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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: Sh. Amit ShuklaDr. B. R. R. Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Sh. Amit Shukla, Judicial Member Dr. B. R. R. Kumar, Accountant Member Asstt. Year : 2014-15 Surpreet Singh Suri, Vs Asstt. Commissioner of Income C/o Sanjiv Sapra & Associates Tax, Central Circle-6, LLP, Chartered Accountants, New Delhi C-763, New Friends Colony, New Delhi-110025 (APPELLANT) (RESPONDENT) PAN No. AOHPS9046K Assessee by : Sh. Sanjiv Sapra, FCA Revenue by : Sh. S. S. Rana, CIT DR Date of Hearing: 21.08.2019 Date of Pronouncement: 24.09.2019 ORDER Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the assessee against the order of the ld. CIT(A)-24, New Delhi dated 31.08.2018.
Following grounds have been raised by the assessee: “1. That there was no justification to make an addition of Rs.2,94,000 on account of deemed/assumed rental income as against the fact that the property in question remained vacant throughout the year under appeal because no tenant could be found.
2. That the authorities below had erred on facts and under the law in making an addition of Rs.2,37,08,076 on account of cash and jewellery found from the residence of the Appellant and bank lockers in the names of family members of the Appellant during search and seizure operations.
2 Surpreet Singh Suri 3. That without prejudice to Ground No. 1 & 2 above, the additions as made by the AO and confirmed ld. CIT (A) are very excessive. Various observations made by the authorities below in their respective orders are either incorrect or legally untenable. Detailed written submissions as made by the Appellant supported by documentary evidence and the case laws have either been ignored or had not been properly appreciated.
4. That the levy of interest u/s 234A, 234B, 234C is illegal and at any rate, without prejudice, the interest as charged is very excessive. This ground was duly argued before the ld. CIT (A) but the same has not been disposed off.” The assessee has got 1/3rd share in the residential house 3. in Sainik Farms which was being treated as self occupied property. Further, the assessee had acquired another property at Aurobindo Marg on which no rental income has been offered under the provisions of Section 23 of the Income Tax Act, 1961. Hence, the Assessing Officer estimated letting value @ Rs.35,000/- per month and added an amount of Rs.294,000/- to the total income on providing for deductions u/s 24 of the Act. The ld. CIT (A) held that the benefit of the vacancy allowance u/s 23(1)(c) of the Act is not available to the assessee as a property was not let out anytime, at least once.
4. Before us, during the arguments, the ld. AR submitted that in spite of the best efforts, the assessee could not get a right tenant in spite of the having best intention to let out the same. Hence, the ALV of the property was taken as Nil. The assessee has quoted the following case laws in support of his arguments: � Premsudha Exports P. Ltd. Vs ACIT 110 ITD 158 (ITAT Mumbai) � Smt. Indu Chandra Vs DCIT in ITA No. 96/Lkw/2011
3 Surpreet Singh Suri � Smt. Shankuntala Devi Vs DCIT in � ACIT Vs Dr. Prabha Sanghi 139 ITD 504 (ITAT Delhi) 5. He argued that the ld. CIT (A) has not been able to distinguish these judgments and has merely denied the vacancy allowance as available u/s 23(1)(c) of the Act on the ground that the same is only available if the property is let out at least once. No condition of such nature as alleged by the ld. CIT (A) is specified in Section 23(1)(c) of the Act for allowing vacancy allowance as also clarified by Mumbai ITAT in Premsudha Export’s case as cited above.
Heard the arguments of both the parties and perused the material available on record. Section 23(1)(c) of the Act pertaining to determination of annual value or determined vacancy allowance reads as under: “Section 23(1)(c) (c) where the property or any part of the property is let and was vacant during the whole or any part of the previous year and owing to such vacancy the actual rent received or receivable by the owner in respect thereof is less than the sum referred to in clause (a), the amount so received or receivable.”
7. Having regard to the clear provisions of the Act, and harmonious reading of Section 23(1)(a) and 23(1)(c) of the Act, were hereby hold that the rent received by the assessee has to be treated as the annual value of the house and liable to tax under income from house property. The action of the ld. CIT (A) on this ground is hereby upheld.
During the search, the warrant was issued in the name of the assessee. The Assessing Officer held in page no. 2 of the 4 Surpreet Singh Suri assessment order that the jewellery in the name of the assessee and other members of the family as found at the residence as well as in bank lockers was as under: Sl. Name S/Sh/Smt Premises Jewellery Jewellery No. fund (in Rs.) found (in Wt.) 1. SS Suri & Kinty 192-B, Sainik 26380346 2539.486 Suri (Wife0 Farm, M B Road, New Delhi 2. Kinty Suri 501, HDFC Bank, 4230938 786.930 Saket, New Delhi 3. Kinty Suri 20, Standard 2635061 651.86 Chartered Bank, E-26, Saket, New Delhi 4. Mehru Suri 694, HDFC Bank, 2359042 875.79 (Married Sister) Saket, New Delhi 5. Kinty Suri 500, HDFC Bank, 8435039 1031.41 Saket, New Delhi 6. PP Suri & Narender 578, UCO Bank, 812676 268.50 Kaur Suri (Father Defence Colony, & Mother New Delhi 7. Narender Kaur Suri 401, HDFC Bank, 2839425 947.30 (Father & Mother) E-143, Saket, New Delhi Total 47692527 7101.279
During the assessment, the assessee submitted that jewellery weighting 875.79 gms belongs to Nehru Suri the married sister of the assessee who is living abroad which was accepted by the Assessing Officer.
The jewellery held by the family members as per the Wealth Tax return is as under: Sh. Surpreet Singh Suri 394.860 gms Smt. Kinty Suri 2086.812 gms Smt. Narender Kaur Suri 1354.146 gms Sh. Pritpal Singh Suri 742.840 gms 11. The Assessing Officer held that the assessee and his wife Smt. Kinty Suri filed the returns of Wealth Tax on 13.09.2013 declaring total jewellery of 2481 gms(394.8+2086.8) as against the 5009 gms found and inventoried at the premises during the 5 Surpreet Singh Suri search and treated the excess jewellery weighting 2528 gms as unexplained investment.
During the arguments, before us, the ld. AR submitted that the assessee has purchased jewellery out of the impressed money given by the company. He submitted that the bills of Swaran Shree Jewels wherein the jewellery has been purchased in cash and argued that the jewellery purchased by the assessee with the money of the company should be considered and the jewellery found be treated as explained.
The ld. DR argued that the explanation of the ld. AR pertaining to the remaining jewellery cannot be accepted and filed his written arguments which are as under: “1. During the course of search, jewellery weighing 5009.686 gms belonging to the assessee and his wife was found valued at Rs. 4,16,81,384. Out of this jewellery weighing 394.860 gms was reflected in their wealth tax returns. Thus, jewelry weighing 2528.014 valued at Rs. 2,10,33,076 remained explained. 2. The assessee claimed that jewellery weighing 1645.548 gms was purchased from 1.04.2013 to 29.10.2013. Some bills were produced but they did not contain name of the assessee. Moreover, mode of payment was cash, source of which the assessee could not explain. Some bills for purchase of jewellery were found during search and credit of these bills has been allowed to the assessee. The bills for jewellery weighing 1645.548 gms were not found during course of search. 3. Reliance is placed upon findings of AO on pages 2 to 4 of assessment order. 4. Reliance is placed upon findings of Ld.CIT(A) on pages 38 to 43 of his order in para 5.1 to para 5.10. “……………………………….
6 Surpreet Singh Suri 5.6 In case of the appellant, total jewellery weighing 5009.686 Gms {(2539.486 Gms from residence) + (786.930 Gms from locker no. 501 in HDFC Bank, Saket, New Delhi) + (651.86 Gms from locker no. 20 in Standard Chartered Bank, New Delhi) +(1031.41 Gms from locker no. 500 in HDFC Bank, Saket, New Delhi)} was found. All the three lockers were in the name of appellant's wife (Smt. Kinty Suri). The appclant furnished copies of wealth tax returns for assessment year 2013-14 of himself and his wife in which weight of declared jewellery was shown at 394.860 respectively. The A0 granted credit for the same weight of the jewellery. The appellant also submitted certain bills from Swarn Shree Jewels (Prop. Vihaan Eximis Company Pvt. Ltd.) showing purchases, of jewellery in cash from 01.04.2013 to 29.10.2013 (date of search) totaling to 1645.548 Gms. The Assessing Officer did not give any credit in respect of these bills because i) the purchases were claimed in cash, ii) the bills mentioned ‘cash’ in place of the name of the Purchasing party (did not have name of the appellant or his wife as purchaser) and iii) source of this cash was stated to be imprest received from the companies i.e. M/s Vistar Construction Pvt. Ltd. and M/s Three C Universal Developers Pvt. Ltd. During the appellant proceedings, it was the argument of the AR that the AO was not right in ignoring the purchase bills submitted by the appellant. The appellant also submitted that credit was not given as per CBDT'S instructions no. 1916 dated 11.01.1994. 5.8 During the course of appellate proceedings, the AR was asked to produce original of the bills as there was certain doubts about authenticity of these bills, however, in spite of sufficient opportunities, the originals were not produced. I have made got independent enquiry and found that certified copies certain bills were not identical of the corresponding photocopies submitted by the AR (as received from the seller, directly). In any case, the AR could not controvert the observations of the AO that these bills mentioned cash' in place of the name of the purchasing party (did not have name of the or his wife as purchaser) and source of this cash was stated to be 7 Surpreet Singh Suri imprest received from the companies which is not possible because company will not provide imprest for purchasing personal affects. 5.9 Regarding credit of jewellery as per CBDT's instructions no. 1916 dated 11.01.1994, it is noted that once appellant and his wife filed wealth tax returns and full credit of jewellery shown in these (wealth tax) returns were allowed there is no occasion 1Or allowing any further benefit as per the said CRDT Instructions. 5.10 In view of the above discussion, this ground (no. 3) of appeal is dismissed and consequently the addition (of Rs.2,37,08,076/-) is confirmed.”
5. In view of above facts, assessee has failed to discharge the onus of proving the source of investment in above jewellery. In the above case, it is humbly submitted that the following decisions may kindly be considered with regard to addition made u/s 69 & 69A of I.T. Act:
1.
R. Mallika Vs CIT [2017] 79 taxmann.com 117 (SC) (Copy Enclosed) where Hon'ble Supreme Court dismissed SLP against Madras High Court's ruling that where assessee had not discharged burden as regards source from which investment had been made, investment in property was an unexplained investment and same was rightly added to income of assessed. CIT Vs R. Mallika [2013] 36 taxmann.com 231 (Madras)/[2013] 219 Taxman 244 (Madras) (Copy Enclosed) where Hon'ble Madras High Court held that where assessee had purchased a property for Rs. 22 lakhs and she had not discharged burden as regards source from which investment had been made, investment in property was an unexplained investment and same was rightly added to income of assessee.
2. Ashokbhai H Jariwala Vs ACIT [2017] 84 taxmann.com 196 (SC/20171 250 Taxman 14 (SC), 2017-TIOL-236-SC-IT (Copy Enclosed)
8 Surpreet Singh Suri where Hon'ble Supreme Court held that Where there was nothing on record to show that sister of assessee was in exclusive possession of bedroom in assessee's house from where cash was seized and further, there was contradiction in statement of assessee and his sister with respect to ownership of actual amount in cash, seized cash would be included as unexplained income in hand of assessee under section 69A, SLP dismissed 3. Sukh Ram Vs ACIT 159 Taxman 385 (Delhi/[2006] 285 ITR 256 (Delhi)/[2006] 204 CTR 336 (Copy Enclosed) where Hon'ble Delhi High Court held that where pursuant to a search conducted at residential premises of assessee, huge sum of cash was found, for which assessee explained that said cash belonged to certain organization but did not bring any material on record to substantiate his explanation and, moreover, verification of books of account of said organization showed no connection with cash recovered from assessee, in said circumstances assessee was to be treated as owner of said cash, and same was to be added to income of assessed under section 69A.
Mahabeer Prasad Jain Vs ACIT [2017] 88 taxmann.com 9 (Allahabad)/[2018] 253 Taxman 152(Allahabad)/[2017] 399 ITR 600 (Allahabad) Copy Enclosed) where Hon'ble Allahabad High Court held that where assessee had purchased drafts by depositing cash but failed to provide source of said cash utilized to make such investment, additions made under section 69 was justified.
Amita Kochar Vs ACIT [20171 79 taxmann.com 432 (Patna)/2016 389 ITR 345 (Patna) (Copy Enclosed) where Hon'ble Allahabad High Court upheld addition where assessee, in block return, did not disclose total gold found during search nor did it give any reasonable explanation therefor and even figures given in belated explanation did not match with gold jewellery actually found in assessee's possession.
9 Surpreet Singh Suri 6. Vijay Kumar Saraf Vs ITAT [1996] 85 Taxman 465 (Madhya Pradesh)/[1997] 226 ITR 860 (Madhya Pradesh) (Copy Enclosed) Certain jewellery and ornaments seized during raid on business premises of assessee were claimed to be assets of ancestral business of assessee's father. Assessee's aforesaid plea having not been pressed before tax authorities nor substantiated by any material evidence. Hon’ble MP High Court held that Tribunal had rightly upheld assessment by treating value of seized assets as also purchase of scooter as unexplained investments of assessee within meaning of section 69.
Karun Dutt Singh Vs CIT [2017] 85 taxmann.com 177 (Kerala) (Copy Enclosed) where Hon'ble Kerala High Court held that where AO made addition to assessee's income in respect of gold ornaments recovered from him after rejecting his explanation that it belonged to his employer company, in view of fact that director of employer company in his statement recorded under sec. 131 denied to have given ornaments to assessee for sale or as samples, impugned addition was to be confirmed.”
Heard the arguments of both the parties and perused the material available on record. We are unable to appreciate the argument of the ld. AR that the jewellery was purchased with the imprest money of the company available with the assessee.
On examination of the material filed before us and from the reading of the panchnamas in the table mentioned in the assessment order at page no. 2, the following facts arises regarding the jewellery of the family members which is as under: Sl. Name of the Relation Premises Net weight Remarks No. owner as per with the panchnama assessee 1. Narender Kaur Parents Locker No. 268.500 Considered and Preet Pal 578, UCO by AO Suri Bank, Defence
10 Surpreet Singh Suri Colony, New Delhi 2. Narender Kaur Parents 192 B, 1388.390 Considered and Preet Pal Sainik by AO in the Suri Farm, New hands of the Delhi assessee 3. Narender Kaur Parents Locker 947.300 Considered and Preet Pal No.401, by AO Suri HDFC Bank, New Delhi 4. Kinty Suri and Wife 192 B, 1151.096 Considered Surpreet Suri Sainik by AO Farm, New Delhi 5. Kinty Suri Wife Locker No. 1031.410 Considered 500, HDFC by AO Bank, Saket, New Delhi 6. Kinty Suri Wife Locker No. 786.900 Considered 501, HDFC by AO Bank, Saket, New Delhi 7. Kinty Suri Wife Locker No. 651.86 Considered 20, by AO Standard Chartered Bank, New Delhi 8. Mehru Suri Sister Locker No. 875.79 No dispute 694, HDFC Bank, Saket, New Delhi Kinty Suri + Surpreet Suri - 1151.096 Kinty Suri - 2470.19 Narender Kaur + Preet Pal Suri - 2604.19 Mehru Suri - 875.79 Total 7101.266 16. The Wealth Tax Return of Surpreet Suri and Kinty Suri shown a total amount of 2481.672 gms whereas the total jewellery found and recorded as per the panchanama pertaining to Surpreet Suri and Kinty Suri was 3622.15 gms. Since, the 11 Surpreet Singh Suri assessee has got two sons and no provision has been given by the revenue regarding the jewellery possessed by them in view of the Instruction No. 1916 dated 11.05.1994 in para (ii) and (iii), keeping in view the return income of the assessee which is 4.5 crores for the assessment year 2013-14, we hereby consider it fair to allow 200 gms of jewellery per person and thus, an amount of 740 gms can be treated as unexplained excess jewellery in the hands of the assessee against 2528 gms determined by the revenue. This was due to the fact that the amount of jewellery of 1388 gms belonging to Narender Kaur Suri and Preet Pal Suri parents of the assessee, found at the residence of the assessee were treated in the hands of the assessee wrongly, even though the panchnama reveals clearly that the jewellery belongs to the parents of the assessee. The appeal of the assessee on this ground is treated as partly allowed. Application of Sections 234A, 234B and 234C of the Act is consequential.
In the result, the appeal of the assessee is partly allowed. (Order Pronounced in the Open Court on 24/09/2019).