TMI Blog2003 (7) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT(A) erred in confirming the action of the AO in adding a sum of ₹ 3,53,44,078 as income from undisclosed sources and wrongfully and illegally held that the said sums were not sale proceeds of silver utensils sold during the relevant previous year and/or was not to be assessed under the head 'capital gains'. The reason given by the CIT(A) to come to these findings are no reasons at all and are based on surmises and conjectures and has been arrived at after ignoring relevant evidence and materials on record and by relying on erroneous facts and irrelevant materials and on extraneous consideration. (4) For that the CIT(A) erred in confirming the order of the AO in treating the loss on sale of silver utensils as relating to personal effects. (5) For that the appellant denies its liability to pay any interest under the provisions of the Act. 3. Broadly stated the facts of the case in brief are that the assessee made a disclosure under Voluntary Disclosure of Income Scheme, 1997 (VDIS) wherein he disclosed various undisclosed investments in diamond, gold and silver utensils. The assessee filed return on 25th Aug., 1998 declaring a total income of ₹ 1,30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee during the relevant assessment year and disallowance of loss of ₹ 92,69,972 suffered on sale of silver utensils on the ground that the same were personal effects. 4. Being aggrieved by the order of the AO the assessee carried the matter in appeal before the CIT(A) who after perusal of the record and considering the submissions of the assessee confirmed the order of the AO. 5. The learned distinguished counsel strongly contended that various assets including silver utensils were disclosed under VDIS, 1997. The silver disclosed were sold and the assessee suffered a loss of ₹ 92,69,972 on such sale. The learned distinguished counsel contended that the AO was wrong in treating the sale proceeds amounting to ₹ 3,53,44,078 as income from undisclosed sources. It was alleged that the statements of the persons on which the AO had relied were not furnished to the assessee and no opportunity was afforded to the assessee for cross-examination of those persons. The learned distinguished counsel brought to our notice that the statements made by the valuer, Shri R.K. Kothari, are contradictory and should not be relied upon. It was also highlighted that M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the jewellers at Delhi in their bank account belonged to Dalmias and as such the sale proceeds of silver utensils were nothing but unexplained cash credit in the hands of the assessee and was taxed as such was based on wrong footings. It was also categorically mentioned that the AO was wrong in holding that even on merit the silver utensils were personal effects and in view of s. 2(14) of the Act, no capital loss or gain could be claimed in respect of personal effects and as such the loss claimed was wrongly disallowed. 7. The learned distinguished counsel strongly contended that the whole approach of the AO is biased and vitiated. The AO acted in an arbitrary and illegal manner and in gross violation of natural justice and fair play. No reasonable, proper or adequate opportunity was given to the assessee to make his representation against the issue raised by the AO. The statements of the persons and/or reports on which reliance has been placed in the order of the assessment were neither supplied nor any opportunity was afforded to cross examine them. It was also contended that various allegations, purported findings and observations made in the order of the assessment are witho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and/or was not to be assessed under the head 'capital gains'. It was asserted by the learned counsel that the CIT(A) erred in confirming the order of the AO in treating the loss on sale of silver utensils as relating to personal effects. In support of his arguments the learned distinguished counsel relied on the decisions of the learned Tribunal, Calcutta Bench in ITA No. 1799/Cal/1982 M.K. Jajodia vs. ITO (1984) 20 TTJ (Cal) 167, Tribunal, Mumbai Bench (A) in ITA No. 6853 (Bom), Miss Veena Chokhani vs. ITO (2002) 74 TTJ (Mumbai) 410 : (2002) 82 ITR 52 (Mumbai), in the decision of Tribunal, Hyderabad Bench 'B' in ITA No. 212/Hyd/2002 (ITD Vol. 85/367). The learned counsel particularly highlighted the following decision of Hyderabad Bench in the case of Harish Kumar vs. Dy. CIT (2003) 80 TTJ (Hyd) 174 : (2003) 85 ITD 366 (Hyd). We have considered the submissions of both sides and perused the relevant record available with us and perused the paper books filed by both sides. We are of the considered opinion that the sum of ₹ 51,92,750 representing the sale of diamonds to Shukra Jewellers, Surat, can not be sustained for the reasons stated below. It is an admi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been explained, in course of his arguments and the above decision has been made on wrong facts in respect of wrong dates and has not been made at all in the check post. The said enquiries also revealed that at some of the check posts no entries of the truck were made passing through the check post. No incriminating evidence was found in course of the search conducted at the residence and office premises of the assessee. The assets disclosed under the VDIS, 1997 were also not found at the time of the said search. It was further stated that the assessee was not confronted with any evidence by the AO while holding that it is evident that the cash deposited by the jewellers at Delhi in their bank accounts belonged to Dalmias and in fact, there is no evidence to show that the cash deposited was not the sale proceeds of the silver utensils. The learned counsel strongly contended that if the allegations of the Department that the said silver utensils were not sold by the assessee is taken to be correct then the said silver utensils should have been found at the time of the search and the existence of the said assets has not been disputed by the Department and cannot be disputed by the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said consignment note was only a book transaction to help the assessee in their tax avoidance (c) No books or any other papers of J.K. Carriers were available. (d) Survey conducted at the premises of M.P. Roadways showed that no firm under the name of J.K. Carriers existed at the said address. The learned Departmental Representative further strongly contended that: 3. Silver utensils were never transported to Delhi is proved by the fact that the trucks did not pass through the Naubatpur check post, Varanasi, U.P. and Ghaziabad check post (UP) and the register of the said two check posts did not show the entries of the trucks passing through that check post which was essential under the U.P. Trade Tax, 1948 on the basis of the certificate issued by the authority of concerned check posts. The learned Departmental Representative further stated that the purchasers of the silver utensils being the jewellers at Delhi showed fictitious purchases and sale of silver utensils to accommodate the assessee inasmuch as: (a) All transactions were in cash. (b) Neo bank accounts were opened by the jewellers in New Delhi during the VDIS' 97 to accommodate the assessee. (c) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he test of preponderance of human probability as laid down in the case of CIT vs. Durga Prasad More and Sumati Dayal vs. CIT (1995) 125 CTR (SC) 124 : (1995) 214 ITR 801 (SC). The learned Departmental Representative further placed reliance on the decision of the Hon'ble Madras High Court in the case of Bombay Hardware Syndicate vs. CIT (1973) 92 ITR 160 (Mad), CIT vs. H.M.T. Ltd. (Karnataka) (1993) 199 ITR 235 (Kar), Homi Jehangir Ghesta vs. CIT (1961) 41 ITR 135 (SC), Addl. CIT vs. Jay Engineering Works Ltd. (1978) 113 ITR 389 (Del) and Vimal Chandra Golecha vs. ITO Ors. (1981) 25 CTR (Raj) 175 : (1982) 134 ITR 119 (Raj). The learned Departmental Representative highlighted that the evidence should be such that a reasonable inference can be drawn with regard to various points which formed the basis of computation of income. Different circumstantial or indirect evidence which together lead to some reasonable inference, may not by themselves individually constitute material on which some finding can be given, but together they constitute acceptable and good evidence. Different indirect or circumstantial evidence individually may not be sufficient to draw a conclusion, but these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned counsel drew our attention to question No. 5 and answer to the said question of Shri Ram Prakash Kothari brother of Shri R.K. Kothari in the statement recorded under s. 132(4) of the IT Act on 18th Jan., 2000 that is on the date of search itself. On being asked whether Shri Ram Prakash Kothari brother of Shri R.K. Kothari remembers the valuation done during the period of VDIS', 97 for S.S. Dalmia, N.P. Dalmia, Geeta Dalmia and others. Shri Ram Prakash Kothari categorically mentioned before the Revenue authorities that the valuation for the purpose of VDIS, 97 for the Dalmia family was done by them and he was also involved during the valuation period which was over many days. He has further replied that all the valuation reports and the bills raised will be found in his office and the receipts reflected in the exercise books and the computer. It was also stated that the valuation was done at the residence of the assessee and the valuation fee was received in cheque. The statement of Shri R.K. Kothari recorded on 18th Jan., 2000 will prove that he did see all the silver utensils and he has stated as under: But I was not carrying a weighing machine which could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the office of the South Eastern Roadways, Delhi and the statements of certain persons were recorded and no copy of the survey report and statements of such persons were given to the assessee. The statement of Shri Anil Kumar Sethi who was also working as accounts manager only from March, 1997 also does not deny but also states that he is not having any knowledge about the transportation of such silver utensils. The AO should have appreciated that Shri Anil Sethi was working in the accounts department and joined only in March, 1997. The statement or Shri Krishna Kumar Gupta states that no silver utensils were received or transported from Calcutta. Admittedly, as RTC was under lock-out, the goods were transported hiring trucks directly by RTC and the goods were delivered to consignee and as such the statement of Shri Gupta is also of no help. We have further noticed that search was conducted at the premises of RTC subsequently and the Department did not find any evidence or material so that the said goods were not transported by them. We have observed that there is ample evidence to show that RTC transported the silver utensils of the assessee to Delhi. In this connection, the repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that Shri Sharma could not have known that the assessee has disclosed tonnes of silver utensils under VDIS' 97 and it was not possible for Shri Sharma to explain in minute details the so called scheme alleged to have been concocted by the assessee under the Act. We have noticed the statement of Shri Sharma was once again recorded on 15th Feb., 2001 by the AO under s. 131 of the Act and in this statement Shri Sharma has confirmed that he has transported silver utensils for the assessee's family and that the earlier statement dt. 21st Jan., 2000 was wrong and written by the officer himself. We have noticed that the statement of Shri Sharma is also proved by the fact that immediately after 21st Jan., 2000 he wrote a letter to the Director of Income-tax (Investigation) dt. 22nd Jan., 2000 alleging the harassment and coercion exerted on him. We, therefore, agree with the learned distinguished counsel that the letter written by Shri Sharma and subsequent deposition dt. 15th Feb., 2001 totally demolishes the case tried to be made out by the AO. 14. As regards the enquiry made at check post in U.P., we have noticed that the AO has mentioned in the assessment order that on enquir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stating that it is the usual practice to sell silver and gold in cash and deposit the sale proceeds in the bank. All the purchasers have filed their sales-tax return in respect of the transactions as mentioned above and have also deposited the sales-tax with the authorities which also proved that the purchase of silver utensils were made from us. The said purchase of silver utensils has been accepted as well as in the assessment of assessee's purchasers. It was also contended that the goods transported to Delhi by trucks were weighed on weighing scale known as Dharam Kanta . Copies of purchase vouchers issued by the purchasers and receipts of 'Dharam Kanta' are at pp. 129 to 159 of the paper book. The above facts also support the contention of the assessee that the silver utensils were in fact transported to New Delhi and received by the purchasers. The claim of the assessee that the statements and depositions which are on record clearly established that the silver utensils were transported to Delhi and were sold. By no stretch of imagination it can be said that the said sale proceeds of silver utensils were unexplained. We have further noticed that the AO suppressed v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m that statement that Shri Trilok Agarwala did not state that the silver utensils had not been transported by RTC. On examination of the records, it is seen that the assessee filed copy of one delivery charges receipt of ₹ 10 with the AO before the completion of assessment but no cross-verification was made before assessment. As the assessee had filed copies of all the delivery charges in the paper book and as no verification was made earlier, cross verification was made from south-eastern roadways and they have since confirmed vide reply dt. 23rd Oct., 2001 the veracity of the money receipts and also delivery to the parties indicated. Xerox copies of the delivery abstracts have been sent by them. They have also mentioned that the delivery transactions were records at Ramnagar Branch. They have furthermore pointed out that three money receipts do not pertain to this assessee but to the other three assessee of the Dalmia Group. The result of this cross-verification goes in favour of the assessee's claim of transportation and delivery of goods. In the paper book the assessee has also filed the copies of weighing slips issued by Purana Dharmakanta Committee, Delhi, in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of some statements and enquiries which have been mentioned in the assessment order. Regarding the assessee's claim that there was no evidence to show that the cash deposited was not the sale proceeds of silver utensils purchased by the jewellers from the assessee, there is nothing on records to show that their sales have been disproved. As mentioned above the assessee has already filed the copy of assessment order of Shri Prakash Kabra, proprietor of M/s Shree Enterprises, one of the purchaser and there is no adverse finding by the AO concerned in this respect. Facts uncontrovertible and uncontroverted The assessee has claimed 7 facts to be uncontrovertible and uncontroverted. These facts and comments against them are given below: (a) The silver utensils were properly disclosed under VDIS' 97 and accepted by the IT Department. Accepted Facts (b) The silver utensils were handed over to Road Transport Corporation and J.K. carriers in Calcutta. Evidenced by consignment notes (c) Both the said Road Transport Corporation and J.K. Carriers are common carrier within the meaning the The Carriers Act, 1865 . No comments (d) The silver was del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly intertwined. The lower authorities have mentioned in their order that circumstances of the transactions are not genuine. But circumstances of the transactions conveys some limitation. It is not as broad as the analogous use in circumstantial evidence which includes evidence of all relevant facts. It is narrower than res gestae. Non-entries in the check post are not by themselves alone sufficient to charge any person with liability. Corroboration is required. What is necessary to be seen in this case is whether besides the non-entries in the check post, there is any evidence to prove that the transaction referred to by the assessee actually took place or not. Such corroboration will be but afforded by the evidences of the persons who made the statements, transported the goods, purchased the silver utensils, bank statements, etc. In the instant case, we have observed that the assessee has produced sufficient evidences to prove the genuineness of transaction of silver utensils, weighed thereof by a registered valuer and sale of the same to genuine parties and realisation of the sale proceeds by account payee bank drafts. What evidence will, in a particular case, be sufficient to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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