Income Tax Appellate Tribunal - Amritsar
Dy. Cit vs Smt. Geeta Gupta on 30 June, 2003
Equivalent citations: (2004)91TTJ(ASR)727
ORDER
By The Bench:
This is an appeal by the department against the order of the CIT (A), Jalandhar, dated 5-3-2001, relating to the block period 1-4-1988, to 8-12-1998.
2. In this apptal, the department has taken the following grounds "1. That, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in law by holding that the additions made by the assessing officer do not represent undisclosed income for the purpose of block assessment.
2. That, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in law in deleting the addition of Rs. 7,86,400 made by the assessing officer on account of unexplained capital built-up by the assessee.
3. That, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in law in deleting the addition of Rs. 12,29,475 made by the assessing officer on account of unexplained investment in jewellery.
4. That, it is prayed that the order of the learned Commissioner (Appeals) be set-aside and that of the assessing officer be restored
5. That the appellant requests for leave to add or amend or alter the grounds of appeal before the appeal is heard and disposed off."
3. Ground Nos. 4 and 6 are general in nature, so do not require any comments on our part, while ground Nos. 1 to 3 are inter-linked and relates to deletion of addition of Rs. 7,86,400 made by the assessing officer on account of unexplained capital built-up by the assessee and Rs. 12,29,475 made by the assessing officer on account of unexplained investment in Jewellery.
4. The facts of the case in brief, are that the assessee had been filing her returns since 1993-94 and she had shown capital of Rs. 4,60,400 as on 31-3-1992. This capital was claimed to have been built up mainly from the gifts received from friends and relatives. From the assessment year 1993-94 onwards, the assessee had shown accretion in capital on account of gifts of Rs. 1,07,400 in the assessment year 1993-94, Rs. 1,08,900 in the assessment year 1994-95, Rs. 19,600 for the assessment year 1995-96 and Rs. 12,100 for the assessment year 1996-97. During the block assessment proceedings, the assessee was asked to explain the source of capital as reflected in the income-tax return for the assessment year 1997-98. In response to that, the assessee vide letter dated 20-12-2000 stated that she was not taking any benefit of the credits in the capital account and that she will not take any benefit of capital account in future. An affidavit in this respect was also filed. In the said affidavit, it was stated that the assets reflected in the balance sheet against the capital build-up were not owned by the assessee and that she had no concern with the same. The assessing officer, however, pointed out that the assessee had shown opening capital balance of Rs. 7,98,400 for the assessment year 1997-98 and closing capital balance of Rs. 8,51,000 against which following assets were shown :
Rs.
Cash in hand 42,700 Loans 1,20,600 Investment in shares of various companies 64,600 Other investments 6,23,100 8,51,000 The assessing officer pointed out that the investment in shares have been owned by Sh. Rakesh Kumar, husband of the assessee, in a petition filed before the Hon'ble Settlement Commission and that for balance investment of Rs. 7,86,400, the assessee had not filed any explanation. The assessing officer, therefore, added Rs. 7,86,400 as taxable income of the assessee for block period under section 68 of the Income Tax Act.
5. Before the learned Commissioner (Appeals), the assessee pointed out that it has been stated during the course of search that the assessee had no cash in her personal possession and that cash was kept by her husband. It was stated that the cash of Rs. 1,12,810 was found during the course of search in possession with the assessee's husband and that cash had been owned up by her husband in the statement of affairs filed before the Hon'ble Settlement Commission. It was contended that the assessing officer should have accepted cash worth Rs. 42,700 from the assets of the assessee on the same line as investment of Rs. 64,600 in shares which was also owned up by assessee's husband before the Settlement Commission. As regards to the loan of Rs. 1,20,600 and another investment of Rs. 6,23, 100, it was stated that neither any investments were found during the course of search nor any documents were found indicating that the investments were made by the assessee. It was also contended that the assessee had disowned any investment reflected in her balance sheet. Therefore, no addition was called for in the income of the assessee as tax could have been levied only on real income and not on any hypothetical, notional, imaginary or fictitious income. Reliance was placed on the decision of the various case laws, viz.
(1) Geeta Devi v. Income Tax Officer (2000) 68 TTJ (Jd) 729 (2) Chander Mohan Mehta v. Assistant Commissioner (1999) 71 ITD 245(Pune) (3) David Dhawan v. Asstt. CIT (1999) 71 ITD 1 (Mumbai) (4) CIT v. Vinod Danchand Ghodawat (2001) 247 ITR 448 (Bom) (5) Pooja Bhat v. Assistant Commissioner (2000) 73 ITD 205 (Mum).
It was further contended that the department was required to establish that the assessee was in control and possession of the property in order to charge the tax. It was also argued that even otherwise, if any asset was shown in the balance sheet, no tax could be charged with respect to the same during the block assessment.
5.1 As regards to the addition of Rs. 12,29,475, the facts are that the assessee had declared gold ornaments weighing 3.4 kgs. valued at Rs. 12,47,210 and silver articles weighing 27 kgs. valued at Rs. 1,96,338, in her wealth-tax return for the assessment year 1995-96. The aforesaid items were claimed to have been received by way of gifts from friends and relatives mainly at the time of marriage. However, during the course of search, jewellery having gross weight of 719 grams valued at Rs. 2,14,073 was only found. In the statement recorded during the course of search, assessee stated that she had only about 80 to 100 tolas, which were kept at her residence of which 25 to 30 tolas were received by her from her parents at the time of her marriage and 50 to 60 tolas were given by her in-laws. As regards her balance jewellery, it was stated that the same had been purchased by her after her marriage. When the assessee was confronted about the discrepancy in the jewellery found at the time of search and the jewellery along with silver declared in the wealth-tax return, the assessee filed affidavit stating that she was not in possession of jewellery as reflected in the return and that she had no interest in papers and documents reflecting such silver and jewellery. The assessing officer held that jewellery of 719.1 gms. found during the course of search was explained and held that remaining jewellery of Rs. 12,29,475, which was reflected in assessee's wealth-tax return was not properly explained and accordingly the addition of Rs. 12,29,425 was made.
6. Before the Commissioner (Appeals), the assessee submitted that there was no justification for making the addition for the same reasons as had been mentioned in respect of the addition of Rs. 7,86,400.
6.1 The assessing officer was also present during the appellate proceedings before the Commissioner (Appeals). She submitted that the assessee had filed return of income, which was accompanied with balance sheet/statement of affairs in which various assets, e.g., cash in hand, loans, investment in share and others were reflected. It was stated that gold jewellery and silver jewellery items were reflected in her statement of affairs and she cannot simply disown those assets. Therefore, the addition had been rightly made as the assessee had not been able to explain the various assets reflected in her statement of affairs/balance sheet.
6.2 The learned Commissioner (Appeals) after considering the submissions of both the parties observed that what was required to be assessed by completing block assessment was the undisclosed income found as a result of search as per the provisions of section 158BA(l) of the Act. According to him, no undisclosed income/assets were found during the course of search. He also pointed out that the assessee disowned the assets, which were reflected in the statement of affairs/balance sheet, therefore, under those circumstances, it could not be said that absence of assets as reflected in the statement of affairs/balance sheet represented undisclosed income of the assessee found as a result of search. Accordingly, addition of Rs. 20,15,875 (Rs. 7,86,400 + Rs. 12,29,476) was deleted.
7. We, have heard both the parties at length and have also cannot through the material available on record. In the 'instant case, it is noticed that during the course of search, the assets reflected by the assessee in her statement of affairs/balance sheet were I not found. The assessing officer by relying on the statement of affairs/balance sheet considered that the jewellery/investments which were not found during the course of search were undisclosed income of the assessee and accordingly the addition was made. In our view, the action of the assessing officer was arbitrary, uncalled for and bad, in law. It seems that the assessing officer has not made any addition on account of anything found, during the course of search representing undisclosed income or assets. However, he has made the addition on the presumption that the assets/investment is reflected in the statement of affairs/balance sheefought to have been in possession of the asses8ee. The above action of the assessing officer is bad in law. Section 158B(b) defines the undisclosed income. In accordance with the provisions of section 158B(b), "undisclosed income," includes any money, bullion, jeweliery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions where such, money, bullion, jewellery, valuable article, thing, entry in the books of account or property which has not been or, would not have been disclosed for the purposes of this Act".
7.1 In he instant case, it is not the case of the department that any assets or investments in the shape of money, bullion, jewellery, etc. were found during the course of search,, which had not, been disclosed by the assessee. On the contrary, the assets, found were much less than the assets reflected in the balance sheet/statement of affairs. For the assessment of undisclosed income as a result of search, Explanation had been inserted in section 158BA(2) to remove the doubt. The aforesaid Explanation states as under :
"(a) . . . . . . . . . . . . . . . . . . . . . . . . . .
(b) the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment as income of such block period."
In the instant case-it is noticed that the assessing officer himself admitted that the assessee was showing assets/investments in her statement of affairs/balance sheet of preceding years. However, those assets/investments were not found during the course of search. On that 'basis on the addition was made. In our view, the action of the assessing officer is contrary At the provisions of law and was also arbitrary in nature. Thus, considering the totality of the facts and' the circumstances of the present case, we are of the view that the learned Commissioner (Appeals) has correctly appreciated the facts of the case as well as the settled position of law. In that view of the matter, we do not see any ground for interfering, with the findings of the Commissioner (Appeals) on this issue The appeal is without any merit and deserves to be dismissed.
8. In the result, the appeals dismissed.