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TMI Blog2017 (12) TMI 1733X X X X Extracts X X X X X X X X Extracts X X X X ..... before purchase. The assessee could not furnish the valid reasons for the conversion of jewellery into bullion. If in any case the jewelleries are to be converted into bullion, how the weight of jewellery gets substantially reduced. All these questions remained unanswered during the course of hearing. We cannot ignore the facts that in the original assessment proceedings, assessee has agreed for the additions proposed by the AO on account of profit and sale of jewelleries. But when the assessment order was revised under section 263 by the CIT in consequential order, assessee retracted from the earlier statement and tried to justify the sale of declared jewellery. Whatever quantity was declared under VDIS Scheme was not sold later on. Therefore, we are of the view that order of the Tribunal would not render any assistance to the assessee. Keeping in view the totality of the fact and circumstances of the case, we are of the considered opinion that assessee could not establish that the goods declared under the VDIS Scheme 1997 were sold as claimed by the assessee. Therefore, we find no infirmity in the order of the CIT(A) who has rightly confirmed the addition. - Decided agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of assessment. 8. The appellant craves leave to add, alter, modify, delete or substitute any or all of the grounds and to file a paper book at the time of hearing the appeal. 9. In view of the above and other grounds that may be taken at the time of the hearing the appeal, the appellant prays that the appeal be allowed in the interest of justice and equity. 2. Though various grounds are raised but they all relate to the addition under section 68 of the Act. The facts in brief borne out from the record are that the return of income for 1998-99 filed by the assessee was selected for scrutiny and during the course of assessment proceedings, it was noticed by the AO that assessee has maintained the capital account with an amount of ₹ 11,21,625/- in the case of Basavaraj I Kamatagi (HUF), as received from sale of gold, silver and diamonds which were declared by the assessee under VDIS 1997. After due verification and the enquiries with the assessee and the parties to whom the jewellery were allegedly sold, the AO came to the conclusion that sales were not genuine and accordingly an amount of ₹ 6,63,278, being profits from sale of the said jewellery, was br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he evidences furnished by the assessee have been thoroughly verified in the light of the observations made by the Hon ble High Court of Karnataka, Circuit Bench, Dharwad to see what is sold under the sale transaction claimed by the assessee in the regular return filed pertains to the gold jewelry, silver articles and diamond which are as declared in the application filed under the VDIS Scheme 1997. On refification it is noticed that what is declared in the application filed under the VDIS scheme 1997 and what is claimed by the assessee in the regular return of income filed by the assessee is as under: Sl. No. What is declared in the application filed under VDIS-1997 What is claimed by the assessee in regular Return of Income as sale transaction Items Net Weight in Grams Items Net Weight in Grams 1 Gold Jewellery: GOLD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 Jug set-1 1. Diamonds: Stones- 291 stones 8.0 From the above table it can be observed that what is sold under the sale transaction claimed by the assessee in the regular return filed and what is declared in the application filed under the VDIS Scheme 1997 are not the same goods. The Hon ble High Court has held that the material fact has not been considered by the Assessing Authority or the first appellate authority or the Appellate Tribunal. As the authorities have not given a finding on the material fact, a finding ahs to be given now by the Assessing Authority, as to the said material fact as to whether the assessee is able to prove that the subject matter of the goods which are sold as per the sale transactions declared under the regular returns filed for the assessment year 1998-99 is in respect of the same goods which were subject matter of application filed under the VDIS Scheme 1997 and accepted by the revenue, as per the observation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvenient to me. In that case assets declared under VDIS are to be treated as not disposed off and are held by me .. As the assessee has agitated against the additions made as per order u/s 263 of the Act, that means as per assessee s own words the assets declared under VDIS are to be treated as not disposed off and they are still held by him. If the VDIS-1997 declared assets were really disposed off, what is the reason behind assessee s making above statement? The above statement of the assessee gives scope for doubt that those VDIS declared assets are still there and what is disposed of is something else. Under the circumstances it is difficult to believe that the material fact that what is sold under the sale transaction claimed by the assessee in the regular return filed and what is declared in the application filed under the VDIS Scheme 1997 are one and the same. 11.0 Apart from the copies of VDIS Certificate, valuation reports and sale bill copies, the assessee is not able to prove what is sold under the sale transaction claimed by the assessee in the regular return filed pertains to the gold jewelry and diamond which as declared in the application filed under the VD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attention as a sample in the case of Shri. Basavaraj I Kamatagi (HUF) that the gold jewellery was of 1401.100 grams but the weight of gold bullion sold was at 1161.250 grams meaning thereby the jewellery declared though it may converted into bullion according to assessee was not the same as contended by the assessee. Similarly, the silver articles declared under the VDIS Scheme were of 38.710 Kgs. but the silver bullion sold was 34.900 Kgs. Therefore, it cannot be said that the silver articles declared under VDIS Scheme was sold in the form of bullion after its conversion. Again in the case of diamond also, the declared diamond stones were 291 in numbers whereas the sold diamonds were cut and polished diamonds of 291 pieces. 5. The learned DR further invited our attention that under the category of gold jewellery, certain gold jewellery i.e., Necklace, Bangles, Tops, Hangings and Rings were studded with diamonds but no sale in this regard was claimed to have been effected. Since the declared jewellery do not tally with the sold goods, the claim of the assessee that he has sold the declared jewellery cannot be accepted. The learned DR further contended that similar is the posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in the regular return filed pertains to the gold jewellery and diamond which was declared in the application filed under Scheme 1997, the contention of the assessee that what is soldunder the sa1e transaction and declared under the regular returns is the gold jewellery and diamond that was subject matter of application filed under the Scheme 1997 and cannot be taxed under section 68 has to be accepted. However, if the assessee is not able to prove that the subject matter of transaction declared in the regular returns is the same goods which is declared under the application filed under Scheme 1997 and accepted by the revenue, then it is clear that the assessee is bound to pay tax on the sale transactions, as what is sold is not the property which is the subject matter of application under the Scheme 1997. This proposition cannot be disputed by the Counsel for the parties. When the finding given by the assessing authority, which is confirmed by the first appellate authority and the Tribunal in appeal is considered, it is clear that there is no specific finding on this material fact, which would decide the contention of the assessee or the revenue. Depending upon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO has made necessary enquiries. Having noted the discrepancies in the jewellery declared under VDIS Scheme and sold, the AO came to the conclusion that the jewellery sold are not the same which were declared under VDIS as there was difference in quantities. From a careful perusal of the chart, we find that gold jewellery declared in the case of Shri. Basavaraj I Kamatagi (HUF) was at 1401.100 grams whereas the gold bullion sold was at 1161.250 grams. Short fall in the quantity of the jewellery was not explained by the assessee either before the lower authorities or before us. Under the heading gold jewellery, gold diamond items were shown as Necklace, Bangles, Tops, Hangings, Rings at 178.570 grams. Once these jewelleries were converted into gold bullion, there may be availability of diamond stones for which no explanation was furnished as to whether they were sold or not. Similar is the position of silver articles. The silver articles were declared at 39.710 Kgs, whereas silver bullion sold were at 34.900 Kgs. There was no explanation from the assessee as to why there was a difference in weight of silver articles and silver bullion and whether the entire silver articles decl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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