TaxTMI 
TaxTMI 
2020 (10) TMI 1086
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....as under :- The assessee is an individual and during the course of search, jewellery worth Rs. 27,05,934/- was found from four bank lockers. This was explained to be belonging to various lady members of the family but assessee had offered it as his income and has also given a pay order for tax Rs. 27,05,934/- equivalent to the value of the jewellery so found. None of this jewellery was seized. Subsequently, the assessee filed Return of income on 17.10.2016 disclosing this income as income from other sources. The Ld.AO accepted the income returned but has initiated penalty proceedings u/s.271AAB as the same was offered to tax consequent to search proceedings. 4. The assessee filed an appeal before the learned CIT(A). In the statement of facts before learned CIT(A) assessee stated as under :- 1. In this case there was a search on 09042015 to 11042015 at the assessees residential premises During the course of the search jewellery of Rs. 2705934 was found from Room No 501 502 503 The said jewelry had been withdrawn from bank lockers listed below as under LOCKER NO. OWNER 375 Bhavanji M Vora and Kankuben B Vora 449 Kankuben B Vora Bhavanji M Vora and ....
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....h the addition of said jewelry in the hands of the Assessee 8. At the time of passing of Assessment order Assessee was advised by the Chartered accountant not to challenge the same due to disclosure in return of Income After the passing of the penalty order Assessee was not advised to file appeal against the Assessment order At the time of hearing of penalty appeal in February 2019 Assessee was advised by the new tax counsel that it would be necessary to challenge the Assessment order on merits particularly in view of the fact that during Assessment proceedings Assessee had explained to the Assessing Officer that the said jewelry did not belong to him Thus Assessee decided to file the appeal as the truth is that the jewellery does not belong to him but it belongs to other family members The jewellery is within the limit prescribed by CBDT Instruction No 1916 dated 11051994 9. The appellant submits that merely since an item was wrongly offered in the return of income does not mean that it is certainly taxable in his hands The Income Tax-Department has the power to tax the income as per law and not as per the wrong disclosure made by the assesse in his retu....
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....e is no grievance which can be addressed by this office. Therefore, the appeal is dismissed. 7. Against this order the assessee is in appeal before the ITAT. 8. I have heard both the counsel and perused the record. Learned Senior Counsel, Dr. K. Shivram vehemently argued that the assessee has duly explained during the course of search itself that the jewellery was belonging to the family members. That it was solely to buy peace of mind that the assessee was forced to pay tax equal to 100% of the value of undisclosed jewellery found. Learned counsel submitted that the jewellery found during the course of search was belonging to the family members of the assessee and it was well within the limit jewellery holding prescribed by the CBDT. He further referred to the CBDT Circular No. 14(XL-35) of 1953 dated 11.4.1955 which states that officers of the Department must not take advantage of the ignorance of the assessee as to his rights. Further learned counsel gave detailed submissions by referring to the details in his paper book as under :- "Issue Addition of Jewellry of Rs. 27,05,9347- under the head income from other sources as unexplained jewllary. AO Para 3 P....
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....ewelry. Assessee also gave details of family members to whom the said jewelry belonged. 8. Though the Assessee had explained during the course of Assessment proceedings that the said jewelry did not belong to him, the AO passed order u/s 143(3) dtd29.12.2017 stating that as the assessee disclosed the jewelry in the return, hence the income cannot be reduced. 9. Affidavit of Mrs KankubenVora dt. 15-2-2019. [Pg. 31-37]. 10. Affidavit of Mrs Arpita Paresh Vora dt. 15-2-2019. [Pg.38 -43] 11. Affidavit of Mrs Varsha JitenVora dt. 15-2-2019. [Pg.44-50] 12.CBDT instruction 1994 dt. 11-5-1994. [Pg. 51] 13. Written Submissions before CIT(A). [Pg. 52-57] 14. Written submission before CIT (A). [Pg. 58 -67] 15. CIT(A) vide order dated 30/8/2019 dismissed the appeal only on the ground that the assessee himself has shown undisclosed jewelry in the return and the assessee himself has offered income stating that jewelry belongs to family and the assessee has not filed the revised return withdrawing the income shown in the return. Legal Submissions 1. At the time of recording of statement on oath u/s 132(4) th....
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....Constitution of India in unmistakable terms provides that no tax shall be levied or collected except by authority of law. Acquiescence cannot take away from a party the relief that he is entitled to where the tax is levied or collected without authority of law. In the case on hand, it was obligatory on the part of the Assessing Officer to apply his mind to the facts disclosed in the return and assess the assessee keeping in mind the law holding the field." (iii) In CIT v. Mitesh Impex [2014] 225 Taxman 168 (Guj) (MAG.) (HC)[Pg 75-85 of P.Book II] the Gujarat High Court was considering the issue of new claim made before CIT(A) though such claim was not made either in Original Return of Income or by Filing Revised Return of Income during the course of assessment proceedings. The relevant extract [Pg 82 of the P.Book II] from the order is reproduced as under : "24. It would be useful to club Questions (3) and (4) for common consideration. Both questions pertain to Revenue's stand that the assessees could not have raised a new claim for the first time before CIT (Appeals) without revising return before the assessing officer. 25. Question (3) pertains to s....
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....a) Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1 and National Thermal Power Co. Ltd. (supra) in the case of Miteshlmpex (supra) had observed as under (page 103 of 367 ITR): "It thus becomes clear that the decision of the Supreme Court in the case of Goetze (India) Ltd, v. CIT (supra) is confined to the powers of the Assessing Officer and accepting a claim without revised return. This is what the Supreme Court observed in the said judgment while distinguishing the judgment in the case of National Thermal Power Co. Ltd. v. CIT (supra) and that is how various High Courts have viewed the dictum of the decision in the case of Goetze (India) Ltd. v. CIT (supra). When it comes to the power of the Appellate Commissioner or the Tribunal, the courts have recognized their jurisdiction to entertain a new ground or a legal contention. A ground would have a reference to an argument touching a question of fact or a question of law or mixed question of law or facts. A legal contention would ordinarily be a pure question of law without raising any dispute about the facts. Not only such additional ground or contention, the courts have also, as noted above, recognized the powers of th....
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....s likely to result into demands and in effecting their recovery, they are lethargic and indifferent in granting refunds and giving reliefs due to assessees under the Act. Dilatoriness or indifference in dealing with refund claims (either under section 48 or due to appellate, revisional, etc. orders) must be completely avoided so that the public may feel that the Government are actually prompt and careful in the matter of collecting taxes and granting refunds and giving reliefs. 3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, off....
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....on of the assessee that once tribunal has adjudicated matter in assessee's favour then merely because disallowance was made in return of income voluntarily under a wrong belief, the assessee cannot resile from its position is not acceptable .The mandate of the 1961 Act is to tax real income and not an income which was never the income chargeable to tax in the hands of the assesseee but was declared under a wrong belief or notion . The mandate of the 1961 Act is to tax real income and tax can only be levied under the authority of law. Thus, if after verifications and following the ratio of law decided by the tribunal in the instant case, if the disallowance falls below the disallowance u/s 14A offered by the assessee in return of income, be it may the Revenue cannot charge tax on income which never was the income of the assessee chargeable to tax within the mandate and provisions of the 1961 Act as the tax can only be levied by the authority of law. The Hon'ble Andhra Pradesh High Court in the case of CIT v. Bakelite Hylam Ltd. [1999] 107 Taxman 429/237 ITR 392 as well Hon;ble Gujarat High Court in the case of Gujarat Gas Co. Ltd. v. Jt. CIT [2000] 111 Taxman 144/24....
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....51 During the search, the total jewellery found was Rs. 64,64,8667- [1974 Gms]. Chart giving bifurcation of jewelry found from Lockers amongst various family members. [Pg .30] Chart giving bifurcation of entire jewelry found during search at various residential premises including jewelry found from the lockers amongst all the family members [Pg.30]. This chart clearly shows that all the family members are holding the jewelry within the limits prescribed by the CBDT. 7. The total jewellery allowable for his entire family as per CBDT Circular is 2,100 grams. A copy of the CBDT circular is enclosed herewith at page no.51 of the compilation. As per the CBDT Circular, the permissible limit of gold for family members is as follows: Name Age Relationship with Jiten Vora Permissible limit of gold jewellery Mrs Kankuben Vora 72 Mother 500 g Mrs Arpita Vora 45 Sister in law 500 g Mrs Varsha Vora 42 Wife 500 g Mr Paresh Vora 49 Brother 100g Mr Jiten Vora 46 Self 100g Mr Bhavanji Vora 78 Father 100g Mr Vaibhav Vora 18 Son 100g Mr Vinay Vora 19 Brother's son 100g Mr Jay Vo....
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.... to the family members. In course of assessment proceedings the assessee has duly given details about the jewellery found in the search belonging to other family members. The very fact that the assessee was made to pay tax equivalent to 100% value of undisclosed jewellery clearly shows that the Revenue authorities have taken advantage of the assessee not being aware of his rights properly. By no stretch of imagination if tax is at all due the same is equivalent to 100% value of the jewellery found. Furthermore, the Revenue authorities cannot also show ignorance of the permissible limit of jewellery holdings as prescribed by the CBDT Instruction No. 1994. Learned Counsel of the assessee has duly brought on record affidavits of the family members owning jewellery. Just because the claim is made otherwise then by revised return the said claim does not seize to be a claim to be adjudicated as long as the claim is made. This exposition was duly expounded by Hon'ble Bombay High Court in the case of CIT Vs. Prithvi 349 ITR 336. Even Hon'ble Supreme Court decision in the case of Goetz (India) Ltd. Vs. CIT (284 ITR 323) has held that the said decision would not debar Tribunal ....