AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 826
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....31.01.2015 under section 153B(1)(b)/143(3) of the Act 1.1 That the conclusion of learned Commissioner of Income Tax (Appeals) that since appellant had furnished return of income after the end of the assessment year and not within the time allowed u/s 139(1) of the Act or before the end of relevant assessment year, therefore notice issued u/s 142(1) of the Act was a valid notice and assessment framed pursuant to the said notice is a valid and, assessment is based on erroneous interpretation of statutory provisions of law and therefore misconceived. 1.2 That learned Commissioner of Income Tax (Appeals) has failed to appreciate that since the original return of income filed by appellant was pending therefore, assessment framed in pursuance to a return filed in response to a invalid notice under section 142(1) of the Act was without jurisdiction. 2 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts by upholding an addition of Rs. 1,08,25,421/- out of addition made of Rs. 1,31,35,421/- representing alleged unexplained jewellery found and seized during the course of search and brought to tax under section 69A of the Act. ....
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.... arbitrary, unjustified and therefore untenable 4 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording various adverse inferences which are contrary to the facts and material placed on record and, are otherwise unsustainable in law and therefore, addition so sustained by overlooking detailed submissions of the appellant supported by various evidences and judicial pronouncements relied is absolutely unwarranted. 5 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest under section 234A and under section 234B of the Act which are not leviable on the facts and circumstances of the case of the appellant. 3. The following grounds have been raised in ITA No. 2811/D/2016 in the case of Ruchie Mittal:- 1 That the learned Commissioner of Income Tax(Appeals)-3, Gurgaon has erred both in law and on facts by upholding an addition of Rs. 1,43,47,233/- out of addition made of Rs. 1,57,67,233/- representing alleged unexplained jewellery found and seized during the course of search and brought to tax under section 69A of the Act. 1.1 That the ....
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....ption of facts and law, arbitrary, unjustified and therefore untenable 3 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in recording various adverse inferences which are contrary to the facts and material placed on record and, are otherwise unsustainable in law and therefore, addition so sustained by overlooking detailed submissions of the appellant supported by various evidences and judicial pronouncements relied is absolutely unwarranted. 4 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest under section 234A and under section 234B of the Act which is not leviable on the facts and circumstances of the case of the appellant. 4. The brief facts of the case are that by virtue of the authorization of the Director of Income Tax (Investigation), Chandigarh, under section 132(1) of the Income Tax Act, 1961 (hereinafter referred as the Act) in the case of the assessee, the residential as well as office premises of CHD Developers Group of cases were subjected to search and seizure operations on 23.11.2012. A survey action u/s. 133A of the Act was also carr....
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....al u/s 132(4) of the Act, an amount to be extent of Rs. 1.31 crores is attributed to unaccounted jewellery found from locker no. 278, Axis Bank, Vasant Kunj, New Delhi. As a result the AO made an addition of Rs. 1,31,35,421/- in the hands of Radha Mittal and Rs. 1,57,67,233/- in the hands of Ruchie Mittal on account of unexplained jewellery u/s 69A of the Act and assessed the income of the respective assessee at Rs. 1,38,02,791/- and Rs. 1,64,07,163/- and completed the assessment u/s. 153B(1) of the Act vide order dated 31.01.2015. Aggrieved with the same, the Assessee appealed before the Ld. CIT(A). 5. Before the Ld. CIT(A) the assesee contended that investment in jewellery found from the residential premises of the assessee had been explained at the time of search by Sh. R. K. Mittal as having been acquired at the time of marriages of asessees and Smt. Shanti Mittal, mother in law of the assessees. It was contended that even jewellery found from the locker was explained to be belonging to the assessees, Smt. Anchal and other family members. It was submitted that marriages of Shanti Mittal had taken place 65 years prior to the search, marriage of the Radha Mittal has taken plac....
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....e are kept. Ans. I cannot provide documentary evidence at present because these are very old and I have to trace out the record from different location such as Bathinda (my native place) etc...... ....... Q.30 Do you want say anything? Ans.i) During the course of search at my residence 10-11, Nelson Mandela Road, Vasant Kunj, N. Delhi on 23.11.2012 one ledger was found bearing in the detail of marriage expenses (including purchase of jewellery) of my son Gaurav Mittal were mentioned. The amount of such expenses was approach 1.10 crores. Such expenses was incurred by my HUF R. K. Mittal HUF, during the F.Y. 2005-06. I as a karta of R. K. Mittal HUF now by surrender above marriage expenses of Rs. 1.10 crores and offer the same for additional tax in the previous year 2005-06 relevant assessment year 2006-07. The source of such expenses was income from real estate business which is being surrendered to buy peace of mind and avid any further litigation and subject to the condition that neither any penalty will be levied nor any provocation will be initiated. ii) During the course of search at my residence, plot No. 10-11, Nelson Mand....
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....nt estimated additional income totaling Rs. 22.50 Crores was offered for taxation. The detail of estimated additional income submitted that time is as under: Sr. No. Nature of Income Amount Assessee 1 Income on account of project expenses 12.88 Cr CHD Developers Ltd. 2 Income on account of Share Capital 04.50 Cr dhyant& Capital Institute 3 Income on account of investment in Jewellery 01.58 Cr R.K. Mittal &Radha Mittal 4 Income on account of Marriage Expenses 01.10 Cr R.K. Mittal HUF 5 Income on account of Miscellaneous Issues 02.50 Cr R.K. Mittal, Radha Mittal and Gaurav Mittal The above offer was made to account for all discrepancies as may be found in seized documents and for other discrepancies as found during search proceedings u/s 132 and post search proceedings. The above disclosure was made also to cover the possible difference of opinion and to purchase peace of mind and to settle the affairs amicably with the department. It is also brought on record that these figures were tentative and were based upon estimates only since at the time of recording of statement, undersigned himself was not awar....
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....roceedings, but not reply was filed by the appellant then. v) Though surrender of the total jewellery found at the residence and locker as made by her father in law in three names (Sh. R. K. Mittal, Smt. Radha Mittal, Smt. Ruchie Mittal) but the same was not disclosed in the return filed. vi) The order of the AO is well thought of and the addition has been made on basis which was confronted to the appellant, thereby ensuring that the addition made on account of alleged unexplained investment jewellery is brought to tax in the hands of appellant and Mrs. Radha Mittal 5.6 However he granted benefit 1100 gms in the hands of Radha Mittal and 700 gms in the hands of Ruchie Mittal in view of the instruction no. 1916 dated 11.5.1994 issued by CBDT and in light of the following tabulation: Sr. No. Name of the family member Relationship with Wt. of jewellery for Benefit in whose beneficiary which benefit given hands 1 Sh. R. K. Mittal Husband 100 gms Smt. Radha Mittal 2 Smt. Radha Mittal Self 500 gms --do-- 3 Smt. Shanit Mittal Mother in law 500 gms --do-- Total &nbs....
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.... benefit of material seized in the course of search in the shape of Annexure A-2 and Annexure A-4 showing that expenses were incurred at the time of marriage of son of Radha Mittal Shri Gaurav Mittal. It was also submitted that there is no material much less incriminating material to arrive at a reasonable conclusion much less a conclusive finding that jewellery acquired had held to be income from undisclosed sources was out of a specific sources not declared by the appellants to revenue. Reliance was placed on the following judgments: i) 50 SOT 629 (Indore) Smt. Shankutala Somani vs. ITO) ii) 307 ITR 348 (Del) CIT v. Mohinder Lal Haryani iii) 69 ITD 218 (Chd) (TM) Dr. (Mrs.) Kamlesh Datta v. ACIT iv) 80 TTJ 945 (Pune) ACIT vs. P.C. Mundra 7. On the other hand, the ld. DR had relied upon the orders of the authorities below and requested that contention of the assessees be rejected in view of the following facts: i) Jewellery weighing 3299.83 grams were found altogether from both the assessees (Smt. Radha Mittal bedroom 673.46 grams, Smt. Ruchi Mittal bedroom 491.67 grams and from locker of Radha and Ruchie Mittal 2134.70 grams). This ....
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....stained on account of unexplained jewellery under section 69A of the Income Tax Act, 1961 in the foregoing paragraphs. 8.1 We have heard both the parties and perused the records, especially the orders of the authorities below and the case laws referred by both the parties. We find that in this case a search & seizure operation under section 132 of the I.T. Act was conducted at the business premises of M/s CHD Developers group of cases and as well as in the residential premises of the directors on 23.11.2012, in consequence to which the case of assessees were taken up for scrutiny. The AO called for an explanation during the assessment proceedings explaining the jewellery found during the course of search. In response to the same, the assessee explained that jewellery belongs to the assessees having received as "streedhan" on the occasion of marriage and also received subsequently on occasions like birth of child etc. in pursuant to customs/tradition of family. According to the assessees the seized documents in the shape of Annexure A-4 shows that expenses were incurred at the time of marriage of Ruchie Mittal (assessee). The said documents reflects expenditure of Rs. 70,12,000/-....
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....e case of Ashok Chadha vs. ITO reported in 14 taxmann.com 57 (Delhi)/202 Taxman 395 wherein the Hon'ble High Court has accepted the jewellery of 906.60 grams in the case of married lady even without documentary evidence as the denying the explanation would tantamount to overlooking the realities of life by holding as under:- "As far as addition qua jewellery is concerned, during the course of search, jewellery weighing 906.900 grams of the value amounting to Rs. 6,93,582 was found. The appellant's explanation was that he was married about 25 years back and the jewellery comprised "streedhan" of Smt. Jyoti Chadha, his wife and other small items jewellery subsequently purchased and accumulated over the years. However, the Assessing Officer did not accept the above explanation on the ground that documentary evidence regarding family status and their financial position was not furnished by the appellant. The Assessing Officer accepted 400 grams of jewellery as explained and treated jewellery amounting to 506.900 grams as unexplained and made an ad hoc addition of Rs. 3,87,364 under section 69A of the Act working on unexplained jewellery, by applying average rate of the total jewell....
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....in the form of "streedhan" or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and/or proper yardstick adopted by the Assessing Officer to treat only 400 grams as "reasonable allowance" and treat the other as "unexplained". Matter would have been different if the quantum and value of the jewellery found was substantial. 4. We are, therefore, of the opinion that the findings of the Tribunal are totally perverse and far from the realities of life. In the peculiar facts of this case we answer the question in favour of the assessee and against the revenue thereby deleting the aforesaid addition of Rs. 3,87,364. 5. Appeal is allowed in the aforesaid terms." ii) Hon'ble Jurisdictional High Court in the case of Sushila Devi in Writ Petition No. 7620 of 2011 dated 21.10.2016 has held as under:- "The income tax authorities rationale or justification is entirely insubstantial. The assessee says that she was married in mid 1960s and her daughters were born in 1967. She was 70 when these proceedings were started. The income tax a....
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.... Ld. CIT(A) while granting the benefit of jewellery of 1100 gms in the case of Radha Mittal and 700 gms in the case of Ruchie Mittal and 700 gms in the case of Ruchie Mittal has incorrectly applied the rate of 2100 per gram as against the average rate of jewellery found @ 8758.83 per gms. The judgment of Jurisdictional High Court in the case of Ashok Chaddha 202 Taxman 395 directly applies here wherein the Assessing Officer himself accepted the aforesaid method and was also accepted by the Hon'ble High Court as would be evident from the following observations: "As far as addition qua jewellery is concerned, during the course of search, jewellery weighing 906.900 grams of the value amounting to Rs. 6,93,582 was found. The appellant's explanation was that he was married about 25 years back and the jewellery comprised "stree dhan" of Smt. Jyoti Chadha, his wife and other small items jewellery subsequently purchased and accumulated over the years. However, the Assessing Officer did not accept the above explanation on the ground that documentary evidence regarding family status and their financial position was not furnished by the appellant. The Assessing Officer accepted 4....