TMI Blog2023 (2) TMI 507X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee whereas as per the CBDT Circular No. 1916 dated 11th May, 1994, the gold jewellery and ornaments to the extent of 500 grams per married lady, 250 grams per unmarried lady and 100 grams per male member of the family need not to be seized. While considering this Circular of CBDT the Hon ble Rajasthan High Court in the case of CIT vs. Satya Narain Patni [ 2014 (5) TMI 1002 - RAJASTHAN HIGH COURT] If the full benefit of this Circular is given in the case of the assessee then the gold jewellery of 1100 grams falls in the ambit of the jewellery and ornaments not to be seized and consequentially not required any explanation of source of acquisition. If the undisputed quantity of the jewellery / gold bars of 623 grams as well as the benefit of the CBDT Circular dated 11th May, 1994 in respect of 250 grams Gold jewellery of each daughter and 100 grams for the husband of the assessee is given then no addition on account of unexplained investment in the jewellery is called for. Hence, the addition sustained by the CIT(A) on account of 499.85 grams jewellery is liable to be deleted. Addition made on account of cash found during the search - AO did not accept the explana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 5-1-2023 - Shri.Vijay Pal Rao, Judicial Member And Shri. Ramit Kochar, Accountant Member For the Appellant : Sh. Praveen Godbole, C.A. For the Respondent : Sh. A.K. Singh, Sr. DR ORDER SHRI. VIJAY PAL RAO, JUDICIAL MEMBER: This appeal by the assessee is directed against the order dated 23.08.2014 of CIT(A) for the assessment year 2010-11. The assessee has raised following grounds:- 1. That in any view of the matter the assessment order dated 20.12.2011 passed u/s 143(3) of the income tax act by the assessing officer and his action as partly confirmed by the Commissioner of Income Tax (Appeals) is bad both on the facts and in law and therefore declared income by the appellant should have been accepted in the facts and circumstances of the case. 2. That in any view of the matter since mandatory requirements were not complied with for framing a legal and valid assessment by the assessing officer and action of the assessing officer were also confirmed partly by the Commissioner of Income Tax (Appeals) without appreciating the facts of the case correctly hence the assessment is invalid. 3. That in any view of the matter undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee does not press ground nos. 1 to 3 and 7 to 9 and the same may be dismissed as not pressed. The learned DR has raised no objection if ground nos. 1 to 3 and 7 to 9 are dismissed as not pressed. Accordingly, the ground nos. 1 to 3 and 7 to 9 of the assessee s appeal are being dismissed being not pressed. 3. Ground no. 4 is regarding addition sustained by the CIT(A) of Rs. 6,95,541/- on account of unexplained investment in the jewellery. The assessee is an individual and derives income from salary and interest on capital from partnership firm of M/s Kesarwani Distributors. The assessee is also proprietrix of M/s Gupta Traders which is engaged in the business of Kimam. There was a search and seizure action carried out on 27.8.2009 in group cases of Kesarwani Zarda Bhandar. During the course of search and seizure action at the resident / business premises of the assessee, gold jewellery weighting 1,796 grams was found. This was the year of search therefore, regular assessment was framed by the AO under section 143(3) on the basis of seized material. In response to the notice issued under section 142(1), the assessee explained the source of acquisition of gold jewellery as it b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and her two daughters. Thus, the learned AR has submitted that at the time of search itself, the assessee explained the source of the jewellery found during the search from her residence. The learned AR thus referred to the affidavit of the mother of the assessee filed before the AO and copy of which is placed at page nos. 38 and 39 of the paper book. The learned AR has also referred to the certificate issued by the Reserve Bank of India regarding Gold Bond Scheme 1998 at page nos. 40 and 42. Thus, the explanation of the assessee was duly supported by the documentary evidence in the shape of gold bond certificate wherein the quantity of the gold bar is matching with the quantity found during search as well as the affidavit of the mother of the assessee confirming the jewellery about 504 grams belongs to her and kept with the assessee. The learned AR has then referred to the decision of the co-ordinate Bench of this Tribunal dated 06.07.2018 in the case of Shri Praveen Kumar Kesarwani vs. Jt. CIT (OSD), Allahabad and submitted that an identical issue has been considered and decided by the Bench in favour of the assessee. He has also relied upon the judgment of Hon ble Rajast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) on this issue is as under:- (iv) The ground of appeal no. 4, 5, 6, 7 are against the addition of Rs 949,003/- u/s 69A of the act on account of unexplained investment in acquisition of jewellery. The gold jewellery weighing 1796 gms was found at the time of search. The appellant explained that she got married in 1975 with Sh Ramesh Kumar S/o Late Mata Saran Kesarwani. That her husband belonged to a respectable family of Allahabad and she received jewellery from both sides at the time of her marriage and subsequently also on the occasions on birthday of her children and other occasions. She explained that her husband deposited 623 gms of gold under tax free gold bond scheme and received it back on 29-12-1998. The said gold was found at the time of search and was appearing at Sr. 13 jewellery inventory in Panchnama. He had claimed a disclosure of 796-150 gms of jewellery in VDIS. The AO held that jewellery weighing 678 gms belong to the assessee which she held to be acquired from undisclosed sources and made the addition of Rs 949,003/- u/s 69B of the Act. The main arguments of the appellant against the said addition in her written submissions was that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... husband of the appellant under VDIS, 97 which shall be considered in his own case. Moreover even the appellant did not claim that jewellery belonging to Shri Ramesh Kumar was included in the jewellery weighing 1796 gms. With regard to the acquisition of jewellery weighing 1796 gms, the appellant had stated before the AO that the said jewellery belongs to herself, her two daughters and some items belonged to her mother Smt Indira Devi, however no evidence was given by the appellant to establish that any part of jewelry weighing 1796 gms belonged to her two daughters and some items belonged to her mother Smt Indira Devi. Accordingly the entire jewellery weighing 1796 gms is held to belong to the appellant. Therefore after allowing the credit of 500 gms of jewellery on account of Stridhan of the appellant and 796.150 gms on account of jewelry declared under VDIS, 97 by the appellant, only the jewellery weighing (1796- 500796.150) = Rs 499.85 gms is held to be the jewellery acquired by the appellant from undisclosed sources. The value of the said jewellery weighing 499.85 gms on the same basis as valued by the AO comes to Rs 695,541/-, which addition is confirmed. The appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the WT return only need be seized. (ii) In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms per married lady. 250 gms per unmarried lady and 100 gms per male member of the family need not be seized. (iii) The authorized officer may, having regard to the status of the family. and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of IT/CIT authorising the search at the time of furnishing the search report. (iv) In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes. These guidelines may please be brought to the notice of the officers in your region. Yours faithfully, Sd/- Siddhartha Mukherjee Secretary (CBDT) (F.No.286/63/93-IT(Inv.II) 7. We have gone through the order of CIT(A) wherein it has been observed as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and one set received from in-laws are lying with her mother-in-law, Smt. Anila Patni. 8. Thus, from the perusal of above chart as well as statements, it is abundantly clear that jewellery which has been found in possession of the family members is in accordance with customs and practice prevalent in the community and in accordance with status of the family. 9. On perusal of the order of CIT(A) as also the Tribunal. we notice that the AO had not given any basis for restricting the claim of jewellery at 1.600 gms as reasonable while the AO has simply mentioned about there being four ladies, but ignored that in addition to four ladies. there were four male members so also three children and if the male members so also the children are considered then even factually the claim of respondent-assessee appears to be reasonable in the light of the aforesaid instruction dt. 11th May. 1994. If the circular is strictly followed, then to the extent of 2.700 gms.. no jewellery could be seized. (500x4 ladies+100x7 male+children=2,700 gms.). In the aforesaid facts. we fail to understand the basis of 1,600 gms held reasonable by the AO. 10. Therefore, in our view, the Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he extent of 500 gms. 250 gms per unmarried lady and 100 gms per male member of the family will also not be questioned about its source and acquisation We can take notice of the fact that at the time of wedding, the daughter/daughter-in-law receives gold ornaments jewellery and other goods not only from parental side but in-laws side as well at the time of Vidal (farewell) or/and at the time when the daughter-in-law enters the house of her husband. We can also take notice of the fact that thereafter also, she continues to receive some small items by various other close friends and relatives of both the sides as well as on the auspicious occasion of birth of a child whether male or female and the CBDT. looking to such custom prevailing throughout India, in one way or the another, came out with this circular and we accordingly are of the firm opinion that it should also mean that to the extent of the aforesaid jewellery, found in possession of the varolus persons, even source cannot be questioned. It is certainly 'Stridhan' of the woman and normally no question at least to the said extent can be made. However, it the authorized officers or/and the AOS. find jewellery beyond t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llery, so found, which has been prescribed hereinabove, was not admitted by the family members at the time of search. All the ladies in the family admitted that the jewellery found were all their own and some of the jewellery was lying in custody and control of their mother- in-law and in Indian conditions, it happens that the daughter-in-law keeps her jewellery with her mother-in-law or/and head of the family and takes the same whenever required for some occasion in the family. Even otherwise, the jewellery is personal wearing in nature and the Revenue has not placed any material on record to show that the items which were found, were not personal wearing of the ladies. 15. Considering the above facts and circumstances. in our view, the Tribunal has correctly analyzed the circular of the Board and we do not find any infirmity or perversity in the order of the Tribunal so as to call for any interference of this Court. In our view, no substantial question of law arise out of the order passed by the Tribunal. 16. Accordingly, the appeal, being devoid of any merit. is hereby dismissed in limine. No order as to costs. 11. If the full benefit of this Circular is given in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taken as well explained. In the present case, we find that the assessee was able to explain the jewellery from various sources such as on the occasion of his marriage, jewellery declared by grand-father and mother and their confirmations to have given the jewellery for making new jewellery for the assessee. Therefore, the addition sustained by learned CIT(A) are not warranted. In view of the above, ground No. 12 and 13 are allowed. 12. In view of the above facts and circumstances of the case, if the undisputed quantity of the jewellery / gold bars of 623 grams as well as the benefit of the CBDT Circular dated 11th May, 1994 in respect of 250 grams Gold jewellery of each daughter and 100 grams for the husband of the assessee is given then no addition on account of unexplained investment in the jewellery is called for. Hence, the addition sustained by the CIT(A) on account of 499.85 grams jewellery is liable to be deleted. We order accordingly. 13. Ground no. 5 is regarding the addition made on account of cash found during the search. During the course of search and seizure action, cash amounting to Rs. 1,07,651/- was found. The assessee explained the source of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition sustained by the CIT(A) is liable to be deleted. 15. On the other hand, the learned DR has submitted that the addition is made by the AO on the basis of the cash found during the search and seizure action and the assessee failed to explain the source of the cash. He has relied upon the orders of the authorities below. 16. We have considered the rival submissions as well as relevant material on record. The assessee has explained the source of the cash found during the course of search and seizure action to the extent of Rs. 1,07,100/- in reply to question no. 4 in her statement recorded under section 132(4) as under:- 17. The cash was found from the possession of the assessee therefore, the assessee is required to explain the source with supporting evidence. The AO allowed the credit to the extent of Rs. 5475.50 paisa as cash balance available in the books of M/s Gupta Traders and rest of the amount was treated as income from undisclosed source. The explanation of the assessee regarding Rs. 24,000/- belonging to her husband and Rs. 30,200/- belonging to the children was not accepted by the AO apart from a sum of Rs. 46,425.50 paisa claimed as the cash of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in absence of any supporting evidence the AO treated the same as income of the assessee from undisclosed sources and made the addition. In her written submissions filed by the appellant in appeal proceedings, the explanation about the source of cash amounting to Rs 107,651/- was as under- That the addition of Rs. 1,07,651/- made by the assessing officer by invoking the provision of section 69A is not correct. The said cash belongs to various persons as admitted by the assessee in the preliminary statement recorded on the date of search. That the breakup of cash amounting Rs. 1,07,100/- found during the course of search was as under: (A) Rs. 24,000.00 belongs to her husband sri Ramesh Kumar. (B) Rs. 53,451.00 belongs to her firm M/s Gupta Traders. (C) Rs. 30,200/- belong to her children which is their savings. That with regard to Rs. 53,451.00 which belongs to the firm M/s Gupta Traders / me it is stated that upto 25.08.2009 cash book was written. And opening balance was Rs. 5,475.50 as on 26.08.2009 there was sale through cash-memo to the extent of Rs. 28,006.00 and likewise collection from debtors was Rs. 20,000/- Totaling Rs. 53,481.50 Less Exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant is dismissed. As regards the source of cash amounting to Rs 24,000/- claimed by the appellant to belong to her husband Sh Ramesh Kumar, there was not even any argument in the written submissions of the appellant, leave alone any evidence furnished in this regard. Accordingly, I am in agreement with the AO that when the husband of the appellant kept mum on this issue in the assessment proceedings in his own case, the explanation of the appellant that the said cash amounting to Rs 24,000/- belonged to her husband Sh Ramesh Kumar was rightly rejected. Accordingly I hold that the entire cash amounting to Rs 107,651/- found during the course of search upon the appellant, belonged to her alone, and accquired from her undisclosed sources of income. Therefore the addition of Rs 107,651/- made by the AO u/s 69A of the Act is confirmed. 18. Though the assessee has explained the source of cash to the extent of the sales of Rs. 28,006/- dated 26.8.2009 and collection from the debtors of Rs. 20,000/-. However, the CIT(A) has rejected the said explanation on the ground that the assessee has not furnished the name of the debtor from whom the collection is made and also did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as undisclosed stock of assessee. The cost price of this Kimam, as taken and signed by the assessee and her auditor in the audit report dated 07- 01-2011 is @ 216.58 per Kg. and valued at 56310/- (260X216.58). This value is taken as income of the assessee from undisclosed sources and added to her total income. 20. The assessee challenged the action of the AO before the CIT(A) and submitted that stock position of kimam as on 26.8.2019 was 1160 kg. Apart from this finished product of kimam as per stock register there was unfinished product / under process stock at the premises at the time of search. The assessee explained that as per the business practice and procedure when the unfinished product becomes finished product which is recorded in the stock register of kimam (finished product). On the date of search, the stock position as per stock register was 1160 kg and the discrepancy was due to consideration of unfinished product as finished product. The CIT(A) did not accept this explanation of the assessee and confirmed the order of the Assessing Officer. 21. Before the Tribunal, the learned AR of the asessee has submitted that the discrepancy pointed out by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained by the assessee. Therefore, in the absence of anything contrary to the details recorded in the stock inventory prepared at the time of survey / search, we do not find any reason to interfere with the orders of the authorities below. The CIT(A) has confirmed the order of the Assessing Officer as under:- It was stated by the AO in the assessment order that assessee manufacture kimam from raw of tobacco and this process take certain time. As per seized stock register there was only 1160 Kg kimam as opening stock as on 27-08-2009. Manufacturing process of kimam takes 3 to 4 days. Also as per stock register 470 kg of raw tobacco was taken for manufacture of kimam on 22/08/2009 and the AO inferred that the yield of this consumption of raw tobacco of 470 kg should have been taken in the stock register and on 26-08- 2009, 320 kg of kimam was entered in the seized stock register. It was further observed by the AO that no raw tobacco was issued for manufacture of kimam after 22/08/2009. Accordingly I agree with the AO that the yield of 470 Kg of raw tobacco issued on 22-08-09 would have been converted into kimam before the date of search and duly entered in the stock register. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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