Addition towards unexplained jewellery unsustainable as ownership belongs to various people

Ashok Kumar Tyagi Vs ACIT (ITAT Delhi)

ITAT Delhi held that addition towards unexplained jewellery unsustainable as panchnama clearly mentions the fact that ownership of jewellery belongs to various people.

Facts- The appellant contested that Commissioner of Income Tax (A) has erred in confirming the addition made by the learned Assessing officer of Rs.7,03,200/- under the head unexplained cash and addition of Rs.28,44,470/- under the head unexplained jewellery without going through the facts of the case that cash and jewellery does not belong to the appellant.

Conclusion- We find from the record that no statement of the assessee with regard to the cash found has been recorded u/s 132(4) of the Income Tax Act, 1961 and statement recorded of the father of the assessee Sh. Jaiveer Tyagi on day of search itself revealed that the amount pertains Sh. Jaiveer Tyagi and other family members. Hence, keeping in view, the entire facts and circumstances, the location of the cash found, the statement of Sh. Jaiveer Tyagi recorded on the date of search, we hold that no addition is called for on account of cash in the hands of the assessee.

We find that the jewellery has been separately valued in different names of the family members namely, Ms. Bindu Tyagi, Ms. Indu Tyagi and Ms. Rajni The panchnama drawn has also clearly mentioned the fact of ownership of the jewelley with various people. Hence, the addition ought not to have been made in the hands of the assessee and hence, the same is ordered to be deleted.

FULL TEXT OF THE ORDER OF ITAT DELHI

The present appeals have been filed by the assessee against the orders of ld. CIT(A)-31, New Delhi dated 17.05.2017.

2. In ITA No. 5651/Del/2017, the assessee has raised the following grounds of appeal:

“1. The order of the Hon’ble Commissioner of Income Tax (A) is arbitrary, against law and facts on record.

2. The Hon’ble Commissioner of Income Tax (A) failed to appreciate that the issuance of notices u/s 153A / 142(1)/143(2) of the Income Tax Act, 1961 by the Assessing officer and the proceedings conducted there under are against the provisions contained in the Income Tax Act, 1961 and is bad in law and hence liable to be quashed.

3. The Hon’ble Commissioner of Income Tax (A) while confirming the addition has failed to consider the fact that during the course of search no incriminating documents have been found in respect of addition made and as such addition made by the Assessing officer while passing the order u/s 153A/ 143(3) is against the provision contained in the Income Tax Act, 196 1.

4. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case by not admitting the additional grounds of appeal during the appellate proceeding and such action of the Hon’ble Commissioner of Income Tax (A) is bad in law.

5. The Hon’ble Commissioner of Income Tax (A) while confirming the addition of Rs.83,097/- in respect of income from partnership firm has failed to consider that the said income have already been declared in the return filed u/s 153A of the Income Tax Act and as such addition made by the learned Assessing officer in the assessment order have resulted in taxing the same income twice.

6. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case in confirming the addition made by the learned Assessing Officer by considering the agriculture income of 3,70,000/- as income from other sources and such action of the Assessing officer is not based on cogent material and shows lack of application of mind.

7. The Hon’ble Commissioner of Income Tax (A) has erred has erred in law as much as on the facts of the case in confirming the addition of Rs.1,60,00,000/- under the head unexplained investment which have been made by the Assessing officer on the basis of assumption and presumption and is not based on cogent material and is bad in law and hence liable to be deleted”

3. In ITA No. 5655/Del/2017, the assessee has raised the following grounds of appeal:

“1. The order of the Hon’ble Commissioner of Income Tax (A) is arbitrary, against law and facts on record.

2. The Hon’ble Commissioner of Income Tax (A) failed to appreciate that the issuance of notices u/s 153A / 142(1)/143(2) of the Income Tax Act, 1961 by the Assessing officer and the proceedings conducted there under are against the provisions contained in the Income Tax Act, 1961 and is bad in law and hence liable to be quashed.

3. The Hon’ble Commissioner of Income Tax (A) while confirming the addition has failed to consider the fact that during the course of search no incriminating documents have been found in respect of addition made and as such addition made by the Assessing officer while passing the order u/s 153A/ 143(3) is against the provision contained in the Income Tax Act, 196 1.

4. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case by not admitting the additional grounds of appeal during the appellate proceeding and such action of the Hon’ble Commissioner of Income Tax (A) is bad in law.

5. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case in confirming the addition of Rs 62,11,740/- under the head commission income which have been made by the Assessing officer on the basis of assumption and presumption and is not based on cogent material and is bad in law and hence liable to be deleted.”

4. In ITA No. 5656/Del/2017, the assessee has raised the following grounds of appeal:

“1. The order of the Hon’ble Commissioner of Income Tax (A) is arbitrary, against law and facts on record.

2. The Hon’ble Commissioner of Income Tax (A) failed to appreciate that the issuance of notices u/s 153A / 142(1)/143(2) of the Income Tax Act, 1961 by the Assessing officer and the proceedings conducted there under are against the provisions contained in the Income Tax Act, 1961 and is bad in law and hence liable to be quashed.

3. The Hon’ble Commissioner of Income Tax (A) while confirming the addition has failed to consider the. fact that during the course of search no incriminating documents have been found in respect of addition made and as such addition made by the Assessing officer while passing the order u/s 153A/ 143(3) is against the provision contained in the Income Tax Act, 196 1.

4. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case by not admitting the additional grounds of appeal during the appellate proceeding and such action of the Hon’ble Commissioner of Income Tax (A) is bad in law.

5. The Hon’ble Commissioner of Income Tax (A) has erred much as on the facts of the case in confirming the addition of Rs.48,77,600/- under the head commission income which have been made by the Assessing Officer on the basis of assumption and presumption and is not based on cogent material and is bad in law and hence liable to be delete.”

5. In ITA No. 5657/Del/2017, the assessee has raised the following grounds of appeal:

“1. The order of the Hon’ble Commissioner of Income Tax (A) is arbitrary, against law and facts on record.

2. The Hon’ble Commissioner of Income Tax (A) failed to appreciate that the issuance of notices u/s 153A / 142(1)/143(2) of the Income Tax Act, 1961 by the Assessing officer and the proceedings conducted there under are against the provisions contained in the Income Tax Act, 1961 and is bad in law and hence liable to be quashed.

3. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case by not admitting the additional grounds of appeal during the appellate proceeding and such action of the Hon’ble Commissioner of Income Tax (A) is bad in law.

4. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case in confirming the addition of Rs.1,54,000/- under the head commission income which have been made by the Assessing officer on the basis of assumption and presumption and is not based on cogent material and is bad in law and hence liable to be deleted.

5. The Hon’ble Commissioner of Income Tax (A) has erred in law as much as on the facts of the case in confirming the addition made by the learned Assessing officer of Rs.7,03,200/- under the head unexplained cash and addition of Rs.28,44,470/- under the head unexplained jewellery without going through the facts of the case that cash and jewellery does not belong to the appellant.”

6. A search & seizure operation was conducted u/s 132 of the Income Tax Act, 1961 on 12.02.2013 at the residential and business premises of the assessee.

A.Y. 2007-08:

Agricultural Income:

7. The addition made treating the agricultural income as “income from other source” has been deleted by the ITAT in assessee’s own case for the A.Y. 2008-09, 2009-10, 2010-11 vide order dated 17.03.2022 in ITA No. 5652-5654/Del/2017. In the absence of any change in the factual matrix, we hereby delete the addition made by the AO.

8. The appeal of the assessee on this ground is allowed.

Addition on the basis of MoU:

9. Based on MOU dated 07.03.2006 found during search for purchase of property no. 9/11, Nehru Place, Delhi, the AO made addition of Rs.1,16,00,000/-. The relevant facts are as under:

• MOU relates to A.Y. 2006-07 and not for A.Y. 2007-08
• AY 2006-07 is not covered in the block of six years, since the date of search was 12.02.2013
• AO considered the MOU in A.Y. 2007-08 on the basis of assumption that the MOU to be completed by 19.06.2006 (A.Y. 2007-08)
• As per MOU, the entire property consisting of GF, FF and SF is agreed to be purchased by assessee.
• Due to some dispute in SF of the said property, seller mentioned in the MOU that entire process of sale of SF to be completed by 19.06.2006
• The said MOU was never been finally completed due to dispute between the parties.
• Case was filed in the Court of Addl. District Magistrate, Saket for execution of agreement to sell.
• The MOU stands cancelled by the Court and hence the same stands null and void. The property in question has
  not been acquired.

10. Hence, we hold that no amount can be taxed on this ground.

Income from Partnership Firm:

11. The AO may examine whether the same has already been declared in the regular return of income.

A.Y. 2011-12:
A.Y. 2012-13:  

Commission Income:

12. The ld. CIT(A) confirmed addition made on commission income @ 1.4% on a gross basis. Before us, it was pleaded that no provision for expenses incurred for earning such income has not been given by the revenue. It cannot be said that the assessee incurred absolutely no expenses for earning such Hence, keeping in view, the sub-commission payments and other expenses, we determine 1% as the net commission income earned. The assessee gets relief of 0.4% on the commission income determined.

A.Y. 2013-14:

Unexplained cash and Jewellery:

13. The AO made addition of Rs.7,03,200/- on account of the cash found during the search.

14. Heard the arguments of both the parties and perused the material available on record.

15. We find from the record that no statement of the assessee with regard to the cash found has been recorded u/s 132(4) of the Income Tax Act, 1961 and statement recorded of the father of the assessee Sh. Jaiveer Tyagi on day of search itself revealed that the amount pertains Sh. Jaiveer Tyagi and other family members. There was a clear demarcation of the dwelling premises pertaining to the father of the assessee Sh. Jaiveer Tyagi who was a retired Government employee and also earning income from agricultural operations. The issue of income from agricultural operations has already been dealt above. Hence, keeping in view, the entire facts and circumstances, the location of the cash found, the statement of Sh. Jaiveer Tyagi recorded on the date of search, we hold that no addition is called for on account of cash in the hands of the assessee.

16. With regard to the jewellery, we find that the jewellery has been separately valued in different names of the family members namely, Ms. Bindu Tyagi, Ms. Indu Tyagi and Ms. Rajni The panchnama drawn has also clearly mentioned the fact of ownership of the jewelley with various people. Hence, the addition ought not to have been made in the hands of the assessee and hence, the same is ordered to be deleted.

17. In the result, all the appeals of the assessee are allowed.

Order Pronounced in the Open Court on 08/06/2023.