TaxTMI 
TaxTMI 
2017 (3) TMI 1862
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....passed by the learned Assessing Officer (hereinafter called "the AO") u/s 143(3) of the Income-tax Act,1961 (Hereinafter called "the Act"). 2. The grounds of appeal raised by the assessee in ITA No. 2249/Mum/2015 for assessment year 2011-12 in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") read as under:- "(1) That the order of the Dy. Commissioner of Income Tax, Central Circle 18 & 19, Mumbai is bad in law and wrong on facts and the learned PR. Commissioner of Income Tax (OSD) further erred in law and on facts in partly confirming the action of the AO. (2) That the learned Dy. Commissioner of Income-tax erred in law and on facts in making addition of Rs. 42,00,650/- on account of unexplained investments u/s.69B of the Income Tax Act and the learned Pr. CIT (OSD) erred in only partly allowing the appeal by holding that gold jewellery of 600 Gms. is considered as explained out of the total gold jewellery seized of Rs. 42,00,650/-. On the basis of facts and circumstances of the case, the evidences furnished and considering the financial status and social standing of the assessee, the action of learned CIT in partly uph....
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....xplain afore-stated jewellery valued at Rs. 42,00,656/- seized from the above locker of the assessee. The assessee was asked by Revenue to explain the source of the jewellery so seized. However, the assessee could not produce any evidence as to the sources of the jewellery found in the locker. The A.O. observed that the assessee in his statement on oath dated 11th January, 2011 had admitted to this fact. The relevant questions and answers are reproduced below:- "Q.2 : You are hereby informed that during the statement of yours recorded on oath on 18.12.2010 you were asked to submit the purchase bills of your items of jewellery found in your locker which were valued and a copy of valuation report was provided to you. In reply to Q. No. 4 which was on the above subject you had stated to give the necessary reply by 10.01.2011. You were again informed that during the search of your locker no. 272 with State Bank of India, Shivaji Park Branch, Dadar, Mumbai, jewellery were found which were valued. According to the valuation report copy of which was provided to you the details of jewellery are as follows: 1. Gold Jewellery (Item 1 to 20) - Net Weight 2962.400 gms. 2. Diamond J....
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....very small family consisting of me, my wife and one child. There were lots of savings which used to be spent by my wife in purchasing of jewellery since my wife is no more who was victim of terror attack held at Oberoi Hotel, Mumbai on 26.11.2008, I could not trace the purchase bills kept by my wife and could not tally few items of jewellery which was known to my wife only. I would further like to humbly inform that my wife brought some jewellery when she got married to me in 1986 but I could not identified such jewellery as it was known to her. Further, I would1ike to bring to your notice that jewellery which I could not tally are very small items, value of which is as low as Rs. 7,375/- (as per present market value) which obviously must have been purchased by my wife in cash. Total numbers of such items are 64. Q-4: Please tell had you or your late wife ever filed W. T. Returns considering that the value of jewellery items as per valuation report, for which you have no purchase bills amounts to a value of Rs. 40 lakhs approximately. Please tell had you ever or late wife ever submitted any statement of affairs of yours in which you have declared such jewellery before any Govt. a....
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..... It was submitted that the present value of jewellery which was found recorded in books of accounts as on 3103-2004 , is more than Rs. 50 lacs i.e. more than jewellery un-explained. The A.O., however, rejected the contentions of the assessee and held that the explanation offered by the assessee was not found satisfactory in the absence of any supporting evidences and the assessee has merely given general explanation . It was held by the AO that the assessee has not filed bills for purchase of jewellery /valuation report by the valuer. It was also observed by the AO that the assessee has also not filed wealth tax return with the Revenue despite having taxable wealth , and sources for purchase of jewellery and diamond to the tune of Rs. 42,00,656/- remained un-explained by the assessee as per provisions of Section 69B of the 1961 Act. The AO brought to tax the unexplained jewellery worth Rs. 42,00,656/- which was seized by Revenue during the course of search and seizure operations u/s 132(1) of 1961 Act as income of the assessee u/s 69B of 1961 Act, vide assessment order dated 28.03.2013 passed by the AO u/s 143(3) of the 1961 Act. 5. Aggrieved by the assessment order dated ....
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....ery items were returned back to the assessee. It was submitted that during the post search assessment proceedings, the AO asked the assessee to explain the source of the jewellery items which were seized and in reply the assessee filed his reply again explaining that what he had explained to the Investigation officer while the statement was recorded. The A.O., however, held that the assessee's explanation was general in nature and not supported by bills. The details of jewellery found during the course of search in the bank locker belonging to the assessee and his deceased wife are as under:- Particulars Jewellery found (in gms) Jewellery supported by bills (in gms) Old jewellery whose bills are not found (in gms) Gold Jewellery 2962.40 2240.50 707.80 Diamond Jewellery 2556.10 1619.14 936.96 Total of the above 5518.50 3859.64 1644.76 Value of the above jewellery whose purchase bills were not found Rs. 42,00,656/- It was submitted by the assessee that the A.O. made addition of Rs. 42,00,656/- towards un-explained Jewellery , out of total Jewellery worth Rs. 1,72,09,556/- which was found during the course of....
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....mpletely erroneous which is not sustainable in law. It was submitted that the AO accepted recently purchased jewellery by the assessee and his wife which are supported by bills. It was submitted that the AO made additions of the entire old jewellery which was acquired over years. It was submitted that if AO observations are to be accepted, then the assessee and his wife never received any jewellery during their marriage and other occasions from their parents and other relatives, which is absolutely perverse and is an incorrect finding of the AO. It was also submitted that no incriminating material was found during the course of search operations u/s 132(1) of 1961 Act to implicate the assessee of having made investment in unexplained jewellery and ornaments. It was submitted that additions have been made based on surmises and conjectures. It was submitted that details were duly furnished including jewellery of Rs. 18 lacs as per books of accounts as on 31-03-2004. The assessee contended that assessee is Executive Director(Commercial) of the flagship company of the Ispat Group, Ispat Industries Ltd. and was deriving adequate amount of remuneration from there so as to afford a suitab....
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.... the assessee, and the AO was directed by learned CIT(A) to give relief to the extent of 600 gms. of value of gold jewellery in the hands of the assessee as being explained , vide appellate order dated 02-022015 passed by learned CIT(A). 6. The Revenue has challenged part relief given to the assessee by learned CIT(A) to the tune of 600 gms of gold jewellery relying on CBDT instructions dated 11-05-1994 which was considered as deemed explained, while the assessee has challenged additions of Rs. 42,00,650/- made by the A.O. to the extent confirmed by ld. CIT(A). Thus, both assessee and Revenue are in appeal before the tribunal wherein cross appeals are filed before the tribunal. 7. The ld. Counsel for the assessee argued strenuously before the tribunal and reiterated the contentions made before the authorities below. The learned counsel submitted that jewellery to the tune of Rs. 42,00,656/- was seized by Revenue during search operations against the assessee u/s 132 of 1961 Act. The assessee is Executive Director (Commercial) of Ispat Industries Limited. There was a search operations u/s 132 of 1961 Act against the Ispat Group of companies, their promoters and Directors conducted ....
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....ich has been duly declared and disclosed in the income tax returns filed with the Revenue. It was submitted that wife of the assessee was also having income from house property and other sources and returns were filed with the Revenue regularly. The return of income filed by her for assessment year 2009-10 is placed on record in paper book/page 66-67. It was submitted that the assessee is habitual of investing in jewellery as also his wife when she was alive, which can be evidenced by purchase bills of Rs. 1.30 crores produced by the assessee for last seven years prior to the date of search. It is submitted that neither wealth tax returns nor statement of affairs were filed by the assessee and his wife with the Revenue. It is submitted that the assessee wife died in terror attack in Mumbai at Oberoi Hotel on 26-11-2008, death certificate is placed in paper book filed with the tribunal at page no 65. It is submitted that assessee is earning substantial income from salaries and other resources and had substantial financial resources at its disposal to invest in jewellery over a period of time. It was submitted that the assessee could explain jewellery to the tune of Rs. 1.30 crores p....
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.... family belongs, as provided in CBDT instruction dated 11-05-1994. Our attention was drawn to CBDT instructions no. 1916 dated 11-5-1994 which is placed in paper book of case laws/page 1. The ld. Counsel also relied upon following judicial decisions in support of his claim:- 1. CBDT Instruction No. 1916 dated 11-5-1994 2. Ashok Chaddha v. ITO (2012) 69 DTR 82 (Del) 3. CIT v. Ratanlal Vyaparilal Jain (2011) 339 ITR 351(Guj.) 4. CIT v. P.K. Noorjahan (1999) 237 ITR 570 (SC) It was also submitted that no documents were seized during the search operations by Revenue which incriminates assessee. It was submitted that the AO erred in invoking Section 69B of 1961 Act while making additions, while the applicable section is 69A of 1961 Act , if at all additions were to be made by the AO. It was submitted that since wife of the assessee had died in Mumbai terror attack on Oberoi Hotel on 26-11-2008, the assessee was keeping the jewellery in locker. It was also submitted that no statement of affair was filed by the assessee with the Revenue in the past. 8. The ld. D.R. on the other hand submitted that the assessee could not explain the sources of acquisition of jewellery worth Rs. 4....
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....e laws relied upon by the rival parties . There was a search & seizure action u/s.132(1) of the 1961 Act carried out by the Dy. Director of Income Tax (Intelligence)- I, New Delhi in the case of Ispat Industries Limited and its Group Companies, Promoters & Executives on 30th November, 2010. The assessee is Executive Director (Commercial) of M/s. Ispat Industries Ltd., flagship company of Ispat Group. The assessee was also covered under the search & seizure action u/s.132(1) of the 1961 Act on the Ispat Group. During the course of search and seizure action at the residential premises of the assessee at, 1101, Rameshwaram Apartment, Kirti K. Dhruba Marg, Prabhadevi, Mumbai and the bank locker standing in the name of the assessee, following jewellery , cash and other valuables were seized:- Sl No. Details of premises Seized Cash(Rs) Jewellery (In Rs) Others 1 Locker No. 272 State Bank of India, Shivaji Park Branch, Mumbai (Shri Vinod Garg) - 42,00,655 - During the course of search operations u/s 132 of 1961 Act from the bank locker No. 272, State Bank of India, Shivaji Nagar Branch, Dadar, Mumbai, standing in the name of the assessee , jewellery totaling to Rs. 1,72,09,556/ -....
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....s allowed benefit/relief to the assessee of jewellery to the tune of 600 gms of gold jewellery , while the additions made by the AO with respect to the rest of the jewellery was upheld by learned CIT(A). It is the say of assessee throughout consistently that it is incomprehensible to hold that the assessee did not held any jewellery prior to seven years from the date of search on 30-11-2010 while the assessee was married in 1986 and the acquisitions through several modes such as streedhan to wife at the time of marriage , gift to the assessee at the time of marriage in 1986, acquisition of the jewellery since marriage in 1986 over a period of time for which bills were not retained, gifts to wife and the assessee since 1986 by relatives, gift to son on his birth and also during several birthdays over the years was explained to the authorities below , while no bills were retained for the same. The assessee explained its background , social status, financial status etc which did not found favour with the AO while part relief was granted by learned CIT(A) relying on CBDT instructions dated 11-05-1994. To understand the whole issue in an holistic manner on the touch stone of prepondera....
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....see being legal heir of wife after her death on 26-11-2008, the jewellery owned and possessed by wife at the time of her death on 26-11-2008 is also to be considered in the hands of the assessee being a legal heir of wife. The instant assessment year under appeal is assessment year 2011-12. The assessee was married in 1986 and has one son also. The assessee has one HUF also. The assessee has recorded jewellery of Rs. 18.51 lacs in ledger accounts as on 31-03-2004 which ledger accounts were part of seized material as stated by learned counsel of the assessee which was seized by Revenue on the date of search on 30-11-2010. The said period ending 31-032004 is prior to the period covered by search proceedings. The assessee has contended that revenue has not given credit for the said jewellery of 18.51 lacs which was found recorded in the ledger accounts found during search which ledger extracts were seized by Revenue , and which represented jewellery acquired by the assessee wife and HUF prior to the period for assessments covered by search operations u/s 132 of 1961 Act for which purchase bills of jewellery are not available.. The market value of said jewellery as found recorded in se....
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....seizure operations u/s 132 of 1961 Act incriminating assessee , further leads to irresistible conclusion from afore-stated assessee's conduct and behavior pattern that for all the jewellery purchased even prior to seven years from the date of search as was bought by the assessee and his wife and HUF, the relevant persons had purchased jewellery after obtaining proper bills as was demonstrated by their conduct of last seven years prior to search . The ledger extract as on 31-03-2004 which was seized by Revenue during the course of search on 30-11-2010 as stated by learned counsel reflecting jewellery of Rs. 18.51 lacs in the name of assessee wife and HUF was acquired prior to seven year period from search cannot be brushed aside lightly and appropriate credit has to be necessarily given while determining jewellery owned by the assessee, his wife and HUF with reference to the jewellery found during the search operations conducted by Revenue u/s 132 of 1961 Act. The market value of said jewellery on the date of search was stated to be more than Rs. 50 lacs which is not contradicted by Revenue as no explanation was given by Revenue about the same, while the additions are made in the ha....
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....vidence. We have to keep in mind that the assessee was married for more than 25-30 years. The jewellery in question is not very substantial. The learned counsel for the appellant/assessee is correct in her submission that it is a normal custom for woman to receive jewellery in the form of "stree dhan" 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." In any case, there was a seized ledger extracts which showed jewellery as on 31-03-2004 of Rs. 18.51 lacs owned by assessee wife and assessee's HUF , market value of which je....