Rajkumar B. Agarwal Vs DCIT (ITAT Pune)
No addition on account of jewellery items on seized documents did not tally with description of jewellery in Wealth-tax returns in case total weight of jewellery was same
Conclusion: Where total gold jewellery in weight found at the time of search matched with the earlier declarations made by assessee in his Wealth-tax returns and VDIS, there could be no question of making any addition simply on the ground that the description of items in the list declared under Wealth-tax returns!VDIS was different from those actually found.
Held: The issue arose for consideration was whether an addition could be made simply on the ground that the jewellery items mentioned on page nos. 2 and 3 of seized documents did not tally with the description of jewellery given in Wealth-tax returns/VDIS declaration notwithstanding the fact that the total weight of jewellery was tallying. It was opined that this view point had no legal legs to stand on. So long as the total gold jewellery in weight found at the time of search matched with the earlier declarations made by the assessee in his Wealth-tax returns and VDIS, there could be no question of making any addition simply on the ground that the description of items in the list declared under Wealth-tax returns!VDIS was different from those actually found.
FULL TEXT OF THE ITAT JUDGMENT
This batch of six appeals by the three different but connected assesses, relating to the assessment years 2004-05, 2005-06 & 2006-07, involve some common issues. We are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
Rajkumar B. Agarwal – A.Y. 2005-06
2. The first issue raised in this appeal, through Ground Nos.1 and 2, is against the confirmation of addition of Rs.17,10,000/- and Rs.5 lakhs on account of unexplained jewellery on the basis of notings made on loose papers.
3. Briefly stated, the facts of the case are that a search action was taken u/s.132 of the Income-tax Act, 1961 (hereafter also called as ‘the Act’) in Agarwal/Malu group of cases on 20-07-2005. The assessee is a member of the Agarwal group. During the course of search, certain loose papers were found, which, inter alia, included page nos. 2 and 3 of the Executive Diary in Bundle no.3 having notings of investment in jewellery. Certain price/value was mentioned against some of the items of jewellery on these pages, while other items had only the description of jewellery without there being any figure depicting price/value. Total of the figures mentioned against the items of jewellery on pages 2 and 3 came at Rs.40,15,263/-. This total is exclusive of the items of jewellery against which no amount was given. During the course of investigation, the assessee stated that the items of jewellery against which no price was written, were not purchased by him or his family. The total value of jewellery items on seized page No.2 came at Rs.13,55,263/-, which the assessee admitted to have purchased from undisclosed sources and equal sum was offered for taxation. Regarding the entries on page no.3, the assessee stated that except for last two items, namely, gold biscuit and one diamond ring, the other items of jewellery were already disclosed in the Wealth-tax returns and declarations made under VDIS of self and his family members. The assessee made certain withdrawals on the occasion of marriage of his son. A sum of Rs.9,50,00/- [Rs.7,00,000 (gold biscuit) + Rs.2,50,00 (one diamond ring)] was claimed to have been spent out of such withdrawals. The AO accepted the assessee’s contention to this extent. He, however, made an addition for the remaining amount invested in jewellery to the tune of Rs. Rs.17,10,000/- [Rs.40,15,263 minus Rs.23,05,263 (Rs.13,55,263 + Rs.9,50,000)]. Thereafter, the AO proceeded to make addition in respect of items written on seized page no.3 against which no value was assigned. He attributed a sum of Rs.5 lakhs to such investments and made an addition for this sum also. This resulted into a total addition of Rs.22,10,000/- on account of unexplained investment in jewellery. The assessee remained unsuccessful before the ld. CIT(A). Aggrieved thereby, the assessee has approached the Tribunal.
4. We have heard both the sides and perused the relevant material on record. The authorities below have made additions of Rs.22.10 lakhs on the basis of certain notings made on page nos. 2 and 3 of the seized documents. The assessee made a claim before the authorities below, including the AO, that the jewellery which was unexplained was promptly offered for taxation while the remaining jewellery was out of declaration made under VDIS/Wealth-tax returns. It is apparent from page 25 of the impugned order that actual total gold, silver and diamond jewellery found during the course of search was as under :-
