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Income Tax Appellate Tribunal, : ‘A’ BENCH, KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S.Viswanethra Ravi
The above appeal by the Revenue is against the order dt. 16- 09-2016 of the CIT-A, 7, Kolkata for the A.Y 2009-10.
At the time of hearing before us, it is noticed that neither any one appeared nor filed any adjournment petition on behalf of assessee inspite of service of notice issued by the registry. Therefore, after perusing the case record and hearing the ld.DR, we proceed to dispose of the appeal ex parte on the basis of material available on record.
Ground no. 1 is relation to deletion of addition of Rs. 28,76,25/- on account of gifts received from sis sisters.
Brief facts of the case are that the assessee filed his return for the A.Y under consideration on 19-08-2009 declaring total income of Rs. 5,72,020/-.The assessee is engaged in the proprietorship business of jewellery under the name & style M/s. Nilima Jewellery Works. A survey was conducted on 05-03-09 at the business premises, M/s. Nilima Jewellery Works. Notices u/s. 143(2) and 142(1) of the Act were issued requesting the assessee to furnish details and evidences. In response to which, the AR representing the assessee appeared. The AO summoned the assessee to appear along with books of account. According to AO, the assessee failed to produce and admitted that no proper books of account were maintained and as such requested the AO, the assessment may be framed on the basis of documents as available on record.
On perusal of two balance sheets, one in respect of self and another in respect of his proprietary concern, M/s. Nilima Jewellery Works, the AO found that the assessee received gift of 1950 gms of gold from his sisters. At the time of hearing the assessee submitted gift deed u/s.131 of the Act on 21-05-09. On 12-12-11 the assessee was asked by AO, to clarify the non inclusion of gifts in stock at the time of survey. As the assessee failed to give explanation, the AO added an amount of Rs. 28,76,250/- ( 1950 x @ Rs.1475/gm) as undisclosed stock of assessee u/s. 69 of the Act.
Aggrieved by such action of AO, the assessee preferred an appeal before the CIT-A. Before him the assessee contended that AO did not believe the said gifts on the ground that assessee did not mention about receipt of these gifts in the statement recorded during the course of survey. In support of the contention/submissions, he relied on the following case laws:- Paul Mathews & Sons Vs.CIT (2003) 263 ITR 101 (Ker) K. Mohon Vs. DCIT (1995) 215ITR 275, 285 Ajit Chintaman Karve Vs. ITO (2009) 311 ITR (At) 66(Pune) CIT Vs. Dhingra Metal Works (2010) 328 ITR 384(Del) CIT Vs. Khader Khan Son (2012) 25 taxmann. Com 413(SC)/ 210 taxman 248(SC) CIT Vs. Khadar Kahn Son (2008) 300 ITR 157
The assessee further submitted that due to family situation and out of natural love and affection all the married sisters gifted their jewelleries (including marriage) to the assessee as per following details :-
Sl. Name of the sisters of the Quantity of gold Value of Gold No. assessee ornaments gifted ornaments to assessee gifted (Rs.) 1. Smt. Padma Ghoroi (Bera) 350 gms 5,25,000/- 2. Smt. Rekha Khara (Bera) 350 gms 5,25,000/- 3. Smt. Sulekha Das (Bera) 325 gms 4,87,500/- 4. Smt. Sampati Routh (Bera) 325 gms 4,87,500/- 5. Smt. Rina Parta (bera) 300 gms 4,50,000/- 6. Smt. Krishna Parta (Bera) 300 gms 4,50,000/-
The assessee further relied on Board’s Instruction No. 1916 dt. 11-05-1994, wherein possession of 500 gms of gold jewellery per married lady is acceptable without any query regarding the source. The Board further clarifies that in view of family status and custom and practices of the community to which the family belong, larger quantities of gold and jewelleries may be accepted. Considering the above submissions of assessee the CIT-A deleted the impugned addition of Rs.28,76,250/- made by the AO.
The ld. DR relied on the order of the AO. He submits that the CIT-A has erred in deleting the said addition without proper justification as there was no evidence regarding receipts of gifts at the time of survey from the said six sisters of assessee and prayed to allow the ground no. 1 raised by the revenue.
Heard the ld. DR and perused the record. We find that the assessee has filed all the details regarding receipts of gifts of Rs. 28,76,250/- before the AO & CIT-A. The CIT-A examined the record, case laws and Board’s Instruction No. 1916 dt. 11-05-1994 as relied on by the assessee and found are relevant to the present facts and circumstances of the case. We find force in the submissions of assessee before CIT-A. We find that, before the AO all the sisters stated that the jewelleries received from parental relatives during their marriage and were gifted to assessee. All the six sisters duly deposed under affidavits and confirmed the same. The relevant portion of order of CIT-A is reproduced herein below:- 4.1.2 Observation and Decision
a) As admitted by the A.O, all the six sisters of the Appellant have filed Affidavits before the Assessing Officer and in the Affidavits all the sisters have stated that they have made the gift of such jewelleries to the Appellant who is their only brother. b) As stated by the A.R the Appellant belongs to a family of traditional jewelers in a rural area of the district of East Medinipur. In such a family, such gifts of jewellery by married women to their brother (particularly the only brother in this case) for strengthening the old family business of jewelleries are not uncommon at all. c) I find that Notices US 131(3) were issued by the A.O to three sisters out of six. All of the said three sisters appeared before the Assessing Officer and their statements on oath were recorded by the Assessing Office on 22.12.2011. All the sisters stated that the jewelleries received from parental relatives during their marriage (as per quantities confirmed by them) were gifted away to the jewellery shop of their only brother i.e. the Appellant. All the six sisters of the Appellant filed duly sworn Affidavits confirming their gifts of gold ornaments to the jewellery shop of their only brother. d) In para 2 of the Order of Assessment the Assessing Office commented that in a statement recorded on 12.12.2011 the Appellant was asked as to why he did not mention about the gold jewelleries received from his six sisters in the statement recorded during Survey. But as pr the Appellant's reply to question No; 14 of the statement recorded during survey, the Appellant stated that he is not in a position to reconcile the difference in the stock of gold ornaments at the moment but he will explain the same later on. c) In view of all the aforesaid facts and circumstances involved in the issue of gift of gold jewelleries by the married sisters of the appellant and the case-laws cited by the A.R in respect of the veracity of statements recorded during the course of survey as well as the Board's instruction referred to by the AIR, I am of the opinion that receipt of gold ornaments by the appellant form his six married sisters (as per Affidavits sworn in by them and confirmed before the Assessing Officer) is believable. Hence, the concerned addition made by the A.O of Rs.28,76,250 is deleted.”
In view of above, we find the CIT-A was justified in deleting the impugned addition and we uphold the same. Thus, ground no. 1 raised by the revenue is dismissed.
Ground no. 2 is relating to deletion of addition of Rs.14,75,000/- out of Rs.45,64,402/-.
During the assessment proceeding the AO found that the assessee has own ancestral property received from his father for 3094.510 gms of gold of Rs. 7,42,682/-. On 12-12-2001 by a statement the assessee was asked to clarify why he did not say that his stock includes the ancestral property as received from his deceased father at the time of survey. The assessee failed to give his answer and the assessee did not come forward with his explanation on the date of statement/survey, the AO was of the view that it is an afterthought and the amount of gold of 3094.510 gms of gold brought to the books in the guise of ancestral property. The AO viewed that the said gold is nothing but assessee’s own stock of gold, which was not reflected in the books of accounts. The AO valued the stock at Rs.45,64,402/- ( 3094.510 gm x Rs. 1475) and added the same to the total income u/s. 69A of the Act.
Before the CIT-A the assessee submitted that old ancestral gold was lying in the shop to the extent of 3094.51 gms and the shop originally was established by his father.
The CIT-A considering the submissions deleted the addition by observing as under:- 4.2.3 Observation and decision a) I have carefully considered the rival arguments on the subject of availability of ancestral gold jewelleries in the shop of the appellant. b) The Assessing Officer has rejected the appellant's claim in an outright manner. But the appellant has proved with documentary evidence (shown before the Survey team) that the concerned shop is an ancestral business of the appellant and it had the requisite license since 1963 when the appellant's father was running the shop. The appellant is the only son of his parents who has inherited the shop from his Late father. c) However it is also a fact that the assessee failed to disclose this fact at the time of survey. Further he failed to disclose this stock in his stock register. d) Considering these aspects of the case, I am of the view that existence of some inherited gold after rolling and re-rolling for so many years is believable. It is likely that the assessee's father was doing gold business at a very small scale with small quantity of stock. If the inherited gold was 3.09 Kg as claimed by the assessee, the assessee would have definitely maintained some kind of evidence to substantiate the claim. Therefore, the A.O is directed to allow 1000.00 grams of gold as being inherited. Balance gold claimed to be inherited may be treated as unexplained. Hence, the concerned addition of Rs.45,64,402 in respect of ancestral gold is partly allowed.
Heard the ld. DR and perused the record. We find that the CIT- A held that existence of some inherited gold after rolling and re- rolling for so many years is believable. We further find that before the CIT-A the assessee furnished copy of license issued on 10/07/1986 in lieu of old license issued in 1963 bearing No. 932/gold/63 and license issued on 12/10/1969 duly signed by Deputy Collector (Tech), Central Excise, Calcutta and Asstt. Collector of Central Excise, Gold Control, Calcutta, which were shown to the Survey Team. The assessee has proved with documentary evidence and shown the same to the survey team that the concerned shop is an ancestral business of the assessee and it had requisite license since 1963. Thus, the CIT- A was justified in directing the AO to allow 1000.00 gms. of gold being inherited. Balance gold as claimed as inherited be treated as unexplained. We find no infirmity in the order of CIT-A and it is justified. Ground no. 2 raised by the revenue is dismissed.
Ground no. 3 is relating to deletion of addition of Rs. 1,50,000/- out of Rs.3,00,000/-.
The AO found that the assessee shown in its account that he received gift of Rs. 3,00,000/- from his mother. The assessee was asked by the AO to produce the details and evidences in respect of such gift. The assessee failed to do so and in his statement dt. 22-12- 11 stated that he has nothing to say in this regard and in view of above, the AO added an amount of gift of Rs. 3,00,000/- to the total income of assessee.
Before the CIT-A the assessee submitted that his mother virtually was head of family since demise of his father. He also submitted that women of Tamluk, East Medinipur are very industrious and they engage themselves in private trade in growing cash crops i.e betel nuts, betel leaves, coconuts and prawn seeds, which are abundant in that area. It is difficult to maintain any kind of documentary evidence regarding such activities for a village woman. Funds saved from these activities conducted by his mother since last thirty years and given to him for running the old family shop due to spiral rise in gold prices.
The CIT-A gave part relief to an amount of Rs.1,50,000/- by stating as under:- 4.3.3 Observation and decision I find that it is not absolutely illogical or impracticable for a mother to handover her personal and domestic savings to her son for properly running the family shop previously run by her deceased husband. In the same time, I also notice that the appellant could not provide any hard evidence in support of his claim. Considering the pros and cons involved in this issue, I am of the view that restricting the addition to 50% of the disallowance will meet the ends of justice. The Appellant gets a relief of Rs. 1,50,000/-“
The ld. DR relied on the order of the AO.
Heard the ld. DR and perused the record. On perusal of the order of the CIT-A, we find the CIT-A examined record and considered the submissions of assessee. We find the relief given by the CIT-A is reasonable, which we uphold and it is justified. Ground no. 3 raised by the revenue is dismissed.
In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 15-06-2018