Income Tax Appellate Tribunal - Ahmedabad
Amritlal Bhagwandas Soni vs Assistant Commissioner Of Income-Tax on 10 June, 1997
ORDER
B.L. Chhibber, A.M.
1. The assessee, an individual, is engaged in the business of sale and purchase of gold ornaments being a partner in Amratlal Bhagwandas Soni, Dhandhuka. A search was carried out at the business and residential premises of the assessee by the Asst. Collector of Customs, Ahmedabad on 11th November, 1985 and the business premises of his major son Shri Maheshkumar who carries on business under the name and style of Sonal Jewellers at Dhandhuka. From the residential premises gold ornaments weighing 493 gms. were found. It was explained that these belonged to the wife and the mother of the assessee. Besides the above jewellery, 469 gms. of gold were found in four different pieces, two of them weighing 117.500 gms. each and the remaining 117.000 gms. each. On these four pieces symbol of "Shree" was inscribed and these pieces of gold had gold content with the percentage 97 to 98. In other words, these pieces were "Kucha" gold i.e. primary gold. Another 207 gms. of gold was found from the business premises of Amratlal Bhagwandas Soni, in which the assessee is one of the two partners, the other being his father Shri Bhagwandas Soni. From the business premises of assessee's son i.e. Sonal Jewellers, 128 gms. of gold ornaments were found by the Asst. Collector (Preventive). All the above ornaments were seized by the Asst. Collector (Preventive). The subject-matter of appeal before us is the value of 469 gms. of "Kucha" gold amounting to Rs. 91,455 and the value of 128 gms. of gold ornaments amounting to Rs. 29,230 found at the business premises of the Sonal Jewellers belonging to the son of the assessee.
2. During the course of search on 12th November, 1985 a statement of the assessee was recorded by the Asst. Collector as also the Panchnamas were drawn. During the course of this statement, the assessee admitted that the pieces of gold with the sign of 'Shree' belonged to him; these were Tejabi gold pieces which were being given to him by one person named Shri Baburao who is Maharashtrian and has refinery in Sonini Khadki, Manek Chowk, Ahmedabad in the name of Maharashtrian refinery. He admitted that these Tejabi gold pieces were not entered by him in the books of account maintained by him. Later on, on 6th March, 1986, the assessee wrote a letter to the Superintendent, Central Excise (Preventive) (placed at p. 62 of the paper-book) wherein he retracted from his earlier statement and submitted that the two gold pieces out of the above four pieces belonged to his mother Smt. Jiviben and the other two to his wife Smt. Nirmalaben. In this letter he further stated as under :
"Concerning the said four pieces of primary gold I had not to make any explanation about the ownership of the same, since my wife and my mother both have already brought this fact to the notices of the officers at the time of the search itself. Inspite of this, in the Panchnama there is no mention of this fact nor has any reason been shown for not doing so. In fact the said four pieces of gold do not belong to me. Neither it is the balance of my trade as a goldsmith or it is in anyway connected with it."
The gold ornaments including four pieces of "Kucha" gold referred to supra were seized under Gold Control Act, 1968. Later on, vide his detailed order dt. 25th May, 1990 the Collector of Customs & Central Excise, Ahmedabad confiscated 1358.000 gms. of gold and gold ornaments under s. 71 of the Gold Control Act, 1968. He gave an option to the assessee to redeem the same on redemption fine of Rs. 25,000 within three months of the date of receipt of the order of confiscation. A penalty of Rs. 5,000 was also levied on the assessee. During the course of hearing before the Collector of Customs the assessee raised a plea that the gold ornaments and the seized primary gold belonged to his wife Smt. Nirmalaben and his mother Smt. Jiviben but this plea was rejected by the Collector observing as under :
"Smt. Jiviben Bhagwandas Soni and Smt. Nirmalaben Amratlal Soni, who are mother and wife of Shri A. B. Soni respectively, deposed that the seized primary gold and gold ornaments were not only of their ownership but also under their control being their 'Streedhan' property. This statement is not corroborated by any other evidence."
The assessee accepted the above order of the Collector of Customs & Central Excise; paid a redemption fine of Rs. 25,000 and also paid the penalty of Rs. 5,000 and thus, the order of the Collector has become final.
3. The AO made an addition of Rs. 91,455 on account of unexplained value of investments in four pieces of primary gold observing as under :
"As regards 469 gms. (117.500 + 117.500 + 117.000 + 117.000) from the assessee's business premises, it has been argued that it represented the assessee's own ornaments but melted and made into pieces. Except this there is no proof regarding the possession of the same gold. A question was put to the assessee as to why this was not recorded in the register, the reply has been that this being the ornaments belonging to the members of the family, no entry was made in the register. In this connection, it may be noted that there is no proof that the ornaments alleged to have been melted and put into the shape of raw gold, belonged to the assessee's family. The argument cannot be accepted as no one is permitted to keep raw gold without the permission of the Central Excise Department. The assessee has no other arguments for the possession of the gold. It may be mentioned that once the gold is found in the business premises of the assessee, it is required to be noted in the register even though the same belongs to the members of the merchant's family. However, according to the assessee this is not required to be recorded. This argument is not correct. As stated earlier the gold bars were found from the residence and such possession by anyone is not authorised by the Act. Moreover, since there is no other argument for the possession of the said gold, the same is treated to have come out of assessee's funds and the same is to be included in his total income. The Central Excise Department have valued the said gold at the rate of Rs. 1,950 and the same is taken at Rs. 91,455."
The AO also made an addition of Rs. 93,670 on account of unexplained gold ornaments found at the residence of the assessee brushing aside the assessee's contention that these belonged to his wife and the mother.
4. On appeal, the CIT(A) deleted the addition of Rs. 93,670 on account of unexplained investments in gold ornaments but confirmed the addition of Rs. 91,455 on account of unexplained investments in four pieces of primary gold observing as under :
"Regarding the items being of primary gold, I find that the assessee and the ladies had admitted that they had got it melted from old ornaments and these are the same gold pieces declared to the Department earlier in the shape of ornaments. Primarily, the items being wholly different from disclosed in WT return and being of 97 to 98 touch purity, the assessee had no legal right to keep them at residence. It was not shown in specific register GS 13 in contravention of the provisions of s. 8(1) and 55 of Gold Control Act, 1968 r/w r. 11 of Gold Control Rules rendering it liable for consfication under s. 71 of the Act. The addition for 469 gms. of the value of Rs. 91,455 is, therefore, confirmed. In view of WT assessment already completed and returns filed by both the ladies disclosing much more jewellery than found in the search, I hold that the jewellery worth 493 gms. are satisfactorily explained. The provisions of s. 69A are not applicable on the facts and the addition of Rs. 93,670 is, therefore, deleted."
5. The Revenue has accepted the order of the CIT(A) so far as deletion of Rs. 93,670 on account of unexplained gold ornaments is concerned. In the first ground raised by the assessee, the assessee has challenged the order of the CIT(A) confirming the addition of Rs. 91,455. Ms. Neha J. Shah, the learned counsel for the assessee submitted that four pieces of primary gold belonged to the wife of the assessee viz. Smt. Nirmalaben and the mother of the assessee viz. Smt. Jiviben. She drew our attention to the statements of these two ladies recorded by the Inspector (Prevention) Gold, Hq., Ahmedabad on 12th April, 1986 (pp. 10 to 13 of the paper-book) in which the ladies stated that the two gold pieces each belonged to them. She further noted that both the ladies are assessed to wealth-tax and she drew our attention to the following note appended to the statement of wealth shown for the asst. yr. 1986-87 by Smt. Jiviben :
"During the year, Nakor gold Kadas Nos. 2 weighing totally 236.000 gms. were melted and formed into two gold pieces weighing totally 234.500 gms. marked each with emblem of "Shree" thereon (Shortage 1.500 gms.)"
A similar note was appended by Smt. Nirmalaben in her statement of wealth for the asst. yr. 1986-87. The learned counsel for the assessee submitted that since the ownership of four pieces of gold did not vest with the assessee the same could not be assessed in the hands of the assessee. In support of her contentions she relied upon the following decisions :
1. Addl. CIT vs. S. Pitchaimanickam Chettiar;
2. Smt. Sant Kaur vs. ITO (1981) 12 TTJ (Del) 155; and
3. J. S. Parkar vs. V. B. Palekar (1974) 94 ITR 616 (Bom).
The learned counsel for the assessee further submitted that the explanations of the two ladies with regard to the gold ornaments have been accepted by the CIT(A) while he has not accepted their statements with regard to gold pieces (primary gold). According to her the statements of the two ladies could not be accepted partly and ought to have been believed in toto in view of the judgment in the case of Tara Devi Goenka vs. CIT (1980) 122 ITR 14 (Cal). She submitted that s. 69 was not applicable to the case of assessee. She, therefore, pleaded that there was no justification for the impugned addition of Rs. 91,455 and the same deserves to be deleted.
6. Shri V. K. Mathur, the learned Departmental Representative supported the orders of the authorities below. He drew our attention to the Panchnamas drawn on the date of search (placed at pp. 4 to 9 of the paper-book) and submitted that no-where in the Panchnama it was submitted that four pieces of gold belonged to the two ladies of the family. He further submitted that in the primary statement recorded during the search the assessee accepted that the gold ornaments with the mark "Shree" belonged to him. It was only after the period of three months that he retracted from his earlier statement. According to the Departmental Representative such retraction was not permissible under the law. In support of his contentions the learned Departmental Representative relied upon the decision of the Supreme Court in the case of Banarsi Das vs. Kanshi Ram AIR 1963 SC 1165 at p. 1169.
7. We have considered the rival submissions and perused the facts on record. During the course of search by the Asst. Collector of Customs and Central Excise (Preventive) four pieces of gold with symbol of "Shree" on these were found at the residence of the assessee. In the preliminary statement recorded by the Asstt. Collector of Customs on 12th November, 1985 the assessee admitted that these pieces of gold were Tejabi gold pieces and he had got them from Shri Baburao, proprietor of Maharashtrian refinery. He admitted that these Tejabi gold pieces with gold purity of 97 to 98 per cent (Kucha gold) were not entered by him in the books of account maintained by him. He was also not in possession of any purchase bills for these four gold pieces. Obviously the investments made in these four gold pieces was not reflected in the books of account. It is well settled in law that admission by a party is the best evidence of a point in issue and though not conclusive, is decisive of the matter unless successfully withdrawn or proved erroneous. What is admitted by a party to be true must be presumed to be true unless a contrary is shown. Here during the course of search the assessee in his statement spontaneously admitted the ownership of the four gold pieces but later on after a lapse of three months he retracted from the same. Such a retraction is not permissible under the law and it was rightly rejected by the Collector of Customs who confiscated the gold and slapped the assessee with fine and penalty. It is also noteworthy that in the Panchnama which was drawn at the time of search which was signed by the Punchas the assessee and his wife there was no mention that these four gold pieces belonged to the two ladies of the family. It was later on that these two ladies were produced before the Inspector (Prevention) Gold, Ahmedabad who recorded their statements on 12th April, 1986 during the course of which they submitted that two pieces each belonged to them. Since these statements were not corroborated by any other evidence the same were rightly rejected by the Collector of Customs and Central Excise. Reliance placed by the learned counsel for the assessee on the note appended to the statement of wealth for asst. yr. 1986-87 by the two ladies is of no assistance because the statement of wealth was drawn and the returns of wealth were filed after the search. The submission of the learned counsel that the two ladies got their Kadas converted into primary gold can not be accepted. It is not understood why the ladies would get their jewellery converted into primary gold an act which is contrary to test of human probability. Under the circumstances we hold that the four gold pieces (primary gold-Tejabi gold) belonged to the assessee and since the assessee was unable to explain the source of their acquisition, the authorities below were justified in making the addition of Rs. 91,455. We accordingly confirm the findings of the authorities below.
8. The next ground raised by the assessee relates to addition of Rs. 29,320 being the value of gold ornaments found in the shop of assessee's major son Shri Maheshkumar. As stated above during the course of search the Central Excise authorities found gold ornaments weighing 128 gms. from the shop of Sonal Jewellers which is run by the major son of the assessee Shri Maheshkumar. The AO held that the shop was rented in the name of the assessee and that the son of the assessee was dealing only in silver jewellery, and hence gold ornaments belonged to the assessee. An explanation was furnished before the AO that these ornaments belonged to some customers who had given these to Sonal Jewellers for only polishing and finishing but the same was not accepted by the AO. The AO accordingly concluded as under :
"Therefore, it may be presumed that the premises of Sonal Jewellers is actually belonging to Amratlal Soni and whatever found from the shop is (sic) belonged to the assessee for the abovementioned reasons. Accordingly 128 gms. of gold ornaments valued at Rs. 24,320 is included in the total income of the assessee."
9. On appeal, the CIT(A) confirmed the addition on the ground that Shri Maheshkumar had no licence to keep the gold ornaments and that the shop belonged to the assessee and that Shri Maheshkumar had no independent status till the search operation.
10. Ms. Neha J. Shah, the learned counsel for the assessee submitted that there was no justification for the impugned addition. She submitted that at the relevant time Shri Maheshkumar was major, he was running independent business in the name and style of Sonal Jewellers and if at all any addition was called for the same ought to have been made in the hands of Shri Maheshkumar and not in the hands of the assessee. She further submitted that Shri Maheshkumar is independently assessed to tax and in this regard she drew our attention to the assessment order of Shri Maheshkumar.
11. The learned Departmental Representative relied upon the orders of the authorities below and submitted that since Shri Maheshkumar had no independent status, gold ornaments weighing 128 gms. belonged to the assessee and accordingly addition of Rs. 29,320 was justified.
12. We have considered the rival submissions and perused the facts on record. It is admitted by the AO in his order that at the relevant time Shri Maheshkumar was major; that he was running business under the name and style of Sonal Jewellers; though he had no licence for gold ornaments, he was dealing in silver jewellery but the shop in which he was running the business was rented in the name of assessee. In our opinion there is no doubt that Shri Maheshkumar was running business in his own right and simply the rent-deed of the shop was in the name of the father of Shri Maheshkumar, could not lead to the conclusion that the business belonged to the father and not to the son who is independently assessed to tax. Under the circumstances we see no justification for the impugned addition. The same is accordingly deleted.
13. In the result, the appeal is allowed in part.