TMI Blog2000 (9) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... ve were the partners of the firm and the remaining 13 are their family members. In the audit report furnished under section 44AB, the said purchases were shown as purchases of old ornaments. However, the purchase memos showed the gold ornaments as new ornaments. The Assessing Officer called for an explanation regarding the above purchase transaction. In its explanation, the case of the assessee was that the said five partners and their family members had filed the returns for the assessment year 1978-79 under the Amnesty Scheme, 1985. That, this was done in March, 1987, when the value of certain jewellery came to be declared as income from undisclosed sources under the head "Income from other sources". The same jewellery was subsequently sold to the firm in the year of account relevant to the assessment year 1988-89. The amnesty return was filed on the basis of a valuation report obtained from a valuer, Meenawalla, on March 27, 1987. The value of the jewellery was accordingly disclosed under the Amnesty Scheme by all 18 individuals on March 27, 1987. Thereafter, all 18 individuals sold the said jewellery to the assessee. The Assessing Officer summoned all 18 individuals under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks, to tax in the assessment year in question. That there was an attempt of capital build-up in the hands of ladies, minors and other relatives of the partners of the assessee-firm. That the entire scheme was planned and coordinated by the assessee-firm. That the assessee-firm cannot be disassociated from the scheme of declaration of gold under the Amnesty Scheme in the names of the family members of the partners of the assessee-firm, particularly in view of the fact that different individuals could not have got the idea of acquiring gold in the assessment year 1978-79 and declaring such gold under the Amnesty Scheme by filing their returns on the same day, viz., March 30, 1987, and thereafter getting the gold converted into ornaments through karigars around. the same time and subsequently selling the ornaments to the assessee-firm in the same accounting year. Accordingly, the Tribunal came to the conclusion that the assessee-firm has resorted to unfair tax-saving device. Accordingly, the Tribunal upheld the findings of the Assessing Officer by adding Rs. 1,53,02,226 to the income of the assessee-firm. Being aggrieved by the decision of the Tribunal, the assessee has come up in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst appellate authority. It was contended that the Tribunal decided certain issues which never arose. In this matter, the Commissioner of Income-tax (Appeals) decided the appeal in favour of the assessee. He held that the judgment of the Supreme Court in Jamnaprasad Kanhaiyalal's case [1981] 130 ITR 244 was not applicable to the facts of this case. Having so held, the Commissioner of Income-tax (Appeals) did not thereafter go into the merits of the case. Against the decision of the Commissioner of Income-tax (Appeals), the Department went in appeal to the Tribunal. The Tribunal came to the conclusion that the decision of the Supreme Court was applicable. It was contended that on the said finding, the Tribunal should have remanded the matter back to the Commissioner of Income-tax to decide the matter on the facts and in view of the applicability of the judgment of the Supreme Court in the case of Jamnaprasad Kanhaiyalal's case [1981] 130 ITR 244. That was not done. After coming to the conclusion that the judgment of the Supreme Court was applicable, the Tribunal examined the facts and found erroneously, that the firm had introduced unexplained investment in gold in the names of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jewellery in question as the first appellate authority came to the conclusion that the said judgment of the Supreme Court in Jamnaprasad Kanhaiyalal's case [1981] 130 ITR 244 had no application to the facts of the present case. That after the Department had assessed the partners and their relatives on account of capital gain for the assessment year 1988-89, and also under the Wealth-tax Act for the assessment year 1987-88, the Department could not have assessed the value of the same jewellery in the hands of the firm once again in the same year 1988-89 and that the Department should not have, therefore, come to the conclusion that the sales to the firm were not genuine. Hence, the Tribunal erred in dismissing the miscellaneous application filed by the appellants under section 254(2) of the Act. Findings : At the outset, it may be mentioned that there is a difference between source of income and genuineness of the sale of ornaments by the individuals in favour of the assessee-firm. The most crucial question which was required to be taken into account by the Tribunal was whether the Department could have come to the conclusion that the impugned sales were not genuine when, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowed Rs. 1,53,02,226 being the purchase consideration credited to the running accounts of the partners and their family members in respect of the same gold jewellery purchased from them holding that it was not a purchase consideration. That, it represented the income of the appellant from undisclosed sources for the assessment year 1988-89. The Assessing Officer came to the conclusion that the purchase consideration payable to the partners and their relatives represents income of the assessee from undisclosed sources amounting to Rs. 1,53,02,226 for the assessment year 1988-89. According to the Department, gold ornaments were not found in 1982 when action was taken under section 132 of the Income-tax Act and, therefore, the sale could not have taken place in favour of the firm in 1987 as the gold ornaments did not belong to the individuals. Hence, according to the Assessing Officer the ornaments always belonged to the firm. That the individuals had no source to acquire the gold ornaments. That the holder of the gold ornaments was only the firm and, therefore, the purchase of gold ornaments by the firm from the partners and their family members was not a genuine transaction. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs passed with regard to the individuals could stand side by side with the order of the Assessing Officer passed in the present appeal. If the ornaments, all along, belonged to the firm, then one fails to understand as to how the cost of acquisition/purchase has been taken into account for the financial year 1977-78 in the assessment orders passed in the cases of the 18 individuals. The assessees have been separately assessed. Lastly, in the present matter, the Tribunal has not considered the evidence which formed part of the statement of facts filed by the assessee before the first appellate authority. Against the order of the Commissioner of Income-tax (Appeals), the Department went in appeal to the Tribunal. They did not file the statement of facts which was filed by the assessee before the first appellate authority. That statement of facts also consisted of voluminous evidence which has been annexed to the paper-book in the present appeal running from pages 91 to 128 of the paper-book in Income-tax Appeal No. 404 of 2000. Under the above circumstances, we are of the view that the impugned order is required to be set aside. That the matter is required to be remitted to the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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