TaxTMI 
TaxTMI 
2021 (8) TMI 330
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....ncome of the assessee and the Ld. CIT(A) has erred in sustaining the same. 3. That the learned Assessing Officer has erred in law as well as on the facts and circumstances of the case in initiating the penalty proceedings under section 271AAB(1)(c) of the Income Tax Act, 1961 and the ld. CIT(A) has erred in sustaining the same." 2. Regarding ground no. 1, the ld AR submitted that the assessee filed his return of income on 27.09.2016 declaring total income of Rs. 15,23,040/-. A search and seizure action u/s 132 of IT Act, 1961 was carried out on the residential premises of assessee on 14.10.2015. During the course of search gold jewellery weighing 1640.32 gms valued at Rs. 42,16,575/- and silver articles weighing 10994 gms valued at Rs. 3,64,672/- was found at the residence of assessee. The assessee vide letter dt. 29.09.2017 (reproduced at Pg 2-4 of the order) and vide letter dt. 08.12.2017 (reproduced at Pg 5-12 of the order) explained that 1300 gms of gold jewellery is a reasonable possession as per CBDT Instruction No.1916 dt. 11.05.1994. Further he has purchased 588.672 gms of gold jewellery between 2008 to 2015 which are supported with proper bills seized during....
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....by the assessee and family members from time to time which is supported by purchase bills. Hence, the quantity of jewellery which is otherwise explained by the assessee would not be treated as part of the quantity of reasonable possession as prescribed under the said CBDT Instruction No. 1916 dated 11-05-1994. Therefore, the benefit of CBDT Instruction will not take away the benefit of the explained jewellery acquired by the assessee. For this purpose, reliance is placed on the decision of Hon'ble ITAT, Jaipur Bench in case of Sh. Ram Prakash Mahawar vs. DCIT (ITA No.918/JP/19 order dt. 20.02.2020) where at Para 2.6, it was held as under:- "We have considered the rival submissions as well as the relevant materials available on record. The first issue is regarding the addition sustained by the ld. CIT(A) to the tune of Rs. 4,57,404/- on account of unexplained gold jewellery by rejecting the claim of the assessee being acquisition of the said jewellery by way of purchases made from time to time and also recorded in the books of account of the assessee. There is no dispute regarding the fact that jewellery to the extent 343.328 gms.represents the purchases made by the assesse....
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....ssession as prescribed under the said CBDT Instruction No. 1916 dated 11-05- 1994. Therefore, the benefit of CBDT Instruction No. 1916 dated 11- 05-1994 will not take away the benefit of the explained jewellery acquired by the assessee. Accordingly, in the facts and circumstance of the case, the quantity of jewellery to the extent of 343.328 gms.has to be allowed separately as explained jewellery and no addition can be made to that extent." 5. It was further submitted that the assessee and his family members have purchased gold jewellery of 708.226 gms between 2008 to 2015. These purchases are duly supported with proper bills seized during the course of search annexed as Annexure N-3/2. A Chart showing the gold jewellery purchased is placed as page 1 of paperbook. It includes gold jewellery weighing 266.138 gms purchased on the occasion of marriage of assessee's son Sh. Shaurav Pareek on 05.12.2011. Thus, when the jewellery purchased are duly supported by bills, addition of 340.32 gms of gold jewellery valued at Rs. 9,18,864/- made by the AO and confirmed by Ld. CIT(A) by treating it as unexplained is uncalled for and be deleted. Otherwise also, when it is a fact on record th....
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....916, jewellery to the tune of 1300 gms was considered as explained. The Ld. A/R has contended that there were certain bills of jewellery which were presented before the AO which would make jewellery to the extent of 588.672 gms explained. In a nut shell the Ld. A/R contends that benefit of those bills should be over and above to the jewellery allowance as per CBDT instruction number 1916. The AO rejected this contention and held that jewellery considered as explained as per CBDT instruction number 1916 would cover such jewellery for which bills are available. Also admittedly the appellant and family members are not wealth tax assessees. Thus, the AO stated that no further benefit of such bills can be allowed. The details and source of jewellery as per bills were stated by assessee as purchased/paid out of cash available with appellant and family which was withdrawn from time to time from bank accounts. However the nexus between withdrawal and purchase is not established. AO also observed that assessee's balance sheet only showed Rs. 3,42,000/- under the head jewellery. The case laws cited by appellant are also not applicable to this case. Under the facts and circumstances ....
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....me and/or nexus between the withdrawals from the bank and the purchases so made out of such cash withdrawals. We find that out of total 708.226 grams of gold jewellery, 266.138 grams of gold jewellery has been purchased during the financial year relevant to A.Y 2012-13 and rest all jewellery has been purchased either prior or subsequent to A.Y 2012-13. Though these purchases are supported by the bills which are demonstrative of purchases made by the assessee, however, given the fact that most of these purchases have been made in cash, what is critical to determine is the source and the availability of cash in the hands of the assessee at the relevant point of time of purchase as for tax purposes, what is relevant to determine is nature and source of acquisition of such jewellery and not merely the acquisition of jewellery. In this regard, we find that in respect of 266.138 grams of gold jewellery purchased during the financial year relevant to A.Y 2012-13 amounting to Rs. 782,233/-, the assessee has come forward with an explanation that these purchases have been made on the occasion of marriage of his son, Shaurav Pareek and source of such purchases has been stated to be cash payme....
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....g 14 of the assessment order). The paper shows receipt of Rs. 25,000/- against trading margin and Rs. 8,400/- received as interest on investment of Rs. 7 lacs from Chintu on 25.05.2015. Further Rs. 1,500/- is reduced with the narration Mom Ji and Rs. 16,500/- with the narration drawn for expenses with date 28.08.2015. The AO accordingly required the assessee to explain the source of receipt of Rs. 7,33,400/- (7,00,000+25,000+,8400). The assessee vide reply dt. 28.11.2017 (reproduced at Pg 15 of the order) submitted that the paper belongs to his son Sh. Shaurav Pareek. Sh. Shaurav Pareek carries the business of trading and broking in equity, derivative, commodity, currency and professional work including consultancy and service providers. This paper has no relevancy with the assessee. The AO, however, held that on the paper there is no reference of Sh. Shaurav Pareek to ascertain that to whom it pertains. The paper contains the details regarding share transactions. The assessee is also involved in the share trading and F&O business during the year under consideration as reflected from his balance sheet, P&L A/c, computation of income. Thus, the contention of assessee that the paper ....
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....age 30/Exhibit 10 of Annexure AS 1. The Ld. A/R contended that transactions of the seized document pertain to Mr. Shaurav Pareek, son of appellant, as it has been owned up and incorporated in the return of income. The AO rejected the contention of the A/R. I am of the view that the AO is right in rejecting the Ld. A/R's contention as there is no reference of name of Shaurav Pareek in the seized document found from the possession of the appellant. The contention that transactions have been incorporated by Shaurav Pareek is also without any basis as the Ld. A/R has not been able to demonstrate how transaction are incorporated in books and the amount offered for taxation by the Shaurav Pareek. Thus considering the facts and the circumstances of the case, the AO has rightly treated the amount of Rs. 7,33,400/- as undisclosed income of assessee. Ground No. 2 is dismissed." 17. We have heard the rival contentions and perused the material available on record. The seized document has been found from the residential premises of the assessee and during the course of assessment proceedings, the assessee has contended that the said document pertains to his son, sh....