Income Tax Appellate Tribunal - Delhi
Vijay Kumar Ashumal,, vs Assessee on 4 March, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G', NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER
AND
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
IT(SS)A No. 209/Del/2005
Block Period from A.Y. 1997-98 to 2003-04
Shri HareshBhai Ashumalbhai Keswani, vs DCIT,
C/o M/s Vijay Stores, Central Circle 3,
Siddarth Road, New Delhi.
Baroda.
IT(SS)A No. 210/Del/2005
Block Period from A.Y. 1997-98 to 2003-04
Sh. Vijay Kumar Ashumal Keswani, vs DCIT,
C/o M/s Vijay Agencies, Central Circle 3,
2/3, Vraj Vatika Complex, New Delhi.
Siddharth Road, Baroda.
(Appellant) (Respondent)
Appellant by: Shri Rajesh Jain, CA
Respondent by: Shri Kartar Singh, CIT DR
ORDER
PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
These appeals by the assessees for the block period from assessment year 1997-98 to 2003-04 (upto 23.10.2002) arise out of the separate orders of CIT (A)-II, New Delhi. These appeals were earlier disposed by the Delhi 'G' Bench of the ITAT by a common order dated 30.09.2008. In IT (SS) A No. 209/Del/2005, the Bench had confirmed the addition in respect IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 of jewellery to the extent of Rs.2,73,701/- and in respect of household goods to the extent of Rs.1,50,000/-. In IT (SS) A No. 210/Del/2005, the Bench had confirmed the addition of Rs.1,87,500/- in respect of household goods. The assessees appealed before the Hon'ble Delhi High Court and the Hon'ble Delhi High Court in its order dated 19.4.2010 in I.T.A. Nos. 368 and 369 of 2009 has remitted the matter to the Tribunal for a consideration of the submissions made by the assessees afresh with the following directions:-
"Having considered the arguments advanced by the learned counsel for the parties, we are of the view that these appeals require re-consideration by the Tribunal. The re- consideration is particularly warranted because the jurisdictional issue, with regard to jewellery in I.T.A. No. 368/2010 requires a finding to be given by the Tribunal before we can examine such an issue on merits. In so far as the household goods are concerned, we find that the Tribunal should examine as to whether these goods pertained to the block period or not and as to whether such goods could not have been acquired by the assessees from their regularly assessed incomes. For these reasons, we set aside the impugned order to the extent of the findings with regard to the jewellery and household goods and remit the matter to the Tribunal for a consideration of the submissions made by the appellant afresh."
2. The first issue for consideration, which is common in both the appeals, relates to addition on account of household goods 2 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 found during the course of search operations. In the case of Haresh Bhai Ashumal Bhai Keshwani, the investment in household goods amounting to Rs. 1,50,000/- was found. The search party made inventory of household goods like air conditioner, fridge, television sound/music system etc. and estimated their value at Rs. 1,50,000/-; and made addition in the entire block period without any reference to relevant assessment year comprised in the block period. During the course of assessment proceedings, the assessee attempted to explain the source of investment of each and every item of household goods and it was submitted that they have been acquired before the block period. It was stated that the assessee got married in the year 1990 in very rich family belonging to high status of society and items like air conditioner, sound system, fridge and television etc. were normal gifts given by them to their children at the time of marriage and other occasions like Diwali, on birth of children etc. The Assessing Officer proceeded to make additions presuming that the assessee was not having any air conditioner, TV, fridge etc, the normal items of household goods, prior to 1.4.1996.
3 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04
3. In the case of Vijay Kumar Ashumal Keshwani, movable assets in the form of air conditioner, fridge, tread mill machine, TVs and sound system etc. were found the value thereof was estimated at Rs. 1,85,700/- by the search party. In this case also it was stated that these items were received at the time of marriage in 1990 from the family of Lalwani Group. Similar arguments as in the case of Hareshbhai Keshwani were advanced in this case also.
4. The Ld. CIT (A) after considering the arguments in both the cases held that since the assessee had not provided any direct evidence to show as to how the articles were acquired, the explanation offered by the assessee was treated general in nature and without any evidence. Accordingly, additions made by the Assessing Officer were upheld.
5. Before us, the Ld. AR submitted that as far as the issues in IT(S S) A No. 209/Del/2005 are concerned, a search and seizure operations u/s 132 of the Act was conducted on 23.10.2002 at the residence of the appellant at 14, Triveni Park, behind Akota Stadium, Akota, Baroda in consequence to the search at the 4 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 residential and business premises of various entities and individuals associated with the Vimal Gutka and Lalwani group of cases. The Appellant is husband of Poonam H Keshwani, who is sister of owners of Vimal Gutka Group. It was submitted that the appellant was assessed to Income Tax for the last several years and filed NIL undisclosed income in the prescribed return form no 2B on 21.07.2004, which was assessed at Rs.7,44,243/- by the Assessing Officer. The undisclosed income as per the Assessment Order comprised the following:-
(i) Unexplained Jewellery 5,19,243/- (ii) Unexplained expenditure on foreign travel 75,000/-
(iii) Unexplained investment in movable assets 1,50,000/-
6. It was submitted that as per Annexure J1 of Panchnama dated 23.10.2002, jewellary amounting to Rs.4.96,493/- and silver utensil of Rs.22,750/- were found from locker no 270 with UTI Bank, Gotry Road, Baroda. It is important to note that the said locker was having first name as Mrs. Poonam H Keshwani, wife of the appellant and Haresh A Keshwani, appellant as second name. The valuation report of government Valuer available on page no 16 of the paper Book dated 23.10.2002 5 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 clearly mentioned that owner of the items in Locker no 270 UTI, Gotry Road, Baroda belongs to Smt. Poonam H Keshani and Harish A Keshwani. It was submitted that before the Assessing Officer as well as before the Ld. CIT(A), the appellant had argued that the Locker in which the jewellery has been found was in the Joint Name of Poonam H Keshwani and the appellant as second name and as such there cannot be any cognizance of the contents of the locker in the block assessment of the appellant due to the fact that the contents to the locker were mainly owned by the wife of the appellant and the appellant was only a joint holder and as such if the revenue wanted to initiate proceedings under chapter XIV B of the act then proceedings under section 158bd should have been initiated against the wife of the appellant.
7. It was further submitted that the Assessing Officer also made an addition of Rs. 1,50,000 on account of unexplained investment in acquiring the household assets. The appellant vide his submission dated 27.10.2004 (available on page no 5 of the paper book) filed item wise explanation on sources of household goods. It was submitted that most of the household items were received at the time of marriage in the year 1990. It was also 6 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 submitted that there was no material found as a consequence to search which proves that the household goods were acquired in the course of block period. It was further submitted that the appellant got married in the year 1990, in a very rich family, belonging to high status of society. Therefore the explanation of the appellant should not have been rejected, in spite of the fact that there was no material found in consequence to search, which could prove that the said household goods were acquired in the block period. Same arguments were advanced for the ground relating to addition of Rs. 187,500/- on account of household goods in the case of Shri Vijay Kumar Ashumal Bhai Keshwani. It was submitted that the income which is not based on the basis of evidence, or material found at the time of search i.e. based on merely on hypothesis, surmises, conjectures or estimate cannot be brought to tax under chapter XIV B.
8. The Ld. DR placed reliance on the orders of the authorities below.
9. We have heard the rival submissions and carefully perused the relevant material placed on record. As far as the issue of 7 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 addition of Rs.2,21,782/- on account of unexplained investment in jewellery is concerned, we are of the view that the scheme of Chapter XIV-B of the Income Tax Act, 1961 relating to block assessment makes it clear that in view of specific provisions contained in section 158BA, the assessment of undisclosed income is made as a result of search. It is only when a search is conducted under section 132 or books of account, other documents etc. are requisitioned u/s 132 in the case of any person that the Assessing Officer proceeds to assess the undisclosed income in accordance with the provisions of Chapter XIV-B. In the case of Verma Roadways vs ACIT TTJ 728 (Allahabad Tribunal), the Allahabad Bench of the Tribunal, while considering a similar issue has held that validity of a search and seizure u/s 132 has to have a clear cut nexus with the warrant of authorization, which is the main foundation of entire proceedings on search and seizure. In the present appeal, the warrant of search was in the name of Shri Harish Ashumal Keshwani whereas the locker in which the jewellery was found (Locker No.
270) was in the name of Smt. Poonam H. Keshwani as the first holder and her husband Shri Harish Ashumal Keshwani was only the second holder. Further, the search warrant in the name 8 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 of the assessee Shri Harish Ashumal Keshwani for the search of residential premises at 14, Triveni Park, Behind Akota Stadium, Baroda as per 'Panchnama' dated 23rd October, 2002 cannot cover search for locker no. 270, UTI Bank, Gotri Road, Baroda and belonging to Smt. Poonam H. Keshwani and Shri Harish A. Keshwani in the joint names. Therefore, since there was no authorization for search for Locker No. 270 situated in altogether different premises and the locker being in the name of Smt. Ponam H. Keshwani as the first holder, the said jewellery cannot be considered in the block assessment of Shri Harish A. Keshwani, the assessee. We, accordingly, order deletion of Rs.2,21,782/- on account of jewellery and silver utensils found in locker no. 270.
10. The second issue regarding addition on account of household goods is common to both the assessees and is being disposed of together. We are of the opinion that Chapter XIV-B is a separate Code to bring to tax only the undisclosed income. Income or source thereof which had been disclosed in regular return cannot be brought under this Chapter. Undisclosed income would include only that asset or income which was based 9 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 on any entry in the books of account or would not have been disclosed by the assessee to the department for the purpose of imposing tax under the Act. Section 158B (b), thus, is a charging provision and this provision of Chapter XIV- B applies only to those incomes which can be brought within the definition 'undisclosed income'. The method how undisclosed income is to be computed has been given under section 158BB. Section 158BB gives the method as to how undisclosed income within the block year has to be pitted. The computation has to be on the basis of books of account or documents or material found as a result of search. It is a settled law that computation provisions cannot supersede the charging provisions. If some income cannot become undisclosed income within the definition under section 158B (b), it cannot be brought to tax by way of computation section under section 158BB. The computation provisions are to be applied subsequent to the charging provisions. Chapter XIV-B is an independent Code. Object of the said Chapter is to bring to tax undisclosed income which the assessee has earned during a block year. How this income is to computed, the method has been given under section 158BB. Thus, every income which can be regarded to be undisclosed income within the definition given 10 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 under section I58BB can be brought to tax under this Chapter by computing such undisclosed income on the basis of evidence, material or record found at the time of search. If no evidence, document, books or material is found at the time of search, income cannot be computed under this Chapter. Thus, the income which is not based on the of evidence or material found at the time of search, i.e., based merely on hypothesis, surmises, conjectures or estimate, cannot be brought to tax under this Chapter. The income which is not undisclosed, i.e., income which has been duly disclosed in the assessee's books maintained in the regular course of business can also not be brought to tax under this Chapter. Even an asset or transaction which is duly entered in the books maintained by the assessee regularly and disclosed to the department can also not be regarded to be undisclosed income. The assessment under this Chapter is in addition to regular assessment and income assessed will not be included in regular assessment. This Chapter cannot be regarded in substitution of regular assessment or in substitution of the powers available to the assessing authority under sections 148 and 263. The learned Departmental Representative has not been able to rebut or controvert the submission made by the learned 11 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 counsel for the assessees that no material or evidence was found during the course of search to show that any unexplained expenditure was actually incurred by the assessee on household items. It is by now well settled that block assessment proceedings are not meant for making regular assessment but the same are meant for assessing the undisclosed income of the assessee based on material found as a result of search. Under Chapter XIV-B, undisclosed income has to be determined on the basis of evidence, documents and material found during the course of search and the assessing officer is not permitted to go beyond the material found as a result of search and to make roving enquiries in order to rope in certain income which is not supported by any evidence or material found during the course of search. In the present case, the addition on account of alleged unexplained expenditure incurred by the assessees household items was made without there being any evidence or material found during the course of search to show that the said expenditure in fact was incurred by the assessees. In the case of David Dhawan v. Dy. CIT (1999) 71 ITD 1 (Mumbai), the Mumbai Bench of the Tribunal has held that without any material found during the course of search to show that the assessee had made 12 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 unexplained investment or had incurred unexplained expenditure, it could not be held that the assessee has earned any undisclosed income which was spent for making such investment or expenditure. In the case of Pooja Bhatt v. Assistant Commissioner (2000) 73 ITD 205 (Mum), the Mumbai Bench of the Tribunal has held that block assessment is separate and distinct from regular assessment and in the block assessment, addition can be made only on the basis of material found during the course of search. As such, considering the facts of the case and keeping in view the legal position emanating from the aforesaid judicial pronouncements, we are of the view that the additions made by the assessing officer amounting to Rs. 1,50,000/- in the case of Shri Harish A. Keshwani and Rs. 1,85,700/- in the case of Shri Vijay Kumar Ashumal Bhai Keshwani were outside the purview of the block assessment and the learned Commissioner (Appeals) was not justified in confirming the same. His impugned order on this issue is, therefore, reversed and the assessing officer is directed to delete the said additions.
11. In the result, the appeals of the assessee are allowed. 13 IT(SS)A No. 209 & 210/D/2005 Block period from A.Y. 1997-98 to 2003-04 Order pronounced in the open court on 4.3.2016.
Sd/- Sd/-
(J.S. REDDY) (SUDHANSHU SRIVASTAVA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: the 4th of March, 2016
'GS'
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT By Order
ASSTT. REGISTRAR
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