2016 (5) TMI 1313 - HC - Income Tax

Unexplained gold jewellery - search operation - Held that - As a matter of fact none of the figures given even in the belated explanation matches with the gold jewellery actually found in possession of the appellant. The clear stand in the submission of the assessee was that as much as 1500 gms. of gold jewellery by net weight was still lying with the appellant but much less gold jewellery have been shown in the returns filed by the family members of the appellant than what has been actually found in the course of search. A deviation between the same or inconsistency in the figures was for the assessee to explain and upon failure to do so the explanation could have been found to be unsatisfactory by the Assessing Officer or at the appellate stage and could have been rejected which has been done in the present matter. Before us learned counsel for the appellant sought to argue that approximately 300 gms. net weight each shown by the two brothers of the husband of the assessee could add up to the figure of defence in the present matter. The same does not match the stand taken before the Assessing Officer and is a last ditch effort to show the consistency in a manner to seek re-appreciation of the evidence for which the last forum of facts was the Tribunal. - Decided against the assessee.

Summary

Issues:
1. Appeal against order passed by Income-tax Appellate Tribunal regarding undisclosed investment in gold jewellery during a search operation.
2. Substantial questions of law framed by the court regarding the addition made and the rejection of the explanation provided by the assessee.

Analysis:
1. The appeal was filed against the order of the Income-tax Appellate Tribunal regarding undisclosed investment in gold jewellery found during a search operation. The appellant claimed that the jewellery was part of family legacy and disclosed in regular returns. However, discrepancies were found in the disclosed amount compared to the actual possession. The Assessing Officer concluded that the appellant failed to disclose 618.530 gms of gold jewellery as an investment, resulting in an undisclosed amount of Rs. 3,51,016. The Commissioner of Income-tax (Appeals) and the Tribunal upheld this decision, leading to the present appeal.

2. The court framed substantial questions of law, questioning the legality of the addition made on unexplained gold ornaments and the justification for rejecting the appellant's explanation. The appellant argued that the jewellery belonged to the family legacy and was kept for distribution among rightful heirs. The appellant's counsel contended that the disclosed jewellery in family members' returns explained the possession, refuting any undisclosed investment. However, the Revenue argued that the delayed explanation and discrepancies in figures indicated undisclosed investments, justifying the rejection of the appellant's claims.

3. The court analyzed the arguments presented by both sides. The appellant's explanation, raised belatedly during the hearing, was deemed insufficient as it should have been provided at the time of filing block returns. The court noted inconsistencies between the disclosed amounts and actual possession of jewellery, indicating a lack of satisfactory explanation. The attempt to correlate the jewellery with the brothers-in-law's disclosed amounts was considered a last-minute effort to seek consistency. The court agreed with the Revenue's stance that no perversity in lower authorities' findings was demonstrated, leading to the dismissal of the appeal in favor of the Revenue.

4. Citing a previous decision, the court emphasized the importance of credible explanations and the onus on the assessee to provide satisfactory clarifications. The court concluded that the appellant's delayed and inconsistent explanations failed to justify the undisclosed investment in gold jewellery, affirming the lower authorities' decision. The judgment upheld the rejection of the appellant's claims, emphasizing the need for accurate disclosures and timely explanations in tax matters.