BABULAL D. MEHTA,MUMBAI vs. DCIT- CC- 2(2), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER;

1. That as on the facts and circumstances of the case the Ld. CIT(A) has erred in confirming the addition of 270 Gms. of Gold worth Rs.6,93,630/- made by the Assessing Officer ignoring the allowable wealth which a lady and a man can possess.

2. That the Ld. CIT(A) has erred in confirming the addition of 270 Gms. of Gold worth Rs.6, 93,630/- out of 370 Gms. of gold jewellery belonging to Mrs. Nisha M. Mehta (Appellant's Brother's Son's Wife) by treating only 100 Gms. as customary by not considering that the excess alleged Mum 2018-Babulal D. Mehta.

unexplained jewellery found at the time of search has been received at marriage and other festivals as a part of Indian Traditions.

3. Without prejudice to the above, the weight of the gold jewellery belonging to Mrs. Nisha M. Mehta is only 370 Gms. which is below 500 Gms. and which as per CBDT Instructions cannot be seized.

4. Further also considering the above facts, so called excess jewellery was returned by the officer in charge at the time of search after due verification and thus no contrary view could be taken by the Assessing Officer.

5. That the addition as above has been made against the facts and circumstances of the case and detailed submissions filed during the course of hearing before CIT(A) and Assessing Officer has not been considered properly.

The Assessing Officer noted that during the search action, Locker was seized wherein certain gold ornaments were found. In the Locker, following gold ornaments were found:

Sr. Premises Jewellery found No. Estimated net Estimated net Total Value weight of Gold weight of diamond R 1704, 17th Floor, A 1 891.30 gms. 13.54 ct. 2448099 wing Shreepati Tower, Pimpalwadi, Goregaon, Mumbai 2 Mum 2018-Babulal D. Mehta.

2 Locker No. 2226, Bank 811.70 gms 10.207 ct. (Rs. 2659175 of India, C.P. Tank (Rs. 764000/-) Road Branch, Mumbai 18,95,175/-)

“6.2 In response to the same, the assessee's AR vide letter dated 25-11-2017 submitted as under: During the course of search and seizure, the total gold found and seized was 1703 gms and Diamonds 23.747 ct. We would like to say the assessee wife Smt. Bhaguben B Mehta is assessed to wealth tax regularly since A. Y.2008-09 to A.Y.2014-1S. In her husband or A. Y.2012-13 to today she is hold 1143.3 gm gold and 27.1 ct diamonds and she is fully returned regularly and paying the wealth tax out of the total gold found and seized (1703 gms) and shown in return of wealth is 1143.3 gms. The difference is 559.7 gm. The explanation of difference is as under: Babulal Mehta: 84.3 gm gold, a man of 60 years in his life cannot saved/purchased or received at the time of marriage etc. Girish B Mehta : 65 gm gold, an aged about 26 years received at the various occasion like birthday and in marriage gift. It should be consider; as per the custom of society. Nisha B Mehta: Gold found and seized is 370.1 gms and diamond 2.48 ct Nisha is wife of his brother son, stay in Bombay as a joint family married 3 year back, get the jewellery as gift from father as well as ill laws. Source is only gift at the time of marriage only. If you accept the Indian culture and consume, every father and family members gives according to the capacity and as per the social security also even the govt made the program and give in the marriage of ladies. It is upto you to decide in the matter. The regarding diamond found and seized is 23.747 but the assessee is showing in return of wealth is 27.1 ct. It is a declared in the Income Tax. So it should be accepted.”

Mum 2018-Babulal D. Mehta.

Name Gold Diamond Baghuben B. Mehta 1143.30 27.1 ct. (wife) Babulal D Mehta 84.30 0 (self) Girish B Mehta 65.00 0 (son) Nisha M Mehta 370.10 2.48 ct. (daughter) Total 1662.7 29.58

Total Found 1703.00 23.747 ct.

The ld. AR of the assessee submits that as per the Circular of CBDT No. 16/17 and various decisions including Hon’ble Bombay High Court in Komal Wazir vs. DCIT (281 CTR 0506 (Bom), Rajasthan High Court in CIT vs. Satyanaran Patni [366 ITR 325 Raj.)], Sachin Garg vs. ACIT in dated 20.11.2017, Nawaz Singhania vs. DCIT IA No. 3979/Mum/2017 dated 22.12.2017, Shri Ashok Jain vs. ACIT in ITA No. 6251/Mum/2016 dated 25.05.2018, ITA No. 302/Mum/2015 in Zakaullah Siddqui vs. ACIT dated 26.02.2018 and Vidhu Aggarwal vs. DCIT [93 taxmann.com 275]. The ld. AR also relied upon the CBDT Instruction No. 1916 dated 11.05.1994. The ld. AR finally submits that the ground of appeal raised in the present appeal is squarely covered in favour of assessee.

7. On the other hand, the ld. Departmental Representative (DR) for the revenue supported the order of lower authorities.

8. We have considered the rival submission of the parties and have gone through the orders of authorities below. In our view, a very narrow dispute before us relates to gold jewellery of 370 gms which was treated by assessing officer as unexplained investment at the hand of the assessee. The ld. AR for the assessee explained before us that disputed jewellery is much below 500 Gms treated by Assessing Officer as 5 ITA No. 4935 Mum 2018-Babulal D. Mehta. unexplained investment is within tolerable limit as per CBDT Circular No. 19 of 2016. We have noted that the Assessing Officer accepted the explanation furnished by assessee with regard to assessee, his wife and other male member of family. However, the Assessing Officer made addition in respect of 270 (370-100 =270) gms of gold jewellery of Nisha Mehta a married female member of assessee’s family. The ld. AR of the assessee vehemently argued before us that Assessing Officer accepted only 100 gms as explained and remaining 270 gms was treated as unexplained. The ld. AR relied upon the CBDT Circular No. 19 of 2016 and the decision of Hon’ble Rajasthan High Court in CIT vs. Satya Narain Patni (supra). we have seen that the coordinate bench of Mumbai Tribunal in Ashok Jain Vs ACIT (supra) by following the decision of Hon’ble Rajasthan High Court in CIT vs. Satya Narain Patni (supra) on similar set of facts passed the following order:

8. We have considered the rival stands and find that so far as the factual aspect is concerned, the total jewellery found at the time of search was 580.900 gms, as noted by the CIT(A) in para 8.4.1 of the order. In so far as the addition of `24,43,218/- is concerned, same is the value of jewellery as well as other valuables including silver utensils, which have been found at the time of search, and is supported by the valuation report dated 12.10.2011 by the government approved valuer, copy of which has been furnished in the Paper Book filed by the assessee. Pertinently the plea of the assessee before us is confined to the treatment of 580.900 gms of gold jewellery as unexplained at the time of search. The assessee has sought to explain the same by pointing out that the same is within the permissible limits stipulated by the CBDT circular dated 11.05.1994 (supra). Factually speaking, the 6 Mum 2018-Babulal D. Mehta.

assertion of the assessee that the jewellery found was within the limits prescribed by the CBDT by its circular is quite justified. The only issue is as to whether the same would merit addition as unexplained in case, if assessee is not able to give concrete source of acquisition. Ostensibly, in the present case the assessee has not filed any wealth tax returns. The Hon'ble Rajasthan High Court in the case of Satya Narain Patni (supra) noted that the jewellery found during the search was within the limits prescribed by the CBDT circular and in the first instance, the jewellery were not seized, and it was held that no addition thereafter was justifiable. The facts in the instant case are squarely covered by the decision of the Hon'ble Rajasthan High Court in the case of Satya Narain Patni (supra). Therefore we find no reason to sustain the addition toward unexplained jewellery. In so far as the reliance placed by the CIT(A) on the decision of the Hon'ble Madras High Court in the case of V.G.P. Ravidas (supra) is concerned, ostensibly it was a case where the assessee was a wealth tax payee and therefore, it was required of him to specifically show the source of jewellery found in excess of what was declared in the respective wealth tax returns. In fact the CBDT circular dated 11.05.1994 (supra) specifically contains para (ii), which prescribes that in the case of wealth tax assessees gold jewellery and ornaments found in excess of the gross weight declared in the wealth tax returns only need to be seized.

Shri Ashok Jain Therefore, the facts of the case before the Hon'ble High Court were completely different than the instant case. The instant is a case where the assessee has not been assessed to wealth tax and the gold jewellery found was within the permissible limits contained in the CBDT circular dated 11.05.1994 (supra) and therefore the ratio of the judgement of the Hon'ble Rajasthan High Court clearly covers the issue in favour of the assessee. We hold so. Therefore, we set aside the order of the CIT(A) and direct the AO to allow appropriate relief and recompute the income on this aspect afresh. Thus, the assessee succeeds in this appeal.

Mum 2018-Babulal D. Mehta.

6. I have considered the rival arguments made by both the sides and perused the orders of the authorities below. It is an admitted fact that during the course of search, jewellery (Net Weight) 313.600 grams was found at Locker no.520, Bank of India, Patparganj, Delhi. Since the assessee could not explain the source of such jewellery, the Assessing Officer made the addition of Rs.8,93,760/- as undisclosed investment in jewellery. It is the submission of the ld. counsel for the assessee that he and his wife have received the above jewellery at the time of marriage. It is also his submission that since the above gold jewellery is less than 500 grams, therefore, in view of the CBDT Circular No.19 of 2016 and various decisions, no addition should be made. I find some 4 force in the above argument of the ld. counsel for the assessee. The Hon’ble Bombay High Court in the case of Mrs. Komal Wazir vs. DCIT reported in 120 DTR 353 has held that in the normal course of human conduct, on occasions such as marriage the parents and parents-in- law of a bride do normally gift jewellery to the bride. It is not possible to expect the bride to ask for evidence of bills/invoices to support the purchase of the jewellery. It was accordingly held that invocation of section 69 in these facts is completely unwarranted. The Hon’ble Rajasthan High Court in the case of CIT vs. Satya Narain Patni reported in 366 ITR 325 has held that where jewellery found in possession of assessee’s family was personal wearing of ladies and same was within permissible limit stipulated by CBDT Circular, no addition was to be made. Since in the instant case, admittedly the jewellery found in the Locker was only 313.600 grams which is much less than 500 grams as per CBDT Circular No.19 of 2016, therefore, in my view, the ld. CIT(A) should not have insisted for Wealth Tax Return or bills and vouchers to explain the source of such investment in jewellery and should have deleted the addition made by the Assessing Officer. Although the above circular is for non-seizure of gold jewellery etc.

Mum 2018-Babulal D. Mehta. however, various Courts and the Co-ordinate Benches of the Tribunal are taking a liberal view on the basis of this circular and are allowing credit for such gold/jewellery as explained. In this view of the matter, I set- aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition. The grounds raised by the assessee are accordingly allowed.

7. In the result, the appeal filed by the assessee is allowed.

10. Considering the decision of co-ordinate bench and Hon’ble Rajasthan High Court and the fact of the present case, the impugned jewellery of 270 gms is much less than 500 gms as per CBDT Circular No. 19 of 2016, in our view, the ratio of Hon’ble Rajasthan High Court clearly covers the issue in favour of assessee. Therefore, we direct the Assessing Officer to allow the relief to the assessee in directing to delete the addition on account of unexplained investment.

Order pronounced in the open court on 07/08/2019.