TMI Blog1999 (2) TMI 671X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 sums of money towards NRI gifts, substantial amounts of non-NRI gifts and daily clinic receipts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1989-90 NIL NIL 1990-91 NIL NIL 1991-92 NIL NIL 1992-93 NIL NIL 1993-94 34,600 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 ₹ 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound volume running into 213 pages, and the second being a compilation consisting of 81 pages. Similarly, the department in Smt. Raj Rani Gupta's case filed two paper books, the first running into 147 pages and the second filed on behalf of the department comprised of 70 pages. Apart from that, the impugned assessment order is attached with Annexures A to E-1. The Assessing Officer stated in his assessment order that on 27-3-96 the assessee's husband, Dr. Arunkumar Gupta, was examined and his statement was recorded. In the said statement, he purported to have stated that except the jewellery on his person and the person of his father, the rest of the jewellery found by the search party in their premises (802.90 gms.) belonged to the two ladies of the house, namely, his mother as well as his wife. It was further stated in the assessment order that on 26-3-96 both Dr. (Mrs.) Renu Gupta as well as Smt. Raj Rani Gupta were also examined and their statements were recorded in which they denied to have any knowledge 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the security of the family and career prospects of the family headed by Dr. Arunkumar Gupta. Under the circumstances, they had to migrate to Bombay with all their belongings and also leaving their well established clinics at Bathinda to start a new life at Bombay from the scratch which was not a very easy task. The Assessing Officer, with a view to assess the economic background of the family, looked into the amounts of withdrawals made for family expenses. He found that the household expenses debited were only ₹ 5,000 to ₹ 6,000 p.m. He opined that for a family whose monthly expenditure was ₹ 5,000 to ₹ 6,000 range cannot claim to be a very high standard family to explain gifts from relatives and friends. As far as marriage gifts are concerned, the Assessing Officer stated that the assessee disclosed heavy amounts of cash gifts from various relatives and friends to the tune of several lakhs of rupees. No occasions like Birthday, Diwali, Holi, Rakhi, etc., were spared without showing procured gifts from friends and relatives on each of those occasions. The Assessing Officer found that on the facts and circumstances it appeared as if the gifts of jewelle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Girdharbaha Mandi. Her brother was a cloth merchant in Bathinda, while her father- in-law was a jeweller of repute who carried on business in Bathinda in the name and style of Lala Ramjidas Saraf . Even though the assessee claims that the whole of the gold found at the time of search in the residential premises belonged to her mother-in-law, Smt. Raj Rani Gupta, it was not included in Smt. Raj Rani Gupta's block assessment. As can be seen from the assessment order itself, a statement was recorded not only from the assessee but also from her mother-in-law on 26-3-96 in which both of them denied having any knowledge of jewellery in the house. They have not stated that any quantity of gold was sold to M/s. Vipul Jewellers either on 30-3-95 or at any time before or after. If really 802.90 gms. of gold found in the house of the family members at the time of search and seizure operations and if really Smt. Raj Rani Gupta was the owner of the said gold, she would have claimed it and strangely she said that she did not have any knowledge of any jewellery in the house. From the seized papers during the search conducted in the residential house of the members of the assessee family, 802 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was signed by both as well as her husband and the highlighted portion of the letter is the following : It bears mention that Dr. Arun Kumar is the only issue of Dr. Sohan Lal Gupta and as such the occasion of his marriage to Dr. Renu Gupta was to become the sole event of the celebration in the Gupta family for the period of spanning more than half a century i.e. from Dr. Sohanlal Gupta's own marriage in 1963, to the anticipated marriage of the family's next progeny around the year 2020. Therefore this was all the more reason for the relatives of Gupta family to extend their wishes by way of symbolic presentations. Long list of relatives of Dr. Sohanlal Gupta, Smt. Raj Rani Gupta, friends of Dr. Arunkumar Gupta, relatives of Dr. Renu Gupta and her friends was given in that letter. However, as rightly pointed out by the Assessing Officer, what sort of gift of gold jewellery was given by her relatives or friends was not noted against their names in the list. Further, even the addresses of her relatives and friends also were not given. Further, 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., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he story. In this connection, he submitted that the date of the search was 26-3-96. However, but for the assessment year 1995-96, the assessee had disclosed long-term capital gains of ₹ 4,34,325 in her income-tax return as having resulted by the sale of gold jewellery. For that purpose, he filed pages 1 and 2 of paper book No. 2 filed in the case of the assessee. Further, for the assessment year 1991-92 itself, the assessee filed her wealth-tax return disclosing 100 tolas of gold as part of her wealth. Her wealth statement for the assessment year 1991-92 is provided at page 8 of paper book No. 2. Her returned wealth for assessment year 1991-92 was accepted under section 16(3) of Wealth Tax Act by the WTO even on 30-5-1995. Similarly, for the assessment year 1992-93, again, the assessee had revealed that her wealth included 100 tolas gold valued at ₹ 3,97,283. Her wealth statement for assessment year 1992-93 was provided at page 5 of the paper book No. 2. She was assessed to wealth-tax for asst. year 1992-93 under section 16(3) by the assessment completed under section 16(3) dated 30-5-95 which was long before the search and seizure proceedings conducted on 26-3-96 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtly income or property which has not been or would not have been disclosed for the purposes of this Act. Shri Tralshawala, the Sr. Depart-mental Representative, submitted that the scope of the enquiry to get at undisclosed income under Chapter XIV-B is of very wide ambit and amplitude. In the said definition of undisclosed income the last words used are for the purposes of this Act . He asked us to bear the distinction between the meaning of the words for the purpose of this Act as against the words the provisions of this Chapter . Further, he brought to our notice the provisions of section 158BA and the title given to that section, namely, Assessment of undisclosed income as a result of search . He wants us to bear that the intention of the Parliament was that the whole undisclosed income which may be revealed as a result of search should be brought to tax. They never confined to bring to tax only such income found out during the search. Even by the use of search material, any income, which was not previously disclosed, can be brought out and can be validly added. Elaborating his arguments, he states that if the capital gains resulted from the sale of gold ornaments of 998 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,11,000 towards the total of the gifts and ₹ 16,880 towards the alleged premium thereon. Similarly, similar additions were considered in the hands of the assessee for the assessment year 1994-95. Similarly, for the assessment year 1995-96, an addition of ₹ 1,46,112 was made in the hands of the assessee. Page 13 of Annexure No. A appended to the block assessment order reveals the total of the gifts received by the assessee, Dr. (Mrs.) Renu Gupta, for the assessment year 1994-95 was ₹ 3,57,112. The total of the donors were said to be 13 in number. The 13th donor was one Shri Mohamedi M.F. Hussein and his address was given as Modern Beirut Ext. P.O. Box 3257, Safat, Kuwait 13033, Arabian Gulf. At page 13 of paper book No.I, there was a letter purported to have been written by the alleged doner, Shri Mohamedi M.F. Hussein, dated 28-3-1995, and it was followed by a gift deed purported to have been executed by the donor confirming the cash gift of ₹ 2,11,000 in favour of the assessee. The gift deed was drafted on a ₹ 10 stamp paper purchased at Bombay. It was not notarised nor was it registered. At page 15 of the paper book No. I, a certificate addressed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the FERA authorities that the NRI gifts were all benami gifts, the moneys of the NRI gifts were secured with the own moneys of himself and his family members by payment of premium. Therefore, the addition of ₹ 2,11,000 and the premium of ₹ 16,880 thereon are hereby confirmed. 16. Now, let us take up the third item which represents non-NRI gifts of ₹ 1,46,112. Again, following our elaborate order in the case of Smt. Raj Rani Gupta, we feel that there is no justification to sustain the addition of ₹ 1,46,112 towards non-NRI gifts for the assessment year 1995-96 in the hands of the assessee. We cancel the same. 17. This leaves us with the last and 4th item relating to unexplained property investment on the basis of which an addition of ₹ 4,06,666 was made in the hands of the assessee as unexplained investment in property for the assessment year 1992-93. This requires a little elaboration. The family members of Dr. Sohanlal Gupta acquired 15 properties listed out in Annexure `E' to the block assessment order passed in the case of this assessee. One of the papers seized at the time of search on 26-3-96 was a slip of paper which is furnished as Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f immovable properties was called for. Since the letter is felt important to be considered at this juncture, it is extracted as under : Please refer to the search seizure operation on 27-3-96 in your case. You are requested to furnish explanation regarding the nature and source of acquisition of the valuables/assets found/seized during the course of search operation. You are also requested to furnish replies on the seized documents in the annexed proforma. It may be clarified that the reply should be furnished on each and every loose paper seized separately. You are also requested to furnish details of immovable properties purchased/possessed by you and furnish explanation regarding the nature and source of the acquisition of the immovable properties. You can take inspection of the seized papers/documents on 11, 12 13th December, 1996 between 11 a.m. 5 p.m. The above explanation/details may please be furnished by 20th December, 1995, failing which the assessment will be finalised on the basis of materials available on record. The letter is signed by the then Dy. CIT Spl. Rg. 2, Mumbai. 18. It is significant that Dr. Sohanlal Gupta, his wife Smt. Raj Ran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the accounting year relevant to assessment year 1992-93 she had acquired any property. It is not even possible to postulate that she would acquire property in Bombay even in the accounting year relevant to assessment year 1992-93 which was prior to her marriage solemnized in August 1994. Therefore, it is obvious that it was not even the claim of the assessee put forward at any time that she purchased the property in Bombay either with her own moneys or with the moneys of anybody at Manek Kunj, C.S. No. 2/118 of Parel-Sewri Division under an agreement of sale dated 30-12-1991. On that purported date of agreement, she was not even an income-tax assessee since she has no source of income of her own at all. This is the most important factor which weighs with us while deciding, this ground. The nature and source of income with which the property was purchased was never disclosed by the assessee or by any of her family members on her behalf. Further, her account books appear to have disclosed the purchase value of this property at ₹ 10,16,666 though the agreement discloses only ₹ 6,10,000. Therefore, the discrepancy between these two was never explained. Though in the slip of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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