SHAILESH JAIKUMAR BHANDARI,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(4),, PUNE

We first of all deal with the assessee’s first and foremost substantive ground regarding unexplained payment addition of Rs.76,78,921/- in issue. There is hardly any dispute between the parties that the search herein is dated 26.02.2014 which got finally concluded on 25.04.2014. The Assessing Officer thereafter initiated sec.153A proceedings against the assessee. All this followed his impugned assessment dated 23.03.2016 adding the alleged unexplained payment of Rs.76,78,921/- which stands upheld in the CIT(A)'s order.

Learned counsel vehemently argued during the course of hearing that both the lower authorities have made a double addition in assessee’s hands for the precise reason that

We find no merit in the assessee’s instant submissions. We note at this stage that the CIT(A)'s detailed discussion itself refutes the assessee’s arguments. Learned counsel could not dispute that the CIT(A) had proposed to add the very sum as deemed dividend as well u/s.2(22)(e) of the Act wherein the assessee’s reply dated 13.10.2021 had contested the same inter alia on the ground that the company had not made any payment nor this amount ever reached its coffers. And also that the said amount was neither an advance nor a loan. It is in light of these clinching facts emerging from the assessee’s reply submitted before the CIT(A) itself [page-25 in the lower appellate discussion] that leads us to the conclusion that both the lower authorities have rightly added the impugned sum of Rs.76,78,921/- in his hands only. We further quote hon’ble apex court’s landmark decision in ITO vs. C. Atchaiah[1996] 218 ITR 239 (SC) that the purpose of the Income Tax Act is to assess the correct income in the right

Next comes the assessee’s identical latter substantive ground in both these appeals challenging interest disallowance(s) of Rs.19,68,543/- and Rs.1,08,29,957/-, assessment year-wise, respectively. The Revenue could hardly dispute that the Assessing Officer had nowhere disallowed any of these interest amounts in his respective twin assessments. That being the case, we quote CIT vs. Shapoorji Pallonji Mistry [1962] 44 ITR 891 (SC), CIT vs. Union Tyres [1999] 240 ITR 556 (Del.) and CIT vs. Sardarilal& Co. [2001] 251 ITR 864 (Del.) (FB) to conclude that the CIT(A)'s lower appellate jurisdiction nowhere extends to add any other head of income than that considered in the concerned assessments. Both these interest disallowances stand deleted for this precise reason alone. The assessee’s corresponding grounds are accepted in very terms.

This leaves us with the assessee’s former substantive ground in latter appeal IT(SS)A.No.2/PUN./2022 challenging correctness of both the lower authorities action adding unexplained jewellery of Rs.16,80,278/- found during the course of search. Suffice to say and to the precise enough, we find that the learned lower authorities have nowhere given credit of the foregoing sum of Rs.76,78,921/- (supra) against any other head of undisclosed income. This is further coupled with the fact that page-173 in assessee’s paper book/ containing annexure-C1[as inventory of the jewellery seized] makes it clear that the unexplained quantity of jewellery was 166cts having value of Rs.30,11,100/- only whereas the learned lower authorities have adopted different valuation for the same based on subsequent events. Faced with the situation, we delete the impugned addition of Rs.16,80,278/- by granting “telescoping” benefit as well as in light of the foregoing irregularity found in valuation. The assessee succeeds in the instant former substantive grievance therefore. This latter appeal I.T.(S.S).A.No.2/PUN./2022 succeeds in very terms.

To sum-up, assessee’s former appeal I.T.(S.S).A.No.1/PUN./2022 is partly allowed and latter appeal I.T.(S.S).A.No.2/PUN./2022 is allowed in above terms. A copy of this common order be placed in the respective case files.