TaxTMI 
TaxTMI 
2020 (1) TMI 1660
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....quently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. 3. Search and seizure proceedings were conducted on 11.06.2013 at the residential premises of the assessee and his family members. In the course of the search proceedings diamond jewellery of an aggregate value of Rs. 2,70,72,253/- was found. As the main persons of the assessee group were not available at the time of the search proceedings, therefore, their statements could not be recorded under Sec. 132(4) of the Act. Statement of Smt. Dimple Mahesh Kothari (daughter-in-law of the assessee) who was available at the time of the search proceedings was recorded under Sec. 132(4) of the Act. However, in her statement she expressed her inability to explain the source of acquisition of the aforesaid diamond jewellery. Subsequently, the statement of Shri Rakesh Manekchand Kothari (son of the assessee) was recorded on 08.08.2013 i.e at the time of revocation of the prohibitory order in the presence of other family members. On being confronted with the details of the diamond jewellery which was found in the course of the search proceedings, it was submitted by him that the same belonged ....
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..../s. H.D.K. international Pvt. Ltd. and M/s. Shree Shyam International, which thereafter were given to certain parties for making of diamond jewellery. It was the claim of the assessee that the aforesaid diamond jewellery was found in the course of the search proceedings. On a perusal of the details, it was observed by the A.O. that the assessee had claimed to have paid the purchase consideration of the cut and polished diamonds to the aforesaid jewellers on 09.07.2013 i.e subsequent to the search proceedings. On being queried by the A.O. that as to whether in the past 10 years he had ever carried out a similar purchase of diamonds, the assessee replied in the negative. On a query raised by the A.O. as to what was the occasion for purchasing the diamonds, it was submitted by the assessee that he had made the investment as at the relevant point of time the purchase value of diamonds had witnessed a fall. However, the A.O. was not satisfied with the genuineness of the aforesaid claim of the assessee. Observing, that the assessee in his attempt to justify his unexplained investment in the diamond jewellery that was found in the course of the search proceedings had came up with a concoc....
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....vations partly allowed the appeal of the assessee. 6. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Departmental Representative (for short 'D.R') took us through the facts of the case. It was submitted by the ld. D.R that a perusal of the assessee's explanation as regards the source of acquisition of the diamond jewellery of a value of Rs. 1,23,95,850/-, revealed beyond doubt that the same was nothing short of a concocted story. It was submitted by the ld. D.R that the claim of the assessee that he had purchased cut and polished diamonds in the month of May, 2013 i.e. immediately prior to the search proceedings, which thereafter were converted into diamond jewellery, did not inspire any confidence. It was submitted by the ld. D.R that the CIT(A) was in error in accepting the unsubstantiated explanation of the assessee. It was further submitted by the ld. D.R that the fact that no "purchase bills" evidencing any such purchase of diamond jewellery were found in the course of the search proceedings further evidenced the falsity of the claim of the assessee. Further, it was submitted by the ld. D.R that the c....
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....tiated claim of the assessee de hors any verifications from the aforementioned respective parties. On the basis of his aforesaid contentions, it was the claim of the ld. A.R that the A.O. had most arbitrarily on the basis of assumptions, presumptions, surmises and conjectures concluded that the assessee had made an unexplained investment within the meaning of Sec. 69A in diamond jewellery of a value of Rs. 1,95,88,013/-. Further, it was submitted by the ld. A.R that involving identical facts the coordinate bench of the Tribunal viz. ITAT "B" Bench, Mumbai had deleted similar additions which were made by the A.O. in the case of the related parties of the assessee viz. (i) DCIT, CC-8(3), Mumbai Vs. Shree Bhawarlal S. Kothari, ITA No. 195/Mum/2018, the order dated 19.08.2019 and (ii) DCIT, CC-8(3), Mumbai Vs. Shri Prithviraj Kothari, ITA No. 196/Mum/2018, dated 09.04.2019. It was the claim of the ld. A.R that the CIT(A) after appreciating the facts of the case had in all fairness sustained the addition on an estimate basis to the extent of Rs. 24,68,722/- [50% of Rs. 49,37,444/-]. It was averred by the ld. A.R that as the appeal of the revenue was devoid of any merit, therefore, the s....
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....e assessee to have been sourced from the diamonds which were purchased just before the search action i.e in the month of May, 2013, in the name of Smt. Devuben Kothari, Dimple Kothari and Nikki Kothari. The jewellery held in the name of the aforesaid persons is stated to have been found in the course of the search proceedings, as under: Dimple Kothari Premise Sr. No. of diamond jewellery valuation report Value (Rs.) Bed Room of Dimple Kothari Shreepati Arcade, Nana Chowk 1 20116 Safe of Devkumari Kothari, Shreepati Arcade, 1 189890 Safe of Devkumari Kothari, Shreepati Arcade, 29 886047 Safe of Devkumari Kothari, Shreepati Arcade, 31 749698 Safe of Devkumari Kothari, Shreepati Arcade, 32 491380 Total 2518081 Devkumari Kothari Premise Sr. No. of diamond jewellery valuation report Value (Rs.) Bed Room of Dimple Kothari Shreepati Arcade, Nana Chowk 2 109115 -do- 10 457465 -do- 13 199885 -do- 15 104556 -do- 16 99488 -do- 17 149895 -do- 41 116493 Bed Room of Dimple Kothari Shreepati Arcade, Nana Chowk 2 384820 -do- ....
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.... us hereinabove, on account of non-availability of the main persons at the time when the search proceedings were conducted, their statements could not be then so recorded under Sec. 132(4) of the Act. However, the statement of Shri Rakesh Manekchand Kothari (son of the assessee) was recorded on 08.08.2013 i.e at the time of revocation of the prohibitory order in the presence of other family members. On being called upon to explain the source of acquisition of the diamond jewellery of a value aggregating to Rs. 2,70,72,255/- that was found in the course of the search proceedings, as under: Sr. No Places where found Diamond jewellery found Gold Diamond Value 1 Residence of Manekchand Kothari at A-43 Bharat Nagar, Grant Road, Mumbai 90.5 14.7 2423500 2. Residence of Rakesh Kothari and Mukesh Kothari at 3001-04, Shreepati Arcade Nana chowk, Mumbai 2032.75 317.64 12089201 3 From the safe of debuben at Shreepati Arcade at the residence of Mukesh & Rakesh Kothari 1682.464 238.53 9717638 4. Locker No. B-442, in the name of Rakesh Kothari, Shilpa Kothari and Devkumari Kothari at Standards Chartered Bank, Breach candy, Mumb....
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....n various occasions; and (v) that, the diamond jewellery which was found in the course of the search proceedings at Shop No. 8 Bapty Road, Daval Bhuvan, Kamathipura, Mumbai was purchased by him in cash, but no supporting documents as regards the same was retained by him. However, the A.O. was not persuaded to accept the claim of the assessee that diamond jewellery of a value of Rs. 1,23,95,850/- was sourced out of the cut and polished diamonds which were claimed to have been purchased in the month of May, 2013 in the name of Smt. Dimple Kothari & Nikki Kothari (daughters in law of the assessee) and Smt. Devuben Kothari (wife of the assessee), from certain jewellers viz. M/s. Opulent Jewellers Pvt. Ltd., M/s. H.D.K. Internationals Pvt. Ltd. and M/s. Shree Shyam International. As for the reasons for doubting the authenticity of the aforesaid explanation, the same had already been discussed at length by us hereinabove. 11. We shall now advert to the sustainability of the view taken by the A.O, wherein he had rejected the explanation of the assessee as regards the source of acquisition of diamond jewellery of a value of Rs. 1,23,95,850/-. On a perusal of the orders of the lower auth....
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....such financial year. On a perusal of the aforesaid statutory provision, it can safely be gathered that it was obligatory on the part of the A.O. to have verified to the hilt the authenticity of the explanation of the assessee as regards the source of acquisition of the diamond jewellery that were found in the course of the search proceedings conducted upon him. In our considered view, the A.O. without dislodging the authenticity of the explanation of the assessee as regards the "nature" and "source" of acquisition of the aforesaid diamond jewellery, could not have summarily held the same as an unexplained investment within the meaning of Sec. 69A of the Act. Admittedly, in case the explanation offered by the assessee is not in the opinion of the A.O. satisfactory. therein as per the mandate of Sec. 69A of the Act, he is vested with the jurisdiction to deem the value of the bullion, jewellery or other valuable article as the deemed income of the assessee. However, the A.O. remains under a statutory obligation to conclusively prove that the explanation of the assessee about the 'nature' and 'source' of the acquisition of the money, bullion, jewellery or other valuable....
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....tions from them. Rather, at no stage in the course of the assessment proceedings the A.O. had even asked the assessee to substantiate the veracity of his aforesaid claim by producing the parties to whom the payment of making charges of diamond jewellery were claimed to have been paid. On the basis of the aforesaid facts, we are of a strong conviction that the A.O. had without any basis and in fact backed by a pre-determined mind most arbitrarily concluded that the assessee had made an unexplained investment within the meaning of Sec. 69A in diamond jewellery of a value aggregating to Rs. 1,23,95,850/-. On the basis of our aforesaid deliberations, we are unable to persuade ourselves to accept the view taken by the A.O. Apart from that, we find that involving identical facts the co-ordinate bench of the Tribunal viz. ITAT "B" Bench, Mumbai had in the case of the related parties of the assessee deleted similar additions which were made by the A.O. without dislodging the factual claim of the assessee viz. (i) DCIT, CC-8(3), Mumbai Vs. Shri Bhawarlal S. Kothari, ITA No. 195/Mum/2018, dated 19.08.2019; and (ii) DCIT, CC-8(3), Mumbai Vs. Shri Prithviraj Kothari, ITA No. 196/Mum/2018, date....
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....ny material which could evidence the falsity of the said claim, had drawn adverse inferences. In fact, we find that the A.O. had not even recorded any reasoning for disbelieving the aforesaid claim of the assessee. As such, we are unable to persuade ourselves to subscribe to the aforesaid view taken by the A.O. and uphold the observations of the CIT(A) in context of the issue under consideration. 13. We shall now advert to the claim of the assessee that the balance diamond jewellery of a value aggregating to Rs. 49,37,444/- that was found in the course of the search proceedings, was acquired by him out of the withdrawals made over the years. As observed by us hereinabove, the A.O. being of the view that the aforesaid claim of the assessee was not substantiated on the basis of any corroborative material, therefore, had rejected the same and treated the aforesaid diamond jewellery of a value of Rs. 49,37,444/- as an unexplained investment of the assessee under Sec. 69A of the Act. On appeal, the CIT(A) taking cognizance of the fact that the assessee belonged to a high profile marwari family and had substantial withdrawals of Rs. 1.36 crores over the period A.Y. 2008-09 to A.Y. 201....