Income Tax Appellate Tribunal - Ahmedabad
Assistant Commissioner Of Income Tax vs Rajeshbhai Jagjivandas Thakkar on 28 February, 1996
Equivalent citations: [1996]58ITD283(AHD)
ORDER
B.L. Chhibber, A. M.
1. The only ground raised in this appeal by the Revenue reads as under :
"The learned CIT(A)-V, Ahmedabad, has erred in law and on facts in deleting addition of Rs. 4,01,141 being value of gold ornaments and jewellery seized during the course of proceedings under s. 132 at the residence of the assessee on 20th Jan., 1984."
2. The assessee, an individual, derives income from four partnership firms, viz., (1) M/s Jagjivandas Liladhar & Sons, (2) M/s Thakkar Liladhar Waghjibhai, (3) M/s Dharti Traders, Delhi, and (4) M/s Thakkar Liladhar Waghjibhai, Rajkot. A search under s. 132 of the IT Act, 1961, was carried out at the residential premises of the assessee on 20th Jan., 1984, during the course of which the following cash and ornaments were found and seized :
Found Seized
Rs. Rs.
1. Cash 16,193 Nil
2. Gold ornaments 6,41,091 4,04,141
3. Silver utensils 92,827 Nil
Except for the part of the gold ornaments, nothing was seized. In his preliminary statement obtained on 20th Jan., 1984, the assessee submitted before the authorised officer that the ornaments found at his residence belonged to his family members, i.e., his wife Smt. Rupaben, his mother Smt. Bhanumatiben and his sister-in-law (brother's wife) Smt. Ranjanben. It will be worthwhile to reproduce question No. 9 and answer to it in the said statement :
"Question No. 9 : How much quantity of the ornaments is in your house ?
Answer : There may be at my residence and locker gold ornaments, weighing 100 tolas of my wife Rupaben, 199 tolas of my mother Bhanumatiben, 60 to 70 tolas of Ranjanben, the wife of my brother Bharatbhai, and also silver vessels, items of Puja and over and above diamond and pearl ornaments."
In response to question No. 13, he stated as under :
"Question No. 13 : If your family members have filed IT or WT returns, give particulars thereof ?
Answer : IT and WT returns are correct. My wife and my brother's wife, Ranjanben, have filed their IT returns for the first time. Tax has been paid and WT returns are yet to be filed in the coming year."
Later on, during the course of proceedings under s. 132(5), the assessee furnished the following information to explain the source of gold ornaments :
"Smt. Rupaben, - Wife of the assessee :
1. She has received 501 grams of gold ornaments at the time of marriage.
2. Some ornaments are received by will of Divaliben Mohanlal - Approx. 96 gms.
3. Some ornaments are received by will of Mohanlal.
4. Some (approx. 73 gms) ornaments are received from Velbai Valjibhai. Velbai is aunt of father-in-law of Smt. Rupaben. It is also stated that Velbai had made disclosure of these ornaments to the IT Department in 1975 scheme.
Smt. Bhanumatiben - Mother of the assessee :
1. She has made disclosure of 428 gms. in 1975 to the IT Department.
2. Ornaments weighing 392 gms. were received at the time of marriage.
3. About 162 tolas were received from Sunderba, mother-in-law of Bhanumatiben. It is further stated that in the case of Sunderba, estate duty is paid on those ornaments.
Smt. Ranjanben - Sister-in-law of the assessee :
1. Ornaments worth 440 gms. were received at time of marriage.
2. 90 gms. of ornaments were received from Diwaliben as per will.
3. 105 gms. of ornaments were received from Mohanlal as per will.
4. 60 gms. received from Velbai Veljibhai. Velbai had made disclosure of those ornaments in 1975 to the IT Department.
5. 310 gms. received from her in-laws at the time of marriage.
Late Shri Jagjivandas - Father of the assessee :
He was filling WT return and in the WT return, 392 gms. of ornaments were shown.
Children :
Son Jai and daughter Tejal received 178 gms. of ornaments at the time of their birth and other good occasions."
In support of the above submissions, the assessee also filed before the authorised officer the following documents :
"1. Copy of statement of estate duty of Sunderba along with copy of will. These were filed before the CED on 25th Feb., 1976. In ED return she has disclosed 60 tolas of ornaments.
2. Copy of statement of Velbai Valjibhai Thakkar along with copy of the will. These documents were filed before CED. The gold ornaments disclosed in the ED return are 1,211 gms. These ornaments were also disclosed by Velbai under V. D. Scheme, 1975.
3. Copy of the list of disclosure made by Smt. Bhanumatiben in 1975 before the IT Department.
4. Copy of the will dt. 21st Jan., 1977, made by Late Shri Mohanlal Ranchhodlal Chokshi - Father of Smt. Bhanumatiben.
5. Copy of valuation report dt. 5th April, 1983, filed by Shri Jagjivandas Thakkar."
The ITO accepted 1,495 grams as explained and held that ornaments weighing 2,425 gms. (3,920 gms. minus 1,495 gms.) remained unexplained. He estimated the value of these unexplained ornaments at the rate of Rs. 165 per gram at Rs. 4,00,125 as per his order dt. 17th April, 1984 under s. 132(5).
3. During the course of assessment proceedings, before the AO the assessee maintained that the gold ornaments found at his residence during the course of search operations belonged to his family members; viz., his wife Smt. Rupaben, his mother Smt. Bhanumatiben and his sister-in-law Smt. Ranjanben and reiterated the submissions made before the AO during the course of proceedings under s. 132(5). The assessee also produced before the AO the documents in respect of disclosures made by Smt. Velbai, disclosure by Smt. Bhanumatiben, the estate duty order of his late father and the wealth-tax order in the case of his late father. The AO was not satisfied with the explanations furnished and literally relying upon the order under s. 132(5) which he has reproduced extensively in his order, made an addition of Rs. 4,01,141.
4. When the matter came up before the CIT(A), he perused the detailed explanations of the assessee in respect of source of these ornaments. He also went through the statements of the assessee recorded during the course of search operations and those of lady members and held that the ornaments found at the time of search did not belong to the assessee but to the three ladies. He further noted that the description in the Panchnama also made it obvious that these ornaments were found from the respective cupboards or rooms of the respective lady members and even inventories were prepared accordingly. He further noted that during the course of search, a list of gold ornaments and jewellery was found in the names of Smt. Ranjanben, sister-in-law of the assessee; Smt. Rupaben, wife of the assessee, and Smt. Bhanumatiben, mother of the assessee, which clearly indicted ownership of gold ornaments and jewellery by these ladies. He accordingly held as under :
"In view of these facts one point is crystal clear that gold ornaments and jewellery did not belong to appellant and therefrom no addition can be made in the hands of the appellant even if the explanation is not upto the satisfaction of the ITO. On going through all the material on record I further hold that there is hardly any case of unexplained jewellery and gold ornaments as the appellant has clearly indicated the source of each and every item in the detailed explanation given by him and there is nothing on record to prove that the wills submitted by him are not genuine. I would, therefore, delete the entire addition of Rs. 4,01,141 made by the ITO on account of unexplained investment in gold ornaments and jewellery on the ground that from the material on record it is obvious that these ornaments and jewellery did not belong to appellant but to lady members of the family of appellant."
5. Shri N. N. Thakur, the learned Departmental Representative, submitted that the CIT(A) is not justified in deleting the impugned addition of Rs. 1,01,141. He submitted that during the course of search operations ornaments weighing 3,920 grams were found as per Annexure D of the Panchnama and the onus was on the assessee to explain the source of acquisition of these ornaments. He submitted that the statement of the assessee that the gold ornaments belonged to the three lady members was a self-serving statement and hence, it could not be relied upon because the ladies had no ostensible source of income and were not in a position to acquire these ornaments. He admitted that the ladies might have received some ornaments at the time of their marriage and for that the ITO had already accepted the explanation furnished in respect of 1,495 gms of gold ornaments. He submitted that taking into consideration the totality of the circumstances, the addition made by the AO was justified. In support of his contentions, he relied upon the judgment of the Supreme Court in the case of CIT vs. Durga Prasad More (1971) 82 ITR 540 (SC).
6. Shri N. R. Divatia, the learned counsel for the assessee strongly supported the order of the CIT(A). He took us through the voluminous paper book running into 143 pages and drew our attention to the statements of the assessee recorded during the course of search (pages 49 to 53 of the paper book and pages 54 to 61 of the paper book); submissions dt. 10th April, 1984, made by the assessee before the ITO in 132 proceedings (pages 75 to 80 of the paper book); statement of Smt. Rupaben dt. 20th Jan., 1984, and 21st Jan., 1984 (pages 53 to 45 of the paper book); statements of Smt. Bhanumatiben recorded on 20th Jan., 1984 and 21st Jan., 1984 (pages 94 to 96 of the paper book); submission dt. 14th April, 1984, in 132 proceedings from Smt. Rupaben (pages 81 to 83 of the paper book); submissions dt. 12th April, 1984 by Smt. Rupaben in 132 proceedings (pages 84 and 85 of the paper book); Order dt. 18th April, 1984, under s. 132(7) in case of Smt. Rupaben (pages 86 to 88 of the paper book); order dt. 17th April, 1984, under s. 132(5) (pages 89 to 93 of the paper book); Inventory of ornaments Annexure 'D' to the Panchnama (pages 35 to 39); will dt. 21st Jan., 1977, of Diwaliben (pages 62 to 63 of the paper book); will dt. 21st Jan., 1977 of Mohanlal R. (pages 64 to 66 of the paper book); will dt 16th Jan., 1976, of Velbai Veljibhai (pages 67 to 72 of the paper book); will dt. 11th Nov., 1953 of Sunderbai (pages 97 to 99 of the paper book); Estate duty statement of Velbai Veljibhai (page 73 of P. B.); copy of order under s. 132(7) in the case of Smt. Ranjanben (pages 129 to 131 of the paper book); copy of valuation report of ornaments of Jagjivandas L. Thakkar (pages 132 and 133 of the paper book); copy of wealth-tax order dt. 31st March, 1987, Jagjivandas L. (p[ages 134 of the paper book); copy of WT statement for asst. yr. 1982-83 of Thakkar Jagjivandas L. Thakkar (pages 135 to 138 of the paper book). According to the learned counsel from these documents it was clear that the assessee had filed detailed explanations in regard to source of ornaments and the said ornaments belonged to family members of the assessee. He further submitted that the ITO had overlooked the fact that various members of the family had made disclosures regarding the nature and source of gold ornaments which would go to show that the gold ornaments in question were owned by them and not by the assessee.
The learned counsel for the assessee further submitted that if the disclosures as made by the various members of the assessee's family were not found acceptable in full, the burden of proving the source of gold ornaments would be on the respective members of the family and not on the assessee. He further submitted that the burden of proving that the family members were benamidars of the assessee clearly lay on the taxing authority and the said burden was not discharged and in any case the said burden could not have been discharged by taxing authority if they were careful to examine the material and evidence produced by the assessee both during the course of proceedings under s. 132(5) and under s. 143. According to the learned counsel, the ITO erred in solely relying on the order under s. 132(5) which is a summary assessment. The learned counsel for the assessee further submitted that the assessee belonged to a status family, his father late Shri Jagjivandas was assessed to wealth-tax and after his death the assessee became an accountable person and filed ED returns. The learned counsel submitted that the three lady members had explained the source of their respective ornaments by documentary evidence which evidence has not been found false by the AO. Refuting the charge of the learned Departmental Representative that the statements of the assessee and the lady members of the family were self-serving statements so also the supporting evidence by way of disclosures, petitions and wills of various persons from whom the ladies had received the gold ornaments on different occasions, the learned counsel submitted that there was no evidence to do so. The wills were executed before the Executive Magistrates much before the date of the search and it will be too much to say that the disclosure petitions were not genuine. The learned counsel further submitted that all the three ladies are assessed to income-tax and their assessments have been completed on substantive basis. Similarly, they are assessed to wealth-tax and their WT assessments have been completed on substantive basis in which the value shown by them of the ornaments has been accepted. He drew our attention to such assessment orders placed in the paper book. The learned counsel also relied upon the order of the Tribunal, Ahmedabad 'C' Bench in the case of ITO vs. Mathuradas Motichand (1993) 47 TTJ (Ahd) 488 where in respect of gold ornaments found during the course of search, explanation of the assessee that ornaments belonged to his wife, daughters-in-law and daughters was partly accepted by the AO but the Tribunal held that the AO accepting the explanation for a part of the ornaments and making the addition for the balance was not justified in view of the affidavits and other evidence produced by the assessee and the status of the assessee's family. He accordingly concluded that no interference was called for in the order of the CIT(A).
6.1 Without prejudice to the above submissions, and as an alternative submission, the learned counsel for the assessee submitted that the assessment framed by the AO is barred by limitation under s. 153 of the Act and hence, deserves to be quashed. He submitted that though the assessee is not in appeal before us no has filed any cross-objection, he is not debarred from raising this vital issue before the Tribunal which is a final fact-finding authority. In support of his contentions he relied upon the judgment of the Tribunal in the case of Indo Java & Co. vs. IAC (1989) 35 TTJ (Del) (SB) 111 : (1989) 30 ITD 161 (Del) (SB); Anam Venkata Krishna Reddy vs. CIT (1988) 172 ITR 425 (AP) and CIT vs. Sundaram Clayton Ltd. (1982) 136 ITR 315 (Mad).
7. We have considered the rival submissions and perused the facts on record. Right at the time of start of the search operations at the residential premises of the assessee on 20th Jan., 1984, the assessee in his preliminary statement recorded by the authorised officer spontaneously submitted that the ornaments found at his residence and in lockers with the banks belonged to his family members, viz., Smt. Rupaben, wife of the assessee; Smt. Bhanumatiben, mother of the assessee and Smt. Ranjanben, sister-in-law of the assessee. Again on conclusion of the search operations in his final statement he steadfastly stuck to the position as stated above. The two lady members, viz., assessee's mother Smt. Bhanumatiben and the assessee's wife Smt. Rupaben who were present during the course of search operations also in their spontaneous statements recorded at the beginning of the search and on the conclusion of the search not only owned up the ornaments belonging to them but also identified them. The third lady viz., Smt. Ranjanben, who is sister-in-law of the assessee and who at the time of search was residing at Delhi also confirmed that she had kept her jewellery with the assessee at Ahmedabad. At no stage she controverted the statement of the assessee that part of the jewellery found at his residence belonged to her. Vide letter dt. 12th April, 1984, addressed to the ITO she requested for the release of her ornaments and a separate order under s. 132(7) was passed by the ITO on 18th April, 1984 (pages 129 to 131 of the paper book). There is thus a clear admission on the part of the each and every family member at the time of search that the gold ornaments belonged to them and not to the assessee. The officer-in-charge of the raid while making inventory of the gold ornaments which were seized had clearly accepted the fact that the ornaments were gathered/collected from the bank lockers and/or cupboards belonging to each of the individual members of the family. Further, at the time of search a list of ornaments made in the name of each of the individual members was found. This list was prepared by the valuer in order to file the WT returns of the individual members of the family. However, the said returns could be filed after the raid took place and the lists of ornaments as stated earlier came into possession of the raiding party which they separately sealed. Further, it is noted that each of the members of the family has an independent source of income by way of share in different partnerships in different firms. They have been assessed to income-tax and wealth-tax in the last several years. Therefore, the ITO was not justified at all in treating the family members as benamidars of the assessee without any material evidence in this regard.
It is further noted that the ITO has allowed part of the ornaments/jewellery found at the time of search as ornaments/jewellery belonging to the family members. The quantum of ornaments/jewellery considered by the AO as belonging to these ladies is very meagre. Looking to the quantum of ornaments/jewellery found at the time of search and taking into consideration the various facts as status, custom, inheritance by wills as evidenced by testamentary documents referred to supra, as well on marriages, gifts on various occasions like birthdays, etc., the source of acquisition supported by disclosure petitions, estate duty orders, wills, valuation reports, the entire quantum found at the time of search ought to have been held as belonging to them and duly explained. For this proposition we find support from the order of the Allahabad High Court in the case of Smt. Kamlawati Raizada vs. CED (1976) 105 ITR 703 (All). In this case the deceased got migrated to India from Pakistan in 1947, and it had been found that he had jewellery of the value of Rs. 55,000. The Asstt. CED included part of the jewellery in the estate of the deceased but the High Court held as follows :
"Jewellery normally is possessed by womenfolk and there was no finding that they were such which males usually wear or possess. Since the deceased migrated from one country to another, he must have taken the entire jewellery of his wife with him, as he was the head of the family. The fact that he had brought jewellery along with his wife and children will not necessarily mean that the jewellery was his personal property. In the absence of any proper details, the authorities were in error in assuming that the entire lot of jewellery must have belonged to the deceased personally."
Though the above judgment was pronounced under the ED Act the ratio decidendi of the judgment will squarely apply to the facts of the case before us because the AO has assumed even in the face of overwhelming evidence to the contrary that the entire jewellery/ornaments belonged to the assessee and not to the lady members.
7.1 Lastly, we note that the AO has erred in solely relying on the order made under s. 132(5) of the Act. The essential and material distinction between the provisions contained in s. 132(5) and 143(3) have gone unnoticed at the hands of the AO. Under s. 132(5) by virtue of the fiction enacted therein for a limited purpose of making summary assessment and the person found to be in possession of money, bullion, jewellery and other valuable articles, etc., is to be the owner of the said items. This fiction which is enacted for the said limited purpose cannot be extended while completing the assessment under s. 143(3) of the Act and, therefore, the burden of proving that the assessee was the owner of the gold ornaments in question in the face of his spontaneous statements and spontaneous statements of family members, clearly lay on the taxing authority supported by overwhelming evidence in respect of source of acquisition of ornaments and that burden has not been discharged.
8. Coming to the alternative submission of the assessee's counsel, that the assessment is barred by limitation and hence, should be quashed we do not find any merit in it. One of the vital legal issues raised by the assessee before the AO was that the proceedings under s. 147(a) were not justified. He rejected the contention of the assessee by giving cogent reasons. The issue was agitated before the CIT(A) who after detailed discussion and following the judgment of the Gujarat High Court in the case of Darbar Saheb Harishchandra Sinhji Dansinhji vs. ITO (1974) 95 ITR 350 (Guj) rejected the same.
8.1 The assessee is not in appeal before us nor has filed any cross-objection. We have gone through the judgments relied upon by the learned counsel but these judgments are only to the effect that new point can be agitated before the Tribunal. We are afraid whether the assessee can agitate the ground dismissed by the first appellate authority in an appeal filed by the Revenue. Accordingly we decline to entertain the alternative submission of the learned counsel for the assessee.
9. In the light of above discussion, we concur with the finding of the CIT(A) and uphold the same.
10. In the result, the appeal is dismissed.