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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI
आदेश / O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by appeal-order dated 04.07.2022 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 12.05.2021 passed by learned ITO, Central Circle, Gwalior [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2018-19, the assessee has filed this appeal on the grounds mentioned in Appeal-Memo.
Shri Naveen Jain Assessment year 2018-19 2. Heard the learned Representatives of both sides at length and case- records perused.
Briefly stated the facts are such that the assessee-individual is engaged in the business of bullion/jewellery in a proprietorship concern under the name and style of M/s Naveen Jewellers, Gwalior. The assessee submitted return of relevant AY 2018-19 alongwith audited accounts u/s 44AB of the act, which was subjected to scrutiny-assessment. During assessment-proceeding, Ld. AO observed that the assessee has credited a sum of Rs. 63,63,986/- to his Capital A/c with the caption “Gold Jewellery transferred from Personal A/c”. When the AO confronted the assessee with respect to this credit entry, the assessee submitted that gold ornaments weighing 2494.478 grams were gifted to him by his grandmother (Smt. Sona Devi Jain) vide gift-deed dated 11.05.2016 before her death and subsequently Smt. Sona Devi expired on 20.08.2016. The assessee further submitted that the same jewellery as received from grandmother was brought into business books by way of fresh capital; accordingly the same was accounted for as a credit entry in proprietary concern. The assessee also furnished copies of (i) gift-deed, (ii) death-certificate, and (iii) valuation- report dated 28.06.2000 of Shri Ram Chand Sukhija, Govt. approved valuer. However, Ld. AO was not satisfied with the submissions of assessee precisely for the following reasons:
(i) Grandmother of assessee never filed wealth-tax return; (ii) The valuation-report is a mere piece of paper having no details of the items of jewellery and item-wise quantity, weight, rate of valuation, purity, etc. It is a very casual report mentioning only gross weight of jewellery and gross value. It is a general fact that the women prepare jewellery of different designs/material and different purity; therefore by no stretch of imagination a flat rate can be taken for valuation.
Shri Naveen Jain Assessment year 2018-19 (iii) Gift-deed is dated 11.05.2016 accordingly the gift is received during the previous year 2016-17 relevant to AY 2017-18 whereas the assessee has introduced capital in AY 2018-19; there is no explanation by assessee for gap of one year.
(iv) Since grandmother of assessee is no more, she cannot be examined on oath and genuineness of possession of jewellery by her cannot be ascertained.
Accordingly, Ld. AO treated the impugned credit-entry of Rs. 63,63,989/- as unexplained credit u/s 68 and made a corresponding addition while framing assessment u/s 143(3).
Being aggrieved, the assessee went in first-appeal. During first-appeal, Ld. CIT(A) agreed with the observations of Ld. AO. Regarding valuation- report, he mainly emphasized that the report does not contain item-wise description of jewellery. He also observed that the gross-weight (2694.500 gram) and net weight (2694.500 grams) are equal and “purity 75%” is just a mention in the Report. He also noted “This report has not been prepared by an expert of his field as claimed by the appellant.” He further observed “This raises suspicion about the veracity of the valuation report. But it has not been proved by any material gathered through enquiry by the AO.” Regarding gift-deed, he scanned the same in appeal-order and observed that the impugned deed is on a plain paper and there is no signature of assessee (donee) accepting the gift; therefore the receipt by way of gift cannot be accepted.
Before us, Ld. AR raised strong contentions. He submitted that it is a fact that the assessee received jewellery of 2494.478 grams from his grandmother; this fact is evidenced by gift-deed which is signed by donor and two witnesses. He submitted that the gift-deed is also supported by the valuation-report dated 20.06.2000 which clearly establishes that prior to making gift to assessee, his grandmother-cum-donor was having possession
Shri Naveen Jain Assessment year 2018-19 of 2694.500 grams of jewellery. He submitted that the valuation-report is prepared and issued by Shri Ram Chand Sukhija and the report prominently demonstrates, on the very face of it, that Shri Ram Chand Sukhija was a Govt. approved valuer for jewellery u/s 34AB of Wealth-tax Act, 1957 having Registration No. CAT VIII 21/41 of 1997. He submitted that the valuer has clearly certified that the jewellery had 75% purity. He submitted that the lower-authorities have made generalized and hypothetical conclusion that the women prepare jewellery of different materials and purities; such general conclusion cannot be tagged in every case like assessee’s. He submitted that the lower authorities have rejected the gift-deed as well as valuation-report on heighted doubts; they do not have any basis of rejection. Ld. AR submitted that the CIT(A) has wrongly mentioned “This report has not been prepared by an expert of his field as claimed by the appellant.” He drew our attention to the report placed in the Paper-Book and exhibited that the said report clearly mentions “Govt. approved valuer for jewellery under section 34AB of the Wealth-tax Act, 1957 – Registration No. CAT VIII 21/41 of 1997”. Further the report clearly mentions that the jewellery “is valued for the purpose of Income-tax”. Regarding gap of one year, Ld. AR submitted that though the assessee received gift in the year 2016-17, the same was brought into business books as capital in the next year i.e. financial year 2017-18 relevant to AY 2018- 19; but what is wrong in this act of assessee? He strongly contended that it is the assessee’s discretion to bring; or not to bring; or when to bring fresh capital in his business : the authorities cannot interfere with assessee’s decision. Regarding non-filing of Wealth-tax Return, Ld. AR submitted that the grandmother of assessee was a regular income-tax filer (PAN: AAYPJ8579R) and her husband Shri Bhogiram Jain was also a regular income-tax return filer (PAN: AAYPJ8085E); that they belonged to a very reputed and established family and they had a good financial standing. Lastly, Ld. AR submitted that if the AO had any doubt on the documentary evidences, he ought to have examined the witnesses of gift-deed and the Shri Naveen Jain Assessment year 2018-19 registered valuer but without doing so he made adverse conclusions, which is not justified.
Per contra, Ld. DR vehemently supported the orders of lower authorities. Ld. DR iterated and emphasized the fallacies in the gift-deed and valuation-report as noted by lower-authorities and discussed by us in foregoing paragraphs; hence we do not repeat the same for the sake of brevity. Ld. DR further contended that simply being income-tax return filers, does not mean that the donor was having that much of jewellery in possession so as to make a gift to assessee.
In rejoinder, Ld. AR re-iterated the same contentions briefly. Further, he submitted that if there be any doubt, the matter may be remanded back to Ld. AO for examination of witnesses and registered valuer to verify the veracity of gift-deed and valuation-report.
We have considered rival submissions of both sides and perused the orders of lower-authorities as well as the documents placed in the Paper- Book, especially the gift-deed and valuation-report at Page No. 30 and 31 thereof, which are the vital documents for adjudication of present controversy. After careful consideration, we find substance in the revenue’s stand that the gift-deed is on a plain-paper and not stamped. Further, it is not signed by assessee himself. Therefore, it is necessary to examine the veracity of same and that is possible only if the witnesses are examined. Regarding valuation-report, we agree that the report simply contains “gold ornaments purity 75%” in description column; there is no mention of the items of jewellery, their quantities, weights, etc. Further, the Ld. CIT(A) has rightly noted that although the report mentions “75%” purity but the gross weight of 2694.500 and net weight of 2694.500 are equal. As noted earlier, the Ld. CIT(A) has also observed “This raises suspicion about the veracity of the valuation report. But it has not been proved by any material gathered through enquiry by the AO.” Thus, the Ld. CIT(A) also accepts
Shri Naveen Jain Assessment year 2018-19 that the AO has not made necessary enquiry to establish or dispel the doubts surrounding the report. In the circumstance, we feel that the authenticity of report can be verified only if the concerned valuer is examined. Therefore, we are of the view that it would be most appropriate to remit this case back to the file of AO who shall examine (i) the witnesses of gift-deed, and (ii) the valuer of the report; consider their outcome and take a final call in the matter. This would help in coming to a proper conclusion as also addressing the grievance of assessee. Needless to mention that the assessee shall also extend full co-operation to AO in carrying out the exercise of such examination.
Resultantly, this appeal of assessee is allowed for statistical purpose.
Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on ….../……/2023. Order pronounced in the open court on 18/04/2023.