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Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
Before: SH. H. S. SIDHUAND, SH. ANIL CHATURVEDI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER AND, SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA No.2694/Del/2017 (for Assessment Year 2013-14) Assistant Commissioner of Vs. Ms. Kanchan Bhalla Income Tax, Farm No.04, Hyde Park, Central Circle -8, Prakriti Marg, New Delhi. Village-Sultanpur, Mehrauli, New Delhi-110030 PAN No. AFEPB 9423 R (APPELLANT) (RESPONDENT) And ITA No.1756/Del/2017 (for Assessment Year 2013-14) Ms. Kanchan Bhalla Vs. Assistant Commissioner of Farm No.04, Hyde Park Income Tax, Prakriti Marg, Central Circle -8, Village-Sultanpur, New Delhi. Mehrauli, New Delhi-110030 (APPELLANT) (RESPONDENT) Assessee by Sh. C. S. Aggarwal, Sr. Adv. Sh. R. P. Mall, Adv. Revenue by Sh. Prakash Dubey, Sr. DR Date of hearing: 17/12/2020 Date of Pronouncement: 19/01/2021
2 ORDER PER ANIL CHATURVEDI, AM: These cross appeals filed by the Revenue and assessee are directed against the order of the Commissioner of Income Tax (A)- 24, New Delhi dated 21.02.2017 relating to Assessment Year 2013-14.
The relevant facts as culled from the material on records are as under :
Assessee is an individual. A search and seizure operation u/s 132 of the Act was conducted on Vatika Group of cases on 16.02.2013. The assessee who is the wife of Shri Anil Bhalla, Chairman of Vatika group, was also covered in the search action. Notice u/s 143(2) of the Act was issued on 24.09.2014 and in response of which assessee filed return of income on 07.10.2014 declaring total income at Rs.1,29,57,020/-. Thereafter, assessment was framed u/s 143(3) vide order dated 30.03.2015 and the total income was determined at Rs.2,95,18,193/-.
Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who vide order dated 21.02.2017 (in Appeal No. 198/15-16) granted partial relief to the assessee. Aggrieved by the order of CIT(A), Revenue and assessee are now in appeal before
us. Before us, Revenue has raised following grounds in ITA No.2694/Del/2017 for A.Y. 2013-14:
“1. The order of Ld. CIT(A) is not correct in law and on facts. 2. On the facts and circumstances of the case, the CIT(A) has erred deleting the addition of Rs.1,59,98,173/- on account of unexplained Jewellery. 3. On the facts and circumstances of the case, the CIT(A) has erred in accepting the submissions of the assessee without giving the department an opportunity to examine it. 4. On the facts and circumstances of the case, the CIT(A) has erred in noting that the all the submissions were available with the A.O when the assessment folder do not show any such submission on record. 5. On the facts and circumstances, the CIT(A) has erred m deleting the addition of Rs. 5,33,000/-on account of unexplained cash. 6. On the facts and circumstances of the case, the CIT(A) has erred m holding that me concept of maintenance of log-book for operation of lockers unheard-off. 7. The appellant craves leave to add, amend any/all the ground of appeal before during the course of hearing of the appeal.”
On the other hand, grounds raised by the assessee in ITA No.1756/Del/2017 for A.Y. 2013-14 reads as under:
“1. That the Ld CIT(A) has erred both the facts and in law in confirming the order of assessment, despite the fact that while framing the assessment u/s 143(3) of the Act, the Ld DCIT had sought an approval from the Ld ACIT who had no role to play in framing the assessment. 2. That on seeking the approval from the Ld ACIT since the AO shared his exclusive jurisdiction to frame the assessment with Ld
ACIT, as such, the order of assessment ought to have been held as invalid in law. 3. That the Ld CIT(A) further erred in sustaining an addition of Rs.60,000/- which represented her stridhan, to be included in the total income. He has failed to appreciate that Rs.60,000/- represented the savings over the period of married life and as such there could have been no basis to sustain such an addition, by concluding the explanation was not satisfactory. It is therefore prayed that it be held that assessment framed was invalid in law and in any case an addition sustained of Rs.60,000/- was totally untenable both on facts and in law.”
We first take up assessee’s appeal in ITA No.1756/Del/2017 for A.Y. 2013-14 and also the grounds raised by the Revenue in their appeal to the extent they are interconnected with the Assessee’s appeal.
In Ground No.1 & 2 it is assessee’s contention that while framing assessment u/s 143(3), DCIT had sought approval from JCIT who had no role to play in framing the assessment and therefore the assessment order passed by the AO be held to be invalid in law.
Before us, Learned AR pointing to Para No.6 of the Assessment order pointed to the fact that the AO has noted that the order dated 30.3.2015 passed u/s 143(3) by him has been passed with prior approval of JCIT u/s 153D of the Act. He submitted that requirement of seeking the prior approval of JCIT is mandated for assessment of cases of search u/s 153A of the Act. In the present case, the assessment has been framed u/s
5 143(3) and therefore AO was not required to take approval from JCIT. He therefore submitted that since in the present case the assessment order has been passed on the basis of approval and on the dictates of JCIT, the assessment order passed by the AO u/s 143(3) of the Act is invalid and therefore be held to be bad in law.
Learned DR on the other hand pointed to the findings of CIT(A) on the relevant issue at Para 4.2.2 of the order and submitted that Ld CIT(A) after calling and examination of the assessment records has noted that no directions were issued by Addl.CIT to complete the assessment in any of manner. In such a situation he submitted that there is no merit in the ground of the Assessee. He thus supported the order of CIT(A).
We have heard rival submissions and perused the materials on record. In the present grounds the assessee is challenging the assessment framed by the AO u/s 143(3) on the ground that AO had obtained prior approval of JCIT u/s 153D of the Act which is contrary to the provisions of the Act. We find that CIT(A) while deciding the ground has noted the fact that he had called for the assessment records and after its examination, he has noted that AO had sought consolidated approval of Addl.CIT for A.Y. 2007- 08 to 2012-13 pertaining to proceedings u/s 153A of the Act. He has thereafter noted that the draft order for AY 2013-14 was also clubbed with the consolidated proposal which appeared to be a bonafide mistake. He has further given a finding that no
6 directions were issued by Addl.CIT to the AO to complete the assessment order for 2013-14 in any particular manner. Before us, no material has been placed by the assessee to demonstrate that the findings of CIT(A) is incorrect or there is any fallacy in the findings of CIT(A). In such circumstances, we do not find any merit in the present ground raised by the assessee. Thus Ground Nos. 1 and 2 are dismissed.
Ground No.3 is with respect to upholding the addition of Rs.60,000/-. This ground is inter connected to Ground No 5 & 6 raised by the Revenue where it is aggrieved by the relief to the extent of Rs.5,33,000/- granted by CIT(A). Since the grounds raised by Assessee and Revenue are interconnected both the grounds are considered together.
During the course of search proceedings, cash amounting to Rs. 6,61,200/- was found from the possession of the assessee at her residence. Further, Rs.5,93,000/- was also found in locker No.1024, Metropolis Vaults Pvt. Ltd. Delhi held in the name of Shri Anil Jain, Smt. Kanchan Bhalla, Shri Gaurav Bhalla and Smt. Divya Bhalla. With respect to the cash found in locker, it was submitted by the assessee that it belonged to the assessee and was out of her bank withdrawals. AO noted that the withdrawals from bank were made substantially prior to the date of search i.e. on 10.12.2012, 26.12.2012 & 05.01.2013. The submission of the assessee about the source being out of cash
7 withdrawals from bank was not found acceptable to AO as according to him it cannot be ascertained whether the cash withdrawal by the assessee from bank had actually been deposited in the locker as no operational log book to substantiate the assessee’s contentions were submitted by the Assessee. AO therefore considered the cash amounting to Rs.5,93,000/- found in the locker to be undeclared and unexplained asset within the meaning of Section 69A of the Act and thus made addition of Rs.5,93,000/-.
Aggrieved by the order of AO, assessee carried the matter before the CIT(A) who after considering the submissions of the assessee noted the fact that the cash book furnished by the assessee has not been doubted by the AO but however concluded that the balance to the extent of Rs.60,000/- has not been explained by the Assessee. He therefore deleted the addition to the extent of Rs.5,33,000/- and upheld the addition of Rs.60,000/-. Aggrieved by the order of CIT(A), assessee and Revenue are now before us.
Before us, Learned AR submitted that on the date of search aggregated cash of Rs.12,50,062.81 was found. He submitted that assessee has been maintaining a cash book and as per the cash book, the cash was Rs.11,90,062/-. With respect to cash of Rs.60,000/- found and which has been upheld by CIT(A) to be unexplained, it represented her pin money. He submitted that it
8 is customary for the ladies to have some pin money which are savings out of the amounts received over the years. He therefore submitted that the addition made by the CIT(A) needs to be deleted. On the other hand, Learned DR pointing to the order of AO submitted that AO did not accept the contention of the assessee on the ground that assessee could not link cash found from locker was exactly out of the cash withdrawals from the bank account. With respect to the claim of the Ld AR that the amount represents pin money, he submitted that the contention is unsubstantiated and therefore the order of AO needs to be upheld. He thus supported the order of AO.
We have heard the rival submissions and perused the materials on record. The present ground of the assessee is with respect to the addition of Rs.60,000 confirmed by CIT(A) and of Revenue is the relief granted to the extent of Rs.5,33,000/-. It is an undisputed fact that the cash aggregating to Rs. 12,50,062.81 was found at the time of search (Rs.5,93,000/- found in locker and Rs.6,61,200/- found from the possession of the assessee at her residence). AO had made the addition of cash of Rs.5,93,000 found from the locker as being unexplained. It is a fact that before CIT(A) it was submitted by the assessee that the total cash withdrawals during the year by the assessee from her bank account was to the extent of Rs.23,05,563/- of which she is stated to have utilized Rs.11,15,000/- towards personal expenses, leaving cash of Rs.11,90,063/- and out of which Rs.60,000/- was stated to be representing assessee’s Stridhan.
9 CIT(A) has deleted the addition of Rs.5,33,000/- but has not accepted the explanation of Rs.60,000/- which is stated to be Stridhan. We do not find any justifiable reason by CIT(A) for disregarding the submission of assessee of the amount being out of Stridhan more so when the assessee has been maintaining cash book and has stated to withdrawn more Rs.20,00,000/- from the bank account and substantial addition has been deleted by accepting the explanation of the assessee. Considering the totality of the aforesaid facts, we find merit in the submission of the Learned AR. We thus hold that CIT(A) was not justified in upholding the addition of Rs.60,000/-. We therefore direct its deletion. As far as the relief of Rs. 5,33,000/- which has been granted by CIT(A) and against which Revenue is before us, Revenue has not pointed to any fallacy in the findings of CIT(A). We therefore find no reason to interfere with the order of CIT(A) to that extent is concerned. Thus the ground of assessee is allowed and of Revenue is dismissed.
In the result, appeal of the assessee is partly allowed.
ITA 17. Now we take up Revenue’s appeal in No.2694/Del/2017.
Ground No. 1 to 4 are interconnected with respect to the deleting the addition of Rs.1,59,98,173/-.
10 19. During the course of search on Vatika Group, jewellery was found at various premises, the details of which are noted by the AO under Para 2 of the order. The net weight of jewellery found was 9373.300 gms and as per the Valuation Officer as on 01.06.2013 the value of such jewellery was Rs. 3,94,80,175/-. Assessee had claimed total jewellery to be explained and had also submitted the mode of its acquisition. The submissions of the assessee was not found acceptable to AO for the reasons inter alia that that no Wealth Tax Returns were filed by the assessee for A.Y. 2006-07 to 2012-13 within the due dates and the returns of Wealth filed by the assessee on 19.02.2013 was after the date of search. He also noted that assessee had not furnished any reconciliation of jewellery found during the present search and the earlier search carried out on 08.05.2013 and since there was a substantial time gap between both the search, the claim of the assessee remained unverified. He also noted that no evidence of purchase of jewellery, vouchers of purchase or the source of purchase was furnished by the assessee. He also noted that assessee had surrendered sum of Rs.35,79,530/- as undisclosed income. He therefore, considered the value of jewellery amounting to Rs.3,94,80,175/- to have been acquired out of unexplained source by Smt Divya Bhalla and Kanchan Bhalla and accordingly half of the jewellery i.e. Rs.1,59,68,173/- was added in the hands of the assessee.
Aggrieved by the order of AO, assessee carried the matter before the CIT(A). CIT(A) while deleting the addition has given a
11 finding that the bulk of purchases of jewellery made by the assessee during the A.Y. 2004-05 to 2012-13 was by cheque and all those evidences was available before the AO but the same was not examined by him. He also noted that difference of jewellery of 8678.323 gms available on 31.03.2012 as per the statement of acquisition and the jewellery found in search of 16.01.2013 was 9373.3 gms valued at Rs. 3,94,80,175/- for A.Y. 2012-13. He noted that Smt. Kanchan Bhalla and Divya Bhalla had made additional disclosure of Rs. 35,79,530/- and Rs. 39,64,219/- respectively on account of unexplained investment of jewellery for A.Y. 2012-13 thus covering the difference. Considering the totality of these facts he deleted the addition made by AO. Aggrieved by the order of CIT(A), Revenue is now before us.
Before us, Learned DR supported the order of AO and further submitted that assessee was found in possession of jewellery weighting 9373.30 gms valued at Rs.3,94,80,175/- on the date of search and was found to be in possession of jewellery weighting 2283.053 gms as on 08.05.2003 (being the earlier date of search) meaning thereby that assessee had acquired jewellery weighing approximately 7090 gms between 08.05.2003 (date of previous search) and 16.01.2013 (date of the present search). He submitted that it is assessee’s submission that the jewellery has been purchased out of the known sources and the payments are through cheque which is also reflected in the bank statements and other details furnished by the assessee. He submitted that
12 assessee’s claim about the source of purchase of jewellery to be from known sources and through bank as well as cash is not supported by evidence. He pointed to the details furnished by the assessee and which is placed in Page 381 & 382 of the Paper book and from that he pointed to an instance of entry dated 20.09.2003 showing cheque payment of Rs.75,590/-. He submitted that though the amount of Rs.75,590/- is reflected in the bank statement on 26.09.2003 but it does not reflect to whom the payment was made and for what purpose the payment was made. He submitted that without the particulars of recipients it is not possible to accept the claim of the assessee that the payments have been made only for the purpose of purchase of jewellery. He therefore submitted that the assessee be asked to produce the evidence regarding the destination of the payments claimed for the purchase of jewellery so that the claim of the assessee can be verified. He thus supported the order of AO. Learned AR on the other hand pointed to the findings of CIT(A) inter alia that the assessee had given the breakup of purchases made during A.Y. 2004-05 to 2012-13 which were duly supported by bank statements showing such purchases, bulk of the payments for purchases being made by cheque and other findings. He further in the written submissions stated as under: “9. At the outset it is submitted that the learned AO while framing the assessment had committed the following fundamental errors: (a) The first of it being that the learned AO had failed to appreciate that merely because the assessee was unable to reconcile the item wise jewellery found with the list of the
inventory prepared on the date of search, by itself could not be held to be any basis to hold that the jewellery held as on 08.05.2003 did not exist and that too on the ground that the assessee has failed to reconcile items of the jewellery with the items of the jewellery found on the date of search. It is submitted that it is no more resintegra that no addition could be made merely on the ground that the description of some of the jewellery items could not be matched/ reconciled. Reliance is placed on the following judicial pronouncements: In the case of Liza Girish Shah Vs. DCIT, in ITA i. No.2516 and 2685/Ahd/2010 dated 21.6.2013, it was held as under:
"..... Regarding second objection of the AO that items are not tallying, we find force in the submissions of the learned AR of the assessee raised before the AO, learned CIT(A) and before us also that over the period of time, items of gold jewellery keep on changing because of remaking and, therefore, gross weight of gold jewellery found in course of search should be taken as explained to the extent of gross weight of gold jewellery as per valuation report already accepted as per wealth tax return filed by the assessee if any, or as in the present case, a valuation report enclosed with Will of Virbalaben, mother- in- law of the assessee and item wise tallying of gold jewellery is not essential. Hence, we do not find any reason to interfere in the order of the learned CIT(A) with regard to the addition deleted by him. In this regard, we sustain his order. Accordingly, ground No.1 of the revenue's appeal is dismissed."
Mrs. Nawaz Singhania vs. DCIT reported in [2018] 168 ii. ITD 478 (Mumbai)
What is relevant critically includes status of the family, as well as customs and practices of the community to which the assessee belongs. It is keeping in view this philosophy, which is the primary basis for the circular, that for a wealth tax assessee, it is the gross weight which has
been prescribed as the basis of decision making. The reason is appreciation of the facts that jewellery is frequently converted into different design depending on the needs. It is in recognition of this fact of the society we live in that gross weight, particularly to the exclusion of comparison item by item, has been prescribed as the decision making criterion for effecting seizure.
iii. Smt. Krishna Wanti Batra vs. ACIT 149 Taxman 36 (Del) iv. GaurishankerOmkarmal vs. ITO: 37 TTJ 353 (Ahd.) v. DCIT vs. Arjun DassKalwani: 101 ITD 337 (Jodh.) vi. Sh. Arvind Agarwal and Sh. Subhash Agarwal: I.T.A. Nos.455, 277, 278 & 443/Ind/2013 (Indore) vii. Raj Kumar B Agrawal Vs DCIT 176 DTR (Pune) Trib 273 viii. Modi (ITA ACIT vs Krishan Kumar 2892 to 2894/Del/2017&3952 to 3956/Del /2017 dated 05.07.2019)
(b) The second being the learned AO had conveniently ignored that the assessee held on 08.05.2003, the jewellery weighing 2625.840 gms out of an aggregate weight of jewellery found weighing 4514.300 gms. The remaining jewellery belonged to her daughter in law Smt. Divya Bhalla . He has also failed to appreciate that in the course of assessment proceeding u/s 158BC of the Act it was found that said jewellery is explained. The order of assessment had been placed before the AO and is at Pg. 170 – 178 of PB. The list of the inventory prepared on the date of search on 08.05.2003 are at Pg. 48 – 49, 53, 56 – 58 of PB. (c) The third of the error, which again was a fundamental, was that the learned AO had completely ignored the acquisition of jewellery by the assessee between the period 01.04.2003 to 31.03.2012., the estimated weight whereof was 4390 gms. He also had failed to appreciate that such jewellery had been purchased mainly through cheques as had been found by the learned CIT(A) and in respect of which necessary evidence had been placed before the AO. (d) Fourth of the error committed by the learned AO was that he had failed to appreciate that the assessee had furnished
returns of wealth for the preceding years as well as for the years 2012-13 and 2013-14 and that there had been an assessment made u/s 16(3) for the AY 2012-13, on 25.03.2015 (Pg. 289 – 292 of PB) accepting that the assessee owned 6673.05 gms of jewellery as on 31.03.2012 and that in the year2013-14 the assesseeadmittedly had acquired jewellery of the value of Rs. 35,79,530/- the weight whereof aggregated to 1234.279 gms. It is thus submitted that had the AO considered such weights of jewellery, there could have been no occasion for him to have held that any part of jewellery found is unexplained warranting any addition to be made. 10. While concluding with the written submission the assessee submits that the ground raised by the revenue in ground no. 3 that the learned CIT(A) has erred in accepting the submissions of the assessee without giving the department an opportunity to examine it, is fallacious and is contrary to the material on record. In fact as has been submitted above, the assessee had furnished before the learned AO along with its written submission as had been detailed above one on 11.02.2013 and another on 05.03.2015, all such material fact as has been referred to by the learned CIT(A) in his order. No new material or fact had been furnished by the assessee before the learned CIT(A) nor is there any basis to allege that the learned CIT(A) had accepted the submissions of the assessee without giving the department an opportunity to examine the same. It is submitted that the learned CIT(A) has examined only such evidence/material as had been furnished by the assessee before the learned AO and no more. Likewise ground raised in ground No. 4 is also misconceived for the same reason.” 22. The Ld AR thus supported the order of CIT(A).
We have heard the rival submissions and perused the material on record. The issue in the present grounds of the Revenue is with respect to deleting the addition made by CIT(A) on account of jewellery.
It is undisputed fact that during the course of search at the residential premises of the assessee, jewellery was found. The assessee was asked to explain the source of its acquisition. The explanations given by the assessee about the source of acquisition of jewellery was not found acceptable to AO and accordingly AO made addition of Rs.1,59,68,173/- in the hands of the assessee. When the matter was carried before CIT(A), the entire addition was deleted by him. Aggrieved by the order of CIT(A), Revenue is now before us. We find that CIT(A) while deleting the addition has given a finding that assessee had given the breakup of purchase of jewellery made during AY 2004-05 to 2012-13 duly supported by bank statements showing the details of such purchases and that the payment for bulk of the purchases have been made by cheque. He has further noted that the aforesaid details were available before the AO but the AO for mysterious reasons has not examined the same. He has also given a finding that assessee has also provided the capital accounts which are duly supported by purchases and which also support the year wise purchase as claimed by the assessee. He has further given a finding that the difference in quantity between the weight of jewellery as per the statement of acquisition (8678.323 gms) and the actual quantity of jewellery found at the time of search (9373.3 gms) was 694.977 gms valued at Rs.21,68,485/- for A.Y. 2013.14 and against which Smt Kanchan Bhalla and Smt Divya Bhalla had made additional disclosure of Rs.35,79,530/- and Rs.39,64,299/- respectively on account of
17 unexplained jewellery thus covering the shortfall. Before us, no fallacy in the findings of CIT(A) has been pointed out by Revenue. Considering the totality of the aforesaid facts, we find no reason to interfere with the order of CIT(A) on this ground. Thus the grounds of the Revenue are dismissed.
In the result, the appeal of Revenue is dismissed.
In the combined result, appeal of the assessee is partly allowed and appeal of the Revenue is dismissed.
Order pronounced in the open court on 19.01.2021
Sd/- Sd/- (H. S. SIDHU) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 19.01.2021 *Priti Yadav, Sr.PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI