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2015 (8) TMI 883 - ITAT DELHI

2015 (8) TMI 883 - ITAT DELHI - TMI - Unexplained jewellery - Held that:- The Departmental Valuer in this case has reported that the jewellery found with the assessee has gross weight of 7949.550 gms and net weight was 5400.450 gms. The A.O. held that the assessee has explained jewellery having gross weight 5686.310 gms and net weight 5144.600 gms. This leaves us with unexplained jewellery of net weight of 255.850 gms and gross weight of 2263.240 gms. The difference in net weight is reported by .....

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mulae without an scientific basis to arrive at net weight, is only surmises and conjectures. Such a calculation cannot be the basis of addition. An expert opinion cannot be discarded without giving any room. Thus, the order of A.O. is bad in law.Merely saying that the assessee has not explained, when the A.O. stated otherwise, cannot be countenanced. The shortage or excess holding of gold and jewellery, under the facts of this case, has to be arrived at on an overall basis. Report of the Departm .....

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though we are not accepting the general argument made by assessee based on turnover of the group and taxes paid, status of family etc., we delete the addition solely on the basis that the extract of copies of books of accounts, remained uncontroverted by the Department. This addition is deleted - Decided in favour of assessee.

Unexplained gifts - Held that:- The gift of ₹ 5 lacs was received from the father Shri Rakesh Batra through cheque. He is an income tax assessee and filed .....

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ed:- 14-8-2015 - SHRI. I. C. SUDHIR AND SHRI J. S. REDDY, JJ. For The Appellant : Shri Salil Agarwal, Adv. Shri Sailesh Gupta, CA For The Respondent : Smt. Sulekha Verma, CIT DR ORDER PER J. S. REDDY, AM: I.T.A. No. 6784/Del/2012 and 6436/Del/2012 are cross appeals filed by assessee and the Revenue directed against the order of Ld. CIT(A) I, New Delhi dated 26.10.2012 for the Assessment Year 2010-11. I.T.A. No. 4500/Del/2014 is the appeal filed by assessee against order of Ld. CIT(A) XXV, New De .....

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on was conducted on 10.02.2010 in Sudhir Group of cases. Brief facts of the case are that Smt. Kritika Seth belongs to Sudhir Group of cases. The group is headed by Sh. Sudhir Seth and is in the area of assembly of D G Sets since more than a decade. The group has in the recent period ventured into real estate sector. No surrender of undisclosed income was made I the group either during or posts search proceedings. Assessment proceedings in the case were initiated by issuing notice u/s 142(1) dat .....

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Rs.03,75,000/- iii) Unexplained gifts Rs.05,21,000/- 4. Aggrieved, the assessee carried the matter in appeal before Ld. CIT(A). The first appellate authority granted part relief to the assessee. Further aggrieved, the assessee is in appeal before us on the following grounds: i) The worthy CIT has erred in disallowing unexplained jewellery worth ₹ 24,67,018/- ii) The worthy CIT has erred in making disallowance of unexplained cash amounting to ₹ 3,75,000/-. 5. The revenue filed cross a .....

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t prove the genuineness of the transaction during post search proceedings. iii) On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition of ₹ 5,21,000/- made by the AO on account of unexplained gift. 6. We first take up the appeal filed by assessee. Ground No.1 is against the addition on account of unexplained jewellery. The facts relating to this ground as stated in the assessment order are extracted as under: Unexplained jewellery; During the course of .....

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by family members including herself but has not filed any item wise reconciliation of jewellery. The weight wise details of jewellery found at the time of search and explained by the assessee during the course of search is as under: Gross weight in Grams Net weight in Grams %age of weight reduced to arrive at net weight Jewellery found from locker No. 49 Axis Bank Ltd. Lajpat Nagar, New Delhi of the assessee 2853.850 1959.450 45.64% Jewellery found from locker No. 458 HDFC bank, G. Kailash Part .....

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at net weight of the jewellery. The method adopted by the assessee to arrive net weight appears to be correct as this is practically used by the jewelers at the time of taking old jewellery from the customers. Departmental valuer valued total 31 items of jewellery found from locker No. 458 and 15 items from locker No. 49 out of which 15 items of jewellery from locker No. 458 were remained unexplained by the assessee. The items which were not explained are mentioned at 51. No. 2,10, 11, 15, 16, .....

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same has been offered by the assessee. It clearly shows that the jewellery found during the search was more than what has been declared by the assessee to the department. As the assessee has reduced 10.52%from the gross weight of the jewellery to arrive at net weight, following the same method as adopted by the assessee, net weight of the unexplained jewellery comes to 2025.147 gms as computed in the table above. The total value of the unexplained jewellery of 2025.147 gms @ 15,700 per 10 gms. a .....

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ery to the income of the assessee as unexplained investment in jewellery. The amount of ₹ 31,79,480/- represents investment of undisclosed income in jewellary, found during the course of search and such she is liable for penalty u/s 271AAA, therefore, penalty proceedings u/s 271AAA are being initiated separately in the case. 7. Ld. Counsel for the assessee Shri Salil Agarwal submitted that the A.O. has not accepted the method of valuation adopted by the assessee. Ld. Counsel further submit .....

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the one hand the A.O. agreed that the assessee has explained 5144.600 gms of jewellery and on the other hand, he made one estimate addition. He further submitted that the assessee has never admitted to have any unexplained jewellery during the search proceedings. In support of this contention, he referred to questions No.3 & 4 and answers thereto given in the statement recorded from the assessee on 30.03.2010. He further argued that the first appellate authority has committed an error in cha .....

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e are seven members of the assessee s family who pay substantial amount of tax. In addition, he submitted that there are HUF of over 10 small private limited companies and all of them have certain cash balances which are kept with the Director or proprietor. He further submitted that the total cash withdrawal was ₹ 1,13,19,000/- and in fact, Mr. Sudhir in his preliminary statement recorded, has stated that cash of ₹ 20 lacs would be available in the house of the assessee and, therefo .....

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the items of jewellery and hen certain items of jewellery not being explained the first appellate authority has rightly held the same to be unexplained jewellery. She submitted that assessee had not given any explanation at the time of search in the statement recorded from her nor has the assessee filed any Wealth Tax Return prior to the date of search. She distinguished the ratio laid down in the decision of Pune Bench of the Tribunal in the case of Ms. Padmani Shrikrishna Gadgil Vs ACIT in I.T .....

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for the assessee submitted that the assessee maintained books of accounts and the availability of cash is supported by the books of accounts and in the absence of any contrary material / evidence, the addition cannot be sustained. 11. On the Revenue s appeal, Ld. D.R. relied upon the order of A.O. whereas Ld. Counsel for the assessee relied upon the order of first appellate authority. 12. We have heard rival contentions and perused the material placed on record. On a careful consideration of the .....

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gms and gross weight of 2263.240 gms. The difference in net weight is reported by the departmental valuer. Instead of accounting the net weight jewellery as arrived by Departmental Valuer, the A.O. deducted 10.52% from the gross weight of jewellery i.e. 2263.2450 gms, which is gross weight of unexplained jewellery arrived at par the departmental valuer and arrived at a net weight of 2025.147 gms. of jewellery. Such estimation cannot be the basis of addition. When DVO has given a report specifyin .....

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ng to Ld. CIT(A) s order, she has rightly held that the methodology adopted by the A.O. cannot be accepted. At the same time, she held that 15 items of jewellery found and seized from the locker which belong to the assessee are unexplained items of jewellery. When the A.O. has held that the assessee has explained the jewellery found in the locker the first appellate authority cannot hold otherwise without any evidence. The entire basis of determining unexplained jewellery is changed by Ld. CIT(A .....

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alue of unexplained jewellery. Thus, this ground of assessee is allowed and addition toward unexplained jewellery is deleted. 15. The next ground of appeal is regarding unexplained cash. The assessee stated that books of accounts are maintained and the cash is evidenced by the books of accounts. The entire addition in this case is made on the basis of general human behaviour, surrounding circumstances and human probabilities. The assessee s explanation is also a general explanation. The only arg .....

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basis for arriving at a conclusion. General explanation given by the assessee or the logic given by revenue authorities cannot be the basis of addition. Unless the books of accounts and summary of the cash flow statement filed by the assessee before the revenue authorities are rejected, the addition cannot be sustained. Without finding defect in these books of accounts and without specifically stating as to why the cash flow statement cannot be accepted, an addition on general presumption made b .....

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elete the addition solely on the basis that the extract of copies of books of accounts, remained uncontroverted by the Department. This addition is deleted. 17. We now come to the revenue s appeal in I.T.A.No. 6436/Del/2012. Ground No. 1 is general in nature. Ground No.2 is on the relief given by the first appellate authority of the addition made on account of unexplained jewellery. In view of our discussion in the assessee s appeal above, this ground has to be dismissed. 18. Ground No.3 is rega .....

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