DCIT, JAIPUR vs. VIJAY MEHTA, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh dqy Hkkjr] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 326/JP/2016 fu/kZkj.k o"kZ@Assessment Year :2012-2013 cuke The DCIT Central, Shri Vijay Mehta, C-14, Jamuna Circle- 2, Jaipur. Vs. Nagar, Sodala, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACTPM0495J vihykFkhZ@Appellant izR;FkhZ@Respondent C.O. No. 8/JP/2016 (Arising out of vk;dj vihy la-@ITA No. 326/JP/2016) cuke The DCIT Central, Circle- 2, Jaipur. Shri Vijay Mehta, C-14, Vs. Jamuna Nagar, Sodala, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ACTPM0495J vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri P.C.Parwal (C.A.) jktLo dh vksj ls@ Revenue by : Shri Verindra Mehta( CIT)

lquokbZ dh rkjh[k@ Date of Hearing : 20/04/2017 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 25/04/2017 vkns'k@ ORDER

PER: VIKRAM SINGH YADAV, A.M.

2 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

This is an appeal filed by the Revenue and cross objection by the assessee against the order dated 19.01.2016 passed by the ld. CIT (A)- 2, Jaipur for the A.Y. 2012-13.

In his cross objection, the assessee has taken solitary ground of appeal as under:- “1. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the addition of Rs. 1,50,000/- u/s 69A on account of unexplained investment in silver articles.”

3 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

searched. In course of search of residential premises, a paper at page 47 of Annexure AS-2 was found. Subsequently, the ADIT recorded the statement of the assessee u/s 131 on 21-12-2011 where the assessee in reply to question No. 6 with reference to this paper stated that he has invested in cash Rs. 35 lacs in Megha Realmart Project but as his share was only 10% in total cash investment of Rs. 71,13,000/- as noted on this paper, Rs. 7,13,000/- were retained and Rs. 23,26,667/- amount was refunded back in cash. He further stated that on back side of the same paper, there is noting of Rs. 73,10,000/- which is the amount invested by him and his family members by cheque in the project of Megha Realmart.

3.1 In course of assessment proceedings, assessee explained the individual figure noted on front side and back side of this paper. It was explained that the amount of Rs. 35 lacs noted on this paper was given by the assessee to M/s Megha Realmart Pvt. Ltd. by cheque but wrongly mentioned in the statement dated 21.12.2011 as cash investment. The relevant supporting papers were filed. It is further clarified that on this paper it is nowhere mentioned that Rs.35 lacs is given in cash. The cash amount given was Rs. 23,26,667/- as noted on lower side of this paper out of which Rs. 7,13,000/- being 10% contribution in cash expenditure of Rs. 71,30,000/- is retained and balance amount of Rs. 16,13,667/- is received back. Therefore, simply on the basis of the statement by ignoring the documentary evidence it cannot be presumed that the amount of Rs. 35 lacs is given in cash. The AO however held that the assessee in his statement dated 21-12- 2011 which was recorded after 20 days from conclusion of search has

4 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

stated that he has contributed Rs. 35 lacs in cash in the project of M/s Megha Realmart Pvt. Ltd. The assesssee has not retracted the above admission till the time of assessment proceedings. Therefore, the claim of the applicant vide its letter dated 18-03-2014 that such amount is contributed by cheque is an after thought. He therefore, made addition of Rs. 35 lacs u/s 69 of the Act. In appellate proceedings, the Ld. CIT(A) after considering the remand report and the submission filed by the assessee, deleted the disallowance. Against which, the Revenue is in appeal before us.

3.2 During the course of hearing, the ld AR Submitted that from the copy of the seized paper, it can be noted that various amounts are noted on the front side and the back side of this paper. All these amounts relate to investment in Magha Realmart Project. The assessee has explained each of the amount noted on this paper vide letter dated 18-03-2014 which is reproduced at page 8-9 of the assessment order. The AO has accepted the explanation in respect of each of the amount noted on this paper except the amount of Rs. 35 lacs which is contributed by the assessee by cheque and not in cash as stated in the statement dated 21-12-2011. The fact that the amount of Rs. 35 lacs was given by the assessee to M/s Mega Realmart Pvt. Ltd. by cheque is evident from the copy of ledger account of the assessee in the books of M/s Mega Realmart Pvt. Ltd. The assessee has given Rs. 35 lacs to Mega Realmart Pvt Ltd. on 20-01-2011 by cheque out of which Rs. 25 lacs is transferred to his loan account and Rs. 10 lacs was adjusted against the share capital issued to the assessee. This fact is also appearing on the back page of this paper where against the name of

5 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

‘VM’ ( Vijay Mehta), Rs. 10 lacs is noted against share application ( 35- 25) and Rs. 25 lacs is noted against loan account. These noting clearly indicate that Rs. 35 lacs was contributed by the assessee by cheque and not in cash.

3.3 It was further submitted that on this paper itself, there is a noting for cash contribution to be made by the partners for Rs. 71.30 lacs in which assessee’s share was Rs. 7.13 lacs. Against this, assessee has paid Rs. 23,26,667/- in cash. The source of this cash is explained to be out of Rs. 10.46 lacs withdrawal by Smt. Kanta Mehta, wife of assessee out of booking amount received in cash of Rs. 633 lacs in the project Rosewood Apartment of M/s Kiran Upasana Builders where she was a partner. M/s Kiran Upasana Builders have offered Rs. 633 lacs for tax in the settlement petition filed by it. Thus, the source of Rs. 23,26,667/- contributed by the assessee out of such amount is explained in support of which details of withdrawal made by the assessee/his wife from Kiran Upasana Builders and the ledger account of assessee in Megha Realmart Pvt. Ltd. where the amount of Rs. 23,26,667/- was deposited was filed. The AO has not taken any adverse view in respect of the cash contribution of Rs. 23,26,667/ noted on this paper.

3.4 It was further submitted that in statement dated 21-12-2011, the assessee was not confronted with all the figures noted on this paper but confronted with only some of the figures. This created a confusion in his mind and therefore assessee stated that he contributed cash of Rs. 35 lacs in this projects of which Rs. 7,13,000/- is retained and balance Rs. 23,26,667/- out of amount of Rs. 35 lacs was refunded back. The total of Rs. 7,13,000/- and Rs. 23,26,667/- comes to Rs. 30,39,667/- and not

6 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

Rs. 35 lacs. This shows that assessee was confused with figures while giving the statement. As against this, the correct fact, as can be gathered from the paper, is that assessee made cash contribution of Rs. 23,26,667/- of which Rs. 7,13,000/- is retained and balance Rs. 16,13,667/- is refunded back. It may also be noted that against the amount of Rs. 35 lacs noted on this paper there is no noting that this amount is contributed in cash whereas the amount of Rs. 23,26,667/- is noted under the heading ‘cash’. Therefore, only on the basis of statement of assessee given on 21-12-2011, by ignoring the documentary evidence, it cannot be presumed that the amount of Rs. 35 lacs is given in cash. Therefore, the addition of Rs. 35 lacs made by the AO is by not appreciating the correct facts.

3.5 It was further submitted that it is settled law that addition cannot be made only on the basis of statement by ignoring the documentary evidence. Though an admission is an important piece of evidence it cannot be a conclusion for assessment. In this connection reference can be made to the following decisions:-

- Chetnaben J. Shah LR of Jagdishchandra K. Shah Vs. ITO (2016) 140 DTR 235 (Guj.) (HC) - Pullangode Rubber Produce Company Ltd. V. State of Kerala and another 91 ITR 0018 (SC) - Federal Bank Ltd. Vs. State of Kerela 124 CTR 355 (Ker.) (HC) - CIT Vs. Ashok Kumar Soni 291 ITR 172 ( Raj.) (HC) - Ashok Kumar Vs. ITO 201 CTR 178 (J&K) (HC) - Rejesh Jain Vs. DCIT 100 TTJ 929 (Del.) (Trib.)

7 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

- Surendra Pal Verma Vs. ACIT 89 ITD 129 (Chd)™ 3.6 The ld DR is heard who has vehemently argued the matter and relied on the order of the AO.

3.7 We have heard the rival contentions, pursued the material available on record. The issue under consideration relates to figure of Rs 35 lacs which found mention in the seized document found during the course of search and whether the same was paid in cash or in cheque. The ld CIT(A) has examined the matter at length and his following findings remain uncontroverted before us and the same are hereby confirmed:

“On careful perusal of aforementioned seized documents, it is seen that against the figure of Rs. 35 lakhs, cheque amounts have been mentioned and so the break up amounts have also been mentioned on the back side of the seized documents which is also verifiable from the bank statements/books of accounts. On further perusal of ledger a/c submitted by the Ld AR it is also seen that the amount of Rs. 35 lacs was given by the assessee to M/s Megha Realmart Pvt Ltd. by cheque which is evident from the copy of ledger account of the assessee in the books of M/s Megha Realmart Pvt. Ltd. The Assessee has jgiven Rs. 35 lacs to M/s Megha Realmart Pvt Ltd. on 20.01.2011 by cheque out of which Rs. 25 lacs is transferred to his loan account and Rs. 10 lacs was adjusted against the share capital issued to the assessee. It is also a fact that for making this addition, AO has simply relied on the sworn statement only. To corroborate his findings, AO has also not brought on record any evidence to prove that assessee had made cash payment of Rs. 35 lacs instead of payment of payment by cheque as claimed by the

8 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

assessee. In view of the facts and circumstances of the case as elaborated above, addition made of Rs. 35 lakhs cannot be sustained, hence deleted.”

3.8 In light of above, we donot see any infirmity in the order of ld CIT(A) and the same is hereby confirmed. Ground no. 1 of the Revenue is thus dismissed. 4. Regarding ground No. 2 of the Revenue’s appeal and cross objection filed by the assessee, briefly the facts of the case are that in course of search, 1300.95 gms of gold jewelry and 8.620 Kg of silver article were found. No part of gold/silver jewelry/articles was seized.

4.1 In course of assessment proceedings it was explained that assessee in Q. No. 7 of his statement u/s 132(4) dated 07.12.2011 has stated that his family owns around 70-80 tola gold ornaments and 10 Kg of silver articles which belongs to him, his wife and two daughter-in- law. The AO accepted the explanation in respect of gold ornaments considering the CBDT instruction but in respect sliver articles he observed that in absence of CBDT instruction only 50% of the silver article can be reasonable attributed to the customary gifts. He therefore, treated silver articles of 4.310 Kg as unexplained and made addition of Rs. 2,43,515/-.

4.2 In appellate proceedings, the Ld. CIT(A) after considering the remand report and the submission filed by the assessee confirmed the addition to a lump sum amount of Rs. 1,50,000/- on account of investment in silver articles.

9 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

4.3 During the course of hearing, it was submitted that the assessee in his preliminary statement u/s 132(4) has categorically stated that family owns 10 Kg of silver articles. In search, 45 silver coin weighing 520 grams, silver glass and tray weighing 2.1 Kg. and silver utensils weighing 6 Kg totaling to 8.620 Kg was found. From the description of item itself it can be noted that these items are received in gift/on the occasion of marriage. The quantity of silver items is reasonable in the hands of three ladies members in the family. In search no evidence of purchase of these items was found. Considering the reasonability, even the search party has not seized any part of silver articles. Further when 1300 gm of gold jewellery is accepted as reasonable possession, 8.620 Kg of silver article cannot be considered as unreasonable possession by the assessee and his family. Therefore, AO is not justified in presuming that only 4.310 Kg can be reasonably attributed towards customary gifts. Further, there is no basis with the ld. CIT(A) to hold that silver articles of Rs. 1,50,000/- is unexplained. Hence, the lump sum addition confirmed by the Ld. CIT(A) without any basis deserves to the deleted.

4.4 The ld DR is heard who has relied on the order of the AO and submitted that 50% of silvery articles found during the course of search has already been allowed as reasonably attributed to customary gifts by the assessee. Therefore, there is no basis for any further relief provided by the ld CIT(A) and hence, the order of the AO be sustained.

4.5 We have heard the rival contentions and pursued the material available on record. Silver articles in terms of silver coins, silver grass and tray, and utencils weighing 8.620 kgs were found during the course of search operation. The AO noted and accepted the assessee’s

10 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur.

explanation that gifts of silver articles during social functions and occasions of birth of children etc are customary in Indian families. Regarding the quantum of such gifts, the AO noted that status and background in terms of social and financial parameters are to be taken into consideration and thereafter, held that 50% of silver articles found can be reasonably attributed to such customary gifts and balance 50% of silver articles valued at Rs 245,515 was held to be unexplained money in the hands of the assessee by the AO which was subsequently reduced to Rs 150,000 by the ld CIT(A). It is therefore not in dispute that these silver items especially given the nature of these items in terms of coin, trays, utencils, etc are generally given as gifts on various social and other family occasions/functions. However, in terms of reasonableness of such gifts which can be given or accepted, there cannot be any straight jacket formula. It all depends upon the facts and circumstances of each case. The onus is on the assessee to come out with the plausible explanation in this regard as the silver articles have been found in his possession. However, in absence of the same, the AO taking into consideration the social and financial standing of the family has arrived at 50% which we find just and proper. In light of above, the additions made by the AO is sustained and the order of the ld CIT(A) is set aside. The ground no. 2 of Revenue’s appeal is allowed and ground in assessee’s cross objection is dismissed.

In the result, revenue’s appeal is partly allowed and assessee’s cross objection is dismissed.

Order pronounced in the open court on 25/04/2017

11 ITA No. 326/JP/2016 C.O. No. 8/JP/2016 DCIT Central, Circle-2 vs. Shri Vijay Mehta, Jaipur. Sd/- Sd/- ¼dqy Hkkjr ½ ¼foØe flag ;kno½ (Kul Bharat) (Vikram Singh Yadav) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 25/04/2017. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- DCIT Central, Circle-2, Jaipur 2. izR;FkhZ@ The Respondent- Shri Vijay Mehta, C-14, Jamuna Nagar, Sodala, Jaipur. 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 326/JP/2016& C.O. No. 8/JP/2016} vkns'kkuqlkj@ By order,

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