TMI Blog2007 (11) TMI 550X X X X Extracts X X X X X X X X Extracts X X X X ..... ce have not been correctly appreciated. (3) Because the addition of Rs. 8,72,713 as investment in silver ornaments is unjustified and illegal. The valuation as added is also not correct. These ornaments did not belong to the assessee, and were not assessable in his hands. The assessee’s replies and evidence have not been correctly appreciated. Making charges estimated at 10 per cent. are also imaginary, and very high. (4) Because on the facts on record, the addition of Rs. 50,787 as undisclosed cash is wrong and unjustified. It was proved by cogent evidence. Confirmation of dalal and details of ornaments sold were wrongly ignored. (5) Because the addition of Rs. 3,89,545 as unexplained investment in shares is unjustified and illegal. The assessee’s replies are not correctly appreciated and considered. These shares do not belong to the assessee.” The assessee’s residential premises at 9/200-E, Moti Katra, Agra and 6/19, Hing Ki Mandi, Agra along with the business premises at Chaubeyji Ka Phatak, Kinari Bazar, Agra, in the name and style of M/s. Kanhaiyalal Anil Kumar was subjected to action under section 132(1) on November 3, 1996. Certain ornaments and valuables were found and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oduced any copy of will written by his father or mother in support of his contention. (iii) During the assessment proceedings, it was noticed that Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal have neither disclosed the above assets in their personal balance-sheet nor filed wealth-tax returns disclosing the same. (iv) Further Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal are salaried employees of M/s. Kanhaiya Lal Anil Kumar which deals in the business of silver ornaments. (v) Had the assessee’s parents actually given silver bullion to him to be distributed between his sons, they should have done so in case of Shri Madan Lal Agarwal also, who is the assessee’s real brother. As no silver bullion has been given by the assessee’s parents to his brother this supports the fact that the assessee is trying to mislead the Department and escape from tax net. (vi) Even if it is assumed for a while that silver bullion was inherited from parents, the same would not have been lying idle for long without being used in the business.” “(i) The assessee has failed to file copy of the disclosure certificate issued by the learned Commissioner of Income-tax, Agra. In the absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Inviting attention to page No. 104 of the paper book, it was submitted that it had been agitated by the assessee that the certificate of disclosure issued by the Commissioner of Income-tax, Agra was not trace able with the assessee and consequently the same could not be filed. In the circumstances, it was prayed on behalf of the assessee that in the eventuality the evidence relied upon by the assessee was not considered to be sufficient to delete the addition, the issue may be restored to the file of the Assessing Officer for verification on facts. With regard to the ownership of 240 kgs. of silver, inviting attention to the very same page No. 104 of the paper book it was submitted that it had been claimed that the same belonged to Shri Anil Kumar and Shri Manoj Kumar, sons of the assessee, the silver had flowed to them from the assessee’s father Shri Bhajan Lal who carried on silver/bullion business at Kherly, District Alwar, Rajasthan. The said silver was submitted relying upon the said page of the paper book had been given to his wife, i.e., the assessee’s mother Smt. Narvada Devi by the assessee’s father a few days before his death in 1968. The same continued to be in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said page it was submitted that after the death of her husband, Smt. Narvada Devi lived with Shri Kanhaiyalal and before her death in 1983 the said silver bullions were handed over to Shri Kanhaiyalal with the desire to distribute the same equally amongst his two sons Shri Anil Kumar and Shri Manoj Kumar. The said transaction took place in the presence of the deponent. Accordingly, in these circumstances it was submitted that the suspicion of the Assessing Officer as to why the said silver bullion was given to the children of the assessee and not to her other son it was submitted stood fully explained. It was submitted that the said gesture by the old widow lady to the sons of that son who took care of her in her old age is a common situation in Indian families and cannot be brushed aside. On the basis of the above, it was submitted that in the hands of the assessee no addition could have been made and the same may be considered in the hands of the sons. The learned Departmental representative, on the other hand, placed heavy reliance upon the assessment order. It was his submission that apart from the self-serving statement of the assessee there is no other evidence on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arly with regard to the ownership of 25.900 kgs. which is owned by the assessee as belonging to himself, however, contended that it has been disclosed in the VDIS of 1975. Taking into consideration the rival submissions, we are of the view that in the circumstances it would be appropriate to restore the issue for verification back to the file of the Assessing Officer with the direction to decide the same in accordance with law by way of a speaking order after giving the assessee an opportunity of being heard. The next issue agitated by the assessee in the present appeal is the addition of Rs. 8,72,713. The relevant facts as recorded in the impugned order read as under : “(7.2) During the course of the assessment proceedings the assessee was required to explain about the source of investment of 20.403 kgs. of silver ornaments. Vide his reply dated October 6, 1997, the assessee has stated that 20.403 kgs. of silver ornaments were given to Shri Dinesh Prasad Seth a day before seizure after vibrator polishing and he further stated that he never meant to surrender these silver ornaments for taxation as the same was not done under free will but under some mistake. At the time of recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se ornaments belonged to someone else the same is treated as unexplained investment in the silver ornaments and will be added to the income of the assessee for the block period. As per valuation report dated October 20, 1997, these silver ornaments weighing 412.143 kgs. was valued at Rs. 8,16,904 at Rs. 7,060 per kg. as on October 20, 1997. It was argued by the assessee that Departmental Valuer has valued the ornaments for the rate of silver as on October 20, 1997, whereas the same should have been taken as on the date of search. Thus, the rate of silver will be taken at Rs. 6,875 per kg. (on the date of valuation) adopted by the Departmental Valuer. The average purity of silver as per valuation report comes to 28 per cent. At this purity cost of 412.143 kgs. of silver ornaments comes to Rs. 7,93,375. To arrive at the actual cost of investment in silver ornaments making charges has also to be considered which generally comes at about 10 per cent. of the cost of ornaments. Though the assessee has contended that this figure is high but had failed to substantiate his contention. Therefore, after adding the 10 per cent. for making charges the total value of silver ornaments worked out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 in response to a specific query stated that he has business relationship with the assessee and that he visits Agra from his area, i.e., Bihar two to three times in a year for making purchases etc. and for getting old wedding ornaments polished etc. As such, he has only business relation with the assessee. As a result of which the assessee allows him to stay for a few days for making purchases and getting his ornaments polished on which he gets 2 per cent. commission. It was submitted by the learned authorised representative that since Shri Dinesh Prasad Seth was unknown at Agra and while getting these ornaments polished etc. he may have referred the name of the assessee, as such, his name may have been mentioned in the paper found in the pocket of Shri Dinesh Prasad Seth. The fact that it pertained to Shri Dinesh Prasad Seth, the addition it was submitted cannot be made in the hands of the assessee. In these circumstances, it was argued by the learned authorised representative that undue emphasis has been laid on the fact that the silver ornament found from the bed room occupied by Shri Dinesh Prasad Seth for reasons best known to the Department the material facts are being igno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly were received through Shri Manoj Kumar, dalal for vibrator polishing belonging to several customers and the assessee in this was to get only polishing charges payable to polishing worker at Rs. 40 per kg. plus the assessee’s own service charges at Rs. 5 per kg. It was submitted that confirmation of Shri Manoj Kumar, dalal had been filed wherein it had been stated that these ornaments were not of pure silver and in fact they have very little silver content and the purity of silver would be around 20 per cent. Inviting attention to the said letter dated October 6, 1997 at page 105 of the paper book it was submitted that it has been requested from the Assessing Officer that the purity may be ascertained from the registered valuer and the request of the assessee was that with regard to the ornaments weighing approximately 360 kgs. The facts may be considered in the hands of Shri Manoj Kumar Agarwal in whose case block assessment proceedings were also being undertaken and the same ought not be considered in the hands of the assessee. Similarly, arguments it was submitted with regard to checking the purity content was also made in the case of the ornaments weighing 20 kgs. and 45 kgs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rage purity of silver as per the valuation report comes to 28 per cent. whereas the same was 20.22 per cent., on the basis of which cost of investment in silver ornaments has been worked out and making charges of 10 per cent. thereon has been levied which it was argued is not justified. As such, as an alternative argument, valuation report was also assailed. The learned Departmental representative, on the other hand, placed heavy reliance upon the block assessment order on the basis of which it was submitted that the story that the assessee made a surrender of 20.403 kgs. of silver ornaments in confusion is an afterthought since admittedly the receipt was found from Shri Dinesh Prasad Seth wherein the name of the assessee was found mentioned. Similarly with regard to the claim of Shri Dinesh Prasad Seth with regard to the silver ornaments found from the bed room in his occupation it was submitted the claim of purchases made by him cannot be accepted since necessary vouchers in support of the said purchase were not available with him. Similarly with regard to 350.52 kgs. of silver ornaments seized from the shop premises of the assessee it was submitted that the same has rightly bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the hands of the son and cannot be sustained in the hands of the assessee. Similarly with regard to the silver ornaments found from the bed room occupied by Shri Dinesh Prasad Seth, we are of the view that simply because the receipts were not available with him is not a cogent enough reason to consider the ownership of the said ornaments in the hands of the assessee, especially in the background that Shri Dinesh Prasad Seth in his statement recorded under oath at the time of search submits that he makes 2-3 trips in a year from his village in Bihar for making these purchases in order to sell these silver ornaments in his hometown which is the source of his livelihood. Further the fact that during the trips he brings silver ornaments for polishing etc. and the receipt to this effect was found from his pocket pertaining to 20.403 kgs. of silver ornaments also cannot be ignored. It is seen that as per paper book page No. 106, as per this very document Rs. 2,000 had been paid to the workman for polishing work. Accordingly the fact that the receipt found in the possession of Shri Dinesh Prasad Seth the submission of Shri Dinesh Prasad Seth made at the time of search and the argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned there. Accordingly, addition of Rs. 50,770 was made. On behalf of the assessee it was submitted that the amount of Rs. 50,787 had been explained before the Assessing Officer as sale proceeds received in cash on sale of the assessee’s own gold ornaments weighing 128.550 gms. (approximately 11 tolas) which has been received by him at the time of his marriage in 1957. Inviting attention to paper book page No. 104 which is letter addressed to the Assessing Officer, it was submitted that the sale proceeds from the said gold ornaments had been kept by the assessee at his shop. The same was stated to have been made through dalal on October 24, 1996. Dharamkanta weighment receipt in support of the said assertion was relied upon. Attention was invited of the Bench to paper book page Nos. 85 and 85A which is the dharamkanta receipt of Shri Sarafa Committee, Kinari Bazar, Agra dated October 24, 1986, wherein the name of the assessee is also found mentioned. Paper book page No. 115 was referred to wherein the confirmation of the dalal has been referred who affirms the transaction. Confirmation vide letter dated October 25, 1997, of Shri Montu alias Nanak Chand Jain was heavily relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogent enough reason. In the face of the confirmation of the dalal the addition cannot be sustained. Accordingly being satisfied by the explanation offered by the assessee, addition of Rs. 50,787 is ordered to be deleted. Ground No. 4 raised by the assessee as such is allowed. Vide ground No. 5 the assessee has challenged the addition of Rs.3,89,545. The relevant facts are found recorded in paragraph 7.4 of the impugned order which reads as under : “(7.4) Investment in shares.-During the course of search and seizure operation huge number of shares certificates were seized in respect of various names. The summary of the same is as under : Name of the shareholders S/Shri Face value as mentioned in the share certificates (Rs.) 1. Anil Kumar Agarwal 3,16,625 2. Smt. Anita Agarwal 64,590 3. Harpal Singh 1,000 4. Jharna Singhal 1,19,350 5. Kanhaiya Lal Agarwal 59,250 6. Mahesh Chand Jain 4,800 7. Manoj Kumar Agarwal 1,09,225 8. Manoj Kumar Lavania 25,300 9. Monica Jain 20,500 10. Narendra Kumar Jain 70 11. Praveen Garg 2,000 12. Rekha Jain 1,22,375 13. Sadhna Garg 1,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of different parties found during the search at 9/200-E Moti Katra, Agra on November 3, 1996, from an attachi/briefcase from his bedroom, i.e., bedroom of Shri Anil Kumar which were with him in order to sell the same. As such, the same should not be considered in the hands of the assessee. Pointing to the said confirmation letter it was submitted that Shri Anil Kumar has affirmed that he deals in share business and he had received the shares from different parties for carrying out subsequent sales. However, on account of a slump in the market these were not/could not be sold. Pointing to the said confirmation it was stated that Shri Anil Kumar Agar wal had categorically stated that in these shares his father does not have any interest and they pertained only to his share business activity. Atten tion was invited to written submissions before the Assessing Officer dated October 6, 1997, at pages 108 and 109 wherein identical submissions were made by the assessee before the Assessing Officer. Inviting attention to the same it was submitted that therein the assessee in all fairness stated that these shares had nothing to do with the assessee and as such may be considered in the hands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. In support of the said submission attention was invited to paper book pages 91-1, 91-2, 92, 92-1, 93 94. With regard to the remaining, it was his submission that the same is to be considered in the hands of Anil Kumar in whose room from a briefcase the said shares were found in order to make sales for different persons which he had received in connection with his share dalali business. It was further submitted that whatever was relatable to the assessee or for that matter has been declared by different family members in their return has to be considered there. However, the other names namely Monika Jain, Praveen Gargh, Mahesh Chand Jain, Manoj Kumar Lavania etc. were neither the family members nor related to the assessee and in the face of confirmation of Shri Anil Kumar Agarwal who confirms they were related to his share business in the face of the fact they were found in his room these facts it was argued cannot be ignored. The learned Departmental representative on the other hand relied upon the assessment order. We have heard the rival submissions and perused the material available on record. On a careful consideration of the same, we are of the view that in the peculia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee’s mother between her two sons after their marriage. Accordingly, it was submitted that the said silver found at the residence was owned by his two sons living in the same house and did not belong to the assessee. The balance silver weighing 25.900 kgs. approximately was accepted by the assessee as belonging to him. The said silver was stated to have been acquired by the assessee in the assessment year 1975-76 and had been disclosed by him under the VDIS of 1975. Reliance for the same was placed upon the treasury challan of the income-tax deposit of Rs. 6,350, dated December 16, 1975. The said explanation was not accepted by the Assistant Commissioner of Income-tax with regard to the ownership of 240 kgs. by the sons of the assessee and the declaration under the VDIS of 25.900 kgs. for the following reasons : (i) The assessee has not adduced any evidence with regard to inheritance of the silver bullion by his two sons namely S/Shri Anil Kumar Agarwal and Manoj Kumar Agarwal. (ii) The assessee has not produced any copy of will written by his father or mother in support of his contention. (iii) During the assessment proceedings, it was noticed that Shri Anil Kumar Agarwal a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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