Income Tax Appellate Tribunal - Indore
Poojashree Chouksey, Bhopal vs Acit-2(1), Bhopal, Bhopal on 29 January, 2020
आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER
AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER
ITA No.572/Ind/2018
Assessment Year 2010-11
Ms. Pooja Shree Chouksey, Asstt. Commissioner of
31, Shyamala Hills, Vs. Income Tax-2(1),
Bhopal (M.P) Bhopal
(Appellant) (Respondent )
PAN No.AKXPC3728Q
Revenue by Shri S.B. Prasad, Sr.DR
Assessee by S/Shri Hitesh Chimnani & Yash
Kukreja, CAs
Date of Hearing 27.1.2020
Date of Pronouncement 29.1.2020
ORDER
PER MANISH BORAD, AM
The above captioned appeal filed at the instance of the assessee pertaining to Assessment Year 2010-11 is directed against the orders of Ld. Commissioner of Income Tax (Appeals)-1 (in short 'Ld.CIT(A)'], Bhopal dated 22.5.2018 which is arising out of the order u/s 143(3) r.w.s. 153A/143(3) of the Income Tax Act 1961(In short the 'Act') dated 16.12.2011 framed by ACIT-2(1), Bhopal.
2. The assessee has raised following grounds of appeal; Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018
1. That on the facts and in the circumstances of the appellant's case and in law, the Ld. CIT(A) upholding the addition of Rs. 6,51,090/- out of total addition of Rs. 9,51,090/- made by Ld. AO on account of jewellery found during search.
The appellant craves leave to add, alter or amend the aforesaid ground of appeal before or at the time of hearing.
3. Brief facts of the case as culled out from the records are that the assessee is an individual. The assessee has filed the original return of income on 28.03.2011 declaring total income of Rs.6,70,502/-. A search u/s 132 was carried out at the residential premises of the assessee on 23.7.2009. The case for Assessment Year 2009-10 and 2010-11 were taken up for compulsory scrutiny. In Assessment Year 2010-11 addition of cash deposit of Rs. 1,47,000/- in the bank account and addition of Rs.9,51,090/- in respect of jewellery found. Assessment u/s 143(3) for A.Y. 2010-11 was completed at Rs. 17,68,590/-. Aggrieved assessee preferred an appeal before Ld. CIT(A) and partly succeeded.
4. Now the assessee is in appeal before the Tribunal against the addition of Rs.6,51,090/-.
5. Ld. Counsel for the assessee argued referring to the following submissions:-
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Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 • Jewellery belonging to the assessee was found during the course of search (680 grams approx.- 580 gms gold jewellery and 117.63 gms diamond jewellery - pg 31 of PB) • The Ld. AO treated the entire jewellery as unexplained investment and made addition on account of same u/s 69 of the Income Tax Act 1961 • The assessee has filed affidavits herself as deponent and also of her 2 aunts, all stating the fact that she received jewellery as a gift from her aunts and maternal grandmother on various occasions. (Page no. 32, 33, 34 a/the PE.) (225 gms + 175 gms + 300 gms = 700 gms aprox. Over the years) • None of the deponents have been discredited by the department by way of cross examination • If the deponent is not cross-examined by the authorities then mere rejection of the affidavit filed by the assessee is not justified [Mehta Parikh & Co. vs. CIT 30 ITR 181 at 187 (SC)! • Assessee is a member of an affluent household and hence the amount of jewellery found is a not excessive or disproportionate given the prestige and prominence of her family members and the fact that she was 19 years old at the time of search • Since the jewellery found during the course of search is very much reasonable (even though in excess of the limit prescribed as per CBDY circular) the addition made on account of same is uncalled for [Vibhu AganvaL vs. DCIT (93 taxmann.com 275 (Delhi- Trib))/ [Ashok Chaddha vs. ITO 14 taxmanll.com 57 (Delhi) In absence of any further evidence and since the ability of the assessee to produce further evidences is constrained by the circumstance of the case the contention of the assessee may very kindly be accepted.3
Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018
6. Ld. Departmental Counsel vehemently argued supporting the orders of lower authorities.
7. We have heard rival contentions and perused the records placed before us. The sole grievance of the assessee is against the finding of Ld. CIT(A) confirming the addition for unexplained jewellery at Rs.9,51,090/- found during the course of search carried out u/s 132 of the Act on 23.7.2009. During the course of search jewellery valued at Rs. 9,51,090/- (550 grams) was found and seized. Though it was contended by the assessee that she received them as gifts from maternal side of relatives from her birth onwards and on many ceremonial as per culture but it was not sufficient to convince the Ld. A.O who proceeded ahead with the addition for total jewellery valued at Rs.9,51,090/-. When the issue came up before the Ld. CIT(A) who in view of the guidelines issued by Central Board of Direct Taxes Instruction No.1916 dated 10.05.1994 held that the possession of the gold jewellery weighing 250 grams was quite normal for an unmarried girl in an Indian family. Ld. CIT(A) accordingly gave relief of Rs.3,00,000/- and sustained the remaining addition. Ld. CIT(A) also did not give any weightage to the affidavits filed by the assessee which were issued by the 4 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 assessee's relatives who have gifted gold jewellery to the assessee on various auspicious occasions. Ld. CIT(A) found them to be after thought as no such information was given during the course of search.
8. On perusal of the records and the submissions given by the Ld. Counsel for the assessee as an officer of the court, that during the course of search no specific question was asked to the assessee about the source of jewellery. In the affidavit given by the assessee on page 32 of paper book the assessee has claimed to have received jewellery weighing approximate 700 gram as gift from her late grand mother Smt. Kalawati Gupta, two maternal aunts Smt. Laxmi Gupta and Smt. Saojini Chouskey. Further on pages 33 & 34 of the paper book affidavit given by Smt. Laxmi Gupta and Smt. Saojini Chouskey are also filed, both of whom are senior citizens and were employed as lecturers having sufficient accumulated savings. Smt. Laxmi Gupta gifted 225 grams of gold jewellery and Smt. Saojini Chouskey has gifted 175 grams of gold jewellery. The contention of the Ld. Counsel for the assessee referring to various judgments is that guidelines given by CBDT Instruction No. 1916 dated 10.5.1994 should not be applied strictly and Lower 5 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 Authorities should have taken a lenient view looking to the status of the family and the Indian customs where gifting of gold jewellery is very common. The above contention of the Ld. Counsel for the assessee needs to be examined in the light of judicial pronouncements.
9. We find that the Hon'ble Delhi High Court in the case of Ashok Chaddha Vs. Income Tax Officer (2011) 14 taxmann.com 57 held as under:-
"3. Learned Counsel for the respondent on the other hand relied upon the reasoning given by the authorities below. After considering the aforesaid submissions we are of the view that addition made is totally arbitrary and is not founded on any cogent basis or evidence. 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 6 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 revenue thereby deleting the aforesaid addition of Rs. 3,87,364.
Appeal is allowed in the aforesaid terms".
10. We also find that the Hon'ble I.T.A.T. Delhi Bench in the case of Vibhu Aggarwal Vs. DCIT (2018) 93 taxmann.com 275 held as under;
" 6.. We have heard both the parties and perused the records, especially the orders of the authorities below and the case laws referred by Assessee's counsel. We find that in this case a search & seizure operation under section 132 of the IT Act was conducted at the business premises of M/s Best Group and as well as in the residential premise of the Directors on 28.03.2011, in consequence to which the case of the assessee was taken up for scrutiny. The AO called for an explanation during the assessment proceedings explaining all the items of jewellery found during the course of search. In reply, the assessee explained that the jewellery belongs to the assessee's parents, their HUF, assessee's family members and his HUF. Most of the jewellery items were inherited from his grandparents and received as gifts on the occasion of marriage and birth of his children and also gifts were received on marriage anniversary, birthdays of children etc. and there was no occasion to file the wealth tax as the net wealth did not exceed the minimum limit prescribed under the Wealth Tax from period to period in each case, therefore neither the assessee nor his family members were assessed to wealth tax. The AO has completed the assessment by making an addition of 40,73,373 on account of unexplained investment in jewellery. The total jewellery found during the course of search was 2531.5 gms, out of which the AO has given assessee the benefit of 950 gms, as per the CBDT Instruction No. 7 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 1916 on account of wife and two children of the assessee. We further note that in appeal Ld. CIT(A) has further allowed the benefit of 600 gms. Of jewellery on account of mother and father of the assessee, holding that the same was allowable to the assessee as per the CBDT Instruction No. 1916, but however, sustained the balance addition made by the AO, vide order dated 22.12.2014, treating the balance jewellery weighting 1050 gms of gold as unexplained, without appreciating the fact that assessee belongs to a wealthy family where gifting of jewellery possessed by each of the family members; all the family members as well as the HUF were assessed to tax separately; the assessee has been married from the past 18 years, and also had two children, the jewellery was gifted/inherited to the assessee and his wife by their parents and grandparents and other relatives at the time of their marriage, and also on several occasions after that, such as birth of their two children, marriage anniversaries etc. Also some of the jewellery was purchased by assesse's wife out of the cash gifts received by her from the relatives on various occasions. We also observe that that the CBDT Instruction No. 1916 dated 11.5.1994 vide para no. (iii) stipulates as under:
"The authorized officer may, having regard to the status of the family, and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure."
6.1 In view of above instructions, the excess jewellery found in the case of assessee, his parents, his wife, their children and the HUF was very nominal, and was very much reasonable, keeping in mind the riches and high status and more customary practices. Our aforesaid view is fortified by following decisions/judgments:-
(i) Judgment of the Hon'ble High Court of Delhi in the case of Ashok Chaddha (supra) wherein the Hon'ble High Court has accepted the 8 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 jewellery of 906.60 grams in the case of married lady even without documentary evidence as the denying the explanation would tantamount to overlooking the realities of life by holding as under:-
"As far as addition qua jewellery is concerned, during the course of search, jewellery weighing 906.900 grams of the value amounting to Rs. 6,93,582 was found. The appellant's explanation was that he was married about 25 years back and the jewellery comprised "streedhan" of Smt. Jyoti Chadha, his wife and other small items jewellery subsequently purchased and accumulated over the years. However, the Assessing Officer did not accept the above explanation on the ground that documentary evidence regarding family status and their financial position was not furnished by the appellant. The Assessing Officer accepted 400 grams of jewellery as explained and treated jewellery amounting to 506.900 grams as unexplained and made an ad hoc addition of Rs. 3,87,364 under section 69A of the Act working on unexplained jewellery, by applying average rate of the total jewellery found. The relevant portion of the assessment order reads as follows:-
"a very reasonable allowance of ownership of gold jewellery to the extent of 400 grams is considered reasonable and the balance quantity of 506 grams by applying average rate, the unexplained gold jewellery is considered at Rs. 3,87,364 (506/900 x 6,93,582) u/s 69A of the Act."
The CIT (A) confirmed this addition stating that the Assessing Officer had been fair in accepting the part of jewellery as unexplained. The ITAT has also endorsed the aforesaid view. Learned counsel for appellant Ms. Kapila submitted that there was no basis for the Assessing Officer to accept the ownership of the gold jewellery to the extent of 400 grams only as "reasonable allowance" and treat the 9 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 remaining jewellery of Rs. 506.900 as unexplained. She also submitted that another glaring fact ignored by the Assessing Officer as well as other authorities was that as the department had conducted a search of all the financial dealings which were within his knowledge and no paper or document was found to indicate that this jewellery belonged to the appellant and that it was undisclosed income of the assessment year 2006-07. In a search operation, no scope is left with the tax department to make addition on subjective guess work, conjectures and surmises. It was also argued that jewellery is "streedhan" of the assessee's wife, evidenced in the form of declaration which was furnished by mother-in-law of the assessee stating that she had given the jewellery in question to her daughter. She argued that it is a normal custom for a woman to receive jewellery in the form of marriage and other occasions such as birth of a child. The assessee had been married more than 25-30 years and acquisition of the jewellery of 906.900 grams could not be treated as excessive.
3. Learned Counsel for the respondent on the other hand relied upon the reasoning given by the authorities below. After considering the aforesaid submissions we are of the view that addition made is totally arbitrary and is not founded on any cogent basis or evidence. 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 "streedhan" 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 10 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 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.
5. Appeal is allowed in the aforesaid terms."
(ii) Jurisdiction High Court in the case of Sushila Devi (supra) wherein it has been held as under:-
"The income tax authorities rationale or justification is entirely insubstantial. The assessee says that she was married in mid 1960s and her daughters were born in 1967. She was 70 when these proceedings were started. The income tax authorities do not deny this. In the circumstances, the further explanation that the jewellery belonged to her and represented accumulations of gifts received from family members over a period of time, and also acquired during the subsistence of her marriage is reasonable and logical [para 9].
The assessee's explanation is justified and reasonable. Her contention that the gold jewellery was acquired through gifts made by relatives and other family members over a long period of time, is in keeping with prevailing customs and habits. The obdurate refusal of the respondents to release the jewellery constitutes deprivation of property without lawful authority and is contrary to article 300A of the Constitution of India. The petition has to succeed; a direction is issued to the income tax authority to release the jewellery within two weeks and in that regard intimate to the assessee the time and place 11 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 where she (or he representative) can received it [para 10]."
(ii) ITAT, Delhi decision in the case of Suneela Soni (supra) wherein the Tribunal has accepted the jewellery in excess of limits specified in the CSDT Instruction No. 1916, by following the decision of the Hon'ble Delhi High Court in the case of Ashok Chaddha (Supra). 6.2 After perusing the aforesaid decisions of the Hon'ble Delhi High Court as well as the ITA T, Delhi, we are of the considered view that facts and circumstances of the present case are similar to the aforesaid decision of the Hon'ble Delhi High Court and Tribunal, hence, the issue in dispute is squarely covered by the aforesaid decisions.
6.3 Keeping in view of the aforesaid facts and circumstances of the case as well as the status of the family and on the anvil of the judgement of the High Court of Delhi in the case of Ashok Chaddha (Supra) & of Sushila Devi (supra) and the ITA T Delhi decision in the case of Suneela Soni (supra), the explanation given by the assessee's counsel is accepted. Accordingly the orders of the authorities below are cancelled and addition made by the AO and partly confirmed by the Ld. CIT(A) on account of balance jewellery weighting 1050 gms of gold as unexplained is hereby deleted.
7. In the result, Assessee's appeal is allowed".
11. After carefully examining the facts of the instant case in the light of above decision and also looking to the fact that the assessee has placed evidence on record to explain the source of jewellery found during the course of search in the form of affidavits given by her relatives having sufficient means, we direct the revenue 12 Ms. Pooja Shree Chouksey ITA No. 572/Ind/2018 authorities to delete the addition for unexplained jewellery of Rs.6,51,090/-. However our this view should not taken as a precedence as the same depends on the material facts of a particular case. Thus Ground No.1of the assessee is allowed.
12. In the result the appeal of the assessee is allowed.
The order pronounced in the open Court on 29.01.2020.
Sd/- Sd/-
( KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
दनांक /Dated : 29 January, 2020
/Dev
Copy to: The Appellant/Respondent/CIT concerned/CIT(A)
concerned/ DR, ITAT, Indore/Guard file.
By Order,
Asstt.Registrar, I.T.A.T., Indore
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