1 IN INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A No.84 /Ind/09 Block period 1.4.1996 to 13.6.2002 Shri Ram Prakash Gupta Bhopal PAN ACOPG5747G Appellant Vs Asstt. Commissioner of Income Tax 1(1), Bhopal Respondent IT(SS)A No.85 /Ind/09 Block period 1.4.1996 to 13.6.2002 Rajendra Gupta Bhopal PAN ACOPG5745L Appellant vs Asstt. Commissioner of Income Tax 1(1), Bhopal Respondent 2 Appellants by : Shri Pradeep Gupta Respondent by : Shri P.K. Mitra O R D E R PER JOGINDER SINGH, Judicial Member These appeals are by different assessees against respective orders of learned CIT(A) dated 8.4.2009 on common ground that on facts and in circumstances of case, learned Commissioner of Income-tax (Appeals) erred in confirming addition and consequent penalty imposed u/s 158BFA(2) of Act. 2. During hearing of these appeals, we have heard Shri Pradeep Gupta, ld. Counsel for assessee and Shri P.K. Mitra, learned Senior Departmental Representative. crux of arguments on behalf of assessee is that Tribunal has considered availability of gold jewellery with various members of family found during search and breakup of which was duly furnished before learned Assessing Officer, learned Commissioner of Income Tax (Appeals) as well as before Tribunal. It was further submitted that impugned jewellery was duly explained by assessee for which our attention was invited to pages 2 and 3 of impugned order along with page 52 of order of Tribunal. plea was also raised that list of gold articles, claimed to be belonging to various family members was filed before 3 department. It was also submitted that benefit of possession of gold jewellery should have been given as per CBDT Circular No. 1916 dated 11.5.1994 in case of 21 members of family and weight prescribed by circular. On other hand, learned Senior Departmental Representative defended impugned order by contending that penalty was rightly imposed. 3. We have considered rival submissions of ld. representatives of both sides and perused material available on record. Brief facts are that search and seizure operation was carried out at business premises of M/s Gupta Brothers at Chowk Bazar Bhopal and also at residential premises of assessee. assessees are partners in M/s Gupta Brothers who are engaged in money lending business along with business of trading of gold and silver jewellery under name of M/s Radhe Jewellers at Bhopal. block assessment was completed u/s 158BC of Act read with section 143(3) of Act on 28.6.2004 at total undisclosed income of Rs.44,55,575/- (In case of Shri Ramprakash Gupta) and Rs.21,56,844/- (in case of Shri Rajendra Kumar Gupta). penalty proceedings u/s 158BFA(2) of Act were initiated which resulted into penalty of Rs.1,10,935/- and Rs. 1,64,154/-, respectively on alleged undisclosed income of Rs.1,76,089/- and Rs.2,60,561/- respectively. additions made by 4 learned Assessing Officer and sustained by learned Commissioner of Income Tax (Appeals) are summarized as under :- In case of Shri Ram Prakash Gupta Nature of addition Amount as per Amount assessment order sustained (Rs.) in appeal (Rs.) by CIT(A) On account of unexplained 631644 144499 cash & gold jewellery found u/s 69A of Income tax Act On account of cash and 545558 protectively Nil jewellery found from Puja 376133 protectively Nil room Undisclosed income on 401106 Nil account of undisclosed profit on sale of silver On account of undisclosed 800000 Nil household expenditure Unexplained investment in 20000 20000 acquiring agricultural land On account of benami 265000 Nil account On account of unexplained 1416114 11590 credit in bank account So far as quantum addition is concerned, we find that same was deleted by Tribunal vide order dated 22.2.2008 in IT(SS) No. 65/Ind/2006, etc. others in case of Radhey Shyam Gupta (HUF) and others. relevant portion of order of Tribunal is as under :- Details of Gold ornaments & silver articles held by family members and declared in Wealth-tax returns etc. S.No. Name of person Gold Silver Silver Evidence enclosed Utensils 1 Prabhat Chand 302 4.5 kg 20 kg WT return for AY 90- (HUF) gms 91 (Ack. + Computation) 2 Omprakash 302 4.5 kg 20 kg WT return for AY 85- (HUF) gms 86 (Ack. + 5 Computation ) 3 Ramprakash 302 4.5 kg 20 kg WT return for AY 90- (HUF) gms 91 + Assmt. Order 4 Suresh (Ind.) - - 120 kg WT return for AY 90- 91 + Assmt. Order 5 Rajendra Gupta 302 4.5 kg 20 kg WT return for AY 86- (Ind) but lateron gms 87 + Assmt. Order HUF on marriage 6 Radhey Shaym 302 - 120 kg WT return for AY 90- (Ind) (silver 23.5 gms 91 (Ack. + kg in Computation) subsequent year hence excluded 7 Smt. Vidhya 902 - 9.962 kg WT return for AY 90- Devi gms 91 (Ack. + Computation) 8 Smt. Meera Devi 932 3 kg - WT return for AY 90- gms 91 (Ack. + Computation) 9 Smt. Asha Rani 835 3 kg - Computation of gms wealth (See note below) 10 Smt. Sandhya 2292 - - VDIS, 97 Certificate gms 6471 24 kg 329.962 gms kgs Note: Computation of net wealth is enclosed. Because acknowledge of WT return is not present traceable in file of counsel Mr. Kaushik. ack. or other evidence will filed as and when traced in counsel s filed. 4 Ld. Counsel for assessee referred to pages 148 to 176 of paper book, which are copies of wealth-tax returns and computation in cases of above persons and copy of VDIS certificate in case of Smt. Sandhya Devi. Ld. Counsel for assessee also referred to pages 177 to 180 of paper book, in which, it was mentioned that total gold jewellery available in family was 11071 gms, out of which, 3559.870 gms were found in bedroom of family members and remaining 7512.330 gms were found in pooja room. Ld. Counsel for assessee also referred to statements of Smt. Meera Gupta, Smt. Rekha Gupta and Smt. Neha recorded in search, in which, they have stated that they have received jewellery at time of their marriage and also received thereafter 6 jewellery from their parents and in-laws and friends and relatives. Their copies of statements are filed at pages 181 to 187 of paper book. Ld. Counsel for assessee also referred to list of family members, who had not filed wealth-tax returns and claimed possession of 4600 gms by 21 family members (PB 147) on basis of CBDT circular/instruction 1916 dated 11.5.1994, in which, it was explained that in case of person not assessed to wealth-tax, gold jewellery and ornaments to extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of family need not be seized. Ld. Counsel for assessee in support of his contention relied upon decision of Karnataka High Court in case of Smt. Patidevi vs. ITO, 240 ITR 727, in which, by referring same instruction dated 11.5.1994, it was held that it is not value which is considered but it is weight which is considered reasonable looking to social circumstances prevailing in country, therefore, benefit of these instructions cannot be denied to assessee. ld. Counsel for assessee also relied upon order in case of Smt. Neena Syal vs. ACIT, 70 ITD 62, in which, by following same instruction, AO was directed to allow appropriate relief to assessee. ld. Counsel for assessee also relied upon unreported decision of Hon ble MP High Court in case of CIT vs. Smt. Savitridevi Shukla dated 2.3.2005 in MA(IT)63/2003, in which, Hon ble High Court confirmed order of appellate Tribunal, in which, addition of jewellery was deleted relying on above instruction no.1916 dated 11.5.1994 and Hon ble High Court held that it is question of fact and ld. CIT(A) has considered matter with reference to status of family and status and financial capacity and other relevant facts and accordingly dismissed appeal of revenue. Ld. Counsel for assessee also relied upon order of this Bench dated 22.6.7 in case of Sureshchand Garg in IT(SS)A No.51 of 2005 in which by following same circular issue was decided in favour of assessee. Ld. Counsel for assessee therefore, 7 submitted that addition is clearly unjustified and may be deleted. On other hand, ld. DR relied upon orders of authorities below and submitted that business assets were found in search therefore, same cannot be household goods and as such CBDT circular is not applicable. 5 We have considered rival submissions and material available on record. It is not in dispute that assessee explained possession of gold and silver jewellery as per wealth-tax returns, which were disclosed by various members of family in wealth-tax returns. Income Tax Appellate Tribunal, Visakhapatnam Bench in case of Smt. Bommanna Swarna Rekha vs. ACIT, 94 TTJ 885, in which, Tribunal following above CBDT circular held that when joint family members are putting together, it is quite natural that all members of family may take jewellery from each other and wear same, therefore, jewellery should have been ascertained after considering all jewellery with all members and entire addition should be deleted. explanations of members of HUF declaring jewellery in wealth-tax returns and VDIS as explained in chart is reproduced above in submission of ld. Counsel for assessee. same is also supported by copies of computation of wealth and acknowledgments of returns. VDIS certificate in case of Smt. Sandhya is also filed. These evidences are not disputed by authorities below, therefore, assessee has been able to explain possession of gold articles in 6471 gms as well as silver articles in 353.962 kgs. Since these items have already been declared in wealth-tax returns and VDIS, 1997 prior to search, therefore, same cannot be undisclosed gold/silver articles. assessee also explained gold articles of various family members, who have not filed wealth-tax returns as per CBDT circular in 4600 gms. Details of same is filed in page 147 of paper book. decisions cited by ld. Counsel for assessee above support case of assessee that benefit of possession of gold jewellery should be given to assessee as per 8 CBDT circular no.1916 dated 11.5.1994 in case of 21 members of family in weight prescribed by circular. Apart from that, we find that during course of search, statements of Smt. Meera Gupta, Smt. Neha Gupta and Rekha Gupta were recorded in which, they have explained to have received jewellery from their parents at time of their marriage and subsequently also received same which have been kept by them with their mother-in-law. Their statements also support explanation by assessee. AO merely on reasons that same did not have similarity or correlation rejected explanation of assessee. AO presumed that probably jewellery of business is kept at house. findings of AO are based on presumptions and without any basis. number of persons of assessee and nature of articles found shows these were belonging to HUF members because no other personal jewellery of any member was found in search. It is highly unbelievable that entire family members mentioned above would not have personal jewellery. evidences on record clearly co-relate personal jewellery with declared jewellery in wealth-tax and others. AO has failed to appreciate that in case above articles as explained by assessee are not same as found at time of search but value of jewellery already declared in wealth-tax and VDIS is available to assessee to explain possession of jewellery found at time of search. benefit of CBDT circular cannot be denied to assessee by merely saying that these are business assets. Considering totality of facts and circumstances noted above, evidence and material on record, we are of view that assessee has been able to explain possession of jewellery found in pooja room. addition of Rs.30,51,486/- is therefore unwarranted. orders of authorities below are therefore set aside and addition is deleted. This ground of appeal of assessee is allowed . 9 4. If totality of facts is analysed, we find that learned Assessing Officer computed undisclosed income at Rs.44,55,575/- which was reduced to Rs.1,76,089/- by learned Commissioner of Income Tax (Appeals) and Tribunal sustained following additions vide order dated 22.2.2008, hence addition of Rs.1,76,089/- was made basis of penalty by Assessing Officer. break up of addition sustained by Tribunal is as under :- Sr. Nature of Amount No. addition 1 Out of Rs.1,44,499 gold jewellery of 1041.470 gms found in bed room of assessee 2 Credit in Bank Rs.11,590 Account 3 Addition on Rs.20,000 hypothetical estimation Total Rs.1,76,089 As far as addition of Rs.1,44,499/- is concerned, during assessment proceedings Assessing Officer asked assessee vide notice dated 13.4.2004 to explain entire gold jedwellery found at residential premises which as per assessee was explained. Even Tribunal (page 52 of order 10 of Tribunal dated 22.2.2008) has referred details of availability of gold jewellery with various members of family found during course of search as under :- Particulars Gold articles (net wt. in gms Gold and silver articles of various family members as 6471 declared by them in their wealthtax returns & VDIS, 1997 as per list at PBP No. 14 Gold articles of various family members those have 4600 not filed their wealthtax returns, as per list at PBP No. 15 Total 11071 Less : Found in search (-) 11068 Short found (-) 3 As far as break of availability of aforesaid 11071 gms of gold which included jewellery of family of assessee is concerned, was explained as under :- S.No Possessed Availability Found ( Net weight by in gms) Bed Pooja Room room 1 Late Shri 1204.000 1204.000 Radhey Shyam Gupta and his wife 2 Late Shri 935.000 935.000 Suresh Chand Gupta and his family members 3 Shri 2684.000 2684.000 Prabhat Chand Gupta and 11 his family members 4 Shri 1352.000 1041.470 310.530 Ramprakash Gupta and his family members 5 Shri 3594.000 1215.200 2378.800 Omprakash Gupta and his family members 6 Shri 1302.000 1303.200 Rajendra Kumar Gupta and his family members TOTAL 11071.000 3559.970 7512.330 Breakup of jewellery found in bed room and Pooja room and its relation with respective family members is as under :- Sr.No. Belongs to Per Assessee Per CIT(A) Per ITAT Net Claimed Weight on Basis of 1 Ramprakash 302 gms W.T. Accepted on Order of Gupta (HUF) return basis of learned W.T. return CIT(A) is 2 Smt Rekha ( 500 gms CBDT Accepted on confirmed Wife of Circular basis of on this issue Ramprakash) No. 1996 CBDT Circular dated 11.05.19 94 3 Ramprakash 250 gms CBDT Not accepted Order of Gupta Circular ld. CIT(A) is (Individual) No.1996 confirmed dated on this 11.05.19 issue, which 94 is contrary 4 Saurabh (son) 100 gms CBDT Not accepted and Circular overlapping No. 1996 to 12 dated Hon ble 11.05.19 ITAT s own 94 finding at 5 Nitin (son) 100 gms CBDT Not accepted page no. 58, Circular para 44 of No.1996 their order dated dated 11.05.19 22.02.2008 94 6 Anubhav (son) 100 gms CBDT Not accepted Circular No.1996 dated 11.05.19 94 Total 1352.000 gms Less:Found 310.500 gms in Pooja Room Balance 1041.470 found in Bed room of Ramprakasa h Gupta If aforesaid tables are kept in juxtaposition and analysed, it is clear that gold jewellery found from bed room of Ram Prakash Gupta was 1041.470 gms only which was net weight and not 1776.130 gms (as mentioned by Assessing Officer in para 3.1 of assessment order) and said mistake continued upto impugned order (page 7) wherein it was held that out of 1176.130 gms explained gold jewellery was 802 gms and unexplained jewellery was 374.180 gms as against mentioned in chart (Table 3 above). In respect of gold articles weighing 4600 gms, Tribunal vide its order 22.2.2008 (page 58 para 44) has recorded following findings :- assessee has explained gold articles of various family members who have not filled Wealth 13 Tax Returns as per CBDT Circular in 4600 gms details of which are filed in page No. 147 of paper book. decision cited by ld. Counsel for assessee above support case of through assessee that benefit of possession of gold jewellery should be given to assessee as per CBDT Circular No. 1916 dtd. 11.05.1994 in case of 21 members of family in weight prescribed by circular. 5. If aforesaid finding is analysed, we find that persons named at sl. nos. 3 to 6 (in table no. 3 above) possessed gold articles and same was duly considered in list of 21 members of family wherein possession of 4600 gm gold was accepted by Tribunal. If explanation of assessee is accepted in light of circular of CBDT then it is not case that in case of one member, it can be accepted and it can be rejected in case of another member. This proposition is supported by decision of Hon ble jurisdictional High Court in case of Surajben Patel v. CIT; (1973) MPLJ-27 (copy of same is available at page 69 of paper book) wherein Hon ble Court has already considered various decisions from Hon ble Apex Court. In view of these facts and CBDT Circular, no penalty should have been imposed on assessee. penalty proceedings and quantum proceedings are separate and distinct and if discussion made in assessment order as well as in impugned order is analysed, then we are satisfied that penalty has wrongly been imposed as per Circular of CBDT and 14 discussion made by us in preceding paras of this order. ratio laid down by Hon ble Punjab and Haryana High Court in CIT v. Dhillo Rice Mill; 256 ITR 447 also comes to rescue of assessee as addition was based on hypothetical calculation and major part of addition was deleted by Tribunal, which has become final as no contrary decision from any Hon ble higher forum was brought to our notice. We, therefore, direct Assessing Officer to delete penalty in both appeals. In result, both appeals of assessee are allowed. Order pronounced in open Court in presence of learned representatives of both sides at conclusion of hearing on 10th January, 2011. (R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 10th January, 2011 Copy to: Appellant, Respondent, CIT, CIT(A), DR, Guard File Dn/- Shri Ramprakash Gupta v. A C I T