1 ITA No. 2349/Del/2019
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `A' NEW DELHI
BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A. No. 2349/DEL/2019 (A.Y. 2015-16)
A/w Stay Application No. 636/DEL/2019
Bina Aggarwal Vs. ACIT
nd
2 Floor, 19 Local Shopping Central circle-08
Complex, Near Pushpa New Delhi
Bhawan, Madangir
New Delhi
PAN : ADBPA1417B
(APPELLANT) (RESPONDENT)
Appellant by Sh. Ved Jain, Adv. & sh.
Himanshu Aggarwal, C.A
Respondent by Sh. Sanjay Goyal, CIT,DR
Date of Hearing 05.09.2019
Date of Pronouncement 30.10.2019
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order dated 21.02.2019
passed by CIT(A)-24, New Delhi for Assessment Year 2015-16.
2. The grounds of appeal are as under:
"1. That on facts and circumstances of the case and in law, the Commissioner
of Income Tax (Appeals)- XXIV, New Delhi [`the Ld. CIT(A)'], has erred in
upholding the order of the Assistant Commission of Income tax, Central Circle-
08, New Delhi (`the Ld. Assessing Officer') in upholding the addition of Rs.
1,33,61,901 made on account of alleged Long-term capital gain on jewellery.
2 ITA No. 2349/Del/2019
2. That on facts and circumstances of the case and in law, the Commissioner
of Income Tax (Appeals)- XXIV, New Delhi [`the Ld. CIT(A)'], has erred in
upholding the order of the Assistant Commission of Income tax, Central Circle-
08, New Delhi (`the Ld. Assessing Officer') in upholding the addition of Rs.
8,59,018 made under section 69A on account of alleged unexplained
investment in jewellery.
The appellant craves for leave to add, amend, vary, omit or substitute any of
the aforesaid grounds of appeal or add any of the aforesaid ground of
appeal(s) at any time before or at the time of hearing of the appeal."
3. A search and seizure operation u/s 132 of the Act was conducted in the
case of Priyagold Group of cases on 16.12.2014 by Investigation Wing, New
Delhi. The assessee's case was also covered in search operation u/s 132 of the
Act. Consequent upon search action, search assessment proceedings were
taken up and statutory notices were issued. Subsequent to the aforesaid
search action, information was received from Investigation Wing, Kolkata that a
search & seizure operation u/s 132 of the Act was conducted upon the
assessee on 19.11.2015. In view of the subsequent search on 19.11.2015,
assessment proceedings initiated in consequence to search operation
conducted on the assessee on 16.12.2014 were abated. The Assessing Officer
thereafter issued notice u/s 153A of the Act dated 01.06.2017 & 06.06.2017
and in response thereto, the assessee filed a reply stating that the return
originally filed u/s 139(1) be treated as return in response to the notice issued
u/s 153A of the Act. The Assessing Officer observed that the assessee filed
return of income u/s 139(4) of the Act on 20th January, 2016 declaring total
income of Rs. 23,26,080/-. During the course of the search operation on
16.12.2014 at the residential premises of the assessee and her husband,
jewellery (Gold, Diamond, Silver) amounting to Rs. 18,74,303/- was found in
possession of the assessee and her husband. Further, during the operation of
the locker no. DD-22, maintained with Oriental Bank of Commerce, Noida in
the name of the assessee and her husband, jewellery amounting to Rs.
35,96,263/- was found. Hence, total jewellery found from the possession of the
3 ITA No. 2349/Del/2019
assessee and her husband was Rs. 54,70,566/-. However, on verification, the
Assessing Officer found that as per the Wealth Tax Return of the assessee for
the Assessment Year 2013-14, the assessee declared jewellery amounting to
Rs. 1,93,05,359/-. The Assessing Officer further observed that the husband of
the assessee had not filed any Wealth Tax Return. However, the total jewellery
in their possession was found to be Rs. 43,17,442/- only. The assessee and her
husband in their respective statements, recorded during the search operation
stated that apart from the jewellery found during the search, the rest of the
jewellery was kept with the relatives or valuer. The Assessing Officer observed
that they were not sure where the valuable jewellery was kept. They could not
furnish the name and address of the relatives. They were unable to furnish any
valuer's receipt or confirmation from the relatives. During the post search
proceedings / assessment proceedings, neither the particulars of the relatives
nor the confirmation from any valuer was provided. As per the Assessing
Officer, the assessee and her husband could not substantiate the statements
recorded during the search action by providing details of custody of the
valuable jewellery or details regarding relatives & valuer where jewellery was
kept. During the course of the assessment proceedings, the Assessing Officer
issued show cause notice dated 20.11.2017 mentioning that the assessee did
not produce any document or produced any person in support of the fact that
jewellery found short was available with the assessee and hence why the same
should not be treated as sold and accordingly capital gain on the sale of the
jewellery be brought to tax. In reply, the assessee stated that she had not
sold/parted with any jewellery till the time of search and furnished the details
of jewellery. The assessee also offered to file an affidavit. The Assessing Officer
was not satisfied with the reply of the assessee. The Assessing Officer once
again on 29.11.2017 confronted to the assessee. The assessee reiterated that
the complete jewellery is with the family and is used by the family members.
The Assessing Officer held that the assessee and her husband could not
substantiate the status of short jewellery and hence it was held that they have
sold the short gold jewellery of 6267.39 grams in the previous year relevant to
4 ITA No. 2349/Del/2019
the assessment year under consideration. Accordingly, the Assessing Officer
adopted year-1997 as the year of purchase of the jewellery where the assessee
declared the jewellery under VDIS and sale price of the jewellery was adopted,
the same was taken by the assessee in the Wealth Tax Return for the
Assessment Year 2013-14 and computed the long term capital gain at Rs.
1,33,61,901/- and brought to tax in the hands of the assessee. The Assessing
Officer noticed that during the course of the search at the premises of the
assessee and her husband, diamond jewellery amounting to Rs. 3,19,250/-
was found from the residential premises whereas diamond jewellery amounting
to Rs. 6,67,700/- was found from the locker of the assessee and her husband,
which was seized during the search as the same was not declared in their last
filed Wealth Tax Returns. Husband of the assessee had never filed the Wealth
Tax Return and stated that the explanation with regard to the jewellery /
articles found during search can be given by his wife only as it belongs to her.
The assessee has taken a stand that since the jewellery was found short than
declared in the Wealth Tax Return, as such, the same cannot be treated as
undeclared jewellery. The Assessing Officer observed that the diamond
jewellery found from the residence and from locker of the assessee and her
husband never disclosed this aspect in their Wealth Tax Return. Hence, the
Assessing Officer held that the diamond jewellery found in their possession
during the search operation on 16.12.2014 and during operation of locker on
30.01.2015, the same has been acquired by the assessee and her husband
from undisclosed income and it is an unexplained investment of the assessee
and her husband during the year i.e. 2014-15 as they could not produce any
purchase bill/voucher. The value of the said diamond jewellery was taken as
per the valuation done during the search proceedings which amounted to Rs.
8,59,018/-. Hence, the diamond jewellery of Rs. 8,59,018/- was added to the
income of the assessee as her unexplained investment u/s 69A of the Act. The
assessment was completed u/s 153A/ 143(3) of the Act at total income of Rs.
1,65,47,000/- on 31.12.2017 after making the additions.
5 ITA No. 2349/Del/2019
4. Being aggrieved by the assessment order, the assessee filed appeal before
the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. AR submitted that as regards to Ground No. 1 relating to
additions on account of long term capital gain on sale of jewellery of Rs.
1,33,61,901/- during A.Y. 2015-16, the assessee filed her return of income on
20.01.2016 declaring total income of Rs. 23,26,080/-. The assessee received
salary from M/s. Surya Food & Agro Ltd and interest income from various
personal investments. A search and seizure operation u/s 132(1) of the Act was
conducted at the business and residential premises of the Priyagold group of
companies, its directors & family members on December 16, 2014. During the
Search Operations the details of jewellery found in the possession of the
applicant/ assessee and her husband are as under :-
Sr. No. Particulars Jewellery (value in Rs.)
1. Residential premises : B-14, Sector-14, 18,74,303 (332.4gm)
Noida
2. Bank Locker No. DD-22, Oriental Bank of 35,96,263 (1115.03gm)
Commerce, Sector-27, Noida
The Assessing Officer observed that as per wealth tax return for A.Y.
2013-14, the assessee declared the amount of jewellery amounting to Rs.
1,93,05,539/- and the husband of the assessee has not filed any wealth tax
return. The Assessing Officer thereafter issued show cause notice u/s 142(1) to
explain the difference between the jewellery found in the possession and the
jewellery declared in the wealth tax returns. The assessee in response to the
same submitted reply dated 08.12.2017. The Ld. AR submitted that she lives
in a joint family and has not parted with or sold any of the jewellery and
submitted the details of the jewellery. The Ld. AR further submitted that the
affidavit to this effect that she has not sold or parted of with any jewellery was
also placed before the Assessing Officer. The details of the jewellery of whole
family was also submitted before the Assessing Officer. The Ld. AR pointed out
6 ITA No. 2349/Del/2019
that the Assessing Officer has accepted the fact at para 7 into (IB) at page 6 of
the assessment order that the jewellery items found during the search are
same are as what declared in wealth tax returns. Thereafter, the Assessing
Officer at page 7 para 7 (a)(i) of the assessment order calculated long term
capital gains on the presumption and without any material on record that the
balance jewellery of 6267.3 grams have been sold for which capital gain has
not been offered and imposed tax thereon. On appeal before the CIT(A), the
CIT(A) confirmed the addition made by the Assessing Officer despite there being
no material with the Assessing Officer that such jewellery was sold by the
assessee. The Ld. AR submitted that the additions made by the Assessing
Officer and confirmed by the CIT(A) is purely based on surmises only and sans
any material found during the search that the assessee has sold any jewellery.
The Assessing Officer adopted arbitrary approach of determining the capital
gains on the alleged sales by calculating the long term capital in the following
manner without any document on record:
i. The Assessing Officer took the cost of acquisition of the jewellery to be
the amount in VDIS valuation of Rs. 2,14,680/- assuming the purchases
were made in FY 1997-98.
ii. The Assessing Officer took the sales consideration at the price of the
jewellery to be the amount declared in wealth tax return for AY 2013-14 of
Rs. 2237.46/- per gram.
iii. Thereafter applying the indexation for FY 2013-14 and FY 1997-98 the
Assessing Officer calculated long term capital gains on alleged sales.
The Ld. AR submitted that the Assessing Officer himself accepted the quantity
/ weight of gold for AY 2014-15. Thus, the above additions are merely on
suspicions only. The Ld. AR further submitted that the assessee at the time of
assessment proceedings submitted the following documents stating that she
has not sold or parted with any jewellery:
7 ITA No. 2349/Del/2019
· Summary of jewellery of whole family
· Affidavit confirming that no part of jewellery is sold
· Details of jewellery of Smt. Bina Agarwal and Manoj Agarwal
· Copy of Wealth Tax Return of the family members :-
- BINA AGARWAL for AY 2014-15 and AY 2015-16
- B.P.AGARWAL for AY 2014-15 and AY 2015-16
- USHA DEVI AGARWAL for AY 2014-15 and AY 2015-16
- SHEKHAR AGARWAL for AY 2015-16
The Ld. AR further submitted that it is a settled position in law that the
additions cannot be made in the absence of any material on record merely on
surmises and conjectures. The Ld. AR relied upon the decision of the Hon'ble
Supreme Court in the case of Lalchand Bhagat Ambica Ram Vs. CIT [1959] 37
ITR 288 (SC). The Ld. AR submitted that without prejudice to the earlier
submissions it is prayed that the value of gold jewellery relating to AY 1987-
1988 was Rs. 14.10.624/-. Thus, the value of Rs. 2,14,860/- and the rate of
indexation for FY 1997-98 i.e. 305, adopted by the Assessing Officer is
arbitrary and cannot be adopted. The CIT(A) observed that the affidavit filed by
the assessee is self-serving document and the facts stated therein cannot be
accepted as evidence. It is the settled principle of law that the decision must
rest not on suspicion but on legal testimony. The Ld. AR relied upon the
decision of Mehta Parikh & Co. vs. CIT reported in 30 ITR 181 (SC). Thus, the
Ld. AR submitted that it is well established by the assessee during the
assessment proceedings that the assessee has not sold any part of the jewellery
and accordingly the allegations made by the Assessing Officer and the CIT(A)
are merely on the basis of surmises and are without any cogent evidence. The
Ld. AR prayed that the additions be deleted.
6. The Ld. DR submitted that the fact remains that jewellery was short as
regards the details filed in the Wealth Tax Returns. The Ld. DR further relied
upon the Assessment Order and the order of the CIT(A).
8 ITA No. 2349/Del/2019
7. We have heard both the parties and perused all the relevant material
available on record. It is pertinent to note that as regards Ground no. 1 , the
assessee has given the explanation that the short of the jewellery found during
the search was due to the reason that in a recent time the assessee's daughter
got married and some of the jewellery is either with the relatives or with the
valuer. These facts were brought on record during the search and in the
statement of the assessee taken during the search has given details of the
relatives of assessee with whom she has kept the jewellery. It is the fact that
the assessee has not filed any confirmation of these relatives but it is also
pertinent to note that the Revenue has not issued 133(6) notice for obtaining
the real picture of assessee's submissions. There is no mechanism under the
provisions of Income Tax Act, if there is short of the jewellery declared by the
assessee then the same should be treated as sold and the capital gain is
attracted. In the present case the Assessing Officer as merely suspected that
the jewellery was sold, but has not brought any material on record. Therefore
the Assessing Officer as well as CIT(A) overlooked the practical aspect that the
jewellery is with relatives / valuer. Hence, Ground No. 1 of the assessee's
appeal is allowed.
8. As regards Ground No. 2 relating to addition on account of investment on
jewellery u/s 69A of Rs. 8,59,018/-, the Ld. AR submitted that the Assessing
Officer observed that during the search operation of bank locker in Oriental
Bank of Commerce, diamond jewellery of Rs. 8,59,018/- was found and the
same was not declared in the wealth tax returns. At the time of hearing, the Ld.
AR submitted that if it is the case of the Revenue that the jewellery is found
short then there can be a case where there is an undisclosed jewellery. No
loose diamonds were found during the search proceedings and all the jewellery
was studded in the gold jewellery. Thus, no additions can be made on such
count. The additions made are purely on surmises and sans any material on
record found during the search that the assessee has made investment in the
diamond jewellery. The Ld. AR further submitted that the additions cannot be
9 ITA No. 2349/Del/2019
made merely on the basis of suspicion. The Ld. AR relied upon the decision of
Umacharan Shaw & Bros. vs. CIT reported in 37 ITR 271 (SC). Ld. AR
submitted that the assessee made full disclosure and has submitted the details
of the jewellery. The Assessing Officer and the CIT(A) accepted the details
submitted by the assessee. Thus, in the absence of any tangible material on
record the additions made cannot be sustained. The Ld. AR further relied upon
the decision of the Hon'ble Delhi ITAT in the case of Shri Raj Kumar Kalrania v.
DCIT in ITA 1397/Del/2015 order dated 30.05.2018. The Ld. AR further
submitted that the diamonds are precious stones and are part of the jewellery.
The assessee seeks support from the definition of jewellery under Wealth tax
Act. Further, reliance is placed on the decision of the Delhi ITAT in the case of
Kumkum Kanodia vs. DCIT in ITA no. 5260/Del/2014 . Ld. AR submitted that
merely because the jewellery is studded with the diamond of 47.18 carat in the
instant case, the same cannot be added in the hands of the assessee when
such jewellery formed part of the gross weight of the jewellery found from the
premises of the assessee. On the basis of above facts and circumstance of the
case, the assessee has not purchased any diamond jewellery and accordingly
the allegations made by the Assessing Officer and the CIT(A), the Ld. AR prayed
that the same should be deleted.
9. The Ld. DR relied upon the Assessment Order and the order of the
CIT(A).
10. We have heard both the parties and perused all the relevant material
available on record. It is pertinent to note that the diamond jewellery is always
studded with gold and it is not a case of revenue that separate diamonds were
found during the search operation. Merely because the jewellery is studded
with the diamond of 47.18 carat in the instant case, the same cannot be added
in the hands of the assessee when such jewellery formed part of the gross
weight of the jewellery found from the premises of the assessee. The assessee
made full disclosure and has submitted the details of the jewellery which were
10 ITA No. 2349/Del/2019
accepted by both the authorities and was never questioned. Thus, this addition
does not sustained. Hence, Ground No. 2 of the assessee is allowed.
10. Since the appeal is decided on merit, the stay application does not
survive, hence dismissed.
11. In result appeal of the assessee is allowed and the stay application is
dismissed.
Order pronounced in the Open Court on 30th October, 2019.
Sd/- Sd/-
(N. K. BILLAIYA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 30/10/2019
*Binita*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
11 ITA No. 2349/Del/2019
Date of dictation 05.09.2019
Date on which the typed draft is placed before the 05.09.2019
dictating Member
Date on which the typed draft is placed before the
Other Member
Date on which the approved draft comes to the Sr.
PS/PS
Date on which the fair order is placed before the
Dictating Member for pronouncement
Date on which the fair order comes back to the Sr.
PS/PS
Date on which the final order is uploaded on the
website of ITAT
Date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
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