TMI Blog2015 (12) TMI 1735X X X X Extracts X X X X X X X X Extracts X X X X ..... also could not be controverted before us by the department. The ld CIT(A) has considered individually i.e. assessee wise, the value of jewellery declared taking the rate of gold at ₹ 900/- per gram is in excess of jewellery found during the course of search. The CIT(A) rightly observes that it is not unusual for families to spend money on modification of their jewellery and very often, the bills evidencing the modification are not retained for a long period of time. However, since there was sufficient cash available with the assessee and her family, there is no reason to disbelieve her contention that the jewellery was remodeled, altered from time to time and hence the difference in description. The Assessing Officer in his assessment order and in the remand report has nowhere refuted the claim of the assessee that both in terms of value and quantity, the jewellery declared in the wealth tax return far exceed the jewellery found during the course of search. There is also no evidence that has been brought on record to prove that the jewellery seized was purchased out of undisclosed income. The reconciliation of jewellery is quite detailed and in the absence of any discrepanci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or during the course of hearing of the appeal. 3. A search seizure action under section 132 of the Income-tax Act, 1961 (hereinafter the Act ) was carried out in the Suresh Nanda Group on 28.02.2007. The case of the assessee was centralized by the CIT, Delhi-XI, New Delhi vide order u/s 127 (2) of the Act dated 20.11.2007. Notice u/s 153A was issued and served to the assessee on 18.11.2008. In response, the assessee filed return of income declaring income of Rs.Nil on 21.01.2009. Notice u/s 143 (2) was issued on 22.012009 and a detailed questionnaire was issued on 23.09.2009. In response, the ld. AR on behalf of the assessee attended the proceedings from time to time and filed necessary details/clarifications. 3.1 During the course of assessment proceedings, the AO noticed that the assessee had received an amount of ₹ 44,469/- on 21.06.2000 and ₹ 50,00,000/- on 17.01.2001 in the saving NRE account from her father Shri Suresh Nanda. The AO observed that it is a settled legal principal that the recipient of any sum of money has to prove the identity and creditworthiness of the giver; however, AO notes that Shri Suresh Nanda (Donor / father) on the pretext of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in which he held that the addition made u/s 153A/143(3) appears to be legally untenable. 8. Ld. CIT (A) allowed this ground of the assessee by observing in A.Y 2001-02 as under:- 4. I have considered the facts of the case, the AO's order, the submission of the appellant and the position of law. It is observed that there is indeed no incriminating evidence found from the premises of the appellant during the impugned assessment year. The Assessing Officer has added a sum of ₹ 50,44,469/- being amount received by the appellant from her father through account payee cheques in her account. The said amount has been held to be unexplained income of the appellant. There is no incriminating evidence found during the course of search. The original return of income for AY. 2001-02 was filed and till date, no notice u/s 143(2) or 148 of the Act has been issued. Hence, on the date of search, no proceedings in respect of AY. 2001-02 could be said to be pending. The appellant has cited the decision of the Hon'ble ITAT, Delhi in the case of Anil Kumar Bhatia reported in 1 ITR (AT) 0484 (Del). As per the said decision, section 153A does not authorize the making of the denovo as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is as under: i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs in which both the disclosed and the undisclosed income would be brought to tax . iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led, notice u/s 143(2) was issued picking the case for further scrutiny. Hence, it cannot be said that on the date of search, the assessment for A.Y. 2007-08 was not pending as no order u/s 143(1) or 143(3) had been passed in respect of the same. The decision of the Hon ble Tribunal in the case of Anil Kumar Bhatia- ITA Nos. 2660 to 2665/Del/2009 (Del) decided on 01.01.2010 would not apply to the said assessment year. Hence this ground of the assessee is dismissed. We have heard both the sides and find that the ground raised by the revenue is misconceived, so we dismiss this ground of appeal of the revenue. 11. Ground No.3 in both the years is common except the difference in amount and the same is reproduced below :- 3. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in law as well as in facts in deleting the addition (Rs.50,44,459/- in AY 2001-02 and ₹ 1 crores in AY 2007-08) made by the assessing officer on account of unexplained money received by the assessee from Shri Suresh Nanda. 12. As regards the aforesaid disallowance made by the AO, the facts leading to the disallowance has been already discussed so the same is not repeated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laws for the proposition that for establishing the creditworthiness of the payer, the source of the source is not to be enquired into , On this issue, the Hon'ble Rajasthan High Court in the case of Aravali Trading Co. 220 CTR 622 held as under:- Neither the provisions of s. 68 nor on general principle, it can be said that once the existence of persons in whose name credits are found in the books of the assessee is proved and such persons own such credits with the assessee still the assessee is to further prove the source from which the creditors could have acquired money to be deposited with him. The fact that the depositors' explanation about the sources where from they acquired the money is not acceptable to the AO, it cannot be presumed that the deposits made by the such creditors is the money of the assessee himself. There is no warrant for such presumption. In such event if the creditors' explanation is found to be not acceptable about such deposits, the investment owned by such persons may be subjected to the proceedings for inclusion of such investment as their income from undisclosed sources or if they have been found benami, he real owner can be brought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditor for the purpose of making an addition u/s 68 of the Act. 9. In the case of the appellant also, the source is the deposits in the non-resident bank account of her father Mr. Suresh Nanda. Mr. Suresh Nanda is an income tax assessee declaring income in India before the Assessing Officer. Hence, there was no need for the Assessing Officer to enquire into the source of the source of Mr. Suresh Nanda for the purpose of applicability of section 68 of the Income-tax Act, 1961. Another judgment of the Hon'ble Rajasthan High Court in the case of Labh Chand Bohra v. ITO 219 CTR 571 is important. The relevant portion of the judgement of the Hon'ble Rajasthan High Court is reproduced herein under:- 7. Really speaking, the judgment in Daulat Ram's case (supra) is the authority, for the proposition, that assessee cannot be required to prove the source of the source. It was precisely held in Daulat Ram's case (supra), that the fact that lender has not been able to give satisfactory explanation regarding the source of the fund lent by him, would not be decisive, even of the matter, as to whether, the lender was the owner of that sum, even though the explanation furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as income from undisclosed sources . (iv) the firm has to establish that the amount was actually given by the lender. (v) the genuineness and regularity in the maintenance of the account have to be taken into consideration by the taxing authorities. (vi) if the explanation is not supported by any documentary or other evidence, then the deeming fiction created by s. 68 can be invoked. 8. Examining the present case even on these parameters, first requirement is not relevant. So far as second requirement is concerned, there is no doubt about initial burden being on the assessee. So far as third requirement is concerned, obviously if the explanation is not satisfactory, then it is added. Then fourth requirement is, that the firm has to establish that the amount was actually given by the lender. Fifth requirement is about genuineness and regularity in maintenance of the accounts, obviously of the assessee, and it is not the finding, that the accounts were not regularly maintained. Then sixth requirement is that if the explanation is not supported by any documentary or other evidence, then the deeming fiction created by s. 68 can be invoked. In the present case, so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank account abroad, have been held to be his undisclosed income and have been taxed in India accordingly. Hence, on this count also, no addition can be made in the hands of the appellant. In view of these facts and the legal pronouncement on the subject, it is held that the appellant has explained fully the origin of the source of money in her bank account and is not enjoined in law to explain the source of the source. It is also not the claim of the A.O. that it is her money which has found its way into her account from the account of her father, Mr. Suresh Nanda. Hence, the addition of ₹ 50,44,469/- made is directed to be deleted. 13. Ld. DR relied on the order of the Assessing Officer and submitted that the AO rightly added the amount in question because the donor Shri Suresh Nanda refused to part with the information regarding his source of income claiming himself to be a non-resident. Therefore, the ld. CIT (A) erred in deleting the addition made by the AO, so he pleads that the order of the ld. CIT (A) may be reversed and the order of the AO be upheld. 14. On the other hand, the Ld. AR relied on the order of the ld. CIT (A) and reiterated the submissions made bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that both the amounts added to the income of the assessee cannot be held to be unexplained income of the assessee, since it was a gift from the father who was the Donor and an NRI from his bank account at Singapore. So the ld. CIT (A) has rightly deleted the addition for both the years and so we uphold the order of the ld. CIT (A) and dismiss these ground of the revenue in both the assessment years. 16. Ground No.4 in assessment year 2007-08 is against the deletion of addition of ₹ 53,98,050/- on account of unexplained jewellery found with the assessee. 17. During search on 28.02.2007, jewellery worth ₹ 1,84,93,605/- was found in the possession of the assessee, out of which jewellery worth ₹ 53,98,050/- was seized and after asking the assessee to reconcile itemwise jewellery found during the search and with that of her wealth tax return filed on 29.03.2006, the AO was of the opinion that the assessee failed to reconcile itemwise reconciliation with the jewellery shown in her wealth tax return, so he added the same as unexplained and added the same to the income of the assessee for AY 2007-08. Aggrieved, the assessee went in appeal before the first appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, the value of declared jewellery taking the rate of gold at ₹ 900/- per gram in respect of the family comprising of appellant, Suresh Nanda and Renu Nanda works out to ₹ 7,55,72,939/- as against the total jewellery found of ₹ 4,12,24,097/-. Hence, the value of jewellery declared is far in excess of the value of jewellery found during the course of search. Even individually i.e. assessee wise, the value of jewellery declared taking the rate of gold at ₹ 900/- per gram is in excess of jewellery found during the course of search. 16. In the case of the appellant, according to the AO., the jewellery amounting to ₹ 53,98,050/- seized during the course of search, does not tally with the description of the jewellery declared by the appellant. The explanation of the appellant that there was large cash in hand to warrant expenditure on repair, renovation, alternation, modification of jewellery has not been examined a challenged by the AO. and is fairly evident from the details of withdrawals filed during the course of assessment proceedings and before me as well. It is not unusual for families to spend money on modification of their jewellery and very ofte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances and facts of the case, the AO was not justified in making addition on account of the jewellery and silver articles explained by the assessee as belonging to his late mother Smt. R and the CIT(A) has rightly deleted the addition . 17. At this stage, it is also pertinent to refer to the Instruction No. 1916 F.No. 286/63/93 - IT dtd. 11.05.1994 wherein it has been directed that in the case of wealth tax assessee only gold jewellery and ornament found in excess of the gross weight declared in the tax return is to be seized. It has already been factually found that the weight and also the value of gold and ornaments declared in the wealth tax return exceeded the gold and jewellery found during the course of search. Hence, in view of the aforesaid discussion and in the absence of any evidence to show that the jewellery seized was purchased out of the undisclosed income, the addition on account unexplained jewellery of ₹ 53,98,050/- stands deleted. The ground taken is, therefore, allowed. 18. Ld. DR relied on the order of the AO and submitted that during search on 28.02.2007, jewellery worth ₹ 1,84,93,605/- was found in the possession of the assessee, out of wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eight of gold of jewellery returned in her wealth-tax returned along with her mother for AY. 2002-03. The total caratages of diamond in jewellery returned/declared by the assessee and her mother Mrs. Renu Nanda has also been computed as per the reconciliation statement. The assessee's contention that, both, she and her mother were using their jewellery interchangeably cannot be ignored and cannot be disbelieved in the absence of any evidence to counter it. The assessee's father Mr. Suresh Nanda has filed a confirmation before the Assessing Officer stating that his family had placed the jewellery in a common pool and used the same interchangeably. In the light of the aforesaid facts the ld CIT(A) has made the observation that the total weight of gold declared by the assessee and her mother exceeds the weight of gold found with them on the date of search by 1577.446 grams. Similarly, the total caratages of diamonds declared in the wealth-tax return exceeds the total weight of diamonds found from both the family members by 26.500 cts. Hence rightly the ld CIT(A) made a finding of fact that the total weight of jewellery declared is in excess of the jewellery found during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
