COMMISSIONER OF INCOME TAX Vs. SATYA NARAIN PATNI

JUDGEMENT

(1.) THIS instant income -tax appeal under s. 260A of the IT Act, 1961 (hereinafter referred to in short as 'Act of 1961') filed by the Revenue assailing the order of the Income -tax Appellate Tribunal, Jaipur Bench 'A, Jaipur, dt. 15th Jan., 2010 passed in ITA No. 715/JP/2009 and cross -objection No. 150/JP/2009, relates to asst. yr. 2005 -06. Though the Revenue has raised as many as 2007 questions which according to the Revenue, are substantial questions of law, but primarily, during the course of arguments, counsel for the Revenue has contended that the question No. 3 pertains to addition of Rs. 2,88,176 made by the AO on account of unexplained jewellery found during the search, and whether there was any proper explanation for its deletion deserves consideration of this Court, and according to him, rest of the substantial questions of law, needs no consideration of this Court. Brief facts which have been culled out on perusal of the impugned orders, are that a search and seizure operation was carried out at the business and residential premises of the assessee on 30th June, 2004 where certain incriminating books of accounts and documents were seized. During the course of search operation, cash amounting to Rs. 1,50,600 was found besides Gold jewellery weighing 2,202.464 gms. valued at Rs. 10,53,520 and silver items valued at Rs. 93,678. Looking to the status of the assessee and the statement given during the course of search operation by various family members and considering the fact that there are four married ladies in the house including the wife of the assessee, no jewellery was seized by the authorised officer, however, the jewellery to the extent of 1600 gm was treated as reasonable by the AO which had been received by them at the time of their marriage. The balance jewellery weighing 602.464 gm was treated as unexplained in absence of any satisfactory explanation from the assessee and the value of the same which was determined at Rs. 2,88,176, was added back to the income of the assessee treating the same as purchased out of Income from undisclosed sources of the assessee and accordingly added back to his income. The assessment order came to be passed on 28th Dec. 2006 where this addition was made along with other additions based on the incriminating documents found during the course of search.

(2.) BEING dissatisfied with the observations and addition, the respondent -assessee preferred an appeal before the CIT(A) Central, Jaipur, who vide order dt. 19th June, 2009, substantially deleted the additions made by the AO including the addition of the jewellery made by the AO to the tune of Rs. 2,88,176.

(3.) LEARNED counsel for the Revenue has contended that the AO had given due credit of jewellery to the various family members. He has also contended that out of jewellery of Rs. 10,53,520, only jewellery of Rs. 2,88,176 was found unexplained and almost 75 per cent of the jewellery found was treated as explained by the AO himself and only where the respondent -assessee or family members were not in position to explain the balance jewellery, the addition was made. The respondent -assessee or/and other family members were not in position to adequately explain the source of receipt of aforesaid jewellery and it was duty of the assessee to lead proper evidence, but since no evidence was led, therefore, according to the status of the respondent, AO rightly gave credit to the respondent of 1,600 gms of jewellery, and being not satisfied with the balance, made addition which was correct and justified. He has further contended that though there is circular of the Board which has been referred to by the Tribunal dt. 11th May, 1994, but it simply lays down that in case a person is not assessed to wealth -tax, then in that case, jewellery and ornaments to the extent of 500 gms per married lady, 250 gms per unmarried lady and 100 gms per male member of the family need not be seized but it does not mean that AO is debarred from questioning even the items found. The circular emphasized only that jewellery will not be seized, however, the AO was duty -bound to seek explanation of owning and possessing of such jewellery. He has also contended that when majority of the jewellery in accordance with the status of the respondent -assessee had been accepted, then only to the extent the assessee was unable to prove by acceptable evidence of the balance, the said addition was made and which is proper and contended that the Tribunal is unjustified and that substantial question of law arise for consideration.