TMI Blog2018 (4) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y 2011-12 against the order of the CIT (A)-11, Hyderabad, dated 30.09.2015. 2. Brief facts of the case are that the assessee, an individual and the Managing Director of M/s NCC Infrastructure Holdings Ltd, was searched u/s 132 of the I.T. Act at his residential premises on 6.10.2010. The assessee filed his return of income on 27.7.2011 admitting an income of ₹ 1,09,32,450. During the assessment proceedings u/s 143(3) of the Act, the AO observed that on the day of search, gold jewellery weighing 3730.200 grams (net weight) and silver articles weighing 38.250 kgs were found in the possession of the assessee and his family members and the registered valuer had valued them at ₹ 1,29,84,804 and ₹ 13,38,750 respectively. After considering the explanation offered by the assessee and after considering the permissible limit of gold and diamond jewellery by an individual as per the CBDT guidelines, it was observed the assessee was in possession of excess gold and diamond jewellery worth ₹ 1,05,00,000. When the assessee was asked to show cause as to why it should not be treated as his unexplained investment, the assessee explained that the gold and diamond jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers had any wealth tax returns evidencing the possession of jewellery and photographs were not acceptable as evidence. The declaration of Sri P.V. Rangaiah Naidu was not a registered document and therefore held to be a self-serving declaration. In respect of the evidence for purchase of jewellery from M/s Krishna Das Co. the Assessing Officer held that since original bill was not produced for verification a photocopy could not be accepted as evidence. The Assessing Officer therefore noted that the assessee merely repeated his statement before the search team and had no fresh evidence to explain the nature and source of acquisition of jewellery. An amount of ₹ 1,05,OO,OOO/- was therefore added to the returned income as unexplained investment in gold jewellery. 06.2 The facts of the case emerging from the oral written submissions of the Id. AR and the record of the Assessing Officer are carefully considered. In bringing to tax ₹ 1,05,00,000/- as unexplained investment in jewellery the Assessing Officer held that the assessee could not produce any evidence that could constitute satisfactory explanation of the jewellery found and seized. The Assessing Officer is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found at his residence. The assessment order does not make out any case to the effect that the jewellery either belongs to the assessee or has been purchased by the assessee. It does not repudiate the fact that there were other assessees in the household to whom the ownership of the jewellery was being attributed. 06.5. The taxability of the value of jewellery added in the assessee's hand has been denied because of three reasons which have not been addressed or appreciated by the Assessing Officer. Firstly, for reasons of their antiquity; secondly on account of identified purchases from accounted sources; and, thirdly, because the jewellery belongs to other assessees in the household, viz spouse, daughter and mother. 06.5.1 Regarding the antiquity of the jewellery, it is claimed that much of it goes back to 1982 being the year of his marriage, or little later when his daughter was born. Similarly, it is urged that jewellery belonging to his deceased mother-in-law (and therefore of similar, if not greater antiquity) to the extent of 1432 gms was part of the total jewellery found. In support, a declaration on a ₹ 100 Non Judicial stamp paper made by his father-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to lead with any itemised listing of such items, particularly when assessee-wise Wealth Tax returns for successive assessment years are not available. The significant issue, however, is that ownership, source of acquisition, and taxability are issues that should be considered in the hands of the assessee concerned. In the explanation furnished before the Assessing Officer, as well as in appellate proceedings, the jewellery claimed to belong to the assessee is only 150 gms. While this is a mere claim that does not bind the Department insofar as identification of an investment is concerned, the fact nevertheless is that it has not been called into question by the Assessing Officer. A finding that certain jewellery is deemed to have been acquired from unaccounted sources has to be made in the hands of person to whom it can be ascribed with reasonable certainty. Faced with a denial that the jewellery belonged to him, in the absence of any finding that it has been purchased by assessee during the year of account, or a finding of the improbability of such other person(s) acquiring or owning some or any of the impugned assets, the Assessing Officer has misdirected himself in seeking an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, is what part of the jewellery found on 06-10-2010 can be reasonably attributed to purchases effected by the assessee after 01- 04-2004, in respect of which alone, an imputation of unexplained investment in jewellery can be fastened on the' assessee. Having regard to the probability of family jewellery handed down being part of the jewellery found on 06-10-2010 it would be reasonable to assume 30% of this accumulation, inclusive of the 150 gms claimed to belong to him, to ' be the aggregate investment by the assessee. Valued pro rata, this amounts to about ₹ 39 lakhs. This amount has to be explained with reference to available sources- in the year of detection, only for want of year-wise purchase details. It has to be recalled in this context that the returned income of the assessee in his individual capacity from AY 2005-06 to AY 2011-12 aggregates to a little under ₹ 4 crores. The returned income in AYs 2008-09, 2009-10, 2010-11 and 201112 is ₹ 64.97 lakhs, ₹ 101 lakhs, ₹ 101 lakhs, and ₹ 109 lakhs respectively. This is a significant multiple of the amount that the assessee can be reasonably called upon to explain. 06.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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