Income Tax Appellate Tribunal - Mumbai
Dr. (Mrs.) Renu Gupta vs Deputy Commissioner Of Income-Tax on 25 February, 1999
Equivalent citations: [2000]72ITD306(MUM)
ORDER
T. V. Rajagopala Rao, President
1. This is an appeal against block assessment dt. 27th August, 1997, framed under s. 158BC against Dr. (Mrs.) Renu Arunkumar Gupta for the block period from 1st April, 1985 to 26th March, 1996. Before proceeding further, it is essential to acquaint ourselves with the members of the family headed by Shri Sohanlal Gupta. Therefore, a small family tree is furnished below :
Dr. Sohanlal Gupta - Dental Surgeon (Individual & HUF).
Smt. Raj Rani Gupta - wife of Karta Dr. Arun Kumar Gupta, BAMS (only son) Dr. (Mrs.) Renu Gupta, BAMS (daughter-in-law & wife of Dr. Arunkumar Gupta) Originally, the family belongs to Bathinda, Punjab. In 1991, Dr. Sohanlal Gupta along with his wife and their son came away to Bombay. Even before coming to Bombay, Mrs. Raj Rani Gupta was said to be running a beauty parlour at Bathinda.
2. Unrest in Punjab and consequent violence that erupted in that part of the country seems to be the cause for the family to come down to Bombay with a view to settle themselves down and try their prospects. Mrs. Raj Raji Gupta opened a sex clinic called "Kaya Kalp" firstly at Borivli and later they have opened branches to the same clinic at Charni Road in May, 1991 and at Dadar in November, 1991. Dr. Sohanlal Gupta has been a Dental Surgeon whereas Shri Arunkumar Gupta and Mrs. Renu Gupta have both passed B.A.M.S. (Bachelor of Ayurvedic Medicines & Surgery). Dr. Sohanlal Gupta, his son Dr. Arunkumar Gupta as well as his Dr. (Mrs.) Renu Gupta were all employed in the sex clinic run by Mrs. Raj Rani Gupta. They have also opened another clinic called "Kaya Kalp International". Smt. Raj Rani Gupta has been running a beauty parlour called "Mona Lisa" even in Bombay. From 1991 to 1996, the family was able to acquire 15 items of immovable properties large sums of money towards NRI gifts, substantial amounts of non-NRI gifts and daily clinic receipts of Rs. 40,000 as estimated by the AO.
3. On 26th March, 1996, a search of residential as well as business premises of the above family was conducted and an amount of Rs. 49,36,550 was seized from the residential premises at Flat Nos. 201-202-203A, Lancelot Building, Borivli (W), and a sum of Rs. 32,400 was seized from the clinic situated at Dadar(W) at 15, Ghamat Terrace. Senapati Bapat Marg. Certain jewellery weighing 802.90 gms. valued at Rs. 3,44,534 was also found at the residence. Out of the 15 immovable properties acquired by the family, one property stood in the name of the Karta's daughter-in-law. All the 15 items are mentioned in Annexure 'E' to the block assessment order passed in the case of Dr. (Mrs.) Renu Gupta. Item No. 15 in the said list, namely, the second flat from south side, Manek Kunj (proposed building). C.S. No. 5/118, Patel-Sewri, said to have been purchased for Rs. 6,10,000 stands in the name of Dr. (Mrs.) Renu Gupta.
4. The block assessments completed against Smt. Raj Rani Gupta, Dr. Sohanlal Gupta (HUF) and Dr. (Mrs.) Renu Gupta were requested to be taken up together and heard together. The block assessments of Dr. Sohanlal Gupta (Individual) and Dr. Arunkumar Gupta (son) were segregated and they were not taken up though they are still pending in the files of this Tribunal.
5. After the search was over, notice under s. 158BC of the IT Act was issued on 27th June, 1996, requiring the assessee to file the return of her income for the block period within 16 days. However, much beyond the prescribed period of 16 days, on 10th March, 1997, a return was filed by the assessee showing 'nil' undisclosed income for the block assessment years 1986-87 to 1996-97. The assessee began disclosing income to the IT Department from 1993-94 and till 1996-97 the income disclosed were accepted and the amounts returned/assessed for the years are furnished as per the tabulation given at p 2 of the AO's order, which is extracted hereunder : -----------------------------------------------------------------
Asst. yr. Total income including Total income
the undisclosed income returned/assessed
-----------------------------------------------------------------
1986-87 NIL NIL
1987-88 NIL NIL
1988-89 NIL NIL
1989-90 NIL NIL
1990-91 NIL NIL
1991-92 NIL NIL
1992-93 NIL NIL
1993-94 34,600 34,600
1994-95 39,760 39,760
1995-96 1,82,240 1,82,240
1996-97 1,55,960 1,55,960
Undisclosed income Rs. NIL
-----------------------------------------------------------------
As against the 'Nil' income disclosed, the AO (Dy. CIT, Spl. Range 2, Mumbai) completed the assessment in which the total disclosed income including the undisclosed income surrendered in the block return was taken at Rs. 11,06,228 in the hands of the assessee, Broadly stated, the following items were taken to be the undisclosed income in the hands of the assessee which is assessable in asst. yrs. 1992-93, 1994-95 and 1995-96 :
1. Asst. yr.1992-93 Rs.
Undisclosed investment in property 4,06,666
2. Asst. yr. 1994-95
NRE Gifts (Hawala) Amount 2,11,000
Premium thereon @ 8% 16,880
----------
2,27,880
3. Asst. yr. 1995-96
Non-NRI gifts (Bogus) 1,46,112
Unexplained investment in jewellery 3,25,570
----------
4,71,682
Total undisclosed income including the
undisclosed income surrendered in the block
return 11,06,228
----------
Against the assessment thus framed for the block period, the assessee came up in appeal before this Tribunal.
6. We have heard the three appeals of the assessee, her father-in-law (HUF) as well as her mother-in-law's appeals together.
As far as the assessee is concerned, the additions made under the following heads are stated to be unjustified, uncalled for, illegal and liable to be cancelled :
Rs.
(1) Unexplained jewellery 3,25,570 (2) NRE gifts 2,11,000 (3) Towards premium for asst. yr. 1994-95 16,880 (4) Non-NRI gifts for asst. yr. 1995-96 1,46,112 (5) Unexplained property investment for asst. yr. 1992-93 4,06,666
Ultimately, she has questioned the legality and property of the whole addition made, namely, Rs. 11,06,228, for whole of the block period.
7. We have heard Shri B. K. Khare, learned chartered accountant for the assessee, and Shri D.J. Tralshawala, learned Departmental Representative. Now, let us take up the merits of the additions made under each of the heads and examine their tenability or otherwise.
Jewellery :
8. As stated earlier, on the search of the residential premises, jewellery weighing 802.90 gms. valued at Rs. 3,44,534 was found. On behalf of the assessee, two paper books, one containing 34 pages and the other containing 8 pages, were filed. In the case of Smt. Raj Rani Gupta, two paper books were filed, the first being a bound volume running into 213 pages, and the second being a compilation consisting of 81 pages. Similarly, the Department in Smt. Raj Rani Gupta's case filed two paper books, the first running into 147 pages and the second filed on behalf of the Department comprised of 70 pages. Apart from that, the impugned assessment order is attached with Annexures A to E-1. The AO stated in his assessment order that on 27th March, 1996, the assessee's husband, Dr. Arunkumar Gupta, was examined and his statement was recorded. In the said statement, he purported to have stated that except the jewellery on his person and the person of his father, the rest of the jewellery found by the search party in their premises (802.90 gms.) belonged to the two ladies of the house, namely, his mother as well as his wife. It was further stated in the assessment order that on 26th March, 1996, both Dr. (Mrs.) Renu Gupta as well as Smt. Raj Rani Gupta were also examined and their statements were recorded in which they denied to have any knowledge of jewellery in their house. Further, p. 18 of Annexure A-41 of the Panchnama dt. 14th May, 1996, disclosed one of the seized papers from the residential premises which revealed that 998.40 gms. of gold was sold by the assessee [Dr. (Mrs.) Renu Gupta at Rs. 4,34,325 to M/s Vipul Jewellers on 30th March, 1995, and the amount thus realised on the sale of jewellery was also credited in the capital account of the assessee. The AO addressed letters dt. 6th December, 1996, from his office both to the assessee as well as her mother-in-law to explain the nature of possession and the source of acquisition of the above jewellery. It did not evoke any response except the earlier version that the jewellery belonged to both the ladies of the house. Even during the assessment proceedings, the AO stated that no supporting evidence was filed before him during the enquiry stage. Ultimately, a show-cause notice dt. 12th March, 1997, was issued setting out all the facts and calling upon the assessee to show cause why the jewellery to the extent of 748.40 gms. valued at Rs. 3,25,570 should not be considered as unexplained and added to her income for the asst. yr. 1995-96. On the appointed day, i.e., 14th March, 1997, no reply was filed. However, in a letter addressed by the assessee along with other family members, it had been contended that all the jewellery found at the residence as well as sold to M/s Vipul Jewellers belonged to her as well as to Smt. Raj Rani Gupta, her mother-in-law. It was also stated that her marriage was solemnized in Augustst, 1994. She annexed a long list of her relatives who attended her marriage but their addresses or the particulars of the gold gifts, if any, made to her by all of them were never furnished. The AO stated that the fact that the assessee had long list of relatives does not mean anything. The assessee has to prove that those relatives had actually gifted the jewellery and the assessee is unable to prove the same. The AO also stated that no documentary proof regarding the status of the family was filed before him. Explaining the family background, the assessee filed a letter dt. 19th March, 1997 (pp. 28 to 30 of the paper book No. 1). In that letter, it was stated that Dr. Sohanlal Gupta had studied the course for Dental Surgeon from Sir C.E.M. Dental College, then situated at J.J. Hospital (now Government Dental College, at V.T.). It was stated that their ancestral town was Bathinda till 1990 and at that time Punjab was infested with militance and terrorism gravely endangering the security of the family and career prospects of the family headed by Dr. Arunkumar Gupta. Under the circumstances, they had to migrate to Bombay with all their belongings and also leaving their well established clinics at Bathinda to start a new life at Bombay from the scratch which was not a very easy task. The AO, with a view to assess the economic background of the family, looked into the amounts of withdrawals made for family expenses. He found that the household expenses debited were only Rs. 5,000 to Rs. 6,000 p.m. He opined that for a family whose monthly expenditure was Rs. 5,000 to Rs. 6,000 range cannot claim to be a very high standard family to explain gifts from relatives and friends. As far as marriage gifts are concerned, the AO stated that the assessee disclosed heavy amounts of cash gifts from various relatives and friends to the tune of several lakhs of rupees. No occasions like birthday. Diwali, Holi, Rakhi, etc., were spared without showing procured gifts from friends and relatives on each of those occasions. The AO found that on the facts and circumstances it appeared as if the gifts of jewellery by friends and relatives were not true but a facade which was adopted as a modus operandi to turn black money into white. He was also not able to accept the explanation of the assessee regarding the jewellery found and sold to M/s Vipul Jewellers. However, he accepts that it is common in Hindu society for women to wear some jewellery. Therefore, he concedes 250 gms. each of gold to the two ladies of the house and 50 gms. each to Dr. Arunkumar Gupta and his father Dr. Sohanlal Gupta and 50 gms. to his minor daughter. Therefore, out of the seized gold of 802.90 gms., he excluded 400 gms. as explained and has taken the balance of 402.90 gms. valued at Rs. 1,72,890 to be the unexplained jewellery and he determined to consider it as unexplained jewellery in the hands of Dr. Arunkumar Gupta from whom the jewellery was seized. The AO also clearly stated that 250 gms. of gold conceded to the assessee should be deducted from out of 998.40 gms. of gold sold to M/s Vipul Jewellers. Thus, the jewellery weighing 748.40 gms. (998.40 minus 250) valued at Rs. 3,25,570 was considered to be unexplained jewellery in the case of the assessee and he has determined to add the unexplained jewellery in the hands of the assessee under s. 69 of the IT Act for the asst. yr. 1995-96.
9. Now, the question is whether this addition is justifiable. It is the case of the assessee that the capital gains accruing from the sale of the jewellery to M/s Vipul Jewellers had duly reflected in her return of income. It is also her case that the jewellery sold by her was acquired on the occasion of her marriage in Augustst, 1994. She had listed out the names of her relatives who had given her assorted pieces of ornaments on the occasion of her marriage and the said list was enclosed with her letter addressed to the AO on 19th March, 1997. It is stated that the family is Gupta family. Dr. Sohanlal Gupta himself married way back in 1963 and from then onwards for half a century no marriage had taken place in the family. That is the reason why the relatives of the Gupta family extended their best wishes by way of symbolic presentations. It is stated that as far as the jewellery which was found during the search is concerned, the same belonged to Smt. Raj Rani Gupta who owned it since her marriage in 1963. Her father was said to be a dealer in hardware and iron in Girdharbaha Mandi. Her brother was a cloth merchant in Bathinda, while her father-in-law was a jeweller of repute who carried on business in Bathinda in the name and style of "Lala Ramjidas Saraf". Even though the assessee claims that the whole of the gold found at the time of search in the residential premises belonged to her mother-in-law, Smt. Raj Rani Gupta, it was not included in Smt. Raj Rani Gupta's block assessment. As can be seen from the assessment order itself, a statement was recorded not only from the assessee but also from her mother-in-law on 26th March, 1996, in which both of them denied having any knowledge of jewellery in the house. They have not stated that any quantity of gold was sold to M/s Vipul Jewellers either on 30th March, 1995, or at any time before or after. If really 802.90 gms. of gold found in the house of the family members at the time of search and seizure operations and if really Smt. Raj Rani Gupta was the owner of the said gold, she would have claimed it and strangely she said that she did not have any knowledge of any jewellery in the house. From the seized papers during the search conducted in the residential house of the members of the assessee family, 802.90 gms. of jewellery valued at the then prevailing value of Rs. 3,44,534 was found. Among the seized papers in the residential premises, paper No. 18 of Annexure-A-41 of Panchnama dt. 14th May, 1996, revealed that the assessee had sold in her name jewellery weighing 998.40 gms. to M/s Vipul Jewellers on 30th March, 1995. The amount realised on the sale of jewellery was also credited in the capital account of the assessee. The AO, by addressing his office letter dt. 6th December, 1996, called upon the assessee as well as her husband, Dr. Arunkumar Gupta, to explain the nature, possession and source of acquisition of the jewellery sold to M/s Vipul Jewellers. However, except reiterating that the said jewellery belonged to both the assessee and her mother-in-law, who are the two ladies of the house, no other explanation was offered. The assessee could not furnish any supporting evidence to back her version during the assessment proceedings. The AO ultimately issued letter dt. 12th March, 1997, listing all facts and calling upon the assessee to show cause why jewellery to the extent of 748.40 gms. valued at Rs. 3,25,570 should not be considered as unexplained in her hands and added to her income for the asst. yr. 1995-96 for the purpose of block assessment. The AO gave time upto 14th March, 1997, to give a reply to the assessee. However, the assessee, according to the AO, failed to furnish any reply. However, the AO stated that along with letters addressed by other members of the family, which were all identical, it had been contended that all jewellery found at the residence as well as sold to M/s Vipul Jewellers belonged to the assessee as well as her mother-in-law, Smt. Raj Rani Gupta. It was also mentioned that the jewellery was given to her by various relatives on the occasion of her marriage which was solemnized in Augustst, 1994. The assessee also annexed a long list of names of the relatives without any addresses and also without giving the particulars and the quantity of jewellery claimed to have been given by each of them. Though the date of the letter she addressed was not mentioned in the assessment order, it is easy to find that the AO must be referring to a letter dt. 19th March, 1997, a copy of which is provided at pp. 30 to 34 of the paper book filed on behalf of the assessee. This letter was signed by both the assessee as well as her husband and the highlighted portion of the letter is the following :
"It bears mention that Dr. Arun Kumar is the only issue of Dr. Sohan Lal Gupta and as such the occasion of his marriage to Dr. Renu Gupta was to become the sole event of the celebration in the Gupta family for the period of spanning more than half a century i.e. from Dr. Sohanlal Gupta's own marriage in 1963, to the anticipated marriage of the family's next progeny around the year 2020. Therefore, this was all the more reason for the relatives of Gupta family to extend their wishes by way of symbolic presentations."
Long list of relatives of Dr. Sohanlal Gupta, Smt. Raj Rani Gupta, friends of Dr. Arunkumar Gupta, relatives of Dr. Renu Gupta and her friends was given in that letter. However, as rightly pointed out by the AO, what sort of gift of gold jewellery was given by her relatives or friends was not noted against their names in the list. Further, even the addresses of her relatives and friends also were not given. Further, by that letter, there was not even a whisper that the gold jewellery held by her was being acquired by her from 1991 onwards, i.e., much before her own marriage in Augustst, 1994. Thus, there are innumerable contradictions about the source of her acquiring gold jewellery found at her residence as well as sold to M/s Vipul Jewellers.
10. In the block assessment framed by the AO against the assessee, what he did was the following. Out of the seized jewellery of 809.90 gms., on the assumption that it is natural for the ladies in a Hindu family to hold reasonable quantity of jewellery on their persons, the AO had conceded that 250 gms. of gold jewellery to each of the two ladies in their house. So also he conceded 50 gms. each to Dr. Arunkumar Gupta and Dr. Sohanlal Gupta and 50 gms. to the daughter of the assessee. Thus, from out of 802.90 gms. of seized gold jewellery, 400 gms. was taken to have been reasonably explained and the remaining 402.90 gms. out of the seized gold was taken to be unexplained gold jewellery and was considered in the hands of Dr. Arunkumar Gupta in his block assessment made for the asst. yr. 1996-97. Thus, the AO stated clearly that he would consider the value of 402.90 gms. valued at Rs. 1,72,890 in the hands of Dr. Arunkumar Gupta under s. 69 of the IT Act.
11. Coming to the seized material which disclosed that 998.40 gms. of jewellery was sold to M/s Vipul Jewellers and the receipt obtained in the name of the assessee dt. 30th March, 1995, the AO conceded that the said gold jewellery, which was sold to M/s Vipul Jewellers, should have included 250 gms. of gold held by the assessee, Dr. (Mrs.) Renu Gupta. Thus, after excluding 250 gms. from 998.40 gms. the rest of 748.40 gms. of gold jewellery valued at Rs. 3,25,570 was considered in the hands of the assessee in the block assessment of the assessee. Thus, a sum of Rs. 3,25,570 was added in the block assessment of the assessee in asst. yr. 1995-96. This addition is now sought to be challenged before us and thus the matter stands for our consideration.
12. Shri B. K. Khare, learned chartered accountant for the assessee, submitted that there is ample circumstantial evidence to prove that the assessee was holding 1,000 gms. of gold jewellery even from 1991-92 onwards. He argued that men/women may lie or inconsistencies may be found in their oral statements but clinching circumstances would not lie and reveal truth of the story. In this connection, he submitted that the date of the search was 26th March, 1996, but (sic) for the asst. yr. 1995-96, (sic) she had disclosed long-term capital gains of Rs. 4,34,325 in her income-tax return as having resulted by the sale of gold jewellery. For that purpose, he filed pages 1 and 2 of paper book No. 2 filed in the case of the assessee. Further, for the asst. yr. 1991-92 itself, the assessee filed her wealth-tax return disclosing 100 tolas of gold as part of her wealth. Her wealth statement for the asst. yr. 1991-92 is provided at p 8 of paper book No. 2. Her returned wealth for asst. yr.1991-92 was accepted under s. 16(3) of WT Act by the WTO even on 30th May, 1995. Similarly, for the asst. yr. 1992-93, again, the assessee had revealed that her wealth included 100 tolas gold valued at Rs. 3,97,283. Her wealth statement for asst. yr. 1992-93 was provided at p. 5 of the paper book No. 1. She was assessed to wealth-tax for asst. yr. 1992-93 under s. 16(3) by the assessment completed under s. 16(3) dt. 20th May, 1995, which was long before the search and seizure proceedings conducted on 26th March, 1996, under s. 132(1). This would clinchingly prove that the claim of the assessee that she was having 1,000 gms. of gold jewellery and it constituted her wealth was her version from the very beginning and in the face of her wealth-tax assessments referred to above, it cannot be said to be her later innovation invented for the purpose of the block assessment. Thus, according to Shri Khare, the whole of the gold jewellery of 998.40 gms. sold to M/s Vipul Jewellers was completely and clinchingly explained by her. Further, it is the contention of Shri Khare that Chapter XIV-B of the IT Act does not confer jurisdiction on the Tribunal, while completing the block assessment, to go into anything other than the seized material. According to him, the block assessment must be completed on the basis of the seized material only and no alien evidence could be considered in the block assessment and for that purpose he relied upon Sunder Agencies vs. Dy. CIT (1997) 59 TTJ (Mumbai) 610 : (1997) 63 ITD 145 (Mumbai) decided by this Tribunal. In the headnote of the said decision at p. 248, the following is what is held :
"It is abundantly clear from the perusal of the prescription of s. 158BA that within the pale of Chapter XIV-B assessment could be made only in respect of the undisclosed income and such undisclosed income must come as a result of search. Sec. 158BA does not provide a licence to revenue for making roving enquiries connected with completed assessment and it is beyond power of the AO to review the assessments completed unless some direct evidence comes to the knowledge of the Department as a result of search which indicates clearly the factum of undisclosed income. Without such evidence or material the AO is not empowered to draw any presumption as to the existence of undisclosed income."
The learned Departmental Representative attacked the soundness of the arguments advanced by Shri Khare making use of the ratio in (1997) 59 TTJ (Mumbai) 610 : (1997) 63 ITD 245 (Mumbai) referred to supra. He invited our attention to s. 158BB(b) which defines the term "undisclosed income" as including any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions whether such money, bullion, jewellery, valuable article or thing, entry in the books of account or transactions represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act. Shri Tralshawala, the senior Departmental Representative, submitted that the scope of the enquiry to get at undisclosed income under Chapter XIV-B is of very wide ambit and amplitude. In the said definition of "undisclosed income" the last words used are "for the purpose of this Act". He asked us to bear the distinction between the meaning of the words "for the purpose of this Act" as against the word "the provisions of this Chapter. Further, he brought to our notice the provisions of s. 158BA and the title given to that section, namely, "Assessment of undisclosed income as a result of search". He wants us to bear that the intention of the Parliament was that the whole undisclosed income which may be revealed as a result of search should be brought to tax. They never confined to bring to tax only such income found out during the search. Even by the use of search material, any income, which was not previously disclosed, can be brought out and can be validly added. Elaborating his arguments, he states that if the capital gains resulted from the sale of gold ornaments of 998.40 gms. to M/s Vipul Jewellers was not disclosed earlier which came to the knowledge of the Department from the seized material, then there is nothing wrong in adding the value of the said gold ornaments under Chapter XIV-B as undisclosed income. He argued that it cannot be successfully argued by the other side that 998.40 gms. of gold jewellery sold to M/s Vipul Jewellers has no connection whatsoever with the seized material at the time of search conducted on 26th March, 1996. One of the papers found in the seized material disclosed the sale of the jewellery. Therefore, it is quite within the province of the AO to find out whether it was previously disclosed or not. Further, he argued that even though the assessee filed only her computation of total income at p. 1 of paper book No. 2, she discreetly avoided filing the assessment order, if any, completed against her for the asst. yr. 1995-96. There is no evidence that her regular assessment for the asst. yr. 1995-96 was completed much prior to the block assessment now under consideration. Therefore, the legal argument should fall. However, the learned Departmental Representative was not able to comment anything against the wealth-tax assessments for asst yrs. 1991-92 and 1992-93 disclosing 1,000 gms. of gold as part of assessee's wealth and wealth-tax assessments were completed on 31st March, 1995, itself which was much prior to 26th March, 1996.
13. After considering the arguments on both sides deeply, we hold that since the assessee had already disclosed 1,000 gms. of gold jewellery as part of her wealth and since wealth-tax assessments themselves were completed against her for asst. yrs. 1991-92 and 1992-93 with regard to the said quantity of gold, the assessee must be taken to have sufficiently explained that the quantity of gold jewellery sold to M/s Vipul Jewellers belonged to her. However, as regards the legal argument, we are inclined to agree with the learned Departmental Representative. In the result, we feel that there is no justification to confirm the addition of Rs. 3,25,570 under s. 69 of the IT Act for the asst. yr. 1995-96.
14. The second and third grounds of appeal relate to the additions made towards unproved NRI gifts as well as unproved non-NRI gifts respectively. Towards the unproved NRI gifts, the AO made an addition of Rs. 2,11,000 towards the total of the gifts and Rs. 16,880 towards the alleged premium thereon. Similarly, similar additions were considered in the hands of the assessee for the asst. yr. 1994-95. Similarly, for the asst. yr. 1995-96, an addition of Rs. 1,46,112 was made in the hands of the assessee. Page 13 of Annexure No. A appended to the block assessment order reveals the total of the gifts received by the assessee, Dr. (Mrs.) Renu Gupta, for the asst. yr. 1994-95 was Rs. 3,57,112. The total of the donors were said to be 13 in number. The 13th donor was one Shri Mohmedi M.F. Hussein and his address was given as "Modern Beirut Ext. P.O. Box 3257, Safat, Kuwait 13033, Arabian Gulf." At p. 13 of paper book No. I, there was a letter purported to have been written by the alleged donor. Shri Mohamedi M.F. Hussein, dt. 28th March, 1995, and it was followed by a gift deed purported to have been executed by the donor confirming the cash gift of Rs. 2,11,000 in favour of the assessee. The gift deed was drafted on a Rs. 10 stamp paper purchased at Bombay. It was not notarised nor was it registered. At p. 15 of the paper book No. I, a certificate addressed to "To Whomsoever it may concern" by the branch manager of Bombay Mercantile Co-op. Bank Ltd., Colaba, is provided. In the said certificate, it is stated that the donor was holding NRE a/c No. 5334 with the said bank. However, he purchased pay order No. 8293 for Rs. 2,11,000 in favour of the assessee, Dr. (Mrs.) Renu Gupta and the certificate was said to have been issued at the instance of the "party".
15. As already stated, we have heard three appeals together and we have considered similar NRI gifts in the case of Mrs. Raj Rani Gupta in whose case we have passed our order dt. 25th February 1999 [reported as Smt. Raj Rani Gupta vs. Dy. CIT (2000) 66 TTJ (Mumbai) 582]. We have elaborately discussed therein about the credibility of the NRI gifts. We want to adopt the same reasoning as given in that order even in this case also. The AO asked the assessee to produce the donor for examination and confirmation of gifts. However, she failed to produce him, though several opportunities were given to her. The Indian address of the donor was also not provided by the assessee to the AO. There is no reason why a fat sum of money like Rs. 2,11,000 be given as gift to the assessee. Her claim that she is intimately known to the donor does not appear to be correct in view of the fact that the donor is a sailor who would be going round the world on ships and there is very little likelihood of intimate relationship being developed between the assessee and the alleged donor. The gift deed, under the circumstances, was not proved. It is significant that the entry of Rs. 2,11,000 did not pass through the bank nor-NRE account pass book. Nothing prevents that the pay order, through which the amount was said to have been gifted to the assessee, having been purchased in the name of the alleged donor. It is not even the case of the assessee that the donor was a patient in her clinic, namely, Kaya-Kalp International, and he used to come very often as a patient to her clinic and she used to treat him also. No attempt is made to strengthen her acquaintance with him in that way. In addition, we adopt all the reasonings which we have elaborately given in our order in the case of Smt. Raj Rani Gupta vs. Dy. CIT (supra), and following our above order, we confirm the addition of Rs. 2,11,000 towards NRI gifts and also the alleged premium of Rs. 16,880 since there was also an admission on the part of the husband of the assessee before the FERA authorities that the NRI gifts were all benami gifts, the moneys of the NRI gifts were secured with the own moneys of himself and his family members by payment of premium. Therefore, the addition of Rs. 2,11,000 and the premium of Rs. 16,880 thereon are hereby confirmed.
16. Now, let us take up the third item which represents non-NRI gifts of Rs. 1,46,112. 'Again, following our elaborate order in the case of Smt. Raj Rani Gupta, we feel that there is no justification to sustain the addition of Rs. 1,46,112 towards non-NRI gifts for the asst. yr. 1995-96 in the hands of the assessee. We cancel the same.
17. This leaves us with the last and 4th item relating to unexplained property investment on the basis of which an addition of Rs. 4,06,666 was made in the hands of the assessee as unexplained investment in property for the asst. yr. 1992-93. This requires a little elaboration. The family members of Dr. Sohanlal Gupta acquired 15 properties listed out in Annexure 'E' to the block assessment order passed in the case of this assessee. One of the papers seized at the time of search on 26th March, 1996, was a slip of paper which is furnished as Annexure 'E' at p. 41 annexed to the block assessment order passed in the case of Smt. Raj Rani Gupta. Since the contents of the seized paper are pertinent in this connection, the same is extracted as under :
Desai Builders Nimesh Mehta Phone : 6149661 (Manager) : 6171818 Vacant Shop area : 3600 carpet Rs. 11,000 Rate per sq. ft.
Ratio 7:30
11th floor Building
1,380 sq. ft. 3 Bed)
1,550 sq. ft. 4 Bed)
Rate Rs. 3,300 per sq. ft.
Ratio : 60 : 40
W/B (Building = Carpet + 22%)
The above slip is unsigned but, according to the AO, the slip was in the handwriting of family members of the assessee family. It is the case of the Revenue that the assessee family members indulged in property transactions which had a ratio of black and white money at 40 : 60 approximately. It is also the case of the Revenue that from out of the information gathered from the Appropriate Authority, Bombay, the comparative sale instances show higher market value of property purchased by the assessee and her family members. Considering all these aspects, the AO held in the order of the assessee's husband, Dr. Arunkumar Gupta, and other family members that the ratio of 40 : 60 would be applied in the case of properties purchased/booked by the assessee and her family members to assess the undisclosed investment involved in the purchase of the properties. The AO also found that the 15th item in the list, i.e., 2nd flat from south side Manek Kunj, C.S. No. S/118 of Parel, Sewri Division. The property is said to have been purchased under the agreement dt. 30th December, 1991, for a consideration of Rs. 6,10,000 and the area is 320 sq. ft. However, while completing the block assessment against the assessee (Dr. Mrs. Renu Gupta), the AO found that the investment on this property was noted in the books of account of the assessee as Rs. 10,16,666. The AO added a sum of Rs. 4,06,666 to the income of the assessee for the asst. yr. 1992-93. On 6th December, 1996, the AO had addressed a letter to Smt. Raj Rani Gupta and in that letter the nature and source of acquisition of immovable properties was called for. Since the letter is felt important to be considered at this juncture, it is extracted as under :
"Please refer to the search and seizure operation on 27th March, 1996, in your case.
You are requested to furnish explanation regarding the nature and source of acquisition of the valuables/assets found/seized during the course of search operation. You are also requested to furnish replies on the seized documents in the annexed proforma. It may be clarified that the reply should be furnished on each and every loose papers seized separately.
You are also requested to furnish details of immovable properties purchased/possessed by you and furnish explanation regarding the nature and source of the acquisition of the immovable properties.
You can take inspection of the seized papers/documents on 11, 12 & 13th December, 1996 between 11 a.m. & 5 p.m. The above explanation/details may please be furnished by 20th December, 1996, failing which the assessment will be finalised on the basis of materials available on record."
The letter is signed by the then Dy. CIT, Spl. Rg. 2, Mumbai.
18. It is significant that Dr. Sohanlal Gupta, his wife Smt. Raj Rani Gupta, his son Dr. Arunkumar Gupta and his daughter-in-law (i.e. Dr. Arunkumar Gupta's wife) Dr. (Mrs.) Renu Gupta were living together in a common residence at Bombay. It was never the claim of the assessee that prior to her marriage (which took place in Augustst 1994) Dr. Renu Gupta happened to live for some time in Bombay. It was also never her case that her Parents belong to Bombay. As already stated, the assessee and her husband sent a common reply dt. 19th March, 1997, with reference to the block assessment proceedings started against them from 1st April, 1985 to 23rd June, 1996. In the reply dt. 19th March, 1997, copy of which is marked as pp. 28 and 29 of paper book No. I filed by the assessee, which represents the reply signed by Dr. Arunkumar Gupta, specifically stated that Dr. Sohanlal Gupta studied and graduated as a Dental Surgeon from J.J. Hospital (Now Government Dental College, V.T.) from 1955 to 1963 and after graduation he went to his ancestral state of Punjab in 1963 and all their family members stayed in Punjab at Bathinda which is described as the ancestral town till 1990. It is stated that at that time the Punjab State was infested with militancy and terrorism severely endangering the security of the family and the career prospects of the family's only property, Dr. Arunkumar Gupta. Subsequently, they migrated to Bombay with all their belongings leaving their well established clinics at Bathinda to start a new life at Bombay. It is stated that they started their life at Bombay from a scratch which was not an easy one. It was always the claim of the assessee that her parents belonged to Punjab and her marriage took place only in Augustst, 1994 with Dr. Arunkumar Gupta. After her marriage, she had been employed in her mother-in-law's clinic, Kaya-Kalp International, on a monthly salary. The block assessment was made against the assessee for the block period commencing from 1st April, 1985, and ending with 26th March, 1996, and the assessee filed her block return on 10th March, 1997, which is already extracted at p. 2 of the AO's assessment order. As far as her return dt. 10th March, 1997, is concerned, it would appear that she became an income-tax assessee only from asst. yr. 1993-94 and in the first return she filed she disclosed only an income of Rs. 34,600 on which she was assessed. Taking that into consideration, it was never even the claim of the assessee that in the accounting year relevant to asst. yr. 1992-93 she had acquired any property. It is not even possible to postulate that she would acquire property in Bombay even in the accounting year relevant to asst. yr. 1992-93 which was prior to her marriage solemnized in Augustst, 1994. Therefore, it is obvious that it was not even the claim of the assessee put forward at any time that she purchased the property in Bombay either with her own moneys or with the moneys of anybody at Manek Kunj, C.S. No. 2/118 of Parel-Sewri Division under an agreement of sale dt. 30th December, 1991. On that purported date of agreement, she was not even an income-tax assessee since she has no source of income of her own at all. This is the most important factor which weights with us while deciding this ground. The nature and source of income with which the property was purchased was never disclosed by the assessee or by any of her family members on her behalf. Further, her account books appear to have disclosed the purchase value of this property at Rs. 10,16,666 though the agreement discloses only Rs. 6,10,000. Therefore, the discrepancy between these two was never explained. Though in the slip of paper which we have extracted already only the family is in the habit of involving in property deals paying only 40 per cent of the consideration as black money to the persons from whom the properties were purchased, it is obvious that as far as this property of the assessee is concerned, there is a discrepancy between the stated consideration in the agreement on the one hand and the recorded consideration in her own books of account on the other which is roughly about Rs. 4,00,000. Further, from the above discussion, we feel justified to come to the conclusion that the assessee failed to prove the nature and source of the consideration with which this property under review was purchased. It is, no doubt, true that the AO had not made any addition for not explaining the nature and source of the purchase money with which this property was purchased but he made the addition on the basis that 40 per cent of the consideration was paid in black. Now, the question is not whether the basis of addition was right or wrong but whether there is any justification whatsoever either for one reason or the other to sustain the addition. We fell that the addition can be sustained more firmly on the ground that the nature and source of the sale consideration was not explained by the assessee to the AO. Therefore, we are inclined to sustain the addition of Rs. 4,06,666 as undisclosed investment by the assessee and the undisclosed investment relates to the asst. yr. 1992-93. Hence, this ground fails.
19. In the result, the appeal is partly allowed to the extent indicated in the above paragraphs.