9911796707
TMI Blog2013 (12) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... oducing the evidence before the lower authorities the assessee has discharged the initial burden which lies upon him. Now the burden shifts on the department as to why the assessee's case cannot be accepted and why it must be held the entry, thought purporting to be in the name of a third party, still represent the income of the assessee from an undisclosed income - The AO or the CIT(A) has neither examined these evidences nor put to cross examination like that of sale bill, the valuation report or the ownership letter written by assessee's mother - The assessee has produced all the evidences and which have arbitrarily been rejected by the lower authorities - Assessee was never the owner of gold and diamond jewellery instead her mother has handed over the possession of jewellery for doing charity out of the sale proceeds of the same and assessee acted accordingly - Decided in favour of assessee. - I.T.A Nos. 1927 & 1928/Kol/2010 - - - Dated:- 21-11-2013 - Shri Mahavir Singh, JM And Shri Abraham P. George, AM,JJ. For the Appellant : Shri Soumitra Choudhury, Advocate For the Respondent : Shri David Z. Chawngthu, Sr. DR ORDER Per Bench: Both appeals are arising ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from gold ornament of her late mother Rampiyari Devi. It was further enquired by AO to state the source of deposits made in the bank account i.e. Standard Chartered Bank, Gariahat Branch and also details of sale proceeds of gold jewellery of assessee's mother Rampiyari Devi and also names and complete addresses of persons to whom jewellery was sold. He was required to produce sale memos in its support. Assessee stated that this bank account of Standard Chartered Bank, Gariahat Branch, Kolkata, which was opened in her name actually belongs to her mother Rampiyari Devi, who expired in the year 1999 and the said account was opened in the month of May, 2005 only for the purpose of depositing the cash receipt from sale proceeds of gold and diamond jewellery of her mother and to fulfill her wish to give the same in charity. It was contended by assessee that she was more than 70 years old at the time of her death in the year 1999 and jewellery were received by her at the time of her marriage as Stridhan earlier than 1950s. The assessee stated that to fulfill her wish, she sold jewellery in the FY 2005-06 and 2006-07 and sale proceeds were received and deposited in the savings bank accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Smt. Rampyari Devi Dudwella who handed over me her jewelleries made of gold, diamonds, pearls etc. which was absolutely belonging to her and was her stridhan. 2) That the said jewelleries were handed over me as per wish of my mother to sale the same and give the sale proceeds in charity with the instruction to take this responsibility to do the good cause. 3) That I opened a Bank A/c. with standard chartered Bank, Gariahat Branch, Kolkata being No. 327-1-030430-0 which was though in my name but was actually belonging to my mother and was opened to deposit the sale proceeds of my mother's jewellery and spend the same in charity. 4) That the jewelleries of my mother were sold in phased manner from the year 2005-06 to 2008-09 from time to time and the said amounts were given in charity. 5) That my mother handed over me the jewelleries in October 1997 due to her ill health who expired in September, 1999 with the instruction to sale the same and give the proceeds in charity. That the statements made above are true to the best of my knowledge and belief." Even sale bills of diamond jewellery, sold during the FY 2006-07 relevant to AY 2007-08, are also enclosed at assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.3.2005 would have been certainly reflected the same. But there was no such reflection. (v) Finally her claim that it was last wish of her mother to donate the sale proceeds of gold jewelleries for charitable purposes and accordingly I never treated these Jewelleries as my own and not shown it in my Balance sheet, is nothing but an afterthought and an attempt to put a vei1 on her alleged undisclosed income of Rs. 14,90,000/- deposited in the bank a/c. during the year under consideration. (vi) Apart from above, it is quite surprising to note that assessee was totally silent about her A/c. No. 327-1-030430-0 - with Standard Chartered Bank, Gariahat Br, even in course of her deposition u/s. 131 at the initial stage. (refer answer to q.6 above). Not only this, she has not disclosed here interest income of Rs.2209/- earned on this a/c (A/c No. 327-1-030430-0 - with Standard Chartered Bank, Gariahat Br.) in the return. This further proves she was totally aware of her act of non disclosure of her income of Rs.14,90,000/- which she now claims to be the sale proceeds of the inherited gold jewelleries." 5. Aggrieved against assessment of cash deposit in bank account i.e. Standard Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his/her mother without mother having shown such jewellery in any IT/WT records. The assessee also filed a valuation report of 1997 prepared by some jeweler on 03.10. 1997. This valuation report also does not have any evidentiary value because it has not been filed with any IT or WT returns. Such reports can be produced by anybody giving any date. This is only a self-serving evidence and does not prove that the jewellery mentioned in the valuation report actually existed; was given to the assessee and was sold to deposit cash in her Standard Chartered Bank Account. The assessee has also produced certain sale bills for sale of diamonds at Surat to substantiate her claim. These bills also appear to be self- serving. In these bills cut and polished diamond have been shown as sold at very high prices n cash. A careful examination of these b lls shows that these have been created with the intention of showing generation of maximum amount of cash. However, n the process astronomically high prices have been charged which are difficult to believe under normal circumstances. -To demonstrate this, the details of the sale of diamonds is reflected in these bills are reproduced below; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also. From the above it can be said that these bills for sale of diamonds are not genuine and have been manufactured to show the generation of cash deposited in the bank account of the assessee. Further, it is seen that the jewellery lying at Patna is taken to Surat for sale and the cash received on sale is brought to Patna and KoIkata. It is difficult to believe why anybody would take risk in taking jewellery all the way to Surat and then bring cash to Kolkata again taking a huge risk. In view of the above discussion I feel that there is no evidence to suggest that the assessee inherited any jewellery from her mother and the cash deposited in her bank in Standard Chartered was sale proceeds of such jewellery. Therefore, the A.O. has rightly treated the source of cash of Rs. 25,07,000 /- deposited in the Standard Chartered bank account of the assessee as unexplained. Hence, I conf rm this addition of Rs 25,07,000/-." Identical order in AY 2006-07 was passed by CIT(A). Aggrieved, assessee preferred appeal before Tribunal in both the years. 6. We have heard rival contentions and gone through facts and circumstances of the case. We find that the assessee has only source of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not declared this jewellery in her Balance Sheet although she is declaring her own jewellery in her Balance Sheets although. Even the assessee has concealed this bank account and has concealed the transactions from Income Tax Department. Even she does not have any sale memo to support the claim of sale of jewellery. The CIT(A) has also pointed out discrepancies in the rates mentioned in the valuation report of 1997 and the sale bill of 2006. Similar are the reasoning of AO for treating the deposits as unexplained. 7. We have considered the facts in entirety and are of the view that the assessee is able to produce the letter of Smt. Rampiyari Devi which clearly states that she is having gold and diamond jewellery, which was received at the time of her marriage, and expressing her will for charity out of the sale proceeds of the above jewellery through her daughter i.e. the present assessee. The assessee opened a bank account with Standard Chartered Bank and deposited sale proceeds of gold and diamond jewellery and gave away the amounts in charity to Ramkrishna Mission as is evidenced from bank account and sale bills, enclosed in assessee's paper book. In her deposition u/s. 131 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial. The AO or the CIT(A) has neither examined these evidences nor put to cross examination like that of sale bill, the valuation report or the ownership letter written by assessee's mother. 8. In the similar circumstances Hon'ble Kerala High Court in the case of S. Kannan Kunhi Vs. CIT (1969) 72 ITR 757, 763-4 (Ker), which was further confirmed by Hon'ble Supreme Court as reported in CIT Vs. K. S. Kannan Kunhi (1973) 87 ITR 395 (SC) considered the issue as under: "The question raised by the assessee in the case before us is not whether the Income-tax Officer is entitled to draw the inference that the receipts are income of the year in which they were found with the assessee on his failure to explain their source, but whether there is material to reject the assessee's explanation and draw such an inference on the facts of this case. Now, as stated in the passage quoted above, the question whether a receipt is to be treated as income or not must depend very largely on the facts and circumstances of each case. It is not the law that, when once the explanation is rejected, it automatically follows that the receipts are income. Whether an explanation is acceptable, and if not, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en brought into the books for the new toddy business. The assessee was asked to explain the nature and source of these funds. The explanation furnished is not at all satisfactory, and so I will treat this amount as income from undisclosed sources. Further it is seen that the assessee has purchased two items of properties during the account year as follows: On 19-5-1950 Rs. 14,250 On 16-2-1951 Rs. 3,000 Rs. 17,250 In the absence of any evidence as to the source of funds for investment of these assets, I will treat this amount also as income from undisclosed sources. " All that the Appellate Assistant Commissioner said about this question is: "The appellant's explanation regarding their source is not in the least convincing, and I am satisfied that the Income-tax Officer was quite justified in assessing them as income from undisclosed sources. As regards the investment of Rs. 3,000 on February 16, 1951, I feel it can be held to have come out of the income from toddy business outside accounts estimated by the Income-tax Officer, and this sum of Rs. 3,000 has accordingly to be deleted. " Thus we find that the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, when once the explanation is rejected, it automatically follows that the receipts are income. Whether an explanation is acceptable, and if not, whether it should be inferred that the receipts constitute income, are different aspects of the same question. Both these aspects are inter-related, and the question whether such receipts constitute income or not has to be decided on a consideration of all the relevant facts and circumstances of the case. It is quite legitimate in the case of an assessee who is known to be carrying on several activities of an income-earning character or who can reasonably be found to be involved in such activities, to draw the inference that the amounts found with him constitute income from undisclosed sources, in the absence of satisfactory explanation regarding their source. Such an inference should not be readily made in the case of a person, who has no known business or other source of income, or who cannot even be reasonably suspected as engaged in any income-earning activities. In the latter case, there must be more substantial reasons to reject the assessee's explanation, and draw the inference that the amounts found with him constituted income. H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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