Income Tax Appellate Tribunal - Ahmedabad
Meena G. Agarwal, Surat vs Department Of Income Tax on 30 April, 2015
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'B' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, AHMEDABAD
ी एन0एस0 सैनी, लेखा सद य एवं ी कुल भारत, या%यक सद य के सम&
BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND
SHRI KUL BHARAT, JUDICIAL MEMBER
आयकर अपील सं./ IT(SS)A No. 590/Ahd/2012
With
CO No.37/Ahd/2013
%नधा)रण वष)/Assessment Year: 2010-11
DCIT, Cent.Cir.3 Meena G. Agarwal
Surat. Vs 18, Kaushalya, 3rd Floor
11th Road, JVPD Scheme
Juhu, Mumbai.
PAN: ADAPA 5628 B
अपीलाथ,/ (Appellant) -.यथ,/ (Respondent)
Revenue by : Shri O.P. Vaishnav, Sr.DR
Assessee(s) by : Shri S.N. Soparkar
सन
ु वाई क तार ख/ Dateof Hearing : 18/04/2015
घोषणा क तार ख / Date of Pronouncement: 30/04/2015
आदे श/O R D E R
PER N.S. SAINI, ACCOUNTANT MEMBER: This is an appeal filed by
the Revenue and Cross Objection by the assessee against the order of the Commissioner of Income-Tax (A)-II, Ahmedabad dated 28.9.2012.
2. In the Revenue's appeal, the sole issue involved is that the CIT(A) erred in law and on facts in deleting the addition of Rs.32,55,685/- out of total addition of Rs.53,27,057/- made on account of unexplained jewellery.
In the Cross Objection filed by the assessee, the sole issue involved is that the CIT(A) erred in upholding the addition of Rs.20,71,372/- in respect of unaccounted jewellery.
IT(SS)A No.590/Ahd/2012 With CO 2
3. As the facts and issue involved are similar, we are disposing of the ground of appeal of the Revenue and the ground of the Cross Objection of the assessee together as under.
4. The brief facts of the case are that the AO observed that during the course of search under section 132 of the IT Act, 1961, carried out on 16.7.2009 in the case of N.R. Agarwal Group and others, jewellery of yellow metals and diamond were found and seized from the residential premises of the assessee. Further, the jewellery found in lockers were operated and brought to the residence of the assessee and valued. The family of Shri Gajendra Agarwal consists of himself, his wife Smt. Meena Agarwal and daughter Neha Agarwal and Nikhar Agarwal. The details of the jewellery found and seized are as under:
Jewellery Found Jewellery seized
Name of Premises Diamond Gold in Silver Value (in Diamond Gold in Silver Value
assessee gram (in Rs.) grams (in Rs.)
(Gross kgs.)
Wt.)
Mrs. Residence 5776 325.10 - 3921655 - - - -
Meena at
G. Kaaushalya,
Agarwal Juhu
Scheme,
Mumbai
Mrs. Residence - 245.600 - 300140 - - - -
Meena at
G. Kaaushalya,
Agarwal Juhu
Scheme,
Mumbai
Mrs. - 0.040 21.300 - 25249 - - - -
Meena
G.
Agarwal
on
person
Mrs. Residence - - 56 1008000 - - - -
Meena at
G. Kaaushalya,
Agarwal Juhu
Scheme,
Mumbai
Mrs. Residence 495.15 2530.880 - 21299940 224.49 1446.87 - 92067
Meena at 60
G. Kaaushalya,
Agarwal Juhu
Scheme,
Mumbai
Mrs. Residence - 3648.730 - 4004245 - - - -
IT(SS)A No.590/Ahd/2012 With CO
3
Meena at
G. Kaaushalya,
Agarwal Juhu
Scheme,
Mumbai
5. Smt. Meena G. Agarwal is assessed to wealth-tax. She had filed her wealth tax return for the Asstt.Year 2008-09 on 31.7.2008 with ACIT, Vapi vide acknowledgement no.397. In the valuation report dated 20.8.2005, enclosed with the return of wealth, she had disclosed jewellery as under:
Diamond in Gold in grams Silver in KGs. Value in Rs.
Carats 239.17 1905.23 - 8875900 726.31 866.1 - 9828000 - 852 - 420000 - 1817.900 - 908950 - - 35.40 354000
The AO, thereafter observed that the total jewellery disclosed in the wealth-tax return by the Smt. Meena G. Agarwal and the jewellery found at the time of search was as under:
Diamond Gold in Value (in Diamond Gold in Value (in Diamond Gold in Value in Cts grams Rs.) in Cts. grams Rs.) in Cts. grams (in (Gross (Gross Rs.) Wt.) Wt.) 965.48 5441.23 20032850 552.95 6771.61 2,95,51,229 - 1330.38 The AO also observed that at time of search, diamond jewellery found has been compared with the description of diamond jewellery mentioned in the valuation report enclosed with the Wealth Tax return of Smt. Meena G. Agarwal. The comparison was made on the basis of number of diamond pieces, gross weight, carat weight and description mentioned in the valuation report of the assessee and that of the Departmental valuer. It was found that the description of diamond jewellery, gross weight, carat weight and number of diamond pieces IT(SS)A No.590/Ahd/2012 With CO 4 mentioned in the report of departmental valuer at the time of search was not tallying with the description of diamond jewellery, gross weight, carat weight and number of diamond pieces mentioned in the valuation report of the assessee enclosed with the wealth-tax return. The jewellery of 224.49 diamonds and 1446.87 grams of gold valued at Rs.92,06,760/- was therefore seized at the time of search. The assessee had claimed at the time of search that the diamond jewellery is not tallying as she has remade some of the diamond jewellery. The AO observed that the assessee has raised the following pleas:
i) Jewellery to the extent of Rs.74,64,673/-has been seized erroneously as either the gross weight or carat weight or description of the jewellery mentioned in the valuation report of the departmental valuer made at the time of search tallied with the jewellery mentioned in the valuation report of the assessee enclosed with the wealth tax return;
ii) Jewellery to the extent of Rs.10,02,596/- has been re-
made/altered from the original jewellery which has been disclosed by the assessee in her wealth-tax return. The assessee has enclosed remaking bills along with the application;
iii) There was calculation error to the extent of Rs.77,107/-.
6. The AO, thereafter, observed that these pleas of the assessee are not acceptable for the following reasons:
i) Gross weight of the jewellery
ii) Carat weight of diamond/stone
iii) Number of pieces of diamond/stone
iv) Description of the jewellery in the departmental valuation report and assessee's valuation report.
IT(SS)A No.590/Ahd/2012 With CO 5
7. It was found that there was gross variation in either or all of the above criteria. The jewellery, which was found to be not matching in any of these four criteria with the assessee's valuation report, was therefore seized. The assessee has raised the plea that jewellery to the extent of Rs.74,64,673/- which has been seized was matching or nearly matching with the valuation report enclosed with the wealth-tax return. This claim of the assessee was not correct. The assessee has in her letter dated 26.9.2009 enclosed the valuation report of departmental valuer and valuation report of her valuer. A perusal of the chart submitted by the assessee showed that there was gross- mismatch between both valuation reports in terms of above four criteria mentioned. From the comparison between the valuation of the assessee and the valuer of the department, it could be seen that there was vide variation in gross weight, carat weight, number of diamond pieces of description. Simply speaking, it cannot be said that the jewellery found and seized and jewellery reflected in wealth-tax return was the same. The assessee could not discharge the onus of proving that this was the same jewellery which was being reflected in the wealth-tax returns. He, therefore, made addition in respect of unexplained excess jewellery as under:
Total unaccounted jewellery 9206760
Unaccounted jewellery after 9129653
rectification of calculation -
mistake
Jewellery claimed to be remade 1002596
Disclosure 2800000
Total addition 53227057
8. Thereafter, the AO observed that during the assessment
proceedings, the assessee has identified the disclosure of Rs.28.00 lakhs, as investment in jewellery. The claim of the remaking of jewellery of Rs.10,02,596/- has been verified to be true. Subject to the above, he made addition of Rs.53,27,057/-.
IT(SS)A No.590/Ahd/2012 With CO 6
9. On appeal, the CIT(A) held as under:
"4. I have considered the basis of addition made by the Assessing Officer, the submission and reconciliation statement filed by the appellant and also perused the valuation report by the appellant's Valuer as on 13th December, 1997 prepared at the time of VDIS, 25th June, 1998, 23rd July, 2001 and 20th August, 2005. The valuation reports have been filed before the Assessing Officer and also during] the appellate proceedings. Out of total seizure of diamond jewellery valued at Rs. 91,29,653 the Assessing Officer has accepted the explanation of the appellant to the extent of diamond jewellery valued at Rs] 10,02,596 on account of alteration and remaking. Out of balance jewellery the appellant has made disclosure of Rs. 28 lacs on account of unexplained investment in jewellery during the search which have been offered by the appellant in the return of income. For balance addition of Rs. 53,27,057, the appellant has filed reconciliation of diamond jewellery as narrated in detail above. As mentioned by the Assessing Officer on page - 3 of the assessment order that 552.95 carats of diamond was found during the search as against 965.48 carats of diamonds declared in Wealth Tax Return prior to the date of search. The addition of unexplained diamond jewellery has been made if discrepancy between assessee's valuation report and the Departmental Valuer's report prepared at the time of search was noticed on any of the four criteria adopted by the Assessing Officer. These criteria were gross weight, carat weight of diamonds, number of pieces of diamonds and description of jewellery. Similar situation was faced by the assessee at the time of block assessment relevant to the search initiated on 1st December, 1995. The DCIT, Special Range - 40, Mumbai, passed order under Section 158BC(c) r.w.s 143(3) of the IT Act with the approval of Commissioner of Income Tax on 23red December, 1996. In that order, one pair jhumkis, one necklace set, four bangles of diamond and one ring of diamond were treated as explained on the ground that description of the jewellery were same or almost identical in the valuation report filed with the assessee's Wealth Tax Return for AY 1994-95 and 1995-96. The number of diamonds were also different and there was human error in counting the diamonds as the diamonds in question were undoubtedly very small. The gross weights were also different but the items found were approximately close to the items declared and there was a reasonable explanation for the small difference noted.
IT(SS)A No.590/Ahd/2012 With CO 7 On comparison of items in the reconciliation statement (1), (6), (8), (9), (10), (11), (16), (17), (18), (19), (21), (22), (23) AND (27), as per valuation report dated 20th August, 2005, by the assessees valuer with the valuation report prepared by the Departmental Valuer it is found that description of the items, gross weight, number of diamonds, and carat weights are almost close to the description in both the valuation reports. In the case of very small diamonds, the number of diamonds may vary due to counting error by both the valuers. For example, in reconciliation statement No. 1, 534 diamonds are studded in one set of necklace in assessee's valuation report, whereas in the Departmental valuation report contains the same description of items with almost iall same gross weight but the number of diamonds were
465. Similarly, inreconciliation statement No. 6, one set of necklace, one pair ear-ring and one bracelet were studded with 1586 diamonds as per assessee's valuation report but as Departmental valuer, the description of items were also same, with counting of diamonds in each item were different but the total a diamonds studded in these items were totaling to 1364 in comparison to 1586 diamonds , in the assessee's valuation report. In reconciliation Statement (8) one ring with one diamond containing 3.9 carats weight and same is described in departmental valuer's report as one solitaire ring with one diamond and four carat weight. Description in both the valuation reports is almost the same and carat weight is almost same with the difference in gross weight. Similar minor difference in -any of the four criteria adopted by the Assessing Officer resulted in rejection of assessee's explanation and addition. From the reconciliation statements mentioned above where only minor difference is noticed by the Assessing Officer with almost same description of items, it is concluded that in minor difference in any of the criteria i.e. gross weight, carat weight, number of diamonds and description of the item should not be made the sole criteria. Minor difference in description in items may be due to nomenclature used by two valuers, minor difference in number of diamonds can be due to human error in counting very small size of diamonds and negligible difference in carat weight can be due to human error and perception of the valuer. At times, the diamond jewellery items are refixed due to loss of small diamonds and loosening of the studded diamonds and there may be minor difference in number of diamonds due to this reason also. The assessee's explanation for (discrepancy in diamond items related to reconciliation statements mentioned above get strength from the fact that these items were continuously included in the valuation reports prepared by the assessee's valuer as on 13th December, 1997 prepared at the time of IT(SS)A No.590/Ahd/2012 With CO 8 VDIS, 25th June, 1998, 23rd July, 2001 and 20th August, 2005 and the same were disclosed in the Wealth Tax Return. The overall diamond jewellery found during the search is less than the diamond jewellery declared in WT Return. In view of the fact that there is minor difference either in gross weight, carat weight, or number of diamonds should not be made the basis for rejection of assessee's explanation. Wherever the description of the item as per Departmental Valuer's report is almost identical, close or the same with regard to name of item either it is necklace, ring, jhuimki, bracelet, earrings and the nature of diamond or precious stone studded in the diamond jewellery item is almost identical to the description of the assessee's valuation report filed with WT Return, the appellant's explanation should have been accepted and in my considered opinion, the Assessing Officer was not justified in making addition of the diamond jewellery as mentioned in the reconciliation statements (1), (6), (8), (9), (10), (11), (16), (17), (18), (19), (21), (22), (23) and (27), particularly for the reason that these items were not part of the jewellery items identified for disclosure to the extent of Rs. 28 lacs and the items of jewellery altered/remade and allowed by the Assessing Officer. Thus, the addition of Rs. 32,55,685 is deleted out of addition of Rs. 53,27,057.
4.1 On comparison of reconciliation statement No. (3), (12), (14), (15), (24), (25) and (C), it is found that there is gross variation in the description of items, carat weights and gross weight of the items in the valuation report by the Departmental Valuer and by the assessee's Valuer. For example, in reconciliation statement (12), one necklace with emerald chowki, has been compared with one necklace with rubies. In reconciliation statement (25), one nath with red stone 17/016 carats has been compared with one nose-ring with eight diamonds. The description of item and diamond details are totally different. Similarly, in reconciliation statement (C), diamond pendent with chain and one piece of 9 carat diamond has been compared with one pendant with 7.02 carats of diamond and three diamond marquises weight about 1.41 carat set in gold as per assessee's valuation report. Gross weight of one pendant was 18.800 gms whereas in assessee's valuation report it was 6.900 gms. There cannot be major difference in carat weight of one diamond only in two valuation reports for which value difference was Rs. 9 lacs. In view of the gross discrepancies in description if the item, gross weight and carat weight and description in nature of precious stone studded in the jewellery, the explanation of reconciliation statement (24), (25) and reconciliation statement (C), the appellant's explanation cannot be accepted and the diamond jewellery IT(SS)A No.590/Ahd/2012 With CO 9 mentioned in these reconciliation statement are treated as different and unexplained and addition made on account of unexplained investment in these items which comes to Rs. 20,71,372 is confirmed. The appellant has in her alternate submission claimed the credit as per CBDT Circular No. 1916, dated 11th May, 1994 but the same cannot be granted as no seizure of separate gold jewellery was made and no separate addition was made for the gold ornaments. No gold ornaments belonging to the three persons were also claimed during the course of search proceedings or during assessment proceedings. The appellant has also not identified the items belonging to these three persons. Thus, the ground of appeal is partly allowed."
10. Being aggrieved with the said order of the CIT(A) both the Revenue and the assessee are in appeal before us.
11. The AR of the assessee submitted that this Bench of the Tribunal in the case of Liza Girish Shah Vs. DCIT, in ITA No.2516 and 2685/Ahd/2010 order dated 21.6.2013 has held as under:
"..... Regarding second objection of the AO that items are not tallying, we find force in the submissions of the learned AR of the assessee raised before the AO, learned CIT(A) and before us also that over the period of time, items of gold jewellery keep on changing because of remaking and, therefore, gross weight of gold jewellery found in course of search should be taken as explained to the extent of gross weight of gold jewellery as per valuation report already accepted as per wealth tax return filed by the assessee if any, or as in the present case, a valuation report enclosed with Will of Virbalaben, mother-in- law of the assessee and item wise tallying of gold jewellery is not essential. Hence, we do not find any reason to interfere in the order of the learned CIT(A) with regard to the addition deleted by him. In this regard, we sustain his order. Accordingly, ground No.1 of the revenue's appeal is dismissed."
12. He, therefore, submitted that the gross-weight of the jewellery shown by the assessee in the wealth-tax return should be accepted as disclosed by the assessee, and not according to item-wise tally, carat- wise tally, gross-weight and number of diamonds with regard to each item of jewellery.
IT(SS)A No.590/Ahd/2012 With CO 10
13. On the other hand, on merit DR supported the order of the AO. The other contention of the DR was that the CIT(A) has erred in law and on facts in not giving the AO opportunity to offer his comments on the new/additional evidences furnished before him in the form of details of reconciliation statements, as required under Rule 46A of the I.T.Rules.
14. In reply, the AR of the assessee submitted that no new or fresh evidences were filed before the CIT(A), and the reconciliation statement which was filed before the CIT(A) was prepared from the valuation report, which was prepared during the course of search and the valuation report, which was filed along with wealth-tax returns. Thus, no new/fresh evidence was filed before the CIT(A).
15. The DR could not controvert the above explanation of the assessee. We, therefore, find that no new/fresh evidence was entertained by the CIT(A). Thus, this ground of appeal of the Revenue has no merit.
16. Further, in respect of other grounds of appeal of the Revenue, we find that no mistake in the findings of the CIT(A) could be pointed out by the DR. The DR could not controvert the conclusion of the CIT(A) that minor difference in description of jewellery in two valuation reports is possible, because of difference in nomenclature used by two valuers, the minor difference in number of small diamonds is possible on the facts of the case, because of human counting error or because of normal wear and tear, and nominal difference in weight could also be on account of two different perceptions of jewelers. We, thus, do not find any force in the appeal of the Revenue, and accordingly, the same is dismissed.
17. Coming to the cross-objection of the assessee, we find that the assessee relied on the above quoted decision of the Tribunal, wherein it was held that gold jewellery to the extent of gross weight already IT(SS)A No.590/Ahd/2012 With CO 11 disclosed should not be treated as undisclosed, because description of the jewellery keep on changing on remaking of jewellery.
18. We find that this decision was not cited, and therefore, could not be taken into consideration by the lower authorities. We find that no finding has been recorded by the lower authorities as to whether the jewellery found during the course of search, which were not tallied with the description of jewellery given in the valuation report filed with wealth-tax return, could be made from remaking of untallied jewellery stated in the valuation report filed along with wealth-tax return or not. We, further, observe that the assessee also could not bring any material before us to show that the same was possible. In the above circumstances, in our considered view, it shall be in the interest of justice to restore this issue back to the file of the AO for deciding the issue afresh after taking into consideration the above cited decision, and actual position in the light of the discussion made above. Needless to mention that, the AO shall allow reasonable and proper opportunity of hearing to the assessee before adjudicating the issue afresh. Thus, this ground of the cross objection of the assessee is allowed for statistical purpose.
19. In the result, the appeal of the Revenue is dismissed and the Cross-Objection of the assessee is allowed for statistical purpose.
Order pronounced in the Court on Thursday the 30th April, 2015 at Ahmedabad.
Sd/- Sd/-
(KUL BHARAT) ( N.S. SAINI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 30/04/2015