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Facts
During a search in February 2018 at the assessee's premises, jewellery valued at Rs. 7.81 crores was seized, leading the AO to make an addition for unexplained jewellery. Separately, a survey at LEEL Electrical Limited found evidence of unrecorded scrap sales, the cash proceeds of which were admitted to have been given to the assessee and her husband. The AO added Rs. 88.24 lakhs (for Renu Punj) for these unaccounted scrap sales. The Ld. CIT(A) deleted both additions.
Held
The Tribunal dismissed the Revenue's appeal regarding the unexplained jewellery, upholding the CIT(A)'s deletion, as the declared jewellery (including VIDS declarations and CBDT allowance) exceeded the amount found. For the unaccounted scrap sales, the Tribunal remitted the issue back to the Assessing Officer to verify if LEEL Electrical Limited had disclosed the income; if not, the addition against the assessee could be sustained. The decision for Renu Punj's jewellery was applied *mutatis mutandis* to Pooja Punj's case.
Key Issues
Whether additions for unexplained jewellery found during search and for unaccounted cash from scrap sales were justified, and the applicability of CBDT Instruction No. 1916.
Sections Cited
69A, 131, 142(1)
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Income Tax Appellate Tribunal, DELHI BENCH ‘F’: NEW DELHI
per CBDT Instruction the assessee family is eligible to claim certain allowances. In view of the above facts and circumstances, the Ld. CIT(A) has rightly deleted the addition.
Considered the rival submissions and materials placed on record, we observed that during the course of search the Revenue has found 11853.72 gms jewellery in the residence of Mr. Bharat Raj Punj, 2069.49 gms gold were found in Locker No.1089-F which belongs to the assessee and 272.45 gms and 681.00 gms gold were found in Locker No.639 and 640 respectively, which are belonging to Ms. Pooja Kunj, therefore, total gross gram of gold jewellery found during the search are 14876.66 gms. The assessee during appellate proceedings has brought to our notice that she has brought to the knowledge of the lower authorities, to the extent of 5560.80 gms which was declared by the family members of the assessee in VIDS, 1997 Scheme and further submitted that details of purchases made by the assessee and her husband to the extent of 6498.78 gms and 2237.83 gms respectively, therefore, the declared value of gold jewelries before the authorizes are 14876.66.
Therefore, the difference of jewellery fund during the search and declared jewellery is only 579.25 gms. After careful consideration of the facts on record and back ground of the family and the income declared by the family, in our considered view, the excess jewellery found during the search is 579.25 gms which is within the limits of allowance as granted by the CBDT vide Instruction No.1916 and also considering the back ground of the family member & wealth, we do not find any reason to disturb the findings of the Ld. CIT(A) in this regard. Accordingly, grounds raised by the Revenue are dismissed.
Coming to the other grounds No.6 & 7. The relevant facts are, during the survey action which was conducted in the case of M/s LEEL Electrical Limited (LEL) on 07/12/2018 at the business premises at Okhala Industrial Area, Phase-2, New Delhi. During the above course of survey proceedings the officer found an excel sheet from the desktop of Mr. Sunil Jindal, Sr. Manager Accounts of the company from Feb,2019 to15th May, 2018 with the heading scrap collection. When confronted, he admitted that the company makes scrap sales without recording in the books of account and the cash were handed over to Mr. Shiv Kumar Sharma. When Shiv Kumar Sharma was confronted u/s 131 of the Act on 28/08/2019, he admitted that the above said cash on sale of scrap after receipt were handed over to assessee and her husband equally.
Accordingly, the show cause notice u/s 142(1) of the Act were issued to assessee and her husband and it was asked to explain why the above said undisclosed receipts should not be added in her hands. The assessee has not filed any submissions in this regard, in order to give opportunities of cross examination to the assessee, notice were issued to the assessee and Mr. Shiv Kumar Shamra, however, both of them has not appeared before the Assessing Officer, therefore, the Assessing Officer observed that assessee has not utilized the opportunities of cross examination and further he observed that even the company LEL has not offered to tax of above said scrap sales in the respective years. Accordingly, he proceeded to make 50% of the scrap sales recorded in the excel sheet and found during the survey proceedings in the hands of the assessee i.e., to extent of Rs.88,24,473/-.
Aggrieved, assessee preferred an appeal before the Ld. CIT(A) and after considering the submissions of the assessee, the Ld. CIT(A) deleted the addition with the following observations:
“The excel sheet with the heading “LEEL-Scrap Collection From feb-18 to 15th May 2018” was found during the survey action on M/s LEEL Electrical Limited on 07.12.2018. The AO has made addition on account of income from unaccounted scrap sales in the hands of Mr. Bharat Raj Punj and Mrs. Renu Punj not in the hands of M/s without bringing on record: i. Whether impounded excel sheet was confronted to M/s LEL during asst. proceedings in the case of M/s LEL; ii. What was the stand of M/s LEL on the impounded excel sheet; iii. How scrap sales were accounted for in the books of accounts of M/s LEL.
Further, the AO has not brought on record any reason/justification as to why addition on account of income from unaccounted cash scrap sales has been made in the hands of Mr. Bharat Raj Punj and Mrs. Renu Punj and not in the hands of M/s LEL as these cash scrap sales are unaccounted and out of books sales of M/s LEL. 9.5 In view of above discussion, it is held that this fact cannot be denied that scrap sales in cash were made by M/s LEL not the appellant. If these scrap sales are unaccounted and out of books sales than any addition on this basis/issue should be made in the hands of M/s LEL not the appellant. Therefore, addition of Rs.88,24,473/- made by the AO is hereby deleted and this ground of appeal is hereby allowed.”
13. Aggrieved, the Revenue is in appeal before us. At the time of hearing, the Ld. DR submitted that it is fact on record that undisclosed scrap sales were found during the survey proceedings and it is admitted fact that the above said cash were handed over to the assessee and her husband and none of these were recorded or reported by the company LEL, therefore, the additions made by the Assessing Officer is just and proper. He objected to the findings of the Ld. CIT(A) and prayed for sustaining the finding of Ld. Assessing Officer.
14. On the other hand, Ld. AR reiterated the findings of the Ld. CIT(A) and submitted that the materials were impounded in the hands of the company LEL. Therefore, it should be added in the hands of the LEL not in the hands of the assessee. The Bench has asked the Ld. AR to substantiate the same at the bar and directed the assessee to submit the details of scrap sales declared by the company LEL. The Ld. AR submitted that it is not possible to substantiate the same.
Considered the rival submissions and material placed on record, we observed that during survey proceedings in the case of the company ,LEL’, the authorities found an excel sheet comprising the details of scrap sales and the same was not recorded by the company, however, on statement recorded u/s 131 of the Act. Sr.
Accounts Manager and Manager Shiv Kumar Sharma has accepted above said transactions and also accepted the cash were handed over to assessee and her husband in equal proportion. When the issue was investigated by the Assessing Officer, the assessee has not filed any objections or filed any document to show that assessee has not received the cash. Further, the Assessing officer also given opportunities to the assessee to confront the above issue with Mr. Shiv Kumar Sharma who was admitted in statement that the cash of scrap sales were handed over to the assessee and her husband.
After considering the overall facts on record, it is admitted fact that the company LEL has sold the scrap sales without recording the same in their books of accounts from the statement recorded u/s 131 of the Act, they admitted the above said fact. It is also admitted position as per law that the above said sales actually belongs to the company ‘LEL’ and it should be undisclosed income in the hands of the LEL, however, nothing was brought on record to show that the company LEL has disclosed the above said income in their return of income. It is important to note that even Assessing Officer in his order has observed that LEL has not disclosed the above said income in the relevant assessment year. In our considered view, it is admitted fact that scrap sales were found during the survey and it should be an income in the hands of the company or in the hands of the beneficiaries of the transactions. Since, there is no record brought to our notice that company has disclosed the above said income in their return of income and also assessee has failed to confront the statement of Shri Shiv Kumar Sharma which clearly shows that assessee is direct beneficiary of above said transactions along with her husband. For the overall justice, we direct the Assessing Officer to call for record from the company ‘LEL’ whether they disclosed the same in the return of income during the assessment year 2019-20 or in the relevant assessment year. In case, it is found that the company ‘LEL’ has not disclosed the above in their return of income. The additions made by the Assessing Officer may be sustained in the hands of the assessee. Accordingly, we remit the above said grounds to the file of the Assessing Officer and after verification the same, the addition may be sustained in the hands of the assessee. It is needless to say that the assessee may be given opportunity of being heard, and, accordingly, grounds raised by the Revenue are allowed for statistical purposes.
The other ground No.8 made by the Revenue is general in nature. The same is not adjudicated.
In the result, the appeal filed by the Revenue is partly allowed as indicated above.
18. As stated earlier, ground Nos. 1 to 5 in the case of Renu Punj (ITA No.3003/Del/2022) raised by the Revenue are exactly the similar and are identical with ground Nos. 1 to 5 in the case of Pooja Punj ( ) as well as the facts are also same except variance in figures recorded. Hence, the decision rendered, herein above, in the case of Renu Punj, cited (supra), shall apply mutatis mutandis to the case of Pooja Punj. Accordingly, the appeal filed by the Revenue are dismissed.
In the result, the appeals filed by the Revenue in the case of Renu Punj is partly allowed for statistical purposes and Pooja Punj is dismissed.
Order pronounced in open Court on 26th April, 2024.