2013 (12) TMI 714 - AT - Income Tax

Unexplained cash credit - Held that - The assessee has only source of income i.e. income from other sources, interest on loans and interest on bank - The assessee has only bank account maintained with Allahabad Bank - She has opened one bank account with Standard Chartered Bank, Gariahat Branch, Kolkata just to deposit the sale proceeds of jewellery, which was handed over by her mother for the purpose of charity - The assessee produced the letter of Smt. Rampiyari Devi which clearly states that she is having gold and diamond jewellery, which was received at the time of her marriage, and expressing her will for charity out of the sale proceeds of the above jewellery through her daughter - Even the sale proceeds were deposited in the Standard Chartered Bank Account only for the purpose of depositing sale proceeds of jewellery, for which the assessee was only custodian and this account was opened just as a facilitator - Immediately after sale of jewellery the amount was deposited in this bank and was issued cheque in the name of Ramkrishna Mission for the purpose of charity - By producing the evidence before the lower authorities the assessee has discharged the initial burden which lies upon him. Now the burden shifts on the department as to why the assessee s case cannot be accepted and why it must be held the entry, thought purporting to be in the name of a third party, still represent the income of the assessee from an undisclosed income - The AO or the CIT(A) has neither examined these evidences nor put to cross examination like that of sale bill, the valuation report or the ownership letter written by assessee s mother - The assessee has produced all the evidences and which have arbitrarily been rejected by the lower authorities - Assessee was never the owner of gold and diamond jewellery instead her mother has handed over the possession of jewellery for doing charity out of the sale proceeds of the same and assessee acted accordingly - Decided in favour of assessee.

Summary

Issues Involved:
1. Confirmation of additions made by AO regarding unexplained cash credit in the bank account of the assessee.
2. Consideration of the letter from the deceased mother of the assessee regarding her Stridhan (Jewellery) for making charity.

Detailed Analysis:

1. Confirmation of Additions Made by AO Regarding Unexplained Cash Credit in the Bank Account of the Assessee:

The primary issue in both appeals was the confirmation by the CIT(A) of the AO's additions of Rs. 14.90 lakh and Rs. 25.07 lakh for AY 2006-07 and 2007-08 respectively, as unexplained cash credits in the assessee's bank account. The AO found deposits in the assessee's undisclosed bank account with Standard Chartered Bank, Gariahat Branch, Kolkata. The assessee claimed these deposits were from the sale of gold and diamond jewellery inherited from her late mother, Smt. Rampiyari Devi. The AO disbelieved this explanation due to the lack of evidence, such as sale memos, and the fact that the jewellery was not reported in the assessee's balance sheet.

The CIT(A) upheld the AO's decision, stating that the evidence provided by the assessee, including a letter from her mother and a valuation report, lacked credibility. The CIT(A) noted discrepancies in the valuation and sale prices of the jewellery and questioned the plausibility of the jewellery being transported and sold in Surat.

2. Consideration of the Letter from the Deceased Mother of the Assessee Regarding Her Stridhan (Jewellery) for Making Charity:

The assessee provided a letter from her deceased mother, dated 27.10.1997, expressing her wish to donate the proceeds from her jewellery to charity. The assessee also submitted a valuation report of the jewellery from 1997 and sale bills for the diamonds sold in Surat. The AO and CIT(A) dismissed these documents as self-serving and not credible, arguing that the letter was not registered and the valuation report was not filed with any tax returns.

The Tribunal, however, found that the assessee had provided substantial evidence, including the letter, valuation report, and sale bills, which were not adequately refuted by the lower authorities. The Tribunal noted that the assessee had no other significant source of income and had used the Standard Chartered Bank account solely for depositing the sale proceeds of the jewellery and making charitable donations. The Tribunal emphasized that the AO and CIT(A) had rejected the evidence based on conjecture and surmises without proper cross-examination or inquiry.

Conclusion:

The Tribunal concluded that the assessee had satisfactorily explained the source of the deposits as the sale proceeds of jewellery inherited from her mother. The Tribunal cited the case of S. Kannan Kunhi Vs. CIT, emphasizing that the rejection of the assessee's explanation does not automatically imply that the receipts are income. The Tribunal reversed the orders of the lower authorities and deleted the additions, allowing the appeals in favor of the assessee.