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TMI Blog2013 (12) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... the above issue, assessee raised various grounds which are repetitive in nature. Hence, we will reproduce only ground nos. 2 and 3: "2. For that on the facts of the case, the Ld. CIT(A) was wrong in confirming the addition of Rs.25,07,000/- as unexplained cash credit in the Bank A/c of the assessee which is completely arbitrary, unjustified and illegal. 3. For that on the facts of the case, should have considered the letter of the deceased mother of the assessee wherein she has given all her Stridhan (Jewellery) to the assessee for making charity which has not been considered by the Ld. CIT(A), therefore, the order passed by the Ld. CIT(A) is completely arbitrary, unjustified and illegal." 3. Briefly stated facts are that during the course of assessment for AY 2006-07 and 2007-08 the AO found that there are deposits in assessee's bank account maintained with Standard Chartered Bank, Gariahat Branch no. 327-1-030430-0. According to AO, this bank account is not disclosed in assessee's returns of income. Hence, he required the assessee to explain the deposits. When no information was coming forth, he required the assessee to depose before him u/s. 131 of the Act. The assessee in he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This valuation report states the description of jewellery, gross weight in grams i.e. in precious metal and semi precious stone. Total value of jewellery as per this valuation report, is in Rupees and value as precious metal and semi precious stones. This valuation report dated 03.10.1997 contains total items at 19. Further, a copy of letter from assessee's mother Smt. Rampiyari Devi Dudhewala dated 27.10.1997 was also enclosed for reference of the AO and even now enclosed with assessee's paper book at page 20. The relevant text of the letter of Smt. Rampiyari Devi dated 27.10.1997 to her daughter Smt. Usha Tibrewal reads as under: "You are aware that my health is not in a good condition and I feel that it may not survive longer. I am having various gold and diamond jewelleries which were received by me at the time of my marriage and on some occasion thereafter. The said jewelleries are absolutely my stridhan and as such I have discussed this matter with your brothers that I am willing to hand it over to you for selling at a best price and give the sale value in charity as you deem fit and proper. As you are my beloved daughter and I feel you can take this burden for doing this n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or her late mother has given to her for making charity. It was explained by the assessee that complete name and address of assessee's brother Shri Naresh Kumar was duly given to the AO and even the purchase bill of purchaser of diamonds for FY 2006-07 relevant to AY 2007-08 of M/S Karni Enterprises along with address was submitted but no inquiry whatsoever was carried out. The AO completely disbelieved sources of jewellery and sale of jewellery and possession of jewellery by assessee from her mother for the purpose of charity by giving following reasons: "(i) Assessee could not produce any evidence towards alleged inheritance of the gold jewelleries, in question from her late mother Rampiyari Devi. (Refer answer to question no. 14 above). (ii) She (assessee) could not produce even Sale Memo (prime evidence) in support of her alleged claim that cash deposits of Rs.14,90,000/- in A/c. No.327-1-030430-0 with Standard Chartered Bank, Gariahat Br, Kolkata represent sale proceeds of inherited jewelleries. (refer answer to question no. 13 above). (iii) She (assessee), could not even furnish name and address of the person(s) to alleged inherited jewelleries claimed to have been sold. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alance sheet and return of income. This shows that she intended to conceal this bank account and its transactions from the Income Tax Department. Similarly, if the jewellery had inherited by her from her mother in 1997 and she became its owner she should have reflected the same in her balance sheet where she was already disclosing other jewellery owned by her. In support of her claim that this jewellery was given to her by her mother she has filed a letter purported to be signed by her mother on 18.10.1997. I think this letter does not have any evidentiary value as it has not been registered any where. It is not proved that this letter has actually been signed by Smt. Rampaiyari Devi. This letter does not contain any description of the jewellery purported to be given to the assessee. Further, it is not understood why a mother will give jewellery to the youngest daughter when she has three sons and three daughters. Normal presumption is that a mother would entrust the task for making charity to one her sons and not the daughters. Even there is no documentary evidence that any jewellery was owned by assessee's mother. During the appellate proceedings the A/R of the assessee was aske ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n some of these bills and the valuation done by the valuer in the so called valuation report. In the Bìll dated 01.12.2006 diamonds of weight 8 Ct. have been shown as sold for Rs. 4,76,000/-. In the valuation report 8 Ct. diamonds are shown to be set in jewellery at item no.3. In this item No. 3 the value of 8 Ct. dìamonds is shown as Rs. 16,000/-. Thus it can be seen that diamonds worth Rs.16,000/- in 1997 are shown to be sold for Rs. 4,76,000/- in 2006. This means that in a period of 10 years the value of the diamonds increased to about 30 times the orìginal value, which is about 2900% increase. This is absolutely absurd figure. Similarly in the Bill dated 29.08.2006 diamonds of weight. 6 Ct. have been shown as sold for Rs. 4,02,000/-. In the valuation report 6 Ct. diamonds are shown to be set in jewellery at item no.4. In this item No. 4 the value of 6 Ct. diamonds is shown as Rs. 12,000/-. Thus it can be seen that diamonds worth Rs. 12,000/- in 1997 are shown to be sold for Rs. 4,02,000/- /- in 2006. This means that in a period of 10 years the value of the diamonds increased to about 33 times the original value, which is about 3200% increase. This is also a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ludes gold and diamond jewellery. Even the sale proceeds were deposited in the Standard Chartered Bank Account, Gariahat Branch opened by assessee in her name only for the purpose of depositing sale proceeds of jewellery, for which the assessee was only custodian and this account was opened just as a facilitator. By going through the above stated bank account of Standard Chartered Bank, it is clear that immediately after sale of jewellery the amount was deposited in this bank and was issued cheque in the name of Ramkrishna Mission for the purpose of charity. These facts were never denied either by AO or by CIT(A). The CIT(A) and the AO rejected the evidences produced by assessee on the basis of conjecture and surmises. The reasons given by CIT(A) is that the evidence produced by assessee during assessment proceedings such as letter purported to be signed by her mother as her mother, according to CIT(A), does not own so much jewellery at the time of her death for the reason that she was not assessed to any income tax or wealth tax. Secondly, according to CIT(A), the assessee does not have any evidence to show that this jewellery was inherited by assessee from her mother in 1997. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the lower authorities i.e. the AO as well as CIT(A). Even if these are rejected, for the sake of argument we accept, no proper opportunity or no show cause notice was given to the assessee and these were rejected merely on the basis of conjecture and surmises. The assessee has produced all the above mentioned evidence before the AO. What evidence will, in a particular case, be sufficient to establish assessee's representation, as also what material is relevant or not relevant would depend of the facts of each case. But the principles that emerged from these are that anything which has a bearing on the question at issue before the judicial forum would be relevant fact. The AO's rejection, not of the explanation, but of the explanation regarding the source of income of depositor, cannot by itself lead to any inference. By producing the evidence before the lower authorities the assessee has discharged the initial burden which lies upon him. Now the burden shifts on the department as to why the assessee's case cannot be accepted and why it must be held the entry, thought purporting to be in the name of a third party, still represent the income of the assessee from an undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examine the facts of the instant case in the light of the above principles. Sankunni, the karta of the assessee family, carried on business in Ceylon for about 20 years, until he returned to India and settled down in his village in 1940. Kannan Kunhi, the eldest son of Sankunni and the present karta of the family, has been carrying on business in Ceylon from 1942 onwards in partnership with others. The licence of the toddy business started in Kerala on August 17, 1950, was taken in the name of Kannan Kunhi. Out of the sum of Rs. 60,813 assessed as income from undisclosed sources, Rs. 46,563 is the amount credited in the books of account of this business on August 17, 1950. The assessee's explanation, as we have already stated, was that this amount as well as the amounts invested for buying immovable properties came from past remittances from Ceylon and savings from agricultural property. This explanation did not receive any consideration by the Appellate Tribunal. All that it stated about the matter is contained in the one sentence appearing in paragraph 37 of its order; and it reads: "The assessee had no proper and satisfactory explanation for the source of these amounts. " The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust 17, 1950, appears a little preposterous. Whatever it may be, the explanation offered by the assessee was not on the face of it improbable, though it is entirely a matter for the fact-finding authority to accept it or not. But if the Appellate Tribunal rejects the explanation without considering its acceptability in the light of the facts and circumstances of the case, or it rejects the explanation without stating any grounds whatsoever, or upon a view of facts which could not reasonably be entertained by any person acting judicially, the case would fall within the principle laid down by the Supreme Court in Mehta Parikh & Co. Vs. CIT (1956) 030 ITR 181, and the finding of the Tribunal would not be valid. In our view, the same is the position in this case; the addition of Rs. 60,813 as the income of the assessee from undisclosed sources was not valid or justified. In the result, we answer the question in this reference in the negative and in favour of the assessee. The parties will bear their own costs. A copy of this judgment will be forwarded to the Income-tax Appellate Tribunal as required by section 66(5) of the Act." 9. From the above case law of Hon'ble Kerala High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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