TMI Blog2015 (8) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... e time when the excess jewellery was found in their possession. The valuation reports are dumb documents and by itself do not indicate in the absence of any other corroborative evidence that the jewellery belongs to the father and the late mother and/or the minor children of the appellants. In the above view, we find that the impugned order of the Tribunal calls for no intereference. Applicability of Section 69A of the Act is not required to be considered, as we find that the authorities have proceeded on the basis of the statement made on oath under Section 132(4) of the Act declaring that the undisclosed jewellery belonged to them. These statements of oath has not been withdrawn and/or retracted by appellant at any point of time till date. Therefore, there is no occasion for the authorities to come to the conclusion that the undisclosed jewellery belongs to the father or late mother. Consequently issuing a notice under Section 158BD of the Act to the father and to the legal heirs of the late mother does not airse. - Tribunal was right in holding that the seized jewellery represented unaccounted income of the appellant Decided against the appellants/assessees and in favour of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the facts and circumstances of the case and in law the Tribunal was right in holding that the seized jewellery represented unaccounted income of the appellant when documentary evidence was found at the time of search to show that part of it belonged to the appellants father, late mother and the minor children who were wealth-tax and income-tax assessees in the earlier years. 3. So far as Appeal No. 1135/2000 (Pragna R. Shah) and 1136/2000 (Priti Paras Shah) are concerned, besides Question A above, the appeal was admitted on the following additional substantial question of law: (B) Whether on the facts and circumstances of the case and in law the Tribunal erred in rejecting the cash method of accounting followed by the assessee and substituting the mercantile method in relation to the accrued interest on loan advanced to the landlord? Regarding Question No.A: 4. Briefly the facts leading to these appeals are as under: (a) The appellants/assessees are a part of the family group engaged in the business of trading in electronic items including its export to African countries. Besides the group also carries on the business of bill discounting. On 11 October 1996, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wellery valued as per Valuation Report of M/s S.C. Kapoor dated 14.11.96 at ₹ 4,63,280/- was found. Please explain the nature of possession and the source of acquisition of the said jewellery items? Ans. These items which are mostly ladies items have been acquired by me and my family members within the last fourfive years. Some of the items might have been received by gifts also. However, since we do not have any supporting documentary evidence for the same in our possession, I hereby offer the value thereof approp., i.e. ₹ 4,60,000/- (Rs. Four Lakhs Sixty Thousand Only), as my additional income u/s. 132(4) of the Act I shall be paying the taxes thereon, in time as per law. Thus the aforesaid jewellery was also offered to tax as the appellant did not have any supporting documentary evidence to establish its purchase. (d) Thereafter on 30 November 1996, Mr. Paras Shah addressed a communication to the Additional Director of Income Tax seeking to explain the jewellery found in the possession of the group on 11 October 1996 and 14 November 1996 as under: This copy of reports were handed over to ADIT Mr. Sanjay Mishra and Department Valuer Mr. Suresh Kapoor at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the appellants/assessees immediately at the time of search/discovery of the undisclosed jewellery. Further it also held that mere possession of valuation reports does not result in the appellant having disclosed the source of jewellery. Resultantly the four appeals on the above account were dismissed by the common impugned order. 8. Mrs. S. Jagtiani, the learned Counsel in support of the appeals submits as under: (a) The Assessing Officer as well as the Tribunal erred in having completely ignored the documentary evidence produced by the appellant. These documents show that the part of the allegedly undisclosed jewellery belonged to the appellants' father, late mother and their minor children as seen by valuation reports of jewellery in their possession. (b) The impugned order erroneously proceeds on the basis that Section 69A of the Act would apply to the facts of the present case. This by ignoring the documentary evidence in the form of documentary evidence of the jewellery in the name of various family members would clearly establish the source of the excess amount of jewellery found in their possession during the search. (c) In any view of the matter, once the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext that on 12 October 1996, a statement was made on oath under Section 132(4) of the Act by the appellant that they are not in a position to produce any evidence in respect of the gold and diamond jewellery found in their possession to the extent of ₹ 7,16,750/-. This after taking into account the jewellery belonging to their father, late mother and valuation done of the family jewellery in July 1996. Moreover it is specifically stated in the statement on oath that the jewellery belonging to their late mother already stood distributed amongst the appellants. Further on 14 November 1996 when the bank locker was opened during the search process jewellery of approximately ₹ 4,60,000/- was found. The appellants on oath again stated that they are unable to produce any evidence about the purchase of the jewellery found and undertake to pay tax thereon. It was only much later i.e. on 30th November 1996 that the appellant wrote a letter to the Additional Director of Income Tax seeking to explain the jewellery seized by the department in particular the undisclosed jewellery found on 12 October 1996 and 14 November 1996 on the basis of valuation reports of the jewellery which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he late mother and/or the minor children of the appellants. In the above view, we find that the impugned order of the Tribunal calls for no intereference. 13. The next submission of the appellant with regard to the applicability of Section 69A of the Act is not required to be considered, as we find that the authorities have proceeded on the basis of the statement made on oath under Section 132(4) of the Act declaring that the undisclosed jewellery belonged to them. These statements of oath has not been withdrawn and/or retracted by appellant at any point of time till date. Therefore, there is no occasion for the authorities to come to the conclusion that the undisclosed jewellery belongs to the father or late mother. Consequently issuing a notice under Section 158BD of the Act to the father and to the legal heirs of the late mother does not airse. 14. In the above view, there is no reason to examine various decisions cited by the appellants in support of the either Section 69A or Section 158BD of the Act. Accordingly, Question A as formulated is answered in affirmative i.e. against the appellants/assessees and in favour of the revenue. Regarding Question No. B : 15. Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est amount is received, no question of payment of tax on the receipt of interest can arise; and (b) The interest income earned could not be treated as undisclosed income in a block assessment. The interest income could be assessed to tax in regular assessment but could never be a part of a block assessment. This is so as block assessment only applies to undisclosed income found during the course of a search. On the above basis, it was submitted that Question B as formulated be answered in favour of the appellant. 19. As against the above, Mr. Pinto, the learned Counsel for revenue in support of the impugned order urges: (a) The appellants/assessees did not follow the cash system of accounting i.e. receipt basis. In the present case, there is no evidence to indicate that the appellants/assessees were maintaining any account in writing so as to hold that they were following the cash system of accounting; and (b) The loan agreement dated 13 August 1992 was found during the search process under Section 132 of the Act. It was this loan agreement which led the revenue to conclude that as the appellants/assessees had not disclosed its income during the regular course of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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