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Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI
Before: SHRI N.K. SAINI, AM & SMT. BEENA A. PILLAI, JM
ORDER PER BEENA A. PILLAI, JM: These cross appeals have been filed by the assessee as well as the Revenue against the order passed by the CIT(A)-Haldwani vide order dated 11.6.2013 in relation to the assessment year 2011-12 on the following grounds of appeal:-
Assessee’s Grounds of Appeal ITA No. 5269/D/13 “1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making disallowance of Rs.6,13,725/- claimed by the assessee, more so when such disallowance could not have been made in the proceedings u/s 153A of the Act.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in not deleting the disallowance of Rs.6,13,725/- made by Ld. AO is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the addition of Rs.3,32,04,460/- fully as made by Ld.AO on account of alleged unexplained jewellery uls 69A and has further erred in sustaining the addition to the extent of Rs.33,20,446/- (i.e. 10% of Rs.3,32,04.460/- ) on account of remaking charges and that too without considering the submission/evidences of the assessee.
4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in framing the impugned assessment order U/S 153A/143(3) without assuming jurisdiction as per law and without obtaining requisite approval as per law and without complying with the other mandatory condition envisaged under the Act, more so when no incriminating material have been found as a result of search.
5. That in any case and in any view of the matter, impugned addition and impugned assessment order are bad in law, illegal, unjustified, barred by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate opportunity of hearing, in violation of principles of natural justice and the same deserves to be quashed.
6. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in framing the impugned assessment order is contrary to law and facts, void ab initio, beyond jurisdiction and the same is not sustainable on various legal and factual grounds. 7. Without prejudice to the above grounds, no addition could have been made in the present appeal because no incriminating material has been found as a result of search. 8. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest 234B of the Income Tax Act, 1961. 9. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. Revenue’s Grounds of appeal
1. On the facts and in the circumstances of the case, the CIT (A) has erred in restricting the addition of Rs. 3,32,04,460/- made by the AO on account of unexplained investment to Rs. 33,20,446/- and directing the AO to delete 90% of the investment made by the assessee when it was clearly established that the assessee could not substantiate the source of investment.
2. On the facts and in the circumstances of the case, the CIT (A) has erred in not appreciating the evidence gathered during the course of search and seizure operation which very clearly pointed out that investment in jewellery was from undisclosed source.
3. The order of the CIT (A) is erroneous and is not tenable on facts and in law. 4. The appellant craves leave to add, alter or amend any all of the grounds of appeal before or during the course of the hearing of the appeal.
The facts in brief are that a search and seizure operation u/s 132 of the Act was carried out in DS Group Cases. The assessee had filed her return of income on 14.9.2011 for the year under consideration declaring total taxable income of Rs.66,69,100/-.
During the assessment proceedings, the ld. AO made the following additions:- (i) Salary income – Rs.6,13,725/- (ii) Unexplained investment in jewellery u/s 69A – 3,32,04,460/-.
Aggrieved by the order of the ld. AO, the assessee went in appeal before the ld.CIT(A). The ld.CIT(A) recorded that as the jewellary seized was less than the jewellary declared by the assessee in her wealth tax returns, it cannot be held that the assessee has made unexplained investments. However ld.CIT(A) confirmed the additions made by the ld. AO on the ground that in the process of remaking, assessee must have spent money which could be unaccounted for.
Aggrieved by the order of the ld.CIT(A), the assessee is in appeal before us now. The ld. AR in respect of Ground Nos.1 and 2 of the assessee’s 5. appeal submitted that, as the issue has been set aside by the ld.CIT(A) to the ld. AO for verification with certain directions, the same are not be pressed before us. Accordingly, we are not inclined to adjudicate these grounds.
We shall first take up the appeal filed by the assessee in; ITA No.5296/Del/2013. 6.1. Ground No.3 of the assessee’s appeal relates to the addition made by the AO in respect of unexplained investments in jewellery amounting to Rs.3,32,04,460/-.
6.2. The ld. AR submitted that the addition has been made by the ld. AO on the basis that the total jewellery found at the time of search was Rs.6,65,43,710/-, out of which jewellery for Rs.3,33,39,250/- remained unexplained. The ld. AR submitted that 5 the total jewellery belonged to the assessee, her husband and their daughter-in-law, which has been explained at paper book page 44 to 47. The ld. AR further submitted that these are accounted for and the assessee her husband and their daughter-in-law has filed wealth-tax return which is also placed at page 48-64, 65-71, 72-79, 80 and 81-86. On perusal of these wealth-tax returns, an amount of Rs.7,73,97,015/- has been shown as the total value of jewellery possessed by the assessee, her husband and their daughter-in-law.
6.3. The ld. AR submitted that the total jewellery disclosed in the wealth-tax return by the three individuals are much more than the jewellery seized by the AO. The ld. AR submitted that there was no justification for holding any jewellery as unexplained.
On the contrary, the ld. DR relied upon the orders of the authorities below.
We have perused the submissions and the wealth-tax returns filed by the assessee in the paper book placed before us. The addition in dispute has been made on account of variation in description of jewellery disclosed in the reports filed with the Revenue authorities.
8.1. It is observed that the ld. AO has made the addition without considering the latest report. In our view, the assessee is entitled to the benefit of weight of jewellery disclosed in the return, as it is a well known fact that Indian ladies keep changing the design of jewellery from time to time. Simply because the assessee could not lead any evidence for conversion or remaking of the jewellery, the possession of which was otherwise accepted, it could not be said that holding of the jewellery to that extent could not be accepted.
8.2. It is further submitted that the assessee her husband and their daughter-in-law have been possessing jewellary in the preceding and subsequent years and have been always assessed to wealth tax. The fact remains that the jewellary found was much less than the jewellary disclosed in the wealth tax returns accepted by the Department and hence no addition can be made in the hands of the assessee. In the present case, the ld. CIT(A) sustained the addition on account of making charges of the jewellary without bringing any cogent material on record. The ld. CIT(A) presumed that all the jewellary was remade and sustained the addition to the extent of 10% of the value of jewellary without any basis which in our opinion is not sustainable. Even otherwise, addition made on 7 the basis of suspicion alone is not sustainable. Suspicion however strong it may be, cannot take place of evidence This ground of appeal, therefore, stands allowed.
Ground Nos.4 to 7 are on the validity of the jurisdiction of the 9. search action which has been conducted by the ld. AO without proper requisite approval. As these grounds have not been argued before us, we are not inclined to adjudicate the same.
The appeal, therefore, stands partly allowed.
Now, we take up the appeal filed by the Revenue; The issue raised by the Revenue is in relation to the deletion of the addition made by the ld.AO, to an extent of 90% on account of unexplained investments in jewellery.
8.3. We have dealt with this issue at length in the assessee’s appeal. We are, therefore, of the considered opinion that the jewellery found by the assessee stands fully explained and no addition can be made in the hands of the assessee for undisclosed investment in jewellery. We accordingly hold that there cannot be any addition in respect of the jewellery u/s 69A of the Act. 8 8.4. The ground raised by the Revenue in their appeal stands dismissed.
In the result, the appeal filed by the Revenue stands dismissed.
The order pronounced in the open court on 12.2.2016.