TMI Blog2006 (1) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of valuation of the impugned assets. Therefore, we cannot allow these grounds so as to set at naught the whole of the assessment order by declaring it a nullity. In the result, this ground stands dismissed. Addition made on account of the value of the stock-in-trade - The overwhelming pieces of evidence in the form of job register which is maintained for quite long time now and the respective bills have to be given credence over the statements. Therefore, we are of the opinion that the action of the learned CIT(A) is quite correct and justified. We dismiss ground No. (ii) of Department's appeal. Stock-in-trade of silver - In our opinion, the assessee had made such a claim by writing to the ADIT, as stated above. The books remained incomplete due to sickness of the assessee. This claim of the assessee is also not unnatural, it may be correct also, but the AO has not cared to look into this aspect. The most important argument of the learned Authorised Representative seems to be with regard to the affidavit of Shri Ganesh Kumar, which was not at all controverted by the AO. In these circumstances, we are of the considered opinion that this issue has to be redecided by meeting e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dt. 19th July, 1999 which pertains to block period 1987-88 to 1997-1998. 2. Briefly stated, the relevant facts are that the assessee derives income from trading in gold and silver ornaments and also from job work. A search and seizure operation was carried out under s. 132(1) of the IT Act, 1961 ('the Act' for short) on 3rd Jan., 1997, at the house and business premises of Shri Shree Chand Soni, the assessee. During the search operation various incriminating documents and books of account, and assets including cash, gold and silver ornaments were found and seized. The search party recorded the statements of various persons who were present at the house which included, the assessee, his wife Smt. Savitri Devi, his sons Shri Satya Prakash and Ashok Soni, his daughters-in-law Smt. Dipika and Smt. Subhya, inter alia , on 3rd Jan., 1997. On the basis of material gathered during search, the AO made various additions, which were subjected to appeal and the first appellate authority allowed part relief, which resulted in these cross-appeals. We will discuss more relevant facts while dealing with the individual ground of appeals. ITA No. 479/Jdpr/1999 [Block period Asst. yr. 1987-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises of point Nos. 4.1 to 4.8) and relates to an addition of Rs. 5,63,456 made on account of the value of the stock-in-trade, which has been reduced to Rs. 3,60,346 by the learned CIT(A). 11. During search a stock of 765.00 gms. of gold ornaments (619 gms from shop and 145 gms from the residence) were found. The assessee claimed that out of this 380.300 gms. belonged to third party, which was received for doing the job work and this fact was also recorded in the job register. When confronted, the assessee stated that this fact could not be disclosed earlier as there was no such occasion. In the statement also no such query was raised if any goods belonging to third parties were at the shop or not. When asked about such goods of third parties being at residence, he had categorically denied. But his son Shri Satya Prakash Soni had stated in answer to question No.8, that as far as his knowledge went, nobody else's stock was included in the stock found at the shop. 12. The AO disbelieved the assessee on this point and rejected assessee's claim that gold ornaments weighing 380.300 gms belonged to others. The learned CIT(A), however, deleted this addition, and the Department is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O. No clearcut question was put either to the assessee or to any other person. The AO has tried to pick something from here and something from there to complete a story. In our considered opinion, the claim of the assessee seems to be quite justified. 16. The overwhelming pieces of evidence in the form of job register which is maintained for quite long time now and the respective bills have to be given credence over the statements. Therefore, we are of the opinion that the action of the learned CIT(A) is quite correct and justified. We dismiss ground No. (ii) of Department's appeal. 17. The next part of this issue relates to the stock-in-trade of silver, out of which the assessee has claimed that pure silver of 5425 gms. valuing Rs. 37,704 belonged to his brother Mr. Ganesh. 18. The stock of silver ornaments found at the shop and residence at SunaronKi-Ghati is as under: At shop as per Annexure S-1 - 99216 gms. At residence as per Annexure 'J' - 12400 gms. 111616 gms. Out of this silver, the assessee claimed that 5425 gms of pure silver belonged to his brother Shri Ganesh Kumar. It was stated by the assessee before the AO that vide letter dt. 17th Jan., 1997 during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion that this issue has to be redecided by meeting each and every objection of the assessee. Therefore, we restore this issue to the file of the AO with the direction to decide the same in the light of our above observations. This ground is allowed for statistical purposes. 21. The other connected points relating to this issue are that impurity content of these ornaments has not been properly considered. The assessee has claimed 40 per cent impurity, whereas the Departmental valuer has taken it at 30 per cent only. Various pieces of evidence produced before the AO, were ignored. According to the assessee the evidence of 40 per cent impurity are placed in the paper book at pp. 140, 141 and the same are supported by duly sworn affidavit placed at pp. 79 to 80 of the paper book. In the statement, no such question with regard to impurity aspect was put to the assessee. 22. In our considered opinion this issue also needs to be restored to the file of the AO. We, therefore, restore the same along with the main issue with the similar directions. Thus, ground Nos. 4.5 and 4.6. are also restored as above. 23. In ground No. 4.7, the assessee has challenged the addition of Rs. 1,67,635. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are inclined to accept this explanation of the assessee and accept ground No. 5.2 of the appeal. 29. The assessee claimed that Rs. 40,000 belonged to his mother Smt. Ratanjot Bai. This amount was stated to be given by Shri Damodar Soni, the brother of the assessee for the treatment of their mother. Shri Damodar Soni is an engineer and the cash given by him was kept in the 'safe' belonging to their mother. In support of this claim, the statement of Shri Satya Prakash Soni who had stated that cash lying in 'Tijori' at the shop belonged to his grandmother, and the duly attested affidavit of Smt. Ratanjot Bai, have been relied by the assessee. But the AO did not accept the same and was confirmed by the learned CIT(A) also. 30. We have heard the rival submissions and perused the evidence on record. 31. The statement of Smt. Ratanjot Bai, the mother of the assessee was also recorded under s. 132(4) on the date of search wherein she had stated that she had one FDR of Rs. 40,000 and some ornaments. She denied to have any cash with her. Shri Damodar Soni had withdrawn Rs. 70,000 in the month of October 1996 from his savings bank a/c No. 11559. The mother of the assessee w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce given by both the parties remained unconsidered properly. Therefore, we allow ground No.6 of assessee's appeal and ground No. (ii) of Department's appeal for statistical purposes, and restore them to the file of the AO with a direction to decide the same again after appreciating both the rival claims. 35. This ground relates to gold ornaments found during the course of search. The AO has made a detailed discussion in respect of gold ornaments on pp. 25 to 30. Gold ornaments weighing 3238.600 gms. were found during search, out of which 874.800 gms. were found on the persons of various family members of the assessee. In his statement recorded under s. 132(4) of the Act, the assessee had stated that with regard to 1780 gms. of gold, he did not have any explanation. In fact, the assessee had surrendered Rs. 8,88,000 on this account. But the assessee retracted from his admission so made and disclosed only income of Rs. 2,39,322 on this account, while furnishing return of income for the block period. During the assessment proceedings the assessee explained that 578 gms. of gold ornaments belonged to Smt. Subhda Soni, which she had received on various occasions including her m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the (assessee) during search. The assessee retracted from his surrender disclosed only income of Rs. 2,39,322 in the return filed for the block period. 39. By referring to above table as has been extracted by us, the learned Authorised Representative has submitted in view of CBDT's opt-quoted circular whereby 500 gms. of gold ornaments are accepted as in relation to a married woman and 250 gms. in relation to a man and likewise one plus gms. in relation to unmarried daughters, the whole of the above gold ornaments would be wiped out and no addition could be made thereafter in this account. He has also drawn our attention to the statement of the (sic) placed at pp. 96 to 97 of the paper book and has submitted that the statement has to be read in its entirety. He has also invited our attention to pp. 46 to 51 of the paper book, where a copy of the 'Will', which was found during the course of search, is placed at p. 52 of the paper book of wealth-tax return of Smt. Shiv Joti Bai, is placed. It has been submitted that the Will in question was found during search from the possession of the assessee and the same has to be accepted as belonging to the possessor. It has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng appellant's ground of appeal No. 5(e) whereby the appellant has disputed the addition made and also the voluntarily offering of Rs. 85,000 in his undisclosed income on account of the marriage expenses of sons and daughter, because the learned AO has arbitrarily estimated such income against the provisions of law and material available on record thereby entitling the appellant to retract and withdraw from the voluntarily disclosed income as the same was offered to tax under the wrong understanding of law and keeping in view the submissions of the appellant and legal position in respect of block period assessment under Chapter XIV-B of the IT Act, 1961, the learned CIT(A) has grossly erred in law and in facts in not fully accepting appellant's ground of appeal No. 5(f) whereby the appellant has disputed the addition made and also the voluntarily offering of Rs. 25,000 in his undisclosed income on account of household expenses because the learned AO has arbitrarily estimated such, income against the provisions of law and material available on record thereby entitling the appellant to retract and withdraw from the voluntarily disclosed income as the same was offered to tax u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 of the assessee's appeal stands dismissed and also the ground taken by the Department's appeal stands dismissed. 46. Now coming to ground No. 10 of the assessee's appeal, the facts are that while making statement under s. 132(4) of the Act, the assessee had disclosed income of Rs. 2.5 lakhs as bogus capital formation in the names of his two daughters-in-law. In the entire process, however, such capital of Rs. 5 lakhs had been formed upto asst. yr. 1996-97. 47. This addition is based on the statement alone and no such income was disclosed in the returns filed for the block period. Admittedly no incriminating document was found to support the impugned addition. This Bench has been continuously taking the view that a statement recorded under s. 132(4) of the Act does not tantamount to unearthing any incriminating evidence, during the course of search, therefore, no addition can be made on that score alone. Therefore, in our opinion, the impugned addition cannot survive, and the same has to be deleted. The following cases can be referred to for the above proposition of law. (i) Dy. CIT vs. Sanmukhdas Wadhwani (2003) 80 TTJ (Nag) 648 : (2004) 85 ITD 734 (Nag); (ii) Concord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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