9911796707
TMI Blog1990 (8) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... /s A.E. Lokhandwala Sons and reflections. He was married in 1958 and Smt. Mehfuzabai is also assessed separately for income-tax and wealth-tax showing income from packagings, interest, dividend, etc. Shri Juzer though only a student of law at present was stated to have been helping his father and mother in their businesses and drawing remuneration, commission, etc., from them. Shri Abbasbhai and his wife have been declaring their returns on income net after deduction of outgoing on account of payment to Juzer. Neither Shri Abbasbhai nor his wife have ever maintained any books of account but they have data supporting their return version for the various years. They had disclosed under the 1975 V.D. Scheme regarding some jewellery. They have also been declaring certain jewellery in their wealth-tax assessment. Whatever jewellery has been sold, was offered for capital gains tax. 3. Action u/s 132 on the premises occupied by the assessee led to discovery of jewellery in excess of that accounted for in the wealth-tax returns. Shri Abbasbhai was called upon to explain the origin of funds which enabled him to acquire such jewellery. The total jewellery found had a gold content of 1121 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Sathe agreed that as far as payment of salary to Juzer is concerned there was no specific mention in the income-tax returns but the corresponding liability on account of the amounts payable to Juzer were shown in the wealth-tax returns and have also been accepted by the authorities below. The entire issue thus centres round" the question whether the cash account as prepared by the assessee could be given any credence beyond that already given by the authorities below. Shri Sathe pointed out that even at the time of search the daughter-in-law Maria has stated clearly that the jewellery belonged not to Abbasbhai alone but also Smt. Mehfuzabai. Unfortunately, neither Abbasbhai nor Mehfuzabai were present at the time of search but they had reiterated their contention to the ITO in the letters mentioned earlier. It is true that in letter dt. 7-5-1994 the assessee's representative did say that going on panchnama basis is redundant and that only overall picture should be taken. This does not, however, mean that Abbasbhai accepted that all the jewellery not reflected in the wealth-tax return owe their origin to the undisclosed income of Abbasbhai alone. 6. Winding up his arguments, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 396.00 grams - do - 74.50 grams ------------ (vide assessee's paper book 1, pages 1 and 2) 668.50 grams ------------ A deduction has been given for 9 grams in excess of 10 grams admitted by Abbasbhai linked with disclosure figures. 49. 10 grams were explained with reference to actual vouchers of earlier period. The net figure is thus 668.50 - 59.10 = 610.40 gm. Shri Roy further contended that the W.T. returns of earlier years are sacrosanct and it cannot be said that the assessee had omitted showing the items of jewellery in respective wealth-tax returns although he did in fact have them. The burden in such cases is heavily on the assessee and it cannot be said to have been discharged by merely filing an affidavit. Relying on Sri Krishna v. CIT [1983] 142 ITR 618 (All.), Shri Roy submitted that such self-serving affidavits have little evidential value. The explanation has therefore, been rightly rejected. Coming to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Smt. Mehfuzabai had no business activity. From her returns, it is quite clear that she was holding substantial business income and that she was disclosing the same long before the raid took place. 11. On an examination of the issues, we hold that the explanation has been rightly rejected. by the authorities below as far as the total jewellery of 610.4 grams is concerned. As rightly pointed out by the DR sec. 69-A comes into full play in this case. Both Shri Abbasbhai and Smt. Mehfuzabai have been assessed regularly to income-tax and wealth-tax, and the ornaments found at the time of search to the extent quantified by the ITO cannot be said to have been explained with reference to the past available records or from alleged gifts. There is absolutely no evidence on the point. We also find considerable force in the argument of Shri Roy that the cash-flow statement now prepared does not deserve as much credence as the assessee's representative would like it to have. If this deserves any credence at all the same has already been done by the authorities below when they allowed the assessee to identify the other investments like scooter, etc., to the extent of Rs. 46,000. It is for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned that this would show that the contributions made represented the actual business ventures. Although no profit or loss was shown in the past from the various statements it should be clear that the km has been incurred and should be allowed. The claim would fall u/s 28. Reliance was also placed on CIT v. Kovur Textiles Co. [1982] 136 ITR 61 (AP) but this is clearly distinguishable, in that, it was a case of interest assessable under other sources. On facts also, Shri Sathe could not tell us how exactly the present accounting period has been chosen for considering the amounts as having become irrecoverable. The Sudarshanan Chit Fund went in liquidation on 18-11-1981. There have been appeals and litigation but so far nothing definite can be said. 15. In reply, the DR invited our attention to the orders of the authorities below the contents of which we have already summarised above. 16. On an examination of the various facts, we hold that the authorities below were justified in rejecting the claim. This ground of appeal therefore, fails. 17. In the result, both the appeals are partly allowed. Per Shri T. A. Bukte, Judicial Member --- I have carefully gone through the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee's income and cancelled the protective assessment made on the assessee's wife Mrs. Mehfuzabai. The learned advocate Shri K. A. Sathe for the assessee has explained that all the figures as shown in cash-flow statement were reflected in the Income Tax and Wealth Tax returns of the assessee and wife. He also explained that the lower authorities have accepted the liabilities shown in the Wealth Tax returns as salary payable to the assessee's son Juzer, though not shown in the Income Tax Return. According to him, the only point for consideration was whether cash-flow statement was acceptable or not. Shri Sathe has stressed upon the statement of the daughter-in-law Smt. Maria who stated that at the time of search the jewellery found belongs to the assessee's wife also. The assessee never agreed that all the jewellery not disclosed in the Wealth Tax return belonged to him alone. Shri Sathe also urged to take a pragmatic approach because of spiralling prices of gold ornaments and the assessee need not be put into difficulties and should not be saddled with high tax liabilities. He also urged to take judicial note of the assessee's peculiar position disabling him from producing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the gold ornaments from time to time. 7. Shri Roy submitted that so far as the assessment of the value of gold jewellery is in the hands of the assessee's wife in equal share, it cannot be done firstly because jewellery was found in one room and secondly, jewellery declared by the assessee's wife is not included. According to him, the entire liability can be fixed on the as only. 8. Smt. Mehfuzabai also filing Income-tax and Wealth Tax Returns. She has been by the same ITO. She was holding substantial business income. Therefore, Shri Sathe urged to assess this in the hands of the assessee's wife equally. 9. What is to be considered is whether the explanation given by the assessee is just, proper and convincing. The affidavits are on record. Cash flow statement prepared cannot be discarded because it is prepared from 1-4-1972. It also cannot be discarded because it reflects the figures from the wealth-tax returns. If the affidavits coupled with cash flow statement is accepted, then the entire addition as made by the lower authorities requires to be deleted from the hands of the assessee. It would not be correct to say that cash flow statement is not creditworthy. Much of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Department on 21-3-1984 at the residence of Shri Abbasbhai E. Lokhandwala hereinafter referred to as "AEL". In the bedroom occupied by "AEL" and his wife Smt. M.A. Lokhandwala, hereinafter referred to as "MAL", and other jewellery was found. Both the husband and the wife were out of station on 21-3-1984 at the time of search. Those who were present included the son Juzer, the daughter-in-law Maria, and the daughter Rashida. Eventually, the Income-tax Officer went into the question as to whether the source of the jewellery which was found during the search was explained or not For this purpose, he went into the wealth-tax returns filed by "AEL" and "MAL" and other statements given by them and others about the receipt of gold jewellery. by the daughter-in-law etc. The conclusion arrived at by the ITO was that out of 1121 gms. of jewellery found, them was adequate explanation to the extent of 511 gms. and the investment in the balance of 610 gms. was unexplained. At the value of Rs. 1,950 per 10 grams, the price came to Rs. 1, 19,925. This amount was included in the hands of "AEL" and also on a protective basis in the hands of "MAL". The reasoned assessment order is in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en acquired prior to 1958. When the jewellery now under consideration was not shown in the Disclosure in 1975, the contention of the Revenue was that at least in 1975 it did not exist and according to the learned Departmental Representative the case clearly falls under the provisions of sec. 69A which reads as under :--- "69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other, valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." He stated that merely because a sort of cash-flow statement was prepared by the assessees to show that they could have been in possession of funds to the extent of about Rs. 86,000 on 31-3-1983 and had pointed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be made in the assessment year 1984-85 for which the first day of the previous year was 14-1984. He also went on to submit that on a similar basis even for the assessment year 1980-81 additions had been made in the re-opened wealth-tax assessments, which showed that the jewellery was in existence much earlier. 10. The learned counsel stated that as far as the additions to the net wealth were concerned in the revised assessments the only challenge by the assessee in the appeals which were pending was against inclusion of the value of the entire jewellery in the hands of "AEL" and "MAL". The assessee was not disputing the existence of the jewellery on 31-3-1983 which formed the basis of the inclusion of the value of the assets in the revised wealth-tax assessments. 11. In view of the aforesaid wealth--tax assessments relied on by the learned counsel for the assessee, the point of difference gets dissolved. The jewellery is taken to have been in existence on 31-3-1983. If that be so, then no addition can be made in the assessment year 1984-85 for jewellery having been acquired out of undisclosed income. It, therefore, follows that on the facts and in the circumstances of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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