Addition under section 68 upheld for unexplained cash credit from sale of inherited gold ornaments and diamonds

ITAT Surat upheld addition under section 68 for unexplained cash credit from alleged sale of gold ornaments and diamonds inherited through grandmother's will. The tribunal found the will concocted due to multiple inconsistencies including contradictory ages, disproportionate gifts to grandson versus other children, lack of supporting documents, absence of probate, and failure to declare valuable assets in returns for 17 years. The assessee failed to establish creditworthiness, genuineness of transaction, and identity requirements under section 68, as grandmother was housewife with no proven income source or asset ownership evidence.

---

---

Issues Involved:
1. Unexplained Cash Credit u/s 68 of the Income-tax Act, 1961.
2. Validity and authenticity of the "Will" as a source of acquisition of jewellery and diamonds.

Summary:

Issue 1: Unexplained Cash Credit
The appellant filed an appeal against the order u/s 250 of the Income-tax Act, 1961, passed by the CIT (A), NFAC, Delhi, for AY 2017-18. The AO added the entire sale consideration of Rs. 85,60,125/- shown in the computation of capital gain as unexplained cash credit u/s 68 of the Act. The AO observed that the source of increase in capital through the sale of jewellery and diamonds was not verified and explained. The AO rejected the explanation provided by the assessee, noting inconsistencies in the "Will" and the lack of supporting evidence for the possession of high-value jewellery and diamonds by the testator, who was a housewife with no visible source of income. The AO also cited information from the ADIT (Investigation), Mumbai, indicating that the purchases were not authenticated, leading to the conclusion that the sale bill was bogus. The CIT(A) upheld the AO's decision, stating that the appellant could not rebut the findings during the appellate proceedings.

Issue 2: Validity and Authenticity of the "Will"
The appellant claimed that the jewellery and diamonds were inherited from his grandmother as per a "Will" dated 15.01.1999. The AO found several inconsistencies in the "Will," such as the testator's age being mentioned as both 75 and 70 years. The AO also questioned the plausibility of a housewife possessing such high-value assets without any visible source of income. The CIT(A) observed that the appellant did not provide any independent evidence to support the "Will" and its content. The Tribunal also found the "Will" to be concocted and unreliable, noting the absence of a probated will and the lack of corroborative evidence to prove the existence of the assets mentioned in the "Will." The Tribunal upheld the AO's and CIT(A)'s findings, stating that the appellant failed to satisfactorily explain the nature and source of the jewellery and diamonds.

Conclusion:
The Tribunal dismissed the appeal, agreeing with the lower authorities that the appellant failed to prove the genuineness of the "Will" and the source of the jewellery and diamonds. The addition of Rs. 85,60,125/- as unexplained cash credit u/s 68 of the Act was upheld. The Tribunal emphasized the importance of corroborative evidence and the application of the theory of human probability in determining the taxability of an event.

---