9911796707
TMI Blog2011 (11) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... is claimed to be ancestral property and, therefore, its fair market value as on 01.04.1981 has been taken at ₹ 1670/- per 10 grams for 24 ct. gold. After reducing the amount by 16%, the fair market value has been taken at ₹ 1402.80 per 10 grams. The value is indexed by multiplying the same by a factor of 4.97. Thus, the indexed cost of acquisition has been worked out at ₹ 21,76,102/-. This leads to computation of LTCG at ₹ 9,338/-. 1.1 In the course of assessment proceedings, detailed enquiries were made regarding the acquisition and sale of jewellery. After considering the submissions of the assessee, the AO did not accept that the jewellery was acquired by the assessee at the time of his marriage etc. The contention that the assessee-HUF was in possession of this jewellery on 31.3.2005 was also not accepted. The evidence of sale of jewellery was also disbelieved. Therefore, it was held that the assessee introduced his own money in the bank account by showing the alleged sale of jewellery. In view thereof, the sale proceeds amounting to ₹ 21,85,440/- were added to the total income. Thus, the total income was computed at ₹ 22,80,860/-. 1.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them were having the capacity to gift such a huge quantity of jewellery. It is merely the unexplained income of the assessee which has been introduced in the garb of sale of jewellery, therefore, the action of the AO is upheld and the ground of appeal of the assessee is rejected. 1.3 Aggrieved by this order, the assessee moved an appeal before the Tribunal. In this appeal, nine grounds have been taken. The grounds contain facts as well as arguments and thus they are not in accordance with the ITAT Rules. In the course of hearing of the appeal, the ld. counsel for the assessee submitted that there is only one effective ground to be decided by the Tribunal, i.e., ground no. 1. The ground is to the effect that the ld. CIT(Appeals) erred on facts and in law in confirming the addition of ₹ 21,85,440/- made by the AO as income from undisclosed sources by invoking the provision contained in section 69 of the Act. It is further submitted that other grounds, to the extentmaterial, will be covered by way of arguments and, therefore, the appeal may be disposed off on the basis of contents of ground no.1 and submissions made in this behalf. 2. The ld. counsel has made two broad su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation report made by Shri Sanjay Aggarwal. This report has not been dated. The jewellery has been classified under five heads. Under each head, name of the ornament and the gross weight have been mentioned; and the total gross weight is shown at 3362.240 grams. The net weight has been taken at 2669.900 grams. This jewellery is valued @ ₹ 618/- per gram as on 31.03.2005 at ₹ 16.50 lakh. At this stage, it may be mentioned that statement of Shri Sanjay Aggarwal was recorded on 17.03.2005 by the Assessing Officer. It is inter-alia stated that he carries on the work of valuation at the shop only. Whenever some body comes for valuation, the jewellery is weighed, however, no record of this work is maintained. The record is maintained only in respect of valuation of work done during the course of searches and surveys. The work of valuation on other occasions is done as a gesture of goodwill and, thus, no record is maintained. About 40 to 50 persons would have come to him for such valuation work in the last four to five years. For such private work, he maintained only a pad, which contains his name and the name of his firm. The valuation report is furnished on this pad. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port because of which the report is of no value. 2.6 The case of the ld. counsel in this regard is that the return of wealth has been filed on 30.03.2006. The assessment had been made on 31.03.2006. The order may be erroneous but it has not been set aside till date. Therefore, the contents of the order have to be taken as true and correct. This means that the assessee had disclosed jewellery as on 31.03.2005, thus, only capital gains could be brought to tax in assessment year 2006-07. As against the aforesaid, the ld. DR submitted that only one return had been filed before WTO, Ward-2, Karnal, for assessment year 2005-06, while the jewellery is stated to have been received at the time of marriage. This return was also filed with the Assessing Officer who did not have jurisdiction over the case. Surprisingly, the assessment was also completed in one day after issuing notice u/s 16(2). The AO, who completed the assessment retired on the same day on which he passed the order. The circumstances surrounding the filing of the return and the assessment order show that the return was filed only for the purpose of strengthening the claim that the assessee was owner of jewellery as on 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e point why strangers should admit the three minors to the benefits of the partnership, the answer appears to be plain enough. The three Singhania brothers might have found it unnecessary and unprofitable to take the sole selling agency contract as it would only add to the burden of income-tax and super tax etc., and they might have agreed to use their influence to get the sole selling agency contract for the firm Harishanker Gopal Hari if their minor sons were benefited by being admitted to the benefits of the partnership. There being no evidence that any joint family funds were used in the business of the firm Harishankar Gopal Hari or any joint family funds were invested in that business, it is not possible to hold that the three minors, who were members of their respective joint families of which their fathers were kartas, merely represented the joint families and were not there in their own rights. Thus, the Tribunal had no material before it on which it could come to the conclusion that it did. 2.8 Further, reliance has been placed on the decision of Hon'ble Supreme Court in the case of Raj Kumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33. The question before the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a return of wealth was filed by the assessee before an incompetent assessing officer, which was assessed by him within a day of filing the return. The assessee knew that the return has not been filed before an officer of competent jurisdiction because all through the returns of income have been filed before Income-tax Officer, Ward-4, Karnal. If this order is treated at par with a decree, as argued by the ld. counsel, it has to be borne in mind that all the proceedings have taken place before an incompetent assessing officer. This is apparent from the face of the record. Therefore, in terms of the decision in the case of Rafique Bibi (supra), the order of the Wealth-tax Officer, Ward-2, Karnal, is not in the nature of an executable decree. Thus, this order has no validity in the eye of law and it can be very well ignored while passing the assessment order in the case of the assessee for assessment year 2006-07. It may also be mentioned that the order has been passed in a haste. The process of serving notice and hearing the assessee has been completed in a day. This leads to an inference that the order was procured with a view to strengthen the income-tax proceedings for assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se details are not available, however, main items have been narrated as bangles, sovereigns, necklace, chains etc. No evidence in the matter is stated to be in his possession for the reason that he was the only son of his father and it was not possible to maintain any detail. Income-tax returns of the HUF have been filed for the last 7 to 8 years but wealth-tax return was required to be filed only for the assets held as on 31.03.2005, therefore, the wealth-tax return was filed only for assessment year 2005-06. He was not kowing whether the father of karta of the assesse-HUF or the grand-father filed any return whatsoever under either of the two Acts. The reason for filing the return with incompetent assessing officer was stated to be that the counsel filed the return and only he can tell anything further in this matter. The jewellery was got valued from an approved valuer at Ambala but he did not remember the name of the valuer. He did not remember as to when he put his signature on the report. 3.2 Coming to the statement of Radha Rani recorded on 11.11.2008 in so far as it is relevant for this purpose, it is stated that she got married in the year 1968 and her husband was an em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities below that the burden to furnish satisfactory explanation of the possession of jewellery and its ownership lies on the assessee. No evidence has been produced in this regard. The statements are in the nature of self-serving statements which go against the conduct of a normal human person in respect of acquisition and its safe custody. Therefore, these statements cannot be relied upon. Further, the jewellery received by the mother from various relatives is in the nature of stree dhan over which the assessee could not have any ownership. Therefore, it is argued that the orders of the authorities below may be confirmed in this behalf. 3.5 We have considered the facts of the case and submissions made before us. The facts are that the assessee claims to have received jewellery weighing about 250 tolas after the death of late Shri Dharampal Bansal. There is no evidence on record about his financial position in terms of income or wealth. Although the extent of income of the assessee is not material, it may be mentioned that it derives business income, which has been computed on presumptive basis u/s 44AF at ₹ 1,35,820/- only. Thus, it is a small time trader. The assessee ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count, therefore, provisions of section 68 are not applicable. In this connection, reliance has been placed on the decision in the case of CIT v. Om Prakash Mahajan Sons [1985] 152 ITR 583/[1984] 18 Taxman 496 (Delhi). In this case, the Tribunal had accepted the explanation to the extent that the amount was in existence on 30.03.1966, though it was not accepted that the amount belonged to the wife. Therefore, it followed that the amount could not have been earned in assessment year 1967-68. The facts of the instant case are totally distinguishable. (Distinguished). It is not accepted that the assessee was the owner of the jewellery as on 31.03.2005. The jewellery came to surface for the first time on or about 30.03.2006. Therefore, the right year of taxation, if it is found to be taxable, is assessment year 2006-07. 3.7 This brings us to the question-whether, the assessee was in possession of any jewellery whatsoever, which could be taken as explained u/s 69A of the Act? The case of the AO is that the transactions of the assessee with M/s M.R. Jewellers, Karol Bagh, New Delhi are bogus. In this connection, he recorded the statement of Shri Mahender Goyal, proprietor M.R. Jewel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt are as under :- After considering the aforesaid submissions we are of the view that addition made is totally arbitrary and is not founded on any cogent basis or evidence. We have to keep in mind that the assessee was married for more than 25-30 years. The jewellery in question is not very substantial. The learned counsel for the appellant/assessee is correct in her submission that it is a normal custom for woman to receive jewellery in the form of stree dhan or on other occasions such as birth of a child etc. Collecting jewellery of 906.900 grams by a woman in a married life of 25-30 years is not abnormal. Furthermore, there was no valid and/or proper yardstick adopted by the Assessing Officer to treat only 400 grams as reasonable allowance and treat the other as unexplained . Matter would have been different if the quantum and value of the jewellery found was substantial. Taking a guidance from this decision, (Applied) it would be reasonable to hold that jewellery of 1000 (one thousand) grams could have been accumulated by the assessee as received from late Shri Dharampal Bansal which came inpossession and ownership of the assessee on his death, and on other occasi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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