Sonalben Nimish Kumar Patel v. The Dy CIT CENT Cir 2(1)
[Citation -2006-LL-0512-13]

Citation 2006-LL-0512-13
Appellant Name Sonalben Nimish Kumar Patel
Respondent Name The Dy CIT CENT Cir 2(1)
Court ITAT-Ahmedabad
Relevant Act Income-tax
Date of Order 12/05/2006
Judgment View Judgment
Keyword Tags opportunity to cross-examine • unaccounted investment • search and seizure • specific provision • undisclosed income • valuation report • block assessment • approved valuer • current asset • market value • panchnama • vdis
Bot Summary: 1.5 The appellant further says and submits that the learned CIT(A) has erred in not appreciating that the diamond ring was prepared from the packet of diamond purchased by the assessee for which the copy of the bill and other evidences for accounting in the books of account was furnished. The assessee produced copy of purchase bill to prove that the weight of diamond ring was 2.4 carat and purchase by Shri Nimesh K Patel and not the assessee. The CIT(A) confirmed the action of the Assessing Officer by stating that the subject-matter of valuation of the diamond ring, whereas purchase bill relates to pack of diamond only and the valuation given by the valuer appears to be correct. In view of these, Ld counsel stated that the diamond ring was made out of the packet of diamond purchase by assessee s husband and he referred to the balance-sheet of assessee s husband, where the diamond jewellary was disclosed in the current asset at Rs.2.66 lakhs as on 31-03- 1995. The Ld. Counsel stated that the value of diamond at Rs.2.48 lakhs was converted into diamond ring and after paying the making charges, the diamond jewellary was valued at Rs.2.66 lakhs which is reflected in the balance-sheet. 11, the assessee clarified that diamond ring found at Sl.No.15 of Annexure-XI and the diamond ring at Sr. No.2 of valuation report for VDIS purposes is the same, was wrong but the correct position was that the ring as per VDIS report was not found during the course of search and this ring was found during the course of search, actually belongs to assessee s husband. Accordingly, there is element of doubt, whether the diamond ring found during the course of search and in inventoried at Sr. No. 15 of Annexure-XI was the same ring, which was in one packet diamonds or not.


IN INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C AHMEDABAD Before Shri Mahavir Singh, Judicial Member and Shri A.N.Phauja, Accountant Member IT(SS) ANo.21/ Ahd/2002 Block assessment f rom 1-4-88 to 24-2-99 Date of hearing:24.7.09 Drafted:29.7.09 Sonal Nimishkum ar V/s. Dy. CIT, Central Circle- Patel, 41, Ashwam egh- 2(1), Ahm edabad III, 132 Ft. Ring Road, Ahmedabad-54 PAN No. ACOFP921-F (Appellant) .. (Respondent) Appellant by :- Shri A. C. Shah, AR Respondent by:- Shri S.K. Gupta, CIT, DR ORDER PER Mahavir Singh, Judicial Member:- This appeal by assessee is arising out of order of Commissioner of Income-tax(Appeals)-III, Ahmedabad in appeal No. CIT(A)- III/CC.2(1)/14/01-02 dated 26-12-2001. block assessment was framed by DCIT, Central Circle-2(1), Ahmedabad u/s.158BC r.w.s. 143(4) of Income-tax Act, 1961 (hereinafter referred to as Act ) vide his order dated 29-03-2001 for block assessment from 01-04-1989 to 24-02-1999. 2. only issue in this appeal of assessee is as regards to order of CIT(A) confirming addition of value of diamond ring as undisclosed income of assessee. For this, assessee has raised following two effective grounds:- IT(SS)A No.21/Ahd/2002 B.P. 1-4-98 to 24-2-99 Sonal Nimishkumar Patel v. DCIT CC-2(1) bd Page 2 1.1 learned CIT(A) has erred in confirming addition of Rs.4,66,650 for A.Y. 1999-2000 as undisclosed income being value of diamond ring item No.15 of Annex. X inasmuch as diamond ring belongs to Nimish K Patel and not to assessee. Further, Nimish K Patel purchased diamond ring for Rs.2,48,000 in February, 1995 which is reflected in books of account. 1.2 appellant further says and submits that weight of diamond ring is 2.40 carat and not 3.1 carat as done by Dept. Valuer. Dept. Valuer also accepts that there can be variation of .5% to 10% in weight. 1.3 appellant further says and submits that value of diamond ring in Febuary-1995 may be about Rs.2,78,972 as stated I assessee s letter dated 14-03-2001 instead of Rs.4,66,650 being market value in February, 1999. 1.4 appellant further says and submits that addition is if at all it is required to be made then it could have been made for A.Y. 1995-96 at Rs.30,972 (Rs.2,78,972 Rs.2,48,000) in case of Nimish K Patel and not in case of Sonal N Patel since assessee has already informed that diamond ring belongs to Nimish K Patel and that Xerox copy of invoice was furnished. Further, learned DCIT does not dispute about ownership of diamond ring. dispute is about carat and valuation. 1.5 appellant further says and submits that learned CIT(A) has erred in not appreciating that diamond ring was prepared from packet of diamond purchased by assessee for which copy of bill and other evidences for accounting in books of account was furnished. 2. learned CIT(A) has erred in confirming block assessment order which was bad in law and illegal in as much as approval of JCIT is granted u/s. 158BG without giving any opportunity to assessee of being heard. power to grant approval is quasi judicial and not administrative and therefore there has too be judicial approach on entire facts, material and evidence[Kiritlal Kalidas & Co. 67 ITD 573 (Mad)]. JCIT has supervisory role and therefore approval granted in administrative in nature in normal course but in block assessment in Chapter XIV-B specific provision is made u/s. 158BG for granting approval, it means that power is quasi-judicial and not of administrative nature. 3. brief facts are that search was conducted u/s.132 of Act on residential premises of assessee on 24-02-1999 and simultaneously IT(SS)A No.21/Ahd/2002 B.P. 1-4-98 to 24-2-99 Sonal Nimishkumar Patel v. DCIT CC-2(1) bd Page 3 search was also conducted at locker No.421B B Dena Bank, Ashram Road, Ahmedabad on 03-03-1999, which is in name of Shri Nimish Patel and Sonalben Patel. During course of search and seizure cash and jewellery was found from residence & locker. During course of search, total jewellery amounting to Rs.25,28,670/- was found out of which jewellery to extent of Rs.7,43,871/- was seized. During course of block assessment proceedings, assessee was required to explain jewellery found from statement of disclosure. Assessing Officer noted that at item No.15 of Annexure-X is diamond ring of 3.1 carat and he required assessee to explain same. assessee stated and relevant portion of reply reads as under:- From statement of disclosure filed width return, it may please be noted that item No.15 of Annex. X being diamond ring of 2.40 carat (not 3.1 carat) was actually purchased by Nimish K. Patel. Xerox copy of said bill is enclosed. It may also be noted that actual carat is 2.40 s per bill and not 3.1 carat as per Annex.X. Therefore, said item is disclosed in books of account. Thus, there is excess gold of 498.513 gms. and excess diamond of 11.49 carat which is disclosed in block return by me. Thus, excess jewellary found is disclosed in block return. reply of assessee is carefully considered. contention of assessee in respect of item No.15 of annex. X is not correct. Item No.15 of Annex. X is diamond ring which is valued at Rs.4,66,650 by Approved Valuer at time of search. weight of this diamond ring is 3.1 ct. shown in panchnama on basis of valuer s report. Now assessee is saying that weight of this ring is only 2.40 ct. and not 3.1 ct. At time of search no objection was raised by as in respect of valuation as well as weight of this diamond ring. During course of assessment proceedings, statement of Shri Nilesh Kothari, Approved Valuer was recorded. In his statement he is categorically stated that valuation done by him is correct. It is also stated by him that there will be slight difference of 5% to 10% in valuation, but he has also stated that no mistake was pointed out in his valuation in past. opportunity to cross examine Approved Valuer was provided to assessee. On behalf of assessee, Shri Dhinal Shah, AR has cross examined Approved Valuer. During course of examination Shri Nilesh Kothari has again categorically stated that there is no mistake in valuation of said diamond ring. Therefore, it is clear IT(SS)A No.21/Ahd/2002 B.P. 1-4-98 to 24-2-99 Sonal Nimishkumar Patel v. DCIT CC-2(1) bd Page 4 that contention of assessee that weight of ring only 2.40 ct. and not 3.1. ct. is not correct and can not be accepted. In respect of balance jewellary, contention of assessee is verified with books of account, return of income and VDIS declaration. After verification, contention of assessee is found acceptable. As assessee has failed to explain investment made in diamond ring, addition of Rs.4,66,650 is made as unaccounted investment in jewellary for A.Y. 99-00. Assessing Officer has not accepted contention of assessee by stating that item No.15 of Annex. X is diamond ring which is valued at Rs.4,66,650/- by Approved Valuer at time of search. weight of this diamond ring is 3.1 carat shown in panchnama on basis of valuer s report. AO stated that diamond was actually purchased by Nimish K Patel. Xerox copy of said bills is enclosed in paper book of assessee even now before us. It may also be noted that actual carat is 2.40 as per bill and not 3.1 carat as per Annexure-X. Therefore, said item is disclosed in books of account and statement approved by Valuer Shri Nilesh Kothari was recorded and he stated that valuation done by him is correct. assessee was provided opportunity to cross-examine Approved Valuer and same was cross-examined by assessee s counsel. During course of examination, Approved Valuer again reiterated that there is no mistake in valuation of diamond ring. Therefore, AO valued diamond ring at 3.1 carat and made addition of Rs.4,66,650/- as unaccounted investment in jewellary for assessment year 1999-00 falling in block period. Aggrieved, assessee preferred appeal before CIT(A). Before CIT(A), assessee produced copy of purchase bill to prove that weight of diamond ring was 2.4 carat and purchase by Shri Nimesh K Patel and not assessee. CIT(A) confirmed action of Assessing Officer by stating that subject-matter of valuation of diamond ring, whereas purchase bill relates to pack of diamond only and valuation given by valuer appears to be correct. Accordingly, he confirmed action of Assessing Officer. Aggrieved, assessee came in second appeal before us. IT(SS)A No.21/Ahd/2002 B.P. 1-4-98 to 24-2-99 Sonal Nimishkumar Patel v. DCIT CC-2(1) bd Page 5 4. Before us Ld. Counsel for assessee, Shri Ashvin C Shah, first of all, sated that none of authorities below has considered issue of ownership of diamond ring. It was stated by Ld. Counsel that this diamond ring was purchased by assessee s husband, Shri Nimesh K Patel and he referred to bill copy of Arun Kanaiyallal Javeri annexed at assessee s paper book at page-12, where description of item is given of Packet of Diamond and weight is carat 2.40 and rate was applied at Rs.1,03,330 per/ct. and total value of packet of diamond was charged at Rs.2,48,004/-. In view of these, Ld counsel stated that diamond ring was made out of packet of diamond purchase by assessee s husband and he referred to balance-sheet of assessee s husband, where diamond jewellary was disclosed in current asset at Rs.2.66 lakhs as on 31-03- 1995.. Ld. Counsel stated that value of diamond at Rs.2.48 lakhs was converted into diamond ring and after paying making charges, diamond jewellary was valued at Rs.2.66 lakhs which is reflected in balance-sheet. In view of this, Ld. Counsel further stated that this belongs to assessee s husband, Shri Nimesh K Patel and not to assessee. Secondly, this is weighing only 2.40 carat and valued at Rs.2.48 lakhs and not weighing of 3.1 carat as valued by Approved Valuer of Department. Accordingly, Ld. Counsel stated that this addition cannot be sustained. On other hand, Ld. CIT Departmental Representative, Shri S.K. Gupta argued that subject-mater of valuation of diamond ring and purchase bill relates to packet of diamond only and it is not same diamond and in view of these, he stated that this diamond ring is to be assessed separately as has been done by lower authorities. Accordingly, he supported order of lower authorities. 5. We have heard rival contentions and gone through facts and circumstances of case. We have also perused block assessment order including order of CIT(A) and assessee s paper book containing pages-1 to 12. We find that assessee pleaded before us that said ring IT(SS)A No.21/Ahd/2002 B.P. 1-4-98 to 24-2-99 Sonal Nimishkumar Patel v. DCIT CC-2(1) bd Page 6 was purchased by assessee s husband Shri Nimishkumar K Patel, who has declared same in his balance sheet dated 31-03-1995 filed along with return for A.Y. 1995-96 and value has been taken at Rs.2.48 lakhs. We further find that even at time of search valuation was done by DVO and same has not been objected to but it had accepted that there can be variation in valuation of said jewellery ranging from 5 to 10% from purchase bill of Arun Kanaiyalal Javeri. assessee to prove that Assessing officer on perusal of same have also reasons stated at page-7 of assessment order. It is noticed that during course of survey and valuation, assessee was given opportunity to cross-examine valuer and it was admitted that there is no mistake in same. We further find that there is no mistake regarding weight in valuation as pointed out and argument regarding weight in 2.40 carat and purchase made by Shri Nimesh Patel, it is seen that in said bill reference has been made for only one packet diamonds at 2.40 carat valued at Rs.2.48 lakhs. Thus, subject-matter of valuation was diamond rig whereas purchase bill relates to packet of diamond only. One more fact was brought to our notice during course of hearing that assessee before Assessing officer has adduced in reply dated 14-03-2001 as under:- 2. In reply to Q.No.11 of statement recorded u/s.131 on 03-03- 1999. I stated that diamond ring found at Sr. No.15 of Annex.XI and diamond ring at Sr. No.2 of valuation report of VDIS purpose is same. This was stated under wrong impression. Actually, ring as per VDIS report was not found during course of search. Further, diamond ring at Sr.No.15 of Annex. XI belongs to my husband which can be verified from measurement of ring. In view of above reply to Q.No.11, assessee clarified that diamond ring found at Sl.No.15 of Annexure-XI and diamond ring at Sr. No.2 of valuation report for VDIS purposes is same, was wrong but correct position was that ring as per VDIS report was not found during course of search and this ring was found during course of search, actually belongs to assessee s husband. assessee required AO to verify IT(SS)A No.21/Ahd/2002 B.P. 1-4-98 to 24-2-99 Sonal Nimishkumar Patel v. DCIT CC-2(1) bd Page 7 same from measurement of ring but AO has not carried out this exercise. Accordingly, there is element of doubt, whether diamond ring found during course of search and in inventoried at Sr. No. 15 of Annexure-XI was same ring, which was in one packet diamonds or not. Accordingly, we are of view that it is same ring, which was made out of one packet diamonds and same belongs to assessee s husband, Shri Nimishkumar K Patel and not to assessee. In view of these facts, we delete addition and this issue of assessee s appeal is allowed. 6. In result, assessee s appeal is allowed. Order pronounced in Open Court on 04/09/2009 Sd/- Sd/- (A.N.Phauja) (Mahavir Singh) (Accountant Member) (Judicial Member) Ahmedabad, Dated :04/09/2009 *Dkp Copy of Order forwarded to:- 1. Appellant. 2. Respondent. 3. CIT(Appeals)-III, Ahmedabad 4. CIT concerns. 5. DR, ITAT, Ahmedabad 6. Guard File. BY ORDER, /True copy/ Deputy/Asstt.Registrar ITAT, Ahmedabad Sonalben Nimish Kumar Patel v. Dy CIT CENT Cir 2(1)
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