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2016 (4) TMI 1093 - ITAT DELHI

2016 (4) TMI 1093 - ITAT DELHI - TMI - Addition on unexplained jewellery u/s 69A - Held that:- In the present case, it is undisputed fact that the AO nowhere stated that the jewellery found during the course of search was more than what was declared by the assessee in the regular wealth tax return furnished much earlier to the search. As regards to the addition sustained by the ld. CIT(A) by presuming that the assessee might have incurred certain expenses for making the jewellery is concerned, i .....

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were incurred out of household withdrawals made from time to time in earlier years. We, therefore, do not see any justification on the part of the ld. CIT(A) in sustaining the addition which was made on the basis of surmises and conjecture. Accordingly, the addition sustained by the ld. CIT(A) is deleted. - Decided in favour of assessee - ITA No. 5295/Del/2013, ITA No. 5370/Del/2013 - Dated:- 17-3-2016 - Sh. N. K. Saini, AM And Sh. A. T. Varkey, JM For The Assessee : Sh. R. S. Singhvi, Adv. For .....

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69A and has further erred in sustaining the addition to the extent of ₹ 33,49,840/- (i.e. 10% of ₹ 3,34,98,409/-) on account of remaking charges and that too without considering the submission/evidences of the assessee. 2. That in any case and in any view of the matter, impugned addition and impugned assessment order are bad in law, illegal, unjustified, barred by limitation, contrary to facts & law and based upon recording of incorrect facts and finding, without giving adequate .....

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incriminating material has been found as a result of search. 5. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not reversing the action of Ld. AO in charging interest 234B of the Income Tax Act, 1961. 6. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other. 3. The grounds raised in the departmental appeal rea .....

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ered during the course of search and seizure operation which very clearly pointed out that investment in jewellery was from undisclosed source. 3. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 4. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 4. From the above grounds it is gathered that the grievance of the assessee as well as the department relates to the sustenance/dele .....

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-1A (E-13), Maharani Bagh, New Delhi jewellery worth ₹ 6,05,33,471/- in value was found. The AO asked the source of acquisition of the said jewellery. The assessee replied as under: A search operation was carried on 21.01.2011 at E-1A, Maharani Bagh, New Delhi. In the case of Sh. Rajiv Kumar and his family members, the total jewellery found was listed on 11.03.2011 and as per valuation report made out in the name of Smt. Sunita Gupta & Rajiv Kumar, the value thereof comes to ₹ 6, .....

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y in respect of the items seized the diamond weight is 625.32 cts. Thus, the diamond weight in respect of total jewellery found is 1091.40 cts. It is further submitted that the various assessee s to whom this jewellery found relate are regularly filing their wealth tax return where in the jewellery is duly disclosed. The assessees used to get the valuation of jewellery done once in 5 years and show the valuation of jewellery in wealth tax returns by adding estimated appreciation in the value of .....

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y of acknowledgment receipts and statement of computation of net wealth in respect of above assessees for A.Y. 2009-10 & A.Y. 2010-11 is enclosed for your perusal and ready reference. Besides, the group of assessees mentioned above have also acquired jewellery since 01.04.2010 till date of search (i.e. upto 21.01.2011) amounting to ₹ 53,28,760.00. Details of these are enclosed. Thus, the total value of jewellery as disclosed by the assessee as on date of search (even without taking int .....

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ew of above factual position, it is submitted that the jewellery found is sufficiently explained and no interference is called for in the income returned for assessment on this issue. 6. The AO after considering the submissions of the assessee observed that the assessee failed to offer any satisfactory explanation with regard to the acquisition of jewellery items not matching in description with the items disclosed in the wealth tax return and that the various submissions made during the course .....

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was treated as unexplained investment made by the assessee and added to the total income u/s 69A of the Act. 7. Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted as under: "GROUND NO. 1 & 2 : The only effective issue in the present appeal is against the addition of ₹ 3,34,98,409/- on the ground that total jewellery found at the time of search was of ₹ 6,05,33,471/- out of which jewellery of ₹ 2,70,35,062/- was explained and thus was relea .....

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were to the tune of ₹ 7,04,82,118/- (Rs.5,33,58,446/- + ₹ 1,71,23,672/-) (Refer PB 21, 34) which are far more than the jewellery of ₹ 6,05,33,471/- (Refer PB 15) found at the time of search. Moreover, jewellery worth ₹ 53,28,760/- was acquired from 01-04- 2010 till the date of search. Therefore total jewellery which was appearing in the wealth tax return is far more than the jewellery found and thus, there was no justification for holding any jewellery as unexplained and .....

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ed but in any case, even if seized, seizure does not mean that it has to be treated as unexplained for all times to come, more particularly when assessee has demonstrated with the help of wealth tax returns that accounted for and declared jewellery was far more than the jewellery found at the time of search. 2. Ld. AO has mentioned that the assessee could not match the jewellery items. In reply, it is submitted that assessee mentioned in the statement which is reproduced at page 3 of the assessm .....

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e one needs to take holistic view and if that view is .so taken, Your Honour would find that there was no unexplained jewellery. It is therefore prayed that the impugned addition may please be deleted". 8. The ld. CIT(A) after considering the submissions of the assessee sustained the addition of ₹ 33,49840/- by observing as under: I have considered the findings of the Assessing Officer and arguments of Ld. AR. It is undisputed fact that total Jewellery declared in weight for gold and .....

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ot match was seized and addition has been made as unexplained investment. The contention of the appellant and Ld. AR is that it is usual to remake the ornament at various times, therefore, the items are not tallying. I have considered entire facts and circumstances of the case. As weight of the gold and diamond in Jewelleries found during the search and seizure operation is less than declared in wealth tax, the- findings of the Assessing officer that these unmatched ornament items are new jewell .....

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7; 3,34,98,409.00/-, 10% of the value comes to ₹ 33,49,840/- When source of remaking charge was asked from the Ld. AR. he contended that the same is from household withdrawal. However no quantification or evidence of household withdrawal was submitted during appellate proceedings. Before the Assessing Officer and before the undersigned only argument was that the discrepancies are on account of remake or alteration without producing any evidence for alteration and explaining the source for .....

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submissions made before the authorities below and further submitted that the assessee and her husband were regularly filing their wealth tax returns wherein the jewellery was duly disclosed and the jewellery was got valued once in every 5 years, the said valuation was shown in the wealth tax returns by adding the estimated appreciation in the value of the jewellery. It was submitted that the value of the jewellery declared in the wealth tax return was as under: (i) Sh. Rajiv Kumar ₹ 1,71, .....

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. CIT(A) to the extent of ₹ 33,49,840/- was not justified. 10. In his rival submissions the ld. DR reiterated the observations made by the AO in the assessment order dated 21.03.2013 and further submitted that the jewellery found during the course of search did not match with the jewellery declared in the wealth tax return. Therefore, the ld. CIT(A) was not justified in allowing the relief to the assessee. It was further submitted that the assessee failed to offer any satisfactory explanat .....

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search, out of the said jewellery, the department seized the jewellery valuing ₹ 3,34,98,409/- weighting 3825.166 gms and the remaining jewellery weighting 5124.612 gms valued at ₹ 2,70,35,062/- had been given back on the spot to the assessee and her husband Sh. Rajiv Kumar in whose name the valuation report was made. In the instant case, the assessee and her husband were regularly filing their wealth tax returns where in the jewellery declared was worth ₹ 7,04,82,118/-. The as .....

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e AO only on this basis that the jewellery found during the course of search and declared in the wealth tax return was not matching, was not justified, particularly when the assessee explained during the course of search itself in her statement recorded u/s 132(4) of the Act as under: Description of the items as per your seizure and also their weight could not tally pie to pie (gram to gram) because of make/remake of the concerned items. However, the concerned items and value thereof are reflect .....

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