BASANT KUMAR DAMANI,KOLKATA vs. DCIT, CENT. CIR. 2(1), KOLKATA

order

: August 17, 2022 ORDER

Per Sanjay Garg, Judicial Member:

“1. For that the CIT(A) erred in confirming the addition of cash of Rs.2,65,208/- out of Rs.3,88,600/- found during the course of search as unexplained money u/s 69A when the said cash was part of the families regular cash savings and balance kept in the locker.

2. For that the CIT(A) erred in confirming the addition of the value of jewellery amounting to Rs.35,65,535/- out of Rs 36,41,318/- seized during the course of search as unexplained u/s 69A when the said jewellery belonged to the assessee and his family members on record of the department covered by the VDIS 1997, the source of which were duly explained to the A.O and section 69A was not applicable.

5. For that the Ld CIT(A) erred in assuming that the assessee may have more jewellery in his house when the assessee coming from a middle class family living in rented house Assessment Year: 2019-20 Basant Kumar Damani kept the jewellery for safe custody in the locker operated by private party and available at marginal rates and became victim of the circumstances since all the lockers in the said locker room were sealed and searched.

During the appellate proceedings before the CIT(A), the assessee contended that part of the cash balance was out of petty savings of the ladies from drawings made. Further, the Assessing Officer has referred to cash balances as on 31.03.2018 instead of 31.03.2019, as the search was conducted on 28.01.2019. The assessee also furnished the balance sheets of all the persons mentioned above as on 31.03.2019.

The ld. CIT(A) considering the above submissions of the assessee observed that it would be fair to the assessee cash balance as on 31.03.2019 would be a better indicator of the source of cash, as it is nearer to the date of search, as compared to cash balances as on 31.03.2018. He further noted that a perusal of the balance sheet as on 31.03.2019 revealed cash-in-hand of Rs.11,342/- in the case of the assessee, Sri Basant Kumar Damani, cash-in-hand of Rs.71,347/- in the case of Smt. Manju Damani, cash-in-hand of Rs.18,561/- in the case of Ms. Sugandha, daughter-in-law and cash-in-hand of Rs.22,142/- in the case of Mr. Aditya Damani. Thus, total cash-in-hand of the family members was Rs.1,23,392/-.

He, therefore, restricted the addition in respect of unexplained cash found in locker to Rs.2,65,208/- only.

Assessment Year: 2019-20 Basant Kumar Damani 3. Being aggrieved by the above order of the CIT(A), the assessee has come in appeal before us. The ld. counsel for the assessee has submitted that the amount found in the locker rented by the assessee was a joint locker with his wife. That the amount found at the locker was out of past savings of the assessee and his wife which inadvertently was not disclosed in the balance sheet. That the amount was a small amount which was saved over the time and that the said amount did not represent any unexplained income of the assessee. He has further submitted that even otherwise since the locker was joint with his wife, therefore, the entire cash found even otherwise cannot be added as income of the assessee.

The ld. DR has relied upon the findings of the lower authorities.

We have considered the rival submissions and gone through the records. It is to be noted that the amount found during the search action was a small amount which the assessee has claimed that the same has been saved out of past savings during long time by him and his wife. Though the aforesaid amount has not been reflected as cash in hand in the balance sheet of the assessee, however, considering the smallness of the amount and that too was found from the locker of the assessee which was placed along with jewellery of the family and that the amount was out of past savings of the assessee family and hence, considering the overall facts and circumstances of the case, we are of the view that the addition of the aforesaid amount was not warranted in this case. The same is accordingly ordered to be deleted.

During the appellate proceedings before CIT(A), the assessee submitted that the locker was in the joint name of the assessee and his wife and the jewellery/bullion of all the family members consisting of assessee, his spouse, his son, daughter and daughter-in-law was kept in the locker. Total weight of jewellery found was 1035.74 gms. Appellant further submitted that as per CBDT circular dated 11.05.1994, 1650 gms. of jewellery 3

Assessment Year: 2019-20 Basant Kumar Damani gets explained as source of investment was not required to be explained as 500 gms. of jewellery for his spouse and daughter-in-law each, 250 gms for daughter and 200 gms each for himself and son was covered by the circular. Appellant further submitted that jewellery was very old and was also disclosed under VDIS.

6. Being aggrieved by the above action of the CIT(A), the assessee has come in appeal before us. At the outset, the ld. counsel for the assessee has invited our attention to valuation report of jewellery dated 14.10.1997 which was prepared for VDIS scheme. As per the said report dated 14.10.1997, the assessee was possessed of 8 jewellery items worth of Rs.3,07,500/-. Further, as per the valuation report as on 31.03.2006, the assessee possessed 16 items of jewellery of the value of Rs.1093618/-. Both the above valuation reports have not been denied by the Revenue. The contention of the ld. counsel for the 4

Assessment Year: 2019-20 Basant Kumar Damani assessee has been that the investment disclosed in the balance sheet was as per purchase price and not as per prevalent market rate of the jewellery. The items which were matched with the aforesaid list were not seized by the department. However, the items which did not match with the list were treated as unexplained. The case of the assessee is that some of the items were remade as per latest design. It is not the case of the Department that any gold/jewellery was found over and above the valuation as disclosed in the valuation dated 14.10.1997 and 31.03.2006. Moreover, as per CBDT Instruction No.1916 dated 12.05.1994, it has been stated that in a case of person not assessed to wealth tax, gold jewellery and ornaments 500 gms. per married lady 250 gms per unmarried lady and 200 gms. per male member of the family, need not be seized. It has been further provide that the authorized officer may having regard to the status of the family and the customs and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. Considering the above CBDT Circular, Hon’ble Gujarat High court in the case of CIT vs. Ratanlal Vyaparilal Jain in Tax Appeal No.661 & 662 of 2009 decided on 19.07.2010 has observed as under:

“10. Though it is true that the CBDT circular No.1916 dated 11.5.1994 lays down guidelines for seizure of jewellery and ornaments in the course of search, the same takes into account the quantity of jewellery which would generally be held by family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in Hindu families whereby jewellery is gifted by the relatives and friends at the time of social functions, viz., marriages, birthdays, marriage anniversary and other festivals. These gifts are customary and customs prevailing in a society cannot be ignored. Thus although the circular had been issued for the purpose of non-seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu society. In the circumstances, unless the revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery stated in the circular stands explained. Thus, the approach adopted by the Tribunal in considering the extent of jewellery specified under the said circular to be a reasonable quantity, cannot be faulted with. In the circumstances, it is not possible to state that the Tribunal has committed any legal error so as to give rise to a question of law.” Considering the above stated proposition of law, in this case, as submitted by the counsel of the assessee, if the entire jewellery found in the locker is considered, still the same is less by 700 gms which a normal middle-class family was supposed to possess out of the 5

Assessment Year: 2019-20 Basant Kumar Damani past savings, gifts etc. Therefore, in the light of the above observation of the Hon’ble Gujarat High Court, the aforesaid jewellery found from the locker of the assessee being less than the minimum quantity as instructed by the CBDT which a normal family under normal circumstances is supposed to possess, we do not find any justification on the part of the lower authorities to treat the same as unexplained. Moreover, as observed above, the above found jewellery is even otherwise less than the value of the jewellery already declared by the assessee in the valuation report from 1997 to 2006. In view of the above, the addition made by the lower authorities is ordered to be deleted.