2016 (11) TMI 1631

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....f penalty u/s 271(1)(c) of the act. 2. The assessee is an individual belongs to Sarvana group of concerns. A search and seizure action u/s.132 of the Act was conducted in Saravan group on 18.08.2011. The assessee is mother of Shri R.Sabapathy and wife of Shri S.Raja Rathinam belonging to the Saravana group. During the course of search proceedings at the residential premises of Shri R.Sabapathy situated at No.10, Lakshman Street T.Nagar, Chennai, gold and jewellery belonging to the assessee Smt. R.Revathy found and seized as per Annexure-Ann/PMS/Gold/S-1 dated 18.08.2011. The value of the gold was valued at Rs. 47,37,496/-. 3. The Assessing Officer issued notice under section 153(C) of the Act and the assessee filed the return of income ....

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....hat most of the jewellery found in course of search was declared under VDIS and acquired over a period of time by way of Sthreedhan and gifts on various occasions. The assessee argued before the CIT(A) that the addition was not disputed to buy peace. The Ld.CIT(A) considered the submissions made by the assessee and cancelled the penalty imposed by the Assessing officer. 5.1 Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before us. Appearing for the Revenue, Mr. Shiva Srinivas, the Ld.DR argued that there was a search and seizure action carried out in the assessee's residential premises and found gold jewellery worth Rs. 47,37,496/-. Though, there was no evidence and proof for purchase of jewellery from the accounted sou....

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....idence in the declaration. The Ld.AR, further, submitted that it is common practice in south India to get gifts on various occasions in the form of gold and jewellery. Therefore, the Ld.AR vehemently argued that the gold jewellery found during the course of search was clearly explained and there is no case for penalty u/s.271(1)(c). For a query from the Bench, the Ld.AR replied that the assessee has not filed the wealth tax details. 6. In the rejoinder, the Ld.DR submitted that the assessee has not declared the jewellery valuing about Rs. 47.37 lakhs in the Wealth Tax returns. In fact, it is found that no Wealth Tax returns are filed by assessee, even though the gold jewellery attracts Wealth Tax. The gold jewellery found during the cours....

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....ewellery as undisclosed income. During appeal the assessee has taken a shelter under the VDIS and filed copy of certificate u/s68(2)of VDIS to explain the source of investment was from the VDIS, gift and Stridhan etc. Though the assessee admitted jewellery of Rs. 2.23 crores and the cash of 3.00 crores under VDIS, she has not filed the wealth tax returns which implies that the wealth declared under VDIS has been exhausted and nothing is carried forward for subsequent year. The assessee is from the educated and from affluent family, assisted by the legal counsels and aware of the wealth tax provisions. In the absence of any evidence for purchase of jewellery from the explained sources, and in the absence of wealth tax returns, we are unable ....