2018 (4) TMI 125

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..... 13,38,750 respectively. After considering the explanation offered by the assessee and after considering the permissible limit of gold and diamond jewellery by an individual as per the CBDT guidelines, it was observed the assessee was in possession of excess gold and diamond jewellery worth Rs. 1,05,00,000. When the assessee was asked to show cause as to why it should not be treated as his unexplained investment, the assessee explained that the gold and diamond jewellery found during the course of search belonged to his wife, mother and daughter. The assessee also produced a receipt from Krishna Das & Co. for purchase of gold worth Rs. 2.00 lakhs. The assessee had stated that the gold jewellery was gifted to his family members on various occasions and family get-together, such as marriages, birth days etc., and he produced the photographs taken on family occasions to substantiate the said contention. However, the AO was not convinced and he made the addition of Rs. 1,05,00,000 to the returned income of the assessee and brought to tax. Aggrieved, the assessee preferred an appeal before the CIT (A), who granted relief to the assessee by observing as under: "06.0 . On the da....

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....ned investment in gold jewellery. 06.2 The facts of the case emerging from the oral & written submissions of the Id. AR and the record of the Assessing Officer are carefully considered. In bringing to tax Rs. 1,05,00,000/- as unexplained investment in jewellery the Assessing Officer held that the assessee could not produce any evidence that could constitute satisfactory explanation of the jewellery found and seized. The Assessing Officer is right insofar as he concludes that some of the evidence relied upon by the assessee such as photographs cannot be accepted as evidence. photographs can never be conclusive because they don't necessarily indicate, much less establish ownership. However, it is the rest of the reasoning relied upon by the Assessing Officer that merits a closer look. 06.3 Regarding Wealth Tax returns it is stated by the assessee that they were not filed owing to a bonafide belief that the individual assessees in the family were holding assets below the taxable limits. In any case it was maintained that they were explainable with reference to their respective sources for investment. With regard to the purchase effected from M/s Krishnadas & Co. ....

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.... 06.5.1 Regarding the antiquity of the jewellery, it is claimed that much of it goes back to 1982 being the year of his marriage, or little later when his daughter was born. Similarly, it is urged that jewellery belonging to his deceased mother-in-law (and therefore of similar, if not greater antiquity) to the extent of 1432 gms was part of the total jewellery found. In support, a declaration on a Rs. 100 Non Judicial stamp paper made by his father-in-law Shri P.V. Rangayya Naidu on 19-04-2010 has been filed. The Assessing Officer dismisses this document as a "self- serving declaration" because it is not a registered document. This document is apparently not part of the seized material though dated 19-04-2010. It is not properly verified or notarised, and therefore, may be lacking the evldentlarv value of an affidavit, but it is a claim nevertheless, calling for an evaluation on probabilities at least. 06.5.2 The claim of purchase from accounted sources was a single bill for a mere Rs. 2 lakhs. This is not a very significant determinant of outcomes for three reasons. Firstly, as noticed earlier, notwithstanding the fact that the original bill was not available a photocopy ....

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....cquired from unaccounted sources has to be made in the hands of person to whom it can be ascribed with reasonable certainty. Faced with a denial that the jewellery belonged to him, in the absence of any finding that it has been purchased by assessee during the year of account, or a finding of the improbability of such other person(s) acquiring or owning some or any of the impugned assets, the Assessing Officer has misdirected himself in seeking an explanation for sources from the assessee for assets claimed to belong to another person(s). 06.7. The assessee's contention that the jewellery very substantially belonged to his spouse and daughter has never been tested with reference to their respective sources. In the absence of books of account or wealth tax returns the assessee's claim that these jewels belonged largely to spouse and daughter rests merely on photographs and the 'affidavit'. Both these 'proofs' are not evidence which by itself permits any itemised deduction from the amount assessed in the hands of the assessee. They are at best an attestation of probabilities. 06.8 Any argument on probabilities cannot be divorced from the soci....

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....be recalled in this context that the returned income of the assessee in his individual capacity from AY 2005-06 to AY 2011-12 aggregates to a little under Rs. 4 crores. The returned income in AYs 2008-09, 2009-10, 2010-11 and 201112 is Rs. 64.97 lakhs, Rs. 101 lakhs, Rs. 101 lakhs, and Rs. 109 lakhs respectively. This is a significant multiple of the amount that the assessee can be reasonably called upon to explain. 06.10 To conclude, entire jewellery found cannot be considered explainable by the assessee. The jewellery to be attributed to others in the household- and therefore excluded from consideration in the hands of the assessee, has to be estimated based on reasonable probabilities because of the non- filing of wealth tax returns. Such an assessment of probabilities has to give due weightage to social tradition and family bonds. The residuary amount is what the assessee should to be held to account for, and with reference to his disclosed sources of income. On a consideration of the balance of probabilities in the above manner, it would be difficult to sustain the view that any part of the jewellery found on 0610-2010 represents unexplained investment taxable in the ....