TMI Blog2018 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... which assessee belongs. The assessee has to attend social gatherings. The family functions are conducted on large scales and the list of invitees again is the cream of the society. A necessary concomitant is remaking of the jewellery; for repetition of the same items in any Indian society, including that of assessee, is bound to be looked down upon. Another necessary corollary is the spate of gifts that are received and, frequently, these are ornaments and jewellery, often high value items. Keeping the status of assessee s family in mind as well as customs and practices of the community to which the family belongs as detailed in preceding paragraphs/ the benefit of CBDT Instruction 1916 dated 11th May 1994, is warranted for assessee. No merit for the addition so made on account of Gold and Diamond jewellery. - Decided in favour of assessee - IT A No. 3979/Mum/2017 - - - Dated:- 22-12-2017 - Shri R. C. Sharma, AM Assessee by Shri Rakesh Mohan Revenue by Ms. N. Hemalatha ORDER Per R. C. Sharma ( A. M ) This is an appeal filed by the assessee against the order of CIT(A)- 50, Mumbai dated 22/03/2017 for A.Y.2012-13 in the matter of order passed u/s.143(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urns and the Valuation Reports), of the family as on the date of search is as under: Particulars Gross Weight of Jewellery in gms. Gautam Singhania Niharika Nawaz Singhania Total Gold Ornaments 434.00 40.00 774.70 1248.70 Diamond Jewellery 1252.10 113.31 510.70 1876.11 Total 1686.10 153.31 1285.40 3124.81 6. The total holding of the family in accordance with above is 3124.81 gms. of jewellery measured as gross weight. However, the jewellery found in the course of search is as under: Particulars of Jewellery Gross Weight in gms (as per Panchnama) Gold Ornaments 1347.40 Diamond Jewellery 1295.90 Personsal wear diamond jewellery 354.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on account of the same cannot be made in assessment. An extended meaning has been adduced to the instruction, going beyond the seizure and hitting at the root of assessment, that the instruction is applicable to assessment with equal force in respect of explained (or otherwise) nature of the jewellery. 12. Reliance was placed on the decision of Hon ble Gujarat High Court in the case of / Ratanlal Vyaparilal Jain reported in 339 ITR 351. This decision was delivered on 19.07.2010, commenting about the CBDT Instruction No. 1916, the Hon'ble Court has observed as under: Thus, although Circular has been issued for the purpose of non- seizure of jewellery during the course of search, the basis for the same recognizes customs prevailing in Hindu Society. In the circumstances, unless the revenue shows anything to the contrary, it can safely be presumed that the source to the extent of the jewellery as stated in the Circular stands explained.' 13. Further reliance was placed on the decision of Hon'ble Karnataka High Court in the case of Smt. Patidevi reported in 240 ITR 727. This decision has been delivered on 15.02.1999. In this decision, the addition to income re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court therefore upheld the approach adopted by the Tribunal in following the said Circular and giving benefit to the assessee, observing that the same is in consonance with the general practice in the Indian families where jewellery is gifted by the relatives and friends at the time of social functions such as marriage, birthdays and other festivals etc. In our opinion the issue involved in this appeal of the revenue thus is squarely covered in favour of the assessee by the decision of the Hon'ble Gujrat High Court in the case of CIT vs. Ratanlal Vyaparilal Jain and respectfully following the same we uphold the impugned order of the Ld. CIT(A) treating the jewellery of ₹ 13,36,9977- found during the course of search as explained, relying on the CBDT Circular No. 1916 dated 11.05.1994. 17. As per learned AR, the decision of Hon'ble Allahabad High Court in the case of Ghanshyamdas Johari reported in 41 Taxmann.com 295 also confirms the position that once the jewellery is covered by Instruction No. 1916, addition to income cannot be made. In this connection, Para 14 of the Order is reproduced herebelow: 14. Thus, the entire seized jewellery is covered by afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd reliefs rests with the assessees on whom it is imposed by law, officers should (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs. (Circular No. 14 (XL-35) of 1955 dated 11-4-1955) 22. In connection with the effect of such circular, reliance is also placed upon the decision of the Supreme Court in Navnit Lal C. Javeri v. K. K Sen, Appellate Assistant Commissioner of Income-tax [1965] 56 ITR 198 (SC). There the majority of the learned judges hearing the appeal held that circular issued by the Central Board of Revenue, of the kind of circular mentioned therein, would be binding on all officers and persons employed in the execution of the Income-tax Act. In the light of this decision of the Supreme Court, it is contended here that it was obligatory on the assessing officer when he originally heard the assessment proceedings to draw the attention of the assessee in the instant case firstly to the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be logically available within the section 132 of the Act under consideration, for otherwise phrase such shall lose its significance. A reference to the earlier portion of Section 132 indicates that phrase such prefixed to jewellery in Clause (iii) above has reference to Clause (c) of Section 132(1), which contains primary basis for undertaking search and is also one of the grounds for issuance of warrant to search. This clause reads as under; (c) any person is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act (hereinafter in this section referred to as the undisclosed income or property). 28. A perusal of the above reveals that the phrase such in Clause (iii) referred earlier has reference to jewellery, which has been specifically provided in clause (c) above to be undisclosed jewellery. Therefore, Instruction 1916 issued by the Board with regard to seizure of jewellery has inherent foundat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch has been prescribed as the basis of decision making. The reason is appreciation of the facts that jewellery is frequently converted into different design depending on the needs. It is in recognition of this fact of the society we live in that gross weight, particularly to the exclusion of comparison item by item, has been prescribed as the decision making criterion for effecting seizure. 32. In view of the above discussion, it is now necessary to look into the facts of the case and applicability of the above legal scenario emerging from interpretation of Instruction 1916 dated 11.05.1994. At the Assessing Officer level, the following were treated as unexplained: 1. Gold ornaments Excess Gross Weight 182.70 gms ₹ 4,62,231/- 2. Diamond Jewellery Unreconciled with Wealth Tax records ₹ 30,32,319/- TOTAL Rs.34,94,550/- 33. I found that in picking up excess gross weight as the basis for gold ornaments, the assessing officer is indirectly giving credit to assessee for any c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x purposes. 36. Perusal of the assessment order clearly reveals that all these objections raised have been acknowledged by assessing officer but while taking the decision, these are dismissed without assigning any reasons whatsoever. The only observation of assessing officer is as under: The explanation of the assessee has been considered and the same is found to be unsatisfactory. 37. The CIT(A) has given relief in respect of some of the claims made before him, but the manner in which the assessee's arguments have been dismissed in respect of diamond jewellery under consideration valued at ₹ 19,28,323/- needs to be elaborated and commented upon. This decision is contained in paragraph no, 6.6 of the order of CIT(A) and is on page no 11 of the order. For the sake of ready reference, it is reproduced here below: 6.6 I have considered this claim of the appellant that jewellery of ₹ 19,28,323/- was received by way of gifts over the years. The claim is not acceptable for the following reasons; (i) In her earlier submissions, the appellant did not claim that she had received part of the unexplained jewellery (was received) by way of gift. She all along ..... X X X X Extracts X X X X X X X X Extracts X X X X
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