1995 (2) TMI 108 - AT - Income Tax

Summary

Issues Involved:

1. Deletion of addition of Rs. 5,66,556 related to silver coins, gold ornaments, and silver utensils.
2. Deletion of addition of Rs. 1,08,000 related to gold ornaments.
3. Setting aside the assessment by CIT(A) for fresh consideration.
4. Ownership and source of acquisition of assets found during the search operation.
5. Validity and existence of the Will of Smt. Magan Devi.
6. Assessment of income belonging to Smt. Shyam Kumari.

Issue-wise Detailed Analysis:

1. Deletion of Addition of Rs. 5,66,556 Related to Silver Coins, Gold Ornaments, and Silver Utensils:

The Revenue challenged the deletion of Rs. 5,66,556, arguing that the silver coins, gold ornaments, and silver utensils were not substantiated by a valid Will. The CIT(A) deleted the addition, accepting the assessee's claim that these items were bequeathed by Smt. Magan Devi through her Will. The Tribunal upheld the CIT(A)'s decision, noting that the notarized copy of the Will, which described the items in detail, was found in a locker and had been notarized in 1981. The Tribunal emphasized that the Will's existence and notarization prior to the search operation in 1986 indicated the items were in possession of the family before the assessment year 1987-88. Therefore, the addition could not be made in the assessment year under appeal.

2. Deletion of Addition of Rs. 1,08,000 Related to Gold Ornaments:

The CIT(A) accepted the assessee's claim that the gold ornaments belonged to the wives of the assessee and his two brothers. The Tribunal found that the evidence provided by the assessee, including statements and documents, was not contested by the Assessing Officer. Given the family's sarrafa business and the customary practice of receiving jewelry at marriage, the Tribunal upheld the CIT(A)'s decision to delete the addition, concluding that the 36 tolas of gold ornaments were reasonably explained.

3. Setting Aside the Assessment by CIT(A) for Fresh Consideration:

The CIT(A) set aside the assessment regarding the addition of Rs. 24,337, directing a fresh assessment. The assessee argued that this income belonged to Smt. Shyam Kumari and should not be added to his income. The Tribunal noted that it could only interfere with the CIT(A)'s discretion if it was exercised arbitrarily, which was not the case here. The Tribunal upheld the CIT(A)'s decision, allowing the Assessing Officer to consider all material during the fresh assessment.

4. Ownership and Source of Acquisition of Assets Found During the Search Operation:

The Tribunal considered the source and ownership of the assets found during the search operation. The assessee claimed these assets were bequeathed by Smt. Magan Devi through her Will. The Tribunal noted that the Assessing Officer failed to cross-examine the deponents regarding the capacity of Smt. Magan Devi to acquire such assets. The Tribunal emphasized that the notarized copy of the Will and the affidavits provided were not refuted by the Revenue, supporting the assessee's claim that the assets were acquired through the Will.

5. Validity and Existence of the Will of Smt. Magan Devi:

The Revenue contested the existence and validity of the Will, arguing that it was not produced during the search and was claimed to be destroyed by ants. The Tribunal noted that the notarized copy of the Will, found in 1986, described the assets in detail and was notarized in 1981. The Tribunal emphasized that the notarized document's existence before the assessment year indicated the assets were in possession of the family earlier. The Tribunal concluded that the original Will's non-production did not materially affect the case, as the notarized copy provided sufficient evidence of the assets' existence and bequeathal.

6. Assessment of Income Belonging to Smt. Shyam Kumari:

The assessee argued that the income of Rs. 24,337 belonged to Smt. Shyam Kumari and should not be added to his income. The Tribunal upheld the CIT(A)'s decision to set aside the assessment for fresh consideration, allowing the Assessing Officer to review all material evidence. The Tribunal found no grounds to interfere with the CIT(A)'s discretion, supporting the need for a fresh assessment to determine the rightful ownership of the income.

Conclusion:

The Tribunal upheld the CIT(A)'s decisions, confirming the deletion of additions related to silver coins, gold ornaments, and silver utensils, and supporting the setting aside of the assessment for fresh consideration. The Tribunal emphasized the importance of the notarized Will and the affidavits provided by the assessee, concluding that the assets were reasonably explained and the additions could not be made in the assessment year under appeal. Both appeals were rejected.