M/S. KISHINCHAND UTTAMCHANDANI, MUMBAI V. THE DCIT CEN CIR-43, MUMBAI

ITSSA 77/MUM/2007

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8066 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-09-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 27-09-2011
• Assessment Year: misc
• Appeal Filed On: 10-05-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOLI SHRINIWAS RAO
• Keywords: Unexplained investment; Gift; Business income; Search and seizure
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH (ACCOUNTANT MEMBER) IT(SS)A NO. 77/MUM/2007 BLOCK PERIOD 1.04.1997 TO 13.05.2003 SHRI KISHINCHAND UTTAMCHANDANI, 4-A, CHAND TERRACE, ST. ANDREW ROAD, BANDRA (W), MUMBAI-400 050 PAN-AACPU 1765 C VS. THE DCIT, CENTRAL CIRCLE-43, OLD CGO BLDG., ANNEXE, M.K. ROAD, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI FARROKH IRANI RESPONDENT BY: SHRI GOLI SHRINIWAS RAO DATE OF HEARING :27.09.2011 DATE OF PRONOUNCEMENT: 30.9.2011 O R D E R PER B.R. MITTAL, JM : THE ASSESSEE HAS FILED THIS APPEAL FOR BLOCK PERIO D FROM 1.04.1997 TO 13.05.2003 AGAINST ORDER OF LD. CIT(A) DT. 26.02.20 07. 2. THE ASSESSEE HAS FILED REVISED GROUNDS OF APPEAL AT THE TIME OF HEARING OF APPEAL. WITH THE CONSENT OF LD. DEPARTMENTAL RE PRESENTATIVE, WE DEAL WITH REVISED GROUNDS OF APPEAL FOR OUR CONSIDERATIO N. 3. IN GROUND NO. 1 OF THE APPEAL, ASSESSEE HAS DISPU TED THE ORDER OF LD. CIT(A) IN CONFIRMING ADDITION TO THE EXTENT OF RS. 2,88,000/- ON ACCOUNT OF UNEXPLAINED JEWELLERY OF GOLD ORNAMENTS. IT(SS)A NO. 77/M/07 2 4. THE RELEVANT FACTS ARE THAT THERE WAS A SEARCH AND SEIZURE U/S. 132 OF THE I.T. ACT ON 13 TH MAY, 2003. DURING THE COURSE OF SEARCH, RESIDENTI AL PREMISES AND BANK LOCKERS, GOLD AND DIAMOND JEWELLE RY WERE INVENTORIED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS EE FILED BY LETTER DT. 22 ND JUNE, 2004 EXPLAINING THE SOURCE FOR THE ACQUISITIO N AND POSSESSION OF THE JEWELLERY IN RESPECT OF GOLD ORNAMENTS FOUND TO THE EXTENT OF 4,129.520GMS. IT WAS STATED THAT SOME OF THE JEWELLERY WAS ANCESTR AL AND ALSO RECEIVED FROM WIFE AND ALSO DAUGHTER IN LAWS ON THE OCCASIONS OF THEIR MARRIAGES AS A PART OF STRIDHAN AND ALSO THEY RECEIVED SOME SOUVENIRS FROM TIME TO TIME ON FESTIVAL OCCASIONS. IT WAS STATED THAT OUT OF SAID J EWELLERY, THE JEWELLERY TO THE EXTENT OF 1433.190 (WRONGLY MENTIONED BY LD. CIT(A) AT PAGE 18 IN PARA 2.1.0 OF 2833.190 GMS) WERE DISCLOSED IN THE WEALT H TAX OF ASSESSEES WIFE SMT. MEENU UTTAMCHANDANI FOR WHICH ASSESSEE ASKED T O GIVE CREDIT. THE ASSESSEE ALSO ASKED FOR CREDIT OF 100 GMS EACH FOR THE FOUR INDIVIDUAL MALE MEMBERS OF THE FAMILY INCLUDING ASSESSEE HIMSELF AN D 500 GMS EACH FOR TWO DAUGHTER-IN-LAWS NAMELY MRS. NAMISHA UTTAMCHANDANI AND MS. LISHA UTTAMCHANDANI AS PER CBDT INSTRUCTION NO. 1916 DT. 1 1.5.1994. HOWEVER, ASSESSEE OFFERED THE BALANCE QUANTITY I.E. 4129.52 0 (-) 2833.190 I.E. 1296.330 GMS AS UNDISCLOSED INVESTMENT @ RS. 480/- PER GM AND OFFERED THE AMOUNT OF RS. 6,22,238/- AS INCOME WHICH FORMS PART OF UNDISCLOSED INCOME AT RS. 1,25,00,000/-. IN RESPECT OF DIAMOND JEWELLE RY, ASSESSEE OFFERED THE ENTIRE DIAMOND JEWELLERY OF RS. 45,685/-. 5. THE AO DID NOT GIVE ANY CREDITS TO THE CLAIM OF ASSESSEE IN RESPECT OF STRIDHAN AND THEREFORE DID NOT ACCEPT CLAIM OF 140 0 GRMS AS CLAIMED BY ASSESSEE RELYING ON CBDT CIRCULAR NO. 1916. HENCE, AO DETERMINED THE INCOME OF RS. 6,72,000/- (1400 GM X 480 GMS) AND AC CORDINGLY ASSESSED THE TOTAL JEWELLERY AS UNDISCLOSED INCOME AT RS. 13,39, 923/- AS AGAINST RS.6,67,923/- OFFERED BY ASSESSEE. BEING AGGRIEVED , ASSESSEE FILED APPEAL BEFORE LD. CIT(A). IT(SS)A NO. 77/M/07 3 6. LD. CIT(A) AFTER CONSIDERING SUBMISSIONS OF ASSE SSEE AND CBDT INSTRUCTION NO. 1916 DT. 15 TH NOVEMBER, 1996 ALLOWED THE TOTAL CREDIT OF 800 GMS IN RESPECT OF JEWELLERY BY CONSIDERING STRIDHA N OF 2 DAUGHTER-IN-LAWS AT 300 GMS EACH AND 50 GMS EACH FOR 4 MALE MEMBER S AS EXPLAINED SOURCES FOR THE POSSESSION OF JEWELLERY. THEREFORE, LD. CI T(A) OUT OF 1400 GMS JEWELLERY EXCESS WORKED OUT BY AO CONSIDERED 600 GM S AS UNEXPLAINED AND TREATED AS UNDISCLOSED INVESTMENT. THUS, LD. CIT(A ) OUT OF ADDITION OF RS. 6,72,000/- MADE BY AO ALLOWED TO THE EXTENT OF RS. 3,84,000/- (800X480 PER GMS) AND CONFIRMED THE BALANCE AMOUNT OF RS. 2,88,0 00/- (600X480 PER GMS) AS UNEXPLAINED INVESTMENT. HENCE ASSESSEE IS IN F URTHER APPEAL BEFORE TRIBUNAL. 7. DURING THE COURSE OF HEARING, LD. AR REFERRED TO CBDT INSTRUCTION NO. 1916 DT. 11 TH MAY, 1994 AND SUBMITTED THAT AS PER SAID GUIDELINE S IT IS PROVIDED THAT IN CASE PERSON NOT ASSESSED TO WEALTH TAX, GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS PER MARRIED LADY , 250GMS PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER OF THE FAMILY NEED NOT BE SEIZED AND SUBMITTED IT MEANS SOURCE OF ACQUISITION OF GOLD O RNAMENTS TO THAT EXTENT BE ACCEPTED. THE LD. AR SUBMITTED THAT ASSESSEE BELON GS TO FINANCIALLY SOUND FAMILY AND CONSIDERING THE SIZE AND STATUS OF THE F AMILY ALONGWITH NORMAL CUSTOMS OF GIFTS OF GOLD AND SILVER ITEMS DURING MA RRIAGE, RELIGIOUS OCCASIONS ETC., THE GOLD ORNAMENTS FOUND IN THE COURSE OF SEA RCH SHOULD HAVE BEEN ACCEPTED AS EXPLAINED KEEPING IN VIEW THE CBDT INSTR UCTION. THE LD. AR SUBMITTED THAT ITAT CHANDIGARH BENCH IN THE CASE OF SMT. NEENA SYAL VS. ACIT (70 ITD 62) HAS CONSIDERED THE SAID CBDT CIRCU LAR AND HELD THAT THE JEWELLERY TO THAT EXTENT I.E. 500 GMS IN THE CASE O F MARRIED LADY, 250 GMS PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER OF THE F AMILY TO BE TREATED AS EXPLAINED AND NEED NOT BE SEIZED. HE SUBMITTED THA T THE SAID DECISION OF ITAT WAS FURTHER FOLLOWED BY ITAT JODHPUR BENCH IN THE CASE OF DCIT VS ARJUN DASS KALWANI 111 ITD 337 AND ITAT AHMEDABAD B ENCH IN THE CASE OF ITO VS MANILAL S. DAVE 70 TTJ 801. HE SUBMITTED THA T IN VIEW OF ABOVE DECISIONS, THE GOLD ORNAMENTS AGGREGATE TO 1400 GMS SHOULD BE TREATED AS IT(SS)A NO. 77/M/07 4 EXPLAINED AND NEED NOT BE CONSIDERED AS UNEXPLAINED INVESTMENT. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON ORDER OF LD. CIT(A). 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. REPRESENTATIVES OF THE PARTIES AND ORDERS OF THE AUTHORITIES BELOW AS ALSO CBDT INSTRUCTION NO. 1916 DT. 11.5.1994 AND THE DECISIONS CITED BY LD. A R (SUPRA). ON CAREFUL CONSIDERATIONS OF SAID DECISIONS OF CO ORDINATE BEN CHES, WE ARE OF THE CONSIDERED VIEW THAT THE INTENTION OF CBDT IN ISSUI NG THE SAID INSTRUCTION IS THAT JEWELLERY TO THE EXTENT OF 500 GMS IN THE CASE OF A MARRIED LADY AND 100 GMS PER MALE MEMBER SHOULD BE TREATED AS EXPLAINED AND NEED NOT BE CONSIDERED AS UNEXPLAINED INVESTMENTS. FURTHER, TH E DEPARTMENT HAS ALSO NOT BROUGHT ANY EVIDENCE ON RECORD THAT KEEPING IN VIEW THE SIZE AND STATUS OF THE FAMILY AND ALSO CONSIDERING THE NORMAL CUSTOMS, ASSESSEE HAD NOT RECEIVED GIFTS OF GOLD AND SILVER ITEMS DURING THE OCCASIONS OF MARRIAGES AND FESTIVALS ETC. WE FURTHER OBSERVE THAT LD. CIT(A) HAS NOT GIVEN ANY BASIS TO GIVE BENEFIT ONLY TO THE EXTENT OF 300 GMS FOR EAC H DAUGHTER-IN-LAWS AND 50 GMS FOR EACH MALE MEMBERS OF THE FAMILY AS EXPLAINE D JEWELLERY AND NOT CONSIDERING THE QUANTITY OF JEWELLERY MENTIONED IN CBDT CIRCULAR I.E. 500 GMS IN THE CASE OF A MARRIED LADY AND 100 GMS PER MALE MEMBERS OF THE FAMILY. WE ARE OF THE CONSIDERED VIEW THAT IN THE FACTS CIR CUMSTANCES OF THE CASE AND IN VIEW OF CBDT INSTRUCTION NO. 1916 DT. 11 TH MAY, 1994 AND ALSO CONSIDERING THE DECISIONS OF CO ORDINATE BENCHES (SUPRA), THE A GGREGATE QTY. OF 1400 GMS JEWELLERY I.E. 500 GMS IN THE CASE OF EACH MARRIED LADY I.E. TWO DAUGHTERS IN- LAW, AND 100 GMS PER MALE MEMBERS OF THE FAMILY(NAM ES GIVEN AT PAGE 14 OF PAPER BOOK) IS TO BE TREATED AS EXPLAINED. THUS WE DELETE THE CONFIRMATION OF ADDITION OF RS. 2,88,000/- MADE BY LD. CIT(A) ON AC COUNT OF UNEXPLAINED JEWELLERY. HENCE. GROUND NO. 1 OF THE APPEAL TAKEN BY ASSESSEE IS ALLOWED. 9. IN GROUND NO. 2 OF THE APPEAL, THE ASSESSEE HAS D ISPUTED THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 24,96, 525/- MADE BY AO AS UNDISCLOSED INCOME ON ACCOUNT OF NOT FILING THE RET URN FOR ASSESSMENT YEAR IT(SS)A NO. 77/M/07 5 2002-03 WITHIN THE DUE DATE AS PER SEC. 139(1) OF THE ACT BUT FILED BELATEDLY U/S. 139(4) OF THE ACT I.E. AFTER THE DATE OF SEARC H. 10. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PA RTIES AND CONSIDERED ORDERS OF THE AUTHORITIES BELOW. WE OBSERVE THAT T HERE WAS A SEARCH AND SEIZURE OPERATION U/S. 132 OF THE ACT ON 13.5.2003. FOR THE ASSESSMENT YEAR 2002-03, ASSESSEE FILED RETURN ON 12 TH SEPTEMBER, 2003 SHOWING TOTAL INCOME OF RS. 21,54,170/-. THE AO CONCLUDED THE ASSESSMEN T FOR A.Y. 2002-03 DETERMINING TOTAL INCOME AT RS. 24,96,525/- ON PROT ECTIVE BASIS. IT IS RELEVANT TO STATE THAT ASSESSEE FILED RETURN FOR A.Y. 2002-0 3 ON 12 TH SEPTEMBER, 2003 I.E. AFTER THE DATE OF SEARCH. IN VIEW OF ABOVE, THE AO CONSIDERING CLAUSE (C) OF SEC. 158BB, TREATED THE SAID ASSESSED INCOME AS UNDISCLOSED INCOME OF THE ASSESSEE WHILE COMPUTING THE UNDISCLOSED INCOME OF THE BLOCK PERIOD UNDER CONSIDERATION ON THE GROUND THAT ASSESSEE HAD NOT FILED THE RETURN WITHIN DUE DATE. IN THE FIRST APPEAL, LD. CIT(A) AL SO CONFIRMED THE ACTION OF AO. 11. AT THE TIME OF HEARING, THE LD. AR SUBMITTED TH AT ASSESSEE IS REGULARLY ASSESSED TO INCOME TAX SINCE LAST SEVERAL YEARS SHO WING INCOME IN THE NATURE OF HOUSE PROPERTY AND BUSINESS INCOME FROM PROPRIET ARY CONCERN. HE FURTHER SUBMITTED THAT INCOME WAS PROPERLY RECORDED IN REG ULAR BOOKS OF ACCOUNT PRIOR TO DATE OF SEARCH AND THE ASSESSEE HAD ALSO P AID ADVANCE TAX. HE SUBMITTED THAT THE UNDISCLOSED INCOME AS PER SEC. 1 58B(B) INCLUDES THAT INCOME WHICH WOULD NOT HAVE BEEN DISCLOSED BY ASSES SEE. HE SUBMITTED THAT IN VIEW OF THE FACT THAT SOURCE OF INCOME HAD ALREA DY BEEN RECORDED IN THE NORMAL BOOKS OF ACCOUNT MAINTAINED BY ASSESSEE AND THE ADVANCE TAX HAD ALREADY BEEN PAID, PRIOR TO THE DATE OF SEARCH, THE MERE FACT THAT THE REGULAR RETURN WAS FILED AFTER THE DATE OF SEARCH BUT WITHI N THE TIME PRESCRIBED U/S. 139(4) IT COULD NOT BE TREATED AS UNDISCLOSED INCOM E IN VIEW OF SEC. 158BB OF THE ACT. THE LD. AR SUBMITTED THAT SIMILAR ISSUE W AS CONSIDERED BY ITAT MUMBAI BENCH IN THE CASE OF ASSESSEES SON IN IT(SS ) A NO. 122/M.06 IN THE CASE OF RAKESH UTTAMCHANDANI VS DCIT VIDE ORDER DT. 10.11.2008 AND THE IT(SS)A NO. 77/M/07 6 TRIBUNAL ALLOWED THE APPEAL OF THE ASSESSEE BY DELE TING THE ADDITION MADE BY AO BY TREATING THE INCOME AS DISCLOSED INCOME ON SI MILAR FACTS AND CIRCUMSTANCES OF THE CASE. 12. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT DIS PUTED THE ABOVE CONTENTION OF THE ASSESSEE SAVE AND ACCEPT RELYING ON ORDER OF LD. CIT(A). 13. WE FIND MERITS IN THE CONTENTION OF LD. AR AND OBSERVE THAT FACTS IN THE CASE OF THE ASSESSEE ARE IDENTICAL TO THE FACTS IN THE CASE OF ASSESSEES SON SHRI RAKESH UTTAMCHANDANI (SUPRA) AND THE ISSUE INV OLVED IN ASSESSEES CASE IS SIMILAR TO THE ISSUE CONSIDERED BY ITAT IN CASE OF ASSESSEES SON VIDE ORDER DT. 10 TH NOV. 2008 (SUPRA) AND TRIBUNAL DECIDED THE ISSUE I N FAVOUR OF THE ASSESSEE. IN THE ABSENCE OF ANY CONTRARY DECISION BROUGHT TO OUR NOTICE BY LD. DR AND/OR ANY OTHER FACTS BROUGHT ON RECORD, WE , RESPECTFULLY FOLLOWING EARLIER ORDER OF TRIBUNAL, ALLOW GROUND NO. 2 TAKEN BY THE ASSESSEE. 14. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF SEPTEMBER, 2011 SD/- SD/- ( RAJENDRA SINGH) (B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 30 TH SEPTEMBER, 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR H BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI