Addition cannot be made as assessee and his family members have valid evidences to prove owing of jewellery by him and his family members in the form of wealth-tax returns, valuation reports, purchases bills, payment evidences bank statements for payments, will, social occasions as per caste/society, etc.

HIGH COURT OF GUJARAT

Tax Appeal No. 887 of 2013

Commissioner of Income-tax -IV............................................................................Appellant.
v.
Ashok Chandrakant Gandhi ...................................................................................Respondent

M.R. Shah AND MS. SONIA GOKANI, JJ.

Date : OCTOBER 15, 2013

Appearances

Ms. Paurami B. Sheth for the Appellant.

Section 69A of the Income Tax Act, 1961 — Unexplained money — Addition cannot be made as assessee and his family members have valid evidences to prove owing of jewellery by him and his family members in the form of wealth-tax returns, valuation reports, purchases bills, payment evidences & bank statements for payments, will, social occasions as per caste/society, etc

FACTS:

Assessee filed the return of income for the AY 2009-10 declaring the total income at Rs.5,81,650/-. assessee was served with the notice u/s 143(2). On the basis of disclosure during the search, more particularly of jewellery, assessee was asked to explain the source of the jewellery with supporting documents and also explain how the books of account were maintained by the assessee. Considering the explanation submitted by the assessee, AO made the addition u/s 69A on account of unexplained jewellery and directed to issue demand notice and penalty order. On appeal by assessee, CIT(A)partly allowed the appeal deleting the addition to the extent of Rs.41,42,515/-, however confirmed the addition of Rs.5,68,981/-. On further appeal by Revenue, Tribunal affirmed the order of CIT(A). being aggrieved, Revenue went on appeal before High Court.

HELD,

that it was required to be noted that both ITAT as well as CIT(A) have categorically observed and given the finding that the assessee has produced the evidence and given the explanation with respect to the jewellery valued at Rs.41,42,515/- and, therefore, have deleted the addition of Rs.41,42,515/-. The finding of fact given by both the authorities below were on appreciation of evidence, which were neither reported to be perverse and/or contrary to the evidence on record. Assessee and his family members have valid evidences to prove owing of jewellery by him and his family members in the form of wealth-tax returns, valuation reports, purchases bills, payment evidences & bank statements for payments, will, social occasions as per caste/society, etc. Most of the jewellery was acquired by them prior to the search period. Gold ornaments & jewellery received as per social customs within the limit of CBDT Instruction No. 1916 were considered as explained. Most of the jewellery was acquired by them prior to the search period. AO has only considered explained gold ornaments & jewellery at Rs. 11,33,260/- out of gold ornaments & jewellery found at the time of search of Rs.58,44,756/-. Assessee and his family members claimed to have possession of gold ornaments & jewellery of Rs.53,55,775/-, whereas Rs.80,000/- were treated as unexplained and balance gold ornaments & jewellery worth Rs.52,75,775/- as explained. CIT(A) confirmed the addition of Rs.5,68,981/- to the extent the assessee failed to explain the same. There was no reason to interfere with the order of CIT(A). In the result, appeal was answered in favour of assessee.

JUDGMENT

M.R. Shah, J. - The present Tax Appeal has been preferred by the revenue challenging the impugned judgment and order dated 08/03/2013 passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the tribunal') in ITA No. 3196/AHD/2011 with respect to the Assessment Year 2009-10 by which the Tribunal has dismissed the appeal preferred by the revenue confirming the judgment and order passed by the CIT(A) deleting the addition of Rs.31,76,735/- out of the total jewellery found during the course of the search of Rs.58,44,756/- made by the Assessing Officer on account of unexplained jewellery under Section 69A of the Act.

2. The revenue has proposed the following substantial question of law;

"Whether the appellate tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the addition of Rs.31,76,735/- out of total jewellery found during the course of search of Rs.58,44,756/- made by the Assessing Officer on account of unexplained jewellery under Section 69A of the Act?"

3. A search under Section 132 of the Income Tax Act (hereinafter referred to as 'the Act') was conducted. The assessee filed the return of income for the Assessment Year 2009-10 declaring the total income at Rs.5,81,650/-. The assessee was served with the notice under Section 143(2) of the Act . On the basis of disclosure during the search, more particularly of jewellery, the Assessing Officer valued the jewellery valued at Rs.58,44,756/- and, thereafter, vide notice under Section 142(1) of the Act dated 24/08/2009 the assessee was asked to explain the source of the jewellery with supporting documents and also explain how the books of account were maintained by the assessee. Considering the explanation submitted by the assessee, the Assessing Officer made the addition of Rs.47,11,496/- under Section 69A of the Act on account of unexplained jewellery and directed to issue demand notice and penalty order. Being aggrieved and dissatisfied with the order of assessment passed by the Assessing Officer making the addition of Rs.47,11,496/- under Section 69A of the Act the assessee preferred appeal before the CIT(A) and the CIT(A) vide order dated 21/10/2011 has partly allowed the appeal deleting the addition to the extent of Rs.41,42,515/-, however confirmed the addition of Rs.5,68,981/-.

3.1 Being aggrieved and dissatisfied with the order passed by the CIT(A) in deleting the addition of Rs.41,42,515/- revenue preferred appeal before the Tribunal. It appears that being aggrieved and dissatisfied with the order passed by the CIT(A) confirming the addition to the extent of Rs.5,68,981/- the assessee also preferred cross objections. By the impugned judgment and order, ITAT has dismissed the appeal as well as the cross objections filed by the revenue as well as the assessee.

3.2 Being aggrieved and dissatisfied with the impugned judgment and order passed by the ITAT in dismissing the appeal preferred by the revenue confirming the order passed by the CIT(A) in deleting the addition to the extent of Rs.41,42,515/-, revenue has preferred the present Tax Appeal with the aforesaid proposed question of law.

4. We have heard Ms. Paurami Sheth, learned Counsel appearing on behalf of the revenue as well as have perused the impugned judgment and orders passed by the ITAT as well as the CIT(A). At the outset, it is required to be noted that both the ITAT as well as the CIT(A) have categorically observed and given the finding that the assessee has produced the evidence and given the explanation with respect to the jewellery valued at Rs.41,42,515/- and, therefore, have deleted the addition of Rs.41,42,515/-. The finding of fact given by both the authorities below are on appreciation of evidence, which are neither reported to be perverse and/or contrary to the evidence on record. While directing to delete the addition of Rs.41,42,515/- the CIT(A) has observed in paragraph 13.1 as under:

"13.1 Having considered the above, I am of the opinion that the appellant and his family members have valid evidences to prove owing of jewellery by him and his family members in the form of wealth-tax returns, valuation reports, purchases bills, payment evidences & bank statements for payments, will, social occasions as per caste/society, etc. Most of the jewellery is acquired by them prior to the search period. In view of decisions of Jurisdictional High Court, gold ornaments & jewellery received as per social customs, within the limit of CBDT Instruction No. 1916 are considered as explained. Most of the jewellery is acquired by them prior to the search period. The Assessing Officer has only considered explained gold ornaments & jewellery at Rs. 11,33,260/- out of gold ornaments & jewellery found at the time of search of Rs.58,44,756/-. The appellant and his family members claimed to have possession of gold ornaments & jewellery of Rs.53,55,775/-, whereas I treated Rs.80,000/- as unexplained and balance gold ornaments & jewellery worth Rs.52,75,775/- as explained. The appellant claimed that the difference of Rs.4,88,981/- (Rs.58,44,756/- less Rs.53,55,775/-) is on account of mistakes in valuation which includes purity of gold, mixing of other metals, weight of pearls/ vilandi/ cotton bindings etc. and prayed that being difference is negligible and within the limits of estimations, I do not give any weightage to this fact since valuation is done by expert and considered further jewellery of Rs.4,88,981/-as unexplained on this account. Therefore, considering all facts, evidences, instruction, decisions, I held that the AO was not justified in rejecting evidences, plausible explanations and decisions of jurisdictional High Court, considering these, the appellant is having unexplained gold ornaments & jewellery of Rs.5,68,981/- (Rs.80,000/-plus Rs.4,88,981/-) and balance is explained as per above findings. Accordingly AO is directed to restrict the addition to Rs.5,68,981/- and the appellant gets relief of Rs.41,42,515/-. This ground is partly allowed."

5. We are in complete agreement with the view taken by the CIT(A) as well as the ITAT in directing the deletion of addition of Rs.41,42,515/-. At this stage, it is required to be noted that as such the CIT(A) confirmed the addition of Rs.5,68,981/- to the extent the assessee failed to explain the same. When there are concurrent finding of fact given by both the Courts below on appreciation of evidence and, thereafter, the order has been passed to delete the addition of Rs.41,42,515/-, we see no reason to interfere with the same as no question of law, much less substantial question of law arises in the appeal. Hence, the present Tax Appeal deserves to be dismissed and is accordingly dismissed.