HARSH JASMIN AJMERA (LEGAL HEIR OF LATE SHRI JASMIN K AJMERA),MUMBAI vs. DCIT, CENTRAL CIRCLE 2(2), MUMBAI

In the instant case, a search and seizure action under section 132 of the Income-tax Act, 1961 ("the Act") was carried out on 25.07.2013 at the residential and business premises of the Assessee, his family members and family concerns belonging to the Ajmera Group.

Consequent thereto, notice under section 153A of the Act dated 03.11.2014 was issued. In response, the Assessee filed the return of income on 07.01.2015 declaring total income of ₹8,81,560/-, being the same income as originally returned on 16.09.2013.

During the course of search, certain loose papers forming part of Annexure/Folder A-1 were seized from the residence of the Assessee and were confronted to the Assessee during the course of search.

Pages 4 and 5 of the seized papers reflected investment in gold ornaments amounting to ₹1,51,884/-. Likewise, pages 8 and 9 reflected proposed investment of ₹10,00,000/- towards purchase of gold ornaments.

In his statement recorded under section 132(4) of the Act, the Assessee admitted that the said investment was not recorded in his books of account and represented unaccounted investment out of cash generated from his business. Accordingly, he offered the said amount for taxation.

Accordingly, the Assessing Officer (in short, "the AO") called upon the Assessee to explain the aforesaid unaccounted investment.

Before the AO, the Assessee though contended that the proposed transactions were rough estimations and did not materialise and in fact the cheque of ₹10,00,000/- issued to the jeweller, was returned back to the Assessee, however despite specific opportunities, the Assessee failed to furnish any supporting evidence, including the identity of the jeweller, details of the cheque or any material substantiating the alleged return of the cheque.

Accordingly, the AO held that the Assessee failed to discharge the onus cast upon him and consequently treated the aggregate amount of ₹11,51,884/- as unexplained investment in gold jewellery and making charges and made the addition accordingly.

Thus, the Assessee being aggrieved, preferred 1st appeal before the Ld. Commissioner and contended that the seized loose papers merely contained estimates relating to some proposed transactions which never materialised and that the statement recorded under section 132(4) had been obtained under coercion and was subsequently retracted by way of an affidavit dated 02.08.2013.

The Assessee further submitted that the Assessee had only negotiated for purchase of gold ornaments and since the parties could not arrive at mutually acceptable terms, the cheque of ₹10,00,000/- was otherwise returned by the jeweller. It was also contended that where the proposed transaction itself had not fructified, no evidence could possibly exist to substantiate the same and, therefore, no addition could be made merely on the basis of rough estimates recorded on loose papers.

The Ld. Commissioner, however, was not convinced with the aforesaid explanation and accordingly confirmed the addition made by the AO.

Thus, the Assessee being aggrieved, has preferred the instant appeal before us.

We have heard the parties and considered the rival submissions and perused the material available on record. It is an admitted position that pages 4, 5, 8 and 9 of Folder A-1 were found during the course of search reflecting proposed investment in gold ornaments aggregating to ₹11,51,884/-. The consistent stand of the Assessee has been that these papers merely represented rough estimates and that the proposed transaction ultimately did not materialise and the cheque of ₹10,00,000/- had been returned by the jeweller after the deal failed.

However, it is equally evident from the assessment records that despite specific queries raised by the AO, the Assessee failed to furnish the particulars of the concerned goldsmith/jeweller, details of the cheque allegedly returned or any corroborative evidence supporting his explanation. At the same time, the AO also did not conduct any independent enquiry from the concerned goldsmith/jeweller to verify the claim of the Assessee.

Thus, considering the peculiar facts and circumstances in totality, we deem it appropriate to restore the matter to the file of the Jurisdictional Assessing Officer (JAO) for fresh adjudication. The JAO shall conduct proper enquiry from the concerned goldsmith/jeweller after the Assessee furnishes complete particulars thereof and extends necessary cooperation, including producing the concerned person. The Assessee shall also substantiate his claim by producing all supporting documentary evidence.

In the result, Assessee’s appeal is allowed for statistical purposes.