TaxTMI 
TaxTMI 
2017 (10) TMI 65
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....d by the Assessee in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called "the tribunal") read as under:- "1. Under the facts and circumstances of your appellant, the Learned CIT(A) has erred in upholding the addition of Rs. 12,50,000 made by the assessing officer by treating the investment made in Fixed Deposits as unexplained investment u/s.69 of the Income-Tax, Act, 1961. 2. The Learned CIT(A) failed to appreciate the fact that your appellant has made investment in Fixed deposits from sale of gold ornaments. 3. The Learned CIT(A) has erred in stating that your appellant has not filed any evidence to substantiate that she was in the possession of gold jewellery as on 31.03.2004 which was subsequently sold by the appellant. 3.01 The Learned CIT(A) failed to appreciate the letter filed with A.O vide letter dated 10th October,2012 in which valuation report of jewellery as on 31/03/2002 vide valuer's report dated 16/04/2002. 4. The Learned CIT(A) failed to appreciate the confirmations obtained from the buyers with respect to the sale of gold ornaments. 5. The Learned CIT(A) failed to appr....
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....lant has made investment in Fixed deposits from sale of gold ornaments and silver. 3. The Learned CIT(A) has erred in stating that your appellant has not filed any evidence to substantiate that she was in the possession of gold jewellery as on 31.03.2002 which was subsequently sold by the appellant. 3.01 The Learned CIT(A) failed to appreciate the letter filed with A.O vide letter dated 10th October,2012 in which valuation report of jewellery as on 31/03/2002 vide valuer's report dated 16/04/2002. 4. The Learned CIT (A) failed to appreciate the confirmations obtained from the buyers with respect to the sale of gold ornaments. 5. The Learned CIT(A) failed to appreciate the fact that buyers have utilized their agricultural income by Sale of Mangoes to fund their purchase. The details with respect to their ownership of the agriculture land had been provided along with confirmations. 6. The Learned CIT(A) failed to appreciate the fact that your appellant has suo-moto offered long term capital gain/loss on sale of jewellery for the assessment year under consideration during the course of appellate proceedings. 7. The Learned CIT(....
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....sment proceedings it was observed by the AO that assessee has made certain deposits with Kokan Mercantile Bank and Bombay Mercantile Bank on various dates and years and their maturity amount along with interest accrued there on was credited in Kokan Mercantile Bank saving bank account which were not declared in the return of income filed with revenue and same was not offered for taxation. The AO made additions to the income of the assessee on account of interest on matured FD/RD's for assessment year 2008-09 . It was observed by the AO that the assessee did not disclosed all the material facts in the return of income regarding the source of FDs, hence, the case for assessment year 2005-06 were reopened by the AO u/s 147 which culminated in the issue of notice u/s. 148 dated 18.03.2011 which was served on assessee on 23-03-2011. The assessee was asked to explain the sources of making deposits in the bank to the tune of Rs. 12.50 lacs which was made in Kokan Mercantile Bank and was not declared in the Balance Sheet filed by the assessee . The assessee did not declared the sources of making such investments by way of deposit in Kokan Mercantile Bank . The assessee did not give any exp....
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....se is regarding source of investment of Rs. 12,50,000/- made by the appellant in FDs in Kokan Mercantile Bank. The appellant claimed that she had sold gold ornaments to following 4 persons and the sale proceeds were deposited in the FDs in Kokan Mercantile Bank. S.No. Name Weight Date Amount 1. Abdul Kader Rakhangi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 569 gms. 18.04.2004 3,51,640 2. Rehana Kalsekar At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 675 gms. 30.04.2004 3,94,875 3. Ismail Abdul Rakhangi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 512 gms. 10.06.2004 3,03,360 4. Ali Saheb Kazi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 330 gms. 25.12.2004 2,04,765 3.3.1 During remand proceedings the Assessing officer has recorded statement of persons mentioned at Sr. No. 1 and 2 above u/s. 131 of the I.T. Act. Regarding persons at Sr. No.3 and 4 above the Assessing Officer has mentioned in the remand repost that documentary evidences were produced. However, the Assessing Officer has not mentioned any details of the nature of....
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....th the parties to substantiate that they have actually purchased gold ornaments from appellant by paying cash. (vii) A copy of the appellant's Balance Sheet as on 31.3.2005 has been filed. Appellant has failed and to file any evidence to substantiate that she was in the possession of gold jewellery as on 31.3.2004 which was subsequently sold by the appellant. No Balance Sheet reflecting the possession of jewellery as on 31.3.2004 has been filed either during assessment proceedings or during appellate proceedings. (viii) Appellant has not disclosed any capital gain/loss on sale of gold jewellery in the return of income filed for A.Y 2005-06. 3.3.3 In view of the above facts it is clear that appellant has not given any proof till date to substantiate that she was in the possession of gold jewellery and there were also no corroborating evidence to prove that this gold jewellery was sold by her to her relatives in cash. Only two persons were produced who have claimed to have purchased the jewellery from the appellant but their claims are also not supported by any evidence. In respect of another two persons there is no details in the file till date that wh....
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....to the revenue in the return of income filed with the Revenue as they were not reflected in the Balance Sheet of the assessee and also interest earned on the said FDR's were credited with saving bank account with Kokan Mercantile Bank which was also not disclosed to Revenue which led to the reopening of the concluded assessments for the A.Y 2005-06 and 2007-08 . It was submitted that no representation could be made before the A.O as the assessee was an old lady of more than 80 years who could not make proper representation before the A.O . Our attention was drawn to assessment order page 2/para 4 and it was submitted that assessee's counsel attended before the AO but did not file the required documents/explanations as were required by the AO, which were submitted before learned CIT(A). It was submitted that the AO has made the addition of Rs. 12.50 lacs for assessment year 2005-06( Rs. 30 lacs for AY 2007-08) u/s. 69 as an unexplained investment as the investments made in the FD's with the bank were not disclosed in the return of income filed with the revenue and also sources of making investment in Bank FDR's could not be explained. It was submitted that the additional evidences w....
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....wn to affidavits executed by assessee narrating facts for AY 2005-06 and 2007-08 which are placed in paper book page no. 22 to 23 and also page no. 40 to 41. Statements on oath given by the persons who have purchased gold from the assessee are placed in paper book page no. 16 to 18 and 19 to 21 . Our attention was drawn to Remand report issued by the A.O. which is placed in paper book / page no. 8 to 10 and also page no. 11 to 15 for A.Y 2005-06 and 2007-08 . Our attention was drawn to question no. 3 and 4 raised by the revenue while recording statement on oath of Sh Abdul Faqir Mohammad Rakhangi (relative of the assessee who bought gold jewellery from assessee) wherein he stated that he is holding agricultural land at Dasoor which is ancestral land and the assessee grew mangoes on the said agricultural land (pb/page 16) . It is submitted that learned CIT(A) sustained the additions only on surmises and conjectures. It was submitted that the learned CIT(A) cannot ignore statements/Affidavit without cross examination of the parties . It was submitted that the A.O has given a favourable report in favour of the assessee in remand report proceedings while learned CIT(A) has erroneously ....
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.... bank to the tune of Rs. 12.50 lacs(Rs. 30 lacs for AY 2007-08), the assessee did not give any details of sources of making said investment during the course of reassessment proceedings u/s 147 which led to the additions to the tune of Rs. 12.50 lacs( AY 2007-08 Rs. 30 lacs) to the income for assessment year 2005-06, vide assessment order dated 22-12-2011 passed u/s 143(3) r.w.s. 147, while in the appellate proceedings before learned CIT(A) in the first appeal filed by the assessee, the assessee came forward to explain the sources of cash receipts which were deposited in the bank account to make FDR's . The additional evidences were filed during course of appellate proceedings before learned CIT(A) which were forwarded by Ld. CIT(A) to the A.O for remand report. The assessee during the course of appellate proceeding before learned CIT(A) has explained that Rs. 12.5 lakh in cash was received during the impugned assessment year by selling the gold ornaments to following four persons:- S. No. Name Weight Date Amount 1. Abdul Rakhangi At & Post Kader Dasoor 596 gms. 18.04.2004 3,51,640 Taluka-Rajapur, Dist. ....
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....ccount and all dealing were made by him in cash. Similar statements were given on oath by Smt. Rehana Kalsekar before the AO . The assessee has also filed an affidavit (pb 22-23/pb) dated 20-06-2012 wherein she stated that she is pursuing mohmadam religion by birth and got married in 1950 . It was submitted by her in the affidavit that at the time of marriage her husband gave her meher of 4 kg of gold ornaments and 150 kg of Sliver utensil being security as per their tradition/customs in society. It was also averred that she used to buy gold/silver out of her PIN money as well from gifts received in cash .She also averred in the affidavit that she sold gold to the following persons:- S.No. Name Weight Date Amount 1. Abdul Kader Rakhangi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 596 gms. 18.04.2004 3,51,640 2. Rehana Kalsekar At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 675 gms. 30.04.2004 3,94,875 3. Ismail Abdul Rakhangi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Maharashtra 512 gms. 10.06.2004 3,03,360 4. Ali Saheb Kazi At & Post Dasoor TalukaRajapur, Dist. Ratnagiri, Mahara....
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....h was held to be unexplained investments u/s 69 and also treating the interest earned thereon as unexplained income which were held to be taxable in the hands of the assessee, vide appellate order dated 23-04-2013.We have given anxious, careful and patient thought to the whole spectrum of contentions and material on record submitted by the assessee and its appreciation by the authorities below. We are fully aware that the assessee was a senior citizen and an old lady of around 75 years during the impugned assessment year (DOB 20-01-1930).She died on 02-02-2017 for which necessary death certificates have been placed on record by the assessee. The legal heirs are brought on record and revised form no 36 is filed. We have observed that assessee filed return of income u/s. 139(1) declaring income of Rs. 46,096/-. The assessee has made huge fixed deposits of Rs. 12.5 lakh (Rs 30 lacs in AY 2007-08) in bank account with Kokan Mercantile Bank which were made out of cash deposits in the banks and the said bank accounts as well FD's were not declared to the Revenue. An explanations has been sought to be offered by the assessee only after the said fixed deposits with banks were detected by r....
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....ugh agents for which proceeds are realised in cash. The income from these agricultural activity is also stated to the tune of Rs. 5-7 lacs in a year. No cash flow statements have been submitted by these persons to substantiate that cash was duly utilised to buy gold ornaments and their earnings were sufficient to sustain their family requirements etc.. These two persons could not give item wise details of ornaments purchased from the assessee when specifically asked by Revenue, while it was expected from them at the time of recording of statement to carry all details with them. They promised to give item-wise details of ornaments purchased from the assessee but no details were filed by the said persons subsequently. The confirmatory letters were also produced from the four persons who bought the gold ( including two persons who gave statement on oath) confirming the transaction of purchase of gold ornaments from the assessee. The land holdings of these persons wherein mangoes were claimed to be grown is brought on record and is stated by all that they are agriculturist and income from sale of mangoes as well past savings were utilised to buy gold of Rs. 12.50 lacs( Rs. 30 lacs in A....
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.... of family background and status of the family including their earnings and assets has been brought on record to justify holding of gold / silver of such magnitude. The assessee has not since 1950 ever declared these holdings of gold /silver in income tax returns filed with Revenue. The assessee did not ever file any wealth tax returns with the Revenue. The assessee has originally filed return of income u/s 139(1) but did not declare income from capital gains arising from sale of gold ornaments as claimed by the assessee. The assessee has filed one valuation report dated 16-04-2002 valuing her gold ornaments and silver utensil held by her at 31-03-2002, which is issued by Sh. Ajit Amarchand Jhaveri (approved valuers) which is placed in paper book/page 62-64. It is not explained by the assessee why she obtained said valuation report in 2002 and having so obtained why she did not acted upon the said valuation report by declaring the said gold/silver in her income tax returns and also she needed to explain why she did not filed her wealth tax return thereafter even after obtaining the said valuation report in 2002 which establishes her liability towards wealth tax. Even the assessee d....
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....rather they did not even held PAN nor had ever filed any return of income with Revenue. They did not either held bank accounts or they did not produce the bank accounts either before the authorities below. These persons are also close relatives of the assessee. Thus, the statements of the said persons who were witnesses is not supported by evidences on record. The affidavit of the assessee is a self serving document, while we have observed serious flaws and deficiencies in the contention of the assessee which are detailed above and are not repeated again . Keeping in view entire factual matrix of the case as detailed above, we have observed that the whole story of sale of gold ornament/silver in cash to close relatives was set up by the assessee after the assessee was cornered by Revenue and it does not inspire confidence, thus her contentions are hereby rejected because neither the purchase/holding of gold ornaments/silver is proved nor the genuineness of the sale of gold ornaments/silver stood proved based on material on record. The said FDR's and interest earned on them were never declared by the assessee to the Revenue and was detected by the Revenue during the course of assess....
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....see could not substantiate the genuineness of the transaction for the balance quantity of sale of gold ornaments/silver and hence after giving credit for value of gold to the tune of 500 gms, rest of the amount shall be charged to tax in the hands of the assessee as undisclosed income . While for sale of 500 gram of the gold, the same shall be brought to tax by computing income from capital gains for which the assessee shall submit necessary details which shall be verified by the AO in accordance with law. Thus, we confirm the appellate order of learned CIT(A) with above modification wherein the assessee will get part relief as detailed above. We order accordingly. 12. In the result appeal of the assessee in ITA no. 4084/Mum/2013 for AY 2005-06 is partly allowed. We order accordingly. 13. Now we will take up appeal for AY 2007-08 in ITA No. 5448/Mum/2013. Our decision in ITA no. 4084/Mum/2013 for assessment year 2005-06 shall apply mutatis mutandis to the appeal of the assessee in ITA no. 5448/Mum/2013 for AY 2007-08 as the facts are similar for both the years. We clarify that benefit of afore-stated CBDT instruction/guideline shall be extended once and not twice separately f....