Income Tax Appellate Tribunal - Mumbai
Vinita S. Jhunjhunwala, Mumbai vs Assessee
vk;dj vihyh; vf/kdj.k ^^,Q^^ U;k;ihB eqacbZ esaA
IN THE INCOME TAX APPELLATE TRIBUNAL "F" BENCH, MUMBAI
Jh vkj-
vkj- lh-
lh- 'kekZ] ys[kk lnL; ,oa Jh vfer 'kqDyk]
yk] U;kf;d lnL; ds
le{k
BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER
AND SHRI AMIT SHUKLA, JUDICIAL MEMBER
vk;dj vihy la[;k/ITA NO.8837/Mum/2010
¼fu/kkZj.k o"kZ@Assessment year 2008-09
Mrs. Vinita S. Jhunjhunwala Assistant Commissioner of
Flat No. 41, 4th Floor, cuke@ Income Tax,
Meghna Apartment, S.V. Road Vs. Central Circle -11, Mumbai
Santacruz (W), New CGO Building,
Mumbai - 400054. M.K. Road, Mumbai.
PAN:- ABFPJ7607L
vihykFkhZ@Appellant izR;FkhZ@Respondent
vihykFkhZ dh vksj ls@Assessee by Shri Prakash Jhunjhunwala
izR;FkhZ dh vksj ls@Revenue by Shri O.P. Singh
lquokbZ dh rkjh[k@Date of hearing 20-01-2014
?kks"k.kk dh rkjh[k@Date of pronouncement 20-01-2014
vkns'k@ORDER
PER R.C. Sharma, AM.
This is an appeal, filed by the assessee against the order of CIT(A) dated 12.10.2010 for A.Y. 2008-09, in the matter of order passed u/s 143(3) of the IT Act. Following grounds have been taken by the assessee:-
1. The Ld. Commissioner of Income Tax (Appeals) erred inconfirming the addition of Rs. 46,59,270/- on account of unexplained jewellery.-1-
2. The Ld. Commissioner of Income Tax, ( Appeals) further erred in confirming the addition of Rs. 1,34,111/- on account of interest paid of Rs. 1,34,111/-
3. The appellant craves lead to add to, alter of modify the above grounds of appeal, at the time of hearing.
2. Rival contentions have been heard and record perused. Facts in brief are that assessee is a resident individual engaged in share trading. She has disclosed income under the head salary, business, capital gains and income from other sources. She is a director of M/s Jhunjhunwala Distributors (P) Ltd. and also a trader and investor in shares. Search and seizure action u/s 132 and survey action u/s .133A of the Act were carried out on 13/3/2008 in the premises of Shri Sudhir Jhunjhunwala group and their associates. During the course of search and seizure action an assessee's premises at 41, 42, Meghna Apartments, S.V. Road, Santacruz (W), Mumbai - 400 054 gold and diamond jewellery of assessee's family were found and part of the same were seized. The Assessing Officer observed that jewellery valued at Rs. 47,67,270/- were found in the bedroom of the assessee on 13/3/2008.
3. It was explained by the assessee that jewellery was found in the bedroom of Mr. Sushil Jhunjhunwala (her husband) is not required to be added in her hand. It was further contended that during the course of search assessee had not owned up the entire seized jewellery and no statement u/s 131 or u/s 132(4) was ever recorded. It was also explained -2- that some of the jewelleries belonged to her daughter Miss Ritika Jhunjhunwala who has also owned the jewellery and had also filed her wealth tax return much prior to the date of search. However, AO did not agree with the assessee's contention to the effect that entire jewellery in terms of weight were duly furnished in the respective returns, in view of the fact that assessee could not match each and every item of jewellery so found with the jewellery offered by assessee in her wealth tax retruns etc. Accordingly addition of Rs. 46,59,270/- was made on account of jewellery so found during course of search. AO also made disallowance on account of interest expenditure.
3. By the impugned order CIT(A) confirmed the action of the AO by observing that assessee has not furnished return of income of A.Y. 2007- 08 till the date of search, even though due date of filing of return has already expired. The CIT(A) also observed that valuation of jewellery has not been shown in the balance sheet of assessee and that assessee's family were not filing wealth tax return since last 15 years and that assessee was not in a position to show purchase bills and any purchase invoices. The CIT(A) not only confirmed the disallowance of interest but also directed to enhance the assessment by directing the AO to make further disallowance as per Rule 8D r.w.s 14A of IT Act.
4. Against the above order of CIT(A) the assessee is in appeal before Tribunal.
-3-5. Shri Prakash Jhunjhunwala appeared on behalf of the assessee and contended that following reconciliation statement was filed before the lower authorities:-
Reconciliation of Gold and Diamond Jewellery Jewellery found in search Gold Diamond Gold (attached Rs. 30,99,495/- Rs. 15,59,775/- with diamons ) 3025.40 gms 57.14 cts 405 gms ========= ======== ========== Disclosed by appellant and her family member
a) As per valuation report of 1732.00gms 34.80cts 154.20gms Johri Rajkumar Bhandari dated 12/9/1986 disclosed in W.T. Returns till 31/3/1992
b) Gold jewellery acquired by 1222.00gms -- --
assessee during F.Y. 2006-07 offered to tax
c) Disclosed in Balance Sheet of -- 4.66cts 0.80gms Sushil Jhunjhunwala (HUF) -
31/03/1995
d) Purchased by Miss Ritika S. -- 70.50cts 250.00gms Jhunjhunwala (daughter) in F.Y. 2006-07 [ 70.50 cts] Stones attached to jewellery ( Rs. 71.40gms -- --
73150/-
------------- -------------- ---------------
Total 3025.40gms 109.96cts 405.00gms
=========== ========== ==========
As per Ld AR, CIT(A) erred in ignoring the gold jewellery of Rs. 30,99,495/- (3025.40 grams), by ignoring the below stated facts;-
a) The appellant disclosed the gold jewellery weighing 1732 grams in her Wealth Tax returns of 13/3/1986 to 31/3/1992 filed alongwith valuer's report dated -4- 19/3/1986. The many items stated in valuation report of M/s Rajkumar Bhandari dated 19/03/1986 matches with the jewellery seized by the department.
b) The jewellery acquired by appellant during A.Y. 2006-07 of Rs. 12,19,000/- had already been offered to tax under "Income from other sources" in A.Y. 2007-08. The Ld. AO, in scrutiny assessment, had considered such additional income of Rs. 12,24,000/- in A.Y. 2007-08.
6. As regards diamond jewellery of Rs. 15,59,775/- (57.14 carats), CIT(A) erred in ignoring following vital facts.
a) The appellant disclosed the diamond jewellery weighing 34.80 carats in her Wealth Tax returns of 31/3/1986 to 31/3/1992 filed alongwith valuer's report dated 19/3/1986. The many items stated in valuation report of M/s Rajkumar Bhandari dated 19/3/1986 matches with the jewellery seized by the department;
b) The diamond jewellery valuing of Rs. 9,05,000/- (70.50 carats) had been owned by Miss Ritika Jhunjhunwala (daughter). The said Miss Ritika Jhunjhunwala also filed her confirmatory letter accepting the ownership of diamond jewellery of 70.50 carats and filed copies of -5- the purchase bill, bank statement evidencing cheque paid before search and IT return on record;
7. On the other hand Ld. DR relied upon the orders of lower authorities and contended that assessee could not match the jewellery during the course of search with the jewelleries acquired by her and shown in the wealth tax returns filed by her.
8. We have considered the rival contentions and have carefully gone through the orders of authorities below and found from record that the assessee had filed valuation report of jewellery as prepared by valuer Johari Rajkumar Bhandari dated 12.09.1986 which was disclosed in WT returns till 31/3/1992 and the same amounted to 1732.00 gms. The assessee has also offered gold jewellery weighing of 1222.00 gms during Financial Year 2006-07 which was also offered to tax as income from other sources. Stones attached to jewelleries which was acquired by assessee during Financial Year 2006-07 was also offered to tax as income from other sources and which amounted to 71.40 carats. Thus total gold jewellery of 3025.40 grams having value of Rs. 30,99,495/- was explained by assessee. In respect of diamond of Rs. 15,59,775/- found during the course of search, the assessee has furnished the valuation report of Johari Rajkumar Bhandari dated 12.09.1986 which was disclosed in the WT returns till 31.03.1992, comprising of diamond of 34.80 carats, gold (attached with diamond) 154.20 gms. The assessee has also furnished the details regarding diamond jewellery disclosed in the balance sheet of Sushil Jhunjhunwala (HUF), as on 31.03.1995 equal to 4.66 carats of -6- diamond and 0.80 grams of gold. Evidences have also been furnished with regard to diamond of 70.50 carat purchased by Miss. Ritika Jhunjhunwala in the Financial Year 2006-07 which was also having gold of 250.00 grams. Thus out of total diamond jewellery found, the assessee has furnished evidence with respect to diamond of 109.96 carats and gold of 405.00 grams.
9. Thus as per reconciliation statement, the assessee has tried to explain the jewellery fond during the course of search which was duly returned by the assessee as well as by the other members of her family in their Wealth Tax returns or by way of documentary evidence. Merely on the basis that the description of the jewellery fond during the course of search was not matching with the jewellery described by assessee in her returns as well as the bills of purchase of such jewellery by Miss Ritika Jhunjhunwala, the authorities below was not justified in adding the entire amount of jewelleary as undisclosed income of the assessee. Ld. AR have relied on various judicial pronouncements of co-ordinate bench of Tribunal wherein it was held that no addition is warranted on account of jewellery found during the course of search, merely because description of jewellery has not matched with the description already returned by the assessee or shown in the hands of other members of the family. In the case of DCIT Vs. Raj Kumar Agarwal 102 TTJ 991 (Jd), it was observed that where gold jewellery declared by all family members, and when there is nothing on record to show that gold jewellery belonging to other family members residing in the same premises was kept in another place and hence the same having been found in assessee's rooms cannot be -7- disbelieved. In the case of Gaurishanker Omkarmal Vs. ITO 37TTJ 353 (AHD), it was observed that where the proof regarding conversion of jewelley found during the course of search is not found, the jewellery disclosed by the assessee under the Voluntary Disclosure Scheme cannot be disbelieved. It was observed that when the jewellery disclosed under the Voluntary Disclosure Scheme not found during the course of search might have been sold and that too will constitute a valid source for explaining the source of acquisition of other jewelleries which was found during the course of search, accordingly, jewelleries disclosed in the return, cannot be ignored while making addition of other jewelleries found which do not match with the jewellery returned by the assessee. In the case of DCIT Vs. Arjun Das Kalwani 102 TTJ 977 (Jd), it was observed by the bench that simply because the items of ornaments do not tally with the items shown in the inventory prepared at the time of earlier search and the assessee could not lead evidence of conversion or remaking of jewellery, it cannot be said that the jewellery to this extent is unexplained.
10. In view of judicial pronouncements cited by Ld. AR and discussed hereinabove, we can safely conclude that when quantity of jewellery disclosed by the assessee is same as the quantity of jewellery found during the course of search, no addition is warranted merely because the description is not matching. It is a vital fact that ladies get jewellery converted as per latest design and for which even the concerned man in the family is being not informed. In these circumstances merely because of conversion of such jewellery, cannot be made basis for making -8- addition, when the jewellery disclosed by the assessee either in its own hand or in the hands of their family members prior to the date of search is equal to or more than the jewellery found during the course of search.
10. In view of the above discussion, matter is restored back to the file of AO with the direction to examine the reconciliation statement furnished by assessee and if the AO finds that the disclosed jewellery was equal to or more than the jewellery found during the course of search in terms of weight, no addition is warranted irrespective of the fact that assessee could not match the description of jewellery so found with respect to the jewellery already returned or disclosed in her hand or in the hands of other family members. Accordinlgy, AO is directed to re- adjudicate the matter afresh in terms of our above observations. We direct accordingly.
11. As regards the disallowance of interest u/s 14A, we find that disallowance has been made with respect to the interest on the borrowed funds utilized for interest free investment in the form of shares. The AO observed that borrowed funds has been used mainly for investment in shares, income from which is not included in taxable income. The assessee was asked to furnish the working of disallowable amount u/s 14A 1, 2 &3, r.w.r 8D. However no details was furnished by the assessee and it was submitted that no dividend income was earned. After applying Rule 8D, the AO computed the disallowance at Rs. 1,34,111/-.
-9-12. We do not find anything wrong in the calculation made by AO for disallowing the expenditure debited to the P&L Account which was attributable to income not liable to tax. Accordingly we confirm the disallowance of Rs. 1,34,111/-.
9. In the result appeal of the assessee is allowed in part for statistical purposes.
Order pronounced on 20 /01/2014
Sd/- Sd/-
(Amit Shukla) (R.C. Sharma)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai dated 20/01/2014
SKS Sr. P.S
Copy to:
1. The Appellant
2. The Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. The DR, "E" Bench, ITAT, Mumbai
By Order
Assistant Registrar
Income Tax Appellate Tribunal,
Mumbai Benches, MUMBAI
- 10 -