TMI Blog2014 (9) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... not claim any liability other than the mentioned in the Annexure-A to the agreement - there is no question of adjusting the liability with electricity deposit as this deposit is independent asset and nothing to do with this expenditure and this expenditure not incurred for the purpose of asesssees business - the CIT(A) is justified in rejecting the claim of the assessee and the order of the CIT(A) is confirmed Decided against Assessee. Unexplained credits - Receipts of deposits against sales - Failure to produce documentary evidences Held that:- CIT(A) rightly held that the assessee had furnished a certificate furnished by the Team Ferro Alloys Pvt. Ltd. confirming the deposit of the amount made with Mahavir Ferro Alloys which was subsequently taken over by the assessee as per agreement dated 01/04/2008 - the source of the deposit is properly explained and therefore, it cannot be brought to tax as unexplained credit or deposit the order of the CIT(A) is upheld Decided against Revenue. Rental income treated as business income TDS deducted by M/s Team Alloys Total income to be taxed and expenses regarding business should be allowed or not Held that:- CIT(A) obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant with reference to deeming provisions of section 69A - 500 grams jewellery is permitted to be retained in the case of a married lady, 250 grams for unmarried lady and 100 grams for male member of the family assessee also contended that there is no granting of cross-examination to the deponent in the affidavit though the donor of the gold jewellery to the assessee has confirmed giving the gift relying upon Mehta Parikh and Co. Vs. CIT [1956 (5) TMI 4 - SUPREME Court] thus, the matter is to be remitted back to the Ao to reappraise possession of the jewellery and give corresponding relief on the basis of the holding of each person of family and the family members are staying under single roof, if it is supported by documentary evidence Decided in favour of Assessee. - ITA No. 208/H/12, 266/H/12 267/H/12 209/H/12 250/H/12 251/H/12 262/H/12 - - - Dated:- 28-3-2014 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Petitioner : Shri B. Sai Prasad For the Respondent : Shri P. Soma Sekhar Reddy ORDER Per Chandra Poojari, A. M. These appeals are preferred by the Revenue as well as by the two different assessees directed against the separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the liability to pay electricity charges amounting to ₹ 34,85,767/- was crystallized in February, 2009 and the assessee had paid a sum of ₹ 18,00,000/- during the year and provided to make the balance which was paid in the subsequent account year relevant for the AY 2010-11. As a proof of this, a letter dated 18/02/2009 as issued by the Supdt. Engineer, Operation Circle, AP Transco, Mahaboobnagar Division, along with the necessary account extracts from the books of FY 2009-10 were filed. The assessee further submitted that discharge of liability crystallized during the relevant accounting year is allowable as decided in the case of CIT Vs. Veekay Engineering Corporation [2010] 323 ITR 252 (Chattisgarh). The assessee had also placed reliance to the decision of the CIT(A)-III, Hyderabad in ITA No. 0287/CIT(A)-III/09-10 dated 13/10/2010 wherein a similar issue was decided in the case of Sri Ramkumar Agarwal for the AY 2007-08. 6. After considering the submissions of the assessee, the CIT(A) observed that there were two issued to be considered. Firstly, it is to be seen whether the amount of ₹ 34,85,767/- is an ascertained liability during the year; and second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Mahavir Ferro Alloys (second party) along with the annexure-A annexed to it. Para no.3 of the agreement, the language used therein makes the position very clear, if read with the Annexure, containing the details of existing liabilities and assets of the unit of M/s Mahavir Ferro Alloys as on 3l.3.2008. The same are reproduced as under; The second party here to, who is a proprietor of Mls Mahavir Ferro Alloys, hereby confirmed that there are no other liabilities of the said concern other than what has been stated in the Anneuxre-A to this agreement and in (read as if) the company is forced to payor pays any liabilities of Mls Mahavir Ferro Alloys, which are not incorporated in Annexure-A to this agreement, the second party here to shall indemnify the same without any allegations/objections. 6.2 The ratios and facts of case laws on the subject cited by assessee, referring to the decision of Hon'ble Chattisgarh High Court in the case of CIT Vs Veekay Engineering Corporation as reported in 323 ITR 252 were examined from the point of view of assessee's case and found that the facts of the case are distinguishable in this regard. Further, the facts in the case of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts which are part of the business continued as governed by the terms of the agreement. In this case, it is not the logic or accounting principles, which coming into the scene, but the agreement binding the vendor and vendee, wherein it was clearly stated that the vendee of the unit is not responsible for any of the liabilities that will arise subsequent to the date of the agreement. For the sake of clarity, the clause (1) (3) of the said agreement is reproduced, which runs as under; clause (1)- The running business of Mahavir Ferro Alloys which has been given on lease to Team Ferro Alloys Pvt Ltd by the second party shall stand transferred and vested in Sri Shiva Spinning Mills Pvt Ltd w.e.j. 1st April 2008 with all its assets, obligations and liabilities as stated in Annexure-A. clause (3)- The second party (Mr.Ramprasad Agarwal) who is a proprietor of M/s Mahavir Ferro Alloys hereby confirms that there are no other liabilities of the said concern other than what has been stated in Annexure-A to this agreement and if the company is forced to payor pays any liabilities of Mahavir Ferro Alloys which are not incorporated in Annexure-A to this agreement, the second party he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this AY of accrual and did qualify for deduction in the computation of business income for this AY. For this proposition he relied on the decision of the Hon ble Delhi High Court in the case of CIT Vs. Delhi Tambaka Udyog (P) Ltd., 247 ITR 816 (Delhi.). He also relied on the decision in the case of Saurashtra Cement Chemical Industries Ltd. Vs. CIT, 213 ITR 523 (Guj) business expenditure year of allowability mercantile system of accounting liability is allowable only in the year in which it has crystallized and determined it cannot be disallowed merely because it related to earlier previous year. The AR also relied on the decision in the case of Shajda Nanda Sons Vs. CIT, 108 ITR 358 (SC). 9. On the other hand, the learned DR relied upon the order of the CIT(A). 10. We have heard the arguments of both the parties and perused the record as well as gone through the orders of the authorities below. In this connection, the contention of the assessee s counsel is that the payment of expenditure of ₹ 34,85,767/- incurred by the assessee towards liability of electricity charges is to be allowed as revenue expenditure though it was relating to prior period. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. 11. Ground No. 1 and 5 are general in nature. 12. Ground No. 2 raised the revenue is as follows: The ld. CIT(A) has erred in allowing relief on total amount of ₹ 1.31 crores, since the assessee failed to produce any details and documentary evidence for receipt of deposits against sales amounting to ₹ 1,31,00,000/-. Thus, it is clear case of unexplained credits. 13. On verification of the information available on record, the Assessing Officer observed that the assessee company is in receipt of deposits against sales amounting to ₹ 1,31,00,000/-. When the Assessing Officer asked the Authorised representative of the assessee company was asked to produce the details for the same, the authorized representative did not produce the details for same. In absence of the details and keeping in view the fact that the sales of the assessee company for the year relevant to the instant asst. year is ₹ 67,61,500/- only, the Assessing Officer held that the advances claimed against sales of ₹ 1,31,00,000/- is clearly unexplained credits and, he therefore, added the same to the income returned. 14. In the course of appeal proceedings before the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing liability as at the end of the account year. In support of this the assessee had also furnished a certificate furnished by the Team Ferro Alloys Pvt Ltd confirming the deposit of the amount of ₹ 1,31,00,000/- made with Mahavir Ferro Alloys which was subsequently taken over by the assessee as per agreement dated 1- 4-2008. In view of the above observations, the CIT(A) held that the source of the deposit of ₹ 1,31,00,000/- is properly explained and therefore, it cannot be brought to tax as unexplained credit or deposit. The addition made of ₹ 1,31,00,000/- is deleted. 16. Aggrieved, the revenue is in appeal before us. 17. We have heard both the parties, perused the record and have gone through the orders of the authorities below. The CIT(A) gave a categorical find that the assessee had furnished a certificate furnished by the Team Ferro Alloys Pvt. Ltd. confirming the deposit of the amount of ₹ 1,31,00,000/- made with Mahavir Ferro Alloys which was subsequently taken over by the assessee as per agreement dated 01/04/2008. Further, he held that the source of the deposit of ₹ 1,31,00,000/- is properly explained and therefore, it cannot be br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sec.194-I of the I.T. Act, 1961. It is the another ground considered by the Assessing Officer, for treating the said income as income from other sources. 20. The assessee objected the said addition before the CIT(A) and the arguments advanced through the written submissions filed before the CIT(A), which are as under: The assumption of the assessing Officer is incorrect. The accepted legal proposition is that merely because income is attached to any immovable property, it can not be the sole factor for assessment of such income as income from property or other sources. What has to be seen is what was the primary object of the assessee while exploiting the property. In case it is found that the main intention is to exploit the immovable property by way of complex commercial activity in that event it must be held as business income. Support for this view was derived from the ratio laid down by the Calcutta High Court in the case of ClT Vs Shambhu Investment {P} Ltd (249 ITR 47). Similar views were also expressed by Calcutta Tribunal in the case of PFH Mall and Retail Management Ltd Vs ITO (298 ITR (AT) 371 placing reliance on several decisions of the hon'ble courts. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the lease rent received for the said period to be considered as business income. In support of its said contention, the assessee relied on the decision in the case of ClT Vs Smt Sureshini Mittal 277 ITR 88 (All) . 22. The CIT(A) after considering the submissions of the assessee perused and observations/findings of the Assessing Officer, in assessment order, observed that assessee company has leased its whole unit consisting of land, plant machinery and was fetching it the lease rent. Against the lease rents received, the assessee company shown to have incurred some expenses mainly falling under the head 'depreciation' (Rs.27,87,107), 'interest on bank loan' (Rs.9,30,609) and 'electrical charges' (Rs.34,85,767) and claimed in arriving at the profit under the head 'business income'. However, the Assessing Officer concluded that the lease rent was received on account of letting out part of its property alone. In this case, it is also a fact that the agreement for lease was not signed between the lessor and lessee for the period under consideration but the same has been materialized with the agreement reduced into writing in the subsequent years, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in this case. Considering all these facts and also on considering the fact that there is no loss of revenue, there was no basis for the Assessing Officer to treat the same as income from other sources. The case law quoted by the assessee in the case of CIT Vs Smt Sureshini Mittal 277 ITR 88 (All) is relevant for the assessee's case under consideration and as such there is no case for the Assessing Officer to treat the lease rent as income from other sources. Further, as it was established in this case that the period of one year to be treated as transition period wherein it was not possible to decide the nature of income. Even on the facts, the expenses such as depreciation and interest on loans related to the assets of the unit are not liable to be rejected since they are related directly to the income earned. Hence, the CIT(A) held that the addition of entire amount as income of the assessee is without any basis and as such the addition is deleted. Accordingly, the Assessing Officer is directed to recompute the income treating the same as business income while giving appeal effect to this order, by excluding the electricity charges. 23. Aggrieved, the revenue is in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer to recompute the income treating the same as business income while giving appeal effect to his order, by excluding the electricity charges. Further, this view of ours is also supported by the judgment of the Hon ble Supreme Court in the case of Universal Plast Ltd. etc Vs. CIT [1999] 237 ITR 454 wherein it was held as follows: No precise test can be laid down to ascertain whether income (referred to by whatever nomenclature, lease amount, rents, licence fee) received by an assessee from leasing or letting out of assets would fall under the head Profits and Gains of business or profession . It is a mixed question of law and fact and has to be determined from the point of view of a businessman in that business on the facts and in the circumstances of each case including true interpretation of the agreement under which the assets are let out. Where all the assets of the business are let out, the period for which the assets are let out is a relevant factor to find out whether the intention of the assessee is to go out of business altogether or to come back and restart the same. If only or a few of the business assets are let out temporarily while the assessee is carrying out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the leased property in question was being exploited by the assessee for its own business purposes. In the circumstances, we find that the decision of the Apex Court in the case of Universal Plast Ltd. (supra) clearly applies to the facts of the present case. The CIT(A) after taking note of the propositions laid down by the Apex Court in that case, has concluded, as taken from paras 3.4 of his impugned order for the assessment year 2007-08, as follows- 3.4 As could be seen from the ratio of the decision of the Hon ble Supreme Court, with special reference to the propositions as indicated above (at para b), the exploitation of properties will amount to exploitation of business where the assets of the business are let out temporarily for making profit for the business and the facts of the case are very much in line with the said propositions in this case. Based on the facts of this case, the ratio of the Hon ble Supreme Court appears squarely applicable to this case. Accordingly, it is held that the lease rent by virtue of exploitation of the commercial assts of the appellant company, amounts to the business income and to be taxed accordingly. We find no infirmity in the abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted investment being the consideration paid for taking over the unit by the assessee group. The Assessing Officer arrived at the said figure of ₹ 6.10 crores as against ₹ 6.0 crores indicated in beginning of the seized materia referred at page No.102 of annexure MIP/A/2. The Assessing Officer discussed about the figures as reflected in the said paper of the annexure in brief and concluded as under; From the available evidence, it is crystal clear that the assessee proposed to invest ₹ 6.10 crores and accordingly incurred expenditure on 30.9.2007 itself. Hence, the assessee's oral assertion that they did not proceed with the acquisition of the company cannot be accepted. As mentioned, it is a fact that the assessee proceeded to acquire the company situated at Jalna by investing ₹ 6.10 crores. The matter may not have reached finality and the factory might not have come to the possession of the assessee but it will not wipe out the concrete evidence, that the assessee incurred substantial expenditure in the process of acguiring the company. It may not be out of place to mention even the amounts of expenditure stated to have been incurred by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on did nat take cognizance of a part of the seized material. It is a settled law that If any material seized is to be relied upon, entire content appearing on it should be considered and revenue cannot ignore some of the entries which do not suit it and accept other. The A. O's action in ignoring the portion of the over draft liability and consider the same as investment made by the assessee is totally wrong. It may not be out of place to mention that the relevant bank accounts which specify the debt due to the Bank were also seized and are part of the seized material. Copies of the same are also produced for your kind perusal. It is an accepted legal proposition that dumb documents with no certainty have no evidentiary value. In the absence of adequate material as to nature and ownership of the transactions, undisclosed income could not be assessed in the hands of the assessee merely by arithmetically totaling various figures jotted down on the loose documents. On the basis of mere entry in loose sheets of paper without there being any evidence of cash payments or discharge of loan due to Bank, the loose entries in the paper is only a planning. Addition on the basis of such e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sheet that has been seized during the course of search seizure proceedings cannot be treated as dumb material in light of the fact that some of the contents of the said loose sheet are corroborated and confirmed by the assessee himself. Under the circumstances, it is relevant to examine the issue involved with the help of circumstantial/corroborative evidence as available in the seized material as well as in the assessment records apart from the information flown from the sworn statement of one of the main persons of the group. It is also not out of place to say that some of the transactions are attempted to be explained by the assessee with the help of books maintained. Under the circumstances, the document cannot be termed as dumb document, as referred by the assessee. 35.1 The CIT(A) noted that in this context, the factual position relating to the actual consideration determined for taking over the unit with reference to the figures as appearing on the loose sheet vis-a-vis the amounts taken by Mr. Ramprasad Agarwal, vide statement dt.22.5.2009, assumes importance. The figure of ₹ 5.51 crores as indicated by Mr. Ramprasad Agarwal, does not appears to have fool proof basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide his statement dt.22.5.2007, the balance payable or paid would be ₹ 94.20 lakhs. Out of the said amounts, the assessee as a group, admitted to have paid an amount of ₹ 38.50 lakhs till the end of the financial year 2008-09, including the amount of ₹ 15 lakhs paid in FY 2007-08. It is relevant to draw attention to the averment made by Mr.Ramprasad Agarwal in the sworn deposition recorded on 22-5-2009 during the search proceedings. An extract of the same reads as under: Q.No.18:- I am showing you Annexure MIP/A/2 seized from your office premises, containing loose sheets and documents and numbered 1 to 148. Please explain the details of the transaction Ans:- Originally it was agreed to buy M/s Maa Sachiya Sponge Iron {P} Ltd, Jalna for an amount of ₹ 5.51 crores including bank liability. The deal could not through. However, during the process of negotiations we have made following payments ₹ 15,00,000/- during the financial year 2007-08 and ₹ 23,50,000/- during the financial year 2008-09. Deducting there from value of lands amounting to ₹ 30,00,000/- retained by them, the balance amount payable is ₹ 5.21 crores. Bank liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be discharged by the owner. On reducing the said amount from the net value of ₹ 1,33,20,245/-, on the basis of figure of ₹ 6.00 crores as indicated in loose sheet, the net agreed price to be paid was determined at ₹ 62,44,345 as against the amount of ₹ 38,50,000 actually paid by the assessee group as on the date of search. 35.5 The CIT(A) observed that the Assessing Officer's conclusion regarding the finality of the deal, and the actual price for taking over the unit at Jalna was not based on the information gathered either with the help of the enquiries conducted through himself or the information collected from the assessee group. On the other hand, the assessee has explained with the help of few details regarding the deal and submitted that the deal could not be completed and the amounts paid as advance are still lying with the unit owner. There is no concrete information as regards to the execution or otherwise of the deal for taking over the unit at Jalna. It was further submitted that the amounts that were paid as advances were paid by the individual member of the group, apart from Mr. Kantilal Agarwal, the assessee. Under the circumstances, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the transaction at ₹ 6.10 crores and to tax the entire amount in the hands of the assessee as unaccounted investment without considering the full facts, including the liabilities standing against the bank as well as other heads, which are very much embedded in the seized material, will also amounts to conclusions that lacks any basis and clarity. As such, the addition of ₹ 6.10 crores made by the Assessing Officer treating the entire presumed consideration as the total income of the assessee, is not sustainable, in its entirety. 35.8 The CIT(A) observed that having concluded that the transaction has not been executed but the consideration, excluding the liabilities has been paid, it is relevant to examine such payments with reference to the sources in the hands of the persons of the assessee group including the assessee Mr.Kantilal Agarwal. It is also pertinent to mention here that no specific entity/individual was shown to have signed/entered the aid proposal for taking over the Unit at Jalna, which appears to be a joint effort by the group as a whole, if the details of the payments made as a part payment, into consideration. During the course of search seizu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, the investment of ₹ 15 lakhs made in FY 2008-09 relevant to AY 2009-10, which has been admitted in the return filed and accordingly, the same has to be allowed. 38. On the other hand, the learned DR has relied upon the order of the CIT(A). 39. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. The contention of the learned AR of the assessee is that the amount of ₹ 15,00,000/- was offered to tax in the AY 2009-10 by the assessee in his return of income and another amount of ₹ 23,50,000/- was offered to tax by the assessee-HUF in AY 2008-09, being, so there cannot be any double taxation. As submitted by the assessee, there cannot be any double taxation in assessee s hands once again and, therefore, we remit the issue back to the file of the AO to examine the issue in the light of the submissions of the assessee and decide the issue in accordance with law. Accordingly, the grounds raised by the assessee are allowed for statistical purposes. 40. In the result, appeal of the assessee in ITA No. 262/H/12 is allowed for statistical purposes. ITA NO. 250/H/12 by the revenue f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of company only and ignore the protective addition made in the hands of Sri Kantilal Agarwal. 44. After considering the submissions of the assessee, the CIT(A) observed that the additions made by the Assessing Officer on protective basis in the assessment order of the assessee. In view of the facts that have emerged and based on the confirmation furnished by M/s Mahavir Ispat Pvt Ltd., the cash deposits into the bank of the assessee which were drawn to meet the liability of M/s Mahavir Ispat Pvt Ltd, the addition is to be considered in the hands of Mahavir Ispat Pvt Ltd only. As such the addition of ₹ 58,42,800/- made in the hands of assessee on protective basis, stands deleted. Aggrieved, the revenue is in appeal before us. 45. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. We do not find any infirmity in the order of the CIT(A) as there is no evidence to suggest that the liabilities of the said company are discharged by the assessee. Being so, we confirm the action the CIT(A) in deleting the addition of ₹ 58,42,800/- made in the hands of the assessee on protective basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A NO. 266/HYD/2012 Appeal by revenue for AY 2008-09 in case of M/s Shiva Spinning Mills P. Ltd. 47. The revenue has raised the following substantial grounds in this appeal: 2. The Ld. CIT(A) has erred in admitting additional evidence without granting any opportunity to the AO as required under Rule 46A of the IT Rules. 3. The Ld. CIT(A) has erred in holding that the said addition does not fall u/s 68 of the IT Act, 1961. 48. As regards the first ground pertaining to admitting additional evidence, this ground is covered by the decision of the coordinate bench in case of M/s Venkata Balaji Steel Rolling Mills P. Ltd. in ITA No. 431 to 433/Hyd/2012 vide order dated 11/07/2012. Therefore, as mentioned in para 26 (supra) of this order, this ground of appeal is dismissed. 49. As regards Ground No.2, the AO noted that on verification of the information available on record, it has been observed that there was an increase in Sundry Creditors from ₹ 20,094/- to ₹ 34,48,931/-. Out of ₹ 34,48,931/- an amount of ₹ 34,23,143/- pertains to Rain Calcining. However, the assessee has failed to produce any documentary evidence in support of his creditor. Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount due to them. As a matter of fact it may be stated that the entire liability of ₹ 34,23,143/- was discharged during the F. Y. 2008-09 relevant for the AY 2009- 10. The same is verifiable from the audited accounts filed for the AY 2009-10. 50.1 It was further contended that as a matter of fact, the A.O. did not ask the assessee to furnish any information relating to the said information, the Assessing Officer's argument that lithe asessee did not furnish the information despite sufficient time is factually incorrect. It was also argued that the entire information is available in the records and the returns filed by the assessee. 51. After considering the submissions of the assessee, the CIT(A) observed that the main issue to be considered here is whether the amount of ₹ 34,23,143/- due to RCL can be considered for addition as unexplained cash credit in terms of section 68 of the I.T. Act. A plain reading of Section 68 shows that there has to be a credit of amount in the books maintained by the assessee and such credit has to be a sum during the previous year with the assessee offers no explanation about the nature and source of such credit found in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been discharged in the subsequent year. Under these circumstances, it cannot be treated as credit for the purpose of section 68 or the unexplained cash credit. Hence, the addition of ₹ 34,23,143/- is deleted. 52. Aggrieved, the revenue is in appeal before us. 53. We have heard the arguments of both the parties, perused the record and have gone through the orders of the revenue authorities. Before deleting the addition, the CIT(A) gave a categorical finding that being the power supplier to one of the units of the company, the liability arisen during the year, which has been discharged in the subsequent year and under these circumstances, it cannot be treated as credit for the purpose of section 68 or the unexplained cash credit. Therefore, we do not find any infirmity in the order of the CIT(A) in deleting the addition made by the Assessing Officer u/s 68 and accordingly we confirm the same dismissing the ground raised by the revenue. 54. In the result, revenue appeal in ITA No. 266/Hyd/2012 is dismissed. ITA NO. 209/Hyd/2012 Assessee s appeal for AY 2009-10 in case of Sri Kantilal Agarwal 55. In this appeal, the assessee has raised the following grounds o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not elaborated the details as regards to the jewellery in possession of each of the individual with reference to their income tax / wealth tax returns. But on verification, it was found that none of them were filing the wealth tax returns except by MRs. Prabha Devi who also found to have filed her wealth tax return for the AY 2008-09 on 6.2.2009 which is subsequent to the date of search and after expiry of the due date, for which no correct credence can be given. The explanation given by the assessee vide the letter dt.23.12.2010 stating that possessing jewellery is a normal feature in marwadi community is common and the jewellery belonged to all the family members brought to one place for inventorising and valuation, is also not very elaborate or evidential except being indicative in nature. There was onus on the assessee to prove that jewellery is accounted in his hands as well as in the hands of the family members through the recorded documents such as wealth tax returns, etc. Instead, the assessee has chosen to explain the same through the help of affidavits filed by fathers of daughters-in-law of the assessee and the other general statements. The affidavits filed by fathers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h can be termed to be belonging to the other members of family whose wealth would be below the taxable limits and explainable in their hands, which was not considered in detail by Assessing Officer. Such value is taken as ₹ 6,47,497/- based on the valuation adopted by the Assessing Officer which is equivalent to 25% of the total value of silver articles of ₹ 25,89,990, which appears to have taken into consideration in quantification of the unaccounted jewellery. Assessee gets a relief of ₹ 6,47,497/- being the value of silver articles, treated as silver articles in the hands of other family members. 57.3 Regarding the valuation of jewellery as adopted by the Assessing Officer,the CIT(A) observed that the claim of the assessee appear to be reasonable since there is no variation in the quantity of the valuables found in the course of search seizure proceedings. The variation was on account of the valuations carried on two different dates by two different valuers with a gap of two months. The purpose of valuation of the jewellery is to ascertain the value of the investment with a purpose of bringing the unaccounted investment, if any, into tax net. That being th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ewellery of ₹ 43,00,000/- which was treated and added as unaccounted investment in the hands of the assessee, it was submitted that jewellery belonged to the entire family and the same is substantiated by the fact that valuers in the reports dt.29.1.2009 17.3.2009 had clearly mentioned the position that jewellery belonged to Mr.Kantilal Agrwal and family. It was also submitted that gold was received by two of the assessee's daughters-in-law from their fathers who has submitted the affidavits in this regard but not examined by the Assessing Officer. It was also contended by the assessee that as on the date of search, there are four married women whose jewellery was also pooled for valuation and in this connection, (CBDT's instruction in F.No.288/63/93-IT (lnv.) dt.11.5.1994 containing the guidelines on possession of gold jewellery by married women is referred to. It was also submitted by the assessee that since the individual members had no liability to wealth tax, no returns of wealth tax were filed by them and in case of Mrs.Prabha Devi, wealth tax returns were filed and as such the possession of jewellery in each of the members may be accepted as reasonable . 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her maternal parents and parents of ladies. He drew our attention to the affidavit from Sri Murarilal Goyal, father of Smt. Radha Devi, (W/o Sri Ramprashad) and Vijay Kumar Goyal of Kanpur father of Smt. Vanita Devi (W/o Sri Shivram) wherein they confirmed that at the time of marrying of their daughter, they have given jewellery. 61.2 In view of the above, we incline to hold that minimum amount of jewellery to be considered in each hand of the family members of the assessee as per the CBDT Instruction No. 1916, dated 11/05/1994, wherein it has been mentioned as under: (i) In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need be seized. (ii) In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms. per married lady, 250 gms. per unmarried lady and 100 gms per male member of the family need not be seized. (iii) The authorised officer may, having regard to the status of the family, and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer is directed to decide the issue in the light of the aforesaid CBDT Circular and in accordance with law. 61.4 Further, the other objections of the assessee s counsel is that there is no granting of cross-examination to the deponent in the affidavit though the donor of the gold jewellery to the assessee has confirmed giving the gift. For this purpose, he relied on the judgment of the Hon ble Supreme Court in the case of Mehta Parikh and Co. Vs. CIT, 30 ITR 181 (SC) the argument of the assessee is not considered. In the said case the Hon ble Apex Court held as follows: The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those enties were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. The appellants took it that the affidavits of these parties were enough and neither the AAC, nor the ITO, who was present at the hearing of the appeal before the AAC, considered it necessary to call for them in order to cross- examine them with reference to the statements made by them in their affidavits. Under these circumstances, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the same is dismissed. 63. In the result, appeal of the assessee in ITA No. 209/H/12 is partly allowed for statistical purposes. ITA No. 251/H/12 for AY 2009-10 by the revenue in case of Sri Kantilal Agarwal 64. In this appeal, the Revenue has raised the following grounds of appeal: 2. The ld. CIT(A) has erred in granting relief or ₹ 6,47,497/- being 25% of the total value of silver articles of ₹ 25,89,990/- as the unaccounted jewellery seized during the course of search which was added in the assessment order did not include silver articles. 3. The Ld. CIT(A) has erred in granting relief of ₹ 3,78,268/- being difference in the valuation reports ignoring the fact that the second valuation was made on 17/03/2009 as there was a technical defect in the first valuation report dt. 29/01/2009, as the items were not tagged properly. This fact was confronted to the assessee and was also confirmed by him in his statement recorded on 17/03/2009. 65. As we have upheld the order of the CIT(A) in assessee s appeal in ITA No. 209/Hyd/2012 (supra), the grounds raised by the Department became infructuous, therefore, the same are dismissed as infruc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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