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TMI Blog2017 (10) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... led with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") read as under:- "1. Under the facts and circumstances of your appellant, the Learned CIT(A) has erred in upholding the addition of Rs. 12,50,000 made by the assessing officer by treating the investment made in Fixed Deposits as unexplained investment u/s.69 of the Income-Tax, Act, 1961. 2. The Learned CIT(A) failed to appreciate the fact that your appellant has made investment in Fixed deposits from sale of gold ornaments. 3. The Learned CIT(A) has erred in stating that your appellant has not filed any evidence to substantiate that she was in the possession of gold jewellery as on 31.03.2004 which was subsequently sold by the appellant. 3.01 The Learned CIT(A) failed to appreciate the letter filed with A.O vide letter dated 10th October,2012 in which valuation report of jewellery as on 31/03/2002 vide valuer's report dated 16/04/2002. 4. The Learned CIT(A) failed to appreciate the confirmations obtained from the buyers with respect to the sale of gold ornaments. 5. The Learned CIT(A) failed to appreciate the fact that buyers have utilized their agricultural income to fund the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has not filed any evidence to substantiate that she was in the possession of gold jewellery as on 31.03.2002 which was subsequently sold by the appellant. 3.01 The Learned CIT(A) failed to appreciate the letter filed with A.O vide letter dated 10th October,2012 in which valuation report of jewellery as on 31/03/2002 vide valuer's report dated 16/04/2002. 4. The Learned CIT (A) failed to appreciate the confirmations obtained from the buyers with respect to the sale of gold ornaments. 5. The Learned CIT(A) failed to appreciate the fact that buyers have utilized their agricultural income by Sale of Mangoes to fund their purchase. The details with respect to their ownership of the agriculture land had been provided along with confirmations. 6. The Learned CIT(A) failed to appreciate the fact that your appellant has suo-moto offered long term capital gain/loss on sale of jewellery for the assessment year under consideration during the course of appellate proceedings. 7. The Learned CIT(A) has erred in holding that appellant has not given any proof to substantiate that your appellant was in the possession of gold jewellery and there were also no corroborating evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Kokan Mercantile Bank saving bank account which were not declared in the return of income filed with revenue and same was not offered for taxation. The AO made additions to the income of the assessee on account of interest on matured FD/RD's for assessment year 2008-09 . It was observed by the AO that the assessee did not disclosed all the material facts in the return of income regarding the source of FDs, hence, the case for assessment year 2005-06 were reopened by the AO u/s 147 which culminated in the issue of notice u/s. 148 dated 18.03.2011 which was served on assessee on 23-03-2011. The assessee was asked to explain the sources of making deposits in the bank to the tune of Rs. 12.50 lacs which was made in Kokan Mercantile Bank and was not declared in the Balance Sheet filed by the assessee . The assessee did not declared the sources of making such investments by way of deposit in Kokan Mercantile Bank . The assessee did not give any explanation as to why this bank account was not declared to Revenue nor any details/explanations were furnished by the assessee, which led to addition to the tune of 12,50,000/- w.r.t. deposits made with Kokan Mercantile Bank as unexplained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 569 gms. 18.04.2004 3,51,640 2. Rehana Kalsekar At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 675 gms. 30.04.2004 3,94,875 3. Ismail Abdul Rakhangi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 512 gms. 10.06.2004 3,03,360 4. Ali Saheb Kazi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 330 gms. 25.12.2004 2,04,765 3.3.1 During remand proceedings the Assessing officer has recorded statement of persons mentioned at Sr. No. 1 and 2 above u/s. 131 of the I.T. Act. Regarding persons at Sr. No.3 and 4 above the Assessing Officer has mentioned in the remand repost that documentary evidences were produced. However, the Assessing Officer has not mentioned any details of the nature of evidences produced and why the same were acceptable. The Assessing Officer has summed up his findings in the remand report as below: "The facts gathered from the abovementioned statements and details are as under: a) Assessee has sold her ornaments which were received to her in wedding by way of Meher. b) The ornaments sold to the closed relative in cash and subsequently cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings or during appellate proceedings. (viii) Appellant has not disclosed any capital gain/loss on sale of gold jewellery in the return of income filed for A.Y 2005-06. 3.3.3 In view of the above facts it is clear that appellant has not given any proof till date to substantiate that she was in the possession of gold jewellery and there were also no corroborating evidence to prove that this gold jewellery was sold by her to her relatives in cash. Only two persons were produced who have claimed to have purchased the jewellery from the appellant but their claims are also not supported by any evidence. In respect of another two persons there is no details in the file till date that what kind of evidences were produced by the appellant to substantiate the claim. The purchases have been claimed to be made in cash. Once the acquisition or possession of gold jewellery by the appellant cannot be proved by filing corroborative evidences, how sale of this jewellery can be relied upon as a source for depositing Rs. 12,50,000/- in fixed deposits. In view of above observations, this it is held that appellant has not been able to explain the source of investment of Rs. 12,50,000/- m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make proper representation before the A.O . Our attention was drawn to assessment order page 2/para 4 and it was submitted that assessee's counsel attended before the AO but did not file the required documents/explanations as were required by the AO, which were submitted before learned CIT(A). It was submitted that the AO has made the addition of Rs. 12.50 lacs for assessment year 2005-06( Rs. 30 lacs for AY 2007-08) u/s. 69 as an unexplained investment as the investments made in the FD's with the bank were not disclosed in the return of income filed with the revenue and also sources of making investment in Bank FDR's could not be explained. It was submitted that the additional evidences were submitted before the learned CIT(A) which were forwarded by learned CIT(A) to the A.O and remand report was called . It was submitted that A.O accepted the sources of investment in remand report proceedings but learned CIT(A) did not accept remand report and sustained additions . Our attention was drawn to page no. 2 of the A.O order /para 4 and it was submitted that the assessee duly attended the hearing but could not file complete details before the A.O. . 8.On the other hand, Ld. DR submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 4 raised by the revenue while recording statement on oath of Sh Abdul Faqir Mohammad Rakhangi (relative of the assessee who bought gold jewellery from assessee) wherein he stated that he is holding agricultural land at Dasoor which is ancestral land and the assessee grew mangoes on the said agricultural land (pb/page 16) . It is submitted that learned CIT(A) sustained the additions only on surmises and conjectures. It was submitted that the learned CIT(A) cannot ignore statements/Affidavit without cross examination of the parties . It was submitted that the A.O has given a favourable report in favour of the assessee in remand report proceedings while learned CIT(A) has erroneously decided the issue against the assessee . 10 Ld. DR in reply to rejoinder submitted that it is a wrong contention advanced by the assessee counsel before the tribunal as the AO has not given any favourable report in remand proceedings in favour of the assessee and AO has only asked the learned CIT(A) to decide the issue on merits . It was submitted by learned DR that no evidence has been produced by the assessee to substantiate its contentions. It is submitted that no sources of making investments in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ward to explain the sources of cash receipts which were deposited in the bank account to make FDR's . The additional evidences were filed during course of appellate proceedings before learned CIT(A) which were forwarded by Ld. CIT(A) to the A.O for remand report. The assessee during the course of appellate proceeding before learned CIT(A) has explained that Rs. 12.5 lakh in cash was received during the impugned assessment year by selling the gold ornaments to following four persons:- S. No. Name Weight Date Amount 1. Abdul Rakhangi At & Post Kader Dasoor 596 gms. 18.04.2004 3,51,640 Taluka-Rajapur, Dist. Ratnagiri, Maharashtra 2. Rehana Kalsekar At & Post Dasoor Taluka-Rajapur, Dist. Ratnagiri, Maharashtra 675 gms. 30.04.2004 3,94,875 3. Ismail Abdul Rakhangi At & Post Dasoor Taluka-Rajapur, Dist. Ratnagiri, Maharashtra 512 gms. 10.06.2004 3,03,360 4. Ali Saheb Kazi At & Post Dasoor Taluka-Rajapur, Dist. Ratnagiri, Maharashtra 330 gms. 25.12.2004 2,04,765 During remand proceedings before the AO, the A.O recorded statements on oath of the persons at serial no. 1 and 2 above, u/s. 131 of the Act while for the person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived in cash .She also averred in the affidavit that she sold gold to the following persons:- S.No. Name Weight Date Amount 1. Abdul Kader Rakhangi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 596 gms. 18.04.2004 3,51,640 2. Rehana Kalsekar At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 675 gms. 30.04.2004 3,94,875 3. Ismail Abdul Rakhangi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 512 gms. 10.06.2004 3,03,360 4. Ali Saheb Kazi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 330 gms. 25.12.2004 2,04,765 She also averred in the said affidavit, details of cash deposits in the Kokan Mercantile Bank Ltd. on following dates Date of Deposit Amount 03.05.2004 2,00,000 03.05.2004 2,00,000 03.05.2004 2,00,000 03.05.2004 2,00,000 03.05.2004 2,00,000 01.01.2005 2,50,000 It was stated by her in affidavit that the aforesaid cash deposits in bank were out of proceeds of sale of gold ornaments . The confirmatory letters from these four persons along with details of agricultural land holdings of these four persons were submitted which has been placed on record in paper book page no. 26 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught on record and revised form no 36 is filed. We have observed that assessee filed return of income u/s. 139(1) declaring income of Rs. 46,096/-. The assessee has made huge fixed deposits of Rs. 12.5 lakh (Rs 30 lacs in AY 2007-08) in bank account with Kokan Mercantile Bank which were made out of cash deposits in the banks and the said bank accounts as well FD's were not declared to the Revenue. An explanations has been sought to be offered by the assessee only after the said fixed deposits with banks were detected by revenue as the fixed deposit made out of said cash deposits and interest earned thereon the said FD's were not declared by the assessee to the revenue in the return of income filed with the Revenue . The case of the assessee was under scrutiny for assessment year 2008-09 when said non disclosure/non declaration of income by the assessee to the Revenue was detected for the first time by the AO which led to reopening of the assessment u/s 147 for impugned assessment year 2005-06, wherein the assessee has not raised any challenge to reopening of assessment u/s 147 which has reached finality. The assessee came forward with the details of the sources of cash deposits in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... details were filed by the said persons subsequently. The confirmatory letters were also produced from the four persons who bought the gold ( including two persons who gave statement on oath) confirming the transaction of purchase of gold ornaments from the assessee. The land holdings of these persons wherein mangoes were claimed to be grown is brought on record and is stated by all that they are agriculturist and income from sale of mangoes as well past savings were utilised to buy gold of Rs. 12.50 lacs( Rs. 30 lacs in AY 2007-08) . The assessee has also executed an affidavit averring that the transactions for sale of gold ornaments to these four persons was in cash . Deposits of a such huge amount of cash in the bank account being 12.5 lakh in A.Y 2005-06 and Rs. 30,00,000/- for A.Y 2007-08 has to be properly explained by the assessee with cogent evidences and material especially contemporaneous evidences which could establish that transactions as claimed did took place at that point of time which can inspire confidence. None of the contemporaneous evidences are brought on record by the assessee to substantiate the happening of the transaction at that time. it is important to ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued by Sh. Ajit Amarchand Jhaveri (approved valuers) which is placed in paper book/page 62-64. It is not explained by the assessee why she obtained said valuation report in 2002 and having so obtained why she did not acted upon the said valuation report by declaring the said gold/silver in her income tax returns and also she needed to explain why she did not filed her wealth tax return thereafter even after obtaining the said valuation report in 2002 which establishes her liability towards wealth tax. Even the assessee did not declare and brought on record the said gold ornaments/silver in her balance sheets filed with Revenue even after obtaining valuation report in 2002. It is also not brought on record whether the said valuer raised any invoice for his fee for doing this valuation report and whether any payment for said fee was made by cheque at that point of time. The onus was on the assessee to prove genuineness of the transaction for purchase, acquisition and sale of gold/silver which the assessee failed to discharge. Thus, the contention of the learned counsel for the assessee is devoid of any merits that the AO has adjudicated the issue on merits in remand report proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of gold ornament/silver in cash to close relatives was set up by the assessee after the assessee was cornered by Revenue and it does not inspire confidence, thus her contentions are hereby rejected because neither the purchase/holding of gold ornaments/silver is proved nor the genuineness of the sale of gold ornaments/silver stood proved based on material on record. The said FDR's and interest earned on them were never declared by the assessee to the Revenue and was detected by the Revenue during the course of assessment proceedings for AY 2008-09 while led to reopening of assessment u/s 147 for the impugned assessment year 2005- 06 and assessee in order to justify the receipt of cash of approx. Rs. 52.5 lakh which stood deposited in Bank account in previous years relevant to A.Y 2005-06 and 2007-08 came forward with this theory of sale of gold ornaments/silver in cash to close relatives who are not even holding PAN and are not filing return of income with Revenue . The statements on oath recorded of these persons who are close relatives and stated to have purchased gold ornaments in cash from the assessee do not inspire confidence due to various reasons cited above. The affid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. In the result appeal of the assessee in ITA no. 4084/Mum/2013 for AY 2005-06 is partly allowed. We order accordingly. 13. Now we will take up appeal for AY 2007-08 in ITA No. 5448/Mum/2013. Our decision in ITA no. 4084/Mum/2013 for assessment year 2005-06 shall apply mutatis mutandis to the appeal of the assessee in ITA no. 5448/Mum/2013 for AY 2007-08 as the facts are similar for both the years. We clarify that benefit of afore-stated CBDT instruction/guideline shall be extended once and not twice separately for both the years under consideration. The assessee has also received gift of Rs. 3.0 lacs in cash from Mr Abdul Kader Fakir Mohammed Rakhangi, a close relative. The cash received by the assessee from gits of Rs. 3,00,000/- also did not stood proved as no gift deed/confirmations are produced from donor by the assessee nor genuineness of the gift is proved. The said donor has claimed to have not maintained any bank account . He has claimed to have given gift of Rs. 3,00,000/- as well purchased gold of Rs. 5.62 lacs from the assessee for impugned assessment year out of his total claimed income from agriculture from sale of mangoes of Rs. 6-7.50 lacs. He does not hold any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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