Income Tax Appellate Tribunal - Delhi
Paresh Nath, New Delhi vs Department Of Income Tax
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "F" : NEW DELHI
BEFORE SHRI A.D. JAIN AND SHRI R.C. SHARMA
IT(SS) No.01/D/09
Block Period: 01-04-1996 to 08-01-2003
A.C.I.T., Vs. Shri Paresh Nath,
Circle 38(1), E-3, Jhandewalan Estate,
New Delhi New Delhi-55
PAN No.ACKPN6466D
&
Cross Objection No.164/D/09
(IT(SS) No.01/D/09)
Block Period: 01-04-1996 to 08-01-2003
Shri Paresh Nath, Vs. ACIT,
E-3, Jhandewalan Estate, Circle 38(1),
New Delhi-55 New Delhi
PAN No.ACKPN6466D
( Appellant) ( Respondent )
Assessee by : S/Shri Pradeep Dinodia & R.K. Kapoor, CAs
Department by : Shri V.K. Tiwari, CIT- DR
O R D E R
PER R.C. SHARMA, AM:
This is an appeal filed by revenue and cross objection by the assessee against the order of CIT(A) dated 10.10.2008 for the block period 01-04- 1996 to 08-01-2003 in the matter of order passed u/s 158BC of the Income Tax Act, 1961 The grounds taken by the revenue in the appeal are as below:- 2
i) Learned CIT(A) has erred in law and facts while deleting the addition of Rs.18,02,213/- holding that assessee has sufficient funds to purchase the jewellery ignoring the fact that assessee neither furnished the bills for the jewellery nor can give the name and address of the jeweler from whom the jewellery was purchased.
ii) Learned CIT(A) has erred in law and facts while deleting the addition of Rs.18,02,213/- holding that assessee ahs sufficient funds to purchase the jewellery ignoring the fact that assessee's daughter has given contradictory statements on 19.12.2002 during search and seizure operation and on 21.12.2004 before the Assessing Officer during the assessment proceedings.
2. The grounds taken by the assessee in cross-objection are as below:-
i) That the learned CIT(A) has grossly erred in law and on the facts and in the circumstances of the appellant's case in confirming the addition of Rs.98,500/- on account of cash found during the search.
ii) That the order passed by the Assessing Officer at the first instance and confirmed by the CIT(A) is bad in law.
iii) That the CIT(A) failed to appreciate that sufficient cash was available with the assessee which was duly supported by entries in the books of accounts prior to the date of search.
3. Rival contentions have been heard and record perused. Facts in brief are that a search operation u/s 132 was carried out at the business premises of M/s Everest Builders Group in Mumbai on 19.12.2002.
4. After the search operation, search warrants were issued in the name of Shri Paresh Nath and Richa Ruchika for the search of lockers No.326, HDFC Bank, Central Avenue Road, Chambur, Mumbai and Locker No.562, 3 Fredo Vault Ltd., Sheruar Nambhar, Juhu Road, Mumbai. During the course of search operation jewellery worth Rs.17,59,939/- & cash Rs.98,500/- and Rs.42,274/- were found in these lockers. Consequent upon passing this information to the Income tax Office, Ward 38(3) and order passed by the CIT, Delhi-XIII, New Delhi u/s 127 dated 13.12.2004, notice u/s 158BC was issued and served upon assessee on 13.12.2004 requiring the assessee to file the return of undisclosed income for the block period relevant to the date of search. Block return was filed at nil income. During the course of asstt. Proceedings, assessee vide his letter dated 11.01.2005 challenged the legality of notice issued u/s 158BC on the grounds that notice under section 158BC for block assessment is totally illegal, unwarranted and without jurisdiction. I state that there was no search warrant against the assessee. It was alleged that assessee have neither been served any warrant for search nor any recovery of any asses has been done in his presence therefore the assessee cannot be subjected to any block assessment. It was also alleged that an assessment under 158BC was done by the ACIT, Circle 22(1), New Delhi pertaining to assessee's daughter Ms. Richa Ruchika on the instructions of A.O. Central Circle 7, Mumbai vide his order dated 30th December, 2004. Since the assessment for the alleged undisclosed income has already been made on the alleged search dated 29.12.2002, and there is no fresh cause therefore no fresh or second assessment can be done in 4 respect of the said same undisclosed income. It was also alleged that in any case there was no information in possession of the authorities authorizing search against me u/s 132 of the Income tax Act. The submission made by the assessee is not found to be tenable because proper search warrant was issued in the name of Shri Paresh Nath & Richa Ruchika after having information in possession. Moreover, search warrant duly seen by Mrs. Richa was shown to the assessee's AR & his brother Shri Rakesh Nath during the course of hearing. Hence, proceedings u/s 158BC was held to be rightly initiated. The assessee was asked for explain the jewellery found in the locker. Vide letter dated 21.01.2005, assessee explained the source of acquisition of jewellery which are reproduced below:
"12. That as per the valuation report of the Department given to Richa Ruchika I wish to explain every item as follows:
a. That on the occasion of her passing class XII exam grandmother smt. Sneh Prabha gifted Richa Ruchika a chain in appreciation of her securing excellent marks. This chain was found in the locker No.562, Fredo Safety Vaults Ltd. Mumbai appearing at serial no.2 of Valuation Report of Suraj Ratan Aggarwal dated 08.01.2002 and valued at Rs.5,044/-. b. I further confirm that four bangles found in the above mentioned locker No.562 of Fredo Safety Vaults Ltd. Mumbai 5 and valued at Rs.28,275/- were also given by my mother on the occasion of her passing out from XIM Institute of Management after doing MBA in April 1998.
c. That my daughter as a mark of respect and appreciation and love for her grand mother had worn these items when she joined financial consultancy firm ICRA Ltd., New Delhi. Incidentally I have a photograph of her wearing these items on the date of hear joining ICRA which is produced separately. (Photo filed with my letter dated 17th Jan., 2005). d. That my daughter Richa was very fond of her mother having grown up under her care an lover and after her marriage in January, 2001, she had kept these items in a separate locker on account of sentimental value.
e. That the silver article found in the above mentioned locker No.562 of Fredo Safety Vaults Ltd. were purchased by me from time to time and given to my daughter Richab Ruchika for birthdays, anniversaries etc. and have more sentimental value than utility. I hereby declare that these were out of my income. The said items have been valued as item No.3 in the valuation report of Suraj Ratan Aggarwal valued at Rs.10,955/-. 6 f. That I declare that the items and cash found in the Locker No.362, HDFC Bank, Chembur, Mumbai is in joint name i.e. myself and Richa Ruchika though I have not operated this locker till the search was done on this locker and the same was solely operated by Richa Ruchika.
g. That the cash of Rs.98,500/- was part of Rs.1,00,000/-
withdrawn from the company to meet expenses at Mumbai. I kept this amount in my daughter's safe custody. Copy of company letter is annexed.
h. That in the year 1996-97 I purchased a gold ornament listed as Ahmedabadi Jodi assessed by Suraj Rattan Aggarwal in his valuation report and valued at Rs.92,150/- (Item o.4). i. That a diamond necklace was bought for my daughter in December,1998 which has been listed as Item No.11 of Suraj Ratan Aggarwal and valued at Rs.2,48,358/-. j. That in 1999 I bought one two line necklace valued at Rs.2,87,840/- by official valuer and itemized at number 9 of by Suraj Rattan Aggarwal.
k. That in August 2000 I purchased a diamond necklace which has been listed as Item No.7 valued at Rs.7,90,100/-. In the same year in September, Richa Ruchika was engaged to Mr. Vimal 7 Shah. On the occasion of engagement, in September, 2000 a purchase of item listed as Navratan Stone studded har was made which is listed as item No.5 and valued by Suraj Ratan Aggarwal at Rs.1,00,000/-.
l. That I also bought a Diamond Tikka which has been listed as Item No.10 of list 2 of Suraj Rattan Aggarwal and valued for Rs.48,160/- in the year 2001-02.
m. That I was informed in May 2001 that my daughter is expecting as such I bought a Diamond Earring for her on the occasion. A photograph showing her wearing the same earrings at the time of God Bhari ceremony in October, 2001 Photo 'C'. The item has been valued by Suraj Rattan Aggarwal at Rs.1,32,520/-. n. That I also had some old jewellery with me and out of which some was given to Richa on the occasion of her marriage. This was out of jewellery forming part of my jewellery as declared in my Wealth tax returns till 1992 amounting to Rs.37,646/- as detailed below:
Item No.1 one pair of Gold Payal 10573
Item No.2 Two Chains, pendant 6693
Item No.6 One pair Kada 16490
5. The assessee further stated that just two days before the marriage of his daughter Richa Ruchika, Dadi of Mr. Vimal Shah, her husband died and 8 consequently a very simple and silent marriage was solemnized. I enclose death certificate which is already on record."
6. The AO was not satisfied with the assessee's explanation, therefore, added the amount of jewellery amounting to Rs.18,02,213/-found in the locker and also cash of Rs.98,500/- found during the course of search.
7. By the impugned order, CIT(A) deleted the addition with regard to jewellery by observing as under:-
"I have considered facts of the case. It is noticed that the jewellery found in locker No.326 in HDFC Bank and in locker No.562, Fredo Vaults has been treated by the AO as undisclosed income basically on the ground that no direct evidence regarding purchase of jewellery had been furnished by the appellant. From the details filed by the appellant, however, it is seen that he had sufficient funds available with him to purchase the jewellery in question. His mother was also a wealth tax assessee. Moreover, the affidavits filed by the appellant and his brother remain unrebutted. Simply because the purchase bills were not produced, it cannot be presumed that the jewellery found in the locker was unexplained. The statements of cash withdrawals of the appellant and his parents for expenses show sufficient availability of funds and this fact has not been found to be incorrect. Moreover, the agricultural income shown by the appellant has been accepted in the earlier assessments. No discrepancies have been found in the cash flow charts filed by the appellant which go on to establish the availability of funds for purchase of jewellery. All these documents show that .the explanation offered by the assessee regarding jewellery found in the lockers was not for-fetched or unreliable. The treatment of jewellery found in the locker as undisclosed income of the appellant, therefore, appears to be unjustified and the addition is accordingly deleted."9
8. Addition made on account of cash found was confirmed by the CIT(A) after having the following observation:-
"So far as the issue of cash amounting to Rs.98,500/- is concerned, it is seen that the same has been treated by the AO as undisclosed income on the ground that there was no direct evidence to show that the money withdrawn from the company was kept in the locker. The appellant has furnished a certificate from the company, namely Delhi Press Patra Prakashan Pte. Ltd. Confirming advance of Rs.1,00,000/- to the appellant. A perusal of this certificate shows that the so called advance is part of Rs.2,50,000/- withdrawn by the company on 08.04.2002. No explanation is forthcoming as to why out of the advance of Rs.1,00,000/- taken in April, 2002, only Rs.1,500/- were spent and the rest was taken to Mumbai to be kept in the locker of the appellant' daughter. No attempt has been made by the appellant to establish nexus between the amount taken as advance in April, 2002 and found in the locker in January, 2003. The explanation of the appellant in this regard, therefore, does not appear to be satisfactory, and, accordingly, treatment of this amount as undisclosed income is confirmed."
9. Aggrieved by the above order of CIT(A), both assessee and the revenue are in appeal before us.
10. It was argued by learned AR Shri Dinodia that assessee was having sufficient cash withdrawal prior to the date of marriage which is sufficient to explain the availability of jewellery found during search at the bank locker. With regard to the cash found in the locker, contention of learned AR was that cash was withdrawn from the bank account of assessee's concern namely Delhi Press Patra Prakashan and which has been taken as advance by 10 the assessee and taken to Bombay. The assessee has kept this amount in the bank locker at Bombay for the use of his daughter in case of emergency.
11. On the other hand, learned DR has drawn our attention to the order of the Tribunal passed in case of daughter of the assessee Smt. Richa Ruchika Saha in respect of jewellery gifted to her by her father Shri Paresh Nath, which stand deleted by the Tribunal but at the very same time department was given a liberty to consider the jewellery so gifted in the hands of her father Shri Paresh Nath who owned up jewellery not only by way of statement but by appearing before the AO for cross examination.
12. We have considered the rival contentions, carefully gone through the orders of the authorities below and found from the record that CIT(A) has deleted the addition in respect of jewellery found in the bank locker No.326 in HDFC Bank, Mumbai on the basis of availability of cash of Rs.45 lakhs withdrawn by the assessee before the marriage of her daughter. However, at the very same time, we found that jewellery found at the residence of the assessee's daughter Smt.Richa Ruchika in respect of which addition was made in the hands of Smt.Richa Ruchika was deleted by the Tribunal vide order dated 27.3.2009 passed in the case of IT(SS) A.Nos.89 & 132/Del/2007 in the case of Smt.Richa Ruchika. While deleting the addition in the hands of assessee's daughter, the Tribunal has observed that jewellery of Rs.18.21 lakhs found at the residence was gifted by Shri Paresh Nath and 11 he has also owned up the jewellery so gifted to the daughter. In view of these facts, the Tribunal in the case of Smt.Richa Ruchika held that this addition is not justified in the hands of the daughter and the same is required to be considered in the hands of Shri Paresh Nath, father of Smt.Richa Ruchika who had owned up the jewellery so gifted to her daughter on her marriage. The Tribunal also found that Rs.45 lakhs was withdrawn by Shri Paresh Nath for the purpose of marriage of her daughter and the same is required to be taken into account while considering the addition of gifted jewellery in his hands. The Tribunal also found that some jewellery was also given by close relatives of Smt.Richa Ruchika. Accordingly, at this juncture, while considering the availability of cash to justify purchase of jewellery of Rs.17,59,939/- as found in locker No.326, HDFC Bank, Mumbai, the Revenue authorities are also required to take into consideration the jewellery of Rs.18,21,494/- as found at the residence of Smt.Richa Ruchika in Mumbai, which has been deleted in her hands and specific directions were given by the Tribunal to consider this jewellery in the hands of Shri Paresh Nath. So far as finding of CIT(A) while deleting the addition of Rs.17.59 lakhs is concerned, we found that CIT(A) was justified in holding that only because purchase bills were not produced, it cannot be presumed that the jewellery found in the locker was unexplained. However, the CIT(A) has considered the availability of cash only with respect to the 12 jewellery of Rs.17.59 lakhs found in locker No.326, HDFC Bank, Mumbai and has not considered the jewellery found at the residence of Smt.Richa Ruchika. The CIT(A) has also found that assessee was having agricultural income which was accepted by the department in the earlier year and no discrepancy was found in the cash flow chart filed by the assessee which goes to establish the availability of funds for purchase of jewellery. Keeping in view the peculiar facts and circumstances of the case vis-à-vis order of the Tribunal in the case of assessee's daughter Smt.Richa Ruchika as discussed hereinabove, we restore this ground to the file of the CIT(A) for deciding the availability of cash to justify jewellery found at the Mumbai residence as well as jewellery found in locker No.326, HDFC Bank, Mumbai. The CIT(A) is also directed to give due credit for the agricultural income shown by the assessee as well as gifts of jewellery given by the close relatives at the time of marriage, so as to justify the jewellery so found.
13. In respect of cash of Rs.98,500/- found in the locker, we found that assessee has taken advance of Rs.1 lakh from his firm and the same was carried by him to Bombay and put in the locker for use in emergency by his daughter. The department has not disputed withdrawal of cash by the assessee's firm M/s Delhi Press Patra Prakashan Ltd. from its bank account nor advance of Rs.1 lakh to the assessee. As per the certificate, the so called advance to the assessee amounting to Rs.1 lakh was part of Rs.2,50,000/- 13 withdrawn by the company on 8.4.2002. No contrary material was brought on record to disbelieve the assessee's contention that cash so taken as advance from the firm was taken to Mumbai and kept in locker for use by assessee's daughter in emergency. Accordingly, no addition is warranted in respect of cash of Rs.98,500/- found in locker No.326 with HDFC Bank, Mumbai.
14. In result, appeal of the assessee and revenue both are allowed in terms indicated hereinabove.
15. This order pronounced in the court on 23-04-2010.
Sd/- Sd/-
( A.D. JAIN ) ( R.C. SHARMA )
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 23.04.2010
NS :
Copy forwarded to: -
1. Shri Paresh Nath, E-3, Jhandewalan Estate, New Delhi-55
2. Asstt. CIT, Circle 38(1), New Delhi.
3. CIT
4. CIT(A)
5. DR, ITAT True Copy Deputy Registrar