2019 (2) TMI 1798 - AT - Income Tax

Tribunal sets aside unexplained cash & jewelry issues, deletes additions lacking evidence, cross-exam.

Ram Niwas Gupta Versus DCIT, Central Circle, Dehradun

The Tribunal allowed the appeals for statistical purposes, setting aside issues related to unexplained jewelry and cash recovered during the search for ... Assessment u/s 153A - unexplained jewellery u/s 69B - HELD THAT:- In the present case the bills of purchase of jewelry were found instead of jewellery itself and assessee has explained that the jewellery is purchased for the friends and relatives of the assessee. In the above decision of RATANLAL VYAPARILAL JAIN [2010 (7) TMI 769 - GUJARAT HIGH COURT] court the purpose of the issue of the circular was accepted. When the jewellery itself is found but the bills are not found the addition is made u/s 69 of the act. When the bills are found but the jewellery is not available with the assessee during the course of search the addition is also required to be made u/s 69 of the act. Therefore we do not find any difference in the above those situations so far as the overall jewellery found during the course of search as well as the bills of such jewellery do not exceed the limits specified in the above instructions. We set aside this issue back to the file of the learned AO, with a direction to the assessee to identify the total grams of the jewellery contained in the purchase bills as well as the actual jewellery found along with the details of the family members staying with the assessee, thereafter the AO may examine the same and grant benefit of instruction number 1994 dated 11/05/1994 to the assessee. In view of this the issue on account of addition of jewellery is set aside to the file of the assessing officer with above direction. Addition with respect to cash received over and above the amount of sale consideration mentioned in the sale deed treated as undisclosed income of the assessee - HELD THAT:- We do not have any hesitation is holding that when the addition is made solely on the basis of statement the third party and revenue does not have any other evidences, then without granting opportunity of cross examination , such addition cannot be made. In the result the assessee succeeds on the second issue. Gr. No 2 is allowed. Addition of cash found during the course of search - HELD THAT:- Before us assessee has filed a copy of that letter but relevant annexure were not filed. Therfore it is not possible for us to verify that assessee has filed any statement of affairs or not along with the return of income. Before us assessee has not submitted the statement of affairs as stated before the lower authorities. However assessee has referred them in reply to the assessment proceedings vide letter dated 14/7/2014. Whole issue is set aside back to the file of the AO with a direction to the assessee to show the statement of affairs of all these family concerns and individuals in whose account the assessee is saying that there is enough cash available on hand. AO may verify the same and if it is found that that such persons are having the cash balances in the statement of affairs , then after examination and proper verification, the learned assessing officer is directed to delete the addition of INR 1809000/– on account of cash found during the course of search. Accordingly ground number 1 of the appeal of the assessee is allowed for statistical purposes with above direction. Addition on account of the voluntary disclosure made by the assessee in his statement recorded u/s 132 (4) - HELD THAT:- As perused the statement of assessee u/s 132 (4) of the act dated 26/4/2012 wherein he made the above disclosure. The letter dated 9/7/2012 stating that there is no undisclosed income earned by the assessee. He also stated that there is no evidence found during search. Along with the statement in search he also handed over 4 post dated cheques of tax payments of ₹ 58.30 lakhs which were also not presented for payments by the revenue. No evidence were also referred by the AO while making the above addition or by the CIT (A) at the time of Confirming the same. Even before us CIT DR also could not show the evidence on which the disclosure was made. The CBDT has issued a letter dated 18/12/2014 where in it has instructed its officers to not to obtain disclosure without gathering evidences supporting the disclosure. Further no coercive measures or pressure to be exerted for disclosure Hon Gujarat High court in case of Kailashben Mangarlal Chokshi Vs CIT [2008 (9) TMI 525 - GUJARAT HIGH COURT] has held that merely on the basis admission, the assessee could not have been subjected to additions, unless and until some corroborative evidence was found in support of such admission In that decision also the statement was retracted by the assessee. Therefore based on the circular of CBDT as well as the decision of Honourable Gujarat High court, in absence of any material based on which disclosure is made, the addition cannot be sustained. Issues Involved:1. Addition of unexplained jewelry under Section 69B.2. Addition on account of undisclosed investment in property.3. Addition of cash recovered during search.4. Addition based on uncorroborated statement under Section 132(4).Issue-wise Detailed Analysis:1. Addition of Unexplained Jewelry Under Section 69B:For AY 2010-11, the assessee challenged the addition of INR 125,240 made for unexplained jewelry. During the search, invoices for gold and diamond jewelry worth INR 1,083,958 were found, but the assessee's balance sheet only disclosed jewelry worth INR 205,000. The assessee argued that the jewelry was purchased for relatives and friends, but the AO rejected this due to lack of documentary evidence. The CIT(A) confirmed the addition, stating that the onus was on the assessee to prove the jewelry did not belong to him. The Tribunal, referencing the Gujarat High Court's decision in CIT v. Ratanlal Vyaparilal Jain, set aside the issue back to the AO to examine the total grams of jewelry and grant benefit as per CBDT Instruction No. 1916.2. Addition on Account of Undisclosed Investment in Property:For AY 2010-11, the AO added INR 1,640,000 as the assessee's share of undisclosed investment in a property. The property was purchased for INR 2,420,000, but the market value was INR 7,865,000. Post-search inquiries revealed that the sellers received additional cash payments. The assessee contended that he was not party to the agreement and was denied the opportunity to cross-examine the sellers. The Tribunal, citing the Supreme Court's decision in Andaman Timber Industries v. CCE, held that the addition was invalid without granting cross-examination and deleted the addition.3. Addition of Cash Recovered During Search:For AY 2012-13, the AO added INR 1,809,000 as unexplained cash found during the search. The assessee claimed the cash was part of reported balances in the statement of affairs of family members. The AO rejected this, relying on the assessee's statement under Section 132(4). The Tribunal noted that the assessee retracted the statement and directed the AO to verify the statement of affairs and delete the addition if the cash balances were substantiated.4. Addition Based on Uncorroborated Statement Under Section 132(4):For AY 2012-13, the AO added INR 8,191,000 based on the assessee's disclosure under Section 132(4). The assessee retracted the statement, claiming no evidence supported the disclosure. The Tribunal, referencing CBDT guidelines and the Gujarat High Court's decision in Kailashben Mangarlal Chokshi v. CIT, held that the addition could not be sustained without corroborative evidence and deleted the addition.For AY 2013-14, the AO made a similar addition of INR 7,500,000 based on the same statement. The Tribunal applied the same reasoning and deleted the addition.Conclusion:The Tribunal allowed the appeals for statistical purposes, setting aside issues related to unexplained jewelry and cash recovered during the search for verification by the AO. Additions based on uncorroborated statements were deleted due to lack of supporting evidence and failure to grant cross-examination.