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TMI Blog2003 (7) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... rmises and conjectures. (3) For that the CIT(A) erred in confirming the action of the AO in adding a sum of ₹ 3,53,44,078 as income from undisclosed sources and wrongfully and illegally held that the said sums were not sale proceeds of silver utensils sold during the relevant previous year and/or was not to be assessed under the head 'capital gains'. The reason given by the CIT(A) to come to these findings are no reasons at all and are based on surmises and conjectures and has been arrived at after ignoring relevant evidence and materials on record and by relying on erroneous facts and irrelevant materials and on extraneous consideration. (4) For that the CIT(A) erred in confirming the order of the AO in treating the loss on sale of silver utensils as relating to personal effects. (5) For that the appellant denies its liability to pay any interest under the provisions of the Act. 3. Broadly stated the facts of the case in brief are that the assessee made a disclosure under Voluntary Disclosure of Income Scheme, 1997 (VDIS) wherein he disclosed various undisclosed investments in diamond, gold and silver utensils. The assessee filed return on 25th Aug., 1998 declari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver disclosed were sold and the assessee suffered a loss of ₹ 92,69,972 on such sale. The learned distinguished counsel contended that the AO was wrong in treating the sale proceeds amounting to ₹ 3,53,44,078 as income from undisclosed sources. It was alleged that the statements of the persons on which the AO had relied were not furnished to the assessee and no opportunity was afforded to the assessee for cross-examination of those persons. The learned distinguished counsel brought to our notice that the statements made by the valuer, Shri R.K. Kothari, are contradictory and should not be relied upon. It was also highlighted that M/s RTC (Road Transport Coporation) was under lock-out during the period and therefore, the goods were transported by hiring trucks directly by M/s RTC and the goods were delivered to the consignees. It was also argued that the statements of Shri Anil Kumar Sethi and Shri R.K. Gupta were therefore, of no consequence. It was also strongly argued that it is conclusively proved that silver utensils were delivered to the consignee as delivery charges receipt were issued on payment of ₹ 10. 6. The learned distinguished counsel further alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guished counsel strongly contended that the whole approach of the AO is biased and vitiated. The AO acted in an arbitrary and illegal manner and in gross violation of natural justice and fair play. No reasonable, proper or adequate opportunity was given to the assessee to make his representation against the issue raised by the AO. The statements of the persons and/or reports on which reliance has been placed in the order of the assessment were neither supplied nor any opportunity was afforded to cross examine them. It was also contended that various allegations, purported findings and observations made in the order of the assessment are without any basis and/or material and are on mere suspicion, surmises and conjectures. Such allegations, purported findings and observations are perverse and have been arrived at or made on extraneous and irrelevant considerations resulting in miscarriage of justice. For the first time, four days before the period of limitation for making the order of the assessment was expiring, a show-cause notice was issued by the AO. Even then all the evidences, documents and statements were not furnished to the assessee. Only two days time was given to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2002) 82 ITR 52 (Mumbai), in the decision of Tribunal, Hyderabad Bench 'B' in ITA No. 212/Hyd/2002 (ITD Vol. 85/367). The learned counsel particularly highlighted the following decision of Hyderabad Bench in the case of Harish Kumar vs. Dy. CIT (2003) 80 TTJ (Hyd) 174 : (2003) 85 ITD 366 (Hyd). "We have considered the submissions of both sides and perused the relevant record available with us and perused the paper books filed by both sides. We are of the considered opinion that the sum of ₹ 51,92,750 representing the sale of diamonds to Shukra Jewellers, Surat, can not be sustained for the reasons stated below. It is an admitted fact that the appellant had declared gold and jewellery under the VDIS 1977 and it was accepted by the Department by issue of necessary certificate in accordance with the said scheme. It is also a fact that the gold and diamond were sold separately. It is also an admitted fact that the sale of gold which was separated from the diamonds was made for ₹ 4,59,979 at Hyderabad and this sale has been accepted. The fact remains that the diamonds were separated. As regards the sale of diamonds to Shukra Jewellers, Surat, we find from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was not confronted with any evidence by the AO while holding that "it is evident that the cash deposited by the jewellers at Delhi in their bank accounts belonged to Dalmias" and in fact, there is no evidence to show that the cash deposited was not the sale proceeds of the silver utensils. The learned counsel strongly contended that if the allegations of the Department that the said silver utensils were not sold by the assessee is taken to be correct then the said silver utensils should have been found at the time of the search and the existence of the said assets has not been disputed by the Department and cannot be disputed by the Department. He has, therefore, reiterated that the addition made by the AO is unjustified and should be deleted. As regards long-term capital loss on the sale of silver utensils which was disallowed by the AO on the ground that the said silver utensils were personal effects is also not correct. The assessee had nowhere stated that the said silver utensils were for his personal use and/or were used as such. No such enquiries were raised at any point of time in the course of the assessment proceedings, even in the letter dt. 26th Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the register of the said two check posts did not show the entries of the trucks passing through that check post which was essential under the U.P. Trade Tax, 1948 on the basis of the certificate issued by the authority of concerned check posts. The learned Departmental Representative further stated that the purchasers of the silver utensils being the jewellers at Delhi showed fictitious purchases and sale of silver utensils to accommodate the assessee inasmuch as: (a) All transactions were in cash. (b) Neo bank accounts were opened by the jewellers in New Delhi during the VDIS' 97 to accommodate the assessee. (c) Their turnover during the VDIS' 1997 rose abnormally. (d) The names of the persons who purchased the silver utensils from the jewellers were not furnished. (e) Mode of receipt of silver utensils was not explained clearly. (f) Such a large quantity of silver utensils could not be sold in a single day as the establishment of the jewellers were small. 10. The learned Departmental Representative, therefore, reiterated that on the grounds mentioned earlier the AO has rightly said that the silver utensils were never transported to Delhi. It was further stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Ors. (1981) 25 CTR (Raj) 175 : (1982) 134 ITR 119 (Raj). The learned Departmental Representative highlighted that the evidence should be such that a reasonable inference can be drawn with regard to various points which formed the basis of computation of income. Different circumstantial or indirect evidence which together lead to some reasonable inference, may not by themselves individually constitute material on which some finding can be given, but together they constitute acceptable and good evidence. Different indirect or circumstantial evidence individually may not be sufficient to draw a conclusion, but these beads of evidence threaded together may point surely and definitely to a reasonable inference which can form the basis of the conclusion that in this case the silver utensils had never existed. The learned Departmental Representative therefore, stated that the conclusion arrived at by the AO is based on sound footing and the assessee could not justify the claim and the same has rightly been disallowed by the AO and in turn, confirmed by the learned CIT(A). 12. We have heard the rival contentions and carefully perused the orders of the authorities below and deliberated u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Dalmia family was done by them and he was also involved during the valuation period which was over many days. He has further replied that all the valuation reports and the bills raised will be found in his office and the receipts reflected in the exercise books and the computer. It was also stated that the valuation was done at the residence of the assessee and the valuation fee was received in cheque. The statement of Shri R.K. Kothari recorded on 18th Jan., 2000 will prove that he did see all the silver utensils and he has stated as under: "But I was not carrying a weighing machine which could have weighed big items of silver utensils. I, therefore, used my small weighing machine to weigh few items of silver utensils on that particular day. Subsequently, as I was very busy in performing valuation work of my other clients during the course of VDIS' 97, I could not visit the place of Dalmias to weigh his rest of the silver utensils." From the foregoing, it is evident that the statement of Shri R.K. Kothari given on 18th Jan., 2000 is contradictory and cannot be relied upon and clearly shows that the said statement was taken under duress and coercion. We hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gupta states that no silver utensils were received or transported from Calcutta. Admittedly, as RTC was under lock-out, the goods were transported hiring trucks directly by RTC and the goods were delivered to consignee and as such the statement of Shri Gupta is also of no help. We have further noticed that search was conducted at the premises of RTC subsequently and the Department did not find any evidence or material so that the said goods were not transported by them. We have observed that there is ample evidence to show that RTC transported the silver utensils of the assessee to Delhi. In this connection, the reply to notice under s. 133(6) wherein they have confirmed the facts that they have transported the silver utensils to Delhi vide their letter dt. 9th March, 2001 have sufficient force. In this connection, pp. 72 to 75 of the paper book may be referred to. The delivery charges receipts are issued by the carrier on delivery and on payment of ₹ 10. This will conclusively prove that the silver utensils were delivered to the consignee. As regards the silver utensils transported through J.K. Carriers, we have noticed that the AO has taken certain statements of employees o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ten by the officer himself. We have noticed that the statement of Shri Sharma is also proved by the fact that immediately after 21st Jan., 2000 he wrote a letter to the Director of Income-tax (Investigation) dt. 22nd Jan., 2000 alleging the harassment and coercion exerted on him. We, therefore, agree with the learned distinguished counsel that the letter written by Shri Sharma and subsequent deposition dt. 15th Feb., 2001 totally demolishes the case tried to be made out by the AO. 14. As regards the enquiry made at check post in U.P., we have noticed that the AO has mentioned in the assessment order that on enquiries conducted at Naubatpur check post near Varanasi and Ghaziabad check post, it has been found that the said trucks carrying silver utensils did not pass through the said check posts and that as per law of U.P. Sales-tax, a truck has to be entered in the register as per entry and exit point of the U.P. Border. The learned counsel mentioned that what is the requirement of U.P. Sales-tax is not the point in question. The pertinent question is that whether the truck has passed through Naubatpur check post or Ghaziabad check post cannot establish or de-establish that the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ram Kanta". Copies of purchase vouchers issued by the purchasers and receipts of 'Dharam Kanta' are at pp. 129 to 159 of the paper book. The above facts also support the contention of the assessee that the silver utensils were in fact transported to New Delhi and received by the purchasers. The claim of the assessee that the statements and depositions which are on record clearly established that the silver utensils were transported to Delhi and were sold. By no stretch of imagination it can be said that the said sale proceeds of silver utensils were unexplained. We have further noticed that the AO suppressed various statements and depositions which conclusively prove that the allegations of the Department were not based on sound footing and that the reason which prompted the AO to suppress various evidences in his possession which were in favour of the assessee indicates the intention of the AO not to allow the assessee to rebut the allegation. We have also noticed that the enquiries made at various check posts as already stated in the earlier paras have been made on wrong facts in respect of wrong dates and has not been made at all about the concerned check posts. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001 the veracity of the money receipts and also delivery to the parties indicated. Xerox copies of the delivery abstracts have been sent by them. They have also mentioned that the delivery transactions were records at Ramnagar Branch. They have furthermore pointed out that three money receipts do not pertain to this assessee but to the other three assessee of the Dalmia Group. The result of this cross-verification goes in favour of the assessee's claim of transportation and delivery of goods." "In the paper book the assessee has also filed the copies of weighing slips issued by Purana Dharmakanta Committee, Delhi, in support of weighing the silver utensils before purchase by the jewellers at Delhi. These slips were also impounded by the DDIT (Investigation). However, there is no discussion in assessment order in this respect and no cross-verification was made. Therefore, letters were written to the Dharmakanta Committee, Delhi and they have since confirmed the weighing and realisation of the weighing charges. In view of this, the existence of silver utensils at Delhi before the sale can not be ruled out." "It is apparent that no cross-verification was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding by the AO concerned in this respect." "Facts uncontrovertible and uncontroverted The assessee has claimed 7 facts to be uncontrovertible and uncontroverted. These facts and comments against them are given below: (a) The silver utensils were properly disclosed under VDIS' 97 and accepted by the IT Department. Accepted Facts (b) The silver utensils were handed over to Road Transport Corporation and J.K. carriers in Calcutta. Evidenced by consignment notes (c) Both the said Road Transport Corporation and J.K. Carriers are "common carrier" within the meaning the "The Carriers Act, 1865". No comments (d) The silver was delivered by the said common carrier to the consignee at the destination in Delhi. Results of verification have already been discussed in the earlier paragraphs (e) The consignee has confirmed having received the silver utensils through the said common carrier. Yes. (f) On search no silver utensils as disclosed in VDIS' 97 were found with the appellant. This is a fact (g) The appellant was not confronted with any evidence to establish that the cash deposited by the jewellers at Delhi in their bank account belonged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is whether besides the non-entries in the check post, there is any evidence to prove that the transaction referred to by the assessee actually took place or not. Such corroboration will be but afforded by the evidences of the persons who made the statements, transported the goods, purchased the silver utensils, bank statements, etc. In the instant case, we have observed that the assessee has produced sufficient evidences to prove the genuineness of transaction of silver utensils, weighed thereof by a registered valuer and sale of the same to genuine parties and realisation of the sale proceeds by account payee bank drafts. What evidence will, in a particular case, be sufficient to establish assessee's representation, as also what material is relevant or not relevant would depend on the facts of each case. The evidence Act embodies the principles of relevancy in ss. 5 to 16. That Act, however, is not applicable to proceedings under IT Act. But the principles that emerge from these sections are that anything which has a bearing on the question of issue before the judicial Tribunal would be a relevant fact. In this connection, the decision of the Hon'ble Jurisdictional High C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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