1996 (2) TMI 166 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition of Rs. 4,01,141 being the value of gold ornaments and jewellery seized.
2. Ownership and source of the gold ornaments and jewellery.
3. Validity of assessment framed by the Assessing Officer.
4. Alternative submission regarding the assessment being barred by limitation.

Detailed Analysis:

1. Deletion of Addition of Rs. 4,01,141:
The primary issue in this appeal is whether the CIT(A) erred in law and on facts in deleting the addition of Rs. 4,01,141, which was the value of gold ornaments and jewellery seized during a search under section 132 at the residence of the assessee on 20-1-1984. The Revenue contended that the CIT(A) was not justified in deleting the addition, arguing that the onus was on the assessee to explain the source of acquisition of these ornaments.

2. Ownership and Source of the Gold Ornaments and Jewellery:
The assessee claimed that the gold ornaments found at his residence belonged to his family members, specifically his wife, mother, and sister-in-law. The assessee provided detailed explanations and documentary evidence, including wills and disclosure petitions, to support his claim. During the search, the statements made by the assessee and his family members consistently indicated that the ornaments belonged to the family members and not to the assessee himself. The CIT(A) reviewed these explanations and documents and found them satisfactory, noting that the ornaments were found in the respective cupboards or rooms of the family members and that inventories were prepared accordingly.

The CIT(A) held that the gold ornaments and jewellery did not belong to the assessee and that the explanations provided were sufficient to establish the source of each item. The CIT(A) also noted that the family members had independent sources of income and were assessed to income tax and wealth tax, which further supported their ownership claims. The CIT(A) concluded that there was no case of unexplained jewellery and gold ornaments and deleted the addition of Rs. 4,01,141.

3. Validity of Assessment Framed by the Assessing Officer:
The Revenue argued that the statements made by the assessee and his family members were self-serving and could not be relied upon. However, the Tribunal found that the Assessing Officer had erred in solely relying on the order made under section 132(5), which is a summary assessment. The Tribunal emphasized that the burden of proving that the assessee was the owner of the gold ornaments lay on the taxing authority, which had not been discharged. The Tribunal also noted that the family members had provided overwhelming evidence in support of their ownership claims.

4. Alternative Submission Regarding the Assessment Being Barred by Limitation:
The assessee's counsel made an alternative submission that the assessment framed by the Assessing Officer was barred by limitation under section 153 of the Act. However, the Tribunal found no merit in this submission. The issue of the proceedings under section 147(a) was raised before the Assessing Officer and the CIT(A), who both rejected the contention of the assessee. The Tribunal declined to entertain this alternative submission, as the assessee had not filed an appeal or cross-objection.

Conclusion:
The Tribunal upheld the findings of the CIT(A) and concluded that the gold ornaments and jewellery did not belong to the assessee but to his family members. The Tribunal found that the explanations and documentary evidence provided by the assessee were sufficient to establish the source of the ornaments. Consequently, the Tribunal dismissed the appeal filed by the Revenue.