TaxTMI 
TaxTMI 
TaxTMI 
2024 (5) TMI 1680
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.... the assessee and rest belonged to the family members and one relative. Also due information and requisite documentation was provided to the AO during the assessment proceedings. Further, CBDT circular regarding seizure of jewellery has also not been considered." 3. In ground No. 1, the assessee has challenged the sustenance of addition of Rs. 10,00,000/- under section 68 of the Act. 3.1 In this regard, briefly the facts of the case are that during the course of search operation conducted by the CBI on 12/09/2016, cash to the tune of Rs. 14.15 Lacs was found from the locker maintained by the assessee with Indian Overseas Bank (IOB), Sector-22, Chandigarh. 3.2 During the course of assessment proceedings, the assessee was asked to justify the source of cash so found in her locker. In her reply, she submitted that an amount of Rs. 10,00,000/- has been received from her husband Rs. 20,000/- from her niece and Rs. 3,50,000/- from Pine Drive Resorts for land transaction and the remaining amount of Rs. 45,000/- was her own money out of past savings. 3.3 The AO accepted the assessee's explanation regarding Rs 4.15 lacs however explanation regarding Rs. 10,00,000/- received ....
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....nish any sale deed even after lapse of two years to prove that the laud agreement was genuine. Sh. Gaurav Bhalla husband of the assessee during the course of recording of his statement informed that the same could not be got registered due to ban by the Himachal Govt, for selling immovable property to Non-Himachali. She could not substantiate her claim and it is nothing but cooked up story and the husband of the assessee was well aware that he cannot enter into an agreement to sell with non-Himachali. In view of the prevailing laws in this regards the further strengthen the view of the department that the family members of the assessee have manipulated documents to save her from difficult situation. Further the agreement was also not on judicial stamp papers and was also not notarized. This agreement was on Non-Judicial Stamp Papers and had it been notarized the real/actual date of this agreement could have been easily ascertained. By creating a sham agreement on plain papers, the assessee has only tried to hood wink the investigation. It is crystal clear that the assessee's claim is an afterthought to cover of the cash found in the possession of the assessee. The agreement is ....
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....O by both the above mentioned persons 5.2 It was further submitted that as per the settled law prevailing for the said relevant year under consideration i.e. AY 2017-18, in the instant case, assessee was only required to explain the source of such money and not the source of source and the assessee had duly discharged her onus for explaining her source. Although the initial burden of proof lies on the assessee to explain the source, however the said onus of proof is not a static one. The initial burden of proof to explain the source have duly been explained by the assessee by stating that the same was received by her from her husband who have further received it as advance against land along with relevant documentary evidence. 5.3 It was submitted that the Id. AO has accepted the source of cash in the hands of assessee i.e. source being her husband, however have questioned the source of source i.e. source in the hands of her husband. If the Id. AO is not satisfied with the explanation/documentation submitted by the assessee in relation to her husband source, the revenue has all the power and wherewithal to tax her husband. 5.4 It was further submitted that he said explanat....
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....e assessee at all, is not required to be proved by the assessee. The addition has been made merely on the basis of suspicion, without any iota of evidence to even lead to the fact that the amount received as gifts were actually the assessees' income only. This cannot be the basis of making an addition under section 68 in the present case." 5.7 It was further submitted that with respect to explanation of source of source in the case of any assessee, first proviso has been inserted under Section 68 only w.e.f 1/4/2023 by the Finance Act, 2023 and no such provisions stood before that. 5.8 It was further submitted that without prejudice to above, even when the assessee had presented the parties (intended buyers) before the Id. AO with whom her husband have entered into an agreement, the Id. AO presumptively rejected their explanation on the ground that there is a time gap in the cash withdrawal and cash given to assessee's husband by such parties by stating that cash may have been used for any other purposes. 5.9 It was submitted that both Shri R K Goel as well as Shri Krishan Joshi have got their statements recorded before the Id. AO during the assessment proceedings ....
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.... treated as income from undisclosed sources u/s 69 of the Act in the hands of the assessee. The AO rejected the explanation of the assessee on hyper technical basis which is not acceptable. We reach to a conclusion that the AO made addition without any legal and justified reason which was rightly deleted by the CIT(A). (Page No. 1-8 of the Case Law Paper Book) ● In the case of ACIT Patiala vs. Sh. Joginder Paul (ITA No. 734/Chd/2014), the Hon'ble Chandigarh Tribunal opines that the learned Commissioner of Income-tax (Appeals) has correctly decided the issue because admittedly the assessee had disclosed the cash deposited in the assessment year 2007-08 and 2008-09. This amount was surrendered during the search and tax has been duly paid and the assessed income includes this amount of surrender. Further, cash is duly reflected in the wealth-tax return. Once the fact of having cash deposited by the Revenue during wealth-tax assessment proceedings, then later on the Revenue cannot challenge the existence of cash, therefore, we find nothing wrong with the order of the learned Commissioner of Income-tax (Appeals) and we confirm the same. (Page No. 9-14 of the Case Law ....
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....discussion, we are of the opinion that though the agreement to sell is not registered, the vendee can seek decree of specific performance on the basis of unregistered agreement to sell in accordance to law as laid by the Hon'ble Delhi High Court in Devinder Singh Vs. Hari Singh (decision on 26.04.2017) and Hon'ble M.P. High Court in Akshay Doogad Vs. Dr. Laxmanrao Dhole (decision on 18.08.2015). So as discussed in para 5 & 6 supra, in the facts and circumstances of the case, we allow the appeal of the assessee and direct grant of exemption u/s. 54 of the Act." 5.14 Even as per the SLP no. 14884/2022 between R. Hemalatha vs. Kashthuri decided on 10/4/2023, Hon'ble Supreme Court held as under: "13. Under the circumstances, as per proviso to Section 49 of the Registration Act, an unregistered document affecting immovable property and required by Registration Act or the Transfer of Property Act to be registered, may be received as evidence of a contract in a suit for specific performance under Chapter-ll of the Specific Relief Act, 1877, or as evidence of any collateral transaction not required to be effected by registered instrument, however, subject to Section....
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....essee's husband and the intended buyers could not enter into agreement and furthermore such cash withdrawn by the intended buyers was not available for entering into an agreement to sell, with the assessee's husband. Thus the said additions are requested to be deleted and necessary relief be provided to the assessee. 6. Per contra, the ld DR has vehemently argued the matter and relied on the findings of the lower authorities and our reference was drawn to the relevant findings as contained in para 5.1.3 to 5.1.8 of the impugned order and the contents thereof read as under: "5.1.3 All the facts and circumstances related to the impugned addition of Rs. 10,00,000 are duly considered. The appellant had claimed that out of the total amount of Rs. 14,15,000 cash found in the locker during the CBI Search, the source of Rs. 10,00,000 was cash received from her husband Shri Gourav Bhalla who had taken the amount from two persons viz. Shri R.K. Goel and Shri Krishan Joshi (for purchasing Land) Details & Sources of Cash: Sr. No. Details of Cash Weight (Approx.) 1 Own Rs. 45,000/- 2 Received from husband for advance Rs. 10,00,000/- 3. ....
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....lf serving documents from related person which was only an afterthought of the assessee and her family members to come out of the difficult situation. 5.1.6 In the background of the above facts and discussion made supra, the Ld. AO had to conclude and rightly so that the so called agreement dated 26.07.2016 (as the relevant parties failed to furnish any 'Sale Deed' even after lapse of two years to prove that the land agreement was genuine) was nothing but cooked up story. It was further observed by the Ld. AO that the husband of the assessee was well aware that he could not enter into an agreement to sell with non-Himachali in view of the prevailing laws in this regard. 5.1.7 In view of Ld. AO it further strengthened the view of the department that the family members of the assessee had manipulated documents to save her from difficult situation. Also, the agreement was not on Judicial Stamp Paper and was also not Notarized. Ld. AO further, observed that had it been notarized the real/actual date of the agreement could have been easily ascertained. 5.1.8 Thus, the Ld. AO had to conclude that by creating a sham agreement on plain paper, the assessee....
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....e assessee's husband in their affidavit and which has been subsequently affirmed and verified in their statement recorded during the course of assessment proceedings and sufficient nexus has been established between the availability of funds, withdrawal and payments, the onus placed on the assessee is sufficiently discharged. Secondly, regarding non-execution of the sale deed, it is an admitted fact that the sale deed couldn't be executed for want of the requisite regulatory approval, however, the same cannot be a basis to question the agreement to sell where both the parties have appeared and confirmed the factum of entering into the said agreement and factum of ownership of land in name of the husband of the assessee not been disputed. In light of aforesaid discussions, we find that there is no legal and justifiable basis to sustain the addition in the hands of the assessee as she has sufficiently explained the source of cash so found in her locker duly supported by documentation placed on record. In the result, the addition so made is hereby directed to be deleted and the ground of appeal so taken by the assessee is allowed. 8. In Ground No. 2, the assessee has challe....
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.... jewellery contained in the locker belongs to any other than Smt. Jyoti Bhalla assessee. Further she has failed to produce any bill and other valid documents in support of her claim. The explanation furnished by the assessee during the course of assessment proceedings are devoid of merits and therefore, are untenable. The onus to prove the genuineness and source of the jewellery found is upon the assessee. 4.4 It is also brought on record that as per the appraisal report of CBI authorities received from the Investigation Wing the jewellery valuing to Rs. 35,26,000/- was seized out of the total jewellery valuing Rs. 49,98,000/- found in the locker. The assessee was already given benefit of CBDT's Guidelines relating to seizure of jewellery in respect of married lady and thus jewellery for the balance amount of Rs. 35,26,000/- has been seized. Therefore, keeping in view of the above facts it is held that value of jewellery to tune of Rs. 35,26,000/- (Seized by the CBI Authorities) has been acquired by the assessee from undisclosed sources. 4.5 Accordingly, an addition of Rs. 35,26,000/- is made to the total income of the assessee for the A.Y. 2017-18 by....
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....ndisclosed income in jewellery. When challenged before the CIT (Appeals), it deleted the entire amount by elaborate discussion of the issue. It was during the course of the search that such jewellery has been found at the residence of the assessee. The statements of different family members were recorded. The confirmation/affidavit of the father, mother, wife of the assessee claiming jewellery were also recorded. In such background, the CIT (Appeals) noted that the jewellery belonged to different family members and it also relied on a circular of the CBDT, which permitted customary owning of such jewellery by the ladies. Resultantly, it deleted the entire amount. When challenged before the Tribunal, it concurred with the findings of the CIT (Appeals) by briefly holding that out of the total disclosure made for the block period by the assessee of Rs. 2.76 crore, the remaining jewellery was covered by the Board's Circular and was already reflected in the books of accounts. We see no reason to entertain this issue as we are convinced by the reasonings given by the CIT (Appeals) at length and also the logic assigned by the Tribunal. In any case, this being predominantly th....
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.... weight of jewellery is valued at Rs. 35,26,000. It is pertinent to mention here that the CBDT guidelines speaks about the weight and not the value. Reference was drawn to the locker inspection memo wherein it was stated that 1541 grams of gold items were found in locker, and the valuation report of jewellery is also enclosed herewith at Page No. 33-34 of the Paper Book wherein as against the value of Rs. 49,98,732/- net weight of 1539.284 grams have been mentioned and it was submitted that this 1539.284 grams pertains both to Gold as well as Diamond Jewellery as stated in the valuation report. It was submitted that at page 2 of the valuation report, it has been mentioned that items mentioned at S. No. 1 to 6 have not been seized (valuing at Rs. 1472753/-) and items no. 7 to 19 have been seized (valuing at Rs. i.e. approx .. 35.26 lakhs) and the comparison thereof is as under: Net weight of items mentioned at S. No. 1 to 6 stood at 259.366 grams 14,72,753/- Net weight of items mentioned at S. No. 7 to 19 stood at 1279.918 grams 35,25,979/- Total 1539.284 grams 49,98,732/- 10.4 It was submitted that what has been not seized weigh only 259.366 grams and ....
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....at the jewellery to the extent specified in instruction should be treated as explained jewellery in the hand of searched person. It was submitted that keeping in mind the high status and customary practices prevailing in one's community, various courts have held that excess jewellery (more than the prescribed limit as per clause (ii) of Board's Instruction no 1916 dated 11/05/1994) found during the course of search will not be considered as unexplained. It has been held that married ladies receiving jewellery in the form of 'streedhan' during her long- married life on various occasion like birth of child, birthdays, marriage anniversaries, etc., and accumulated over a period of years are to be excluded. In support, reliance was placed on the following decisions: ● Delhi High Court in the case of Ashok Chaddha [2011] 14 taxmann.com 57 wherein the Hon'ble High Court has accepted the jewellery of 906.60 grams in the case of married lady even without documentary evidence. The court stated that collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. The court has held that it is a normal custom for woman to re....
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....ge and subsequent marriage. 10.9 It was accordingly submitted that keeping in view the above circular issued by CBDT as well as the case laws justifying the same, the jewellery seized by the department is within the permissible limits of jewellery holdings as prescribed in the CBDT Instructions and the additions may please be deleted. 11. Per contra, the ld DR has vehemently argued the matter and relied on the findings of the lower authorities and our reference was drawn to the relevant findings as contained in para 5.2.3 to 5.2.8 of the impugned order and the contents thereof read as under: "5.2.3 All the facts and circumstances related to the impugned addition of Rs. 35,26,000 are duly considered. During the course of Search Operation conducted by the CBI on 12.09.2016 and as A.O. mentioned in the impugned Asst. Order as per the appraisal report of CBI authorities received from the Investigation Wing; the jewellery valuing Rs. 35,26,000 only was seized out of the total jewellery valuing Rs. 49,98,000 found in the locker of the appellant lady. Thus, the Ld. A.O. rightly held that the appellant lady was already given benefit of CBDT's Instruction quoted by the Ld....
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.... record. As per the valuation report, 1539.284 grams of jewellery valued at Rs 49,98,732/- has been found from the locker in the name of the assessee. The assessee has explained that the jewellery so found weighing 500 grams belongs to her, 300 grams belong to her husband and sons, 300 grams belong to her niece and 441 grams belongs to her father in law and to support her explanation, she has placed on record the affidavits signed by the family members wherein they have confirmed the ownership of the jewellery as belonging to them and the fact that the same was kept with the assessee for safe custody. We have gone through the affidavit of Shri Gaurav Bhalla, husband of the assessee, where he has confirmed having kept the jewellery belonging to him and his two sons weighing 300 grams in the locker of the assessee. Similarly, in the affidavit submitted by Shri Subhash Chander Bhalla, the father-in-law of the assessee, he has confirmed having kept the jewellery belonging to him and his late wife Smt Shanti Bhalla, weighing 300-400 grams in the locker of the assessee. Similar is the affidavit submitted by the niece of the assessee, Gauri Puri where she has stated that given that she ha....
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....ccasions and festivities to the assessee and his family members cannot be denied. The limited question for consideration is what is the reasonable quantity of jewellery which can be considered as acquired/received by the assessee over the period of time and which can be considered as explained for tax purposes. During the course of search, gold jewellery weighing 1979.92 gms and silver jewellery/items weighing 3229 gms were found in possession of the assessee. In her statement recorded u/s 132(4), the wife of the assessee (duly accepted by the assessee) has stated as under: 13. Basis the above statement, the search team has found the possession of the above jewellery by the assessee and other members of the family within the reasonable limits and has not carried any seizure of the aforesaid jewellery. The Assessing officer has however considered jewellery pertaining to assessee, his wife, two unmarried daughters and one son as explained as per minimum threshold prescribed by the aforesaid CBDT circular and the remaining jewellery stated to be belonging to married daughter and two grandchildren as unexplained. To our mind, once the assessee has stated on oath in her stateme....
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....hould also mean that to the extent of the aforesaid jewellery, found in possession of the assessee, even source cannot be questioned. In the present case, looking at the status of the family and the jewellery found during the search, it was held to be reasonable and therefore, the search team, in the first instance, did not seize the said jewellery and thus, in our view, subsequent addition is also not justified on the part of the Assessing Officer. Similar is the position regarding silver jewellery and items found in possession of the assessee in respect of which the source can be said to be duly explained. In this regard, useful reference can be drawn to Hon'ble Rajasthan High Court decision in case of CIT vs Satya Narain Patni 46 Taxmann.com 440 wherein it was held as under: "8. Thus, from the perusal of above chart as well as statements, it is abundantly clear that jewellery which has been found in possession of the family members is in accordance with customs and practice prevalent in the community and in accordance with status of the family. 9. On perusal of the order of CIT (Appeals) as also the Tribunal, we notice that the Assessing Officer had not giv....
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.... to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. 12. It is true that the circular of the CBDT, referred to supra dt. 11/05/1994 only refers to the jewellery to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family, need not be seized and it does not speak about the questioning of the said jewellery from the person who has been found with possession of the said jewellery. However, the Board, looking to the Indian customs and traditions, has fairly expressed that jewellery to the said extent will not be seized and once the Board is also of the express opinion that the said jewellery cannot be seized, it should normally mean that any jewellery, found in possesion of a married lady to the extent of 500 gms, 250 gms per unmarried lady and 100 gms per male member of the family will also not be questioned about its source and acquisation. We can take notice of the fact that at the time of wedding, the daughter/daughter-in-law receives gold ornaments jewellery and other goods not only from parental side but in- laws side as well at th....
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....amely; liquid, capital investments in firms/shares, one house property, commercial assets were exempt and even the limit of other assets was raised to 15 lacs (for the Assessment Year 1993-94 to 2009-10) and thereafter, by and large, even the assessee, who were furnishing returns prior to 01/04/1992, in view of the drastic amendment made under the Wealth Tax Act, chose not to file wealth tax return as there was no liability for furnishing wealth tax returns. That does not mean that whatever assets were there in their possession, not disclosed under the Wealth Tax Act, remained undisclosed. May be, later on, on account of increase in the gold/silver prices, value of gems/ stones, value of jewellery may have exceeded but that does not mean that if a person has not filed wealth tax return, then jewellery even to the said extent of 500 gms prescribed by r the aforesaid circular, became undisclosed. Admittedly, it is not the case of the revenue that the jewellery, so found, which has been prescribed hereinabove, was not admitted by the family members at the time of search. All the ladies in the family admitted that the jewellery found were all their own and some of the jewellery was lyi....
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....t since the benefit of reasonable jewellery to the extent of 850 gms. as per CBDT Instruction No. 1916 dated 11-05-1994 is already granted, therefore, to that extent, no further benefit can be granted. It is pertinent to note that CBDT Instruction No. 1916 dated 11-05-1994 has explained in case of gold jewellery found in the possession of the assessee during the course of search and seizure action and the assessee is not able to explain the same then the quantity prescribed under the said CBDT Instruction No. 1916 in respect of married female member, unmarried female member and male member of the assessee would be treated as a reasonable holding of jewellery on account of acquisition of that much jewellery on various occasions of marriages, other social & customary occasions as prevailing in the society. Therefore, reasonable possession of the jewellery as per the customs prevailing in the society is the basis for allowing the benefit of certain quantity of jewellery explained by the CBDT Instruction No. 1916 dated 11-05-1994 which means that the assessee need not to explain the source of jewellery found in his possession to the extent of specified quantity treated as reasonable po....