Income Tax Appellate Tribunal - Delhi
Sh. Rajesh J Aeren,, New Delhi vs Acit, New Delhi on 13 August, 2019
FIT FOR PUBLICATION
Sd/- Sd/-
(JM) (AM)
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH: 'F': NEW DELHI)
BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER &
SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER
ITA No:- 6251/Del/2016
(Assessment Year: 2012-13)
Rajesh J Aeren, ACIT,
Aerens Estate, Mall Road, Vs Cent. Circle-18,
Kishan Garh, D-3, Vasant Kunj, New Delhi
New Delhi-110070.
PAN-AAHPG0479N
APPELLANT RESPONDENT
Appellant by None
Respondent by Shri Surender Pal, Sr.DR
ORDER
PER ANADEE NATH MISSHRA, AM
[1]. This appeal filed by the assessee against the order dated 31.05.2016 passed by Ld.CIT(A)-25, Delhi ["Ld.CIT(A)"] pertaining to 2012-13 assessment year. The grounds of appeal are as under:-
1. "That the said case learned CIT(A) has not followed instruction No. 20/2003 dated 23.12.2003 issued by CBDT regarding issue of appellate order within 15 days of last hearing of case.
2. That the said case in law and in the facts, on both, the learned CIT(A) has grossly erred in rejecting Grounds of the appellant's appeal before him and has confirmed addition of Rs.
4,15,400/- which had been made by Assessing officer, on the basis that the cash of Rs. 4,15,400/- which was found during the search proceeding his sources of income was not proved by the appellant.
ITA No:- 6251/Del/2016 (Assessment Year: 2012-13)
3. That the said case in law and in the facts, on both, the learned CIT(A) has erred and has made additional addition of Rs. 13,69,100/-, on the basis of the fact that during the search proceeding unexplained 'Jewellery' was found at the resident premises of the appellant, in regarding of the same Assessing officer has stated in assessment order however, by virtue of mistake the same could not added in Assessment order whereas, the same matter was dealt with Assessing officer.
4. That the said case learned CIT(A) and Assessing officer, both has erred on law, whereas the provisions of section 234A(3) and 234B(3) are not applicable in the case of the appellant.
5. That the said case the learned CIT(A) and Assessing officer, both has erred on law in initiate penalty proceeding u/s 271(1)(C) & 271AAA of the Income Tax Act.
6. That the appellant craves leave to add, alter, modify withdraw, amend, substitute any ground (s) of appeal either before or at the time of hearing."
[1.1]. The grounds of appeal taken by the assessee in appeal before Ld.CIT(A) are as under:-
1. "That the Ld Assessing Officer has erred on facts and in law in making order stating that the source of cash is not proven by the assessee and had added Rs.4,15,400/- found at the residence of the appellant The impugned assessment order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.
2. That the Ld Assessing Officer has erred on facts and in law in charging the interest of Rs.41,075/- on additional tax liability of Rs.
1,28,359/- as the provisions of section 234A(3) and 234B(3) are not at all applicable.
3. That the Ld. Assessing Officer has erred on facts and in law in initiate penalty proceeding u/s 271(l)(c) &271AAA of The Income-Tax Act,1961 without considering the fact.
Page | 2 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13)
4. That the impugned assessment order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.
5. That the Appellant craves leave to add/alter any/all grounds of appeal before or at the time of hearing of the Appeal."
[1.2]. On comparison of assessee's grounds of appeal in Income Tax Appellate Tribunal ["ITAT"] with those before Ld.CIT(A), it is found that disputes raised in Ground Nos. 2,4 and 5 in the appeal before us in ITAT, are similar to disputes raised in the appeal before Ld. CIT(A). However, the disputes raised in Ground Nos. 1 & 3 in appeal before ITAT are new. The third ground of appeal in the assessee's appeal in ITAT arises from the fact that enhancement has been made by Ld. CIT(A), amounting to Rs.13,69,100/- on account of unexplained jewellery found during search.
[2]. Assessment order u/s 143(3) of the Income Tax Act, 1961 ("Act") was passed on 30.03.2014 wherein an addition of Rs.4,15,400/- was made on account of cash found at the time of search & seizure and survey operations u/s 132/133A of the Act conducted on 17.08.2011. The AO treated the aforesaid amount of Rs.4,15,400/- as unaccounted income of the assessee. The relevant portion of the assessment order is reproduced hereunder:-
3. "During the course of search proceeding at the residence of the assessee cash amounting to Rs.4,15,400/- was found, besides the jewellery valued at Rs.13,69,100/-. The assessee was required to explain the nature and source of the cash found at requisition of Page | 3 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) jewellery. In reply it has been stated that the cash found was the money received on functions or during meet by elderly members of whole family or close relatives to the younger one. 3.1. The explanation offered are far from the satisfactory as no details of the receipt in the shape of occasions, name of the relatives or other details to prove the genuineness of the cash received as is alleged above. Therefore, the entire sum of Rs.4,15,400/- is treated as unaccounted income of the assessee and will be added in the income of the assessee."
[2.1]. The assessee filed appeal before Ld. CIT(A)-25, Delhi. Vide order dated 31.05.2016, Ld.CIT(A) confirmed the aforesaid addition of Rs.4,15,400/- vide paragraph 7.4 of his aforesaid impugned order. The assessee's ground of appeal regarding interest u/s 234A and 234B of the Act was dismissed by Ld.CIT(A) vide paragraph 7.5 of his aforesaid impugned order dated 31.05.2016. Also, the assessee's ground of appeal regarding initiation of penalty proceedings was dismissed by Ld.CIT(A) vide paragraph 7.6 of the aforesaid impugned order dated 31.05.2016. Ld.CIT(A) made a further enhancement of Rs.13,69,100/- being value of unexplained jewellery found during the course of search vide paragraphs 7.8 to 7.21 of his aforesaid impugned order dated 31.05.2016. The relevant portion of the appellate order of Ld.CIT(A) is reproduced hereunder:-
"7. DECISION:
7.1. The Assessee is an individual. Search & Seizure operations u/s 132 of the Income Tax Act, 1961 were conducted on 17.08.11 in the case of the Assessee alongwith other cases of the Group. The Page | 4 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) jurisdiction over the Assessee was transferred from the Ward-24(4), New Delhi to Central Circle-9, New Delhi vide order F.No. CIT-
VIII/Cent&Trf./2013-14/1115 issued by the Commissioner of Income Tax, Delhi-VIII, New Delhi under section 127 of the Income Tax Act on 25th September, 2013. In response to Notice u/s 143(2fRemrn declaring income of Rs. 57,35,000/- was filed by the Assessee.
7.2 During the course of search proceeding at the residence of the Assessee, Cash amounting to Rs.4,15,400/- was found, besides Jewellery valued at Rs. 13,69,100/-. The Assessee was required to explain the nature and source of the Cash and Jewellery found. The Assessee could not give explanations to the satisfaction of the Learned Assessing Officer and hence the Cash and Jewellery were held to be unaccounted in the Assessment Order u/s 143(3) dated 30.03.14. The Assessing Officer held that he was satisfied that the Assessee had failed to file true and correct Return of Income for which Penalty proceedings were initiated by issue of penalty notice u/s 271(1 )(c).
7.3 The Assessee is in Appeal against the addition of Rs. 4,15,400/- on account of Unexplained Cash, levy of Interest u/s 234 A and 234 B and initiation of Penalty u/s 271(1) (c) and 271 AAA of the Income Tax Act,'l961.
7.4 The Appellant could not provide any justification regarding the claim that the Assessing Officer had erred in stating that the source of Cash amounting to Rs.4,15,400/- found at the residence of Assessee was not explained. Such Cash was found during the Search Proceedings u/s 132(1) at the residence of the Assessee on 17.08.11 and the Assessee was duty bound to explain the nature and source of the Cash found. It was claimed by the Assessee that the Cash found was the money received on functions or during meeting by elder members of the family or close relatives. The Learned Assessing Officer has observed that no details regarding the receipt of Cash could be given, neither the details of the occasions , nor the names of the relatives or any other details could Page | 5 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) be given by the Assessee. The same situation continues in the Appellate Proceedings and no details or justification regarding the Cash could be given. Hence there is no reason to interfere with the order of the Assessing Officer in this respect and the addition towards Unexplained Cash amounting to Rs. 4,15,400/- treated as Unaccounted Income of the Assessee is hereby confirmed. 7.5 The Appellant has challenged the imposition of interest u/s 234 A and 234 B. However, the levy of Interest u/s 234 A and 234 B is mandatory and is on the basis of the Income Tax Act, 1961. There is nothing to show that the Interest charged is excessive. Hence, this Ground of Appeal is also rejected.
7.6 The Appellant has also challenged the initiation of Penalty u/s 271 (1) (c ) and 271 AAA of the Income Tax Act, 1961. However, such ground challenging the mere initiation of Penalty is premature hence it is rejected.
7.7 Ground no. 4 & 5 are general in nature and the Appellant has been unable to provide any justification for the claims. These Grounds are also rejected.
7.8 During the Appellate Proceedings, it was noticed that as per Para 3 of the Assessment Order , it has inter alia been observed by the Assessing Officer that during the course of Search Proceedings at residence of the Assessee, Cash amounting to Rs. 4,15,400/- was found, besides Jewellery valued at Rs. 13,69,100/- and the Assessee was required to explain the nature and source of the Cash and Jewellery found . It has been observed in Para 3.1 of the Assessment Order that the explanation regarding Cash was not satisfactory and no proper detail regarding the claimed receipt of Cash, particularly the occasions, names of the relatives and other details to prove the genuineness of the Cash claimed to be received were given and hence the entire Cash found amounting to Rs. 4,15,400/- was treated as unaccounted income of the Assessee. It is further clearly mentioned in Para 4 of the Assessment Order that the Assessee failed to explain the nature and source of the Jewellery found. Thus, the Learned Assessing Officer has given the clear Page | 6 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) finding that the Assessee could not explain the nature and source of the Jewellery found in the Search. However, while computing the Income of the Assessee in Para 5 of the Assessment Order, the addition of only Rs. 4,15,400/- towards Unexplained Cash found in the Search Proceedings was made, mentioning the discussion in Para 3.1 of the Assessment Order. However, while doing so , the Ld. Assessing Officer, omitted making the addition towards Unexplained Jewellery found in the Search Proceedings, which was valued at Rs. 13,69,100/- and was discussed in Para 3 of the Assessment Order, and for which specific findings were given in Para 4 of the Assessment Order, and for which Penalty Proceedings u/s 271 (1) (c) were initiated.
7.9 It is further noticed that the Assessee has challenged the initiation of Penalty u/s 271(l)(c) of the Income Tax Act, 1961 (alongwith initiation of Penalty u/s 271 AAA) in Ground no. 3 of the Appeal. This Ground is partly linked with the finding regarding the Unexplained Jewellery found during the Search Proceedings. The Assessing Officer has held the Jewellery found to be Unexplained and has initiated Penalty Proceedings u/s 271 (l)(c), but the Assessee has challenged only the initiation of Penalty u/s 271 (l)(c) and has not challenged the findings of the Learned Assessing Officer regarding the Assessee's failure to explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/-.
7.10 In view of the above, it is clear that the Assessee could not explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/- and has not challenged this finding of the Learned Assessing Officer, who having given the finding that the Jewellery found was Unexplained, failed to add the value of this Unexplained Jewellery amounting to Rs. 13,69,100/- to the Total Income of the Assessee. In view of this situation, an opportunity was given the Appellant u/s 251(21 of the Income Tax Act, 1961 to explain as to why enhancement of the income assessed by the Assessing Officer at Rs. 61,51,400/- vide Assessment Page | 7 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) Order u/s 143(3) dated 30.03.14 for AY 12-13, by Rs.13,69,100/- should not be made, being the value of the Unexplained Jewellery found in the Search conducted u/s 132 of the Income Tax Act, 1961 upon the Assessee on 17.08.11.
7.11 A Notice u/s 251(2) of the Income Tax Act, 1961 for enhancement of Income was issued to the Appellant on 18.05.16, stating as under :
"You have submitted an Appeal u/s 246(A) of the Income Tax Act, 1961 against the Assessment Order u/s 143(3) of the I.T. Act, 1961 dated 30.03.14 for AY12-13 in your case, in the Office of CIT(A)-32, New Delhi , which was numbered as Appeal No. 339/14-15 and was subsequently transferred to this office on 05.08.15 and was numbered as Appeal No. 83/15-16.
2. Perusal of the Assessment Order dated 30.03.14 u/s 143(3) for the AY 12-13 shows that as per Para 3 of the Assessment Order, it has inter alia been observed by the Assessing Officer that during the course of Search Proceedings at your residence, Cash amounting to Rs. 4,15,400/- was found, besides Jewellery valued at Rs. 13,69,100/- and you were required to explain the nature and source of the Cash found and the requisition of the Jewellery. It has been observed in Para 3.1 of the Assessment Order that the explanation regarding Cash was not satisfactory and no proper detail regarding the claimed receipt of Cash, particularly the occasions, names of the relatives and other details to prove the genuineness of the Cash claimed to be received were given and hence the entire Cash found amounting to Rs. 4,15,400/- was treated as unaccounted income of the Assessee.
3. It is further clearly mentioned in Para 4 of the Assessment Order that the Assessee failed to explain the nature and source of the Jewellery found. The specific observations of the Learned Assessing Officer in Para 4 of the Assessment Order are as under: -
"For assessee's failure to explain the nature and source of jewellery found as discussed above satisfactorily I am satisfied that assessee Page | 8 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) has failed to file true and correct return of income for which penalty proceedings will be taken by issue of penalty notice u/s 271(1) (c)."
4. Thus, the Learned Assessing Officer has given the clear finding that the Assessee could not explain the nature and source of the Jewellery found in the Search. However, while computing the Income of the Assessee in Para 5 of the Assessment Order the addition of only Rs. 4,15,400/- towards Unexplained Cash found in the Search Proceedings was made, mentioning the discussion in Para 3.1 of the Assessment Order. However, while doing so , the Ld. Assessing Officer, omitted making the addition towards Unexplained Jewellery found in the Search Proceedings, which was valued at Rs.13,69,100/- and was discussed in Para 3 of the Assessment Order, and for which specific findings were given in Para 4 of the Assessment Order, and for which Penalty Proceedings u/s 271 (1) (c) were initiated.
5, The Assessee has challenged the initiation of Penalty u/s 271 (l)(c) of the Income Tax Act, 1961 (alongwith initiation of Penalty u/s 271AAA) in Ground no. 3 of the Appeal. This Ground is partly linked with the finding regarding the Unexplained Jewellery found during the Search Proceedings. The Assessing Officer has held the Jewellery found to be Unexplained and has initiated Penalty Proceedings u/s 271 (l)(c), but the Assessee has challenged only the initiation of Penalty u/s 271 (l)(c) and has not challenged the findings of the Learned Assessing Officer regarding the Assessee's failure to explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/-.
6. In view of the above, it is clear that the Assessee could not explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/- and has not challenged this finding of the Learned Assessing Officer, who having given the finding that the Jewellery found was Unexplained, failed to add the value of this Unexplained Jewellery amounting to Rs. 13,69,100/- to the Total Income of the Assessee.
Page | 9 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13)
7. Please explain as to why enhancement of the income assessed by the Assessing Officer at Rs. 61,50,400/- vide Assessment Order u/s 143(3) dated 30.03.14 for AY 12-13, by Rs. 13,69,100/- should not be made, being the value of the Unexplained Jewellery found in the Search conducted u/s 132 of the Income Tax Act, 1961 upon the Assessee on 17.08.11.
8. This may please be treated as an opportunity of showing cause u/s 251(2) of the Income Tax Act, 1961 against such enhancement of income by Rs. 13,69,100/-. Please submit your reply at the next date of hearing on 26.05.16 at 5.00 PM. 7.12 In response to the above Notice for enhancement of Income u/s 251(2), the Appellant filed Written Submissions dated 31.05.16, stating as under :
"This is in reference of your goodself notice Dt. 18.05,16 wherein, your goodself asked that please explain as to why enhancement of the income assessed by the Assessing officer at Rs.61,50,400/-vide Assessment order u/s 143(3) dated 30.03.14 for A.Y.12-13, by Rs.13,69,100/- should not be made, being the value of the unexplained Jewellery found in the search conducted u/s 132 of the Income tax Act,1961 upon the Assessee on dt.17.08.11. In regarding the same we want to put in your knowledge that the said matter(Jewellery Rs.13,69,100/-) had been already discussed during the assessment proceeding and assessee had been already submitted written submission on the same. In regarding of the same your goodself need any documents/details which had been submitted during the assessment proceeding. We shall be happy to provide it.
For the sake of clarification on said subject we have reproduced the content of your goodself notice u/s 251(2) of Income Tax Act,1961 Dt.lfi05.16, which are as under:-
2. Perusal of the Assessment Order dated 30.03.14 u/s 143(3) for the AY 12-13 shows that as per Para 3 of the Assessment Order, it has inter alia been observed by the Assessing Officer that during the course of Search Proceedings at your residence, Cash amounting Page | 10 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) to Rs. 4,15,400/- was found, besides Jewellery valued at Rs.
13,69,100/- and you were required to explain the nature and source of the Cash found and the requisition of the Jewellery. It has been observed in Para 3.1 of the Assessment Order that the explanation regarding Cash was not satisfactory and no proper detail regarding the claimed receipt of Cash, particularly the occasions, names of the relatives and other details to prove the genuineness of the Cash claimed to be received were given and hence the entire Cash found amounting to Rs. 4,15,400/- was treated as unaccounted income of the Assessee.
3. It is further clearly mentioned in Para 4 of the Assessment Order that the Assessee failed to explain the nature and source of the jewellery found. The specific observations of the Learned Assessing Officer in Para 4 of the Assessment Order are as under: -
"For assessee's failure to explain the nature and source of jewellery found as discussed above satisfactorily I am satisfied that assessee has failed to file true and correct return of income for which penalty proceedings will be taken by issue of penalty notice u/s 271 (1) (c)."
4. Thus, the Learned Assessing Officer has given the clear finding that the Assessee could not explain the nature and source of the Jewellery found in the Search. However, while computing the Income of the Assessee in Para 5 of the Assessment Order the addition of only Rs. 4,15,400/-towards Unexplained Cash found in the Search Proceedings was made, mentioning the discussion in Para 3.1 of the Assessment Order. However, while doing so , the Ld. Assessing Officer, omitted making the addition towards Unexplained Jewellery found in the Search Proceedings, which was valued at Rs. 13,69,100/- and was discussed in Para 3 of the Assessment Order, and for which specific findings were given in Para 4 of the Assessment Order; and for which Penalty Proceedings u/s 271(1)(c) were initiated.
5. The Assessee has challenged the initiation of Penalty u/s 271
(l)(c) of the Income Tax Act, 1961 (alongwith initiation of Penalty u/s 271 AAA) in Ground no. 3 of the Appeal. This Ground is partly linked Page | 11 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) with the finding regarding the Unexplained Jewellery found during the Search Proceedings. The Assessing Officer has held the Jewellery found to be Unexplained and has initiated Penalty Proceedings u/s 271(l)(c), but the Assessee has challenged only the initiation of add the value of this Unexplained Jewellery amounting to Rs. 13,69,100/- to the Total Income of the Assessee. On the above contents of your goodself notice our rebuttal are as under:-
The said matter had been already discussed during the assessment proceeding wherein, after the satisfactory reply of assessee, the Ld assessing officer had not made any addition against Jewellery in hand of assessee. The same fact has been already disclosed in assessment order. In regarding of the same, the assessing officer had issued office note wherein, they have stated reason that why the Jewellery found at the residence amounting to Rs.13,69,100/- has not been added in hand of assessee, For the sake of your kind reference we can reproduce the office note on the said matter before your honor but we need sometime for this as office of the assesse is seized on the order of High Court of Delhi and ail the documents are placed there. Else you may also collect the copy of that office note from the office of Ld. AO for verifying the same. After the plain reading of the office note of the assessing officer it will be clear that the said matter had been already discussed during the assessment proceeding and after the satisfactory submission by the assessee side, the LD Assessing officer had not made any addition in hand of assessee.
After reading the office note of assessing officer it is clear that Jewellery amounting Rs.13,69,100/- which had found during the search proceeding at the premises of assessee. It matter is 100% tested water by assessing officer.
Para no. 4 of the assessment order wherein stated that for assessee's failure to explain the nature and source of cash and Jewellery found as discussed above satisfactorily 1 am satisfied that assessee has failed to file true and correct return of income for Page | 12 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) which penalty proceedings will be taken by issue of penalty notice u/s 271(1 )(C) will be initiated.
After plain reading of Para no. 4 of the assessment order It shows a typing mistake, the same matter had been already discussed during assessment proceeding and had been also accepted by assessing officer, it matter may be also verified with office note of assessing officer.
The Law Powers of the [Commissioner (Appeals)]
251. (1) In disposing of an appeal, the [Commissioner (Appeals)] shall have the following powers-
(a) in an appeal against an order of assessment, he may confirm, reduce, enhance or annul the assessment.
(b) in an appeal against an order imposing a penalty, he may confirm or cancel such order or vary it so as either to enhance or to reduce the penalty.
Your honor prima facie the matter has not aroused from the assessment order. However, we need some time to further elaborate the provisions of Section 251(1) & (2) of The Income Tax Act in light of judgements and logics.
Prayer Your honor in view of the settled law and facts, as matter already been dealt by the Ld. AO and it seems that due to some clerical error the word jewelry. It was being added only for the purpose of in initiating penalty. Hence, your honor is requested not to enhance the income of the assessee. And requested to withdraw the proceedings under U/s 251(2).
Hence, on the same matter after know the actual fact if your goodself take any adverse conclusion it will be arbitrary and bad interpretation of law.
We shall pray further your good self that sake of justice if required then we shall be happy to provide any other information/documents you may require in this matter."
Page | 13 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) 7.13 Perusal of the above reply by the Appellant shows that the Appellant has failed to explain why enhancement of income for the Unexplained Jewellery amounting to Rs. 13,69,100/- found in the Search should not be made. The Assessee has claimed that the matter had already been discussed during the Assessment Proceedings wherein after satisfactory reply of the Assessee, the Learned Assessing Officer had not made any addition against Jewellery in the hands of the Assessee. However, this is a false claim as nowhere in the Assessment Order, the Assessing Officer has stated that the reply of the Assessee regarding Jewellery was satisfactory. It has also been claimed by the Appellant that the Assessing Officer has issued an Office Note, wherein the reasons were stated as to why the Jewellery found at the residence amounting to Rs. 13,69,100/- had not been added in the hands of the Assessee. It was claimed that after a plain reading of the Office Note of the Assessing Officer it will be clear that the matter had already been discussed during the Assessment Proceedings and the Assessing Officer had not made any addition on account of Jewellery after the satisfactory submission by the Assessee. However, there is no Office Note to the Assessment Order in this case and no such Office Note could be produced by the Appellant. Further, the contents of the Assessment Order are very clear wherein the Learned Assessing Officer has made it clear that the explanations were not satisfactory. The Ld. Assessing Officer has stated in Para 3.1 of the Assessment Order that " The explanation offered are far from the satisfactory... ". The Learned Assessing Officer has also stated in Para 4 of the Assessment Order that "For assessee's failure to explain the nature and source of Jewellery found as discussed above satisfactorily I am satisfied that the assessee has failed to file true and correct return of income... ". 7.14 Thus, it is clear that contrary to the claim of the Assessee that on the issue of Jewellery, the Assessing Officer was satisfied with the explanations submitted by the Assessee, the Learned Assessing Officer has clearly recorded his dissatisfaction with the Page | 14 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) contentions of the Assessee and has clearly stated that the Assessee failed to explain the nature and source of Jewellery found in the Search. The Assessee's claim that the Assessing Officer recorded his satisfaction in the Office Note. However, firstly neither there is any such Office Note available on file nor could be produced by the Appellant and secondly, the findings in the main Assessment Order will take precedence over the comments, if any, in an Office Note. Hence the claim of the Assessee that the Assessing Officer was satisfied on the issue of Jewellery has to be rejected. 7.15 It has been further claimed that there was a typing mistake/clerical error in the Assessment Order. The Assessee has not been able to show how any typing mistake / clerical error could help the Assessee to escape Assessment of the Unaccounted Jewellery of Rs. 13,69,100/- found in the Search. No doubt, there was a mistake, due to which the Unaccounted Jewellery of Rs. 13,69,100/- was not added to the income of the Assessee, but such mistake cannot be allowed to continue, and the Unaccounted Income of the Assessee to the extent of Rs. 13,69,100/-, appearing in the form of Unaccounted Jewellery found in the Search has to be brought to tax.
7.16 It was further claimed by Sh. Rajeshwar Prasad Painuly, CA , the Learned Counsel of the Appellant that the matter has not arisen from the Assessment Order and hence the Commissioner (Appeals) does not have power to enhance the assessment. However, it could not be demonstrated by the Learned Counsel as to how it could be said that the matter has not arisen from the Assessment Order, particularly when the Assessment Order clearly mentions in Para 3 that Cash amounting to Rs. 4,15,400/- and Jewellery valued at Rs. 13,69,100/- was found during the course of Search Proceedings at the residence of the Assessee and the Assessee was required to explain the nature and source of the Cash and Jewellery, and further it has been clearly stated that the explanations offered by the Assessee were not satisfactory. Further, it has been explicitly stated in Para 4 that the Assesse failed to explain the nature and source of Page | 15 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) Jewellery found. In such a situation, it cannot at all be claimed that the matter had not arisen from the Assessment Order. 7.17 It is further seen that the Assessee has the Assessee has challenged the initiation of Penalty u/s 271 (l)(c) of the Income Tax Act, 1961 (alongwith initiation of Penalty u/s 271 AAA) in Ground no. 3 of the Appeal. This Ground is partly linked with the finding regarding the Unexplained Jewellery found during the Search Proceedings. The Assessing Officer has held the Jewellery found to be Unexplained and has initiated Penalty Proceedings u/s 271 (l)(c) , but the Assessee has challenged only the initiation of Penalty u/s 271 (l)(c) and has not challenged the findings of the Learned Assessing Officer regarding the Assessee's failure to explain the nature and source of Jewellery found in the Search Proceedings amounting to Rs. 13,69,100/-. In such a situation, it is not only clear that the value of the Unexplained Jewellery amounting to Rs. 13,69,100/- as to be added to the Income, but also that the issue directly arises from the Assessment Order.
7.18 An examination of various judicial pronouncements on the issue of enhancement of assessment by the Commissioned Appeals) shows that the enhancement of income in the instant case was fully justified.
7.19 It has been held by the Hon'ble Gujarat High Court in the case of Commissioner of Income Tax vs. Ahmedabad Crucible Company, 206 ITR 574 (as per headnote) that :
"The powers of the Appellate Assistant Commissioner are not confined to the subject- matter of the appeal, but extend to the subject-matter of the assessment. The entire assessment is thrown open before the Appellate Assistant Commissioner, and so long as it does not travel outside the matters considered and determined by the income-tax Officer, he can correct any decision of the Income-tax Officer in the course of the assessment even if the assessee is satisfied with it and has not specifically challenged it in the appeal. The order of the Appellate Assistant Commissioner would thus consist of various decisions on matters which may be raised in Page | 16 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) appeal by the assessee or considered suo motu by the Appellate Assistant Commissioner and the effect of these decisions would be to confirm or reduce or enhance or annul or set aside the assessment. Thus, the crux of the matter is that the Appellate Assistant Commissioner may deal with all points and grounds which arise from not merely the subject-matter of the appeal, but even from the larger area of the subject-matter of the assessment."
7.19.1 The Hon'ble Gujarat High Court observed in the abovementioned case of Commissioner of Income Tax vs. Ahmedabad Crucible Company, 206 ITR 574 as under:
"...the questions raised for our consideration are as under:
"1. Whether the Appellate Assistant Commissioner can set aside the assessment order for consideration of an aspect of the matter which was never before the Income-tax Officer and on which the assessee was never aggrieved ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in confirming the order of the Appellate Assistant Commissioner in setting aside the assessment for consideration of an aspect of the matter which was never before the Income-tax Officer and on which the assessee was not aggrieved ?
3. Whether the order of the Income-tax Appellate Tribunal in confirming the decision of the Appellate Assistant Commissioner in setting aside the assessment for computation of capital gains is correct in law and sustainable from the material on record ?"
In our opinion, these questions are conclusively covered by a decision of this court in the case of CIT v. Steel Cast Corporation [1977] 107 ITR 683. We must note that the decision in question specifically deals with the same issue and the same contention, but in the context of the powers of the Tribunal. The principle laid down in the said decision, however, also applies to the contentions raised by the assessee before the Appellate Assistant Commissioner. The principle clearly enunciated in the said decision is that the question raised has been decided ultimately in the light of the Page | 17 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) decision of the Supreme Court in the case of Hukumchand Mills Ltd. v. CIT [1967] 63 ITR 232. Accordingly, it must first be determined as to what is the subject-matter of the appeal and that can only be determined by finding out what the Appellate Assistant Commissioner decided, whether expressly or impliedly. The subject- matter of the appeal before the Tribunal can only be the decision, whether expressed or implied, of the Appellate Assistant Commissioner, and the jurisdiction of the Tribunal is thus restricted to the subject-matter of the appeal. Once the subject-matter of the appeal is determined, the Tribunal has very wide powers to deal with all questions of fact and law pertaining to this subject-matter of appeal, and it can allow a new question of law to be raised in support of the same.
The same decision at page 694 also deals with the powers of the Appellate Assistant Commissioner. In this context, it has been observed that the powers of the Appellate Assistant Commissioner are not confined to the subject-matter of the appeal, but extend to the subject-matter of the assessment. The entire assessment is thrown open before the Appellate Assistant Commissioner, and so long as it does not travel outside the matters considered and determined by the Income-tax Officer, he can correct any decision of the Income-tax Officer in the course of the assessment even if the assessee is satisfied with it and has not specifically challenged it in the appeal. The order of the Appellate Assistant Commissioner would thus consist of various decisions on matters which may be raised in appeal by the assessee or considered suo motu by the Appellate Assistant Commissioner and the effect of these decisions would be to confirm or reduce or enhance or annul or set aside the assessment.
Thus, the crux of the matter is that the Appellate Assistant Commissioner may deal with all points and grounds which arise from not merely the subject-matter of the appeal, but even from the larger area of the subject-matter of the assessment.
Page | 18 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) The aforesaid decision has been considered and approved by a subsequent decision of a Full Bench of this court in the case of CIT v. Cellulose Products of India Ltd. [1985] 151 ITR 499. We note that the Full Bench was directly concerned with the interpretation of the powers of the Appellate Tribunal but, even in this context, it has been observed, as in the earlier decision, that the powers of the Appellate Assistant Commissioner are wider than the powers of the Appellate Tribunal. The principle laid down in the earlier decision is also approved in the Full Bench decision, viz., that the jurisdiction and the power to deal with the matters in issue must be from the perspective as to what was the subject-matter of the assessment and not merely on what was the subject-matter of appeal. On the facts of the case, there is no dispute that the subject-matter of the assessment was the computation as regards the profits arising from the sale of the property in question coupled with the computation of longterm capital gains. Thus, it was this issue which was directly before the Income-tax Officer and it was the very same issue which was open before the Appellate Assistant Commissioner. In view of the aforesaid position, we are of the opinion that the Tribunal was correct in specifying the three questions raised in the present reference for our consideration and each question must be answered in the affirmative..."
7.20 It was held by the Hon'ble Supreme Court in the case of CIT vs Nirbheram Daluram, 224 ITR 610 that the CIT(Appeals) was entitled to direct additions in respect of items of income not considered by the Assessing Officer. It was held by the Hon'ble Supreme Court in this case as under :
"In this appeal, by special leave, the question that falls for consideration relates to the scope of the powers of the Appellate Assistant Commissioner while dealing with appeals against orders of Assessing Officers under section 251 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The matter relates to the assessment year 1956-57. Nirbheram Daluram (hereinafter referred to as "the assessee") is a partnership firm carrying on business in Page | 19 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) grains, rice, gunny bags and oil seeds, etc. Under order dated March 11, 1957, assessment was originally made on a total income of Rs. 28,724. On reassessment in proceedings initiated under section 147 of the Act the Income-tax Officer included in the total income a sum of Rs. 2,45,000 referable to ostensible transactions in hundi loans shown by the assessee. The assessee filed an appeal against the said assessment order passed by the Income-tax Officer. The Appellate Assistant Commissioner not only sustained the said addition of Rs. 2,45,000 but he also took notice of 10 other items of ostensible hundi loans amounting to Rs. 2,30,000 and directed that the total income be enhanced by the sum of Rs. 2,30,000. On further appeal, the Income-tax Appellate Tribunal (hereinafter referred to as "the Tribunal") deleted the said addition of Rs.2,30,000 made by the Appellate Assistant Commissioner on the view that in doing so the Appellate Assistant Commissioner had exceeded his jurisdiction. At the instance of the Revenue, the Tribunal was directed by the High Court of Madhya Pradesh to refer the following questions of law for opinion:
"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the sum of Rs. 2,30,000 freshly added by the Appellate Assistant Commissioner ? (2) Whether the sum of Rs. 2,30,000 was added by the Appellate Assistant Commissioner on new sources of income or items not considered by the Income-tax Officer from the point of view of assessability ?
(3) Whether the Appellate Assistant Commissioner had no jurisdiction or power to enhance the sum of Rs. 2,30,000 under the facts and circumstances in which he has added the same ?"
By the impugned judgment dated February 28, 1980, the High Court has answered these questions against the Revenue (see [1981] 127 ITR 491). The High Court has held that the Appellate Assistant Commissioner had no jurisdiction to consider the new entries which were not considered at all by the Income-tax Officer and to add the amount of Rs. 2,30,000 to the total income of the assessee.
Page | 20 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) According to the High Court, the items containing that amount constituted new sources of income which were not the subject-matter of assessment before the Income-tax Officer and, therefore, it was not open in appeal to consider these sources and to assess them. In taking this view, the High Court has placed reliance on the decision of this court in Addl. CIT v. Gurjargravures Pvt. Ltd. [1978] 111 ITR 1, wherein it was held that the Appellate Assistant Commissioner had no power to grant exemption under section 84 of the Act since the Income- tax Officer did not consider the item from the point of view of its non-taxability. Feeling aggrieved by the said decision of the High Court, the Revenue has filed this appeal. Shri Ranbir Chandra, learned counsel appearing for the Revenue, has submitted that the High Court was in error in construing narrowly the powers conferred on the Appellate Assistant Commissioner under section 251 of the Act. Learned counsel has pointed out that the decision in Addl. CIT v. Gurjargravures Pvt. Ltd. [1978] 111 ITR 1 (SC), on which reliance has been placed by the High Court, was a decision of a two-judge Bench and that its correctness has been doubted by a Bench of three judges in Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688 (SC). In Jute Corporation of India Ltd. v. CIT [1991] 187 ITR 688, this court has referred to the earlier decision of this court in CIT v. Kanpur Coal Syndicate [1964] 53 ITR 225, 229, which was also a decision of a three judge Bench wherein the scope of section 31 (3)(a) of the Indian Income- tax Act, 1922 (which was almost identical to section 251(1)(a) of the Act) was considered and it was held (at page 693):
"If an appeal lies, section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under section 31(3)(a), in disposing of such an appeal, the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income-tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope Page | 21 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) of his power is conterminous with that of the Income-tax Officer. He can do what the Income-tax Officer can do and also direct him to do what he has failed to do."
After referring to these observations, this court in Jute Corporation of India Ltd. [1991] 187 ITR 688 has stated (at page 693):
"The above observations are squarely applicable in the interpretation of section 251(1)(a) of the Act. The declaration of law is clear that the power of the Appellate Assistant Commissioner is coterminous with that of the Income-tax Officer, and if that is so, there appears to be no reason as to why the appellate authority cannot modify the assessment order on an additional ground even if not raised before the Income-tax Officer. No exception could be taken to this view as the Act does not place any restriction or limitation on the exercise of appellate power. Even otherwise, an appellate authority while hearing the appeal against the order of a subordinate authority, has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers which the subordinate authority may have in the matter. There appears to be no good reason and none was placed before us to justify curtailment of the power of the Appellate Assistant Commissioner in entertaining an additional ground raised by the assessee in seeking modification of the order of assessment passed by the Income-tax Officer."
Taking note of the decision in Addl. CIT v. Gurjargravures Pvt. Ltd. [1978] 111 ITR 1 (SC), the court has said (at page 694):
"Apparently, this view taken by the two-judge Bench of this court appears to be in conflict with the view taken by the three-judge Bench of this court in Kanpur Coal Syndicate's case [1964] 53 ITR
225. It appears from the report of the decision in the Gujarat case that the three judge Bench decision in Kanpur Coal Syndicate case [1964] 53 iTR 225 (SC) was not brought to the notice of the Bench in Gurjargravures Pvt. Ltd. [1978] 111 ITR 1 (SC). In the circumstances, Page | 22 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) the view of the larger Bench in Kanpur Coal Syndicate case [1964] 53 ITR 225 (SC) holds the field."
Having regard to the decision in Jute Corporation of India Ltd. [1991] 187 ITR 688 (SC), it must be held that the High Court was in error in holding that the appellate power conferred on the Appellate Assistant Commissioner under section 251 was confined to the matter which had been considered by the Income-tax Officer and the Appellate Assistant Commissioner exceeded his jurisdiction in making an addition of Rs.2,30,000 on the basis of the other 10 items of hundis which had not been explained by the assessee. This means that even if question No. 2 is answered in the affirmative, questions Nos. 1 and 3 must be answered in the negative. The appeal is, therefore, allowed, the impugned judgment of the High Court in so far as it relates to questions Nos. 1 and 3 is set aside and the said questions are answered in the negative, i.e., in favour of the Revenue and against the assessee. No order as to costs." 7.21 In view of the facts of the case and the judicial pronouncements discussed above, it is clear that the income of the Assessee has to be enhanced by Rs. 13,69,100/- being the value of the Unexplained Jewellery found during the course of Search. Accordingly, it is directed that the Assessment be enhanced by an amount of Rs. 13,69,100/- u/s 251(l)(a) of the Income Tax Act, 1961."
[3]. The assessee has filed this present appeal in Tribunal against the aforesaid impugned order dated 31.05.2016 of Ld.CIT(A). At the time of hearing before us, Revenue was represented by Mr. Surender Pal, Ld. Departmental Representative ["Ld. DR"].
However, the assessee neither appeared in person nor was the assessee represented by any authorized representative. Hence, Page | 23 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) this appeal is disposed off on merits in accordance with Rule 24 of Income Tax [Appellate Tribunal] Rules, 1963.
[4]. In the absence of any representation from assessee's side, we have heard Ld. DR who relied on the order of the AO and the impugned order dated 31.05.2016 of Ld.CIT(A). After hearing Ld. DR and on careful perusal of the material available on record, we hereby proceed to decide this appeal.
[4.1]. As far as the first ground of appeal is concerned, we find from perusal of materials on our record; that the claim of the assessee [that appellate order was not issued by Ld.CIT(A) within 15 days of last hearing of case] cannot be borne out by record. During the appellate proceedings in ITAT, no material has been brought for our consideration to substantiate the claim made by the assessee in this ground. The assessee has not complied with Rule 10 of Income Tax [Appellate Tribunal] Rules, 1963 in this regard. Where a fact which cannot be borne out by, or is contrary to the record, it is to be stated clearly and concisely and supported by a duly sworn affidavit. Unless this requirement is fulfilled, the allegation of a fact which cannot be borne out by, or is contrary to the record, is liable to be rejected. In view of the foregoing, the first ground of appeal is dismissed.
Page | 24 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) [5]. Coming to the aforesaid addition of Rs.4,15,400/-, we find that the explanation of the assessee regarding aforesaid addition of Rs.4,15,400/- was rejected by the AO. The assessee had stated during assessment proceedings that cash found was the "money received on functions or during meet by elderly members of whole family or close relatives to the younger one." [Italicized words have been quoted from assessment order]. The AO had rejected this explanation on the ground that "no details of the receipt in the shape of occasions, name of the relatives or other details to prove the genuineness of the cash received". [Italicized words have been quoted from assessment order]. We find from perusal of the record that the assessee failed to furnish any satisfactory explanation regarding the aforesaid addition of Rs.4,15,400/- even during the appellate proceedings before Ld.CIT(A). Even during the appellate proceedings in ITAT, the assessee has failed to furnish any satisfactory explanation regarding the aforesaid amount of Rs.4,15,400/-. Relevant portion of the order of Ld.CIT(A) has already been reproduced in foregoing paragraph 2.1 of this order.
In view of the foregoing discussion and as the assessee has failed to bring any material for our consideration during appellate proceedings in ITAT, to persuade us to take a view different from the view taken by Ld.CIT(A) in his impugned order; the addition made by the AO amounting to Rs.4,15,400/- and confirmed by Page | 25 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) Ld.CIT(A) in his aforesaid order dated 31.05.2016 is hereby sustained. Accordingly, second ground of appeal filed by assessee in ITAT is dismissed.
[6]. As far as 3rd, 4th and 5th grounds of appeal in assessee's appeal in ITAT are concerned; relevant portions of the order of the Ld. CIT(A) have already been reproduced in foregoing paragraph No.2.1 of this order. We find that Ld.CIT(A) has discussed the facts and circumstances of the case elaborately in his aforesaid order.
Ld.CIT(A) has also referred to numerous judicial precedents in his aforesaid impugned order dated 31.05.2016. We find that Ld.CIT(A) has given detailed reasoning for enhancement of Rs.13,69,100/- made by him in the impugned appellate order dated 31.05.2016 on account of unexplained jewellery. During appellate proceedings in ITAT, the assessee has failed to bring any material for our consideration to persuade us to take a view different from the view taken by Ld.CIT(A) in aforesaid impugned order dated 31.05.2016. Accordingly, 3rd, 4th and 5th grounds of appeal raised by the assessee in this appeal are dismissed.
[6.1]. Before we part, we explicitly clarify that the assessee is at liberty to approach ITAT for restoration of the appeal in accordance with proviso to Rule 24 of Income Tax (Appellate Tribunal) Rules, 1963. If the assessee does approach the Tribunal for Page | 26 ITA No:- 6251/Del/2016 (Assessment Year: 2012-13) restoration of the appeal, the matter will be considered in accordance with law as well as facts and circumstances.
7. In the result, the appeal filed by the assessee is dismissed.
Order is pronounced in the open Court on 13th day of August, 2019.
Sd/- Sd/-
(H.S.SIDHU) (ANADEE NATH MISSHRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 13.08.2019
* Amit Kumar *
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Draft dictated 07.08.2019
Draft placed before author 08.08.2019
Approved Draft comes to the Sr.PS/PS
Order signed and pronounced on .08.2019
File sent to the Bench Clerk .08.2019
Date on which file goes to the AR
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Date of dispatch of Order.
Date of uploading on the website .08.2019
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