SHRUTI MITTAL,MUMBAI vs. DCIT, CENTRAL CIRCLE, KARNAL

The appeal has been preferred by the Assessee against the order dated 29.12.2017 of CIT(A)-2, Gurgaon (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Appeal No. 422/2016-17 arising out of an appeal before it against the order dated 14.12.2016 passed u/s 144 r.w.s 153A(1)(b) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the DCIT, Central Circle, Karnal (hereinafter referred as the Ld. AO).

2. During the course of search jewellery amounting to Rs. 3568470/- was found from the locker of assessee with Kotak Mahindra Bank. In' this regard, it is stated that the assessee is a member of enlarged close knit family of Sh. Subhash Chander Mittal (PAN: ACDPM9847Q), who is also assessed with Centre Circle, Karnal. There are three ladies in the family and the jewellery is interchanged between all the members as and when required. The total record of jewellery and other valuable items is kept by Sh. Subhash Chander Mittal. The complete detail alongwith shortfall, if any, will be submitted in his return of income. The jewellery which has not been seized (vide CBDT instruction no. 1916 dated 11 may 1994) is belonging to me and my husband received since birth at various occasions and festivals from friends and relatives as per Hindu Customs.

“Ground of Appeal

No. 3:- relate to addition of Rs. 35,68,470/- as undisclosed investment in jewellery. This has been contested by the appellant by taking the following two related issues. Even when jewellery valued at Rs. 11,07,600/- was not seized a) at the time of search and, thus, accepted by Revenue as made from disclosed sources following the CBDT instructions No. 1916 dated 11/05/1994; and b) Even when the remaining jewellery valued at Rs. 24,60,870/- was family jewellery acquired by the assessee’s father-in-law , Mr. Subhash Chander Mittal, and who had declared the equivalent sum as his undisclosed income in his return of income filed for the A.Y. 2014-15. Fact of the case is that the jewellery worth Rs. 35,68,470/- was found from locker No. 04 of Kotak Mahindra Bank Ltd., Chembur Branch, Mumbai maintained in the name of the appellant. Out of this jewellery worth Rs. 24,60,870/- was seized by the department. Before the Assessing Officer, the appellant did not give any details of the source of investment made in them but had only submitted that:- “The assessee is a member of enlarged close knit family of Sh. Subhash Chander Mittal (PAN: ACDPM9847Q), who is also assessed with Centre Circle, Karnal. There are three ladies in the family and the jewelleiy is interchanged between all the members as and when reqidred. The total record of jewellery and other valuable items is kept by Sh. Subhash Chander Mittal, The complete detail alongwith shortfall, if any, will be submitted in his return of income. The jewellery which has not been seized (vide CBDT instruction no. 1916 dated

11. May 1994) is belonging to me and my husband received since birth at various occasions and festivals from friends and relatives as per Hindu Customs.” This argument of the appellant does not hold good as the locker from where the entire jewellery worth Rs. 35,68,470/- was found, was in the name of appellant only and also it was not in Kaithal but in Mumbai. The appellant cannot be absolved of the duty to explain the source of the same. Moreover, the jewellery found worth 15,25,117/- from the residence of the Sh. Subhash Chander Mittal, which is claimed to be belonging to the family members, was neither seized nor added in the hands of the appellant in the assessment order. Hence, credit for 500 gm. of jewellery in the name of appellant has already been considered by the department and there is no scope for further deduction on 'this account, as claimed by the appellant. During the appellate proceedings, the AR of the appellant submitted that the appellant’s father-in-law, Shri Shubhash Chander Mittal has declared an amount of Rs. 1,47,00,000/- as undisclosed income and also paid taxes on the same, in the return for A.Y. 2014-15. He has further submitted that this amount of l,47,00,000/-declared by Sh. Subhash Chander Mittal, also includes the value of jewellery found from the locker at Kotak Mahindra Bank Ltd., Chembur Branch, Mumbai. As the appellant lives in a joint family, this explanation should be accepted and no further addition should be made in the han ds of the appellant. During the course of assessment proceedings for A.Y.2014- 15 Shri Subhash Chander Mittal has submitted that the amount disclosed u/s 132(4) by him includes jewellery found from (i) Locker No. 227 with Punjab National Bank, Ambala Road, Kaithal and (ii) Locker No. 81 with Punjab National Bank, Ambala Road, Kaithal. Also, it is seen from the computation of income filed alongwith the Return for A.Y. 2014-15 in case of Shri Subhash Chander Mittal, that the amount of Rs. 1,47,00,000/- declared by him has been shown as income from other sources and ‘undisclosed speculative profit from Rice.’ Therefore, the argument of the appellant that this undisclosed income offered includes investment in jewellery of the appellant is not accepted. It is therefore clear that no amount of undisclosed income, declared for the jewellery found in the locker at Kotak Mahindra Bank Ltd., Chembur Branch, Mumbai, held in the name of the appellant.

Thus, the appellant’s argument that the amount invested in acquiring jewellery of Rs.35,68,470/- kept in the locker no. 04 of Kotak Mahindra Bank Ltd., Chembur Branch, Mumbai has been declared by her Father-in-law, is not correct and cannot be accepted.” 4. The assessee is in appeal raising following grounds :-

“1. The learned CIT(A) erred in law and on facts in confirming the addition of Rs. 35,68,470/- as undisclosed investment in jewellery- even wlien the jewellery valued at Rs. 11,07,600/- was not (a) seized at the time of search and, thus, accepted to that extent by the Revenue as made from the disclosed sources following the CBDT Instruction No. 1916 dated 11/05/1994; and even when the remaining jewellery valued at Rs. 24,60,870/- (b) was the family jewellery acquired by the assessee’s father-in-law, Mr. Subhash Chander Mittal, and who had declared the equivalent sum as his undisclosed income in his return of income filed for the AY 2014-15 relevant to the date of search. Thus, total addition of Rs. 35,68,470/- so made must be deleted.

2. The appellant craves the leave to add, substitute, modify, delete or amend all or any ground of appeal

either before or at the time of hearing.”

5. Heard and perused the record.

6. Appreciating the material on record it can be observed that learned tax authorities below have given a specific finding that the disputed jewellery recovered from the locker of the assessee was not part of the declaration made by Shri Subhash Chander Mittal, the father-in-law of the assessee. In this context it can be appreciated that admitted fact is that jewellery worth Rs. 24,60,870/- was seized by the Department while that worth Rs. Rs. 11,07,600/- was let go un- seized. Learned AO, however, had made addition of whole of the amount considering the same to be unexplained asset.

SHRUTI M ITTAL Value Seized Released (Locker No . 4 KOTAK MAHI NDRA Jewellary 3568470 2460870 1107600 MUMBAI )

B LANK SHARE TRANS FER DEED Total 20884261 1280304 4 80 81217 Misc. Income Declared Jewellery 12803044 Cash 896956 Mittal & Co. 1000000 14700000 Jewellery Seized Person wise S.C. Mittal 1255654 S.C. Mittal 4027042 Pallavi Mittal 1414638 Hitesh 2460870 Hitesh( Shruti Mittal) 3644840 Total 1,28,03,044

8. From the above , we find that Sh. S. C. Mittal, father-in-law of the assessee staying under the same roof, as the head o f the joint family has disclosed an amount equal to the unaccounted jewellery seized belonging to the entire family as an undisclosed income. The vary purpose of centralization of the cases of the family members is to have a comprehensive understanding and determination of undisclosed income. In the instant case , since the undisclosed income determined tallies with the undisclosed income declared in the return, no separate addition in the hands of the assessee is called for .” 7.1. Very categorically the Coordinate Bench has given a finding that jewellery worth Rs. 24,60,870/- which was seized in the hands of assessee Smt. Shruti Mittal was found to be part of the jewellery worth Rs. 1,28,03,044/-, surrendered by Shri S.C. Mittal, father-in-law of the assessee. In for A.Y. 2014-15 in the case of Shri Hitesh Mittal, vide order dated 07.02.2022 another Coordinate Bench has taken note of the order dated 21.09.2021 in the case of Pallavi Mittal and has again concluded that balance seized jewlellery worth Rs. 36,44,840/- in the hands of Hitesh Mittal, son of Shri S.C. Mittal stood accounted being part and parcel of jewellery surrendered by Shri S.C. Mittal. Learned DR could not bring on record anything to show that these factual findings were disputed, hence, this Bench is inclined to follow the same.