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2011 (11) TMI 810

IT Appeal No. 1631 (Delhi) of 2009 - Dated:- 18-11-2011 - Rajpal Yadav, JUDICIAL MEMBER AND K. G. Bansal, ACCOUNTANT MEMBER For the Appellant : C.S. Aggarwal and R.P. Mall For the Respondent : R.S. Negi ORDER K.G. Bansal, Accountant Member The facts of the case are that the assessee-HUF filed its return on 25.07.2006 declaring total income of ₹ 1,04,756/-. The assessee included long-term capital gains ('LTCG' for short) amounting to ₹ 9,338/- in this income. While computing t .....

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leads to computation of LTCG at ₹ 9,338/-. 1.1 In the course of assessment proceedings, detailed enquiries were made regarding the acquisition and sale of jewellery. After considering the submissions of the assessee, the AO did not accept that the jewellery was acquired by the assessee at the time of his marriage etc. The contention that the assessee-HUF was in possession of this jewellery on 31.3.2005 was also not accepted. The evidence of sale of jewellery was also disbelieved. Therefore .....

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have been given to all sons and daughters but the evidence of income or holding of jewellery is not there even to the extent, it is claimed to have been received by the assessee. The circumstances in which the claim of jewellery and its sale has been made are also very suspicious because there was no talk of this jewellery earlier to 30.03.2006, when the return of wealth was filed by the assessee in the wrong charge. Earlier to 30.03.2006, the jewellery was not shown in any other document or oth .....

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more than 3 Kg. have been claimed to have been received as gift, therefore, it is clear that the assessee had not received any gift of jewellery from father or forefathers and none of them were having the capacity to gift such a huge quantity of jewellery. It is merely the unexplained income of the assessee which has been introduced in the garb of sale of jewellery, therefore, the action of the AO is upheld and the ground of appeal of the assessee is rejected." 1.3 Aggrieved by this order, .....

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ry as on 31.03.2005, therefore, only capital gains can be brought to tax in this year and not the sale proceeds; and (ii) the assessee has proved acquisition of jewellery with reasonable evidence and, therefore, only capital gains on sale thereof, as worked out by it, could be brought to tax. We proceed with the determination of these propositions. 2.1 The ld. counsel has relied on two major evidences to prove that the assessee-HUF was in possession of the jewellery as on 31.03.2005. These evide .....

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ch is shown in the return. The jewellery is ancestral, being gifts to it from his father at the time of marriage. Some jewellery is also received as gift on marriage anniversary from the in-laws in the year 2004-05. The WTO completed the assessment on 31.03.2006. In a one page order dated 31.03.2006, it is mentioned that the value of the jewellery in the report of the registered valuer has been shown at ₹ 16.50 lakh. The jewellery is stated to be received at the time of marriage and marria .....

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ed. The record is maintained only in respect of valuation of work done during the course of searches and surveys. The work of valuation on other occasions is done as a gesture of goodwill and, thus, no record is maintained. About 40 to 50 persons would have come to him for such valuation work in the last four to five years. For such private work, he maintained only a pad, which contains his name and the name of his firm. The valuation report is furnished on this pad. The pad does not bear serial .....

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h the wealth-tax assessment order, it is mentioned that the same has been passed by WTO, Ward 2, Karnal, who does not have jurisdiction over the case of the assessee as it is vested in him, i.e., WTO, Ward-4, Karnal. The assessee filed its return of income on 19.01.2006, i.e., about two months before filing the wealth-tax return before a wrong WTO. The address in both the returns is the same. The return was filed on 30.03.2006 and the assessment was completed on 31.03.2006 after issuing notice u .....

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een filed on 30.03.2006. The assessment had been made on 31.03.2006. The order may be erroneous but it has not been set aside till date. Therefore, the contents of the order have to be taken as true and correct. This means that the assessee had disclosed jewellery as on 31.03.2005, thus, only capital gains could be brought to tax in assessment year 2006-07. As against the aforesaid, the ld. DR submitted that only one return had been filed before WTO, Ward-2, Karnal, for assessment year 2005-06, .....

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ment of the karta of the assessee-HUF and the valuer in respect of payment and receipt of remuneration for valuation. The assessee stated that he paid ₹ 5,000/- while the valuer stated that he did not charge any money for private valuations as this work is done as a gesture of goodwill. The assessee is a resident of Karnal while the jewellery was got valued at Ambala Cantt. All these factors show that the valuation does not lead to inference that the assessee was owner and in possession of .....

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ree Singhania brothers from joint family funds, it should have been easy for the Department to give evidence on the point and prove it. From the fact that no mention is made in the orders of the Income-tax Officer and Appellate Assistant Commissioner that there were any such investments, the Hon'ble court took it there was no evidence to show that any funds of the Hindu undivided family were utilized in the business of Harishanker Gopal Hari. As regards the point why strangers should admit t .....

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e has been placed on the decision of Hon'ble Supreme Court in the case of Raj Kumar Singh Hukam Chandji v. CIT [1970] 78 ITR 33. The question before the Hon'ble Court was-whether, on the facts and in the circumstances of the case, the managing director's remuneration received by Sri Raj Kumar Singh was assessable in his individual hand and not in the hands of Hindu undivided family? It has been mentioned that the broader principle that emerges is whether the remuneration received by .....

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ance was also placed on the decision of Hon'ble Supreme Court in the case of Rafique Bibi v. Sayed Waliuddin AIR 2003 SC 3789. It is mentioned that a distinction exist between a decree passed by a Court having no jurisdiction and consequently being a nullity and not executable and a decree of the Court which is merely illegal or not passed in accordance with the procedure laid down by the law. A decree suffering from illegality or irregularity of procedure, cannot be termed inexecutable by t .....

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n mind that all the proceedings have taken place before an incompetent assessing officer. This is apparent from the face of the record. Therefore, in terms of the decision in the case of Rafique Bibi (supra), the order of the Wealth-tax Officer, Ward-2, Karnal, is not in the nature of an executable decree. Thus, this order has no validity in the eye of law and it can be very well ignored while passing the assessment order in the case of the assessee for assessment year 2006-07. It may also be me .....

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e jewellery as on 31.03.2005. He would not be knowing whether the assessee possessed the jewellery on 31.03.2005 even if he had seen the jewellery on or about 31.03.2006. Therefore, without going into other infirmities, it can be held that the report does not establish that the assessee owned and possessed the jewellery on 31.03.2005. 2.12 The aforesaid discussion leads to a clear conclusion that there is no reliable evidence, not to speak of cogent and strong evidence, to show that the assessee .....

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is concerned, it is stated that he received approximately 250 tolas of gold jewellery in the year 2002 on the death of his father. The item-wise details are not available, however, main items have been narrated as bangles, sovereigns, necklace, chains etc. No evidence in the matter is stated to be in his possession for the reason that he was the only son of his father and it was not possible to maintain any detail. Income-tax returns of the HUF have been filed for the last 7 to 8 years but weal .....

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ewellery on the occasions of birthday of the son and the daughter. She also purchased four to five tolas of gold jewellery out of her own resources subsequently. She also got jewellery weighing about 3.00 kilograms at the time of death of her husband. There is no record maintained in respect of aforesaid acquisition of the jewellery on various occasions. She also filed an affidavit sworn in November, 2008 to the effect that she got good quantity of jewellery on her marriage from both the sides a .....

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of the jewellery, of which she was not aware. She is not aware of purchase of agricultural land worth about ₹ 10,63,800/-. The karta also does not remember item-wise details of jewellery or anything about the fact whether the father was either assessed to wealth-tax or income-tax. His case is that the material fact is about receipt of jewellery from the father at the time of his death. Both the mother and the karta have clearly deposed that jewellery weighing about 250 tolas was received. .....

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ave received jewellery weighing about 250 tolas after the death of late Shri Dharampal Bansal. There is no evidence on record about his financial position in terms of income or wealth. Although the extent of income of the assessee is not material, it may be mentioned that it derives business income, which has been computed on presumptive basis u/s 44AF at ₹ 1,35,820/- only. Thus, it is a small time trader. The assessee has not furnished the details of jewellery item-wise. In fact, no recor .....

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matter. Accordingly, it is held that the assessee has failed to establish that the whole of jewellery weighing 3,362.240 grams owned by it was acquired from late Shri Dharampal Bansal. 3.6 The ld. counsel made some other arguments of minor importance, which may be disposed off at this juncture. It is submitted that if the jewellery was not acquired by the karta but by some other person, then it could not have been assessed in the hands of the assessee. The cases in this regard have already been .....

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an & Sons [1985] 152 ITR 583/[1984] 18 Taxman 496 (Delhi). In this case, the Tribunal had accepted the explanation to the extent that the amount was in existence on 30.03.1966, though it was not accepted that the amount belonged to the wife. Therefore, it followed that the amount could not have been earned in assessment year 1967-68. The facts of the instant case are totally distinguishable. (Distinguished). It is not accepted that the assessee was the owner of the jewellery as on 31.03.2005 .....

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the total income of the assessee. We need not go into the details of the statement for the reason that we have come to the conclusion that the assessee was found to be the owner of the jewellery on or about 30.03.2006. The jewellery is stated to have been sold on various dates between 18.03.2006 and 23.03.2006. The dates of sale and our finding in the matter are in harmony. Therefore, the provision of section 69A are applicable. Further, the fair market value of the jewellery when the assessee w .....

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his case, the possession and ownership was proved from actual discovery of the jewellery in the course of search and seizure. In the case at hand, the same is proved by the sale of jewellery. In the case of Ashoka Chaddha (supra), the AO had accepted the explanation to the extent of 400 grams, for which allowance was granted. The remaining jewellery weighing 506.900 grams was taken as unexplained. The findings of the Hon'ble Court are as under :- "After considering the aforesaid submiss .....

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