TaxTMI 
TaxTMI 
1999 (2) TMI 671
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....ginally, the family belongs to Bathinda, Punjab. In 1991, Dr. Sohanlal Gupta along with his wife and their son came away to Bombay. Even before coming to Bombay, Mrs. Raj Rani Gupta was said to be running a beauty parlour at Bathinda. 2. Unrest in Punjab and consequent violence that reputed in that part of the country seems to be the cause for the family to come down to Bombay with a view to settle themselves down and try their prospects, Mrs. Raj Rani Gupta opened a sex clinic called "Kaya Kalp" firstly at Borivli and later they have opened branches to the same clinic at Charni Road in May 1991 and at Dadar in November 1991. Dr. Shoanlal Gupta has been a Dental Surgeon whereas Shri Arunkumar Gupta and Mrs. Renu Gupta have both passed B.A.M.S. (Bachelor of Ayurvedic Medicines & Surgery). Dr. Sohanlal Gupta, his son Dr. Arunkumar Gupta as well as his Dr. (Mrs.) Renu Gupta were all employed in the sex clinic run by Mrs. Raj Rani Gupta. They have also opened another clinic called "Kaya Kalp International". Smt. Raj Rani Gupta has been running a beauty parlour called "Mona Lisa" even in Bombay. From 1991 to 1996, the family was able to acquire 15 items of immovable properties large ....
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....0 34,600 1994-95 39,760 39,760 1995-96 1,82,240 1,82,240 1996-97 1,55,960 1,55,960 Undisclosed income Rs. NIL As against the `Nil' income disclosed, the A.O. (Dy. Commr., Spl. Range 2, Mumbai) completed the assessment in which the total undisclosed income including the undisclosed income surrendered in the block return was taken at Rs. 11,06,228 in the hands of the assessee. Broadly stated, the following items were taken to be the undisclosed income in the hands of the assessee which is assessable in asst. years 1992-93, 1994-95 and 1995-96 : 1.A.Y. 1992-93 Rs. Undisclosed investment in property. Rs.4,06,666 2.A.Y. 1994-95 NRE Gifts (Hawala) Amount 2,11,000 Premium thereon @ 8% 16,880 2,27,880 3.A.Y. 1995-96 Non-NRI Gifts (Bogus) 1,46,112 Unexplained investment in jewellery 3,25,570 4,71,682 Total undisclosed income including the undisclosed income surrendered in the block return. 11,06,228 Against the assessment thus framed for the block period, the assessee came u....
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....of jewellery in their house. Further, page 18 of Annexure A-41 of the panchanama dated 14-5-96 disclosed one of the seized papers from the residential premises which revealed that 998.40 gms. of gold was sold by the assessee Dr. (Mrs.) Renu Gupta at Rs. 4,34,325 to M/s. Vipul Jewellers on 30-3-95 and the amount thus realised on the sale of jewellery was also credited in the capital account of the assessee. The Assessing Officer addressed letters dated 6-12-96 from his office both to the assessee as well as her mother-in-law to explain the nature of possession and the source of acquisition of the above jewellery. It did not evoke any response except the earlier version that the jewellery belonged to both the ladies of the house. Even during the assessment proceedings, the Assessing Officer stated that no supporting evidence was filed before him during the enquiry stage. Ultimately, a show-cause notice dated 12-3-97 was issued setting out all the facts and calling upon the assessee to show cause why the jewellery to the extent of 748.40 gms. valued at Rs. 3,25,570 should not be considered as unexplained and added to her income for the asst. year 1995-96. On the appointed day, i.e., 1....
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....elatives on each of those occasions. The Assessing Officer found that on the facts and circumstances it appeared as if the gifts of jewellery by friends and relatives were not true but a facade which was adopted as a modus operandi to turn black money into white. He was also not able to accept the explanation of the assessee regarding the jewellery found and sold to M/s. Vipul Jewellers. However, he accepts that it is common in Hindu society for women to wear some jewellery. Therefore, he concedes 250 gms. each of gold to the two ladies of the house and 50 gms. each to Dr. Arunkumar Gupta and his father Dr. Sohanlal Gupta and 50 gms. to his minor daughter. Therefore, out of the seized gold of 802.90 gms., he excluded 400 gms. as explained and has taken the balance of 402.90 gms. valued at Rs. 1,72,890 to be the unexplained jewellery and he determined to consider it as unexplained jewellery in the hands of Dr. Arunkumar Gupta from whom the jewellery was seized. The Assessing Officer also clearly stated that 250 gms. of gold conceded to the assessee should be deducted from out of 998.40 gms. of gold sold to M/s. Vipul Jewellers. Thus, the jewellery weighing 748.40 gms. (998.40 minus ....
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....n the house. From the seized papers during the search conducted in the residential house of the members of the assessee family, 802.90 gms. of jewellery valued at the then prevailing value of Rs. 3,44,534 was found. Among the seized papers in the residential premises, paper No. 18 of Annexure-A-41 of panchanama dated 14-5-96 revealed that the assessee had sold in her name jewellery weighing 998.40 gms. to M/s. Vipul Jewellers on 30-3-95. The amount realised on the sale of jewellery was also credited in the capital account of the assessee. The Assessing Officer by addressing his office letter dated 6-12-96, called upon the assessee as well as her husband, Dr. Arunkumar Gupta, to explain the nature, possession and source of acquisition of the jewellery sold to M/s. Vipul Jewellers. However, except reiterating that the said jewellery belonged to both the assessee and her mother-in-law, who are the two ladies of the house, no other explanation was offered. The assessee could not furnish any supporting evidence to back her version during the assessment proceedings. The Assessing Officer ultimately issued letter dated 12-3-97 listing all facts and calling upon the assessee to show cause ....
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....r, by that letter, there was not a whisper that the gold jewellery held by her was being acquired by her from 1991 onwards, i.e., much before her own marriage in August, 1994. Thus, there are innumerable contradictions about the source of her acquiring gold jewellery found at her residence as well as sold to M/s. Vipul Jewellers. 10. In the block assessment framed by the Assessing Officer against the assessee, what he did was the following. Out of the seized jewellery of 809.90 gms., on the assumption that it is natural for the ladies in a Hindu family to hold reasonable quantity of jewellery on their persons, the Assessing Officer had conceded that 250 gms. of gold jewellery to each of the two ladies in their house. So also he conceded 50 gms. each to Dr. Arun Kumar Gupta and Dr. Sohanlal Gupta and 50 gms. to the daughter of the assessee. Thus, from out of 802.90 gms. of seized gold jewellery, 400 gms. was taken to have been reasonably explained and the remaining 402.90 gms. out of the seized gold was taken to be unexplained gold jewellery and was considered in the hands of Dr. Arunkumar Gupta in his block assessment made for the assessment year 1996-97. Thus, the Assessing Off....
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....ction 16(3) dated 30-5-95 which was long before the search and seizure proceedings conducted on 26-3-96 under section 132(1). This would clinchingly prove that the claim of the assessee that she was having 1000 gms. of gold jewellery and it constituted her wealth was her version from the very beginning and in the face of her wealth-tax assessments referred to above, it cannot be said to be her later innovation invented for the purpose of the block assessment. Thus, according to Shri Khare, the whole of the gold jewellery of 998.40 gms. sold to M/s. Vipul Jewellers was completely and clinchingly explained by her. Further, it is the contention of Shri Khare that Chapter XIV-B of the Income-tax Act does not confer jurisdiction on the Tribunal, while completing the block assessment, to go into anything other than the seized material. According to him, the block assessment must be completed on the basis of the seized material only and no alien evidence could be considered in the block assessment and for that purpose he relied upon Sunder Agencies v. Dy. CIT [1997] 63 ITD 245 Mum. decided by this Tribunal. In the headnote of the said decision at page 248, the following is what is held : ....
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....ded. Elaborating his arguments, he states that if the capital gains resulted from the sale of gold ornaments of 998.40 gms. to M/s. Vipul Jewellers was not disclosed earlier which came to the knowledge of the department from the seized material, then there is nothing wrong in adding the value of the said gold ornaments under Chapter XIV-B as undisclosed income. He argued that it cannot be successfully argued by the other side that 998.40 gms. of gold jewellery sold to M/s. Vipul Jewellers has no connection whatsoever with the seized material at the time of search conducted on 26-3-96. One of the papers found in the seized material disclosed the sale of the jewellery. Therefore, it is quite within the province of the Assessing Officer to find out whether it was previously disclosed or not. Further, he argued that even though the assessee filed only her computation of total income at page-1 of paper book No. 2, she discreetly avoided filing the assessment order, if any, completed against her for the assessment year 1995-96. There is no evidence that her regular assessment for the assessment year 1995-96 was completed much prior to the block assessment now under consideration. Therefo....
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....sed nor was it registered. At page 15 of the paper book No. I, a certificate addressed to "To Whomsoever It May Concern" by the Branch Manager of Bombay Mercantile Co-op. Bank Ltd., Colaba, is provided. In the said certificate, it is stated that the donor was holding NRE A/c No. 5334 with the said Bank. However, he purchased pay order No. 8293 for Rs. 2,11,000 in favour of the assessee, Dr. (Mrs.) Renu Gupta and the certificate was said to have been issued at the instance of the "party". 15. As already stated, we have heard three appeals together and we have considered similar NRI gifts in the case of Mrs. Raj Rani Gupta in whose case we have passed our order dated 25-2-1999. We have elaborately discussed therein about the credibility of the NRI gifts. We want to adopt the same reasoning as given in that order even in this case also. The Assessing Officer asked the assessee to produce the donor for examina- tion and confirmation of gifts. However, she failed to produce him, though several opportunities were given to her. The Indian address of the donor was also not provided by the assessee to the Assessing Officer. There is no reason why a fat sum of money like Rs. 2,11,000 be g....
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....6 was a slip of paper which is furnished as Annexure `E' at page 41 annexed to the block assessment order passed in the case of Smt. Raj Rani Gupta. Since the contents of the seized paper are pertinent in this connection, the same is extracted as under : Desai Builders Nimesh Mehta (Manager) Phone : 6149661, 6171818 Shop area : Vacant 3600 carpet Rs. 11,000 Rate per sq. ft. Ratio 7/30 11th floor Building : 1380 sq. ft. 3 Bed 1550 sq. ft. 4 Bed Ratio : 60/40 W/B (Building - Carpet + 22%) Rate Rs. 3,300 per sq. ft. The above slip is unsigned but, according to the Assessing Officer, the slip was in the hand-writing of family members of the assessee-family. It is the case of the revenue that the assessee-family members indulged in property transactions which had a ratio of black and white money at 40:60 approximately. It is also the case of the revenue that from out of the information gathered from the Appropriate Authority, Bombay, the comparative sale instances show higher market value of property purchased by the assessee and her family members. Considering all these aspects, the Assessing Office....
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..... (Mrs.) Renu Gupta were living together in a common residence at Bombay. It was never the claim of the assessee that prior to her marriage (which took place in August 1994) Dr. Renu Gupta happened to live for some time in Bombay. It was also never her case that her parents belong to Bombay. As already stated, the assessee and her husband sent a common reply dated 19-3-97 with reference to the block assessment proceedings started against them from 1-4-1985 to 23-6-1996. In the reply dated 19-3-97, copy of which is marked as pages 28 & 29 of paper book No. 1 filed by the assessee, which represents the reply signed by Dr. Arunkumar Gupta, specifically stated that Dr. Sohanlal Gupta studied and graduated as a Dental Surgeon from J.J. Hospital (Now Govt. Dental College, V.T.) from 1955 to 1963 and after graduation he went to his ancestral state of Punjab in 1963 and all their family members stayed in Punjab at Bathinda which is described as the ancestral town till 1990. It is stated that at that time the Punjab State was infested with militancy and terrorism severely endangering the security of the family and the career prospects of the family's only property, Dr. Arunkumar Gupta. ....