Income Tax Appellate Tribunal - Mumbai
Vijay Bahadur Singh, Mumbai vs Assessee on 3 August, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI 'F' BENCH
BEFORE SHRI D.MANMOHAN, VICE PRESIDENT &
SHRI T.R.SOOD, ACCOUNTANT MEMBER
I.T.A.NO.3967/Mum/2010 - A.Y 2004-05
Shri Vijay Bahadur Singh, Vs. Asst. Commissioner of I.T.,
501, Akhilesh Kunj, Vikhroli (E), Central Circle 10,
Mumbai 400 083. Mumbai.
PAN: AAFP 53362 Q
(Appellant) (Respondent)
Appellant by : Shri B. N. Rao.
Respondent by : Shri Subachan Ram, CIT DR
Date of Hearing: 03/08/2011
Date of Pronouncement: 10/8/2011
ORDER
Per T.R.SOOD, AM:
In this appeal, assessee has raised the following grounds:
1. The learned CIT(Appeals) erred in upholding the addition of Rs.15,395/- alleging lower withdrawal for house hold expenses.
2. The learned CIT(Appeals) erred in upholding the addition of Rs.37,152/- holding that the same for purchase of jewellery is not proved.
3. The learned CIT(Appeals) erred in upholding the addition of Rs.66,678/- based on the bills for jewellery found in the house of the appellant during the previous year relevant to the assessment year.
4. The learned CIT(Appeals) erred in upholding that jewellery valued at Rs.2,58,720/- was not explained as to sources. The CIT(Appeals) ought to have given due credit for the weight explained which was also forming part of jewellery disclosed under VDI Scheme.
2. Ground No.1: After hearing both the parties, we find that during assessment proceedings AO noted that assessee has shown withdrawal for house hold expenses including the withdrawal of the wife at Rs.1,04,605/-. On query, it was found that assessee has three children who were all school going. Since no further details were supplied AO 2 ITA NO.3967/M/2010 estimated the house hold expenses at Rs.1,20,000/- i.e. Rs.10,000/- p.m. and made an addition of Rs.15,395/-.
3. On appeal, action of the AO has been confirmed by the ld. CIT(A).
4. Before us Ld. Counsel of the assessee submitted that assessee along with his four brothers was living in the same complex in different flats but had a common kitchen and, therefore, the expenditure was on lower side. He further submitted that the two daughters who were going to St. Joseph's School were not required to pay any fees and, therefore, this also has to be considered and, accordingly, the expenditure incurred by the assessee was justified.
5. On the other hand, Ld. DR submitted that assessee had one son aged about 10 and two daughters aged about 16 and 14 and, therefore, withdrawal of Rs.1,04,605/- was on a very low side. No evidence was ever filed to show that no fees was payable on account of daughters. In fact, there is a scheme in the State of Maharashtra that girls are not required to pay any fees but such relief is available only in government schools and not in private schools. He also submitted that there is no force in the argument that four brothers living in four different buildings in the same complex can possibly have a common kitchen.
6. We have considered the rival submissions carefully and are unable to agree with the submissions of the Ld. Counsel of the assessee. In a modern world where nuclear family cultural is prevalent, 3 ITA NO.3967/M/2010 people are not likely to have a common kitchen even if they are staying in adjacent flats. In the case before us, admittedly, assessee along with his four brothers was staying in different buildings in the same complex, but it is practically not possible to have a common kitchen. Further, assessee has not been able to give any proof that no fee was payable for the two daughters going to school as it is a common knowledge that school fees are very high in Mumbai. Considering the over all facts the withdrawal estimated by the AO at Rs.10,000/- p.m. is more than reasonable and, therefore, we decline to interfere and reject this ground.
7. Grounds Nos.2, 3 & 4: These grounds are being considered together because Ld. Counsel of the assessee has made common arguments. Brief facts are that a search was conducted at the premises of the assessee along with other partners and other group concerns. During the search two bills for purchase of jewellery were found and in the statement recorded it was admitted that the jewellery has been purchased amounting to Rs.37,152/- and Rs.66,678/- out of the undisclosed income. When AO sought to add the same u/s.69B it was submitted that the said jewellery was purchased out of the income declared u/s.153A. However, this submission was rejected because assessee failed to produce any supporting documents or explanation in support of such purchases.
8. Before the CIT(A) it was mainly contended that said jewellery should be considered as covered by the declared income in the hands 4 ITA NO.3967/M/2010 of flagship entity of Shree Sai Stone Crushing Query a partnership firm where all members of the family were partners. The ld. CIT(A) adjudicated the issue vide para 6.4 which is as under:
"6.4 I have carefully considered the order of the Assessing Officer and the submission made by the appellant. I find that in respect of the above mentioned addition the contention of the appellant is not acceptable especially regarding the request for telescoping against the income of the firm I find that this request of the appellant is not at all tenable or acceptable as both the appellant and the firm in which he is a partner are different taxable entities. The application of undisclosed income as a source can only be set off against undisclosed asset or investment in the hands of the same appellant. No set off can be given in respect of undisclosed income declared by another appellant. The Income Tax Act does not recognize the concept of group assessments. Even for a moment if one considers the appellant's request, it is seen from the observation made by the Hon'ble Supreme Court in the case of Kale Khan Mohd. Hanif vs. CIT 50 ITR 1 S.C that the onus of proving the source of the asset found is on the appellant. In this case, besides making a general statement no evidence had been produced to link the said asset with the undisclosed income of the firm. Besides, it is to be kept in mind here that out of Rs.93320 worth of jewellery shown in the hands of the Mrs. Urmila Singh, the Assessing Officer has added only Rs.66,678/- worth as purchased from undisclosed income as the appellant had categorically stated so in his statement. Now the appellant is trying to take refuge referring to the films undisclosed income and the return of income filed by his wife and this cannot be accepted unless the appellant conclusively proves his case that jewellery identified as undisclosed by the Assessing Officer has a nexus with the income of the firm or with that declared in the return of income of his wife. As such on this ground also the appellant's contention fails. Therefore, the AO's order is upheld and the ground of appeal dismissed."
9. The next addition of Rs.2,58,720/- was made on the basis of excess jewellery found. The jewellery found during the search was as under:
a) Jewellery found during the search 1118 gms.
b) Jewellery appearing in balance sheet as on
31-3-98 Valued at Rs.320 per gm 489 gms.
c) Jewellery purchased in Assessment Year 167 gms.
Year 2004-05
d) Unexplained jewellery [a-(b+c) 462 gms.
e) Valuation of unexplained jewellery@ 560 gm.
As valued by valuer as on the day of search Rs.2,58,720 5 ITA NO.3967/M/2010 The AO was of the view that there is no explanation for excess jewellery found, therefore, same was added to the income of the assessee.
10. Before the ld. CIT(A) the submissions regarding availability of source from the undisclosed income declared in the hands of the partnership firm Shree Sai Stone Crushing Query was reiterated and it was submitted that telescoping should be done. Some additional evidence was also filed which was sent by the ld. CIT(A) to the AO for the remand report. The remand report was submitted, which was given to the assessee who in turn gave certain replies. Ultimately, the issue was adjudicated by the ld. CIT(A) vide following paras 7.7 to I have carefully considered the order of the Assessing officer arid the submission made by the appellant. On the request of the appellant, I have taken into consideration the assessment records of the firm Slid Sal Stone Crushing Quay and Others along with that of the other partners of the firm namely 1) Shri Shyam Bahadur Jalkaran Singh 2) Shri Krishna Bahadur Singh. The appellant has stated that the facts of the appellant's case regarding the issue of undisclosed jewellery Is similar to that of the case of the other partners mentioned above. In the case of Slid Shyam Bahadur Jaikaran Singh for Assessment Year 2004- 05 I find that the case has reached a finality and therefore it should be used as a reference issue. The facts of the above mentioned case are as under:
During the course of action under section 132 of the IS Act, 1961, jewelery was found. The Assessing Officer decided the issue against the appellant side order dated 31.3.2006. The order of the Assessing Officer was confirmed by the Id. ClT(A) vide his order dated 15.12.2006. The appellant preferred an appeal before the Hon'ble ITAT. who vide order dated 2yth)09 set aside the case to the tile of the Assessing Officer with directions. The Assessing Officer, I find. passed an order ul/ 143(3) rws 254 of the I.T Act, 1961 on 17.6.2009 acceptIng the explanation of the appellant and treated the jewelery as disclosed because
i) The weight of the jewelery disclosed in the balance sheet as on 31.3.98 declaring it under VDIS and after reducing the weight held was 853.4 gms.6 ITA NO.3967/M/2010
ii) Jewellery weighing 714.930 gins was found during the search operations and as it was fully covered by the amount of jewellery disclosed under VDIS
iii) There was no newly acquired or purchased jewellery.
7.8 The appellant has submitted that in the case of the appellant, the same logic should bö appied and addition made deleted. When the referred case is compared with that of the appellant, I find that there Is a material difference. In the appellant's case, I find that the jewellery found at 1118 grains is much mom than that declared under VDIS at 489 gins and finally appearing in the Balance sheet as on 31.3.98. Further, in the case of the appellant, there has been fresh purchase of jewellery in the year of 167 gms. The Assessing Officer in the assessment order has taken all this into consideration and arrived at the figure of Rs258720l- as unexplained jewellery adopting the value of Rs.560 per grain for 482 gms. as valued by the valuer on day of search. Therefore, the case of Mr S B J Singh will not apply to the appellant and this case has to be decided independently.
7.9 During the course of appellate proceedings, the appellant had submitted that while calculating the value of jewellery and deciding the Issue, the Assesalng4kej)as omitted to lake under consideration the value of jewellery at Rs.3,08,548/- purchased by the wife of the appellant in Assessment Year 2004-05 on 15.12.03 i.e. before the action u/s 132 and what had been declared by her in her return of income The appellant had considered Rs.3,06,9181- as representing 548 gms of jewellery and had submitted that the difference of 88 gms represents loss on account of estimation and changes effected in the jewellery. The appellant has also argued that the jewellery declared under VDIS should be valued at Rs.164.50 per gm and not Rs.320/- and if done so, the jewellery held would amount to 951 gms instead of 489 gms fully explaining the amount found during search. 7.10 I have considered the above two Issues. I find that the contention of the appellant to adopt the rate of @164.50 per gram cannot be accepted. In the valuation report submitted along with the VDIS certificate, I find that the average rate of valuation is at Rs.256 per gram.
However, a bill of Arora Bullion Corporation dt. 9.2S8 recording sale & gold ornaments by the wife of the appellant shows that a rate of Rs.361 per gram was applied. Therefore, I find that there Is no infirmly in the order of the Assessing Officer in adopting the rate of Rs.320 per gram. The action of the Assessing Officer Is 7 ITA NO.3967/M/2010 upheld as on that date the value was at around Rs.320 per gram.
7.11 Now coming to the jewellery purchased by the appellants wife as on 15.12.03. appellant states that 578 gms were purchased. However, no bills to substantiate the has been submitted. It has been stated that the value adopted is that which has been adopted by the Assessing Officer while valuing undisclosed jewellery. I am not inclined to accept this. For claiming the credit the appellant was required to prove conclusively that the jewellery purchased was 578 grams worth. Unless the evidence of actual purchase is submitted and nexus established that it Is the same jewellery as treated by the Assessing Officer as undisclosed, I find that benefit as asked by the appellant cannot be given. Alternatively too, if the appellant's version is accepted, it is seen that the total weight of the jewellery would exceed the amount found by 86 grams for which no acceptable reasons exists. The appellant has tried to explain the difference accruing by elating that the ladles indulged in changing the form of jewellery to suit fashion. However, it could not be explained as to which piece under went a form change or was exchanged. The jeweller's bill was also not produced to prove this. Besides, it could not be explained as to what necessitated a change in a piece of jewellery acquired and the appellant was unable to correlate the piece changed or exchanged with what was available in the sane assessment year. Therefore, I am inclined to agree with the Assessing Officer on this issue as per the observation made in the assessment order and the remand report that section 690 is clearly attracted In this case. Regarding the issue of telescoping as requested, I find that on this issue too the finding remain the same as mentioned earlier in the order In respect of the ground of appeal No.4. The addition made is therefore, confirmed and the ground of appeal dismissed.
11. Before us Ld. Counsel of the assessee made three fold submissions. His first submission is that the firm Shree Sai Stone Crushing Query was also searched in which all the four brothers were partners and ultimately in that case some undisclosed income was determined. Therefore, same was available in the hands of all the four brothers. He argued that basically telescoping should be done for 8 ITA NO.3967/M/2010 undisclosed jewellery found against the undisclosed income of the firm. In this regard he relied on the decisions of the Mumbai Bench of the Tribunal in the cases of DCIT vs. Sunil Umashankar Rungta [94 TTJ 329] and Jagmohan Singh Arora & Ors. Vs. DCIT [101 TTJ 682]. He also filed a chart along with the order of the CIT(A) in the case of the firm. The chart shows that ultimately undisclosed income declared by the assessee was Rs.58,47,847/- out of which only a cash deposit and employees deposits were also there and after reducing these items, net amount available was Rs.37,39,412/- which is available for creation of asset in the hands of the family members and thus telescoping should be allowed. Secondly, since addition has been made separately against the jewellery items purchased for which bills were found, therefore, credit against the same should be allowed while making over all addition. Thirdly, he submitted that the government valuer has valued the jewellery at a very high rate which is not justified in view of the rates given in the ready reckoner for the gold.
12. On the other hand, Ld. DR referred to various paras of ld. CIT(A)'s order and pointed out that all these arguments have already been duly considered and CIT(A) has given valid reasons for not accepting the same. Ultimately he supported the order of the CIT(A).
13. We have considered the rival submissions carefully. No doubt, principally concept of telescoping is applicable in case of search matter, but the same cannot be applied in the case of the assessee because the surplus income, if any, declared in the hands of the firm cannot be 9 ITA NO.3967/M/2010 allocated for personal assets. Before us only an order of the CIT(A) in the case of the firm has been filed and it is not clear whether assessee has preferred any appeal against that order before the Tribunal, therefore, the same order cannot be considered as final. Further it is not clear whether any credit has been taken by other partners or not and if assessee wanted to claim such credit, it was the duty of Learned Counsel to point out how the credit is available. Simply furnishing of a chart cannot lead to any conclusion. In any case, in the statement recorded during the search, it was clearly admitted that jewellery was purchased out of unaccounted income and nowhere was it stated that jewellery was purchased out of the income of the firm. The Ld. Counsel of the assessee though has filed a chart that undisclosed income of Rs.58,47,847/- was offered and after accounting for cash deposits a sum of Rs.37,39,412/- was available, but he has not filed any accounts or assessment order or referred to any para of the appellate order to show how this amount was available. A perusal of the appellate order in the case of the firm shows that apart from cash amounting to Rs.10,86,435/- held by various persons, some of the other major additions are on account of disallowance of expenses claimed against undisclosed sales, labour expenses and other expenses amounted to Rs.22,26,812/-, Rs.1,84,000/- and Rs.18,000/- respectively. Thus, major additions have been made on account of disallowance of expenditures and, therefore, there is no question of availability of cash. In any case, as observed earlier, no specific details have been filed that 10 ITA NO.3967/M/2010 out of which particular addition the amount was available, hence telescoping cannot be allowed.
14. As far as the decisions of the Tribunal in the cases of DCIT vs. Sunil Umashankar Rungta and Jagmohan Singh Arora & Ors. Vs. DCIT [cited supra] are concerned, same are distinguishable on their own facts and there is no need to deal with those facts.
15. We further find that there is no force in the submission that credit has not been given against the purchase of jewellery for which bills were found. We have already reproduced the chart showing the addition for balance of jewellery which read as under:
a) Jewellery found during the search 1118 gms.
b) Jewellery appearing in balance sheet as on
Valued at Rs.320 per gm 489 gms.
c) Jewellery purchased in Assessment Year 167 gms.
2004-05
d) Unexplained jewellery [a-(b+c) 462 gms.
e) Valuation of unexplained jewellery@ 560 gm.
as valued by valuer as on the day of search Rs.2,58,720 From the above it is clear that out of the total jewellery of 1118 gms, 489 gms. was held to be explained because same was taken in the balance sheet. Further, credit for jewellery of 167 gms. purchased has been specifically allowed and only jewellery of 462 gms. has been treated as unexplained. Therefore, the second submission is not maintainable because specific credit has already been given for jewellery already purchased.
16. As far as the last submission regarding valuation is concerned, the same can also not be entertained because copy of valuation report itself was not filed to show that which particular item has been wrongly 11 ITA NO.3967/M/2010 valued. It is a common knowledge that sometimes gold jewellery is embedded with various precious stones and value would depend on the same. Simply the rate of gold cannot be compared on a particular date. Therefore, in the absence of valuation report and specific objection regarding valuation of a particular item, this claim cannot be entertained. In view of these facts, we are of the view that ld. CIT(A) has correctly decided the issue and confirm his order.
17. In the result, appeal is dismissed.
Order pronounced in the open Court on this day of 10/08/2011.
Sd/- Sd/-
(D.MANMOHAN) (T.R.SOOD)
Vice President Accountant Member
Mumbai: 10/08/2011.
P/-*