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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This is the appeal filed by the Revenue against the order of CIT(A)- 12, Pune, dated 10-08-2015 for the A.Y. 2012-13.
The only issue revenue agitated in this appeal relates to the relief given by the CIT(A) in respect of protective addition of Rs.64,94,404/-. The same was offered for taxation in the case of Shri Sunil Kotecha and it reached the finality.
Briefly stated relevant facts are that the assessee is an individual and earned money from coaching classes. There was search and seizure action on the Kotecha group of cases, Jalgaon on 09-08-2011. Among many, the discovery of a locker held in the name of the assessee is one of them. Search resulted in seizure of jewellery kept in the said locker.
2 ITA No.1499/PUN/2015 Smt. Maya Sudhir Duggad
During the search proceedings, Shri Sunil Kotecha owned up the
contents of the locker and offered the said unaccounted jewellery of
Rs.64,94,404/- (1731.37 grams jewellery and 120 Karat diamond) as the
additional income of Shri Sunil Kotecha. This is part of gross declaration
of addition income of Rs.6 crores given by Shri Sunil Kotecha during the
search and seizure action. There is no dispute on this issue. The said
amount was offered to tax in the return of income too. As per the Ld. AR
for the assessee, this assessment has reached finality and the said
amount of Rs.64,94,404/- stood assessed in his name as on date.
During the search assessment proceedings, the AO protectively
added the said amount in the hands of assessee as per the discussion
given in Para No.7.02 of the assessment order. Relevant lines are
extracted here as under :
“7.02 During the course of post assessment proceedings in the case of Shri Sunil Manakchand Kotecha, the said Shri Sunil Kotecha (whose case is also centralized with this office), furnished along with letter dated 25- 02-2014 a copy of the statement recorded under section 132(4) on 14-09- 2011 during the course of operation of locker No.1 of Jalgaon Janta Sahakari Bank Ltd. Omkareshwar Branch, Jalgaon. Annexed to this statement is a declaration that although the said locker stands in the name of Smt. Maya Sudhir Dugad, who is the sister of his wife, all the jewellery found in this locker stands covered in his declaration of additional income to the tune of Rs.6 crores made by him during the search/post search proceedings. In the light of the above facts and absence of confirmation of these facts from the assessee, in spite of a specific query made in this regard vide this office notice under section 142(1) dated 19-02-2014, the sum of Rs.64,94,404/- is assessed as the additional income of the assessee for the year under consideration on a protective basis. Penalty proceedings under section 271AAA of the Act are initiated in respect of this undisclosed income of Rs.64,94,404/- for the year under consideration.”
During the First Appellate proceedings, after hearing the assessee
and considering the assessee’s submissions, the CIT(A) deleted the said
addition in view of the fact that the said jewellery stands assessed in the
name of Shri Sunil Kotecha. CIT(A) considered the fact of denial of
ownership of the said jewellery by the assessee and entertained the
affidavit given by the assessee in this regard. Accordingly, the CIT(A)
3 ITA No.1499/PUN/2015 Smt. Maya Sudhir Duggad
deleted protective addition in view of the confirmation of the additional
income assessed in the hands of Shri Sunil Kotecha. Relevant
discussion is given in Para Nos. 7.3 and 7.4 of the order of CIT(A). For
the sake of completeness of this order, we proceed to extract the
operational Para No.7.4 which reads as under :
“7.4 While making addition on protective basis AO had wrongly made addition in the AY 2012-13 despite the fact that locker was not operated during 01-04-2011 to 14-09-2011 (date of search). Addition in the AY 2012-13 is, therefore, prima facie not sustainable. On merit also, since entire jewellery found in the locker including that which was owned by the appellant initially, has already been taxed on substantive basis, there is no justification of adding the same on protective basis in the hands of appellant in any assessment year. Appellant succeeds on this ground and the protective addition made of Rs.64,94,404/- is hereby deleted. Ground No.3 may be treated as allowed.”
From the above, it is evident that the CIT(A) gave additional reason
for granting relief, i.e. non-assessability of the said amount on protective
basis too in the current A.Y. 2012-13. The reasoning given by the
revenue includes that the locker was never operated in A.Y. 2012-13 by
the assessee. AO reasoned that the locker is in the hands of the
assessee and therefore, the contents should also accordingly be assessed
in her name. The unaccounted additional income in the hands of Shri
Sunil Kotecha was seen as malafide as the additional income stands
adjusted against the brought forward losses of Shri Sunil Kotecha. As
such, Shri Sunil Kotecha did not pay any tax on the said additional
income of Rs.64,94,404/-.
Aggrieved with the above order of CIT(A), the Revenue is in appeal
before us.
On hearing both the sides and considering the above conclusions
drawn by the CIT(A), it is evident from the fact that the said additional
income is protectively added in the hands of this assessee who flatly
denied the ownership of the said jewellery. Further, it is relevant fact
4 ITA No.1499/PUN/2015 Smt. Maya Sudhir Duggad
that Shri Sunil Kotecha has owned up the said jewellery and offered the
same as additional income in his hands. Further, it is a fact that the
locker was never operated during the year under consideration.
Therefore, making addition in the assessment year under consideration
is unsustainable as the assessment made by the AO in the hands of Shri
Sunil Kotecha has reached finality and the same stood assessed on
substantive basis in the hands of that assessee. As such, the AO of Shri
Sunil Kotecha has no problem in granting the set off benefit to Shri Sunil
Kotecha.
Considering the above undisputed facts we find that mere
ownership of locker does not grant ownership on the contents found in
the said locker. Further, in the scheme of Indian family structure, the
locker of any one of the family members is often utilized by all members
of the family and the same is a usual practice in our culture in joint
families. The revenue’s allegation that the same is adjusted against
brought forwarded losses in the hands of Shri Sunil Kotecha is not a
relevant factor as the said loss anyway is available for setting off as per
the rules in the statute. AO of Shri Sunil Kotecha did not raise any
objection on this aspect. Therefore, we are of the opinion that the order
of the CIT(A) is fair and reasonable and it does not call for any
interference. Accordingly, the grounds raised by the Revenue are
dismissed,
In the result, appeal of the Revenue is dismissed.
Order pronounced in the open court on this 17th day of January, 2018. Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक सद�य �याियक सद�य /JUDICIAL MEMBER लेखा लेखा सद�य सद�य / ACCOUNTANT MEMBER �याियक �याियक सद�य सद�य लेखा लेखा सद�य सद�य
पुणे Pune; �दनांक Dated : 17th January, 2018. सतीश
5 ITA No.1499/PUN/2015 Smt. Maya Sudhir Duggad
आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत
अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. CIT(A)-12, Pune 4. CIT-12, Pune िवभागीय %ितिनिध, आयकर अपीलीय अिधकरण, “A Bench” 5. Pune; गाड� फाईल / Guard file. 6. आदेशानुसार आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार
स�यािपत �ित //True Copy// Senior Private Secretary //True Copy// आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune