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Income Tax Appellate Tribunal, DELHIBENCH ‘F’, NEW DELHI
Before: Dr. B. R. R. KumarSh. Yogesh Kumar US
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of ld. CIT(A)-24, Delhi dated 11.11.2019.
Following grounds have been raised by the assessee:
“1. That the learned Commissioner of Income Tax (Appeals) is not justified in rejecting assessee’s claim that seized jewellery should be assessed as income from business instead of assessing as income u/s 69A.
2. That the learned Commissioner of Income Tax (Appeals) is not justified in upholding Assessing Officer’s view that assessee has not surrendered undisclosed income during search proceedings.”
Brief facts of the case are that during the relevant assessment year, the assessee was engaged as working partner in a partnership firm named M/s. C.LAL Realtors, which was 2 Prashant Aggarwal engaged in the business of primarily broking in real estate and was entitled to salary from the firm and share in profit/loss of the firm. The assessee also was engaged in property broking business of his own and also made investment in properties.
A Search & seizure operation u/s 132 of the Act was conducted on Ashish Begwani Group of cases on 22.10.2016 by the Investigation Wing, Unit-8(2), New Delhi. Thereafter, warrant of authorization was also executed in the case of the assessee on 09.11.2016 at Locker No. 235, 220 & 221, Central Bank of Commerce, Kailash Colony, Delhi.
During the search proceedings, Jewellery worth Rs.11,08,520/- was found from the residential premises of the assessee and Jewellery worth Rs.35,61,751/- was found from the lockers of the assessee.
During the search proceedings, the statement of assessee was recorded wherein the assessee submitted that the jewellery belonged to him and his family. The assessee in statement u/s 131 of the Act at question no. 14 confirmed that he has surrendered Rs.42,36,027/- as commission income from property transactions. The assessee vide surrender communication dated 08.12.2016, informed the ADIT (Invt.)- 8(2) that the source of investment in Jewellery worth Rs.42,46,877/- was commission income from property transactions as mentioned above. Thereafter, assessee filed income tax return dated 27.09.2017, declaring total income of Rs.77,66,797/- which included commission income from property transactions of Rs.42,36,027/-.Thereafter, notice u/s 142(1) dated 30.11.2018 was issued to the assessee and in the 3 Prashant Aggarwal impugned notice AO asked assessee to explain source of his income and also asked the assessee to explain the source of investment in Jewellery.
It was argued that the AO ignoring the explanation provided by the assessee and without bringing any contrary evidence on record, passed the assessment order where income tax return filed by assessee was accepted, however AO treated the amount of business income of Rs. 42,36,027/- as income from other sources by invoking section 69A of the Act. AO also applied section 115BBE of the Act and raised a demand of Rs.22,72,340/-.
Before the Ld. CIT(A), the assessee reiterated its stand taken before the AO. The ld. CIT(A) confirmed the order of AO and thereby confirmed the demand of Rs.22,72,340/-.
Aggrieved the assessee filed appeal before us.
At the outset, it was argued that it is relevant to point out that both AO and ld. CIT(A) has accepted the return of income filed by the assessee, neither AO nor ld. CIT(A) has rejected the explanation offered by the assessee that the jewellery worth Rs.42,36,027/- was bought by assessee from the commission income from property transactions.
It was argued that the AO invoked section 69A r.w.s. 115BBE of the Act by indulging in surmises and conjunctures. That AO did not bring anything on record to establish that the assessee has purchased jewellery from undisclosed income and also that the AO had not brought on record any evidence or material to establish that the assessee was involved in any 4 Prashant Aggarwal other activity or having any other source of Income. It was argued that it is a settled position in law that burden of showing that the assessee had undisclosed income is on the revenue not on the assessee.
The ld. AR relied on the following judicial pronouncements:
Lalchand Bhagat Ambica Ram Vs. CIT, Bihar & Orissa, 1959 (5) TMI 12 – (SC)) dated 14.05.1959 “The Tribunal in arriving at the conclusion it did in the present case indulged in suspicions, conjectures and surmises and acted without any evidence or upon a view of the facts which could not reasonably be entertained or the facts found were such that no person acting judicially and properly instructed as to the relevant law could have found, or the finding was, in other words, perverse and this court is entitled to interfere.”
A number of other judgments relied on by the ld. AR have been duly perused.
The provisions of Section 69A are as under:
69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.
The provisions of Section 115BBE are as under:
“115BBE. (1) Where the total income of an assessee,— (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i).
(2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) and clause (b) of sub- section (1).”
We have gone through the page no. 2 of the paper book containing computation of income wherein the amount of Rs.42,36,027/- has been explicitly shown as “surrendered for tax in pursuance to search”. Further, while answering to the Question No. 14 posed to the assessee by the ADIT(Inv.), Unit- 8(2), New Delhi during the statement recorded u/s 131(1) of the Income Tax Act, 1961. The assessee confirmed that the amount has been undisclosed and surrendered. Subsequently, the assessee filed return of income. There was no documents
6 Prashant Aggarwal submitted by the assessee to prove that the jewellery has been purchased out of this income. Even if, it is so, the generation of undisclosed income and application of such income has been unraveled. It is a fact on record that the income earned has been undisclosed and has been unearthed only due to the action u/s 132 and the jewellery is only application of such undisclosed income. Hence, the provisions of Section 115BBE(1)(a) that where the total income of an assessee, includes any income referred to in section 69A and reflected in the return of income furnished under section 139, are evidently applicable in the instant case.
The order of the ld. CIT(A) is affirmed.
In the result, the appeal of the assessee is dismissed. Order Pronounced in the Open Court on 08/02/2023.