZURE OF JEWELLERY AND ORNAMENTS IN COURSE OF SEARCH INSTRUCTION NO. 1916, DATED 11-5-1994 3 IT(SS)A NO.62/AHD/2017 FOR A.Y. 2013-14 SHRI ANKIT MANUBHAI KACHADIYA INSTANCES OF SEIZURE OF JEWELLERY OF SMALL QUANTITY IN COURSE OF OPERATIONS UNDER SECTION 132 HAVE COME TO THE NOTICE OF THE BOARD. THE QUESTION OF A COMMON APPROACH TO SITUATIONS WHERE SEARCH PARTIES COME ACROSS ITEMS OF JEWELLERY, HAS BEEN EXAMINED BY THE BOARD AND FOLLOWING GUIDELINES ARE ISSUED FOR STRICT COMPLIANCE. (I) IN THE CASE OF WEALTH-TAX ASSESSEE, GOLD JEWELLERY AND ORNAMENTS FOUND IN EXCESS OF THE GROSS WEIGHT DECLARED IN THE WEALTH-TAX RETURN ONLY NEED BE SEIZED. (II) IN THE CASE OF A PERSON NOT ASSESSED TO WEALTH-TAX GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS PER MARRIED LADY, 250 GMS. PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER OF THE FAMILY NEED NOT BE SEIZED. (III) THE AUTHORISED OFFICER MAY, HAVING REGARD TO THE STATUS OF THE FAMILY, AND THE CUSTOM AND PRACTICES OF THE COMMUNITY TO WHICH THE FAMILY BELONGS AND OTHER CIRCUMSTANCES OF THE CASE, DECIDE TO EXCLUDE A LARGER QUANTITY OF JEWELLERY AND ORNAMENTS FROM SEIZURE. THIS SHOULD BE REPORTED TO THE DIRECTOR OF INCOME-TAX/COMMISSIONER AUTHORISING THE SEARCH AT THE TIME OF FURNISHING THE SEARCH REPORT. (IV) IN ALL CASES, A DETAILED INVENTORY OF THE JEWELLERY AND ORNAMENTS FOUND MUST BE PREPARED TO BE USED FOR ASSESSMENT PURPOSES. THESE GUIDELINES MAY PLEASE BE BROUGHT TO THE NOTICE OF THE OFFICERS IN YOUR REGION. 6.IN THE LIGHT OF THE AFORESAID INSTRUCTION OF CBDT, WE NOTE THAT TOTAL GOLD JEWELLERY AND ORNAMENTS FOUND DURING THE COURSE OF SEARCH WERE 636.790GMS OF GOLD AND 7.95 CARATS OF DIAMONDS. LEARNED COUNSEL HAS SUBMITTED BEFORE THE BENCH THAT THERE ARE THREE MARRIED LADIES AND THREE MARRIED MALES IN THE FAMILY BESIDES TWO MINORS. THUS, WE NOTE THAT AS PER CBDT INSTRUCTION NO.1916 DATED 11.05.1994 (SUPRA), THE GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GRAMS PER MARRIED LADY, 250 GRAMS PER UNMARRIED LADY AND 100 GRAMS PER MALE MEMBER OF THE FAMILY NEED NOT BE SEIZED BY THE SEARCH TEAM. WE NOTE THAT GOLD SEIZED WAS ONLY 636.790 GRAMS EMBEDDED WITH DIAMONDS OF 7.95 CARATES, WHICH IS BELOW THE LIMIT PRESCRIBED BY THE CBDT IN THE SAID INSTRUCTION. THE LD COUNSEL SUBMITS BEFORE THE BENCH THAT THESE DIAMONDS WERE NOT SEPARATED WITH GOLD, THESE WERE EMBEDDED IN THE GOLD AND TOTAL VALUE OF THE GOLD INCLUDING DIAMONDS IS TO THE TUNE OF RS. RS.1,36,406/-. 4 IT(SS)A NO.62/AHD/2017 FOR A.Y. 2013-14 SHRI ANKIT MANUBHAI KACHADIYA 7. HOWEVER, ON THE OTHER HAND, SHRI RITESH MISHRA, LEARNED CIT(DR), FOR THE REVENUE OPPOSED THE PLEA TAKEN BY LD COUNSEL AND HE RELIED ON THE STAND TAKEN BY THE ASSESSING OFFICER. WE NOTE THAT GOLD SEIZED WAS ONLY 636.790 GRAMS EMBEDDED WITH DIAMONDS OF 7.95 CARATES, AND IN THE ASSESSEE`S FAMILY THERE ARE THREE MARRIED LADIES, THREE MARRIED MALES AND TWO MINORS. THREE MARRIED LADIES MAY HOLD THE GOLD UP TO 1500 GRAMS, WHICH NEED NOT TO BE EXPLAINED BY THE ASSESSEE, AS PER SAID CBDT INSTRUCTION, THEREFORE IT SEEMS TO US CLEARLY THAT GOLD SEIZED WAS ONLY 636.790 GRAMS EMBEDDED WITH DIAMONDS OF 7.95 CARATES, WHICH IS BELOW THE LIMIT PRESCRIBED BY THE CBDT, THEREFORE, THE DEPARTMENT OUGHT NOT TO HAVE SEIZED SUCH GOLD.IT IS A SETTLED LAW THAT THE CIRCULARS ISSUED BY CBDT ARE BINDING ON THE REVENUE. THIS POSITION WAS CONFIRMED BY THE HON`BLE APEX COURT IN THE CASE OF COMMISSIONER OF CUSTOMS VS. INDIAN OIL CORPORATION LTD REPORTED IN 267 ITR 272 WHEREIN THEIR LORDSHIPS EXAMINED THE EARLIER DECISIONS OF THE APEX COURT WITH REGARD TO BINDING NATURE OF THE CIRCULAR AND LAID DOWN THAT WHEN A CIRCULAR ISSUED BY THE BOARD REMAINS IN OPERATION THEN THE REVENUE IS BOUND BY IT AND CANNOT BE ALLOWED TO PLEAD THAT IT IS NOT VALID OR THAT IT IS CONTRARY TO THE TERMS OF THE STATUTE. AT THE COST OF REPETITION, WE STATE THAT IN ASSESSEES CASE, THE FAMILY CONTAINS THREE MARRIED LADES, THREE MARRIED MALE MEMBERS AND TWO MINORS, THEREFORE CONSIDERING THE NUMBER OF FAMILY MEMBERS AS MENTIONED ABOVE, NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE, THEREFORE, WE DELETE THE ADDITION OF RS.1,36,406/-. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER IS PRONOUNCED ON 13/09/2021 BY PLACING RESULT IN THE NOTICE BOARD. SD/- SD/- (PAWAN SINGH) (DR. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER SURAT / / DATE: 13/09/2021 / SGR COPY OF THE ORDER FORWARDED TO 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A) 4. PR.CIT 5. DR/AR, ITAT, SURAT 6. GUARD FILE 5 IT(SS)A NO.62/AHD/2017 FOR A.Y. 2013-14 SHRI ANKIT MANUBHAI KACHADIYA BY ORDER / / TRUE COPY / / SENIOR PRIVATE SECRETARY ITAT, SURAT