Income Tax Appellate Tribunal - Panji
Priti Devendra Shah,, Pune vs Deputy Commissioner Of Income-Tax,, on 17 January, 2018
आयकर अपीलीय अिधकरण,
अिधकरण, पुणे यायपीठ "ए" पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "A", PUNE
ी डी.
डी क णाकरा राव , लेखा सद य
एवं
ी िवकास अव थी,
अव थी याियक सद य के सम
BEFORE SHRI D.KARUNAKARA RAO, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA Nos.1508 to 1511/PUN/2015
िनधा रण वष / Assessment Years : 2008-09 to 2011-12
Priti Devendra Shah,
Bhagyalaxmi Niwas,
A/P Manchar,
Bazar Peth,
District Pune - 410503 .... अपीलाथ /Appellant
Vs.
Dy.CIT, Central Circle-1(1),
Pune .... यथ / Respondent
Assessee by : Shri Suhas P. Bora
Revenue by : Shri Achal Sharma
सुनवाई क तारीख
/ घोषणा क तारीख /
Date of Hearing : 16.01.2018 Date of Pronouncement: 17.01.2018
आदेश / ORDER
PER BENCH :
There are 4 appeals of the assessee under consideration involving assessment years 2008-09 to 2011-12. All these 4 appeals revolve around the common issue of taxation of unaccounted jewellery and silver.
2. We first take up the appeal ITA No.1511/PUN/2015 for A.Y. 2011-12. Giving background facts of the case, Ld. AR for the assessee submitted that search action u/s.132 of the Act was conducted in the Priti group of cases on 04-02-2011 (A.Y. 2011-12). Search resulted in the seizure of documents and the excess jewellery/silver. Regarding the gold jewellery, it is the finding of the search party that assessee made disclosure of Rs.41,14,225/- on account of jewellery found and 2 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah seized during the search action. However, the seized papers during the search action named Bundle No.3 lists out the bills showing the evidence of purchase of jewellery and such acquisition of jewellery works out to Rs.71,40,553/- and the details of acquisition are listed in a tabular form. Relevant assessment-year wise details are in the table which is extracted here as under :
S. Seized Party name Particulars Date of bill Amount A.Y. Total No. page no 1 2 NA Gold 11/06/2007 416000 2008-09 2 8 NA jewellery 11/06/2007 937368 2008-09 3 11 Govardhan jewellery 19/08/07 55757 2008-09 4 13 NA jewellery 27/03/08 500000 2008-09 5 21 NA jewellery 27/04/07 596453 2008-09 2505578 6 1 NA Earring 23/10/08 62000 2009-10 7 9 NA jewellery 07/09/2008 83750 2009-10 8 10 NA jewellery 10/01/2008 1410000 2009-10 9 14 NA NA 9/7/08, 273000 2009-10 1828750 25/10/08 10 5 Arena Kundan Set 22K 26/06/09 127596 2010-11 11 6 Pannalal D P Set 15/06/09 18938 2010-11 Zaveri 12 16 NA jewellery 30/05/09 1160000 2010-11 13 17 Gokul Gems jewellery 06/01/2009 4500 2010-11 & Jewellery 14 18 NA jewellery 27/12/09 1130000 2010-11 15 19 Gokul Gems jewellery 06/01/2009 14600 2010-11 2455634 & Jewellery 16 15 Shah jewellery 18/01/11 38089 2011-12 Babulal Gokuldas 17 20 Gala jewellery 12/01/2010 212502 2011-12 Diamond 18 4 Card I5-008 NA NA 100000 2011-12 350591 Total 7140553
3. From the above table, the total unaccounted jewellery acquired during the A.Y. 2008-09 works out to Rs.25,05,578/-. Similarly, Rs.18,28,750/- is the jewellery relevant to the A.Y. 2009-10, Rs.24,55,634/- for the A.Y. 2010-11 and Rs.3,50,591/- is for the A.Y. 2011-12.
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ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah
4. Ld. AR submitted that ignoring the facts relating to the availability of the dates of acquisition of the said jewellery, the whole of this amount of Rs.71,40,553/- was taxed in the A.Y. 2011-12. Infact, assessee offered the same during the said search proceedings. The said unaccounted investment of Rs.71,40,553/- on account of jewellery was offered to tax in the return of income filed by the assessee for A.Y. 2011-12. However, during the assessment proceedings, ignoring the above arrangement, the AO issued a notice u/s.153C of the Act for the A.Yrs. 2008-09 to 2010-11 and proceeded to tax the unaccounted jewellery of 25,05,578/- for the A.Y. 2008-09, Rs.18,28,750/- for the A.Y. 2009-10 and Rs.24,55,634/- for the A.Y. 2010-11 respectively. In doing so, the dates appearing in the seized documents were relied by the AO. However, when it comes to the addition for the A.Y. 2011-12 is concerned, the AO proceeded to tax as per the income returned by the assessee without granting any telescoping benefit. To that extent, it is a case of double taxation on the said unaccounted jewellery. The CIT(A) confirmed the aforesaid additions for all the 4 years, i.e. A.Yrs. 2008-09 to 2011-120-11. In effect, the amount of Rs.67,89,962/- is taxed twice both in the A.Y. 2011-12 cumulatively and in the individual assessment years.
5. Aggrieved with the above manner of assessment of the AO in all the 4 years and confirmed by the CIT(A), the assessee is in appeal before us.
6. Further, Ld. AR for the assessee submitted that the assessee has no objection to not to press the appeals for A.Yrs. 2008-09 to 2010-11 if the suitable directions are given to the AO with regard to the A.Y. 2011-12 which is in effect of granting relief to the assessee to the extent of Rs.67,89,962/-.
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ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah
7. In the background of the above, assessee raised the following additional grounds and the same are extracted as under :
"1. Assessee submits that if addition made on account of excess jewellery of Rs.25,05,587/- in the A.Y. 2008-09, Rs.18,28,750/- in the A.Y. 2009-10 and Rs.24,55,634/- in the A.Y. 2010-11 is confirmed as to be taxed in the respective years then telescopic benefit of these amounts be given in the A.Y. 2011-12.
2. Assessee submits that this will be double addition once on the basis of seized paper in the respective years and again in the A.Y. 2011-12 on the basis of declaration u/s.134(4) of the Act in the A.Y. 2011-12.
3. The assessee therefore submits that on these facts the matter may be set aside to the AO for the purpose of taxing the amounts in the correct year and income for the A.Y. 2011-12 be reduced to the extent of amount taxed in the year 2008-09 to 2020-11 on account of excess jewellery.
4. The assessee submits that the additional grounds raised are legal in nature and as all the facts are on record, the assessee request for admission of the above additional grounds of appeal."
8. Bringing our attention to the assessments made by the AO for all the 4 years, Ld. AR for the assessee submitted that it is unfair that the manner of making the assessment on the amount to the extent of Rs.67,89,962/- is unsustainable in law. Further, the fact of making addition of Rs.67,89,962/- in the A.Y. 2011-12 was demonstrated by the Ld. AR for the assessee. Drawing our attention to the computation of income placed at page 2 of the paper book and also drawing our attention to item No.2 on the said page, he demonstrated that an amount of Rs.68,53,001/- was already offered to tax under the head "income from other sources" -(Bank Int./Int. on Bonds (Bank Interest) other income (Income disclosed in search-jewellery). Mentioning that assessee erroneously offered the said amount in the A.Y. 2011-12, Ld. AR submitted that the assessee is under the bonafide belief that such income will not be added by the AO once again in the A.Yrs. 2008-09 to 2010-11. But this is a case where the 5 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah AO unfairly taxed this amount in the respective assessment years also without granting any telescopic benefit in the A.Y. 2011-12.
9. Relying on the CBDT Circular No.14 (XL-35), dated 11-04-1955, Ld. AR for the assessee submitted that it is the duty of the AO to make proper assessment guiding the assessee in every reasonable way, particularly in the matter of claiming and securing reliefs as per the rules and procedures laid down in the Income tax Act and the Rules. Further, he submitted that there is no bar for the AO for making an assessment even if it has an effect of reduction of return of income and if it is in the interest of administration of justice. He also brought our attention to the Nagpur Bench decision in the case of DCIT Vs. Sanmukhdas Wadhwani 85 ITD 734. Relying on the decision of Pune Bench of the Tribunal in the case of Serum Institute of India Ltd. Vs. DCIT and Vice versa in ITA Nos. 985 and 986/PUN/2015 and ITA Nos. 1535 and 1536/PUN/2015, dated 28-11-2017, Ld. AR for the assessee also submitted in favour of taxing the amounts in the correct assessment year even if means having a negative effect for the A.Y. 2011-12.
10. On the other hand, Ld. DR for the Revenue relied heavily on the orders of the AO/CIT(A) and mentioned the fact of not raising the issue of telescoping benefit before the lower authorities. In any case, he fairly concurred with the fact that the issue raised by the assessee through the additional grounds constitutes legal in nature.
11. We heard both the sides and perused the peculiar facts of this case and orders of assessment and the combined order of CIT(A). We find there is no dispute with regard to the unaccounted nature of the jewellery worth Rs.71,40,553/-. Further, there is no dispute about the years of acquisition and taxability of the same. It was offered in the 6 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah respective assessment years. It is an undisputed fact that the assessee offered an amount of Rs.68,53,001/- and filed the returns and paid taxes under the head "income from other sources", which is evident from the computation of income placed at page 2 of the paper book. In effect, the said amount of unaccounted jewellery is once added by the AO for the A.Yrs. 2008-09 to 2010-11 u/s.153C of the Act ignoring the fact that the said amounts were already offered in the return of income for the A.Y. 2011-12. Bonafide belief in offering the additional income was not respected by the AO for any reason. Now, through the additional grounds (supra), assessee raised the legal issue stating that the assessee desires telescoping benefit in the A.Y. 2011-2. He relied on various decisions including the CBDT Circular No.14(XL-
35), dated 19-04-1955 in respect of the legal proposition that the returned income can be assessed at the lower side on the peculiar facts of the present case. In this regard, we perused the CBDT Circular and the relevant portion is extracted as under :
"3. Officers of the Department must not take advantage of ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the Officers should take the initiative in guiding a taxpayer where proceedings or other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the Department for it would inspire confidence in him that he may be sure of getting a square deal from the Department. Although, therefore, the responsibility for claiming refunds and reliefs rests with assessees on whom it is imposed by law, officers should :--
(a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other;
(b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs."
12. Further, we also perused the decision of the Tribunal in the case of Serum Institute of India Ltd. (relied upon by the assessee) where the decision of Nagpur Bench in the case of DCIT Vs. Sanmukhdas 7 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah Wadhwani was relied upon by the Tribunal and held that making of an assessment on the assessed income lesser than the returned income is within the scope/jurisdiction of the AO. Adopting the said decisions, we have granted similar directions in the case of Serum Institute of India Ltd. vide our order dated 28-11-2017. Relevant portion is extracted as under :
"33. To start with, we will take up the Apex Court's judgment in the case of Commissioner of Income-tax v. Shelly Products [2003] 261 ITR 367 (SC), the Apex Court held in favour of refunding of the excess taxes paid (of advance tax as well as self-assessment tax) out of abundant caution or owing to error or non taxability. Held portion of this judgment is extracted as under :
"However, failure or inability of the Revenue to frame a fresh assessment should not place the assessee in a more dis- advantageous position than he would have been in if a fresh assessment were made. In a case where the assessee chooses to deposit, by way of abundant caution, advance tax or tax on self assessment which is in excess of his liability on the basis of the return furnished or, if there is an arithmetical error or inaccuracy, it is open to the assessee to claim refund of the excess tax paid in the course of the assessment proceedings. He can certainly make such a claim before the concerned authority calculating the refund. Similarly, if the assessee has, by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which, if satisfied, may grant him relief and refund the tax paid in excess, if any. Such matters can be brought to the notice of the concerned authority in a case where a refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief."
34. In the case of Gujarat Gas Company Ltd. Vs. JCIT (245 ITR 84) the Hon'ble Gujarat High Court held that the instruction of the CBDT Circular No.549 (Para No.5.12 dated 31-10-1989 is ultra-vires when the said instruction mandates the AO against making the scrutiny assessments at the figure less than that returned by the assessee. Relevant held portion of this judgment reads as under :
"Held, that the circular in question refers to assessments which are to be made u/s.143(3) of the Act. The circular directs that in a particular type of cases, i.e. in scrutiny cases u/s.143(3) of the Act, the income can neither be assessed at a figure lower than the returned income nor the loss assessed at a figure higher than the loss nor further refund given except what was due on the basis of the returned income. Thus, by issuance of the circular, the quasi-judicial officer is directed to assess cases of particular nature in a particular manner. The Assessing Officer being bound by it had abdicated his function and did not act independently and, therefore, there was no question of alternative remedy which was a futile remedy. In fact, the 8 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah jurisdiction had been exercised by the Central Board of Direct Taxes by issuing the circular and, therefore, the order of the Assessing Officer was without jurisdiction. The court had to exercise its jurisdiction under article 226. The order of the Assessing Officer to the extent it stated that the total income would be the returned income, was to be set aside, with a direction to the Assessing Officer to make assessment without keeping in mind the Central Board of Direct Taxes Circular dated 31-10-1989."
35. The same Hon'ble Gujarat High Court again in the case of CIT Vs. Milton Laminates Ltd. vide Tax Appeal No.1022 of 2010 dated 24-01- 2012 held the issue in favour of the Assessee and against the Revenue. Revenue took the issue to the Hon'ble High Court on the issue, if the Tribunal's direction to the AO to allow complete effect to the order of the CIT(A) without restricting the income to the returned income. In this case, after giving effect to the order of the CIT(A), the income assessed has fallen below the returned income of the assessee. The Hon'ble High Court upheld the order of the Tribunal. Relevant lines from this judgment also are extracted as under :
"7. In view of the above, we do not find any reason to interfere with the Tribunal's ultimate conclusion in allowing the assessee's appeal. Though some of the observations may not appeal to us, nevertheless, for the reasons somewhat different from those recorded by the Tribunal we come to the same conclusion. Decision of the Apex Court in case of Shelly Products & Others (supra), was rendered in very different background. It was a case where the assessee had filed return. Assessee had paid self assessment tax on the income disclosed in the return. Tribunal on appeal by the assessee held that the order of the assessment passed by the Assessing Officer was ab- initio void since he had no jurisdiction to deal with such proceedings. Revenue sought reference before the High Court. When such reference was pending, the assessee applied to the department for refund of the tax paid. It was in this background the Apex Court expressed the opinion that liability to pay income tax does not depend on assessment being made and failure or inability to frame fresh assessment after earlier assessment is set aside or nullified in appropriate proceedings, does not disentitle the assessee to claim refund of the advance tax and tax paid on self assessment because to that extent the assessee had admitted his liability to pay tax in accordance with law. Facts of the present case are therefore, different. In case of hand, the assessment was not rendered null. In fact such assessment, which according to the order of CIT(Appeals) had become final tax liability of the assessee, came lower than that declared by him in the return filed."
(1) To sum up, from the above, it is obvious that the fetters imposed by the CBDT, on the AOs, when it comes to assessing the income of assessee lower than the returned income, are held ultra vires. Further, the Hon'ble Apex Court also held that the taxes paid by the assessee as a matter of abundant caution, i.e. by way of Advance or Self Assessment Taxes, needs to be refunded after due verification of the claims.
(2) Ld. Counsel for the assessee filed various decisions of the Tribunal demonstrating that the 'contingency' disclosure are entitled to refund after due verification. In this regard, Ld. Counsel for the assessee filed written note on 'Contingency issue' stating that the return of income filed by the assessee constitutes a notional undisclosed 9 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah income as part of the total income. The same should not become an impediment for assessing the income of the assessee based on the principles relating to the Real Income theory. According to him, the income offered by the assessee in the return of income is not sacrosanct and what matters is the AO's finding on the assessed income of the assessee. The assessed income can be lower than the returned income. Relying on the decision of Nagpur Bench of the Tribunal in the case of DCIT Vs. Sanmukhdas Wadhwani 85 ITD 734, Shri R.S. Abhyankar, Ld. Counsel for the assessee submitted that where the assessee himself returned his undisclosed income on adhoc basis without giving any break-up for the same and when the subsequent working submitted by him reveals that the undisclosed income actually assessable in the hands of the assessee is lower than the returned income, the same has to be assessed at such lower income based on the concept of Real Income. Only condition specified in the said decision relates to the verification and correctness of the statements so submitted giving the detailed working before the AO. Relevant portion is extracted as under :
"12. It is observed that a similar issue in the context of regular assessment arose for consideration before the Hon'ble Delhi High Court in the case of CIT v. Bharat General Insurance Co. Ltd. [1971] 81 ITR 303 wherein it was held by their Lordships that even if an assessee declares an income in the return, the Assessing Officer cannot assess it merely on that basis and he has to consider its taxability in the light of other circumstances de hors the admission made in the return. In the case of Narayanan v. Gopal AIR 1960 SC 235, the Hon'ble Supreme Court has held that an admission in the return is not conclusive and it would be decisive only if not subsequently withdrawn or proved to be erroneous. It is well- established that the object of an assessment is to determine the correct income and consequently the correct tax liability. In our opinion, this settled position equally holds good in the matter of block assessment also since the scope of undisclosed income assessable in the block assessment is specifically provided and the procedure for determination of such income is also clearly laid down. In these circumstances, any amount which is not assessable as undisclosed income for the block period cannot be assessed as such merely for the reason that the same was declared by the Assessee in the return for block period and there cannot be such estoppel against the statute. It, therefore, follows that if the assessee commits a patent mistake of fact or law while filing his return of undisclosed income under section 158BC, he cannot be assessed on such incorrect income merely on the basis of admission made in the return.
13. . . . . . . . .In such circumstances, when a detailed working made subsequently by the assessee of undisclosed income revealed that the total undisclosed income assessable in the hands of the Assessee was lower than the returned income, we are of the opinion that the same has to be assessed at such lower amount going by the concept of real income especially when the said working was verified and found to be correct by the Assessing Officer."
36. Similar proposition was affirmed by the Hon'ble Delhi High Court in the case of CIT Vs. Bharat General Insurance Company Ltd. 81 ITR 303 wherein it is held that when the assessee declares income in the return, the AO cannot assess merely on that basis and has to consider its liability in the light of other circumstances de hors the admission made by him in the return. Ld. Counsel for the assessee also referred to 10 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah the other judgment in the case of Ester Industries Ltd. Vs. CIT 316 ITR 260 (Delhi). According to this judgment, suo moto disallowance leading to increased returned income can always be verified by the AO in the assessment and decrease the returned income, even if it falls below the amount of total income returned by the assessee in the return of income. In this case, the Hon'ble High Court restored the matter for such verification. Relevant portion of the judgment are extracted as under :
"11. According to us, the Tribunal ought to have examined the issue as to whether the fact that assessee had made an admission with respect to an addition / disallowance in its original return or in the revised return would ipso facto bar the assessee from claiming an expense or disputing an addition if it is otherwise permissible under law. This is so especially in view of the circumstances, that the Assessing Officer while making the additions /disallowances did not call upon the assessee to furnish any explanation. The upshot of the submission made by the learned counsel for the assessee, is that, had the assessee been given an opportunity by the Assessing Officer it could have demonstrated that no additions or disallowances were called for, in view of the binding precedents of Courts and/or Tribunal in respect of each of the addition/disallowance. The observations made in the Tax Audit Report could not have formed the basis of additions/ allowances by the Assessing Officer. On this aspect of the matter the observations in the judgment of the Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 being apposite are extracted hereinbelow :
It is no doubt true that e ntries in the account books of the assessee amount to an admission that the amount in question was laid out or expended for the cultivation, upkeep or maintenance of immature plants from which no agricultural income was derived during the previous year. An admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. (p. 20).
11.1 We find that the Tribunal instead of examining the matter from this angle has repeated the order passed in the first round without due application of mind to the issues which called for adjudication.
37. The Nagpur Bench of the Tribunal in the case of DCIT Vs. Sanmukhdas Wadhwani (supra) held categorically that the "income not assessable as undisclosed income of the assessee cannot be assessed as such" merely because assessee declared the same through a statement in search action. Admission made by the assessee in the return of income is no sacrosanct. AO is under statutory obligation to make assessment of assessee based on the facts of case and as per the provisions of Act. In other words, coming to the facts of the assessee, if the said sum of Rs. 1 crore is not assessable to tax as income of the assessee, the same ought not be assessed even if the assessed income comes to a lower figure qua the returned income.11
ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah
38. We have considered the above legal scope of the principle relating to the lower figure of assessed income qua the returned income. Further, we have heard the parties and perused the written submissions of the Ld. Counsel for the assessee. Further also, we perused the reasoning given by the CIT(A) while dismissing the claim of the assessee. We find the contents of Para No.12 of his order are relevant. For the sake of completeness of this order, we proceed to extract Para No.13.2 of the CIT(A) :
"13.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . To sum up, the fresh claim made by the appellant during the present proceedings that such income of Rs.1,00,00,000/- may be excluded from the total income assessed by the Assessing Officer as no discrepancies were found during the assessment proceedings cannot be accepted as the additional income was offered voluntarily in the return of income. The alternate claim of the appellant for set off of such contingencies against other statutory disallowance made by the AO also cannot be accepted as discussed above. Ground of appeal No.8 stands rejected."
The CIT(A) denied the claim of the assessee ignoring the settled legal propositions on the topic. The reasons given above by the CIT(A) are artificial and not supported by the legal precedents.
39. The CBDT issued a Circular No.549 dated 31-10-1989 imposing fetters on the AOs for not determining the assessed income at a lower figure than the returned income. The said Circular was held ultra vires by the higher judiciary in the case of Gujarat Gas Company Ltd. (supra). Infact, it is the duty of the AO to make an assessment basing on the facts of the case and as per the provisions of the I.T. Act. In the case of Shelly Products (supra), the Hon'ble Apex Court held that the advance tax/self assessment tax paid as part of an abundant caution are required to be refunded on verification of the claim of the assessee. The Nagpur Coordinate Bench of the Tribunal in the case of DCIT Vs. Sanmukhdas Wadhwani (supra) held that the assessed income can be lower qua the returned income of the assessee. Further, the Tribunal held in this case, any amount which is not assessable as undisclosed income of the assessee cannot be assessed merely for the reason assessee declared in the return of income. There cannot be such estoppels against the statute if the assessee itself finds a patent mistake of fact while filing the return of income assessee cannot be assessed on such incorrect income merely on the basis of admission made by him in the return of income.'
40. In the instant case, considering the above settled legal propositions, we proceed to examine availability of facts relating to the present case. In the return of income, assessee merely offered an amount of Rs.1 crore towards contingency. Meaning thereby that incase the AO makes certain additions basing on same facts or legal issues, the said disclosure amount of Rs.1 crore should be considered for set off/adjustment etc. In case AO failed to make such additions, the said amount of Rs.1 crore is not required to be assessed as income of the assessee. It is an admitted fact that the AO made addition u/s.14A of the Act in the assessment u/s.153A of the Act in the absence of any incriminating material. This addition is made over and above the said contingency amount of Rs.1 crore. However, we find while discussing in the preceding paragraph this disallowance u/s.14A is unsustainable in this assessment as the same does not have strength of any incriminating material. In other words, the AO made an unsustainable addition u/s.14A of the Act and taxed the said amount of Rs.1 crore- contingency income without making adjustment the said amount of Rs.1 crore. In any case, we deleted said disallowance u/s.14A of the Act. Therefore, the question of adjustment is only an academic exercise. 12
ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah Ignoring the same, we now have to decide that the said amount of Rs. 1 crore is assessable to tax in the light of the above legal scope relating to this addition.
41. The AO has not brought any issue or facts relating to the undisclosed income specific to the said sum of Rs.1 crore. In such circumstances, we are of the opinion that the decision of the Nagpur Bench of the Tribunal in the case of DCIT Vs. Sanmukhdas Wadhwani (supra) becomes relevant to the facts of the present case. As such, we proceed to dismiss the voluntary-centric reasoning given by the CIT(A) for denying the claim of the assessee regarding the issue of taxation of the said amount of Rs.1 crore. Considering the above, we are of the opinion that the AO is directed to verify the working of total undisclosed income assessable in the hands of the assessee going by the concept of real income. He shall grant reasonable opportunity of being heard to the assessee. AO is directed to apply the ratio laid down by the above referred judgments in general and the ratio laid down by the Nagpur Bench of the Tribunal in the case of DCIT Vs. Sanmukhdas Wadhwani (supra) while arriving at the assessed income of the assessee. AO shall not consider the so-called voluntary disclosure of the said amount of Rs. 1 crore as the same does not amount to any voluntary disclosure in a real sense. Had it been really voluntary, the assessee would not have raised this issue before us. It is the requirement of the statute that the AO shall make assessment strictly as per the provisions of the law and determine the assessed income accordingly. For applying the said legal principles as well as the judgments and the order of the Nagpur Bench of the Tribunal, we remand this issue to the file of the AO for the limited purpose of adjudication of the issue relating to taxability of the contingency amount of Rs.1 crore. Accordingly, this ground by the assessee is allowed pro tanto."
13. From the above, it is evident that making of proper assessment by the AO assumes significance under the statute notwithstanding the offer of income by the assessee in the return of income on peculiar facts of each case. Therefore, we are of the view that considering the principles of natural justice, the additional grounds raised by the assessee should be admitted and remanded to the file of AO for fresh adjudication in the matter considering the above referred decisions and the CBDT circular referred above. Accordingly, the additional grounds relating to granting of telescoping benefit with regard to the disclosure of unaccounted jewellery is remanded to the file of AO for fresh adjudication and decision. It is obviously unfair to tax Rs.67,89,962/- and others if any, in three assessment years as discussed above. Therefore, AO shall not only allow the claim of the assessee after hearing him and examining the issue and applicability of the cited judgments but also grant reasonable opportunity of being 13 ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah heard to the assessee in accordance with the set principles of natural justice. Thus, all the additional grounds raised by the assessee are allowed for statistical purposes.
14. Coming to the regular ground Nos. 1 to 4 raised by the assessee in the appeal, Ld. AR for the assessee submitted that all the grounds revolve around the issue of addition of Rs.2.2 lakhs on account of unexplained investment in silver articles.
15. Bringing our attention to the order of Tribunal in the case of Netra Pritam Shah Vs. DCIT vide ITA No.1504/PUN/2015 for the A.Y. 2011-12, order dated 29-11-2017, Ld. AR for the assessee submitted that this issue now stands covered by the order of the Tribunal. As discussed in the above said case, the assessee happened to be one of the family members of this group. Relevant discussion is given in Para Nos. 4 to 10 of the said order of the Tribunal and they are identical. For the sake of completeness, relevant portions are extracted here as under :
"4. Briefly, in the facts of the case, search and seizure action under section 132 of the Act was conducted in the Parag Group of cases on 04.02.2011. Search was conducted at the residence of Shri Devendra Shah, Shri Pritam Shah, their business associates and the corresponding business premises on 04.02.2011. The said group was engaged in trading and manufacturing of milk products, wherein M/s. Parag Milk Foods Pvt. Ltd. was flagship concern of the group and M/s. Bhagyalaxmi Dairy Farms Pvt. Ltd. was sister concern of Parag group. Some of group concerns of Parag group as well as business associates were also covered under Survey under section 133A of the Act. Various loose papers, hand written chits and computer print outs, etc. supporting the practice adopted by the concern was seized from the business premises as well as residential premises. All these papers / loose documents were confronted to Shri Devendra Shah, Smt. Priti Shah, Smt. Netra Pritam Shah (assessee) and the employees and concerned officials during the search as well as during post search enquiries.. . . .
5. . . . .
6. The learned Authorized Representative for the assessee pointed out that out of total jewellery found valued at Rs.8,80,000/-, the assessee had shown the value of silver articles at Rs.2,20,000/-, which has accumulated over a period of time and the same is thus, explained in the hands of assessee.. . . . . .14
ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah
7. . . . .
8. . . . .
9. . . . .
10. Now, coming to the second addition on account of value of silver articles found from the assessee and her family members, which totaled to the value of Rs.8,80,000/-. The list of family members which is available at page 6 of the assessment order reflects 13 members of the said family and in view of family traditions, holding of silver articles to the extent of Rs.2,20,000/- merits to be accepted in the hands of assessee. Accordingly, we hold so. Thus, there is no merit in making aforesaid addition on account of silver of Rs.2,20,000/-. The grounds of appeal raised by the assessee are thus, allowed."
16. Considering the above, we are of the opinion that the unexplained silver to the extent of worth Rs.2.2 lakhs is held to be allowable without any tax. Therefore, relying on the order of Tribunal (supra), taxing the unaccounted silver worth of Rs.2.2 lakhs in the hands of the assessee is uncalled for. Accordingly, the original grounds raised by the assessee on this issue are allowed in toto.
17. Coming to the appeals ITA Nos. 1508 to 1510/PUN/2015 for A.Yrs. 2008-09 to 2010-11, Ld. AR drew our attention to the grounds raised by the assessee in all the 3 appeals and mentioned that the same are raised in connection with the aforesaid unexplained investment in jewellery of 25,05,578/- for the A.Y. 2008-09, Rs.18,28,750/- for the A.Y. 2009-10 and Rs.24,55,634/- for the A.Y. 2010-11 respectively. Total of these additions works out to Rs.67,89,962/-. Referring to the facts and additional grounds raised in A.Y. 2011-12, subjected to the grant of relief on account of telescopic benefit, Ld. AR for the assessee further submitted that he will not press these appeals. The additions in these assessment years were made as per the dates available on the receipts/invoices showing the evidence of acquisition of jewellery in particular assessment year. 15
ITA Nos.1508 to 1511/PUN/2015 Priti Devendra Shah
18. On hearing both the parties, we find the prayer of the Ld. AR for the assessee should be allowed in view of our finding in Para 13 above. Therefore, all the 3 appeals stands dismissed as 'not pressed' in view of our finding in principle and in favour of granting telescoping benefit to the extent of the above said amounts from the income returned by the assessee for A.Y. 2011-12. The figures and facts are subject to verification of the AO during the remand proceedings for the A.Y. 2011-12. With these directions, the grounds raised by the assessee in all these 3 appeals are dismissed as not pressed'.
19. In the result, all the 3 appeals of the assessee are dismissed.
20. To sum up, the appeal of the assessee for A.Y. 2011-12 is allowed for statistical purposes and the appeals of the assessee for A.Yrs. 2008-09 to 2010-11 are dismissed.
Order pronounced in the open court on this 17th day of January, 2018.
Sd/- Sd/-
(VIKAS AWASTHY) (D. KARUNAKARA RAO)
याियक सद य /JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
पुणे Pune; दनांक Dated : 17th January, 2018.
सतीश
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. CIT(A)-13, Pune
4. CIT-13, Pune
5. िवभागीय %ितिनिध, आयकर अपीलीय अिधकरण, "A Bench"
Pune;
6. गाड फाईल / Guard file.
आदेशानुसार / BY ORDER,स
स यािपत ित //True Copy//
//True Copy// Senior Private Secretary
आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune