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TMI Blog2021 (9) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... d in rejecting the most plausible explanation/s offered by the assessee during the course of search and assessment proceedings, while confirming addition under Section 69A of the Act. 2. The learned Commissioner of Income tax Appeals should have considered the family background of assessee and should have deleted the addition under section 69A of the Act, particularly keeping in view instructions of CBDT's in circular number 1916. 3. The learned Commissioner of Income tax Appeals erred in rejecting the most plausible explanation/s offered by the assessee and duly supported by evidences during the course of search and assessment proceedings, while confirming addition under Section 69C of the Act. All the above grounds of appeal are independent from one other and without prejudice to one other. We further crave to add new grounds of appeal during the course of hearing before your Honor." 3. The common issue raised by the assessee in all these grounds of appeal is against the confirmation of addition of unexplained jewellery of Rs. 26,13,971/- and unexplained cash expenditure of Rs. 13,90,000/- by Ld. CIT(A) thereby upholding the assessment order passed by the AO. We are fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery at Rs. 18,22,856/- thereby allowing a relief of Rs. 6,50,733/- in respect of unexplained gold jewellery whereas the addition in respect of diamond jewellery of Rs. 1,40,382/- was confirmed by observing and holding as under: "5.2 I have considered the submissions and contentions of the assessee as also the order of the AO. It is noted that a search action u/s 132 was carried out on the assessee group on 18.11.2015 and since the assessee is a member of this group, she was also covered. The family tree of Mehta family is explained as under: Mother Ms. Anila Mehta & Shri Rasiklal Mehta (1st Gen) Second Generation Sons Mr. Manoj Mehta(NRI) Mr. Sudhir Mehta Late Mr. Sunil Mehta Wife Mrs. Sangita Mehta Mrs. Shilpa Mehta Mrs. Kaushika Mehta Third Generation Sons Mr. Saket Mehta & Mr. Sumit Mehta Mr. Vivek Mehta Wife Mrs. Meenti Mehta Mrs. Geeta Mehta Mrs.Sikha Mehta 5.3 In course of the search action, at the residence of Mr. Saket Mehta at Sushilp, Ridge Road, Malabar Hill, Mumbai as well as Locker No 1335 with Bank of India and Locker No 449 with Dena Bank, diamond and gold jewellery etc. were found. Similarly, from the residence of Mr. Vivek Mehta at Usha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trying to reconcile the excess jewellery/valuables, Mr. Vivek Sunil Mehta also stated that some of the items may have been received as gifts from family and close friends from time to time on festive occasions and personal milestones of the family members including children. However, when asked to clarify as to whether the said gifts received are reflected in their wealth-tax returns, it was informed that these gifts may have been received on or after 01.04.2014 and therefore are not reflected in the respective wealth-tax returns filed till date. 5.6 It is relevant to note that at the time of the search action, both Mr Saket Mehta as well as Mr. Vivek Mehta were specifically asked to furnish evidences to show that Mr. Manoj Mehta and Mrs Sangita Mehta had kept some jewellery with their respective mothers, Mrs Shilpa Mehta and Mrs Kaushika Mehta. However, both of them could not furnish any evidence at the time of the search action or even after around 4 months of the search actions. The relevant portion of the statement on oath of Mr. Saket Mehta and Mr. Vivek Mehta recorded on 27.11.2015 at the time of the search action is reproduced as under: Saket Mehta "Q. 7 Please provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evant portion of the statement of Ms Shilpa Sudhir Mehta is reproduced as under: "Q.27 During the course of search action, Shri Saket Mehta in his statement u/s132(4) of the I T Act dated 27.11.2015 stated mat you would be in a position to explain regarding jewellery of Sangeeta Mehta whether kept in India. Please furnish the details of jewellery, if any kept related to Sangeeta Mehta with item-wise description? Ans I confirm that my sister-in-law Mrs Sangeeta Mehta who is an NRI has kept some jewellery belonging to her with me for safe keeping and for her use as and when she visits India. Q.28 Which jewelleries have been kept by Smt Sangeeta Manoj Mehta with you and where was it kept? Ans I do not remember." 5.9 From the aforesaid, it can be observed that assessee even after around four months of the search action could not furnish item-wise description of the alleged jewellery items belonging to Mrs Sangita Mehta and Mr. Manoj Mehta. She even could not provide details of the specific place at her residence/locker where the said alleged diamond and gold jewellery items belonging to Mrs Sangita Mehta and Mr. Manoj Mehta were lying. 5.10 It is surprisingly noted that in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n allowance for gold jewellery to the extent of 350 gms ( 250 gms for Mrs Sangita Mehta and 100 gms Mr Manoj Mehta) while determining the excess gold jewellery, in respect of the entire assessee group, which has not been done. While adjudicating the appeal of Mrs Kaushika Mehta, allowance has already been given for 73.8 gms of gold jewellery. Therefore, now in the case of the assessee, allowance to the extent of the balance 276.2 gms of value Rs. 6,50,733/- (Rs. 24,73,589 / 1049.90 X 276.2 gms) is allowed. Thus the addition made by the AO on account of unexplained gold jewellery is restricted to Rs. 18.22.856/- (Rs. 24,73,5897- - Rs. 6.50.733/-). This allowance will also take care of the contention of the assessee group that certain items of jewellery were received by the members on festive occasions as well as achieving personal milestones. However, no infirmity is found in the action of the AO of treating the diamond jewellery of Rs. 1,40,382/- as unexplained. Accordingly, this ground of appeal is partly allowed." 6. The Ld. A.R. submitted before us that the Ld. CIT(A) has passed the order by ignoring the legal as well as factual aspects and huge net worth of the family while di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year was Rs. 14,72,84,548/-. The Ld. A.R. submitted that considering the status of the family ,these additions are very negligible and not warranted to be made to the assessee. In defense of his arguments the Ld. A.R. relied on a series of decisions and Board's circular No.1916 dated 11.05.1994. 1. Vinod Garg & ANR. vs. DOT 49 CCH 0446 (Mum- Trib) 2. Ritu Bajaj vs. DCIT 52 CCH 166, 63 ITR (Tri) 594 (Delhi) 3. Vibhu Aggarwal vs. DCIT 53 CCH 355,170 ITD 580 (Delhi) 4. Nawaz Singhania vs. DCIT 51 CCH 0723,191 TTJ 650 (Mumbai) 5. Instruction No. 1916 dated 11/5/1994 Clause III 6.1 The Ld. A.R. submitted that Ld. CIT(A) partly allowed the appeal of the assessee as per instruction No.1916 dated 11.05.1994 by observing that instruction No.1916 is not applicable to diamond jewellery whereas as a matter of fact the instruction No.1916 is applicable to diamond jewellery as well as to gold jewellery as has been laid in the following decisions : a) Nawaz Singhania vs. DCIT 51 CCH 0723,191 TTJ 650 (Mumbai) b) Kumkum Kanodia Vs. DCIT, Central Circle-11, ITA No.5260/Del/2014 (Circular no 1916 dated 11/4/1994 covers Diamond Jewellery also) 6.2. The third argument of the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mily members namely Mr. Saket Mehta, Mr. Vivek Mehta, Mrs. Shilpa Sudheer Mehtah during recording of statement under section 132(4) specifically stated that the excess jewellery belonged to Ms. Sangeeta Mehta and Mr. Manoj Mehta who are Belgium residents and visit India during family functions and social occasions and used the said jewellery for their personal purposes. We have also examined the bills of purchase dated 25.12.2013 amounting Rs. 48,93,962/- for purchase of diamond jewellery and bill dated 01.10.2013 for the purchase of jewellery amounting to Rs. 12,66,682/- along with the bank statements evidencing the payments which are filed at page No.32 to 41 of the paper book by Ms. Sangeeta Mehta and Mr. Manoj Mehta. We also find that the couple bought some more jewellery during the marriage of their two daughters and the bills whereof are placed at page No.157 to 185 of the paper book with the bills for making the charges as enclosed at page No.42 to 45. Besides considering the net worth of the family which is approximately Rs. 314 crores as on 31.03.2016, we are quite convinced that the amount of addition is negligible and can not be justified in view of the financial strengt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral in nature and is not supported by bills of Shri Hiten Patel etc who undertook the work and also his receipts acknowledging receiving the said cash payments. Moreover, it is noted that the assessee had contended that the said expenditure is out of the cash withdrawals spread over several months whereas as per the cash book and other details filed, it is observed that the said alleged cash withdrawals are spread over several years. Therefore, no infirmity is found in the action of the AO of treating the said amount of Rs. 13,90,000/- as unexplained expenditure and making an addition u/s 69C. Accordingly, Ground No 2 of the appeal is dismissed." 12. We have heard the rival contentions of both the parties and perused the material on record including the various documents filed by the assessee in the paper book. We note that the total withdrawal from 01.04.2014 to 20.09.2015 were Rs. 26,13,319/- besides opening balances of cash as on 01.04.2014 and 01.04.2015 of Rs. 52,819/- & Rs. 2,39,529/- respectively. Thus the available cash for the construction was Rs. 29,05,667/- while the actual expenditure on the renovation of bungalow at Navasari, Gujarat were Rs. 37,57,721/-. We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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