9911796707
TMI Blog1989 (9) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... us stones was initially determined by the IT Department at Rs. 59,41,123. This valuation was modified and valuation made in June, August and Sept., 1985, and the same seized jewellery, diamonds, precious stones, etc., were revalued at Rs. 72,90,450. The Department also seized cash of Rs. 40,000 and Fixed Deposit Receipts of Rs. 55,600. The ITO passed an order under s. 132(5) of the Act on 20th Oct., 1984 and retained the whole of jewellery, ornaments, precious stones, cash and FDRs. The assessee made an application under s. 132(12) of the Act to the CIT, Bombay City-VIII, Bombay. The CIT passed an order under s. 132(12) of the Act on 14th Feb., 1986. Thereafter, the ITO passed order under s. 143(3). Before the ITO, the assessee filed letters dt. 5th Sept., 1984, 15th Oct., 1984, 15th June, 1985 and 10th March, 1986. He also filed a settlement petition on 12th Feb., 1985 before the CIT. Broadly, the case of the assessee before the ITO was that the assets were declared in the voluntary disclosure made by the members of the Zaveri family. Some of the assets were declared in the IT returns of the members of the Zaveri family. The assets belonged to third parties, that the ornaments bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evaluation of the ornaments at Rs. 72,90,450. The additions so made, therefore, were patently incorrect. 4.1 Thereafter, Shri Haribhakti argued that the assessee had given various documents pertaining to the declarations made by it and made by the members of the family under the Voluntary Disclosure Scheme, He argued that the assets declared in 1975 under the Voluntary Disclosure Scheme largely continued to remain with the Zaveris and their corresponding value in 1984, when the raid was carried on, should be treated as explained. Shri Haribhakti pointed out that the CIT Bombay City-VIII, in his order under s. 132(12) had more or less accepted this explanation and had directed the ITO to give relief after broadly verifying and tallying the items declared in 1975 with those found in 1984. However, the ITO had given relief only to the tune of Rs. 3,14,886. Shri Haribhakti thereafter argued that the mother of the assessee and his brothers had given statements on 10th Sept., 1984 and 25th July, 1984 stating, inter alia, that the jewellery belonged to the family. He argued that the Zaveris had a habit of investing surplus funds in buying diamonds, precious stones, etc., and, secondly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was generally occupied by the assessee's mother and two brothers. One bedroom was occupied by the assessee, and another by his brother Bipin and the third by his another brother Mahendra. The fact that the three rooms were occupied by there different brothers was indicated in their respective ration cards. The jewellery seized was taken out from different cupboards in different rooms and belonged to different persons. The details in this respect have been mentioned in the aforementioned letter dt. 14th July, 1987 addressed to the CIT (A). Shri Haribhakti argued that the CIT (A) had not taken into account these submissions. In support of the same argument, Shri Haribhakti argued that Shashikant was not an exclusive tenant of the premises at Sital Bhavan. There was an agreement between the brothers on a stamp paper about joint tenancy of these premises. Shri Haribhakti has filed an affidavit of all the members of the family of the assessee in support of this statement. Finally, Shri Haribhakti argued that the provisions of s. 132(4A) could not be invoked against the assessee because the jewellery and valuable articles found in the search were not in possession of the assessee nor wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. He relied on the decision of the Supreme Court in the case of CIT vs. Durga Prasad More 1973 CTR (SC) 500 : (1971) 82 ITR 540 (SC). He also relied on two other decisions of the Supreme Court in Jamanaprasad Kanhaiyalal vs. CIT (1981) 23 CTR (SC) 146 : (1981) 130 ITR 244 (SC) and Radheshyam Tibrewal vs. CIT Ors. (1984) 38 CTR (SC) 381 : (184) 145 ITR 186 (SC), the decision of Punjab Haryana High Court in CIT vs. Meera Co. (1986) 52 CTR (P H) 176 : (1986) 161 ITR 31 (P H) and the decision of the Orissa High Court in Udham Singh vs. CIT (1988) 171 ITR 471 (Ori) in support of his argument that the Department was not precluded from drawing independent inference from evidence which came in the course of proceedings under s. 132. He also argued that s. 69A had to be considered in conjunction with s. 132 (4A) of the Act. 7. We have carefully considered the submissions made by the Representatives of both sides. In our opinion, the addition of Rs. 69,59,339 has been made by the ITO without going into several important aspects of the issue and without affording the assessee a property opportunity of being heard. The valuation of seized jewellery and ornaments was first done by Aj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acked by a stamped document which was executed about 3 years before the date on which the search and seizure action was taken against Shashikant. It is necessary that this document is looked into by the tax authorities, and the fact that the premises were occupied by the assessee and his brothers as joint tenants has to be given proper weightage while considering the claim of the assessee that the jewellery found belonged to all of them and not to Shashikant individually. Reference in this regard may be made to the various statements made by the assessee as well as the members of his family. The assessee's mother stated in her statement recorded on 10th Sept., 1984 that the contents of the box containing precious stones, etc., which were seized from the assessee's residence represents the property of her family, i.e., herself and her sons. Similar statement was made by the assessee's brother, B.M. Zaveri., on the same day, i.e., on 10th Sept., 1984. In reply to some of the questions put to him on 25th July, 1984, the assessee clearly stated that all personal and business assets in the form of jewellery were assembled at the premises belonging to the family. These assets belonged to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 12.45 lakhs which was offered for taxation. Whereas all the figures mentioned in the annexure to the settlement petition cannot be accepted at their face value, they cannot be wholly rejected as has been done by the Revenue authorities, particularly when we see that the CIT in his order under s. 132(12) has substantially accepted the assessee's case. The CIT in para 4 of his order observed as under: "4.4. After considering the rival submissions, I am of the opinion that at the time of completing the regular assessment, the ITO should give the petitioner another opportunity to produce evidence in support of the contention that certain more jewellery belonging to the ladies and children were not given credit for in the impugned order under s. 132(5). In other words, this matter shall have to be looked into afresh, at the time of completing the regular assessment when the ITO will certainly weigh the evidence produced before him and the ITO shall thereafter come to a proper conclusion." Even in respect of third party jewellery, the CIT has given directions as under: "5:1 It is clear from the quotation from the ITO's report dt. 11th June, 1985 that the petitioner's con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s family. Total amount of nearly Rs. 75,000 was withdrawn on 10th July, 1984. No proper credit appears to have been given for the amounts withdrawn. On the other hand, the amount that has been withdrawn, has been treated by the ITO as amount credited. It has also been brought to our notice that a separate list of valuables belonging to the third parties was prepared by the assessee and the claim that these ornaments belonged to third parties was supported by a number of seized documents. The assessee had requested that the third party concerned should be called and cross-examined. Whereas M/s Ratnam Niryat had attended and produced their books of account in support of their stand that they had given the assessee's family certain valuables in the course of their business, the ITO had not accepted this stand but had not given adequate reasons for not considering the statement of Ratnam Niryat. Some of the other third parties have not been examined at all. Even in respect of the ornaments belonging to the ladies, it would appear that the seized documents include the list of jewellery belonging to the wives of the assessee and his brothers and to the assessee's sisters. The ITO has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med" have been employed. It is, therefore, clear that making of the presumptions in such cases depends upon the particular facts of the case. The ITO would not be justified in making such presumption in all cases without judicial application of mind to the facts of the particular case. Further, even if such presumption is made, the same is rebuttable and the person is free to lead evidence to rebut such evidence. Now, what type of evidence and what amount of evidence will rebut a presumption in a given set of facts, does not admit of any rigid rule. Here, both the assessee and his brothers have made several statements concerning the ownership of the assets seized. These statements have to be put to test. It can be said that the assessee has made all efforts to rebut the presumption of ownership that has been drawn against him by the Revenue authorities, but the evidence produced by the assessee in support of such rebuttal has, in our opinion, not been properly weighed by the ITO and CIT (A). 12.1 The next legal argument revolves round the concept of 'possession'. Now, 'possession is a term which may have different meanings in different contexts. It may be impossible to work out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to the assessee the information supplied by the Departmental Representative and without giving any opportunity to the assessee to rebut the information as supplied and declining to take into consideration all materials which the assessee wants to produce in support of the case constitutes a violation of the fundamental rules of justice and calls for interference by the Court. These observations are very apposite in the present context and support our observations and findings in the preceding paragraphs. The Supreme Court in Kishinchand Chellaram, vs. CIT observed that the Department ought to have produced the documents and papers on the basis of which the manager had made certain statements in the letters dt 18th Feb., 1955, and 9th March, 1957, which were accepted as enough evidence by the Tribunal for making an addition of Rs. 1,07,350 remitted by the assessee from Madras. It was true, observed their Lordships, that proceedings under the IT law were not governed by the strict rules of evidence, and therefore, it might be said that even without calling the manager of the bank in evidence to prove the letters it could be taken into account as evidence. But before the IT author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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