Income Tax Appellate Tribunal - Amritsar
Smt. Raj Bahri vs Asstt. Cit on 26 August, 2002
Equivalent citations: (2004)86TTJ(ASR)567
ORDER
N.K. Saini, A.M.:
Both these appeals filed by the assessee are directed against the orders of the Commissioner (Appeals), Jalandhar, dated 19-4-1994 and 11-8-1998, for the assessment year 1988-89. Since similar issue having identical facts is involved in both these appeals and the appeals were heard together, so these are being disposed of by this common order for the sake of convenience.
2. In ITA No. 614/Asr/1994, the grounds raised by the assessee are following :
"1. That the order of the Commissioner (Appeals) is against law and facts of the case on the file.
2. That an addition of Rs. 2 lakh was made by the assessing officer on account of unexplained jewellery which was surrendered by the assessee at the time of search operations to be split up in four earlier assessment years in the years of acquisition. The same was accordingly assessed by the assessing officer on protective basis. The direction of the Commissioner (Appeals) to treat the said amount as income of the year in which the locker was last operated is against all carmos of justice. The presumption under section 69A is rebuttable. On the facts and circumstances of the case, the direction of the Commissioner (Appeals) is illegal and prayed to be vacated."
3. In ITA No. 725/Asr/1998, the following grounds have been raised by the assessee :
"1 That on the facts and circumstances of the case, the Commissioner (Appeals) has gravely erred in upholding addition of Rs. 2 lacs on account of jewellery found during search operations and surrendered there and then and was agreed to be split up in the last four years and stands assessed.
2. That while upholding the addition, the Commissioner (Appeals) ignored that the locker was operated in the last four years also for which the split up was agreed with the department and also stands assessed in those years along with split up of other items agreed during search.
3. That the charging of interest under section 215/217 is against law and facts of the case and the interest charged under section 244A is against all cannons of justice."
4. On perusal of the grounds of appeals, it would be clear that the only issue agitated by the assessee in ITA No. 614/Asr/1994, and vide ground Nos. 1 and 2 of ITA No. 725/Asr/1998 relates to the addition of Rs. 2 lacs surrendered by the assessee at the time of search operations. The grievance of the assessee is that no split up in four earlier assessment years has been given while making the addition of Rs. 2 lacs which was claimed to be agreed during the search operations.
5. The facts of the case in brief, appearing from the orders of the authorities below are that the assessee filed her return of income on 9-6-1988, declaring an income of Rs. 24,623. Again the revised return was filed declaring an income of Rs. 2,12,120 on 17-2-1991. In this case, a search was carried out at the residence of the assessee on 19-10- 1987 and jewellery weighing 446.300 gms. was found. Further, there was a locker in the joint name of the assessee and her husband which was operated by the search party on 28-10- 1987 and gold jewellery weighing 1087.500 gms. was found. While making assessment, the assessing officer calculated the total quantity of the jewellery as under :
"(i) Found at residence 446.300 gms.
(ii) Found from the locker 1087.500 gms.
(iii) Jewellery given to daughter on her marriage 20 tola 233.200 gms.
(iv) Jewellery sold on 21-1-1977 113.600 gms.
1880.600 gms.
The assessing officer stated that the aforesaid jewellery was explained by the assessee as under :
"(i) Smt. Sohni Devi 47 Tolas (Assessee's mother-in-law)
(ii) Smt. Raj Bahari (ever since her marriage) including 20 Tolas given to Smt. Naviditta 45 Tolas
(iii) Surrender by Smt. Raj Bahari under section 132(4) of the Act 70 Tolas 162 Tolas The value of aforesaid 70 Tolas of the gold jewellery surrendered by the assessee was estimated at Rs. 2 lacs. In the course of search operations, the assessee surrendered a sum of Rs. 2 lacs on account of unexplained jewellery weighing 70 Tolas stating that the same was to be spread over the last four years and accordingly Rs. 50,000 was surrendered in each of the four assessment years i.e., in assessment years 1984-85 to 1987-88. The assessing officer, however, did not accept the surrender to be spread over and invoked the provisions of section 69A of the Act by mentioning that as per provisions of section 69A, the unexplained jewellery was to be treated as the deemed income for the financial year in which the assessee was found to be the owner of such jewellery and he, therefore, included the value of the jewellery amounting to Rs. 2 lacs as the income for the financial year 198788 relevant to the assessment year 1988-89. Before making the aforesaid addition, the assessing officer also called upon the assessee to produce documentary evidence if the jewellery was acquired in earlier years but no such proof was submitted by the assessee.
6. In the first appeal before the Commissioner (Appeals), the learned counsel for the assessee in his written submissions submitted the following extract from the statement of the assessee recorded on the conclusion of the search about the unexplained investments :
"So far as the surrender of the jewellery is concerned, some jewellery is seized at my residence yesterday and some jewellery is lying in the locker with Bharat Overseas Bank, Adda Bastian, Jalandhar. Out of this I surrender a sum of Rs. 2 lakhs representing over in last four years."
It was further stated that in pursuance of the above statement, the assessee filed revised income-tax returns on 25-1-1991, declaring therein additional income of Rs. 50,000 and the same were accepted. The learned Commissioner (Appeals) after considering the submissions of the assessee directed the assessing officer to make necessary enquiries and summon the Bank records to find out when the locker was last operated before its operation on 28-10-1987, that is, the date of search. He further directed that the unexplained jewellery of Rs. 2 lacs surrendered by the assessee should accordingly be treated as the income of that relevant assessment year. To comply-with the directions of the learned Commissioner (Appeals), the assessing officer requisitioned the records of the locker's operations for the relevant period from the Manager, Bharat Overseas Bank, Adda, Bastian, Jalandhar, by issuing summon under section 131 of the Income Tax Act, 1961. The details obtained from the Bank authorities revealed that the locker was last operated by the assessee on 22-5-1987. The assessing officer opined that the assessee operated the locker before the date of search, i.e., 28-10- 1997, and the date on which the locker was last operated that is 22-5-1987, was falling in the accounting year 1987-88 relevant to the assessment year 1988-89. He, therefore, added whole of the amount surrendered i.e., Rs. 2 lacs in the year relevant to the assessment year 1988-89. The assessee again challenged the same before the learned Commissioner (Appeals) in the second innings.
7. It was argued before the learned Commissioner (Appeals) that the presumption under section 69A was a rebuttable presumption and the mere fact that the locker was operated on 22-5-1987, did not mean that the jewellery did not represent the undisclosed income of earlier years, as the locker had been operated in each of the earlier years also. It was further stated that the assessee had made a surrender of Rs. 2 lacs to be spread over in the last four years to purchase peace and to avoid litigation with the department, subject to no penalty and no prosecution as agreed with the officers of the search party. It was further stated that in the statement, the assessee had stated that for the earlier years, the return shall be revised in consultation with the authorities. Accordingly, it was submitted that the surrender was made with the stipulations as agreed to by the department. It was also pointed out that the assessee revised the returns of earlier four years i.e., assessment years 1984-85 to 1987-88 wherein Rs. 50,000 was offered for taxation in each of those four years. It was further submitted that there was nothing on record to show that all the jewellery had been purchased during the period 1-4-1987 to 22-5-1987, to justify its addition in assessment year 1988-89. It was also stated that the authorised officers who were conducting the search should have asked the assessee to surrender jewellery in year of search itself but the assessee was made to surrender in the last 4 years. It was further argued that the assessee had made different surrenders against building, stock and TV which had been accepted by the assessing officer. Therefore, there was no justification in not accepting a splitting up of surrender in respect of the jewellery.
7.1 The learned Commissioner (Appeals) after considering the submissions of the assessee observed that although the presumption under section 69A of the Income Tax Act was considered to be rebuttable presumption but no evidence had been pointed out or produced by the assessee before the assessing officer or before him to indicate that the investment in the undisclosed jewellery had been made not in the previous year relevant to the assessment year 1988-89, but in earlier four years equally. According to the learned Commissioner (Appeals), the assessee had not been able to rebut the presumption under section 69A of the Income Tax Act and neither there was any evidence nor any authority with the authorised officer to enterd into any agreement with the assessee with regard to the income being surrendered or spread over of income to various years. He further noted that there was no evidence that any authorised officer entered into any such agreement or gave any such assurance to the assessee or that they directed/forced the assessee to surrender the income of Rs. 2 lacs to be spread over in earlier four years. The learned Commissioner (Appeals) was of the view that the principal of promissory estoppel was not applicable in the case of the assessee as no promise or assurance directly or indirectly was given by the authorised officer. He further relied on the decision of the Tribunal, Amritsar Bench, in the case of Assistant Commissioner v. Bhandari Silk Stores, Jalandbar, in ITA No. 448/Asr/1992, order dated September, 1998, wherein it was held that while recording the statement under section 132(4), the authorised officer in no circumstances obtains a jurisdiction whereby he can reach an understanding regarding assessment of the income or waiver of penalty under section 271(1)(c). The learned Commissioner (Appeals) upheld the action of the assessing officer by observing as under :
"1.5. As regards earning of income between 1-4-1987 to 22-5-1987, this period cannot be considered insufficient in earning of income of Rs. 2 lacs. Moreover, the surrender of Rs. 2 lacs did not represent jewellery only in the locker because part of the jewellery was available in the locker and part of it was available at the residence and, therefore, some part of the unexplained jewellery could have been acquired even after 22-5-1987. In view of above, the assessing officer has rightly taxed the entire income of Rs. 2 lacs as income for the assessment year 198889 and action of the assessing officer in this regard is upheld."
8. Now, the assessee is in appeal before the Tribunal. After considering the rival submissions as regards to the directions of the learned Commissioner (Appeals) while disposing of the appeal preferred by the assessee in the first innings, we are of the view that the learned Commissioner (Appeals) rightly directed the assessing officer to treat the unexplained jewellery surrendered by the assessee as income of that relevant assessment year, after making necessary enquiries because the assessee had not furnished any evidence as regards to the purchase of jewellery and also not furnished the proper details as regards to the operation of the locker in each of the year. As such we find no merit in the grounds raised by the assessee in ITA No. 614/Asr/1996 and accordingly dismiss the same.
8.1. As regards to the merit of the case is concerned, the learned counsel for the assessee reiterated the submissions made before the authorities below and also submitted that the assessee surrendered a sum of Rs. 2 lacs on account of jewellery while making statement, recorded under section 132(5) of the Income Tax Act, on the condition that the same was to be spread over in the last four years. It was vehemently argued that at the time of recording of the statement, the assessee specifically mentioned that the surrender of Rs. 2 lacs representing the unexplained investments may be spread over in the last four years and the abovesaid surrender had been made with the entire purpose to purchase peace and avoid confrontation with the department and litigation, etc. He drew our attention towards page Nos. 4 and 5 of the paper book which is the statement of the assessee recorded on 20-10- 1987, by the ADI-cum-Income Tax Officer. It was vehemently argued that the assessee after adding the income of Rs. 50,000 in each of the last four years, revised the return of income and paid the taxes, so, there was no justification in making the addition in the year relevant to the assessment year under consideration. The reliance was also placed on the decision of the Tribunal, Madras 'A' Bench in the case of S. Maiiappa Nadar vs, Income Tax Officer (1984) 19 TTJ (Mad) 431.
8.2. In his rival submissions, the learned Departmental Representative strongly supported the orders of the authorities below and also stated that at the time of search operation, no understanding was given by the department that the surrender on account of unexplained jewellery will be spread over in last four years. It was stated that the authorised officer noted down the contents of the statement of the assessee and it was only the version of the assessee that the surrender has been made for the last four years. He further ar the assessee never furnished the details in respect of the purchase of y in the earlier years and also never mentioned the name of the pers om whom the jewellery was purchased by the assessee. The surrender was made by the assessee only after detection made by department during the search operations. He, therefore, justified the assessing officer in making the addition in accordance with the provisions of section 69A of the Income Tax Act. It was also stated that the facts of the case decided by the Hon'ble Tribunal, Madras 'A' Bench as relied upon by the learned counsel for the assessee, were different from the facts of the present case. Accordingly', it was submitted that the case law relied upon by the learned counsel for the assessee is distinguishable.
9. We have heard both the parties at length and carefully gone through the material available on the records. In the instant case, it is not in dispute that a sum of Rs. 2 lacs represented the surrender made by the assessee on account of unexplained jewellery. The claim of the assessee is that the benefit of split-over has to be given to the assessee in accordance with the statement recorded at the time of search. On the other hand, the department claims that the amount is to be added in the year in which the assessee is found to be the owner of the jewellery. It is relevant to discuss the provisions of section 69A of the Income Tax Act which reads as under :
"Unexplained money, etc. 69A. Where in any financial year the assessee is found to be the owner of any bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the (Assessing) Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."
From the above provisions of section 69A, it would be clear that although the presumption under that section is considered to be a rebuttable presumption but the onus is on the assessee to give the explanation to the satisfaction of the assessing officer. In the instant case, the assessee miserably failed to produce any evidence before the assessing officer to substantiate that the jewellery was purchased for equal amount in each of the last four years that is the years relevant to the assessment years 1984-85 to 1987-88. The assessee had not produced any documentary evidence in support of her contention, as regards to the purchase of jewellery was concerned. It is also noticed that nothing is available on record to establish this contention of the assessee that an understanding was given by the department that the surrendered amount will be spread over in the earlier four years. The statement recorded by the authorised officer was the contention of the assessee and it was open to the department to accept or reject that. It cannot be presumed that any offer made by someone can be considered as accepted by another until and unless there is something on record in support of that agreement. But in the instant case, nothing has been brought on record by the assessee to establish that there was any understanding in between the assessee and the department that a surrender of Rs. 2 lacs made by the assessee at the time of search will be spread over in the earlier four years. Moreover, the assessee at no stage submitted the details of the jewellery and the amount of jewellery purchased in each of the year. So, no immunity can be granted to the assessee only on the basis of her statement particularly when the department has not agreed to the offer of the assessee.
9.1 Considering the totality of the facts as narrated above, we are of the considered view that the assessing officer was justified in considering the entire amount of Rs. 2 lacs as income for the year relevant to the assessment year under consideration and we find no valid ground to interfere with the findings of the learned Commissioner (Appeals) on this issue.
9.2 As regards to the case relied upon by the learned counsel for the assessee in the case of S. Mariappa Nadar v. Income Tax Officer, Madras 'A' Bench of Tribunal (supra), we are of the view that the facts were different in that case viz-a-viz to the facts of the present case. In that case, the designs of the jewellery was in vogue much earlier, so it was considered that the jewellery would have been acquired much earlier by the assessee. But in the instant case, no description of the jewellery was furnished by the assessee. Neither the quantity nor the amount was explained by the assessee to establish that the jewellery was purchased in earlier years. In other words, the assessee could not produce any evidence to establish that the whole of the jewellery surrendered was not purchased in the year relevant to the assessment year under consideration. In that view of the matter also, we are of the opinion that the assessing officer was justified in treating the surrendered amount as the income of the year relevant to the assessment year 1988-89. Accordingly, we dismiss the appeal of the assessee on this issue.
10. Another ground agitated by the assessee relates to the charging of interest under section 215/217 10.1 After considering the rival submissions, we restore this issue to the file of the assessing officer to decide the same afresh. and in accordance with law after providing reasonable opportunity of being heard to the assessee. The assessee is also free to adduce any evidence in support of her contention. This ground is disposed of accordingly.
11. In the result, the appeal in ITA No. 614/Asr/1994 is dismissed while in ITA No. 725/Asr/1998 is partly allowed for statistical purposes only.