LATE SHRI. P. YOGESH ACHAR,MANGALORE vs. ACIT, MANGALORE

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ITA 670/BANG/2010Status: DisposedITAT Bangalore02 May 2017AY 1993-946 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that credit for jewellery declared in a family member's wealth-tax return should not be denied merely because the member was not present during the search. The matter was remitted to the AO to grant credit for the declared jewellery and distribute any remaining excess among all family members.

What were the facts?

During a search and seizure operation, the Income Tax Department found gold jewellery and diamonds at the assessee's residential premises. The department brought this to tax as undisclosed income in the hands of the assessee, who is the head of the family.

What were the issues?

Whether credit for jewellery declared in a wealth-tax return of a family member should be allowed when the member was not present during the search. How to distribute undisclosed jewellery found in a family business.

Which sections of the Income-tax Act were involved?

Section 69A,Section 132

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CIRCUIT BENCH AT MANGALORE

Before: SHRI INTURI RAMA RAO & SHRI SUDHANSHU SRIVASTAVAShri Shashikal Palke, Sandeep Palke

For Appellant: Shri Joseph Rodrige, ACIT(DR)
Hearing: 03/02/2017Pronounced: 02/05/2017

Per INTURI RAMA RAO, AM :

1.

This is an appeal filed by the assessee directed against the order of the CIT(A), Mangalore, dated 17/03/2010 for the assessment year 1993-94.

Page 2 of 6 2. The only ground that survives for consideration in this appeal relates to confirmation of addition u/s 69A [hereinafter referred to as 'the Act' for short.

3.

Brief facts leading to the above addition are as follows: During the course of search and seizure proceedings u/s 132 of the Act, on 11/07/1992, the residential premises of the assessee were also searched. During the course of such proceedings, Investigation Wing of the Department found gold jewellery of 4615 gms. of gold and 19.7 gms. of diamonds and the same were brought to tax in the hands of the assessee as he is the head of the family. The factual background of the issue is set out by the AO vide para.5 of the assessment order which reads as under:

In response to show cause notice issued by the AO, it was submitted that the assessee vide his written submissions daed 3/11/2009 that the quantity of gold and diamonds declared in wealth-tax return of Sandeep Palke was not considered. Once that is considered, there would be not be any excess. The assessee was not successful even before the CIT(A). Being aggrieved, the assessee is before us in the present appeal.

4.

It is undisputed fact that the assessee was staying along with his other brothers in a common family residence. All of them

Page 5 of 6 are carrying on the business of jewellery and also partners of M/s.Canara Jewellers. There is no dispute about quantification of the jewellery found at the time of search and seizure operations. The Investigation Wing of the department estimated excess jewellery after deducting quantity of jewellery declared in the respective hands of the family members. The only dispute is with regard to set off of or granting credit for quantity of gold purported to be belonging to one Mr.Sandeep Palke who is also undisputedly the brother of the appellant. The contention of the appellant, that the quantity of jewellery of Sandeep Palke in his wealth-tax return should be reduced from the quantity of undisclosed jewellery, was not accepted by the lower authorities by holding that Sandeep Palke was not present in the house at the time of search and seizure operation. According to our considered opinion, merely because he was not present at the time of search and seizure, credit for the amount of jewellery declared in wealth-tax return cannot be denied, especially in view of the fact that wealth-tax return was filed well before the date of search and seizure operations. Therefore, we direct the AO to give credit for the quantum of gold and jewellery or diamonds declared by Sandeep Palke in his wealth-tax return. If there is any balance of jewellery, same should be distributed among all the family members as laid down by the Hon’ble Supreme Court in the case of CIT vs. Rekha Bai (Civil Appeal No.1749 of 2007 dated 21/03/2017 wherein the Hon’ble Supreme Court held as under:

Page 6 of 6 “So far as the income dividend among the family members of the respondent-assessee is concerned, we find that all of them were carrying on same business from the same premises. Therefore, it is but natural that if any concealed income has been found at the time of search and survey, it has to be distributed among all the family members who were carrying on business.”

With the above direction, we remit the matter back to the file of the AO to modify the assessment in accordance with the above direction.

5.

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

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