Income Tax Appellate Tribunal - Kolkata
Shyam Sunder Dalmia (Huf) vs Dy. Cit on 7 October, 2003
Equivalent citations: (2004)87TTJ(KOL)1114
ORDER
B.K. Mitra, J.M. This is an appeal filed by the assessee against the order of the learned Commissioner (Appeals) dated 28-10-2002 for the assessment year 1998-99.
2. The following grounds have been taken :
(1) For that the order passed by the Commissioner (Appeals) confirming the order of assessment is arbitrary, erroneous, illegal and perverse and has been passed without application of mind. None of the argument raised in course of the appellate proceedings as well as various materials and evidences including remand report given by the assessing officer were referred to and/or dealt by the Commissioner (Appeals) while passing the order.
(2) For that the Commissioner (Appeals) passed the order by ignoring the relevant materials and evidence available on record by relying on erroneous facts and on irrelevant and extraneous consideration. Various allegations, purported finding and observation against the appellant have been made without any basis or material and on mere suspicion, surmises and conjectures.
(3) For that the Commissioner (Appeals) erred in confirming the action of the assessing officer in adding a sum of Rs. 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 Commissioner (Appeals) 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 Commissioner (Appeals) erred in confirming the order of the assessing officer 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 25-8-1998 declaring a total income of Rs. 1,30,520 and notice under section 143(2) was issued and served upon the assessee. The assessee's authorised representative appeared from time to time and filed the details as asked for by the assessing officer. As per the capital account filed, it revealed that the assessee credited Rs. 84,35,601 as income disclosed in VDIS, 1997 and as per the profit and loss a/c the assessee has credited Rs. 5,04,13,245 as sale proceeds of jewellery and silver utensils. The assessee had shown details of sale proceeds as appended below :
(i) Diamonds :
1,85,68,643
(ii) Gold :
44,90,000
(iii) Silver utensils :
3,53,44,078 The assessee stated that the assets declared in VDIS, 1997 have been sold in the financial year 1997-98 and as such, sale proceeds have been credited in the books of accounts as stated above.
Name and Address of buyer Quantity of silver sold kg.
Sale proceeds Transport from Calcutta to Delhi M/s. Shree Enterprises 1168, Kucha Mahajani Chandni Chock, Delhi 110006 1189.967 78,35,280 RTC, Calcutta Shri Tirupati Balaji & Co., 19, Katra Chouban, Chandni Chowk, Delhi 110006 1319.970 89,29,195 RTC, Calcutta Gupta Trading Co., 1166, Kucha Mahajani, Chandni Chowk, Delhi-110006 1624.899 113,83,024 RTC, Calcutta, J.K. Carriers, Calcutta Rajeshwari Jewellers, 1168, Kucha Mahajani, Chandni Chowk, Delhi-110006 1089.414 71,95,579 RTC, Calcutta Total 5224.25 3,53,44,078 With a view to verifying the genuineness of the above sale transaction of silver, the Investigation Directorate at Calcutta and Investigation Directorate, New Delhi conducted enquiries regarding genuineness of the sale of silver utensils and the transportation of the same from Calcutta to Delhi. The controversy arises when the assessing officer made additions of Rs. 3,53,44,078 as income from undisclosed sources in respect of silver utensils sold by the assessee during the relevant assessment year and disallowance of loss of Rs. 92,69,972 suffered on sale of silver utensils on the ground that the same were personal effects.
4. Being aggrieved by the order of the assessing officer the assessee carried the matter in appeal before the Commissioner (Appeals) who after perusal of the record and considering the submissions of the assessee confirmed the order of the assessing officer.
5. The learned distinguished counsel strongly contended that various assets including silver utensils were disclosed under VDIS, 1997. The silver disclosed were sold and the assessee suffered a loss of Rs. 92,69,972 on such sale. The learned distinguished counsel contended that the assessing officer was wrong in treating the sale proceeds amounting to Rs. 3,53,44,078 as income from undisclosed sources. It was alleged that the statements of the persons on which the assessing officer 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 Corporation) 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 Rs. 10.
6. The learned distinguished counsel further alleged that the statement of Shri J.K. Sharma was taken under coercion and threat, and M/s. J.K. Carriers by its letter dt. 12-2-2001 had confirmed that the silver utensils were transported by M/s. J.K. Carriers to Delhi. It was also argued that the statement recorded on 21-2-2000 could not be relied upon as it was written by some official of the Income Tax Department and it was beyond Shri J.K. Sharma to explain in such lucid details, the so-called scheme and the intricacies of the VDIS Scheme. It was categorically pointed out that the statement taken on 15-2-2001 showed that Shri Sharma had confirmed the transportation of silver utensils for the Dalmias. As regards the enquiries at the check post at Gaziabad the learned distinguished counsel argued that it is common knowledge that the drivers of goods carriages adopted various methods to evade check post and payment of State taxes charged by such check post. It was also mentioned that the drivers might have taken some other routes and reached Delhi which was beyond the knowledge of the assessee. As regards the sale of silver in cash by the Delhi jewellers, the assessee argued that how the jewellers would conduct their business is a matter of their choice and the assessee has got no suggestion to make in this regard. He has, therefore, reiterated that just because the sales were made in cash, no adverse inference could be drawn against the assessee. The learned counsel drew our attention to the weighing slips from the weigh bridge (Dharamkanta) and from all these slips, it is evident that silver utensils were transported from Calcutta to Delhi and were received by the purchasers. The learned counsel submitted that the view of the assessing officer that the silver utensils were never transported to Delhi and that the silver utensils allegedly sold never existed and cash deposited by the jewellers at Delhi in their bank account belonged to Dalmias and as such the sale proceeds of silver utensils were nothing but unexplained cash credit in the hands of the assessee and was taxed as such was based on wrong footings. It was also categorically mentioned that the assessing officer was wrong in holding that even on merit the silver utensils were personal effects and in view of section 2(14) of the Act, no capital loss or gain could be claimed in respect of personal effects and as such the loss claimed was wrongly disallowed.
7. The learned distinguished counsel strongly contended that the whole approach of the assessing officer is biased and vitiated. The assessing officer 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 assessing officer. 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 assessing officer. Even then all the evidences, documents and statements were not furnished to the assessee. Only two days time was given to the assessee to give its reply that too without supply of various documents, evidences and statements. The learned distinguished counsel humbly submitted that in view of the factual position, the addition of sale proceeds of silver utensils as unexplained cash credit by the assessing officer is prima facie illegal, perverse and is liable to be cancelled. It was also brought to the notice of the Bench that subsequent to the passing of the order of assessment, the assessee once again requested the assessing officer to furnish statements and depositions. On such request the assessing officer supplied to the assessee various depositions and statements obtained by the assessing officer in course of the assessment proceedings. On perusal of the said statements and depositions, it transpires that all the depositions and statements not discussed in the order of the assessment were in support of the assessee's contention and/or supported the transactions entered into by the assessee. The learned distinguished counsel, therefore, asserted that such action on the part of the assessing officer in suppressing these materials and vital evidence itself clearly shows the prejudice and biased mind and the manner in which the assessment was framed. It was contended that the learned Commissioner (Appeals) was not at all justified in confirming the order of the assessing officer which has been passed without application of mind. The learned Commissioner (Appeals) was not at all justified in confirming the order of the assessing officer by ignoring the relevant materials and evidence available on record by relying on erroneous facts and on irrelevant and extraneous considerations. The learned counsel strongly contended that the learned Commissioner (Appeals) erred in confirming the action of the assessing officer in adding a sum of Rs. 3,53,44,078 as income from undisclosed sources and wrongfully and illegally held that the sums were not the sale proceeds of silver utensils sold during the previous year and/or was not to be assessed under the head 'capital gains'. It was asserted by the learned counsel that the Commissioner (Appeals) erred in confirming the order of the assessing officer in treating the loss on sale of silver utensils as relating to personal effects. In support of his arguments the learned distinguished counsel relied on the decisions of the learned Tribunal, Calcutta Bench in ITA No. 1799/Cal/1982 M.K. Jajodia v. TTO (1984) 20 TTJ (Cal) 167, Tribunal, Mumbai Bench (A) in ITA No. 6853 (Bom), Miss Veena Chokhani v. Income Tax Officer (2002) 82 ITR 52 (Mum), 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 v. Dy. CIT (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 Rs. 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 Rs. 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 material evidence placed before us that the identity of the party has been established, the transaction is genuine and the credit worthiness of Shukra Jewellers has been proved beyond doubt by the assessee. The bank accounts of M/s. Shukra Jewellers which were collected by the assessing officer showed that the amounts were received by account payee DDs from Mumbai. The DDs were taken by Shukra Jewellers and sent to the appellant which were credited in the appellant's bank account and used for business purposes of his business entities. As regards. the credits in the bank account of Shukra Jewellers, we agree with the submissions of the learned authorised representative of the appellant that it is not the duty of the appellant to prove the sources of the credits in the bank account of Shukra Jewellers. The appellant can not establish the source of the source. The decision of the Hon'ble Madras High Court in S. Hastimal's case (supra) also supports this view of the appellant."
The learned counsel also placed reliance in the decision of the learned Tribunal, Ahmedabad Bench 'B' (ITA No. 3860/Ahd/1992, dt. 15-9-2000) in the case of Rohini Builders v. Dy. CIT.
8. The learned counsel highlighted that in view of the various judicial pronouncement as stated earlier and on the basis of the facts it clearly established that the silver utensils were transported to Delhi and were sold. By no stretch of imagination it can be said that the sale proceeds of silver utensils were unexplained. He has further stated that the action of the assessing officer in suppressing different statements and depositions also conclusively proved that the department has no case and that was the reason which prompted the assessing officer to suppress various evidences in his possession which were in favour of the assessee. The enquiries made at various check posts has already been explained, in course of his arguments and the above decision has been made on wrong facts in respect of wrong dates and has not been made at all in the check post. The said enquiries also revealed that at some of the check posts no entries of the truck were made passing through the check post. No incriminating evidence was found in course of the search conducted at the residence and office premises of the assessee. The assets disclosed under the VDIS, 1997 were also not found at the time of the said search. It was further stated that the assessee was not confronted with any evidence by the assessing officer 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 assessing officer is unjustified and should be deleted. As regards long-term capital loss on the sale of silver utensils which was disallowed by the assessing officer 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 dated 26-3-2001 the said query was not raised by the assessing officer. It was also highlighted that the huge quantity of silver utensils itself shows that the same were not and could not be personal effect and were in the form of the investments made by the assessee for capital appreciations. Accordingly, the disallowance of long-term capital loss is also not correct and the loss as claimed should be allowed.
9. The learned Departmental Representative supported the order of the lower authorities and further added that Shri Raj Kumar Kothari, who valued the silver utensils for the purpose of VDIS 1997 and issued valuation report did not weigh the entire quantity of silver utensils and he obliged the assessee by issuing the valuation certificate as required by the assessee and he did not see the total quantity of silver utensils himself. As regards the silver utensils alleged to have been transported through Road Transport Corporation (RTC) to New Delhi could not have been transported as :
2A. (a) RTC was under lock out during the relevant period.
(b) Toll register did not contain the entries of consignment belonging to the assessee.
(c) Booking register did not show the entry of the consignment of the assessee.
(d) Shri Trilok Agarwal, general manager of RTC Booking Office at Calcutta has given wrong facts about loading of the goods.
(e) The partners of RTC were close relatives of the assessee.
(f) Statements obtained on survey in the office of RTC at New Delhi of various persons also denied any knowledge of the said transportation of silver utensils.
2B. Silver utensils alleged to have been transported through J.K. Carriers of Calcutta was not transported for the following reasons :
(a) Shri J.K. Sharma, proprietor of J.K. Carriers denied that any such transportation was done by him.
(b) Shri J.K. Sharma also admitted that the said consignment note was only a book transaction to help the assessee in their tax avoidance
(c) No books or any other papers of J.K. Carriers were available.
(d) Survey conducted at the premises of M.P. Roadways showed that no firm under the name of J.K. Carriers existed at the said address.
The learned Departmental Representative further strongly contended that :
3. Silver utensils were never transported to Delhi is proved by the fact that the trucks did not pass through the Naubatpur check post, Varanasi, U.P. and Ghaziabad check post (UP) and 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 assessing officer has rightly said that the silver utensils were never transported to Delhi. It was further stated that the facts and circumstances of the case proves beyond doubt that the silver utensils never existed and the cash deposited by the jewellers at Delhi in their bank accounts belonged to Dalmias. The assessing officer was, therefore, right in holding that the sale proceeds of silver utensils was nothing but unexplained cash credit in the hands of the assessee.
11. The learned Departmental Representative relied on the order of the learned Commissioner (Appeals) stated that in the instant case like any other case involving facts of various shades and dimensions, the cumulative effect of all evidences, after due appreciation of the acceptability and probative value of all evidences one can come to a definite. conclusion that the assessing officer was quite justified in disallowing the claim of the assessee and in turn confirmed by the learned Commissioner (Appeals). The learned Departmental Representative placed reliance in the decision of the Apex Court in the case of CIT v. Durga Prasad More (1971) 82 ITR 540 (SC) that the reliability of evidence is to be judged by human probabilities. It was mentioned that where it is impossible to lay hands on direct evidence as in the case of suspected tax evasion, the matter must be viewed after considering the surrounding circumstances as because of the very nature of the things it is virtually absurd to expect to lay hands on direct evidence. The learned Departmental Representative further highlighted that in this case the assessing officer had certain oral evidences coming out through spot examination, which are contemporaneous in nature. Such oral evidences are in the nature of admissions and it is true that there are attempted retractions of some of the admissions. After considering the cumulative effect of all the relevant evidences and the acceptability as well as their probative value the assessing officer satisfied the test of preponderance of human probability as laid down in the case of CIT v. Durga Prasad More (supra) and Sumati Dayal v. CIT (1995) 214 ITR 801 (SC). The learned Departmental Representative further placed reliance on the decision of the Hon'ble Madras High Court in the case of Bombay Hardware Syndicate v. CIT (1973) 92 ITR 160 (Mad), CIT v. H.M.T Ltd. (Kar) (1993) 199 ITR 235 (Kar), Homi Jehangir Ghesta v. CIT (1961) 41 ITR 135 (SC), Addl. CIT v. Jay Engineering Works Ltd. (1978) 113 ITR 389 (Del) and Vimal Chandra Golecha v. ITR & Ors. (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 assessing officer is based on sound footing and the assessee could not justify the claim and the same has rightly been disallowed by the assessing officer and in turn, confirmed by the learned Commissioner (Appeals).
12. We have heard the rival contentions and carefully perused the orders of the authorities below and deliberated upon the applicable legal position and also the factual matrix of the case. We have noticed that the assessing officer referred to certain alleged statements obtained from Shri Raj Kumar Kothari, the purport of which allegedly is that he had given the valuation report without examining the articles in question. The assessing officer also has referred to the retraction of such alleged statement by him. The retraction statement of Shri Raj Kumar Kothari and his alleged statement recorded on 14-3-2001 has not been given to the assessee. The assessee claimed that the allegations made in Shri R.K. Kothari's alleged earlier statement that he had made the valuation without examining the articles in question is false and not correct. The assessee therefore like to cross examine Mr. Kothari with reference to his alleged statement on which the assessing officer has sought to rely. We have noticed on the basis of Shri R.K. Kothari's statement recorded on the date of search in his business premises, i.e., on 18-1-2000 (pp. 44 to 49 of the paper book) that Shri R.K. Kothari has admitted that he weighed only one tonne of silver utensils and gave the valuation report of the balance without actually weighing and/or seeing them. The statements given by Shri Kothari were retracted by him by way of an affidavit affirmed before the Metropolitan Magistrate on 24-1-2000 (pp. 81-88), a perusal of which clearly shows that what is being alleged is not correct and Shri R.K. Kothari did value the silver utensils after weighing them. It has been observed that the said affidavit also placed on record that the silver utensils were weighed on a platform weighing scale arranged by the assessee's family as against the wrong statements attributed to Shri R.K. Kothari that only one tonne of silver utensils was weighed on a small weighing scale belonging to him. In this connection, the learned counsel drew our attention to question No. 5 and answer to the said question of Shri Ram Prakash Kothari brother of Shri R.K. Kothari in the statement recorded under section 132(4) of the Income Tax Act on 18-1-2000 that is on the date of search itself (pp. 76 to 84 of the paper book may be referred to). On being asked whether Shri Ram Prakash Kothari brother of Shri R.K. Kothari remembers the valuation done during the period of VDIS', 97 for S.S. Dalmia, N.P. Dalmia, Geeta Dalmia and others. Shri Ram Prakash Kothari categorically mentioned before the revenue authorities that the valuation for the purpose of VDIS, 97 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 18-1-2000 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 18-1-2000 is contradictory and cannot be relied upon and clearly shows that the said statement was taken under duress and coercion. We have further noticed that the assessing officer has not referred to the subsequent statement of Shri R.K. Kothari recorded by him under section 131 of the Act which will conclusively prove that he did see and weigh the entire silver utensils. We have further noticed that the assessing officer mentioned in the order of assessment that Shri R.K. Kothari retracted his statement after 42 days of admission and as such is nothing but after thought. The statement was retracted before a Magistrate within 6 days, i.e., on 24-1-2000 and the fact has wrongly been stated in the order of assessment.
13. As regards the claim of silver utensils transported through Road Transport Corporation (RTC), it has been stated that during the period the silver utensils were transported, RTC was under lock-out and in various registers there is no entry of consignment notes issued by them. It is clear that as there was lock-out, the entries could not be made in the register which has got sufficient force in the contention of the assessee that due to this reason the silver utensils were directly loaded on trucks from the assessee's residence and were not sent to the godown of RTC. We have observed that the statement alleged to have been given by Shri Trilok Agarwal does not state that the silver utensils were not transported by RTC. In this connection, our attention was drawn to the letter of Shri Trilok Agarwal dated 22-1-2001 filed before the assessing officer and the copies of the affidavit of Mr. & Mrs. Agarwal affirmed before the Metropolitan Magistrate, it will show the matter in which the statements were obtained and enquiries were conducted and searches were made by the Investigation Wing of the Income Tax Department. Both the said affidavits support the contention of the assessee to a considerable extent (pp. 64 to 71 of the paper book). We have noticed that some survey was also conducted in the office of the South Eastern Roadways, Delhi and the statements of certain persons were recorded and no copy of the survey report and statements of such persons were given to the assessee. The statement of Shri Anil Kumar Sethi who was also working as accounts manager only from March, 1997 also does not deny but also states that he is not having any knowledge about the transportation of such silver utensils. The assessing officer should have appreciated that Shri Anil Sethi was working in the accounts department and joined only in March, 1997. The statement or Shri Krishna Kumar 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 final 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 section 133(6) wherein they have confirmed the facts that they have transported the silver utensils to Delhi vide their letter dated 9-3-2001 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 Rs. 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 assessing officer has taken certain statements of employees of M.P. Roadways to show that no transportation business was, carried on by J.K. Carriers. Further and in any event that the statement of Shri R.K. Prasad states that no consignment pertaining to J.K. Carriers is booked from the booking office of M.P. Roadways. The statement of M.P. Roadways is of no help to the department. We have noticed that the assessing officer has relied on statement of some labourer who are working for M.P. Roadways which is not relevant in the present context. The statements recorded by the assessing officer under section 131 on 6-9-1999 and 9-9-1999, were suppressed and copies were not given to the assessee. We have further noticed in response to notice under section 133(6) of the Act dated 17-1-2001 issued to J.K. Carriers, it was confirmed vide their letter dated 12-2-2001 that they transported the silver utensils to Delhi (pp. 105 to 108 of the paper book). The allegations of the assessing officer that there was no firm in existence under the name of J.K. Carrier are not based on sound footing because in response to question No. 4, Shri J.K. Sharma clearly stated that he had purchased two carriers in 1996 and 1997 for the purpose of his transport business and had given the lorry numbers to the assessing officer which was also financed by Usha Martin Finance Corporation. It is conclusively proved that J.K. Carriers did carry on the business of common carrier and the allegation of the assessing officer was motivated. The learned distinguished counsel also brought to our notice that the answer to question Nos. 10 and 11 will show that the said answers were not given by Shri J.K. Sharma but were written by the persons taking statement and the extent of alleged information which was given by Shri Sharma in reply to question Nos. 10 and 11 was not available and could not be available with him but could only be available with the Income Tax Department. The assessee's contention that Shri Sharma could not have known that the assessee has disclosed tonnes of silver utensils under VDIS' 97 and it was not possible for Shri Sharma to explain in minute details the so called scheme alleged to have been concocted by the assessee under the Act.
We have noticed the statement of Shri Sharma was once again recorded on 15-2-2001 (pp. 96 to 101 of the paper book) by the assessing officer under section 131 of the Act and in this statement Shri Sharma has confirmed that he has transported silver utensils for the assessee's family and that the earlier statement dt. 21-1-2000 was wrong and written by the officer himself. We have noticed that the statement of Shri Sharma is also proved by the fact that immediately after 21-1-2000 he wrote a letter to the Director of Income Tax (Investigation) dated 22-1-2000 (pp. 102 to 104 of paper book) 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. 16-2-2001 totally demolishes the case tried to be made out by the assessing officer.
14. As regards the enquiry made at check post in U.P., we have noticed that the assessing officer 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 goods have not reached the destination. It is a common knowledge that drivers of common carriers adopt various means to evade check post and payment of charges, etc. It was also brought to our notice that the letter issued by Ghaziabad check post which made the matter more clear (pp. 9 and 10 of the paper book). It shows that there is another entry point at Kosikalan near Agra. It was further brought to our notice that the letter of Asstt. Commissioner, Mohan Nagar, Ghaziabad states that these records are not maintained by any other check post except those mentioned. Since a Govt. officer of the level of Addl. Commissioner has issued a letter, it proves that no reliance can be placed on the findings of the Ghaziabad check post. We, therefore, agree with the learned, counsel that even the letter issued by the Dy. Commissioner, Varanasi shows that the whole enquiry was done on wrong facts and no reliance can be placed on the same (pp. 12 to 14 of the paper book). From the foregoing, it is clear that both the reports cannot and does not establish that the goods were not transported from Calcutta to Delhi when there is overwhelming evidence to the contrary on record.
15. As regards the enquiries in the case of purchasers of silver utensils made by the assessing officer, we have noticed that the purchasers of the silver utensils disclosed large turnover during the period 1997-98 as compared to the earlier year or the subsequent year. Our attention was also drawn that the said purchasers sold the silver utensils in cash and deposited the sale proceeds in bank. It was also brought to our notice that the entire sale of silver utensils took place over a period of two months and many purchasers were involved and as such surmises and conjectures about size of their shop is not relevant. Our notice was also drawn to the certificate issued by Bullion Merchant Association of New Delhi (p. 109 of the paper book) stating that it is the usual practice to sell silver and gold in cash and deposit the sale proceeds in the bank . All the purchasers have filed their sales-tax return in respect of the transactions as mentioned above and have also deposited the sales-tax with the authorities which also proved that the purchase of silver utensils were made from us (pp. 110 to 125 of the paper book). The said purchase of silver utensils has been accepted as well as in the assessment of assessee's purchasers (pp. 126 to 128 of the paper book). It was also contended that the goods transported to Delhi by trucks were weighed on weighing scale known as "Dhararn Kanta". Copies of purchase vouchers issued by the purchasers and receipts of 'Dhararn 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 assessing officer 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 assessing officer to suppress various evidences in his possession which were in favour of the assessee indicates the intention of the assessing officer 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 is not out of place to mention that no incriminating evidence was found in the course of search conducted by the department at the residence and office premises of the assessee and assets disclosed at VDIS' 97 were not found at the time of said search. We have further observed that the assessee was not confronted with any evidence by the assessing officer while holding that the cash deposited by the jewellers in their bank account belonged to Dalmias. The assessing officer could not show any evidence and brought out record that the cash deposited was not the sale proceeds of the silver utensils. We agree with the learned distinguished counsel that the allegations of the department that if 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 search. The existence of the said assets has not been disputed by the department. In this connection, the remand report submitted by the Dy. CIT/CC-XXVIII, Calcutta may be referred to at p. 13 of the paper book. We have noticed that the Dy. CIT has mentioned that the claims of the assessee as discussed in his remand report are apparent from the record and the relevant statement. In view of the relevance of the statement under section 132(4) of Shri Ram Prakash Kothari recorded during the search and also the affidavit of Shri R.K. Kothari within six days of the recording of his statement under section 132(4) that the retraction statement of Shri Ram Prakash Kothari appears to be acceptable. Further at pp. 14, 15 & 16 of the remand report, it was reported as under :
"It is apparent from the assessment order that there is no discussion regarding these affidavits. Shri Trilok Agarwala in his affidavit stated that his reply was not properly recorded in the statement under section 132(4). However, it is apparent from that statement that Shri Trilok Agarwala did not state that the silver utensils had not been transported by RTC. On examination of the records, it is seen that the assessee filed copy of one delivery charges receipt of Rs. 10 with the assessing officer before the completion of assessment but no cross-verification was made before assessment. As the assessee had filed copies of all the delivery charges in the paper book and as no verification was made earlier, cross verification was made from south-eastern roadways and they have since confirmed vide reply dated 23-10-2001 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 in respect of Dharmakanta receipts which were impounded by assessing officer. Shri N.P. Dalmia's statement in this regard was also not considered in the assessment order. Therefore, crossverification was made with Purana Dharmakanta Committee, Delhi and they have since confirmed the weighing the silver utensils and receiving the weighing charges. So, the existence of silver utensils at Delhi before sale can not be ruled out."
"There is no evidence to show that the cash deposited was not their sale proceeds of silver utensils.
As discussed in earlier paragraphs some of the statements and evidence were not considered in the assessment order. Comments thereon have already been given.
It is apparent from records that enquiries were not made at all the check posts. The letter issued by the Ghaziabad check post shows that there was another entry point at Koshikalan and that records are not maintained by any other check post except Naubatpur and Ghaziabad check posts. It is also apparent from the records that enquiries were made in respect of the same date as the date of consignment and the trucks cannot reach from Calcutta to U.P. on the same day. However, no further verification has been made because in some of the check posts no records are maintained."
"As regards evidence regarding deposit of cash by the assessee in the bank account of the jewellers at Delhi, the assessing officer came to the conclusion that the assessee gave cash to Delhi jewellers to obtain the accommodation entries, on the basis of observations made by him in the assessment order. The records were verified and no direct evidence in this respect is found. It may be mentioned in this connection that searches were also conducted in the case of jewellers and no direct evidence in this regard was found. It is therefore, apparent that the assessing officer came to the conclusion on the basis of some statements and enquiries which have been mentioned in the assessment order. Regarding the assessee's claim that there was no evidence to show that the cash deposited was not the sale proceeds of silver utensils purchased by the jewellers from the assessee, there is nothing on records to show that their sales have been disproved. As mentioned above the assessee has already filed the copy of assessment order of Shri Prakash Kabra, proprietor of M/s. Shree Enterprises, one of the purchaser and there is no adverse finding by the assessing officer 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 Income Tax 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 to Dalmias and in fact there is no evidence to show that the cash deposited was not the sale proceeds of the silver utensils.
As already stated there is no direct evidence in these regards."
16. In view of the above discussions, the following points emerged in favour of the assessee.
"(a) The silver utensils were properly disclosed under VDIS' 97 and accepted by the Income Tax Department.
(b) The silver utensils were handed over to Road Transport Corporation and J.K. Carriers in Calcutta.
(c) Both the said Road Transport Corporation and J.K. Carriers are "common carrier" within the meaning of "The Carriers Act, 1865".
(d) The silver was delivered by the said common carrier to the consignee at the destination in Delhi.
(e) The consignee has confirmed having received the silver utensils through the said common carrier.
(f) On search no silver utensils as disclosed in VDIS' 97 were found with the appellant.
(g) The appellant was not confronted with any evidence to establish that the cash deposited by 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."
So far as the appreciation of evidence in concerned, the court has to decide on the basis of the evidence adduced before it by the parties whether the guilt of the accused is made out beyond reasonable doubt and whether in a Civil Case/Tax Case, on a balance of probabilities the plaintiff has made out a case for relief. The higher courts have often to reject or remand cases because the evidence was not properly appreciated. The Hon'ble Supreme Court in the case of Lila Krishnan v. Memiram Godare AIR 1985 (SC) has held that the court can reject an evidence when it is stated to the core, that is, where falsehood and truth are inextricably intertwined. The lower authorities have mentioned in their order that circumstances of the transactions are not genuine. But circumstances of the transactions conveys some limitation. It is not as broad as the analogous use in "circumstantial evidence" which includes evidence of all relevant facts. It is narrower than res gestae.
Non-entries in the check post are not by themselves alone sufficient to charge any person with liability. Corroboration is required. What is necessary to be seen in this case 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 sections 5 to 16. That Act, however, is not applicable to proceedings under Income Tax 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 Court in the case of CIT v. Sahibganj Electric Cables (P) Ltd. (1978) 115 ITR 108 (Cal) may be referred to. In the instant case, the assessee has proved beyond doubt the identity of the party to whom the silver utensils were sold. The initial burden which lied upon him can be said to have been discharged by him and the onus has been shifted on the revenue. In this connection, the observation of Lord Hansworth M.R. in the case of Stoney v. East Bourne R.D. Council (1927) 1 Ch. 367, 397 may be referred to which reads as follows :
"There can only be sufficient evidence to shift the onus from one side to the other if the evidence is sufficiently prima facie to establish the case of the party on whom the onus lies."
It is not merely a question of weighing feathers on the one side or the other and saying that if there were two feathers on one side and one on the other that would not be sufficient to shift the onus. What is meant is that in the first instance, the party on whom the onus lies must prove his case sufficiently to justify a judgment in his favour if there is no other evidence.
The Hon'ble Calcutta High Court in the case of Northern Bengal Jute Trading Co. Ltd. v. CIT (1968) 70 ITR 407 (Cal) has observed that each case has got to be decided on the facts and circumstances of the case. The surrounding circumstances to be considered must however be objective facts, evidence adduced before the taxing authorities, presumption of facts based on common human experience in life and reasonable conclusions. In holding a particular receipt as income from undisclosed source, the fate of the assessee cannot be decided by the revenue on the basis of surmises, suspicion or probabilities. The remand report does not help the revenue at all to come to the conclusion. The remand report indicates that the conclusion drawn by the revenue authorities are not based on sound footing and it could not be proved that the transportation were not genuine. On the other hand, the remand report supports the contentions of the assessee with regard to the aspects which have been dealt with by us at para 14 of our order.
17. We have noticed that in the facts of the instant case apart from circumstances which by themselves could be said to be neutral, there was no other material to doubt the nature of transaction and to hold that it was income. Regards having been given to the facts of the case and the materials on record, we are of the considered opinion that without tangible material to suspect that the silver utensils were not transported to Delhi and sold to the parties as mentioned above the order of the assessing officer is based on suspicion, surmises and conjectures. The conclusion of the revenue authorities that the amount was assessable as income and the loss on sale of silver utensils is related to personal effects are wholly untenable.
18. In the result, the assessee's appeal is allowed.