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Shri HareshBhai Ashumalbhai Keswani and Sh. Vijay Kumar Ashumal Keswani Versus DCIT, Central Circle 3, New Delhi.

2016 (4) TMI 632 - ITAT DELHI

Addition on account of unexplained investment in jewellery - Validity of a search - Held that:- Validity of a search and seizure u/s 132 has to have a clear cut nexus with the warrant of authorization, which is the main foundation of entire proceedings on search and seizure. In the present appeal, the warrant of search was in the name of Shri Harish Ashumal Keshwani whereas the locker in which the jewellery was found (Locker No. 270) was in the name of Smt. Poonam H. Keshwani as the first holder .....

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arch for Locker No. 270 situated in altogether different premises and the locker being in the name of Smt. Ponam H. Keshwani as the first holder, the said jewellery cannot be considered in the block assessment of Shri Harish A. Keshwani, the assessee. We, accordingly, order deletion of ₹ 2,21,782/- on account of jewellery and silver utensils found in locker no. 270.- Decided in favour of assessee

Addition on account of household goods - Held that:- Without any material found dur .....

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e made only on the basis of material found during the course of search. As such, considering the facts of the case and keeping in view the legal position emanating from the aforesaid judicial pronouncements, we are of the view that the additions made by the assessing officer were outside the purview of the block assessment and the learned Commissioner (Appeals) was not justified in confirming the same. - Decided in favour of assessee - IT(SS)A No. 209/Del/2005, IT(SS)A No. 210/Del/2005 - Dated:- .....

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.09.2008. In IT (SS) A No. 209/Del/2005, the Bench had confirmed the addition in respect of jewellery to the extent of ₹ 2,73,701/- and in respect of household goods to the extent of ₹ 1,50,000/-. In IT (SS) A No. 210/Del/2005, the Bench had confirmed the addition of ₹ 1,87,500/- in respect of household goods. The assessees appealed before the Hon'ble Delhi High Court and the Hon'ble Delhi High Court in its order dated 19.4.2010 in I.T.A. Nos. 368 and 369 of 2009 has re .....

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issue on merits. In so far as the household goods are concerned, we find that the Tribunal should examine as to whether these goods pertained to the block period or not and as to whether such goods could not have been acquired by the assessees from their regularly assessed incomes. For these reasons, we set aside the impugned order to the extent of the findings with regard to the jewellery and household goods and remit the matter to the Tribunal for a consideration of the submissions made by the .....

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in the entire block period without any reference to relevant assessment year comprised in the block period. During the course of assessment proceedings, the assessee attempted to explain the source of investment of each and every item of household goods and it was submitted that they have been acquired before the block period. It was stated that the assessee got married in the year 1990 in very rich family belonging to high status of society and items like air conditioner, sound system, fridge a .....

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e value thereof was estimated at ₹ 1,85,700/- by the search party. In this case also it was stated that these items were received at the time of marriage in 1990 from the family of Lalwani Group. Similar arguments as in the case of Hareshbhai Keshwani were advanced in this case also. 4. The Ld. CIT (A) after considering the arguments in both the cases held that since the assessee had not provided any direct evidence to show as to how the articles were acquired, the explanation offered by t .....

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and individuals associated with the Vimal Gutka and Lalwani group of cases. The Appellant is husband of Poonam H Keshwani, who is sister of owners of Vimal Gutka Group. It was submitted that the appellant was assessed to Income Tax for the last several years and filed NIL undisclosed income in the prescribed return form no 2B on 21.07.2004, which was assessed at ₹ 7,44,243/- by the Assessing Officer. The undisclosed income as per the Assessment Order comprised the following:- (i) Unexplain .....

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pellant as second name. The valuation report of government Valuer available on page no 16 of the paper Book dated 23.10.2002 clearly mentioned that owner of the items in Locker no 270 UTI, Gotry Road, Baroda belongs to Smt. Poonam H Keshani and Harish A Keshwani. It was submitted that before the Assessing Officer as well as before the Ld. CIT(A), the appellant had argued that the Locker in which the jewellery has been found was in the Joint Name of Poonam H Keshwani and the appellant as second n .....

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so made an addition of ₹ 1,50,000 on account of unexplained investment in acquiring the household assets. The appellant vide his submission dated 27.10.2004 (available on page no 5 of the paper book) filed item wise explanation on sources of household goods. It was submitted that most of the household items were received at the time of marriage in the year 1990. It was also submitted that there was no material found as a consequence to search which proves that the household goods were acqu .....

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unt of household goods in the case of Shri Vijay Kumar Ashumal Bhai Keshwani. It was submitted that the income which is not based on the basis of evidence, or material found at the time of search i.e. based on merely on hypothesis, surmises, conjectures or estimate cannot be brought to tax under chapter XIV B. 8. The Ld. DR placed reliance on the orders of the authorities below. 9. We have heard the rival submissions and carefully perused the relevant material placed on record. As far as the iss .....

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person that the Assessing Officer proceeds to assess the undisclosed income in accordance with the provisions of Chapter XIV-B. In the case of Verma Roadways vs ACIT TTJ 728 (Allahabad Tribunal), the Allahabad Bench of the Tribunal, while considering a similar issue has held that validity of a search and seizure u/s 132 has to have a clear cut nexus with the warrant of authorization, which is the main foundation of entire proceedings on search and seizure. In the present appeal, the warrant of s .....

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ocker no. 270, UTI Bank, Gotri Road, Baroda and belonging to Smt. Poonam H. Keshwani and Shri Harish A. Keshwani in the joint names. Therefore, since there was no authorization for search for Locker No. 270 situated in altogether different premises and the locker being in the name of Smt. Ponam H. Keshwani as the first holder, the said jewellery cannot be considered in the block assessment of Shri Harish A. Keshwani, the assessee. We, accordingly, order deletion of ₹ 2,21,782/- on account .....

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books of account or would not have been disclosed by the assessee to the department for the purpose of imposing tax under the Act. Section 158B (b), thus, is a charging provision and this provision of Chapter XIV- B applies only to those incomes which can be brought within the definition undisclosed income'. The method how undisclosed income is to be computed has been given under section 158BB. Section 158BB gives the method as to how undisclosed income within the block year has to be pitte .....

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Object of the said Chapter is to bring to tax undisclosed income which the assessee has earned during a block year. How this income is to computed, the method has been given under section 158BB. Thus, every income which can be regarded to be undisclosed income within the definition given under section I58BB can be brought to tax under this Chapter by computing such undisclosed income on the basis of evidence, material or record found at the time of search. If no evidence, document, books or mat .....

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en an asset or transaction which is duly entered in the books maintained by the assessee regularly and disclosed to the department can also not be regarded to be undisclosed income. The assessment under this Chapter is in addition to regular assessment and income assessed will not be included in regular assessment. This Chapter cannot be regarded in substitution of regular assessment or in substitution of the powers available to the assessing authority under sections 148 and 263. The learned Dep .....

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a result of search. Under Chapter XIV-B, undisclosed income has to be determined on the basis of evidence, documents and material found during the course of search and the assessing officer is not permitted to go beyond the material found as a result of search and to make roving enquiries in order to rope in certain income which is not supported by any evidence or material found during the course of search. In the present case, the addition on account of alleged unexplained expenditure incurred .....

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