Delhi High Court
B. N. Mathur vs Income-Tax Officer. on 10 February, 1989
Equivalent citations: [1989]30ITD9(DELHI), (1989)34TTJ(DEL)230
ORDER
Per Agarwal, JM - This is an assesseds appeal arising out of his assessment for assessment year 1982-83. We have heard the learned counsel for the assessed and the learned Departmental Representative and have perused the material placed before us.
2. The first contention raised in this appeal is about an addition of Rs. 1,61,616 made by the ITO on account of unexplained investment in two silver bars which were found in possession of the assessed on the search of his bank locker No. 64 at the United Commercial Bank, Nizammudin on 20-1-1982. The said locker was found to contain two silver bars, one weighting 30.480 kgs. and the other weighting 28.570 kgs. The assesseds explanation in proceedings under section 132 and in the assessment proceedings has throughout been that the silver bar weighing 30.480 kgs. belonged to Bishamber Nath & Sons, a HUF of which the assessed was the karta and that the other silver bar weighing 28.570 kgs. belonged to the assesseds wife Smt. Indra Mathur. The assessed sought to substantiate this explanation by relying on the disclosure petitions made by the said HUF and the assesseds wife under the Voluntary Disclosure Scheme 1975. This contention has not been accepted by the authorities below as the weight of the silver bars that were declared under the Voluntary Disclosure Scheme was different from the weight of the bars found during the search. At the hearing before us, the learned counsel for the assessed again stressed upon the same explanation and took us through the diverse material that has been placed on record to substance this claim.
3. A copy of the disclosure petition moved on behalf of the HUF has been placed at page 13 of the paper book. In this declaration two items of property have been declared. One is cash amounting to Rs. 10,144 declared for assessment years 1970-71 to 1974-75, the other property declared is silver bar worth Rs. 14,836 for asst. years 1967-68 to 1969-70. In this disclosure petition, the weight of the silver bar has been added in hand and in the copy placed before us, it is almost invisible but it is admitted on both sides that the weight of the silver bar was 32.252 kgs. In the disclosure petition moved by Smt. Indra Mathur, two silver bars were declared. They are mentioned at items No. 1 & 2 in the relevant column. Item No. 1 is a silver bar weighing 33.065 kgs. and valued at Rs. 12,362 Item No. 2 is another silver bar weighing 33.062 kgs. and valued at Rs. 17,133 both these items were declared for assessment years 1962-63 to 1966-67. In the disclosure petition of the HUF in Column No. 9, which requires information whether the amount of voluntary disclosure income has been credited in the books of account or any other record, it has been stated "still not kept at home and cash Rs. 10,000 deposited into (sic) Rs. 144 is at home." In the disclosure petition of Smt. Indra Mathur, it has been stated that one silver bar was in possession of the Income-tax Department and one silver bar and the jewellery was in self -possession. At the hearing, the learned counsel for the assessed informed us that the silver that was in possession of the Department, continues to be there.
4. As is evident from the above details, the silver bar that was declared by the HUF weighed 32.252 kgs. and the silver bar which was found during the search and of which the ownership is assigned to the said HUF weighs 30.480 kgs. There is thus a difference in weight of 1.772 kgs. Similarly, the silver bar that was declared by Smt. Indra Mathur weighed 33.065 kgs. while the silver bar found during the search weighed 28.570 kgs. There was thus a difference in weight of 4.475 kgs.
5. Immediately after the search on 20-1-1982, the assessed in a letter dated 27-1-1982 addressed to the Director of Inspection (Intelligence) (copes at pages 5 and 6 of the paper book) set up his claim that the silver bars belonged to the HUF and to his wife respectively and that they had already been disclosed. Regarding the difference in the weight, the explanation was that it was quite likely that the weight shown in wealth - tax return for the silver bars was higher than the actual weight because of the fact that the bars were not each time weighed when submitting the returns that old weights were carried on. Later on the assessed Shri B. N. Mathur was examined on 16-4-1982 and a copy of his statement has been placed at pages 8 to 10 of the paper book. In this statement in answer to question Nos. 12 and 20, he explained the cause of variation in the weight as under :
"Q. 12. The silver bar weighing 30.48 kgs. are said by you to be belonging to Visheshwar Nath & Sons but from the Wealth-tax records, it is seen that the silver bar disclosed by the said party is 32.252 kgs. Why the variation ?
Ans. There could be two reasons for the variation : One at the time of disclosure, we might have given an approximate weight of the Bar without physically checking the Bar which was stored somewhere else, and second is there could be another piece of silver bar which could account for the price difference in the declaration and the actual bar, and that price might have been utilised for making some silver utensils for my use, over a period of time.
Q. 20 From the declaration of Smt. Indra Mathur, it is seen that she has disclosed silver bars weighing 33.265 and 33.062 kgs. Can you reconcile why there is a difference in that declaration with that of 28.57 kgs. silver bar found in your locker and said to be belonging to Smt. Indra Mathur ?
Ans. The explanation for the difference can be only two reasons that either the weight/silver in the declaration was approximate, or there could be another piece of silver bar which could be of the weight of difference, in the actual declaration, and the bar seized by you, and over a period of time we may have used the smaller silver bar for making household utensils."
In a petition under section 132(11) of the I. T. Act, 1961, a copy of which has been placed at pages 17 to 19 of the paper book, the assessed stated :
"The ITO while passing the order under section 132(5) has placed reliance on the difference in weight of the two silver bars. The weight declared in the Voluntary Disclosure form was more than the actual weight of the bar seized by the Department."
During the proceedings, the assessed also filed the affidavit of Smt. Indra Mathur and of himself. Smt. Indra Mathur, the wife of the assessed in her affidavit dated 28-8-1982 stated that the weight of the silver bars given in the disclosure also included weight of small pieces in the shape of bars which had been taken away by her on the occasion of making silver jewellery for her two daughters who were married in 1978 and 1979. Then she made a mere clever statement :
"I further declare that I am a house wife and am not aware of the technical terms used in bullion market and have always understood by the terms silver bar all silver that can be so designated."
She does not say that according to her understanding even silver utensils or ornaments could also be designated by silver bars. Her statement shows that she clearly understands the different between silver in the shape of a bar and silver in the other shapes like utensils, ornaments or other pieces of art. The assessed in his affidavit dated 28-8-1982 also stated that what was stated in the voluntary disclosure made by the HUF was not one bar but, "all silver including the bar and other silver pieces which were available with the HUF." He further states that the weight given in the disclosure was only approximate.
6. The learned counsel for the assessed strongly stressed before us that the silver bars in question do not belong to the assessed and that one silver bar belongs to the HUF Bisheshwar Nath & Sons and the other to the assesseds wife Smt. Indra Mathur. He further contended that these are not new acquisitions but they are the silver bars which were disclosed under the Voluntary Disclosure Scheme and continued to be in possession of the HUF and the wife respectively. This contention has been negatived by the authorities below and in our view, they were right in doing so. As is evident from the above narration, the assessed has been taking different stands in different submissions made before the lower authorities. In the first letter dated 27-1-1982, it was stated that in the voluntary disclosure petitions, the weight of the silver bars that was stated was "an approximate weight and not the actual weight of the bars." It was further stated in the same letter that the bars were not weighed each time when submitting the returns but old weights were carried on. Then in the petition under section 132(11) dated 7-5-1982 (copy at pages 17 to 19 of the paper book), it was stated that the weight declared in the voluntary disclosure form was more than the actual weight of the bars seized by the Department. No reason is stated why more weight was declared than the actual weight of the silver bars. Later the assessed changed its stand further and started saying that there were some other silver bars as well of smaller size and lesser weight which were possessed by the HUF and the assesseds wife along with the silver bar found in the present search and that the difference in weight was because the smaller bars had been used by the assessed at the time of the marriage of his two daughters in the years 1978 and 1979 respectively. Thus the assessed has been taking conductor and irreconcilable stand.
7. The assesseds petition under section 132(11) (copy at pages 17 to 19) states that in 1974, i.e., prior to the voluntary disclosure, there was a search at the premises of the assessed and some silver bars, silvers places of different weighs were found in possession of Vishwshwar Nath & Sons HUF, the assessed and his family members. The disclosure was made after the aforesaid search and it is, therefore, improbable and totally unacceptable that the assessed would be giving incorrect details in the voluntary disclosure petitions. AS a matter of fact, he appears to have been quite careful and contention as is evident from the fact that the weight of the respective silver bars was mentioned up to three decimal places. It is admitted that silver bars have their weight inscribed on them even the silver bars that are the matter of dispute before us had their weight inscribed on them. Therefore, there was no question of any approximation. Silver bars do not lose or gain weight simply by lapse of time nor does their weight gets reduced simply by handling in the ordinary course like shifting their place of storage.
8. The learned counsel for the assessed contended that the affidavit of Smt. Indra Mathur and B. N. Mathur that were filed before the ITO remain uncontroverter and, therefore, the assesseds contention that the bars were the same that were in possession of the HUF and the lady at the time of voluntary disclosure should be accepted. This contention in our view has no force. The filing of an affidavit does not mean that whatever is stated therein must be mechanically accepted. The facts narrated above clearly show that it cannot be accepted that the two silver bars that were found in the search on 20-1-1982 were in possession of the HUF and the lady respectively when the disclosure was made or that the same bars continued in possession of these persons, till recovered in the search on 20-1-1982. As already stated, the assessed has himself stated that there was an earlier search in the year 1974 when several silver bars were allegedly recovered from the possession of the assessed and his family members. A copy of the search and seizure memo prepared at the time of that search has not been filed before us to show that there were any smaller pieces as well as is now contended. That document could also have shown the exact weight of the silver bars found in search at that time and whether the description and weight mentioned therein in respect of any or more of the silver bars toiled with the weighed of the silver bars found in search on 2 0-1-1982. That document has been withheld in all probability because the same would not support the assesseds contention.
9. The learned counsel for the assessed then contended that in the search conducted in January, 1982 all the premises belonging to the assessed as well as the three lockers held by the assessed and his family members were searched and no other silver be was recovered. He also contended that continuously since the voluntary disclosure the HUF as well as Smt. Indra Mathur have been declaring silver in their wealth-tax returns. He also pointed out that for asst. years 1982-83, silver bars of the same weight as that of the bars in question was declared by the HUF and Smt. Indra Mathur respectively and they have been assessed as their wealth.
For the reasons, the learned counsel for the assessed contended that it should be accepted that the bars in question are the property of the HUF Smt. Indra Mathur and further that they are the same that were disclosed by them in the Voluntary Disclosure Scheme. In our view, all these contentions are also unacceptable. The mere fact that no other bar could be located in the search held in January, 1982 is no guarantee for the assertion that the HUF and the lady or for that matter even the assessed had no other property. A search is based on the information available to the authorised officer whereas it is only the person concerned who knows where he has kept his property. Merely because a search has been conducted unannounced, it would not be possible to presume that everything has been unearthed. That the assessed has been keeping its property elsewhere as well is evident from the assesseds answer to question No. 12 which we have reproduced above. In that answer, he has stated that the weight of the silver bars might have been given on approximate basis without physically checking the bar which was stored somewhere else. This answer clearly indicates that he keeps his bars at places which are not readily approachable so that even when he makes a voluntary disclosure, he has to resort to approximation. Can in the face of such statement, it be said that in the present search, there was no possibility whatsoever of anything remaining unearthed ?
10. As regard the contention that in the wealth-tax assessment, the HUF and the assesseds wife have been declaring silver bars as their property, the same does not appear to help the assessed to any appreciable extent. The reason is that so far as the period prior to the search in question is concerned, admittedly neither the HUF nor Smt. Indra Mathur declared the weight of the silver bars tallying with the bars in question. The learned counsel for the assessed admitted before us that year after year, the weight that was mentioned in the disclosure petition was repeated in the returns of the two persons concerned. Therefore, it cannot be said that what the HUF and the assesseds wife were returning as their wealth in the form of silver were the particular silver bars in question that were admittedly found from a locker in the exclusive name of the present assessed. It was only after the present search that for assessment year 1982-83 the valuation date for which was 31-3-1982, the two persons aforesaid filed computations of wealth incorporating therein silver bars of weight equal to the silver bars in question. At pages 33 and 34 of the paper book is a revised computation of wealth as on 31-3-1981 in the case of Visheshwar Nath & Sons in which one silver bar of 32.252 kgs. was included as the wealth of that person. At pages 36 and 37 is the computation of wealth of the HUF for assessment year 1982-83 for which the valuation date was 31-3-1982. In this computation, the silver bar that was included was of 30.480 kgs. and not the one having a weight of 32.252 kgs. which was being returned earlier. In the case of Smt. Indra Mathur for assessment year 1981-82 the valuation date for which was 31-12-1980, the copy of the computation of wealth at page 27 of the paper book shows that what was returned was returned was one silver bar weighing 33 kgs. It was only in the computation of wealth for assessment year 1982-83 the valuation date for which was 31-12-1981 and the return for which was admittedly filed after 20-1-1982 that one silver bar of 28.57 kgs. was returned as the wealth of Smt. Indra Mathur. No doubt the WTO assessing the HUF & Mrs. Mathur has accepted the silver bar as belonging to these persons but the acceptance is not specific. The assessment orders or the other documents referred to above do not show that it was ever pointed out to the WTO that the silver bars returned by them as their respective wealths were recovered in a search from the locker of the present assessed and were the subject matter of controversy whether they belong to them or to B. N. Mathur, the present assessed. In the absence of this information having been provided to the WTO, nothing of the sort of estoppel can be pleaded against the Revenue. At page 87 and 87A of the paper book has been placed a copy of letter dated 17-12-1986 by Smt. Indra Mathur to the WTO in relation of assessment for asst. year 1982-83. In this letter, she has explained that the value of the gold and silver was based on Gargs Ready Recokner and in paragraph 4 of this letter, she has explained the cause for the variation in the weight of the silver bar. The letter states "in the last assessment year, i.e., 1981-82, this silver bar was being shown of 33 kgs. on approximate weight of silver bar. The difference in weight during this year is only due to the physical verification of the same. This letter would show that the story that some smaller pieces have been used for the purposes of the marriage of the daughters was not advanced and further that the most relevant fact that a silver bar of identical weight was recovered from the possession of B. N. Mathur was concealed. There is also a copy of letter dated 4-2-1987 at pages 88 to 91 of the paper book. This letter was writtine by the assessed as karta of the HUF to the WTO for assessment year 1982-83. In this letter it was stated that the silver bar weighing 30.480 kgs. was valued at a particular rate on the basis of Gargs Ready Recokner. This letter also did not disclose that an identical silver bar was found from the possession of B. N. Mathur, individual nor did it state that the silver bar recovered from the possession of B. N. Mathur, individual actually belong to the HUF. Thus the WTO was kept in dark. Further the mere fact that somebody else returns in his wealth the property answering the description of property found in possession of the present assessed is no ground to hold that the said property belonged to the said third person. Under section 132(4A) a presumption has to be raised that the asset which was admittedly found in the control of the present assessed belongs to him. Such a presumption has to be rebutted by cogent and reliable evidence and in our view the assessed has produced no such evidence as may be able to rebut the aforesaid presumption or may otherwise sustain a finding that the two silver bars were the property of the HUF and Smt. Indra Mathur respectively.
11. Lastly the learned counsel for the assessed contended that since the HUF and Smt. Indra Mathur were possessed of silver bars having higher weight than the weight of the respective bars recovered during the search, it should be presumed that the bars in question were acquired in substitution of the bars possessed by the HUF and Smt. Indra Mathur and, therefore, the source of acquisition stood explained. This contention in our view is not tenable. As shown above, the case advanced by the assessed has throughout been that there has been no change in the physical identity of the silver bars and that these were the very silver bars that the possessed by the HUF and Smt. Indra Mathur. For detailed reasons, we have held above that this contention is not acceptable. It was never asserted on behalf of the assessed that Smt. Indra Mathur and the HUF have been selling off the respective silver bars and acquiring new ones at appropriate times and that the present silver bars were acquired out of the sale proceeds of the earlier silver bars. When the assessed never advanced such a case and rather the evidence led by him negatived such an assertion, it is not possible to accept this suggestion which has neither any evidence nor any pleading for its support.
12. For the above reasons, we uphold the findings of the authorities below that the sources of acquisition of the two bars referred to above which were recovered from the assessed on 20-1-1982 remain unexplained and, therefore, the addition of Rs. 1,61,616 representing the value thereof on the said date has been rightly made and we uphold the same.
13. The next ground raised in the memorandum of appeal is about a disallowance of Rs. 2,760 representing maintenance charges of the property. The assessed claimed this deduction in respect of income from house property which was a flat in a multistoreyed building known as Varsha Buildings. No arguments were addressed to us on this point. under section 24 of the Act, the deductions which are permissible from income from house property have been specified and such charges are not specified there. On the other hand, for repairs a sum equal to 1/6th of the annual value is admissible as deduction irrespective of whether any amount has been actually spent or not. Therefore, there is no question of any separate allowance for maintenance charges. This contention is therefore, rejected.
14. The next ground raised is about the expenses allowable in computing the assesseds professional income. No argument was raised before us. The assessed has shown gross receipts from the profession of acting as a Liaison man at Rs. 28,000 against which he claimed expenses of Rs. 47,347. The ITO after mentioning the past history of the case allowed expenses to the extent of Rs. 20,000 only. On appeal, the learned CIT (Appeals) held that it was doubtful whether the services of the entire staff were exclusively utilised for professional purposes. Since no argument has been addressed to us, it is not shown that the entire expenditure was incurred wholly and exclusively for the purposes of business. This ground, therefore, shall stand rejected.
15. The last ground raised in this appeal is as under :
"6. Without prejudice to the contention that M/s. DMKS Trust was not a benami of the assessed, the learned CIT (Appeals) has erred in holding that the ITO was justified in not allowing any deduction for the loss shown by the said trust.
It is accordingly prayed that the additions/disallowances made as above may kindly be deleted and further in the event it is held that M/s. DMKS Trust was a benami of the assessed, then the loss shown by that Trust be directed to be adjusted against the income of the assessed."
It appears that the assessed is the trustees of a Trust named as DMKS Trust. The said Trust has been carrying on business and in earlier years, it has been held that the said business was owned by the assessed and the said Trust was only benami for the assessed. This year the said DMKS Trust had filed a separate return declaring a loss of Rs. 38,420. The ITO stated that the assessment of the Trust is still pending and, therefore, he adopted the income of the Trust at nil. On appeal, the learned CIT (Appeals) observed that the appellant objected to the inclusion of the income of the Trust, in his hands and, therefore, the ITO was justified in not allowing any deduction on account of loss of this Trust.
16. No argument was addressed to us by the learned counsel for the assessed in respect of the aforesaid ground. Admittedly the assessed does not admit that the business carried on by the alleged Trust actually belongs to him. He is contesting the ITOs stand. According to the assesseds own showing the income or loss of the said Trust cannot be included in the assesseds income and nothing has so far been included in the assesseds income for the year under consideration. Therefore, as the things stand at present, the assessed has no grievance. His grievance could arise only if any income of the said Trust is included in his income for purposes of assessment to tax or if the assessed himself admits that the said business is the assesseds own business and, therefore, the income or loss arising from that business should be assessed in the hands of the present assessed. No such contingency has so far arisen and, therefore, the issue is only academic and needs no decision in the present state of things. This contention too, therefore, shall stand rejected.
17. In the result, the assesseds appeal is dismissed.