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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 ..... held that the assessee could not substantiate the genuineness of the transaction for the balance quantity of sale of gold ornaments/silver and hence after giving credit for value of gold to the tune of 500 gms, rest of the amount shall be charged to tax in the hands of the assessee as undisclosed income . While for sale of 500 gram of the gold, the same shall be brought to tax by computing income from capital gains for which the assessee shall submit necessary details which shall be verified by the AO in accordance with law. Thus, we confirm the appellate order of learned CIT(A) with above modification wherein the assessee will get part relief as detailed above. We order accordingly. For AY 2005-06 The assessee has also received gift of ₹ 3.0 lacs in cash from Mr Abdul Kader Fakir Mohammed Rakhangi, a close relative. The cash received by the assessee from gits of ₹ 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 ₹ 3,00,000/- as well purchased gold of ₹ 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 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 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 evidence to prove that this gold jewellery was sold by her to her relatives in cash. 8. The Learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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 evidence to prove that this gold jewellery was sold by her to her relatives in cash. 8. The Learned CIT(A) has erred in holding that appellant has not given any proof to substantiate that your appellant has received gift of ₹ 300,000/- from Mr Abdul Rakhangi. 8.01 The Learned CIT(A) failed to appreciate the remand report in which it is clearly stated vide point 5 of remand report of A.O that Mr Abdul Rakhangi has confirmed vide letter dated 16/08/2012 that he has gifted in cash ₹ 300,000/- on 26.07.2006 and the same was given out of his agriculture income and past savings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.2011 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 ₹ 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 investment u/s. 69 of the Act, vide assessment order dated 22-12-2011 passed by the AO u/s 143(3) r.w.s. 147. The details of said deposits are as under:- Date of Deposits/bank Date of deposit Dep. Amount Maturity amount Interest which was not incorporated Kokan Mecantile Bank 01.01.2005 2,50,000 2,58,058 58,058 Kokan Mecantile Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to following 4 persons and the sale proceeds were deposited in the FDs in Kokan Mercantile Bank. S.No. Name Weight Date Amount 1. Abdul Kader Rakhangi At 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opies of their bank accounts or passbooks were not produced showing the sums of payment by them. ( vi) There is no proof available either with appellant or with the parties to substantiate that they have actually purchased gold ornaments from appellant by paying cash. ( vii) A copy of the appellant's Balance Sheet as on 31.3.2005 has been filed. Appellant has failed and to file any evidence to substantiate that she was in the possession of gold jewellery as on 31.3.2004 which was subsequently sold by the appellant. No Balance Sheet reflecting the possession of jewellery as on 31.3.2004 has been filed either during assessment 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2008-09 . it was submitted that the investments made in Bank FDR s in assessment year 2005-06 were ₹ 12.50 lacs( ₹ 30 Lacs for assessment year 2007-08) which were not disclosed to the revenue in the return of income filed with the Revenue as they were not reflected in the Balance Sheet of the assessee and also interest earned on the said FDR s were credited with saving bank account with Kokan Mercantile Bank which was also not disclosed to Revenue which led to the reopening of the concluded assessments for the A.Y 2005-06 and 2007-08 . It was submitted that no representation could be made before the A.O as the assessee was an old lady of more than 80 years who could not 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 ₹ 12.50 lacs for assessment year 2005-06( ₹ 30 lacs for AY 2007-08) u/s. 69 as an unexplained investment as the investments made in the FD s with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee . The learned counsel for the assessee relied upon the decision of Hon ble Punjab Haryana High Court in the case of CIT v. Shanti Swaroop (2002) 255 ITR 0655 (P H HC) . Our attention was drawn to affidavits executed by assessee narrating facts for AY 2005-06 and 2007-08 which are placed in paper book page no. 22 to 23 and also page no. 40 to 41. Statements on oath given by the persons who have purchased gold from the assessee are placed in paper book page no. 16 to 18 and 19 to 21 . Our attention was drawn to Remand report issued by the A.O. which is placed in paper book / page no. 8 to 10 and also page no. 11 to 15 for A.Y 2005-06 and 2007-08 . Our attention was drawn to question no. 3 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/Affida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Kokan Mercantile Bank was also not declared to the Revenue. The assessee was asked to explain the sources of cash deposits in the said bank account which were used to make fixed deposits with this bank to the tune of ₹ 12.50 lacs(Rs. 30 lacs for AY 2007-08), the assessee did not give any details of sources of making said investment during the course of reassessment proceedings u/s 147 which led to the additions to the tune of ₹ 12.50 lacs( AY 2007-08 ₹ 30 lacs) to the income for assessment year 2005-06, vide assessment order dated 22-12-2011 passed u/s 143(3) r.w.s. 147, while in the appellate proceedings before learned CIT(A) in the first appeal filed by the assessee, the assessee came forward 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 ₹ 12.5 lakh in cash was received during the impugned assessment year by selling the gold ornaments to followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. He was asked to explain itemwise details of ornament purchased but he could not give any detail of the item wise ornament purchased from the assessee but he confirm that he purchased some 550 to 600 gram of gold ornaments from the assessee by paying cash in financial year 2004-05 and also 600-650 gms of gold ornaments in financial year 2006-07, but no further detail of purchase of item wise ornament could be submitted by said Mr Abdul Kadir Faqir Mohammed Rakhangi which he confirmed to submit in due course of time but was never submitted later. He also submitted that he does not have any bank account and all dealing were made by him in cash. Similar statements were given on oath by Smt. Rehana Kalsekar before the AO . The assessee has also filed an affidavit (pb 22-23/pb) dated 20-06-2012 wherein she stated that she is pursuing mohmadam religion by birth and got married in 1950 . It was submitted by her in the affidavit that at the time of marriage her husband gave her meher of 4 kg of gold ornaments and 150 kg of Sliver utensil being security as per their tradition/customs in society. It was also averred that she used to buy gold/silver out of her PIN money as well from gifts r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the AO summarised factual contentions placed by the assessee before him and after reproducing the same left the matter to the learned CIT(A) to be decided by learned CIT(A) on merits. 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 proceedings rather the AO only summarised the entire factual details as claimed by the assessee in remand report proceedings and placed the same before learned CIT(A) for him to decide the issue on merits in appellate proceedings. After considering the remand report and the additional evidences submitted by the assessee, the learned CIT(A) rejected the contentions of the assessee by holding that transactions for sale of gold ornaments as claimed by the assessee is not a genuine transaction and the assessee has not given any proof to substantiate that she was in possession of gold jewellery and there is no evidence on record to prove that the said gold jewellery was sold by the assessee to her relative in cash. Thus, learned CIT(A) held that the assessee is not able to explain the sources of investment of ₹ 12.50 lacs made in FDR with Kokan Mercan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited from ancestors and mangoes are grown there and these gold ornaments are purchased from the sale of mangoes in cash and from past savings. They have given document of their land holding and yearly income is in the range of ₹ 5-7 lacs while no return of income has been filed by them nor are they holding PAN . No linkages of cash withdrawal from bank has been bought on record rather the said persons claimed that they are not maintaining any bank account and/or the bank accounts,if maintained were not produced before the AO. No contemporaneous evidences are brought on record to prove these purchases of gold by these persons from the assessee. These two persons were not having PAN and not filing return of income with the Revenue. The said gold so purchased from the assessee has not been declared and disclosed by these buyers to the Revenue in return of income filed with Revenue in-fact both of them were not filing their income-tax returns with Revenue. These persons carried out all transactions of purchase of gold ornaments in cash. These two persons claimed that they own agricultural land which is their agricultural land wherein mangoes were grown and they have income from s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re given to her as meher as per mohmadam customs and she was married in 1950 . It was also averred that gold ornaments were purchased from time to time out of her PIN money and gifts received. The assessee has not brought on record any evidence of contract of meher in her favour nor independent witnesses are brought on record to substantiate that the said meher was granted in her favour by her husband at the time of marriage. There is no evidence on record which substantiate this contention of the assessee and this is to be evaluated on touchstone of preponderance of probabilities as the assessee has never declared gold/silver holdings in the returns of income filed with Revenue nor the said details are filed with any authorities as no such evidences is brought on record. Even details as to family background/status of the family including assets and earnings of family members are not submitted to substantiate that such gold /silver holding is reasonable keeping in view family background/status of the assessee. The assessee has not brought on record any evidences of buying gold/silver by way of invoices or cheque payments to substantiate its claim that she bought gold/silver from ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case in hand which is decided on its own facts on merits . The assessee has also placed reliance on decision of Hon ble Supreme Court in the case of Mehta Parikh Co(supra) is a case where cash book stood accepted and affidavits were produced before AAC to explain the transactions, it was held that affidavit could not be rejected in the absence of cross examination of the deponent. In the instant case before us statements of two persons who allegedly purchased gold from the assessee in cash were recorded wherein they explained that they purchased gold from assessee in cash from agricultural income . These persons could not submit item wise details of ornaments purchased from assessee nor they could submit the cash flow statements to justify the purchase of gold from the assessee in cash. They each have income of only ₹ 5-7 lacs per year only and they claimed that they purchased gold of ₹ 3.50-Rs 4.0 lacs each from the assessee which does not inspire confidence on the touchstone of preponderance of probabilities also. No contemporary evidences have been brought on record by either party to substantiate and prove genuineness of purchases of gold from the assessee. They h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the evidence which could be and is not produces would, if produced, be unfavourable to the person who withholds it. Thus, the onus was on the assessee to have bring on record cogent and reliable evidences to support her contentions. However, we cannot also shut our eyes to reality of Indian lives wherein there is a love, pride and preference of Indian households to invest and hold gold ornaments etc for their usage as well for rainy days wherein gold can be sold to tide over financial difficulties. However, we also note that there is a CBDT instruction/guidelines no. 1916 dated 11th May, 1994 which although relates to non seizure of gold during the course of search operation u/s 132 which has duly considered Indian traditions and culture, wherein it is permitted by CBDT not to seize gold ornaments and jewellery in case of married lady to the tune of 500 gram in the course of search operations where no wealth tax returns are filed by said married lady and hence we are of the view that the explanation of the assessee of holding of the gold ornament/jewellery to the tune of 500 gram stand accepted, while the rest of the theory of selling balance of the gold /silver as put forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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