TaxTMI 
TaxTMI 
2024 (4) TMI 1028
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.... details are duly mentioned in her WILL. Copy of WILL is also produced before learned A.O. for reference. Assessee reserves right to add, amend, alter or delete any of the grounds mentioned herewith." 2. The facts of the case in brief are that the assessee is an individual and was engaged in the business of trading of cut and polished diamonds in the name and style of M/s. Diksha Diamond. The assessee e-filed his return of income for the AY 2017-18 on 08.10.2017 declaring total income of Rs. 4,71,260/-. The case was selected for compulsory scrutiny based on the information received from the ADIT (Investigation), Mumbai. Statutory notices under section 143(2) and 142(1) of the Act were issued and duly served on the assessee. It may be stated that the assessee has shown net profit @ 2.22% on total turnover of Rs. 2,29,15,417/-. The AO found that the assessee has disclosed long-term capital gain of Rs. 1,02,721/- from sale of jewellery and diamonds costing Rs. 84,57,404/- at a sale price of Rs. 85,60,125/-. The AO asked the assessee to submit copies of purchase and sales bills and ledger accounts of the parties from whom the jewellery and diamonds were purchased and sold. In absenc....
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.... of bill issued by the assessee was found and the bill was URD purchase without any VAT number. This proves that the purchases are not authenticated. In view of the above facts, the AO held that the theory of bill is cooked up and both the existence of jewellery and diamonds and their subsequent sale are not true. The AO observed that the assessee procured a bogus sale bill only with an intent and purpose to increase his capital. Therefore, the entire sale consideration shown in the computation of income under the head capital gain of Rs. 85,60,125/- was unexplained cash credit and the same was added u/s 68 of the Act. The AO further rejected the income of Rs. 1,02,721/- offered by the assess under the head of capital gains. The AO also invoked the provisions of section 115BBE of the Act since addition was made u/s 68 of the Act and levied penalty u/s 271AAC of the Act. 4. Aggrieved by the order of the AO as above, the assessee filed appeal before Ld. CIT(A). In the order passed u/s 250 of the Act dated 21.12.2023, the Ld. CIT(A) has dismissed the appeal of the assessee. In the appellate order, the Ld. CIT(A) has observed that the appellant has reiterated similar reply which was p....
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....tliben Kalidas Seth and the written submission before the Ld. CIT(A). The Ld. AR took us through the assessment order as well as the appellate order passed by the Ld. CIT(A). The Ld. AR argued that the addition has been based on mere assumption and presumption. He further relied upon the submission made to the AO during the assessment proceedings, which is reproduced at para 3.4 of the assessment order. The same is as under: "4. Assessee has sold capital assets (Jewellery, Ornaments & Diamonds) for the consideration of Rs. 85,60,125/- during the year under assessment. The sale of Capital Assets is duly shown in the books of accounts of the assessee and assessee has duly paid the Capital Gain tax liability arises on these sales. Copy of ledger account of party to whom the Capital assets was sold along with sale bill thereof are attached herewith in Annexure-IV. The Jewellery sold by the assessee was acquired by him upon death of Grant parent as per will executed by the deceased person. Copy of will of grandparent stating arrangement of transfer of his assets is attached herewith in Annexure V. The will itself justified that Assessee has duly received aforesaid capital assets under....
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....nsideration of Rs. 85,60,125/-, is duly explained by the appellant. In the paper book, the Ld. AR has submitted the purchase memo received from M/s Swastic Corporation and sales bills issued to M/s HS Impex for sale of diamonds along with their ledger accounts. The Ld. AR also submitted the bank statements reflecting payments received from M/s. Swastic Corporation and M/s HS Impex. In order to prove effectuation of these sales, the appellant had submitted copy of the "Will" dated 15.01.1999 of his grandmother, Smt. Putliben Kalidas Seth, and has stated that the gold jewellery and diamonds of 186.86 carat received by him in 1999 by way of the will belonged to his grandmother. The Ld. AR has also relied on the decision in the case of Mukesh Nanubhai Desai (supra), where it was held that additions based on mere suspicion without any evidence on record could not be sustained. 9. We have carefully perused the "Will and Testament" and its English translation enclosed in the paper book at page Nos. 11 to 16. Since the source of acquisition claimed by the appellant is the "Will" of his grandmother, Smt. Putliben Kalidas Seth, let us reproduce it for ready reference and proper appreciation....
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.... my current property and current debts in the name of my son: Sevantilal Kalidas Seth. The details of which are as follows- Out of my current property Rs. 2,00,000/- in cash. Balance in all my Bank Accounts. 3) All the gold ornaments (rings, bangles, necklaces etc.), gold bar weighing about 738 grams and all the gold ornaments belonging to me, I wish to bequeath to my grandson Milan Sevantilal Seth. 4) I have a total of 187 Carats of Diamonds which I wish to give to my Grandson Milan Sevantilal Seth. I have made this will out of my own intention and wish. So that after my death, my other heirs should not oppose this will in any way and if they do then they will be eliminated and so they will have to co-operate in all ways to get this Will executed. This is my last will and testament with above particulars that I have made out of my natural love and affection, with stable state of my mind and body, without any drugs in an undisturbed condition, without any pressure of any kind from any person, duly read and got it read, duly understanding with my wish and in the presence of two witnesses making this Will which is binding on every one including me and my all the descend....
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.... AR. No corroborative evidence has been furnished by the Ld. AR to support the case of the appellant. Shares have also been gifted but no details regarding the quantity and value of shares is mentioned. No DMAT account or any evidence from Stock Exchange was produced to support the "Will". Another very important fact is absence of "probated will" in this case. On a specific question by the Bench, the Ld. AR fairly admitted that there is no probate in the present case. Probate is a legal process of proving a will in a Court and confirming its validity. In absence of the probate and existence of overwhelming surrounding circumstances discussed above, the explanation of the appellant regarding the nature and source of the impugned gold jewellery and diamonds is not prima facie satisfactory. In view of the facts discussed above, we agree with the concurrent findings of the AO and Ld. CIT(A) that the said will deed is concocted and cannot be relied upon. 11. Let us now discuss whether the ratio of the decision relied upon by the Ld. AR in the case of Mukesh Nanubhai Desai (supra) is applicable to the facts of the present case. In the case relied upon, the assessee had declared long-ter....
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....arged to income-tax as the income of the assessee of that previous year: 35[Provided that where the sum so credited consists of loan or borrowing or any such amount, by whatever name called, any explanation offered by such assessee shall be deemed to be not satisfactory, unless,- (a) the person in whose name such credit is recorded in the books of such assessee also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the AO aforesaid has been found to be satisfactory: Provided further that] where the assessee is a company (not being a company in which the public are substantially interested), and the sum so credited consists of share application money, share capital, share premium or any such amount by whatever name called, any explanation offered by such assessee-company shall be deemed to be not satisfactory, unless- (a) the person, being a resident in whose name such credit is recorded in the books of such company also offers an explanation about the nature and source of such sum so credited; and (b) such explanation in the opinion of the AO aforesaid has been found to be satisfactory: 36[Provided al....
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....ce of a receipt, whether it be of money or other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that the income is from any particular source. Reliance may be placed on the decisions of the Hon'ble Supreme Court in the cases of Roshan Di Hatti vs. CIT, [1977] 107 ITR 938 (SC) and Kale Khan Mohammad Hanif vs. CIT [1963] 50 ITR 1 (SC). The statute puts the onus on the assessee to offer a lucid, reasonable and acceptable explanation before the AO and thereafter the AO should form an opinion accepting or rejecting the explanation based upon appreciation of facts/materials and other attending circumstances. The opinion of the AO is required to be formed objectively based on the material available on record. In the present case, the genuineness of the transaction as well as the creditworthiness of the donor has not been satisfactorily explained by the appellant. It is well established that identity of the creditor, creditworthiness or capacity of the creditor to advance the money and genuineness of the transactions are the three ingredients which are re....