TaxTMI 
TaxTMI 
1990 (8) TMI 233
X X X X Extracts X X X X
X X X X Extracts X X X X
....husain & Sons. Later on, the activities "tended to the firm M/s A.E. Lokhandwala & Sons and reflections. He was married in 1958 and Smt. Mehfuzabai is also assessed separately for income-tax and wealth-tax showing income from packagings, interest, dividend, etc. Shri Juzer though only a student of law at present was stated to have been helping his father and mother in their businesses and drawing remuneration, commission, etc., from them. Shri Abbasbhai and his wife have been declaring their returns on income net after deduction of outgoing on account of payment to Juzer. Neither Shri Abbasbhai nor his wife have ever maintained any books of account but they have data supporting their return version for the various years. They had disclosed under the 1975 V.D. Scheme regarding some jewellery. They have also been declaring certain jewellery in their wealth-tax assessment. Whatever jewellery has been sold, was offered for capital gains tax. 3. Action u/s 132 on the premises occupied by the assessee led to discovery of jewellery in excess of that accounted for in the wealth-tax returns. Shri Abbasbhai was called upon to explain the origin of funds which enabled him to acquire such j....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to this version. Actually, the assessee's explanation regarding the destination of the sum of Rs. 86,000 was that only about Rs. 40,000 were utilised for acquiring the ornaments and that the remaining 46,000 were utilised by acquiring some other investments like furniture, etc., which has been accepted by the WTO. ITO added Rs. 1,19,925 u/s 69A being the value of 610.40 grams (sic). 4. Aggrieved by the decision of the ITO, the assessee filed an appeal before the CIT(A) who confirmed the same in the case of Abbasbhai. As the ITO had also made a protective assessment in the case of Smt. Mehfuzabai the CIT(A) has cancelled the same. Against the latter the revenue has come in appeal. 5. On behalf of Shri Abbasbhai Shri Sathe took us through the various facts which we have mentioned above. Shri Sathe took us through the cash account now prepared and submitted that all the figures therein are those which are already reflected in the income-tax and wealth-tax returns of the two parties above, the only exception being the estimate of household expenses. Shri Sathe agreed that as far as payment of salary to Juzer is concerned there was no specific mention in the income-tax returns b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r explaining the entire jewellery. It is on record that the jewellery was found in two cupboards in a room which was occupied both by Abbasbhai and Mehfuzabai. The description of the ornament as per panchnama would indicate that majority of the ornaments are those generally worn by ladies. If there is any unexplained jewellery at all the same could be considered at least proportionately in the hands of Mehfuzabai. 8. In reply, the DR submitted that what we have to see is the applicability of sec. 69-A. There is no dispute that the assessee was found in possession of jewellery which was not reflected in the wealth-tax returns. Shri Roy submitted that every explanation given by the assessee has been considered sympathetically. The quantity for which the explanation is rejected is worked as below : Claimed to have been received from Abbasbhai's mother for want of proof 198.00 grams &nbs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the items of jewellery in respective wealth-tax returns although he did in fact have them. The burden in such cases is heavily on the assessee and it cannot be said to have been discharged by merely filing an affidavit. Relying on Sri Krishna v. CIT [1983] 142 ITR 618 (All.), Shri Roy submitted that such self-serving affidavits have little evidential value. The explanation has therefore, been rightly rejected. Coming to the cash-flow statement, Shri Roy submitted that this statement too has little evidential value. Firstly it was prepared in 1984 with effect from 1-4-1972. It may be that some of the figures derive support from the corresponding wealth-tax returns filed long before the search but from this alone, it cannot be said that the cash-flow statement deserves any credence. In these cash-flow statements the figure of withdrawal itself is a balancing figure arrived at to tally the cash balance at the end of a particular year with that shown in the corresponding wealth-tax return. These withdrawals cannot therefore, be said to be available in cash. Again, there is no reason why the assessee should make any withdrawals in excess of his legitimate requirements and hold the s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vidence on the point. We also find considerable force in the argument of Shri Roy that the cash-flow statement now prepared does not deserve as much credence as the assessee's representative would like it to have. If this deserves any credence at all the same has already been done by the authorities below when they allowed the assessee to identify the other investments like scooter, etc., to the extent of Rs. 46,000. It is for the assessee to show the exact mode of acquisition of the impugned jewellery. As the parties having failed, we hold that the addition of total sum in the two cases together Rs. 1,19,925 is justified. 12. We do however, find considerable force in the argument of Shri Sathe that since the ornaments were found in a room occupied by Abbasbhai and Mehfuzabai and since the description of the ornaments does give an indication of possible acquisition by Mehfuzabai also from the undisclosed income, it would not be proper to saddle Shri Abbasbhai alone with full responsibility. There is doubtless an element of guess work involved in such matters. But circumstantial evidence is in favour of allocation. in our opinion, it would be reasonable to divide the sum added by....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... In reply, the DR invited our attention to the orders of the authorities below the contents of which we have already summarised above. 16. On an examination of the various facts, we hold that the authorities below were justified in rejecting the claim. This ground of appeal therefore, fails. 17. In the result, both the appeals are partly allowed. Per Shri T. A. Bukte, Judicial Member --- I have carefully gone through the order passed by the learned Accountant Member. Though I fully agree with his conclusions in respect of other grounds of appeal, but as far as ground regarding addition of Rs. 1,19,925 is concerned, I do not agree with his conclusions arrived it in para 11 of his order. I give my own reasons as follows. 2. There is no doubt that the assessee and his wife never maintained books of account. On the basis of the data they have filed the Income-tax returns and Wealth-tax returns. The assessee and his wife are being assessed to both Income-tax and Wealth-tax since long. Both of them have disclosed gold jewellery in their wealth-tax returns as well as under the 1975 Voluntary Disclosure Scheme. When the search was conducted in their premises, the assessee and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the assessee's wife also. The assessee never agreed that all the jewellery not disclosed in the Wealth Tax return belonged to him alone. Shri Sathe also urged to take a pragmatic approach because of spiralling prices of gold ornaments and the assessee need not be put into difficulties and should not be saddled with high tax liabilities. He also urged to take judicial note of the assessee's peculiar position disabling him from producing proper evidence. According to Shri Sathe, it is needless to say that one does not always keep vouchers for all the purchases made. It would be difficult for every one to produce evidence in respect of every item of gold ornaments or jewellery found in his house. He urged that this common knowledge requires to be taken into consideration and it need not be brushed aside easily. Similarly, the assessee also cannot keep vouchers of all the gold ornaments intact for a longer period, but he has fairly stated that all the purchases were made from Santosh Pedhi of Centre Street The assessee has filed his affidavit in this respect He was not cross-examined. Therefore, Shri Sathe urged that rejection of the assessee's explanation by the ITO and the CIT(A)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n record. Cash flow statement prepared cannot be discarded because it is prepared from 1-4-1972. It also cannot be discarded because it reflects the figures from the wealth-tax returns. If the affidavits coupled with cash flow statement is accepted, then the entire addition as made by the lower authorities requires to be deleted from the hands of the assessee. It would not be correct to say that cash flow statement is not creditworthy. Much of acquisition of jewellery is fully explained in the affidavits and explanation and there is no doubt why it should not be accepted. It is true that there is no direct , but at the same time, it would not be proper to shut our eyes to the reality of the situation that it is impossible for any person to explain every item with proper evidence purchased in past several years. I do not find substance in the department's allegations also except being too rigid on technical grounds. 10. By taking the rates of gold during the relevant years, there is every possibility that the assessee might have purchased gold from die cash balance of Rs. 86,660 and there is nothing wrong to accept the affidavit and the explanation. In my opinion, there is much s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llery. by the daughter-in-law etc. The conclusion arrived at by the ITO was that out of 1121 gms. of jewellery found, them was adequate explanation to the extent of 511 gms. and the investment in the balance of 610 gms. was unexplained. At the value of Rs. 1,950 per 10 grams, the price came to Rs. 1, 19,925. This amount was included in the hands of "AEL" and also on a protective basis in the hands of "MAL". The reasoned assessment order is in the case of "MAL". 3. The matter was taken up in appeal to the CIT(A) and the Commissioner (Appeals) upheld the assessment in the case of "AEL" but the assessment being protective in the case of "MAL", he cancelled the same. "AEL" appealed to the Tribunal and the Revenue appealed against the cancellation of the protective assessment in the case of "MAL". 4. When the Tribunal came to hear the case, the learned Accountant Member was of the view that the source of acquisition of the jewellery was not established and he held, therefore, that the value thereof was taxable. However, he considered that it would be equitable to make an apportionment in the ratio of 2:1 and, therefore, 2/3rd of the value, i.e., Rs. 79,950 was held to be taxable i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icle, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year." He stated that merely because a sort of cash-flow statement was prepared by the assessees to show that they could have been in possession of funds to the extent of about Rs. 86,000 on 31-3-1983 and had pointed to the disposal of those funds as relating to the acquisition of jewellery over the years valued at the time of acquisition at Rs. 40,000 and to the acquisition of some other assets like Units of the Unit Trust of India, some two wheelers etc., it did not follow that any inference could be drawn that the jewellery was not purchased in the accounting period 1-4-1983 to 31-3-1984. It was emphasised by the learned Departmental Representative that the onus was on the assessee to establish this and this has not been discharged even considering the affidavits filed by "AEL" and "MAL". 8. The learned counsel for the assessee, however, has brought on record certain assessment orders framed subsequent to these proceedings. These a....