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Income Tax Appellate Tribunal, DELHI BENCH “G”: NEW DELHI
Before: SHRI R.K. PANDA & MS SUCHITRA KAMBLE
This appeal filed by the assessee is directed against the order dated 15th September, 2016 of the Ld. CIT-(A)-IV Kanpur relating to assessment year 2013-14.
Facts of the case, in brief, are that the assessee is an individual and derives income from business. A search u/s 132 of the Income Tax Act 1961 was conducted at the business and residential premises of the assessee on 26th April 2012. In response to notice u/s 142(1) the assessee filed his return of income on 10th July 2014 declaring income of Rs. 5,50,810/-. The AO observed that during the course of search u/s 132 of the Income Tax Act 1961 jewellery weighing 831.500 gms valued at Rs. 20,76,020/- was found from the locker No. 139 maintained by the assessee at PNB bank Dehradun. On being asked by the AO to furnish the source of investment in above jewellery it was submitted that the said jewellery belongs to the assessee, his wife Smt Sneha Aggarwal and unmarried daughter which was received at the time of marriage. However, the AO was not satisfied with the above explanation given by the assessee on the ground that the assessee and his wife are not filing any wealth tax returns. Further the submission of the assessee that the jewellery was received at the time of marriage and gifts is not supported by any kind of evidence. According to the AO to verify the source of parental family and relatives of the assessee’s wife needs examination which is outside the purview of present assessment. In view of the above and considering the totality of the facts of the case the AO held 30% of jewellery valued at 20,76,020/- which comes to Rs. 6,22,806/- ( 249.45 gms) as unexplained investment by the assessee u/s 69B.
2.1 In appeal Ld. CIT(A) upheld the action of the AO by observing as under :-
“5.1 I have carefully gone through assessment order, written submission filed as well as verbal arguments of the Ld. A.R. During the appellate proceeding, it was submitted by the appellant that jewellery was belonging to him and his family members. Even though the explanation of appellant is accepted. It explains the value of jewellery only to the event of 450 gms. and the A.O. has already considered the value of jewellery to the extent of 582.05 gms as explained which is more than 450 gms. The A.O. has made addition only for 249.45 gms for which the appellant could not furnish sufficient evidence either during assessment or at appellate proceeding. Therefore, the addition made by A.O. does not call for interference and addition is hereby confirmed.”
Aggrieved with such order of the Ld. CIT(A) , the assessee is in appeal before the Tribunal by raising the following grounds :-
1. “That in facts and circumstance of the case, the addition of Rs. 6, 22,806/- sustain by Learned CIT (A) is unjustified and bad at law.
2. That in facts and circumstances of the case, the CIT(A) have wrongly stated the facts at page 4 of the appellate order instead of writing the name of the wife "Sneha Aggarwal" and giving the credit of 500gm of jewellery he has wrongly mentioned the name of his brother stating as "son Nitin Aggarwal" and given the credit of 100 gms against 500gms following the CBDT notification. 3. That in facts and circumstances of the case, as per CBDT notification no. 347(E) dated 20.05.1978, the allowable jewellery of 500 gms for the wife may please be given. 4. That in facts and circumstances of the case, the addition to the returned income as sustained by the Id. CIT (A) Rs. 6,22,806/- may please be deleted. 5. That in fact and circumstance of the case, the appellant craves leave to add, amend, modify, delete and/or change all or any of the ground on or before the date of hearing.”
4. Ld. Counsel for the assessee submitted that the assessee is an individual engaged in business of trading in lime. He maintains books of accounts alongwith bills and vouchers which are in order and no incriminating material was found during the course of search. He submitted that the assessee was born in 1980 and on the date of search he was about 32 years of age. He had opened the locker in Punjab National Bank on 23.10.2007 which was in his name along with his father. He got married on 26.11.2007 to Miss Sneha Agarwal. He submitted that the jewellery found at the time of search from the locker is only 831.500 gms. Referring to the CBDT instruction No. 4 347(E) dated 20th May, 1978 he submitted that the jewellery found at the time of search is within the permissible limits since his family consists of self his wife and minor daughter Miss Avni. Referring to the decision of the Indore Bench of the Tribunal vide order dated 23rd September 2013 he submitted that the Tribunal relying on the above circulars had deleted the addition made by the AO on account of unexplained jewellary. He submitted that since in instant case the Ld. CIT(A) has granted relief of only 450 gms of jewellery out of 850 gms found at the time of search, the balance jewellery also should be accepted as explained.
5. Ld. DR on the other hand strongly supported the order of the AO and Ld. CIT(A).
6. We have considered the rival arguments made by both the sides, perused the orders of the AO and Ld. CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find that the AO in the instant case made addition of Rs. 6,22,806/- u/s 69B on the ground that the assessee was unable to explain the source of 831.50 gms of jewellery valued at Rs. 20,76,020/- found at the time of search u/s 132 (1) on 26th April, 2012. We find the Ld. CIT(A) sustained the addition made by the AO, the reasons of which have already been reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that in view of CBDT instruction No. 347(E) dated 20th May, 1978 the jewellery found at the time of search being within the permissible limit, therefore, considering the status of the family consisting of the assessee, his wife and minor daughter, the addition should be deleted. It is also his submission that no other incriminating material was found during the course of search. We find some force in the above arguments of the Ld. Counsel for the assessee. As mentioned earlier the locker was opened by the assessee on 23rd October 2007 much prior to his marriage on 26.11.2007. The family of the assessee consists of the assessee his wife and minor daughter. Although as per the above circular the department is not required to seize the jewellery found at the time of search, however the coordinate benches of the Tribunal are taking the consistent view that considering the status of the family and past income tax records showing the income by the assessee a reasonable view can be taken to explain the source of the jewellery found at the time of search. Since in the instant case the assessee is consistently showing reasonable income for the preceding years of search and the family of the assessee is consisting of the assessee, his wife and minor son and minor daughter, therefore considering the totality of the facts of the case we are of the considered opinion that the jewellery found at the time of search weighing 831.50 gms valued at Rs. 20,76,020/- is explained and no addition u/s 69B is warranted. The disallowance by the AO of 30% of the jewellery found at the time of search in our opinion is purely on surmises. The Ld. CIT(A) without considering the totality of the facts of the case has upheld the addition made by the AO which in our opinion is not justified. In this view of the matter we set aside the order of the Ld. CIT(A) and direct the AO to delete the addition. The grounds raised by the assessee are allowed.
In the result the appeal filed by the assessee is allowed.