PAUL DHINAKARAN,CHENNAI vs. DCIT, CENTRAL CIRCLE-391), CHENNAI

6. The CIT(A) erred in upholding the addition by failing to consider the standard and status of the appellant and his family in the society.

7. Without prejudice to the ground that the entire addition is grossly incorrect and illegal, the CIT(A) erred in upholding the entire addition in the hands of the appellant.

8. The CIT(A) erred in failing to delete the addition of credit card expenses of Rs.11,17,570/-.

9. The CIT(A) erred in merely directing the AO to verify the expenses when all the evidences were available both before the AO and the CIT(A) for deletion of the addition in full.

10. The directions of the CIT(A) being erroneous and unsustainable, the same are to be set aside and the addition is to be deleted in full.

11. Any other grounds that may be raised at the time of hearing.”

3.1 The assessee Dr. Paul Dhinakaran, is an individual assessed to tax with PAN-AABPD8489M, under the jurisdiction of DCIT, Central circle – 3(1), Chennai.

4. For the A.Y.2021-22, the assessee filed his original Return of Income on 30.12.2021 by admitting total income of Rs.2,43,86,290/- u/s.139(1) of the Act. He was a 'Resident' for the relevant financial year as per the provisions of the Act and his global income was subject to tax in India. A search u/s.132 of the Act was conducted in the premises of the assessee on 20.01.2021 and subsequent to which, the assessment proceedings u/s.143(3) of the Act were initiated.

4.1 A Show Cause notice dt.16.03.2023 was issued to the assessee in which the AO had asked the source for repayment of expenses incurred for the use of Credit Cards held in the name of the assessee and Jesus Calls International and documentary evidence for 10,464.32 gms. of jewellery foundduring the course of search.

4.2 In response to the notice, the assessee had submitted that only one credit card was used for his personal purpose and the re-payments for the same were made out of his JP Morgan Chase A/c, in which his foreign income were credited. In respect of other credit cards, it was submitted that they were used for the purpose of meeting the expenses of M/s.Jesus Calls International and the repayments were made from the said concern. Copy of the Bank statements highlighting the re-payment entries were also enclosed during the course of assessment proceedings.

4.3 Regarding, jewellery of 10,464.32 grams. found at the time search, a detailed submission, was filed on 28.02.2023, explaining the background of the family and how the family, its inheritance and accumulation of jewellery. Besides, invoice copies for about 677 grams. were also furnished in response to the questionnaire u/s.142(1) for A.Ys.2016-17, 2017-18, 2019-20 & 2020- 21.

4.4 The AO in her Assessment Order had accepted the explanation in respect of the assessee’s credit card payments amounting to Rs.16,90,927.54 (22,782.64 dollars x Rs.74.22) and made an addition of expenses, amounting to Rs.11,17,570.61 (15,057.54 dollars x Rs.74.22), which was claimed to have been incurred by the assessee for the purpose M/s. Jesus Calls International, stating that the confirmation provided by the assessee being "general in nature". The AO also treated the value of Jewellery seized of 7,942.09 grams i.e. Rs.3,69,38,660/- (7,942.09 grams. x Rs. 4,651) as ‘unexplained investment’, by stating that the explanation of the assessee lacks proper documentary evidence. The AO has disregarded the submissions of invoices made by the Assessee, in response to the questionnaires issued u/s.142(1) of the Act. The AO had proceeded to complete the assessment without considering the submissions of the Assessee, thereby adding the said amount to the income of the Assessee.

5. Aggrieved with the decision of the AO, the assessee assailed the order by way of appeal before the ld. CIT(A).The assessee’s submissions before ld.CIT(A) were as under: For Credit card Expenses: The appellant submitted that in order to carry out the activities of M/s.Jesus Calls International Inc., was given Business Credit Cards to incur expenses for his travel and other related activities of Jesus Calls International Inc. The expenses incurred using such credit cards were paid by JCII. The AO in the assessment order has stated that the appellant had used the following credit card and payments made through such card was added to his Income: Sl.No Credit Card Number Amount (in USD) i. 4147202336466949 15,057.54

The above mentioned credit card was used by the appellant for meeting the expenses of M/s. Jesus Calls International, USA. Confirmation letter from Jesus Calls International that the transactions in the said card pertain to it was submitted to the AO. In the confirmation letter dtd.15.10.2024, M/s. Jesus Calls International had stated as follows: i. Payments made from credit cards ending with 6949 were used for official expenses of Jesus Calls International Inc.,USA. ii. The expenses were re-imbursed from the Jesus Calls International’s bank account. iii. List of payments re-imbursed by Jesus Calls International Inc. are tabulated in their letter. Copy of same is enclosed. Copies of Credit card statements ledger a/c of the said entity (transaction statement) for having accounted the credit card payments in their books of accounts are also enclosed. 5.2 Unaccounted Gold Jewellery: The AO in completing the assessment had valued the seized jewelley of 7942.09 grams at Rs.3,69,38,660 and added it as Unexplained Investment U/s.69A of the Act. The appellant lives in a joint family consisting of himself, his mother, wife, a son, daughter-in-law and two daughters. The family tree is given hereunder: Dr.D.G.S.Dhinakaran (deceased on 20.02.2008) &Mrs.Stella Dhinakaran Aged 84 yrs

Evangeline Dhinakaran Dr. Paul Dhinakaran (Aged 60 yrs) &Evangeline Paul (Aged 54 yrs) (deceased in 1986)

Samuel Paul Dhinakaran & Shilpa Samuel (Son & Daughter-in-law)

(i) Appellant’s father late Dr. DGS. Dhinakaran worked with State Bank of India for 28 years and opted for VRS from the bank in the year 1985. He passed away on 20.02.2008. Both of his parents hailed from upper middle-class family. (ii) Dr. DGS Dhinakaran had a celestial vision when he was 27 years old. He had a divine calling to pray for people and comfort them. Lakhs of people began to throng to listen to him in his public meetings, through his programs on the radio as well as the TV, on National Doordharshan channel, since 1985. His messages resonated with people of all faith & language. His popularity was buoyed by the fact that everything he did was driven by passion and conviction. (iii) Because he preached without expecting anything in return, the practice of giving him gifts and mementos grew within the community and many more people began doing so. (iv) Following Mr.D.G.S.Dhinakaran’s footsteps, all of the appellant’s family members began participating in ministering the prayer meetings. (v) The appellant is a MBA and Ph.D. in marketing from University of Madras. His prayer meetings draw 3-5 lakh people across India in a single meeting. His social media posts reach millions of people. (vi) His family members meet the seekers individually, praying personally for each of them after listening to each person’s sorrows and problems. (vii) All the services rendered by him and his family members are free of cost. However, after the demise of his father, the practice of giving gifts to the appellant’s family, by people continued. (viii) From the records available with the family, the income returned by the appellant’s father, Dr.D.G.S.Dhinakaran between AY 2000-01 to 2008-09 are hereunder: (In Rs.) Income Total A.Y from Income from Gifts Income salary other sources 2000-01 87,217 3,49,924 6,87,639 11,24,780 2001-02 89,891 4,27,452 - 517343 2002-03 92,621 5,07,705 - 6,00,326 2003-04 - - - - 2004-05 1,00,317 5,75,665 - 6,75,982 2005-06 1,03,415 1,67,008 3,18,451 5,88,874 2006-07 1,07,650 2,90,364 5,41,266 9,39,280 2007-08 1,13,021 1,50,364 12,05,772 14,69,157 2008-09 1,00,831 1,19,555 21,36,544 23,56,930 Total 7,94,963 25,88,037 48,89,672 82,72,672 It could be seen from the above, that gifts received by the appellant’s father totalling to Rs. 48,89,672/-, till his demise were included in his Return of Income and taxes were paid. (ix) The details of Income returned by the appellant’s mother Mrs.Stella Dhinakaran are given hereunder: (In Rs.) A.Y Total Income Gift/ Offerings Taxable Income 2014-15 2,18,882 9,62,483 11,81,365 2015-16 2,65,574 7,34,935 10,00,509 2016-17 3,06,524 6,88,762 9,95,286 2017-18 3,81,169 9,96,077 13,77,246 2018-19 3,32,135 10,55,765 13,87,900 2019-20 3,47,747 7,95,361 11,43,108 2020-21 3,59,744 7,32,838 10,92,582 2021-22 3,47,669 8,96,625 12,44,294 Total 25,59,444 68,62,846 94,22,290

It could also be seen that Gifts received by the appellant’s mother i.e.Rs.68,62,846/- from FY 2013-14 to FY 2020-21, were admitted in his Return of Income and taxes were paid. (x) The details of Income returned by the appellant are given hereunder: (In Rs.)

A.Y Total Income Gift/ Offerings Taxable Income 2012-13 57,84,375 11,25,578 69,09,953 2013-14 60,15,835 12,32,061 72,47,896 2014-15 35,64,797 21,18,218 56,83,015 2015-16 61,80,648 14,33,497 76,14,145 2016-17 63,12,708 12,83,440 75,96,148 2017-18 4,51,266 26,34,652 30,85,918 2018-19 7,36,039 11,28,354 18,64,393 2019-20 1,45,74,842 59,15,075 2,04,89,917 2020-21 1,21,80,585 30,39,400 1,52,19,985 2021-22 2,35,98,097 9,73,193 2,45,71,290 Total 7,93,99,192 2,08,83,468 10,02,82,660 It could also be seen that Gifts received by the appellant i.e.Rs.2,08,83,468/- from FY 2011-12 to FY 2020-21, were admitted in his Return of Income and taxes were paid. (xi) The details of Income returned by the appellant’s wife Mrs.Evangeline Paul are given hereunder: (In Rs.)

A.Y Total Income Gift/ Offerings Taxable Income 2012-13 18,12,134 25,400 18,37,534 2013-14 18,12,704 1,37,000 19,49,704 2014-15 27,56,420 14,640 27,71,060 2015-16 42,92,231 38,000 43,30,231 2016-17 42,98,706 47,600 43,46,306 2017-18 8,00,280 78,100 8,78,198 2018-19 13,53,220 41,286 13,94,506 2019-20 78,58,350 23,64,122 1,02,22,472 2020-21 36,70,297 17,29,999 54,00,296 2021-22 11,23,048 27,72,865 38,95,913

Total 2,97,77,390 72,49,012 3,70,26,402 It could also be seen that Gifts received by the appellant’s wife i.e.Rs.72,49,012/- from FY 2011-12 to FY 2020-21, were admitted in Return of Income and taxes were paid. The summary of Income and gifts of the family members stated above for the past years are as under:(In Rs.) Particulars Total Income Gifts Taxable Income Dr.D.G.S.Dhinakaran 33,83,000 48,89,672 82,72,672 Mrs.Stella Dhinakaran 25,59,444 68,62,846 94,22,290 Dr.Paul 7,93,99,192 2,08,83,468 10,02,82,660 Dhinakaran(appellant) Mrs.Evangeline Paul 2,97,77,390 72,49,012 3,70,26,402 Dhinakaran Total 11,51,19,026 3,98,84,998 15,50,04,024 (xii) The jewellery of 10,464.32 grams found (out of which 7942.09 seized) belongs to the family members of the appellant. The said jewellery have come to the family, as under: i. Gifts received by the appellant’s parents from their respective parents, at the time of their marriage on 17.08.1959 ii. Personal gifts received the appellant’s father late Dr. DGS Dhinakaran during the spiritual meetings held by him at various places in India. iii. Purchases made by his parents during the period of their married life of 49 years, out of their earnings. iv. Gifts received by the appellant and his wife from their parents, friends and relatives, at the time of their marriage on 02.06.1989. v. Gifts received by the appellant/his family members, from people during spiritual meetings/personal hearings. vi. Gifts received on the occasion of the appellant’s son Samuel’s marriage held on 10.01.2019. vii. Appellant’s daughter-in-law Mrs.Shilpa Samuel and her parents are doctors by profession. She hails from an affluent family and is the only daughter. She was provided with about 200 sovereigns of gold as Shreedhan. viii. Purchases made out of the appellant’s income over the years. The Assessing Officer failed to consider the customs, traditions and practices of Indian women, that it is normal to hold ancestral jewellery and accumulate their savings in the form of jewellery. The appellant is a from an affluent family, having prominent status in the society. Their services for the Christian community are recognized all over the world. The Income admitted by the appellant and his family are sufficient to explain the source of the jewellery seized. The appellant relies on the observations of the Hon’ble Delhi High Court in the case of Ashok Chaddha vs. ITO (2011) 14 taxmann.com 57 (Del) wherein collecting jewellery above the limit prescribed in the instruction, in a married life of 25 to 30 years, was not treated as abnormal. The normal custom of Indian society and realities of life were taken into account by the Hon’ble High Court. The relevant portion of the judgment is reproduced hereunder for your reference: “As far as addition qua jewellery is concerned, during the course of search, jewellery weighing 906.900 grams of the value amounting to Rs. 6,93,582 was found. The appellant's explanation was that he was married about 25 years back and the jewellery comprised "streedhan" of Smt. Jyoti Chadha, his wife and other small items jewellery subsequently purchased and accumulated over the years. However, the Assessing Officer did not accept the above explanation on the ground that documentary evidence regarding family status and their financial position was not furnished by the appellant The Assessing Officer accepted 400 grams of jewellery as explained and treated jewellery amounting to 506.900 grams as unexplained and made an ad hoc addition of Rs. 3,87,364 under section 69A of the Act working on unexplained jewellery, by applying average rate of the total jewellery found. The relevant portion of the assessment order reads as follows:- " very reasonable allowance of ownership of gold jewellery to the extent of 400 grams is considered reasonable and the balance quantity of 506 grams by applying average rate, the unexplained gold jewellery is considered at Rs. 3,87,364 (506/900 × 6,93,582) u/s 69A of the Act." The CIT (A) confirmed this addition stating that the Assessing Officer had been fair in accepting the part of jewellery as unexplained. The ITAT has also endorsed the aforesaid view. Learned counsel for appellant Ms. Kapila submitted that there was no basis for the Assessing Officer to accept the ownership of the gold jewellery to the extent of 400 grams only as "reasonable allowance" and treat the remaining jewellery of Rs. 506.900 as unexplained. She also submitted that another glaring fact ignored by the Assessing Officer as well as other authorities was that as the department had conducted a search of all the financial dealings which were within his knowledge and no paper or document was found to indicate that this jewellery belonged to the appellant and that it was undisclosed income of the assessment year 2006-07. In a search operation, no scope is left with the tax department to make addition on subjective guess work, conjectures and surmises. It was also argued that jewellery is "streedhan" of the appellant's wife, evidenced in the form of declaration which was furnished by mother-in-law of the appellant stating that she had given the jewellery in question to her daughter: She argued that it is a normal custom for a woman to receive jewellery in the form of marriage and other occasions such as birth of a child. The appellant had been married more than 25-30 years and acquisition of the jewellery of 906.900 grams could not be treated as excessive.

3. Learned Counsel for the respondent on the other hand relied upon the reasoning given by the authorities below. After considering the aforesaid submissions we are of the view that addition made is totally arbitrary and is not founded on any cogent basis or evidence. We have to keep in mind that the appellant was married for more than 25-30 years. The jewellery in question is not very substantial. 'The learned counsel for the appellant is correct in her submission that it is a normal custom for woman to receive jewellery in the form of "streedhan" or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and or proper yardstick adopted by the Assessing Officer to treat only 400 grams as reasonable allowance" and treat the other as "unexplained". Matter would have been different if the quantum and value of the jewellery found was substantial.

Dr. Paul Dhinakaran has also been holding membership in various esteemed government bodies, like: (i) Syndicate Member, Bharathiar University – served two terms between 1996 to 2002. (ii) Governing Council Member, National Mission for Sarva Shiksha Abhiyan, Ministry of Human Resource Development (MHRD), Government of India – from 2004 to 2010. (iii) Member, National Monitoring Committee for Minorities’ Education, Government of India – from 2004 to 2010. 12.1 His mission is to bring solace and hope to millions of broken hearted people and has been spearheaded by Dr.Paul Dhinakaran since 1982. He has been holding rallies of hope through prayer which has been attended by hundreds of thousands of people, even more than 5.00 Lakhs in one single meeting across the nation of India (38 years). In these meetings people from all communities and faith gather to pray. He has worked with all denominations of the Christian faith both Catholics and Protestants across the nation.

12.2 In this mission, he has established 123 Prayer Towers across the nation and 14 prayer towers abroad which are available for prayer at any time for people who are in need. God has enabled Dr.Paul to establish National Prayer Tower at Delhi to pray for the nation of India and all its citizens. ‘Jesus calls’ has about 2 million partners who receive spiritual nurturing through various training programs which make them experience the presence of God and to have closer walk with Him. His 'Messages of Hope' are very well received through Television, Radio and Social Media. His book on 'Prayer and Hope' have comforted a few millions. He has offices in USA - Dallas, Texas, London - UK, Singapore, Australia and Israel.

12.3 As the Managing Trustee of Samiti for Education Environmental Social & Health Action (SEESHA), he is actively involved in equipping needy children, empowering unemployed youth and women, providing affordable healthcare, caring for senior citizens and the destitute, enabling the differently-abled to live self-sufficient lives, providing relief to those adversely affected by natural calamities in disaster prone districts across India. Through specialized programmes, SEESHA also reaching out to highly vulnerable sections of society including children living with HIV (CLHIV) by providing them with nutritional supplements and care and offering counselling and dedication services to those who are in need of psychological healthcare. Jesus Calls International Inc. (JCII) is a non-profit organization registered on 02.12.1995 with the Secretary of State, Texas, USA, and operates from 3821 Wood valley Dr., Houston, Texas 70025. In 2011, the assessee was appointed as the President of JCII. Following his appointment, the assessee established the United States as his operational headquarters and began travelling to various countries to carry out the official duties entrusted to him by JCII.As per the terms of his appointment, the assessee was required to oversee and manage JCII’s global activities and serve as an active speaker at its prayer conferences and meetings held across the world.

13. The Ld. AR has submitted that, for the purpose of carrying out the official functions of JCII, the assessee was issued a business credit card ending with number 6949 by JCII. This card was used exclusively for incurring expenses related to travel and activities undertaken on behalf of JCII. It was emphasized that all expenses incurred through this credit card were paid by JCII and were neither personal in nature nor borne by the assessee himself. The assessee incurred the said expenses purely in his representative capacity for JCII.

18.1 The Assessing Officer and the Ld.CIT(A) failed to consider Indian customs and social realities where accumulation of jewellery over years, especially as "sreedhan," is common and not indicative of undisclosed income. The affluence of assessee’s family, with a socially prominent status and worldwide recognition in their Christian ministry, further substantiate the legitimacy of their assets.

19.1 The Hon’ble Delhi High Court following the decision of Ashok Chaddha (supra) in the case of Sushila Devi [2016] 76 taxmann.com 163 has held that the gold jewellery which is acquired through gifts made by relatives and other 19.2 A reference is also made to the decision of the co-ordinate Bench in Monisha R. Jaising vs. DCIT, (2019) 101 taxmann.com 519 (Mum – Trib.) and Vibhu Aggarwal vs. DCIT, (2018) 93 taxmann.com 275 (Del. Trib.) where keeping in mind the high income reported by the respectiveassessee and having regard to wealthy family status where gifting of jewellery is customary, the explanation offered by the assessee towards holding gold and ornaments in excess of CBDT instruction was treated as explained.Similar view has been taken by the Tribunal in the case of Kirti Singh Vs. Assistant Commissioner of Income Tax.

19.3 The Delhi Tribunal in the cases Ankur Sharma vs. DCIT, Assessment Year 2019-20 order dated 06.10.2023; Gagan Saran Sharma vs. DCIT, order dated 06.10.2023 and Ankit Sharma &ors. vs. DCIT, ITA No.1842/Del/2022 order dated 16.10.2023 has taken a similar view. In these group of cases, total jewellery found during the search u/s.132 of the Act stood at 3,877.50 gms, the revenue provided relief is to the extent of 2,250 gms. The excessive jewellery of 1,627.50 gms. found in the course of search was treated as explained by the Tribunal in the backdrop of high income declared by the assessee in the different assessment years.

19.4 The Chennai Tribunal in the case of DCIT Vs. Shri.Krishnan Vijayanand, in dtd.13.09.2023 has accepted the findings of the ld.CIT(A) that the assessee had received gifts of gold jewellery at the time of marriage and considering withdrawals of the family from A.Y.2014-15 to 2020- 21 from the partnership firm and held that the source has been sufficiently explained.

20.1 The Ld. DR has further argued that the ld.CIT(A) has stated that it is only a claim of the assessee that he and his family members have received gifts either on the occasion of their marriage or other occasions, from their friends and relatives or from the people who attended their prayer meetings and the same is the source for the jewellery seized. The assessee could not furnish any details of gifts received either from the friends and relatives or from other people who attended their prayer meetings. It is also noted that the nature of gift, received in cash or kind was not explained/furnished with regard to the income offered in their return of income on account of gifts received by them. In the absence of such vital information, offering of gifts received as an income in the return of income filed, cannot be considered that the assessee and his family members have received gold or gold jewellery as gifts and the same were found and seized at the time of search. In the absence of this information, it can only be concluded that the assessee and his family members have offered the income out of gifts received only in the form of cash in their return of income and the gifts do not include gold or gold jewellery.

21.1 After considering the facts of the case, the submissions made, and the judicial precedents relied upon, we find that the jewellery seized, totalling 7,942.09 grams, is duly explained. The explanation offered by the assessee based on high declared income, family status, and customary gifting practices are reasonable and consistent with accepted norms. On perusal of the income tax returns filed by the assessee and his family members, we find that the income declared on account of gifts under the income from other sources to the tune of Rs.3.98 crores from A.Y.2012-13 to 2021-22. Therefore, the explanation for holding the gold jewellery found at the premises cannot be brushed aside. Accordingly, the addition of Rs.3,69,38,660/- made u/s.69A of the Act is deleted. The order of the Ld. CIT(A) is set aside.In the result, the appeal filed by the for A.Y. 2021-22 is allowed.