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2015 (7) TMI 919 - BOMBAY HIGH COURT

2015 (7) TMI 919 - BOMBAY HIGH COURT - [2015] 376 ITR 347 (Bom) - Addition under section 69A - unaccounted jewellery - Held that:- Section 69A of the Act provides that where in any financial year, an assessee is found to be the owner of any jewellery which is not recorded in the books of account and the explanation offered by assessee about the nature and source of acquisition is not satisfactory, then value of such jewellery would be deemed to be income of the assessee in the year in which the .....

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ocker of Mrs. Malani on 28 July 1986, did the revenue find the jewellery and also that some part thereof, belonged to the appellant as claimed by the appellant and as also declared by Mrs. Malani in her assessment proceedings as recorded in the order of her Assessing Officer at Kolkata on 25 November 1986. Thus it is only in the previous year relevant to the Assessment Year 1987-88 i.e. financial year 1 April 1986 to 31 March 1987 that the appellant was found to be the owner of the jewellery in .....

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n all the cited cases the offending goods/money etc was found in the possession of the party in whose hand Section 69A of the Act was applied. - Decided against assessee.

Double taxation - whether Tribunal erred in confirming the addition of ₹ 2,01,100/- in the Assessment Year 1987-88 specially in view of the addition made in the assessee's own case for the Assessment Year 1986-87 which addition includes the alleged source of the jewellery valued at ₹ 2,02,100/-, thereby r .....

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he deemed income being the cost of jewellery found in the locker of Mr. Malani being assessed to tax in Assessment Year 1987-88 cannot be found fault with. - Decided in favour of the revenue - Income Tax Appeal No. 1127 of 2000 - Dated:- 15-7-2015 - M S Sanklecha And N M Jamdar,JJ. For the Appellant : Mr Subramniam a/w V S Hadade, Adv. For the Respondent : Mr Arvind Pinto, Adv. JUDGMENT (Per Sanklecha,J. ) This appeal under Section 260A of the Income Tax Act, 1961 (the 'Act') is directed .....

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not found to be owners of jewellery valued at the said amount in the financial year 1986-88 being the relevant previous year for the Assessment Year 1987-88 which is the requirement of section 69A of the Act? 2) Whether on the facts and circumstances of the case and in law the Tribunal erred in confirming the addition of ₹ 2,01,100/- in the Assessment Year 1987-88 specially in view of the addition made in the assessee's own case for the Assessment Year 1986-87 which addition includes .....

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e appellant. 4. On 28 July 1986, the locker of Mrs. Malani (the key to which was seized on 20 March 1986) was opened by the revenue. On opening the locker, jewellery valued in the aggregate of ₹ 2.53 lakh was found therein. In the course of proceedings under Section 132(5) of the Act, the revenue on 25 November 1986 accepted the explanation of Mrs. Malani that jewellery valued at ₹ 2.41 lakh out of ₹ 2.53 lakh belonged to the appellant. The appellant also claimed to be owner of .....

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urce of the jewellery found in Mrs. Malani's locker as being a gift recived from Mrs. Shashikala L. Dhoot. Consequently, the Assessing Officer added the cost of the jewellery which at ₹ 2.01 lakh as deemed income under Section 69A of the Act. 6. In appeal, the Commissioner of Income Tax (Appeals) (the 'CIT(A)') did not interfere with the order of the Assessing Officer to the extent a sum of ₹ 2.01 lakh which was added as deemed income on account of unexplained jewellery o .....

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order holds that in terms of Section 69A of the Act, the financial year in which an assessee is found to be owner of any jewellery and for which no sufficient explanation is offered, then the value of such jewellery is deemed to be income of the assessee in such financial year in which the jewellery was found. In this case, the impugned order holds that the jewellery was found to be owned by the appellant only on opening the locker i.e. on 28 July 1986. Consequently, the year of assessment in r .....

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at date, that the jewellery valued at cost of ₹ 2.01 lakh was found in the ownership of the appellant for the purposes of Section 69A of the Act. The finding of the jewellery it is submitted was not dependent upon opening of the locker but on the revenue having possession of the keys to the locker which contained the jewellery. In these circumstances, it was submitted that the jewellery was found in the previous year relevant to Assessment Year 1986-87 and not Assessment Year 1987-88. In s .....

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ning the locker that the quantum/value of the jewellery could be ascertained for subsequent decision/finding on ownership. Consequently, in terms of Section 69A of the Act, the ownership of the appellant in respect of the jewellery in the locker of Mrs. Malani was found only on opening of the locker. Thus the Assessment Year 1987-88 is the correct assessment year to which jewellery has been brought to tax as deemed income in view of unexplained jewellery. (c) We have considered the rival submiss .....

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course of the search on 20 March 1986, did not belong to the appellant. Thus on that date the quantum of jewellery in the locker of Mrs. Malani which belonged to the appellant could not be ascertained/forecast. The normal presumption would be the jewellery in the locker of Mrs. Malani would belong to her and not to another person. Therefore, it is only on opening of the locker of Mrs. Malani on 28 July 1986, did the revenue find the jewellery and also that some part thereof, belonged to the app .....

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present facts. The basic difference in all the cited cases to the present facts is that the locker key which was seized on 20 March 1986 did not belong to the appellant but to one Mrs. Malani and therefore it was only on the opening of her locker that the question of finding jewellery in the locker and if found, the ownership of such jewellery would arise for determination. In all the cited cases the offending goods/money etc was found in the possession of the party in whose hand Section 69A of .....

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rein to tax for the Assessment Year 1970-71. However the applicant therein claimed that as ownership of the articles found in its residence was determined only when an assessment order was passed on 25 August 1971, the appropriate assessment would be the Assessment Year 1972-73. The Gauhati High Court on the basis of plain interpretation of Section 69A of the Act held that the date on which the applicant was found to be in possession of the jewellery, etc. would be the date to be taken into cons .....

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appellant was of Madhya Pradesh High Court in the case of Harlal Mannulal. In the that case for the Assessment Year 1973-74, the relevant previous year of the applicant therein was 19 October 1971 to 5 November 1972. For the Assessment Year 1973-74, an addition of ₹ 20,000/- as income from undisclosed sources was made by the Assessing Officer. This was on the basis of statement filed by the appellant alongwith his return for the Assessment Year 1972-73 that he was inter alia possessed of .....

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n opening it on 28 July 1986 unlike in the case of Harlal Mannulal where an unexplained cash of ₹ 20,000/- was disclosed by the applicant in its return of income for the Assessment Year 1972-73 and therefore it was to be asessed in the Assessment Year 1972-73. (g) The last case relied upon by the appellant is Mathuradas Gokuldas decided by this Court wherein the assessee had made a declaration on 19 January 1946 that she possessed 138 notes of ₹ 1,000/- each. The revenue assessed the .....

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der the Act. The aforesaid decision also has no application to the present facts, as admittedly the jewellery was found only on 28 July 1986 on opening the locker belonging to Mrs. Malani for which the relevant Assessment Year is 1987-88. (h) In view of the above, so far as the first question is concerned, we find no infirmity in the impugned order of the Tribunal and the same is answered in the affirmative in favour of the revenue and against the assessee. 10. Question 2: (a) It was urged by Mr .....

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ent Year 198687. Thus charging of tax in the Assessment Year 1987-88 would lead to double taxation. (b) As against the above, Mr. Pinto submits that the occasion to tax the jewellery found in the locker of Mrs. Malani valued at ₹ 2.01 lakh during the Assessment Year 1986-87 does not arise. This for the reason that it has never been the appellant's case that the jewellery which was found on opening of Mrs. Malani's locker was jewellery which had been purchased out of the cash entrie .....

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