2015 (8) TMI 702 - AT - Income Tax

Adoption of value of gold jewellery - Revenue raised the ground with regard to non-adoption of value of 30,000 gms. of gold at the average rate as on 01/04/2008 and 31/03/2009 (i.e. ₹ 10892/- per 10 gms) as per the provision of sec. 69A - Held that - It is a settled proposition that whenever gold articles are recovered from the assessee, unless there is cogent evidence adduced by the assessee regarding the date on which it was acquired, it should be presumed that the articles belonged to the assessee and were owned by him and it is also to be presumed that the articles were acquired in the year in question and it represented the concealed income of the assessee. The assessee s Counsel submitted that the gold jewellery was accumulated year after year for the last 15 years, therefore the average rate of ₹ 520 per gram is to be considered. Without prejudice to this argument, the assessee took the plea that the valuation of 26 kg. at ₹ 1,93,44,000/- has been accepted by the Department for the assessment year 2007-08 which was considered as protective assessment and in the substantive assessment for the assessment year 2009-10, the same value is to be adopted. U/s. 69A gold jewellery found during the course of survey is to be valued at the rate prevalent at the time of survey and not at the rate stated by the assessee. In this case, it is to be deemed that the gold jewellery was acquired in the year in question when the survey took place. More so, this view taken by the Assessing officer finds support in the case of CIT vs. K.I. Pavunny (1998 (2) TMI 105 - KERALA High Court) wherein the same ratio was laid down by the Court. In view of this, the jewellery found during the course of survey is to be valued at the rate as applicable in the assessment year under consideration. CIT(A) is not justified in valuing the gold jewellery at the rate prevalent in the assessment year 2007-08. Accordingly, we reverse the order of the CIT(A) and restore that of the Assessing officer. - Decided in favour of revenue. Addition of value of 2 kg. gold - CIT(A) deleted addition on the reason that the assessee himself has offered it for taxation in his return of income at ₹ 19,40,000/- - Held that - We are of the opinion that the entire value of 30 kg. of gold jewellery is to be taxed in this assessment year at the prevalent rate at the time of survey and thereafter, the value of gold jewellery already offered by the assessee for taxation in his return of income, is to be reduced from the total value and only net balance is to be considered for addition. Admittedly, in this case, the Assessing officer worked out the total value of 30 kg. at ₹ 3,26,76,000/- and he has made deduction towards the value of 2 kg of gold at ₹ 19,40,000/- when it was already offered for taxation by the assessee himself in his return of income filed in this assessment year. Thus, the Assessing officer considered the difference of ₹ 3,07,36,000/-. Being so, in our opinion, the CIT(A) is not justified in making further deduction of ₹ 19,40,000/- on this count. Accordingly, we are inclined to reverse the order of the CIT(A) and restore that of the Assessing officer on this issue also. Accordingly. the Revenue appeal is allowed on this issue also.- Decided in favour of revenue.

Summary

Issues:
1. Valuation of gold jewelry for assessment year 2009-10.
2. Condonation of delay in filing Cross Objection.
3. Dispute over valuation of gold jewelry between Revenue and assessee.

Analysis:

Issue 1: Valuation of gold jewelry for assessment year 2009-10
The appeal and cross objection were filed against the order passed by the CIT(A)-V, Kochi for the assessment year 2009-10. The Revenue contested the non-adoption of the value of 30,000 gms of gold at the average rate as per sec. 69A of the Income Tax Act, while the assessee raised concerns over the adoption of a different value for 26 kg of gold jewelry. The CIT(A) had valued the 26 kg of gold at a lower rate compared to the Assessing Officer's valuation. The Tribunal held that the gold jewelry found during the survey should be valued at the rate prevalent at the time of the survey, as per the decision in CIT vs. K.I. Pavunny. Therefore, the CIT(A)'s valuation at the rate applicable in the assessment year 2007-08 was deemed incorrect, and the Assessing Officer's valuation was upheld. The Revenue's appeal was allowed on this issue.

Issue 2: Condonation of delay in filing Cross Objection
There was a delay of 58 days in filing the Cross Objection by the assessee. The assessee sought condonation of delay, attributing it to misplaced appeal papers. The Tribunal, after considering the reasons provided by the assessee, condoned the delay and admitted the Cross Objection for adjudication. The Revenue did not raise any serious objection to the condonation of delay.

Issue 3: Dispute over valuation of gold jewelry between Revenue and assessee
The dispute between the Revenue and the assessee primarily revolved around the valuation of the gold jewelry. The Revenue argued for valuation at the rate prevalent at the time of the survey, relying on legal precedents. In contrast, the assessee contended that the gold had been accumulated over 15 years at a consistent rate, justifying a lower valuation. The Tribunal upheld the Revenue's argument, emphasizing that the valuation should be based on the prevailing rate at the time of the survey. The CIT(A)'s decision to value the jewelry at a lower rate was overturned, and the Assessing Officer's valuation was reinstated. Consequently, the Revenue's appeal was allowed on this issue, and the Cross Objection filed by the assessee was dismissed as it became infructuous.

In conclusion, the Tribunal upheld the Revenue's appeal regarding the valuation of gold jewelry for the assessment year 2009-10, emphasizing the importance of valuing the jewelry at the rate prevalent at the time of the survey. The delay in filing the Cross Objection was condoned, and the Cross Objection was admitted for adjudication, although it was later dismissed as infructuous due to the decision on the main issue.