2007 (11) TMI 550 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 19,03,027 as investment in silver bullion.
2. Addition of Rs. 8,72,713 as investment in silver ornaments.
3. Addition of Rs. 50,787 as undisclosed cash.
4. Addition of Rs. 3,89,545 as unexplained investment in shares.

Issue-wise Detailed Analysis:

1. Addition of Rs. 19,03,027 as Investment in Silver Bullion:
The assessee contested the addition of Rs. 19,03,027 for silver bullion weighing 265.9 kgs seized from their residence. The assessee claimed that 240 kgs belonged to his sons, inherited from their grandfather, and 25.9 kgs belonged to him, disclosed under the VDIS of 1975. The Assistant Commissioner of Income-tax rejected this claim due to lack of evidence, such as a will, and the fact that the sons did not disclose these assets in their balance sheets or wealth-tax returns. The Tribunal, however, accepted the assessee's explanation, noting that the inheritance of silver bullion in Indian families without a written will is common. The Tribunal directed that the addition should be considered in the hands of the sons, not the assessee.

2. Addition of Rs. 8,72,713 as Investment in Silver Ornaments:
The assessee challenged the addition of Rs. 8,72,713 for silver ornaments weighing 412.143 kgs found at various premises. The ornaments were claimed to belong to customers for polishing work and not the assessee. The Tribunal found that the ornaments belonged to the son, who dealt in dalali business, and the assessee only facilitated the polishing. The Tribunal directed that the addition should be considered in the hands of the son, not the assessee.

3. Addition of Rs. 50,787 as Undisclosed Cash:
The assessee explained that the cash of Rs. 50,787 was from the sale of gold ornaments received at the time of marriage. The Assistant Commissioner rejected this claim due to insufficient evidence, such as the absence of a detailed receipt. The Tribunal, however, accepted the assessee's explanation, noting the confirmation from the dalal who facilitated the sale. The Tribunal deleted the addition.

4. Addition of Rs. 3,89,545 as Unexplained Investment in Shares:
The assessee contested the addition of Rs. 3,89,545 for shares found during the search. The assessee claimed that these shares belonged to his son, who dealt in share business. The Tribunal accepted the son's confirmation letter and directed that the addition should be considered in the hands of the son, not the assessee.

Conclusion:
The Tribunal allowed the appeal partly for statistical purposes, directing that the additions related to silver bullion, silver ornaments, and shares should be considered in the hands of the respective owners (the assessee's sons) and not the assessee. The addition of Rs. 50,787 as undisclosed cash was deleted based on the evidence provided by the assessee.