LOON KARAN JHANWAR,KOLKATA vs. ACIT, CC-IV, KOLKATA, KOLKATA

This is an appeal by the Assessee against the order dated 16.07.2014 of C.I.T.(A)-Central-I, Kolkata relating to A.Y.2010-11.

There was a delay of about 18 days in filing the appeal by the assessee. The delay has been explained by the Chartered Accountant of the assessee as owing to his busy professional commitment and inability to prepare the case of the assessee within the time prescribed. We have perused the reasons given in the affidavit by Shri B.C.Jain, AR of the assessee. We are satisfied that the delay in filing the appeal was owing to a reasonable and sufficient cause. The delay in filing the appeal by the assessee is condoned.

Ground No.1 raised by the assesee reads as follows :- “1. That in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in confirming addition of Rs.1 ,08,895/ - in respect of jewellery. “

The Assessee is an individual. There was a search and seizure operation carried out in the business premises of the assessee. The assessee belong to the Inland group of 2 Loon Karan Jhanwar A.Yr.2010-11 cases which is engaged in inland transport and courier services business etc. A search and seizure operation u/s 132(1) of the Income tax Act, 1961 (Act) was conducted in the business and residential premises of the assessee on 05.11.2009. In the course of search jewellery valued at Rs.9,11,895/- was found. The jewellery found weighed 579 gms and it was claimed by the assessee that it belongs to the assessee’s wife Smt. Sita Devi Jhanwar and an affidavit dated 15.09.2011 was filed by her in this regard. It was explained in the affidavit that she belongs to the marwari community and as per the custom in the community gifts were received on social functions from relatives and that was the source of acquisition of jewellery by her.

The AO was of the view that the claim of the assessee’s wife to the extent of 500 gms is acceptable and with regard to the remaining 79 gms the explanation has to be regarded as not proper. Accordingly the addition of Rs.1,08,895/- was made to the total income of the assessee. The following were the relevant observations of the AO :- “Valuation of jewelry & ornaments made by the Registered valuer on the day of search indicate that all ornaments are ladies ornaments and wife of assessee is entitled to keep only 500 gm of jewellery tax free, as she is a married lady. The value of remaining jewellery is taxable. Hence value of remaining ornaments is calculated as under @ Rs.1606 per kt. (22 kt.) adopted by registered valuer, as most of the ornaments are of 22 kt.:-

On appeal by the assessee the CIT(A) confirmed the order of AO.

We have heard the rival submissions. In the light of the admitted fact that the assessee’s wife owned up the jewellery, the assessment of the same in the hands of the assessee was not permissible. The assessee’s wife is assessed to tax by ACIT, Central 2

Ground No.2 raised by the assessee reads as follows :- “2. That in the facts and circumstances of the case, the Ld. C.I.T.(A) erred in not allowing expenses in respect of courier business as reflected in the statement of accounts filed before the Ld Assessing Officer and determining the entire Gross receipts of Rs.2,38,994/- as income.”

As we have already seen the assessee is also in the business of courier services. In the course of search loose sheets were found which evidenced that for a period of three months during the previous year, the assessee had made bookings of articles for delivery as a courier and the receipts evidenced by the loose papers was to the extent of Rs.2,38,995/-. Admittedly these receipts had not been shown in the books of accounts of the assessee. The AO was of the view that since there was evidence for suppressed receipts from courier services for three months, similar pattern of suppressed receipts would exit for the remaining period also. The AO arrived at the suppressed receipts from rendering courier services on such a premise as follows :- “Hence his income from document booking is estimated as under :- Income from Document Booking for three months = 238995 Average of 3 months = 238995 = 79665 3 Income of whole year i.e. 12 months = 79665 x 12 = 955980 Income already shown (-) 238995 Income not disclosed = 716985

In ground no.,2 the assessee is aggrieved by the action of CIT(A) in not allowing expense against the suppressed receipts from rendering courier services.

We have heard the rival submissions. We are of the view that there is no merit in ground no.2 raised by the assessee. A copy of the income and expenditure account for A.Y.2010-11 is at page 2 of the assessee’s paper book. A perusal of the same shows that the suppressed booking receipts has been shown in the credit side in the income and expenditure account. The income as per the income and expenditure account is a sum of Rs.2,63,358/-. In the computation of total income for A.Y.2010-11, the AO has adopted this income as the starting point of computation of income under the head profits and gains of business. Thus the income of Rs.2,63,357/- includes all expenses debited in the income and expenditure account. The direction of CIT(A) has to be understood as making a reference to no further expenses are to be allowed over and above what is debited in the income and expenditure account. This direction in our view is proper and appropriate because the assessee has not been able to substantiate any other expenses over and above the expenditure debited in the profit and loss 4

In the result the appeal of the assessee is partly allowed.