Income Tax Appellate Tribunal - Delhi
Smt. Manju Gupta, Faridabad vs Acit, Faridabad on 8 May, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F", NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
AND
SMT. BEENA A. PILLAI, JUDICIAL MEMBER
ITA No.2284/Del/2016
Assessment Year : 2007-08
Manju Gupta, ACIT, Central Circle- 1,
House No.705/706, Sector- 16A, Faridabad.
Vs.
Faridabad.
PAN : ACRPG5669C
(Appellant) (Respondent)
Assessee by : Shri Vivek Bansal
Shri Sanjay Goyal, Adv.
Department by : Shri Atiq Ahmad, Sr.DR
Date of hearing : 15-02-2018
Date of pronouncement : 08-05-2018
ORDER
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated 29.02.2016 of CIT(A)- 3, Gurgaon relating to assessment year 2007-08.
2. Facts of the case, in brief, are that a search and seizure operation u/s 132 of the I.T. Act, 1961 was conducted at the residential premises of the assessee, Smt. Manju Gupta on 07.09.2006. The assessee is the proprietor of M/s Royal Precision Works, Pandit Place, Tigaon Road, Ballabgarh. During the course of search operation, cash of Rs.96,651/- and jewellery valued at Rs.6,35,847/- were found from the residence of the assessee. Similarly, jewellery valued at Rs.9,68,957/- were also found from the Locker No.90 maintained with Oriental 2 ITA No.2284/Del/2016 Bank of Commerce, Sector- 19, Faridabad in the name of Manju Gupta. During the course of assessment proceedings, the Assessing Officer asked the assessee to explain the jewellery found from the residence as well as Locker of the assessee amounting to Rs.6,35,847/- and Rs.9,68,957/- respectively. The assessee explained that the jewellery found at the residence has been acquired by her on various occasions like marriage, birth of children, mundan ceremony of children as per culture and religion prevalent in the Hindu Society.
3. So far as jewellery found from the locker of the assessee at Oriental Bank of Commerce valued at Rs.9,68,957/- is concerned, it was explained that the correct valuation is Rs.9,10,157/- and not Rs.9,68,957/- since there is a totaling mistake in the valuation report amounting to Rs.58,800/-. It was further submitted that during the course of search, the statement of the assessee was recorded wherein she had stated that a portion of this jewellery originally belonged to her mother in law, who had given the same to the assessee before her death, since she was staying with the assessee at that time. A chart specifying the jewellery inherited from the mother in law of the assessee was filed before the Assessing Officer. Based on the arguments advanced by the assessee and the documentary evidences produced before him, the Assessing Officer keeping in mind the social status, culture and religion prevalent in 3 ITA No.2284/Del/2016 Hindu Society etc. allowed jewellery totaling to 1200 gms. as explained in the hands of the assessee. The manner of such explanation was as under :-
(i) Mrs. Manju Gupta = 400 gms.
(ii) Two sons = 200 gms.
(iii) Shri Vinay Gupta = 100 gms.
= 700 gms.
(iv) Jewellery belonging to mother
in law of the assessee = 500 gms. (treated as owned by
mother in law.)
= 1200 gms.
4. The Assessing Officer accordingly treated the remaining jewellery of 384 gms. valued at Rs.3,64,800/- as unexplained and added the same to the total income of the assessee as unexplained investment in jewellery.
5. Before ld. CIT(A), the assessee made elaborate submissions challenging the addition made by the Assessing Officer. However, the ld. CIT(A) instead of granting any relief issued an enhancement notice asking the assessee to explain as to why the excess benefit granted by the Assessing Officer of 600 gms. valued at Rs.5,70,000/- should not be added to the total income of the assessee. Rejecting the various arguments advanced by the assessee, ld. CIT(A) finally sustained the addition on account of 400 gms. and enhanced the income by Rs.3,80,000/- by observing as under :-
"I have gone through the assessment order and the submissions filed by the appellant and following observations are made:-
(i) The AO had made an addition of Rs. 3,64,800/- on account of unexplained investment in gold after treating 1200 gms of gold as explained in the hands of different family members and Rs. 40,000/- on account of unexplained investment in silver utensils.4 ITA No.2284/Del/2016
(ii) Relying on the judgment of the Hon'ble Gujrat High Court in the case of CIT vs Ratan Lal Vyaparilal Jain (2011), 339 ITR 351, the Hon'ble ITAT Chandigarh Bench in the case of Shri Pradeep Goyal in ITA No. 589/Chd/2015 has held that the AO should to give benefit of jewellery found during search proceedings as per CBDT instruction no. 1916 dated 10.05.1994 in each member from the total jewellery found during the course of search as follows:
500 gms to married ladies, 250 gms to unmarried ladies and 100 gms in case of male members.
(iii) During appellate proceedings, notice u/s 251(2) of the Act for enhancement of income was given to the appellant to withdraw the relief given to appellant on account of her deceased mother in law (500 gms of gold jewellery) and two sons (200 gms of gold jewellery)
(iv) In view of the judicial pronouncements, no relief can be given on account of a deceased lady. The submissions of the appellant with regard to mother -in - law's jewellery account be accepted as no proof has been given regarding the investment of the same, explained in her hands. With regard to appellant's contention regarding receipt of same, the courts have taken such situations into consideration while giving benefit of jewellery weighing 500 gms to married ladles.
(v) In view of the same, this investment in 500 gms gold attributed to appellant's mother in law is also treated as unexplained investment u/s 69 of the IT Act. As the AO has treated the jewellery weighing 400 gms in hands of the appellant explained, this is increased to 500 gms in view of judicial pronouncements. Enhancement is made to the appellant's taxable income treating 400gms (500 gms-100gms) of gold found during search also as unexplained investment u/s 69 of the IT Act valued at Rs. 3,80,000/- (Rs. 950x 400 gms).
(vi) The jewellery in the hands of 2 sons weighing 200 gms is accepted as explained in view of judicial pronouncements.
(vii) Further, relief is allowed to the appellant in respect of addition of Rs. 40,000/-
on account of unexplained investments in silver utensils in view of Hon'ble Chandigarh ITAT's decision in case of Shri Rajesh Popli in ITA Nos 84 & 85/Chd/2014 and ITA No. 94 & 95/Chd/2014 for AY 2010-11 & 2011-12."
6. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :-
"1. That having regard to facts and circumstances of the case, Ld. CIT(A) has erred in law on facts in enhancing the income of the assessee by Rs.3,80,000/- on account of alleged unexplained investment u/s 69 of the Income Tax Act, 1961.
2. That in any view of the matter and in any case, action of Ld. CIT(A) in enhancing the income is bad in law and against fact of the case and beyond the jurisdiction of the Ld. CIT(A) to make such enhancement.5 ITA No.2284/Del/2016
3. That having regard to facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the additions of Rs.3,64,800/- on account of alleged unexplained jewellery.
4. That having regard to facts and circumstances of the case and in any view of the matter and in any case, action of Ld. CIT(A) in confirming the assessment order, passed without following the principles of natural justice, is bad in law and against fact of the case.
5. That having regard to facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. A.O. charring interest u/s 234A and 234B of the Act.
6. That having regard to facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in initiating the penalty proceedings.
7. That the appellant craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other."
7. Ld. counsel for the assessee strongly objected to the order of the ld. CIT(A). So far as order of the ld. CIT(A) rejecting the claim of jewellery belonging to the mother in law of the assessee is concerned, he submitted that during the course of search itself the assessee in her statement recorded u/s 132(4) of the I.T. Act had categorically stated that a part of the jewellery belonged to the mother in law of the assessee who had given the same prior to her death. It was explained that the mother in law of the assessee was staying with the assessee Smt. Manju Gupta. Referring to the confirmations by the various family members i.e. brothers and sisters of husband of the assessee placed at page 38 of the Paper Book, he drew the attention of the Bench to the confirmations given by them regarding the jewellery given by Smt. Ramanandi Devi, mother in law of the assessee, Smt. Manju Gupta. He submitted that considering the status of the assessee, the CBDT Instruction No.1994 dated 6 ITA No.2284/Del/2016 11.05.1994 and the jewellery given by the mother in law of the assessee, the entire jewellery stands explained and no addition is called for. Referring to the decision of the Pune Bench of the Tribunal in the case of National Auto World vs. ITO reported in 162 TTJ 74, he submitted that the Tribunal at para 92 of the order has decided a somewhat similar issue and has held that although the assessee could not furnish any clinching documentary evidence, however, considering the status of the assessee and level of income of the entire family members it cannot be ruled out that the assessee was in position of jewellery inherited from her parents.
8. Referring to the Chandigarh Bench of the Tribunal in the case of Shri Satish Goyal vs. DCIT vide ITA No.588/Chd/2015 and batch of other appeals order dated 28.09.2015 for assessment year 2012-13, he submitted that there also the Tribunal has deleted the addition sustained by the ld. CIT(A) on account of unaccounted investment in jewellery by considering the benefit of customary practices and Stridhan etc. apart from the Instruction No.1916 dated 10.05.1994 issued by the CBDT. He accordingly submitted that since the total jewellery found during the course of search was only 1584 gms which included the jewellery given by the mother in law of the assessee, no addition is called for.
9. Ld. DR on the other hand heavily relied on the order of the ld. CIT(A). 7 ITA No.2284/Del/2016
10. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and ld. CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that during the course of search jewellery totaling to 1584 gms were found from the residence and locker of the assessee out of which the Assessing Officer accepted 1200 gms as explained which included the 500 gms belonging to mother in law of the assessee who was staying with the assessee prior to her death. We find, in appeal, the ld. CIT(A) did not accept the jewellery given by the mother in law of the assessee as belonging to the assessee and held that as per CBDT Instruction, the 500 gms allowable to the assessee will take care of such jewellery. He, therefore, accepted only 800 gms as explained and held the balance 784 gms of jewellery as unexplained. Thus, apart from sustaining the addition of Rs.3,64,800/- made by the Assessing Officer, ld. CIT(A) further enhanced the income of the assessee by Rs.3,80,000/-. The reasons for such enhancement as well as sustaining of the addition has already been reproduced in the preceding paragraph. It is the submission of the ld. counsel for the assessee that in view of the statement given by the assessee during the course of search and the confirmation of the other family members i.e. the brother and sister of husband of the assessee confirming that such jewellery has been given by the mother in 8 ITA No.2284/Del/2016 law of the assessee to her and considering the social status as well as CBDT Instruction, no addition is called for.
11. We find some force in the above argument of the ld. counsel for the assessee. It is an admitted fact that the assessee during the course of search had stated that a portion of the jewellery originally belonging to her mother in law was given by her to the assessee prior to her death since she was staying with her. The confirmation from the family members of the husband of the assessee was also filed before the Assessing Officer for which he had accepted the genuineness of such 500 gms apart from 700 gms as belonged to the assessee.
12. We find the Pune Bench of Tribunal in the case of National Auto World (supra) has decided the identical issue by observing as under :-
"92. We have carefully considered the rival submissions. In our considered opinion, firstly, the CIT(A) made no mistake in allowing the benefit of 600 gms. of jewellery for the reasons assigned by him. Secondly, with regard to the assessee's claim for availability of ancestral jewellery, the same, in our view, has been wrongly shut out by the CIT(A). No doubt, the assessee could not furnish any clinching documentary evidence, so however considering the status of assessee and the level of income of the entire family, it cannot be ruled out that the assessee was in position of jewellery inherited from his parents. It would be reasonable to expect that the ancestral jewellery available with the assessee would cover the remaining jewellery weighing 627.45 gms. considered unexplained by the CIT(A). Therefore, we uphold the plea of the assessee and direct the AO to delete the entire addition."
13. We find the Chandigarh Bench of the Tribunal in the case of Shri Satish Goyal and batch of other appeals (supra) has observed as under :-
"10. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. The first issue to be decided here is that whether the jewellery found during the course of 9 ITA No.2284/Del/2016 search at the residence as well as at the bank lockers can be considered as jointly held by the family. It is an admitted fact that all the members of the family have maintained the same stance all through the proceedings that the jewellery is being held jointly by all of them. The statement of Shri Pradeep Goyal recorded as early as at the time of search is evident to this fact. The statements of two family members recorded at the time of search on bank lockers also point out to the said fact. The Assessing Officer in his order has nowhere denied the said fact, neither he has been able to bring on record any contradictory fact. If he was not satisfied with this submission of family members, he could have gone ahead and make further enquiries to figure out which jewellery belong to which member of the family. Even the learned CIT (Appeals) in her order has not been able to bring on record any such fact. The fact that all the members are living together, has also not been controverted at any stage. In this background, it is not improbable that the jewellery was being held jointly by all members of the family, as it is customary in our society, where the concept of joint family system is still existing, that the members keep their jewelleries jointly and ladies wear them at times as per their wish. Even the learned CIT (Appeals) while giving arbitrary relief to the assessee has considered the jewellery to be common. In this background, we find ourselves in agreement with the submission of the assessee that the jewellery was being held jointly by the family."
14. Since in the instant case the brothers and sisters of the husband of the assessee have confirmed that the mother in law of the assessee had given her jewellery weighing 500 gms before her death since she was staying with her and since the Assessing Officer had also accepted the same, therefore, we find merit in the argument of the ld. counsel for the assessee that order of CIT(A) enhancing the income is not proper. We, therefore, set-aside the order of CIT(A) and allow the jewellery to the extent of 500 gms as explained. The Assessing Officer is directed to delete addition to this extent.
15. Now coming to the addition sustained by the Assessing Officer is concerned, we find the Assessing Officer had allowed credit to the tune of 400 gms to the assessee. It is an admitted fact that no wealth-tax return was filed by 10 ITA No.2284/Del/2016 the assessee to substantiate the acquisition/availability of jewellery. In absence of the same and going by CBDT Instruction No.1916 dated 11.05.1994 we allow 500 gms of jewellery in the hands of the assessee as explained as against 400 gms allowed by the Assessing Officer. Thus, in effect 284 gms of gold remains unexplained the value of which comes to Rs.2,69,800/- i.e. (950 per gram x 284 gms). The Assessing Officer is directed to restrict the addition to Rs.2,69,800/-. The grounds raised by the assessee are accordingly partly allowed.
16. In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open Court on this 08th May, 2018.
Sd/- Sd/-
(BEENA A. PILLAI) (R. K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 08-05-2018.
Sujeet
Copy of order to: -
1) The Appellant
2) The Respondent
3) The CIT
4) The CIT(A)
5) The DR, I.T.A.T., New Delhi
By Order
//True Copy//
Assistant Registrar
ITAT, New Delhi