TMI Blog2021 (8) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... lery in the balance sheet as on 31.03.2016 is demonstrate of purchases made during the financial year 2015-16 relevant to A.Y 2016-17 in absence of anything on record that such purchases were made in the earlier period and thus doesn t come to the aid of the assessee in terms of explanation of possession of the jewellery during the financial year relevant to impugned assessment year. Therefore, the addition to the extent of ₹ 136,631/- towards unexplained gold jewellery is hereby confirmed. Regarding silver articles, AO has recorded a finding that assessee has furnished no explanation and the ld CIT(A) has recorded a finding that the assessee has failed to explain the source of acquisition of silver articles. Before us, it has been contended for the first time that the silver articles weighing 3844.50 grams are supported by purchase bills seized during the course of search. As we have held mere purchase bills are not sufficient to explain the source of purchase of silver items where such purchases are made in cash and in absence of any explanation on record in terms of availability of cash in the hands of the assessee at the relevant point of time of purchase, such purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry u/s 69A of the Income tax Act, 1961 and added Back for the income of the assessee and Ld. CIT(A) has erred in sustaining the same. 2. That the learned Assessing Officer has erred in law as well as on the facts and circumstances of the case in making an addition of ₹ 7,33,400/- on account of undisclosed receipt u/s 68 of the Income tax Act, 1961 and added back to the income of the assessee and the Ld. CIT(A) has erred in sustaining the same. 3. That the learned Assessing Officer has erred in law as well as on the facts and circumstances of the case in initiating the penalty proceedings under section 271AAB(1)(c) of the Income Tax Act, 1961 and the ld. CIT(A) has erred in sustaining the same. 2. Regarding ground no. 1, the ld AR submitted that the assessee filed his return of income on 27.09.2016 declaring total income of ₹ 15,23,040/-. A search and seizure action u/s 132 of IT Act, 1961 was carried out on the residential premises of assessee on 14.10.2015. During the course of search gold jewellery weighing 1640.32 gms valued at ₹ 42,16,575/- and silver articles weighing 10994 gms valued at ₹ 3,64,672/- was found at the residence of asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of AO and confirmed the addition made by him. 4. In the aforesaid factual background, the ld. AR submitted that the benefit of CBDT Instruction No. 1916 dt. 11.05.1994 is available to the assessee in respect of jewellery received by various family members on the occasion of marriages and other social customary occasions. The said CBDT Instruction does not include the jewellery which is purchased by the assessee and family members from time to time which is supported by purchase bills. Hence, the quantity of jewellery which is otherwise explained by the assessee would not be treated as part of the quantity of reasonable possession as prescribed under the said CBDT Instruction No. 1916 dated 11-05-1994. Therefore, the benefit of CBDT Instruction will not take away the benefit of the explained jewellery acquired by the assessee. For this purpose, reliance is placed on the decision of Hon ble ITAT, Jaipur Bench in case of Sh. Ram Prakash Mahawar vs. DCIT (ITA No.918/JP/19 order dt. 20.02.2020) where at Para 2.6, it was held as under:- We have considered the rival submissions as well as the relevant materials available on record. The first issue is regarding the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount of the assessee. Hence, the quantity of jewellery which is otherwise explained by the assessee by producing the purchase bills as well as recorded in the books of account of the assessee and the AO had not disputed the said explanation then the quantity which is explained otherwise by producing the purchase bills and books of account would not be treated as part of the quantity of reasonable possession as prescribed under the said CBDT Instruction No. 1916 dated 11-05- 1994. Therefore, the benefit of CBDT Instruction No. 1916 dated 11- 05-1994 will not take away the benefit of the explained jewellery acquired by the assessee. Accordingly, in the facts and circumstance of the case, the quantity of jewellery to the extent of 343.328 gms.has to be allowed separately as explained jewellery and no addition can be made to that extent. 5. It was further submitted that the assessee and his family members have purchased gold jewellery of 708.226 gms between 2008 to 2015. These purchases are duly supported with proper bills seized during the course of search annexed as Annexure N-3/2. A Chart showing the gold jewellery purchased is placed as page 1 of paperbook. It includes go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT relied on the finding of the lower authorities and our reference was drawn to the findings of the ld CIT(A) which read as under: 2.3 I have perused the written submissions submitted by the Ld. A/R and the order of AO. I have also gone through various judgments cited. In the present case, the jewellery found in the course of search was 1640.32 gms out of which due to CBDT instruction number 1916, jewellery to the tune of 1300 gms was considered as explained. The Ld. A/R has contended that there were certain bills of jewellery which were presented before the AO which would make jewellery to the extent of 588.672 gms explained. In a nut shell the Ld. A/R contends that benefit of those bills should be over and above to the jewellery allowance as per CBDT instruction number 1916. The AO rejected this contention and held that jewellery considered as explained as per CBDT instruction number 1916 would cover such jewellery for which bills are available. Also admittedly the appellant and family members are not wealth tax assessees. Thus, the AO stated that no further benefit of such bills can be allowed. The details and source of jewellery as per bills were stated by asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on 31.03.2016, the assessee has also disclosed his individual gold jewellery worth ₹ 3,42,000/- which has not been appreciated by the lower authorities. Per contra, the ld CIT/DR has contended that on perusal of purchase bills placed on record as per assessee s own paperbook, most of the purchases have been made in cash and the assessee has failed to demonstrate the availability of cash at the relevant point in time and/or nexus between the withdrawals from the bank and the purchases so made out of such cash withdrawals. We find that out of total 708.226 grams of gold jewellery, 266.138 grams of gold jewellery has been purchased during the financial year relevant to A.Y 2012-13 and rest all jewellery has been purchased either prior or subsequent to A.Y 2012-13. Though these purchases are supported by the bills which are demonstrative of purchases made by the assessee, however, given the fact that most of these purchases have been made in cash, what is critical to determine is the source and the availability of cash in the hands of the assessee at the relevant point of time of purchase as for tax purposes, what is relevant to determine is nature and source of acquisition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 3,64,672/- made by the AO is hereby confirmed. 11. In the result, the ground of appeal no. 1 is thus partly allowed. 12. In ground No. 2, the assessee has challenged the addition of ₹ 7,33,400/- on account of undisclosed receipt U/s 68 of the IT Act. 13. In this regard, the ld AR submitted that during the course of search a paper marked as Pg 30 of Exhibit-10 of Annexure AS was seized from the residential premises of assessee (Pg 14 of the assessment order). The paper shows receipt of ₹ 25,000/- against trading margin and ₹ 8,400/- received as interest on investment of ₹ 7 lacs from Chintu on 25.05.2015. Further ₹ 1,500/- is reduced with the narration Mom Ji and ₹ 16,500/- with the narration drawn for expenses with date 28.08.2015. The AO accordingly required the assessee to explain the source of receipt of ₹ 7,33,400/- (7,00,000+25,000+,8400). The assessee vide reply dt. 28.11.2017 (reproduced at Pg 15 of the order) submitted that the paper belongs to his son Sh. Shaurav Pareek. Sh. Shaurav Pareek carries the business of trading and broking in equity, derivative, commodity, currency and professional work including consultanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry noted on this paper with supporting evidence, even the addition on merit is not sustainable. In view of above, addition confirmed by Ld. CIT(A) be directed to be deleted. 16. Per contra, the ld. DR/CIT relied on the finding of the lower authorities and our reference was drawn to the findings of the ld CIT(A) which read as under: 3.3 I have perused the written submissions submitted by the Ld. A/R and the order of AO. I have also perused the scanned copy of seized document page 30/Exhibit 10 of Annexure AS 1. The Ld. A/R contended that transactions of the seized document pertain to Mr. Shaurav Pareek, son of appellant, as it has been owned up and incorporated in the return of income. The AO rejected the contention of the A/R. I am of the view that the AO is right in rejecting the Ld. A/R s contention as there is no reference of name of Shaurav Pareek in the seized document found from the possession of the appellant. The contention that transactions have been incorporated by Shaurav Pareek is also without any basis as the Ld. A/R has not been able to demonstrate how transaction are incorporated in books and the amount offered for taxation by the Shaurav Paree ..... 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