1997 (6) TMI 37 - AT - Income Tax

Summary

Issues Involved:
1. Unexplained value of investments in four pieces of primary gold.
2. Unexplained gold ornaments found at the residence of the assessee.
3. Value of gold ornaments found in the shop of the assessee's major son.

Issue-wise Detailed Analysis:

1. Unexplained Value of Investments in Four Pieces of Primary Gold:
The assessee admitted during a search on 12th Nov., 1985, that four pieces of gold with the sign of 'Shree' belonged to him and were not entered in his books of account. Later, he retracted this statement, claiming that the gold belonged to his wife and mother. The Collector of Customs & Central Excise confiscated the gold under s. 71 of the Gold Control Act, 1968, and imposed a redemption fine and penalty. The AO added Rs. 91,455 to the assessee's income for unexplained investments in these gold pieces. The CIT(A) confirmed this addition, noting that the gold pieces were not legally kept at the residence and were not recorded in the required register. The Tribunal upheld this decision, stating that the assessee's retraction was not permissible under the law and that the statements of the two ladies were not corroborated by any other evidence. The Tribunal concluded that the four gold pieces belonged to the assessee and confirmed the addition of Rs. 91,455.

2. Unexplained Gold Ornaments Found at the Residence of the Assessee:
The AO made an addition of Rs. 93,670 for unexplained gold ornaments found at the assessee's residence, rejecting the claim that they belonged to his wife and mother. However, the CIT(A) deleted this addition, accepting the explanation that the ornaments were satisfactorily explained as belonging to the wife and mother, who had disclosed much more jewellery in their wealth tax returns. The Revenue accepted this deletion, and the Tribunal did not further address this issue.

3. Value of Gold Ornaments Found in the Shop of the Assessee's Major Son:
Gold ornaments weighing 128 gms. were found in the shop of the assessee's major son, who ran a business under the name Sonal Jewellers. The AO added Rs. 29,320 to the assessee's income, presuming that the shop belonged to the assessee and that the gold ornaments were his. The CIT(A) confirmed this addition, stating that the son had no independent status and no licence to keep gold ornaments. The Tribunal, however, deleted this addition, noting that the son was a major, running an independent business, and was independently assessed to tax. The Tribunal concluded that the gold ornaments did not belong to the assessee and that the addition was unjustified.

Conclusion:
The Tribunal partially allowed the appeal, confirming the addition of Rs. 91,455 for unexplained investments in primary gold but deleting the addition of Rs. 29,320 for gold ornaments found in the son's shop. The deletion of Rs. 93,670 for unexplained gold ornaments at the residence was accepted by the Revenue and was not further contested.