YATEEN ANANT PANDIT,MUMBAI vs. ACIT 15(2), MUMBAI

In this appeal, the assessee is aggrieved for upholding disallowance of Rs.24 lakhs u/s.68 rejecting the explanations forwarded by the assessee with regard to the source of Rs.24 lakhs.

Rival contentions have been heard and record perused. Facts in brief are that the assessee is an individual, working as a Pilot for Kingfisher Airlines Ltd. During the year under consideration, the assessee has derived income from salaries, other sources & capital gains. The assessee has filed return of income on 30.07.2010, declaring a total 2 income of Rs.52.01 Lacs as against which the Assessing Officer (AO) has assessed the assessee's income at Rs.75.21 Lacs. In doing so, the AO has taxed a sum of Rs.24 Lacs (being cash) deposited on 17.08.2009 in a bank account maintained with State Bank of India, A/c No.: 10154478793 standing in the joint names of the assessee, his father - Mr. Anant Gangaram Pandit, mother - Mrs. Leena Anant Pandit & his brother - Mr. Rajesh Anant Pandit. The assessee had explained vide his letter dtd.09.01.2013 that the sum of Rs.24 Lacs (cash deposited on 17.08.2009) in the said bank account maintained with State Bank of India was sourced out of sale of jewellery made by the following persons: Sr. Name of Person Weight of Gold Amount of cash No. Ornament Sold (Rs.) a) Mr. Anant Gangaram Pandit 240 gms. 3,33,800 (father of the assessee) b) Mrs. Leena Anant Pandit 360 gms. 4,84,200 (mother of the assessee) c) Mrs. Gulab Shankar Patkar 210 gms. 2,82,450 (grandmother of the assessee) d) Mrs. Anjana Yatin Pandit (wife 1,500 gms. 13,05,440 of the assessee) Total…. 2,310 gms. 24,05,850 4. Affidavits explaining the sources of the jewellery were also filed by the respective persons during the course of the assessment proceeding before the AO, vide letter dtd.09.01.2013. The AO in order to verify the genuineness of the sale of jewellery, deputed his Inspector to visit the showroom of "Rajlaxmi Jewellers". A field visit of the Inspector revealed that the jeweler had left the premises, as stated in the sale bill & had therefore, no clue in respect of the new address of the Jeweller. In these circumstances, the AO rejected the explanation offered by the assessee & 3 thereby, treated the sum of Rs.24 Lacs as undisclosed income u/s.68 of the Income Tax Act.

By the impugned order, the CIT(A) confirmed the action of the AO, against which assessee is in further appeal before us.

Ld. AR drew our attention to the following documents placed on record :- i) Copy of summary of bank account with SB.I. Bank, Santacruz (West) Branch. ii) Copies of the bill for sale of jewellery by the appellant - Mr. Yateen Anant Pandit on 10.08.2009 for Rs.10,90,780/-, bearing No.21. iii) Copies of the bill for sale of jewellery by Mrs. Anjana Yateen Pandit (Appellant's wife) on 11.08.2009 for Rs.13,05,440/-, bearing No.26. iv) Copy of the letter dtd.05.12.20 12 filed before the learned AO. v) Copy of the letter dtd.09.01.2013 filed before the learned AO along with the copies of 6 declarations. copies of which are also enclosed as under: a) Deed of Confirmation from Shri Anant Gangaram Pandit. b) Declaration from Smt. Leena Anant Pandit. c) Declaration from Ms. Gulab Shankar Patkar. d) Declaration from ShIi Arvind Kumar Mathur and Smt. Abba Mathur. e) Declaration from Anjana Yateen Pandit giving details of gold & jewellery holding along with wealth tax applicability. f) Declaration from Yateen Anant Pandit giving details of gold & jewellery holding along with Wealth tax applicability. In view of the above, it was contended by ld. AR that the assessee has brought on records, all the relevant supporting, which are possible & are within his control for the purpose of establishing genuineness of the transaction & the source of the cash deposit. The learned AO has not in any manner rebutted the evidence produced by the assessee with a cohesive counter evidence nor has he pointed out any lacunae in the quality of the evidence produced. Just because the learned AO 4 subjectively thinks that on the "test of human probabilities" and his statement that the genuineness & source as "doubtful" cannot be an adequate base for such a disallowance. It was further contended that assessee wanted urgently to pay for the house and he being a non- technical person and the amount being of high magnitude, he did not take any risk of cheques or D/D (which can bounce) and. accepted the cash. The subsequent change of place of business by the Jeweller without any trace, per se, is completely outside control of the assessee. The bonafide of the contentions of the assessee, as on the date of transaction, is established by the VAT Registration details from the records with Government of Maharashtra. Thus, your assessee has proved the genuineness of the transaction & bonafide source of investment with documents like bills, declarations, VAT Registration Certificate and overall explanation.

On the other hand, ld. DR relied on the order of lower authorities and contended that assessee could not prove the source of amount deposited in the bank account, therefore, the AO was justified in making the addition.

We have considered rival contentions and carefully gone through the orders of the authorities below and found that assessee has explained source of deposit out of sale proceeds on jewellery owned by the family members. As the jeweller to whom jewellery were sold was not available at the time of inspector’s visit, the AO did not accept assessee’s contention and added the amount as undisclosed income of the 5 assessee. We found that all the family members have explained jewellery by filing declaration duly executed on the stamp paper, which indicate the items of jewellery along with their weights as possessed by them and its sale to a jeweller. These family members consists of grandmother, father, mother, wife and the assessee himself. As per CBDT Circular No.1916 dated 11th May, 1994, jewellery upto 100 gms. for male member and 500 gms. for female member in a family is allowed to be possessed and not to be seized during the course of search. Various courts have taken a view that this Circular is also applicable for considering the quantum of jewellery, which a normal family may possess. Considering the totality of facts and circumstances, we direct the AO to allow source of funds out of jewellery possessed by different family members as per CBDT Circular No.1916, dated 11th May, 1994. Accordingly jewellery possessed/sold by them subject to the maximum extent of jewellery as prescribed in Circular No.1916, dated 11-5-1994, is to be allowed. No sale of jewellery by assessee had been shown, therefore, benefit of aforesaid CBDT Circular will not extend to assessee himself. We direct accordingly.

In the result, appeal of assessee is allowed in part. Order pronounced in the open court on this 11/05/ 2016. Sd/- Sd/- (SANJAY GARG) (R.C.SHARMA) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक Dated 11/05/2016 प्र.कु.मभ/pkm, नन.स/ PS आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A), Mumbai. 3.