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2019 (8) TMI 305 - HC - Income TaxUndisclosed gold and diamond sold - Voluntary disclosure of gold and diamond jewellery u/s 65(1) of VDIS 1997 accompanied by a valuation report in respect of declared items, reflecting item-wise weight with other particulars - tribunal held that assessee had failed to establish that sold diamonds are VDIS declared items on account of number of pieces of diamond, their size, cut and colour of the sold diamonds was not verifiable - tribunal differ from decisions rendred on similar facts - HELD THAT - The assessee in the instant case being similarly placed and gold having been smelted through Balaji Refinery and having sold the same to M/s.Mahalakshmi Jewellers, the chain of link stood established with regard to the gold/jewellery declared by the assessee under VDIS 1997 on 05.11.1997 being the same items which had been got smelted by them through goldsmith M/s. Shree Balaji Refinery and then sold to M/s.Mahalakshmi Jewellery and M/s.Sheetal Exports. As such, tribunal was not justified in not applying the ratio of its own orders rendered in several matters which have been referred to herein above. In fact, tribunal in its various decisions rendered in respect of the assessees who are similarly placed, who also contended that gold declared by them under VDIS had been smelted through Balaji Refinery and sold thereafter to Mahalakshmi Jewellers had been accepted. Tribunal committed a serious error in not accepting the sale invoices Annexures- F and J submitted by the assessee on the ground that it is not the same items which had been shown and declared by them in the VDIS declaration and the valuation report annexed to such declaration. It further committed a serious error in not applying the ratio of its earlier decision to the facts on hand which were not only similar but also identical as it relates to the same Refinery who had smelted the gold declared by the assessee under VDIS-1997. Hence, we answer the substantial questions of law in favour of the assessee and against the Revenue.
Issues Involved:
1. Whether the weight of jewellery declared under Voluntary Disclosure of Income Scheme (VDIS) matches the weight claimed by the assessee based on invoices. 2. Whether the tribunal erred in not relying on its previous decisions under similar facts. Detailed Analysis: Issue 1: Weight of Jewellery Declared Under VDIS The appellants voluntarily disclosed gold and diamond jewellery under Section 65(1) of VDIS 1997, accompanied by a valuation report detailing the items' weight and other particulars. This declaration was accepted by the Commissioner of Income Tax, and a Certificate under Section 68(2) of VDIS 1997 was issued. The appellants later filed income tax returns for the Assessment Year 1998-99, declaring negative income from the sale of the VDIS-declared jewellery, which had been smelted into bullion and sold. During scrutiny, the appellants produced the valuation reports, original purchase invoices, and an affidavit from the goldsmith to substantiate their claims. However, the assessing officer rejected the capital gains income and taxed the entire sale consideration under Section 68 of the IT Act. The rejection was based on the grounds that the premises mentioned in the invoices were not occupied by the involved parties, and the affidavit from the goldsmith lacked evidentiary value. Upon review, it was found that the assessing officer did not confront the appellants with the evidence collected during the enquiry, which was used against them. The appellants had provided sufficient documentation, including valuation reports and bank drafts, to prove that the sold items were the same as those declared under VDIS. The tribunal's failure to consider these documents and the lack of opportunity given to the appellants to rebut the evidence collected during the enquiry were significant errors. Issue 2: Tribunal's Reliance on Previous Decisions The tribunal had previously dealt with similar cases where the appellants had declared jewellery under VDIS, smelted it through the same refinery, and sold it. In those cases, the tribunal accepted the appellants' claims, noting that the items' weight and other details matched those in the valuation reports submitted under VDIS. For instance, in ITA No.102/BANG/2016 and ITA No.103/BANG/2016, the tribunal found that the appellants had sufficiently demonstrated that the gold and diamonds sold were the same as those declared under VDIS, despite the assessing officer's reliance on outdated and non-conclusive evidence. In the present case, the tribunal failed to apply the same reasoning and did not consider the appellants' evidence, which included similar valuation reports and invoices. The tribunal's inconsistency in handling identical facts and its failure to apply the ratio of its earlier decisions were highlighted as serious errors. Conclusion The tribunal's decision was set aside, and the appeals filed by the appellants were allowed. The court concluded that the appellants had sufficiently established that the jewellery sold was the same as that declared under VDIS, and the tribunal should have relied on its previous decisions in similar cases. The substantial questions of law were answered in favor of the appellants and against the Revenue. Order: 1. ITA Nos.100005-100006/2018 are allowed. 2. The order dated 11.08.2017 by the Income Tax Appellate Tribunal, Bangalore Bench ‘C’, in ITA No.2095/Bang/2016 and ITA No.2096/Bang/2016 for the assessment year 1998-99 is set aside. 3. Appeals filed by the assessees before the Income Tax Appellate Tribunal, Bangalore Bench ‘C’, are allowed. 4. No order as to costs.
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