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Income Tax Appellate Tribunal, BANGALORE BENCH “ C ”
Before: SHRI VIJAY PAL RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order dt.30.09.2015 of Commissioner of Income Tax (Appeals), Hubli for the Assessment Year 1998-99.
This is second round of litigation. The assessee is an individual and filed his return of income declaring total income of Rs.86,917. The assessee had also declared additional income under Voluntary Disclosure of Income Scheme
(VDIS), 1997 and paid the due tax on the said income disclosed which was accepted by the department. During the scrutiny assessment proceedings the Assessing Officer asked the assessee to produce the relevant document in support of the deposit made in the Bank. The assessee explained that the deposits in the Bank are in respect of sale of gold and diamond as declared under VDIS, 1997. The Assessing Officer did not accept the explanation of source of deposit on the ground that what was declared in VDIS was jewellery items whereas the assessee is showing the sale proceeds from gold and diamond, not jewellery item. Accordingly, the Assessing Officer made an addition of Rs.11,49,971 under Section 68 of the Income Tax Act, 1961 (in short 'the Act'). On appeal, the CIT (Appeals) as well as this Tribunal confirmed the addition made by the Assessing Officer. On further appeal, the Hon'ble High Court has remanded the matter to the record of the Assessing Officer vide decision dt.22.9.2008 in ITA No.211/04. The Hon'ble High Court has given the reference of the decision dt.22.9.2008 in wherein it was specifically directed that if the assessee is able to prove that what is sold under the transaction claimed by the assessee in the regular return filed pertains to the gold jewellery and diamond which was declared in the application filed
VDS Scheme, 1997. However, if the assessee is not able to prove that the said transaction of the return is the same goods which is jewellery under VDIS,1997 then it is a clear case that the assessee is failed to prove the said transaction. In the remand proceedings, the Assessing Officer again made the addition on the ground that what is declared as sale transaction is gold bullion and loose diamonds whereas the assessee had declared gold and diamond jewellery in the VDIS, 1997. The assessee challenged the action of the Assessing Officer before the CIT (Appeals) but could not succeed.
Before the Tribunal, the learned Authorised Representative of the assessee referred to the items of gold and diamond jewellery as declared in the VDIS, 1997 and submitted that subsequently the assessee converted the jewellery into gold and diamond for which the assessee has produced a certificate of the jewelers. The learned Authorised Representative has then referred to the bill/cash memo under which the converted gold bullion and diamonds were sold. He has pointed out that the conversion quantity and the sale quantity matches. Even the quantity of diamond as declared in the VDIS and which was sold subsequently is same in carats. He has referred an identical case of one Poonamchand M Oswal wherein while passing the assessment
Assessing Officer has accepted the sale proceeds of gold and diamond after conversion from jewellery as declared in the VDIS. The learned Authorised Representative has also relied upon the decision of the co-ordinate benches of the Tribunal dt.30.6.2016 in the case of Sri Seshmal J Jain in & 110/Bang/2016 as well as the decision dt.30.6.2016 in the case of Sri Bijendra B Agrawal & Another Vs. ITO in ITA Nos.102 & 103/Bang/2016.
On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that the Assessing Officer as well as the CIT (Appeals) has given a categorical finding that what is declared under VDIS,1997 are jewellery items whereas what is declared in the return of income is bullion and loose diamonds. Therefore the assessee has failed to prove that gold and diamond jewellery as declared in VDIS was sold subsequently.
Having considered the rival submissions as well as relevant material on record, it is noted that the assessee has produced the details of items declared under VDIS, 1997 which contains the gold jewellery, diamond jewellery and loose diamonds amounting to Rs.4,84,100. Since the declaration under VDIS was accepted by the department and therefore there is no dispute on the fact
Rs.4,84,100. The assessee produced the bill dt.17.12.1997 issued by Sri Balaji Refinery, Hubli whereby the gold jewellery was converted into bullion. As per the said bill the gross weight of jewellery is shown as 1406.55 gms and net weight is shown as 1249.500 gms which was converted into 1245.200 gms. The items shown in the conversion bill and VDIS declaration do match without any discrepancy. The bullion converted from the jewellery was sold by the assessee vide billdt.18.12.1997.
Subsequently, the assessee has also sold the diamonds vide bill dt.16.2.2008.
All these records were produced by the assessee before the Assessing Officer.
It is manifest from the documents produced by the assessee that the gold jewellery items which were converted into bullion are identical as jewellery shown in the VDIS, 1997. The diamond items are also matching in the weight in carats a shown in the declaration of VDIS, 1997 and purchase bill. Therefore as far as the quantity and items which are declared in the VDIS, 1997 and which are subject matter of conversion and subsequent sale, there is no discrepancy.
The co-ordinate bench of this Tribunal in the case of Bijendra G Agrawal & Another (supra) after considering the identical facts on record as held in para 15 as under :
What we note is that all the items which were appearing in bill issued by M/s. Balaji Refinery were also mentioned in the valuation report filed in support of the VDIS declarations. Gross weight also tallies. Purchase invoice issued by the concern which purchased the gold and diamonds also shows the same weight of bullion as mentioned in the bill of M/s. Balaji Refinery and same caretage of diamonds marked in the valuation report. Case of the Revenue is that M/s. Balaji Refinery, which melted the ornaments and the concern to which the gold / bullion were sold were not found in Keshavpur, Hubli. Assessees were repeatedly questioned about this during the course of second round of proceedings. Inspector’s report relied on by the AO was based on an enquiry done more than 15 years after the event. There was no way assessees could ensure that M/s. Balaji Refinery continued to do its business all through. Much reliance has been placed by the AO on a letter issued by Gold and Silver Refinery Welfare Association, Hubli, wherein it was mentioned that no refinery called M/s. Balaji Refinery, did any refinery work in Hubli since 15 years. However, it is not necessary that every refinery should be a member of an association. A glance at the bill issued by M/s. Balaji Refinery does show that it was holding a licence. A Look at the purchase bill issued by the concerns namely Shri. Mahalaxmi Jewellery and M/s. Sheetal Exports, show that they were having KST and CST registration numbers. In my opinion, these evidence do tilt the case in favour of the assessees. Assessees had done whatever possible, within their means to show that the gold and diamond sold by them were the same gold and diamond declared in VDIS, after conversion. Assessees had submitted copies of bills issued by M/s. Balaji Refinery which did show similar details of gold and diamond as returned in the VDIS. In such situation we are of the opinion that assessees had discharged their onus to show that the gold and diamond sold by them were the same which were declared by them in the VDIS declarations. Reasoning given by the AO that antique jewellery would not have been sold by the assessees is only a surmise and cannot dislodge the evidence filed by the assessee. Further there is nothing on record to show that the gold jewellery which were sold by the assessee were antique in nature. In such circumstances, I am of the opinion that the lower authorities fell in error in disbelieving the source for credits shown by the assessees concerned. I have no hesitation in deleting the additions made in the hands of the assessees.”
In view of the above facts and circumstances of the case as well as the decisions of the co-ordinate benches cited supra, I am of the considered opinion that the assessee has established the facts by producing the relevant record that what was sold and declared in the return of income is nothing but the gold and VDIS, 1997. Accordingly the addition made by the Assessing Officer is deleted and the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 31st Aug., 2016.