Income Tax Appellate Tribunal - Jaipur
Devi Lal Soni vs Assistant Commissioner Of Income Tax ... on 2 April, 1998
ORDER
C.L. Bokolia, A.M.
1. These two appeals are based on identical facts and common grounds of appeal. Both these appeals are being decided by a common order for the sake of convenience. The appeal filed by the assessee is against the order of the CIT(A) in not allowing the claim and the Department is aggrieved against the order of the CIT(A) in allowing part relief.
2. The facts of the case are that a search was conducted at the residential premises of the assessee on 28th and 29th September, 1988, and cash as well as jewellery were seized from the premises. At the time of search, statement of the assessee as well as his wife were recorded under s. 132(4) of the IT Act. In the first assessment order, the income was as under :
Rs.
(1) Cash found and treated as unexplained 12,348 (2) Investment in acquisition of gold ornaments 1,72,000 (3) Income from profession (gold-smith) 40,000 (4) Investment under s. 69B 2,00,000 ------------ 4,24,248 ------------
3. The assessee being aggrieved, preferred appeal against this order before the CIT(A) who set aside the order and restored the same to the file of the AO by issuing directions. The first appellate authority accepted the contention of the assessee that the so-called surrender was not voluntary and the assessee was forced under the threats and intimidation of the search party. He, therefore, held that the statement was recorded on 29th July, 1988, by the said search party under s. 132(4) of the Act and the same cannot be considered as voluntary. It was also mentioned therein that on the same date different statements were recorded according to the first statement, the assessee is said to have surrendered Rs. 1,72,000 representing the value of gold ornaments and according to the second statement, he surrendered Rs. 2 lakhs which is stated to be investment. The first appellate authority, therefore, directed the AO "Thus the statements of surrender are also invalid on the basis of the above facts. Besides that there are affidavits of the appellant Devi Lal and the witness Asha Ram on record which clearly allege undue influence during the course of search and the recording of the statement of the appellant. These affidavits have not been controverted by the AO while completing the assessment. All these facts clearly indicate that all was not well with the statements of surrender recorded under s. 132(4) of the IT Act on 29th September, 1988. After carefully perusing the above statements and all the above referred facts and circumstances of the case, I have no hesitation in concluding that the above referred alleged statements of surrender given by the appellant on 29th September, 1988, were not voluntary. Thus, it would be quite unfair to make additions on the basis of such statements. Therefore, the additions, if any are required to be made on account of unexplained gold ornaments or other movable and immovable assets, the same should be made on merits after examining the relevant details and incriminating material e.g., if the acquisition of residential house and plots, etc. are not explained then the action for taxing the escaped income can be taken only in the relevant previous year and the same cannot be added for the assessment year under reference. These issues, therefore, required fresh consideration after allowing adequate opportunity to the appellant. The above additions of Rs. 1,72,000 and Rs. 2,00,000 are, therefore, restored to the file of the AO with the directions that the case should be examined on merits and additions should be made only on the basis of some material after giving one opportunity to the appellant without placing any reliance on the so-called statement of surrender of the appellant recorded on 29th September, 1988".
The AO, therefore, reframed the order, according to which the total income assessed was worked out :
Rs.
(1) Unexplained investment for gold under s. 69 2,14,720 (2) Income from profession (goldsmith) 25,000 (3) Income from house property 3,000 (4) Unexplained cash 7,248 -------------- 2,49,968 --------------
Besides, the other points, the main reasons for making huge additions under the head 'unexplained gold' are that during the search operation total gold ornaments found in the house of the assessee totalled at Rs. 995.5 gms and the AO recorded gold ornaments of 25 tolas as explained and, therefore, 2,91,291.5 was reduced from this and accordingly unexplained gold ornaments worked out to 704 gms, which was valued @ Rs. 3,050 per gm. and hence the total addition of Rs. 2,14,720.
4. The assessee disputed this addition also and preferred appeal before the CIT(A). The CIT(A) examined various facts of this case and ultimately allowed a relief of Rs. 60,000. While allowing relief of Rs. 50,000, the CIT(A) has observed :
"The AO's order shows that he has discussed the statements of the different family members with regard to the ownership of the jewellery in detail after quoting extracts from their original statements recorded in Hindi in the body of the assessment order extracted above. The AO has given due consideration for their statements. Furthermore the appellant had made a surrender which was later on retracted. The surrendered amount added by the AO at Rs. 1,72,000 + Rs. 2,00,000 = Rs. 3,72,000 in the assessment order has been left out of assessment under appeal because the AO ignored the surrender made by the appellant in view of the specific directions of the CIT(A) as referred to above. Now we are only concerned with the addition for unexplained jewellery. Hence, the addition for investment in the jewellery has to be sustained because the appellant cannot have the best of the both words. The appellant has been allowed sufficient relief by my predecessor. Therefore, in my opinion no further relief is admissible. However, keeping in view the facts and circumstances of the case that the AO has made addition of different amounts at different occasions-once at the original assessment stage and higher addition was made at the second assessment, I feel that some relief is called for. Therefore, I allow a reduction of Rs. 50,000 to meet the ends of justice and fair play."
Against this order of the CIT(A) assessee is in appeal before us.
5. The learned authorised representative of the assessee argues that the search started on 28th September, 1988. Since the search was not concluded on that day, all valuables i.e. gold ornaments, silver utensils were placed in one almirah and sealed to be inventories on the next working day. All these were inventorised on 29th September, 1988. It is also contended that assessee-family consists of himself, and his wife, four sons of which three are married. All the married sons are having independent bed-rooms, in the same premises. Gold ornaments belonging to the sons and daughters-in-law actually recovered from their rooms but placed in one almirah and sealed. The third son is no more alive out his widow states that these gold ornaments were also put in the almirah. While inventorising the gold ornaments, separate identification of the ornaments as to from which room, which particular item was collected (sic). This argument of the assessee also gets support from affidavit of one Asha Ram, one of the witnesses present at the time of search, filed before the lower authorities. It is also argued that the assessee's wife had in all about 80 tolas - 68 Tolas of ornaments received from her-in-laws at the time of marriage and 10 tolas from her parents. At the time of birth of sons etc. she also received further gold ornaments.
Thus, she claimed that she was having around 80 tolas of gold ornaments. This fact is duly corroborated from the statement recorded under s. 132(4) of the Act. It is further submitted that out of this possession of gold ornaments, assessee and his wife gave some ornaments to the three daughters-in-law at the time of their marriage, and the gold ornaments presented by both these persons were around 22 tolas to each of the daughters-in-law. The daughters-in-law also received some gold ornaments from their parents at the time of marriage which was around 8 tolas by eldest daughter-in-law and 3 tolas each by the remaining two daughters-in-law. The assessee in his enthusiasm to prove the receipt of this gold ornaments from his in-laws and the in-laws of his sons, has filed affidavit of various persons. The learned authorised representative argues that the contents of these affidavits as well as the statement of Asha Ram, one of the witnesses at the time of search had not been rebutted by the AO. The AO has conveniently ignored all those primary evidence at the time of completion of assessment.
6. The learned authorised representative also draws our attention to Instruction No. 1996, dt. 11th September, 1994, issued by the CBDT which deals with guide lines for seizure of jewellery and ornaments in course of search. According to this instruction, sub-para 2 is stated to be relevant in the instant case which says (ii) in case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms. per married lady, 285 gm. per unmarried lady and 100 gms. per male member of the family need not be seized."
7. The learned authorised representative submits that Department accepts the possession of the gold ornaments to the extent mentioned in above para (ii) as reasonable and explained and should, therefore, be not considered as unexplained. He argues that the addition on this account is unreasonable and unjustified. On the other hand, the learned Departmental Representative strongly supports the order of the AO.
8. We have examined the facts and the arguments of the rival parties and have perused the material available on record. While making the addition of unexplained gold ornaments, AO has not rebutted the affidavits filed by the various persons. The statements recorded under s. 132(4) of the assessee as well as his wife and other statements of the daughters-in-law of the assessee all points towards one fact that assessee's wife was in possession of roughly 80 tolas of gold ornaments. This fact has not been examined or rebutted by the AO. Out of this possession of 80 tolas, assessee and his wife has gifted some items of ornaments to their daughters-in-law which is not unusual in Hindu family. It is a matter of common knowledge that at the time of marriage, some valuables in the form of jewellery silver utensils, etc. are presented to the daughters-in-law. It is also a matter of common knowledge that parents of a daughter always give gift of ornaments, etc. at the time of marriage to their daughters. If the receipt of gold ornaments by daughters-in-law of the assessee at the time of their marriage from their parents, viz. 8, 3 and 3 tolas are accepted, then in all family proves the possession of 94 tolas of gold ornaments. This cannot be considered as excessive or unreasonable, if examined with reference to the instructions issued by the CBDT relied by the assessee and quoted (supra). Since the AO has not challenged the possession of this much gold ornaments, he has only doubted and pointed out the difference in the statement of the assessee and his wife which mentions the gift of ornaments which varies slightly. But the fact remains that all other things have been not rebutted by the AO. It is also proved beyond doubt from independent source i.e., in the form of an affidavit of Asha Ram who was one of the Panchas at the time of search, that the gold ornaments were collected from different rooms and put together in an almirah. Thus it is proved that all the jewellery found was claimed to be belonging to the family ladies and the same was recovered from their rooms. It was claimed to have been received by them during their marriages, gifts on child birth, etc. The AO, however, treated the jewellery worth Rs. 2,14,720 as unexplained and belonging to the assessee. It is also worth noting that at the time of search at the premises, assessee in his preliminary statement recorded by the authorised officer strongly submitted that the ornaments found at his residence belonged to the various ladies of the family. Wife of the assessee also explained the source of the possession of these ornaments at the very same time. At no stage these statements or affidavits filed by various persons were controverted. In view of various facts, like status, customs, gifts at the time of marriage, child-birth, etc. the entire jewellery found should have been accepted as explained and belonging to the various ladies. Following the decision of the Hon'ble Allahabad High Court in Smt. Kamlawati vs. CED (1977) 105 ITR 703 (All) and the fact that the AO has not controverted the various statements and affidavits filed by the assessee and did not bring any evidence on record to disprove the various evidence, we have no hesitation in holding that the entire jewellery in the possession of the assessee is well-explained. In this connection, we rely on the decision of the Ahmedabad Bench in case of Asstt. CIT vs. Rajeshbhai Jagjivandas Thakkar (1996) 56 TTJ (Ahd) 288 : (1996) 135 Taxation 96 (Trib.) appeal filed by the assessee, therefore, stands allowed.
9. Following the same arguments the appeal filed by the Revenue stands dismissed.