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Income Tax Appellate Tribunal, ‘ C’ BENCH : CHENNAI
Before: SHRI ABRAHAM P. GEORGE & SHRI G. PAVAN KUMAR
आदेश / O R D E R
PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:
In this appeal filed by the assessee, it assails an addition of �4,15,65,882/- arising out of undisclosed gold jewelry found at the time of search.
ITA No.2718/Mds/2016. :- 2 -:
Facts apropos are that assessee engaged in gold jewellery business had filed return of income for the impugned assessment year disclosing income of �26,91,860/-. There was a search u/s.132 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’) in the premises of the assessee on 21.11.2012. A notice u/s.143(2) of the Act was issued to the assessee, calling for a return of income pursuant to which assessee had filed return declaring the very same income.
During the course of search, gold jewellery weighing 3.
21456.550 grams was seized by the Department. As per ld. Assessing Officer assessee had submitted evidence for 4437 grams out of these and the balance of 16619.550 grams was accepted as undisclosed income in a statement recorded at the time of search. However, in return of income filed assessee had disclosed only 924.78 grams. As
per assessee the balance represented gold jewellery deposited by family members and persons who were related to its business. Gold jewellery claimed by the assessee as belonging to its family members/relatives and parties related to its business were as under:-
Sl.No Name Weight in Grams 1 Smt. Bhagwanti Jain 2416 2 S.A. Dilip Kumar 1798 3 Smt. Anjana Bai 1750
ITA No.2718/Mds/2016. :- 3 -:
4 Mrs. Kanchana Bai 1635 5 M/s. Gouthamchand & Sons 1060 6 N. Amarchand 1050 7 M/s. Dilipkumar & Sons 850 8 M/s. Amarchand HUF 750 9 Shruti 730 10 Manisha 680 11 Nitin Kumar 675 12 Praful Kumar 660 13 Sankesh 610 14 Smt. Lalita Bai 450 15 Gouthamchand Surana 388 16 N. Jegadesh 250 17 R.I. Deva 176 18 G. Sampathkumar 170 19 Anupdas HUF 166 20 Mr. V. Ramprakash 165 21 Mr. R. Somasundaram 115
Total 16544 However, ld. Assessing Officer was of the opinion that affidavits and documents in support of the gold jewellery claimed by the assessee as belonging to its family members and parties related to its business, were prepared after search, only as an after thought. As per ld. Assessing Officer, Wealth Tax returns of the family members/relatives filed in support of the claim of gold deposits pertained to years prior to financial year 2003-2004. According to the ld. Assessing Officer out of the 16544 grams claimed by the assessee to have been received as deposits from its relatives /family members and other parties related to ITA No.2718/Mds/2016. :- 4 -: its business, what could be accepted was only 4437 grams from the following family members/ relatives.
Particulars In Grams In Grams Mrs. Kanchana Bai 450 Nitin Kumar 250 Sankesh 200 S.A. Dilip Kumar 1749 N. Amarchand 350 Smt. Anjana Bai 1000 M/s. Amarchand HUF 438
Total 4437 The ld. Assessing Officer it seems relied on the statement given by the assessee during the course of search wherein it was mentioned by the assessee that there were deposits of gold ornaments weighing 4437 grams from his relatives. Apart from 4437 grams which ld. Assessing Officer accepted as received from assessee’s relatives, he also accepted claim of the assessee with regard to stock of 834 grams in the business. Thus, out of seized jewellery 21456.550 grams, ld. Assessing Officer accepted claim of the assessee with regard to 5271.00 grams and the balance was considered as undisclosed investments. This was valued at �4,40,40,882/-. Since assessee had itself disclosed �24,75,000/- in its return for undisclosed jewellery, balance of �4,15,65,882/- was added to the income of the assessee.
ITA No.2718/Mds/2016. :- 5 -:
Aggrieved, the assessee moved in appeal before ld. Commissioner of Income Tax (Appeals). Argument of the assessee was that explanation offered for substantiating the source of acquisition of gold jewellery with supporting evidence was rejected without any cogent reasons. As per assessee gold jewellery found at the time of search was of 80% purity and therefore net weight when converted to 91.6% purity was only 18,302.79 grams. As per assessee, ld. Assessing Officer while accepting 5,271.00 grams of gold jewellery as explained, failed to consider affidavits, Wealth Tax Returns and VDIS declaration of very same relatives who had affirmed depositing gold jewellery totaling 15502 grams with the assessee.
Further, as per assessee gold jewellery given by goldsmith which were relating to its business, came to 1042 grams and this was also supported by affidavits from concerned persons. Contention of the assessee was that ld. Assessing Officer had relied on gold deposit agreements found at the time of search, aggregating 4437 grams ignoring the availability of gold jewellery received from very same family members which were reflected in respective VDIS declaration/Wealth Tax returns. Thus, as per assessee a part of the source was accepted whereas other part was rejected. As per assessee this was not a logical approach. Assessee in its submission before ld. Commissioner of Income Tax (Appeals) categorized the gold
ITA No.2718/Mds/2016. :- 6 -: jewellery deposits received from its family members and others and explained the difference in gold jewellery as under:-
‘’Undisclosed investment - 21,456.550 gms Net Weight - 20,956.690 gms Converted to 22 carat purity- 18,302.790 gms
Source for the gold jewellery
Source Quantity in terms of Grams
Category A- As per deposits 3831.00 agreements relatives Category B- As per VDIS & 7234.00 Wealth Tax returns from relative supported by affidavits Category C – From business 1042.00 associates Accepted by the DCIT 5271.00 Disclosed in the return of 924.79 income
Total 18,302.79
Ld. Commissioner of Income Tax (Appeals) after considering the submissions of the assessee was of the opinion that in the statement recorded at the time of search, assessee had answered question No.7 as under:-
‘’Q. No.7. During the course of search in this premises, gold jewelry weighing gross weight of 21456.550 grams were found. Kindly tell me how this ITA No.2718/Mds/2016. :- 7 -: jewelry had been acquired.
Ans. Sir, in the statement recorded u/s.131 during the day, I have stated that I have purchased 400 grams of primary gold from MNC Bullion Limited, apart from this, the following persons deposited gold ornaments:-
Mrs. Kanchana Bai 450 grams Master Sankesh 200 grams bhai Smt. Anjana Bai 1000 grams Myself 1749 grams Amarchand & 438 grams Sons, (HUF)
Nitinkumar Suran 250 grams N. Amarchand 350 grams
Total 4437 grams
I am producing the evidence for the same. Thus, totaling to 4837 grams (inclusive of purchase from MNC Bullion Limited at 400 grams as mentioned above) leaving a difference of 16619.550 grams of jewelry (gross) which represents my personal gold. This 16619.550 grams of gold belongs to me and not belong to anybody else. Thus 16619.550 grams does not include anybody else jewelery except myself’’.
According to him, assessee could bring-in evidence at the time of search, only for 4437 grams. Conclusion of the ld. Commissioner of Income Tax (Appeals) was that the stereo- type affidavits all of which were dated 28.11.2013 filed by the assessee in support of deposits of gold jewellery in excess of what was mentioned above, was only an ITA No.2718/Mds/2016. :- 8 -: after thought and a story cooked up by the assessee. Ld. Commissioner of Income Tax (Appeals) noted that assessee has made this claim after one year from the date of search, catching hold of people from his community who had filed Wealth Tax returns. Further, as per ld. Commissioner of Income Tax (Appeals), it could not be believed that women who had emotional attachment towards their jewellery handed over such jewellery to the assessee. He thus, rejected the contention of the assessee and confirmed the addition made by the ld. Assessing Officer.
Now before us, the ld. Authorised Representative strongly assailing the orders of the lower authorities submitted that jewellery weighing of 15502 grams received from relatives/family member and 1042 grams received from its business associates who were gold smiths were supported by respective affidavits. As per the ld. Authorised Representative these were ignored and rejected without any reasons. Contention as per ld. Authorised Representative was that out of the gold deposits claimed by the assessee from its fifteen family members aggregating 15502 grams, ld. Assessing Officer partly accepted 4437 grams and rejected the balance despite their jewellery holding being reflected in their respective VDIS/ Wealth Tax returns filed, well prior to the search. As per ld. Authorised Representative
ITA No.2718/Mds/2016. :- 9 -: affidavits filed by these persons were rejected without any verification. According to him, lower authorities placed undue importance on the statement given by the assessee during the course of search when strong evidence to the contrary was produced by the assessee. According to him, addition was fastened on assessee even without considering the purity factor. Neither the affidavits were verified nor the contentions of the assessee were properly considered by the lower authorities. Thus, according to him, the addition made had no legs to stand. Reliance was placed by the ld. Authorised Representative on the judgment of Hon’ble Apex Court in the case of Mehta Parikh and Co vs. CIT (1956) 30 ITR 181.
Per contra, ld. Departmental Representative strongly supporting the orders of the authorities below submitted that ld. Assessing Officer had accepted source of the gold jewellery in so far as assessee could bring in evidence at the time of search. According to him, what was rejected was only the claim of the assessee made subsequent to the date of search, which was nothing but an after thought. Assessee had clearly admitted undisclosed jewellery of gold at the time of search and having done so it was manufacturing new stories and documents to wriggle out of the liability to pay tax on the undisclosed investments. Thus, according to him, addition was rightly
ITA No.2718/Mds/2016. :- 10 -: done by the ld. Assessing Officer and sustained by the ld. Commissioner of Income Tax (Appeals).
We have considered the rival contentions and perused the orders of the authorities below. Jewellery found at the time of search was 21456.550 grams. One of the claim of the assessee was that such jewellery was of low purity and after excluding stones and conversion to 91.6% purity, its equivalent weight would be 18,302.790 grams only. However, neither ld. Assessing Officer nor ld. Commissioner of Income Tax (Appeals) had dealt with the correctness of this claim and why it could not be accepted. Coming to the variation in quantity out of gold jewellery deposits totaling to 15502 grams claimed to have been received from relatives, ld. Assessing Officer had accepted 4437grams but rejected 11065 grams. Reason for accepting 4437 grams is presumably based on a reply given to question No.7 recorded from the assessee at the time of search which has been reproduced by us at para 5 above. Contention of the assessee however was that it had actually received more than what was mentioned in the statement and this was supported by affidavits received from respective relatives.
Details of the claim of gold deposits from relatives and the extent to which it was accepted and extent to which it was supported by the Wealth Tax and VDIS returns of respective persons were as under:-
ITA No.2718/Mds/2016. :- 11 -:
Sl. Name of family PAN Total Gold Gold Gold No members Gold deposit reflected Deposit accepted in VDIS reflected by in WT Assessing Return Officer 1 Mrs. Kanchana AACPB6980G 1635 450 1650 Bai 2 Nitin Kumar ACRPN9209M 675 250 675 3 Sankesh ARYPS8168C 610 200 610 4 S.A. Dilip Kumar ADPPD8896D 1798 1749 1257 541 5 N. Amarchand AABPA8645G 1050 350 970 80 6 Smt. Anjana Bai AAFPD4331A 1750 1000 1784 7 M/s. Amarchand AACHA2068N 750 438 750 HUF 8 M/s. Dilip & Sons AADHD6701N 850 1184 HUF 9 Smt. Bhagwanti AEYPJ4322A 2416 1505 912 Jain 10 Praful Kumar AITPP1771G 660 660 11 Shruti ARYPS3028H 730 730 12 Manisha AHVPM1252G 680 680 13 M/s. Goutham AALHS6983B 1060 1060 chand & Sons 14 Gourthamchand ADVPG4975E 388 388 Surana 15 Smt. Lalita Bai ACUPK7889H 455 1130
15502 4437 5382 11184 No doubt statement given u/s.132(4) of the Act can be used as an evidence against the person making such statement in any proceedings under the Act. Hon’ble Jurisdictional High Court in the ITA No.2718/Mds/2016. :- 12 -: case of CIT vs. S. Jayalakshmi AmmaL (TCA Nos.488 and 489/2016, dated 01.08.2016) had held that there could be no addition based on Sec. 132(4) of the Act alone without corroborative evidence. Thus, an assessee can always bring in evidence to show that what was stated by him was incorrect. Where the assessee asserts that it had received as gold deposits from its family members/ relative more than what it was stated at the time of search and such assertion is supported by affidavits and corroborative evidences likes VIDS declaration of the giver/ creditor and copies of Wealth Tax returns of the giver/creditors, in our opinion it was incorrect to brush it aside. Lower authorities simply went by a presumption that the claim was an after thought.
Gold deposits agreements stipulates a return on investments to the credit and therefore this cannot be deemed gratuitous transactions.
Even otherwise, when the relatives/family members had come forward to file affidavit in support of deposit of gold jewellery and which were in turn supported by VDIS/Wealth Tax returns filed, prior to the date of search, it could never be considered as an after thought. In the circumstances, we are of the opinion that claim of the assessee that 15502 grams of gold represented deposits from its family members and relatives, in our opinion had to be accepted.
Since Assessing Officer had accepted only 4437 grams out of it, we
ITA No.2718/Mds/2016. :- 13 -: delete the addition for the value of the balance of 11065 grams as well. Ld. Assessing Officer is directed to give relief to the assessee to this extent.
Coming to the gold jewellery claimed by the assessee to have received from gold smith aggregating 1042 grams, it is not disputed that assessee had filed affidavits in support. The claim of 1042 grams were from the following persons:-
Mr. V. Ramprakash : 165.00 02. Mr. R. Somasundram : 115.00 03. R.I. Deva : 176.00 04. N. Nagadeesh : 250.00 05. G. Sampathkumar : 170.00 06. M/s. Anuphas HUF : 166.00 ------------------- 1,042.00 None of the lower authorities had examined the claim of the assessee that 1042 grams of gold jewellery belonged to goldsmith, whose affidavits were also filed. We are of the opinion that the correctness of claim of the assessee with regard to 1042 grams claimed to be received from the goldsmiths, requires fresh verification. Similarly, claim of the assessee that after excluding stones and converting the jewellery to 91.6% purity actual weight would only be 18302.790 grams also requires fresh look by the ld. Assessing Officer. The ld. Assessing Officer has to verify affidavits of the goldsmiths/ business
ITA No.2718/Mds/2016. :- 14 -: associates filed by the assessee before coming to the conclusion whether the claim of source for 1042 grams of gold could be accepted. Thus, while deleting the addition for the value of gold jewellery received by the assessee from its family member/ relatives, we remit the issue regarding claim of the assessee on actual weight of jewellery found at the time of search, and source for 1042 grams claimed to have been received from business associates back to the file of the Assessing Officer for consideration afresh in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes.