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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ NEW DELHI
Before: SHRI SUNIL KUMAR YADAV & SHRI L.P. SAHU
Per L.P. Sahu, Accountant Member:
These are two cross appeals filed by the assessee and the Revenue against the order of ld. CIT(A)-XVII, New Delhi dated 16.05.2012 for the assessment year 2002-03 on the following grounds :
Ground raised by assessee: 1(i). That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining addition of Rs. 11,88,610/- in respect of alleged unexplained jewellery.
(ii) That there was no case of any unexplained jewellery and whole basis of addition is illegal, arbitrary and misconceived.
(iii) That in the alternative, the addition is highly excessive.
2(i). That on the facts and circumstances of the case, the CIT(A) was not justified in sustaining addition of Rs. 15,00,000/- in respect of gift even though all the relevant documents were before Assessing Officer and there is no dispute about correctness of the same.
(ii) That in any case, if the personal presence of the donors were required, the Assessing Officer should have enforced presence of donors as directed by Hon'ble Tribunal.
(iii) That in any case, appellant has duly discharged the onus by finding by all the relevant documents in support of the gift and there is no ground or justification for any addition.
That order of the lower authorities are not justified on facts and same are bad in law.”
Ground raised by Revenue :
1. On the facts and circumstances of the case, the Ld. CIT(A) erred in law as well as on facts by granting relief of Rs.22,83,240/- to the assessee out of the total undisclosed stock at the time of survey.”
The brief facts of the case are that the assessee was engaged in the business of trading in gold ornaments. A survey u/s. 133A was conducted at the business premises of the assessee on 31.01.2002. During the survey proceedings, statement was recorded of the appellant wherein, the assessee surrendered a sum of Rs.1 crore, comprising of undisclosed stock of Rs.35 lacs, investment in furniture and equipments of Rs.20 lacs and bogus gift of Rs.45 lacs. The assessee, however, retracted the statement by letter dated 14.02.2002 addressed to CCIT stating that the statement of assessee was recorded in coercive and forcible manner. The assessee filed its return of income without giving effect to the surrendered amount of Rs.1 crore, allegedly surrendered in the aforesaid statement. According to the Assessing Officer, the retraction was baseless, incorrect and only an afterthought. The Assessing Officer did not accept the same and made assessment with total addition of Rs.1,00,66,224/-. The matter travelled upto Tribunal and the Tribunal partly accepting the contention of the assessee, restored the issue to the file of AO with the direction that entire surrender of Rs.1 crore made by the assessee during the survey proceedings was under coercion and/or made in ignorance of legal rights. Hence, the same has no evidentiary value and as such no such addition could be made merely on the basis of said surrender. Therefore, the impugned addition needs to be examined on the basis of relevant material on record. Accordingly, the Assessing Officer has passed the order on 31.12.2009 by making addition of Rs.35 lacs for undisclosed stock and Rs.15,00,000/- for bogus gift, as the rest of the additions made by the Assessing Officer in the original assessment were deleted by the ITAT. Against this order of the AO, the assessee filed appeal before the ld. CIT(A), who after considering all the facts and circumstances of the case and the submissions of assessee, partly allowed the appeal of the assessee. Aggrieved by the order of ld. CIT(A), both the parties have come up in these two cross appeal on the grounds mentioned hereinabove.
3. During the course of hearing, the ld. Counsel for the assessee explained that excess stock alleged to have been found by the survey team during the survey also included 1210 grams of gold belonging to M/s. Raman Jewellers, whose confirmation was filed and was supported by cash memo dated 28.03.2002 issued by M/s. Raman Fewellers to M/s. Gurcharan Jewellers, whose proprietor is the assessee, whereby the jewellery was received by appellant on approval basis. Therefore, the ld. CIT(A) was justified in excluding 1210 gms of gold from the alleged excess stock found on survey. It was also submitted that the departmental valuer while estimating the valuation of excess stock, has taken the gross weight and net weight of the jeweler at the same figure, which is not justified in common parlance and the ld. CIT(A) was quite justified in excluding 3075 grams of gold from the excess stock, being the difference between the gross weight and net weight of jewellery found. The next submission of the ld. AR has been that the stock found on survey at the shop also included the personal jewellery of family members, as the same was kept at the shop for want of strong room at the residence and its availability at the shop. He therefore, submitted that in terms of CBDT Instruction No. 1916 dated 11.05.1994, the assessee should be given credit of personal jewellery of all the family members which was placed at the shop. The AO wrongly rejected the contention of the assessee stating that said instruction relates to seizure of jewellery in the search and seizure operations. It was submitted that the ld. CIT(A) is also not justified to give part credit of only 1100 grams for five family members (2 male and 3 female members) at the rate of 150 grams per male member and 300 grams per female member, which is not justified in terms of above CBDT Instruction. It was next submitted that the ld. CIT(A) was not justified in giving part relief to the assessee by applying the rate of 424/- per gram whereas the total addition was made by applying the rate of Rs.501/- per gram by the AO. The ld. CIT(A) has not considered the fact that once the rate of Rs.501/- per gram has been applied for making total addition in this head, the relief from such addition should also be given by applying the rate of 501/- per gram and not Rs.424/- per gram as done by the ld. CIT(A), as no reason has been assigned by the ld. CIT(A) to sustain the part addition @ Rs.501/- per gram and to given relief to appellant @ 424/- per gram.
It was next contended that complete details of the donors along with substantial evidences of donors such as copy of affidavits, memorandum of gifts, copies of income-tax and W.T. returns, copy of assessments, ration cards etc. were furnished before the authorities below, which could not be discarded without making any enquiry. Therefore, in view of plenty of decisions, the addition made on account of bogus gift is not justified.
On the other hand, the ld. DR appearing on behalf of the Revenue relied on the order of the Assessing Officer and submitted that the ld. CIT(A) was not justified in deleting partial addition made by the Assessing Officer on valid reasons.
We have considered the rival submissions and have perused the entire material on record. As far as the addition of Rs.35,00,000/- on account of excess stock found at the time of survey is concerned, we do not find any mistake in the conclusion of ld. CIT(A) while giving credit of 1210 grams of jewellery, received from M/s. Raman Jewellers on approval basis, as the same was supported by cash memo issued by Raman Jewellers to M/s. Gurucharan Jewellers and also the enquiries made at the appellate stage. The conclusion of the ld. CIT(A) regarding exclusion of 3075 grams of jewellery from the excess stock, on account of difference between the gross and net weight of stock, is also not found inappropriate, as the valuation of jewellery was to be made on the net weight which cannot be equal to its gross weight. We also do not find any good reason to discard the decision of ld. CIT(A) regarding credit of only 1100 gram of personal jewellery from the excess stock. There is nothing on record from the side of both the parties to discard the consideration of the assessee’s plea about availability of strong room in the shop coupled with the fact that the residence and shop were located in the same premises. We also do not find any material on record to discard the finding of ld. CIT(A) that, however, it is not possible to believe that entire jewellery of each family member was kept in the shop, particularly when during the survey proceedings, the assessee did not point out any such jewellery, which belong to a particular family member nor any such tagging was found on any such article. However, we find the explanation of the assessee as plausible that sustenance of addition and relief from the addition both should be made on the basis of valuation at uniform rate of jewellery, which has not been done by the ld. CIT(A), inasmuch as the addition sustained fetches the valuation @ 501/-
per gram, as applied by AO whereas relief granted for total addition fetches the valuation @ 424/- per gram, as done by CIT(A). We accordingly direct the AO to give relief on the jewellery weighting 5385 grams (1210 + 3075 + 1100 grams) by valuing the same at the rate of Rs.501/- per gram, which comes to Rs.26,97,885/- in place of 22,83,240/- given by the ld. CIT(A). Accordingly, the respective ground of assessee’s appeal deserves to be partly allowed and that of Revenue’s appeal is liable to be dismissed. The appeal of the Revenue on this sole ground further deserves to fail for the reason that the present appeal of the Revenue has been preferred in violation of CBDT Circular No. 21/2015 dated 10.12.2015, wherein the pecuniary limit of tax effect for preferring the appeal by the Revenue before the ITAT has been prescribed beyond Rs.10 lacs, which in the present appeal of the Revenue is below Rs.10 lacs.
As far as the next issue regarding bogus gift of Rs.15 lacs is concerned, the basic contention of the assessee has been that the AO did not make any enquiries on the evidences submitted by the assessee, without which the gift under consideration could not be said to be bogus. We do not find substance in the contentions of the assessee on this issue for the reason that as per the assessment order, the assessee had surrendered this amount of Rs.15 lacs vide letter dated 29.12.2009 during the assessment proceedings itself. So, in a way, it was an addition on agreed basis. It was also mentioned in the assessment order that the appellant has given a written statement that these gifts were his own money received back. It is also not in dispute that despite the AO had requested the appellant to produce the donors for cross examination, the assessee failed to produce them. The ld. CIT(A) also observed that the assessee did not prove the occasion, relationship and reciprocity of the gift as required by the Hon'ble Delhi High Court's order in the case of Rajeev Tandon reported in 294 ITR 488 read with the Hon'ble Delhi ITAT's order in the same case reported in 294 ITR (AT)
No contrary material is adduced on behalf of the assessee before us.
Considering all these facts, especially that the assessee had surrendered this gift of Rs.15 lacs vide letter dated 29.12.2009 during the assessment proceedings itself by giving its statements also, we do not find any justification to interfere with the decision of ld. CIT(A) on this count. The decision in the case of CIT vs. R.S. Sibal, 269 ITR 429 relied on by the assessee is not applicable to the present case, as in the instant case, the assessee in the assessment proceedings by way of written statement has admitted to have received the bogus gifts and that it was his own money received back. Such facts are not involved in the reported case.
Accordingly, this ground of assessee’s appeal deserves to be dismissed.
In the result, the appeal of the assessee is partly allowed and that of the Revenue is dismissed, as indicated above.
Order pronounced in the open court on 16.11.2016.