Smt. Nirmal Kumari V. Chauhan, Ahmedabad V. The Income tax Officer,Ward-5(4), Baroda

CO 246/AHD/2009

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8177 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-09-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Keywords: Unexplained investment; Business income; Opportunity of being heard; Principle of natural justice; Cost of acquisition; Valuation report
• Section: 143(3); 142(1); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ITA NOS. 1544 & 2595/AHD/2009 ASSESSMENT YEARS :2003-04 & 2004-05 & C.O. NOS.118 & 246/AHD/2009 ASSESSMENT YEARS :2003-04 & 2004-05 INCOME-TAX OFFICER, WARD- 5 (4), 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA SMT. NIRMAL KUMARI V. CHAUHAN L/H. OF LATE SHRI VIRENDRASING N. CHAUHAN KUSUM VILAS PALACE, CHHOTAUDEPUR, DIST: BARODA V/S . V/S. SMT. NIRMAL KUMARI V. CHAUHAN L/H. OF LATE SHRI VIRENDRASING N. CHAUHAN KUSUM VILAS PALACE, CHHOTAUDEPUR, DIST: BARODA. INCOME-TAX OFFICER, WARD- 5 (4), 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA PAN NO. A BLPC0733G (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI Y.P. VERMA, SR.D.R. /BY ASSESSEE SHRI S.N. SOPARKAR WITH SHRI ANIL R. SHAH, A.R. /DATE OF HEARING 23.11.2012 /DATE OF PRONOUNCEMENT 31.01.2013 O R D E R PER : T.R.MEENA, ACCOUNTANT MEMBER THESE ARE TWO APPEALS AT THE BEHEST OF THE REVENUE AND TWO C.OS. OF THE ASSESSEE WHICH HAVE EMANATED FROM THE ORDERS OF CIT(A)-V, BARODA, DATED 24.02.2009 FOR ASSESSMENT YEAR 2003-04 & 18.0 6.2009 FOR ASSESSMENT ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 2 YEAR 2004-05. THE REVENUES APPEALS AND ASSESSEES C.OS. WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C OMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE EFFECTIVE GROUNDS OF REVENUES APPEAL AND AS SESSEES C.O. FOR A.Y. 2003-04 ARE AS UNDER: ITA NO. 1544/AHD/2009 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN ALLOWING BUSINESS LOSS TO BE SET OFF TO TH E EXTENT OF RS. 2,14,748/- DESPITE THE FACT THE BUSINESS OF RUNNING THE CINEMA HALL IS CLOSED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN DELETING ADDITION OF RS.1,64,200/- BEING U NACCOUNTED DEPOSITS DESPITE THE ASSESSEES FAILURE TO PROVE THE CREDIT WORTHINESS OF THE SAID DEPOSITORS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN ALLOWING THE CAPITAL LOSS OF RS. 72,08,630 /- ON SALE OF JEWELER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN DELETING PROTECTIVE OF RS. 35,76,000/- BEI NG UNACCOUNTED INVESTMENT IN JEWELER AS THE SAME WAS NOT REFLECTED IN THE ASSESSEES W.T. RETURNS. C.O. NO. 118/AHD/2009 1. THE LEARNED C.I.T.(APPEALS) CONSIDERING THE FAC TS OF THE CASE AND THE PROVISIONS OF LAW HAS RIGHTLY DELETED THE FOLLOWING ADDITIONS MADE BY THE ASSESSING OFFICER. (A) ALLOWING BUSINESS LOSS OF RS.2,14,748/- (B) DELETING ADDITION OF RS.1,64,200/- UNACCOUNTED DEPOSIT. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 3 (C) ALLOWING CAPITAL LOSS OF RS.72,08,630/- ON SALE OF JEWELLERY. (D) DELETING PROTECTIVE ADDITION OF RS.35,76,000/- BEING UNACCOUNTED INVESTMENT IN JEWELLERY. YOUR RESPONDENT RESPECTFULLY SUBMITS THAT THE ORDER OF THE LEARNED CIT(A) PASSED CONSIDERING ALL FACTS OF THE CASES IS REQUIRED TO BE UPHELD AND THAT APPEAL FILED BY THE DEPARTMENT BE DISMISSED AS INFRUCTUOUS. 2. WITHOUT PREJUDICE TO ABOVE YOUR RESPONDENT SUBMI TS THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING DIS ALLOWANCE OF INTEREST EXPENSE OF RS.1,67,673/-. YOUR RESPONDENT SUBMITS THAT ON FACTS OF THE CASE A ND AS PER THE PROVISIONS OF LAW INTEREST CLAIMED IS BU SINESS EXPENDITURE AND LOANS TAKEN IS THE PURPOSE OF BUSIN ESS. YOUR RESPONDENT FURTHER SUBMITS THAT THE A.O. HAVING FAILED TO PROVE THE NEXUS BETWEEN INTEREST F REE FUNDS AVAILABLE AND INTEREST FREE ADVANCE GIVEN WITHOUT I NTEREST/LOW RATE OF INTEREST, DISALLOWANCE OF RS.1,67,673/- BEI NG INTEREST EXPENSES REQUIRES TO BE ALLOWED AND DISALLOWANCE IS REQUIRED TO BE DELETED. 3. GROUND NO.1 OF REVENUES APPEAL AND GROUND NO.1( A) OF ASSESSEES C.O. IS AGAINST ALLOWING BUSINESS LOSS TO BE SET OF F TO THE EXTENT OF RS.2,14,748/- ON ACCOUNT OF CLOSED CINEMA HALL. ON VERIFICATION OF THE ASSESSMENT ORDER IN SUCH ADDITION HAD BEEN MADE BY THE A.O. LD. SR. D.R. HAD NOT BEEN BROUGHT ON RECORD THAT THIS GROUND OF APPEAL EXISTS OR NOT. FURTHER, BEFORE LD. CIT(A), THE LD. A.R. OF THE APP ELLANT HAD NOT PRESSED AND ACCORDINGLY, HE DISMISSED THE APPEAL OF THE APPELLA NT. THUS, THIS GROUND OF REVENUE AND ASSESSEE IS DISMISSED. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 4 4. GROUND NO.2 OF REVENUES APPEAL AND GROUND NO. 1 (B) OF ASSESSEES C.O.IS AGAINST DELETING THE ADDITION OF RS. 1,64,20 0/- ON ACCOUNT OF DEPOSIT. THE A.O. OBSERVED THAT ON PERUSAL OF THE BANK ACCOU NT OF THE ASSESSEE, VARIOUS CASH DEPOSITS WERE FOUND, WHICH ARE AS UNDE R: NAME AMOUNT DATE MATRIYA VIRENDRASINH P 19,000 18.04.2002 MATRIYA RANJITSINH G 18,000 18.04.2002 VALAND JAGDISHCHANDRA SAKARLAL 16,400 27.04.200 2 JADEJA SUKHDEV GOPALSINH 18,900 25.04.2002 RAJPUT GIRDHARSINH RAGHUVIRSINH 16,800 25.04.20 02 SAUDAGAR MAJIDBHAI RAHIMBHAI 19,200 27.04.2002 CHUDASAMA PRATAPSING P 18,000 27.04.2002 PUJARI BHARATBHAI TIMBABHAI 18,700 27.04.2002 DAVE CHETANBHAI SHANTILAL 19,200 16.04.2002 TOTAL DEPOSITS 1,64,200/- ========= THE A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD THE APPELLANT AND TO FILE THE CONFIRMATION AND EXPLAIN THE SOURCE OF CASH DEPOSITED IN ABOVE BANK ACCOUNT. THE APPELLANT HAD FURNISHED THE CONF IRMATION BEFORE THE A.O. BUT, THE GENUINENESS OF THE TRANSACTION AND CREDITW ORTHINESS OF THE DEPOSITOR HAD NOT BEEN PROVED. THE PAYMENTS WERE RECEIVED IN CASH IN THE MONTH OF APRIL, 2002 AND ALSO SHOWN RE-PAYMENT IN CASH. THE REFORE, THE A.O. MADE THE ADDITION OF RS.1,64,200/- AS UNEXPLAINED INCOME OF THE ASSESSEE. 5. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE CIT(A), WHO HAD DELETED THE ADDITION IN PARAGRAPH NO.9.2 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER: ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 5 9.2 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WE LL AS THE SUBMISSION MADE AND ARGUMENTS PUT FOURTH BY THE AR OF THE APPELLANT FOR THIS ISSUE. THE APPELLANT HAS SUBMIT TED CONFIRMATIONS FROM THE RESPECTIVE DEPOSITORS. FURTHER, ADDRESSES OF THE DEPOSITORS AS WELL AS DETAILS OF SOURCES HAVE ALSO BEEN PROVID ED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN MY OPINION, T HE ONUS OF THE APPELLANT HAS BEEN DISCHARGED IN RESPECT OF THE DEP OSITS TAKEN. THE A.O. HAS NEITHER MADE ANY INQUIRIES WITH THE DEPOSI TORS NOR ISSUED ANY SHOW CAUSE TO THE APPELLANT CLEARLY SHOWS THAT THE DETAILS SUBMITTED BY THE APPELLANT WERE TO THE SATISFACTION OF THE A.O. WITHOUT PROPERLY VERIFYING THE DETAILS SUBMITTED BY THE APPELLANT, THE ADDITION MADE BY THE A.O. IS NOT AT ALL JUSTIFIED. I THEREFORE, HEREBY DELETE THE ADDITION OF RS.1,64,200/- IN RESPECT OF DEPOSITS/LOANS TAKEN BY THE APPELLANT. 6. NOW THE MATTER IS BEFORE US. LD. SR. D.R. CONTE NDED THAT THE APPELLANT DID NOT PROVE THE GENUINENESS OF THE TRANSACTION AN D CREDITWORTHINESS OF THE DEPOSITOR. THE PAYMENTS WERE RECEIVED IN CASH. LD . CIT(A) WAS WRONG BY SAYING THAT THE SOURCE OF THE INCOME OF THE DEPOSIT OR HAD PROVIDED DURING THE COURSE OF ASSESSMENT PROCEEDING, BUT, CIT(A) HIMSEL F HAS NOT CLARIFIED WHAT WAS THE SOURCE OF DEPOSITOR, EVEN THEN, HE HAS DELE TED THE ADDITION. AT THE OUTSET, LD. COUNSEL FOR THE APPELLANT FILED THE PAP ER BOOK WHICH INCLUDES REPLY SUBMITTED TO THE CIT(A) AT THE TIME OF APPEAL PROCE EDING AND CLAIMED THAT CONFIRMATION HAS BEEN FILED WITH THE SOURCE OF INCO ME BEFORE THE A.O. AND CIT(A). THEREFORE, CIT (A) WAS RIGHT IN DELETING T HE ADDITION. 7. WE HAVE PERUSED THE ORDERS OF THE AUTHORITIES BE LOW, HEARD BOTH THE SIDES AND GONE THROUGH THE PAPER BOOK. THE APPELLA NT FILED REPLY BEFORE THE A.O. VIDE LETTER DATED 19.01.2006, WHICH IS REPRODU CED AS UNDER: ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 6 REGARDING VARIOUS CASH CREDITOR/DEPOSITS ACCEPTED BY THE ASSESSEE DURING THE FINANCIAL YEAR 2002-03, COPY OF ACCOUNT OF THE RESPECTIVE DEPOSITORS ALONG WITH THE CONFIRMATION A RE ENCLOSED. THE APPELLANT FILED WRITTEN REPLY BEFORE THE CIT (A )-V, BARODA, AT PAGE NO.1 OF THE PAPER BOOK WITHOUT DATE, WHEREIN IT HAS BEEN CL AIMED BY THE APPELLANT THAT HE HAD FILED THE CONFIRMATION FROM ALL THESE DEPOSI TORS DULY STATING THEIR SOURCE OF INCOME, DURING THE COURSE OF ASSESSMENT PROCEEDI NG BEFORE THE A.O. THE LD. A.O. HAD NOT ASKED ANYTHING FURTHER IN THIS REG ARD AND THEREFORE, THE ASSESSEE FAIRLY PRESUMED THAT THE A.O. DID NOT WANT ANY FURTHER DETAIL AND ON SATISFIED ABOUT THE DEPOSITS RECEIVED. HE DID NOT RESORT TO ANY FURTHER VERIFICATION ON HIS OWN, HOWEVER, MADE ADDITION OF ALL THE DEPOSITS TREATING SAME AS UNEXPLAINED. HE FURTHER ARGUED BEFORE THE CIT(A) THAT CONFIRMATION OF THE DEPOSITORS ITSELF SHOWED THE CREDITWORTHINES S OF THE DEPOSITORS IN THE RANGE OF RS.15,000/- TO RS. 20,000/-. HE ALSO RELI ED UPON IN CASE OF CIT VS. ORRISA CORPORATION PRIVATE LTD. 159 ITR 78 (SC) WHICH IS NOT APPLICABLE AS IN REFERRED DECISION, THE DEPOSITORS WERE ASSESSED TO TAX. HOWEVER, IN CASE OF ASSESSEE, THE DEPOSITORS WERE NOT ASSESSED TO TAX. NO FURTHER EVIDENCES WERE PLACED BEFORE US TO EXAMINE THE FACT WHETHER C ASH CREDITORS WERE ASSESSED TO TAX OR NOT. THUS, WE HAVE CONSIDERED V IEW THAT THIS ISSUE IS REQUIRED TO BE SET ASIDE TO THE CIT(A) TO GIVE SPEC IFIC FINDING ON THIS ADDITION AS NO SOURCE OF DEPOSITOR HAS BEEN MENTIONED BY HIM IN HIS ORDER. THUS, THIS ISSUE IS SET ASIDE TO THE CIT(A). 8. GROUND NOS. 3 & 4 OF REVENUES APPEAL AND GROUND NO.1(C) & 1(D) OF ASSESSEES C.O. ARE INTERCONNECTED, WHICH ARE AGAIN ST THE ALLOWING THE CAPITAL ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 7 LOSS OF RS. 72,08,630/- ON SALE OF JEWELLERY AND DE LETING THE PROTECTIVE ADDITION OF RS.35,76,000/- BEING UNACCOUNTED INVESTMENT IN J EWELLERY. THE APPELLANT FILED RETURN FOR A.Y. 03-04 ON 21.01.2004 DECLARING TOTAL INCOME AT RS.4,79,550/-. THIS CASE WAS SCRUTINIZED U/S. 143( 3) OF THE IT ACT AND A DETAILED QUESTIONNAIRE DATED 11.07.2005 WAS ISSUED BY THE A.O. AS THE ASSESSEE HAD EXPIRED, SMT. NIRMAL KUMARI V. CHAUHAN , WIFE AND LEGAL HEIR OF THE ASSESSEE HAS FURNISHED THE DETAILS AND DOCUMENT S IN CONNECTION WITH ASSESSMENT PROCEEDINGS IN THE CASE OF ASSESSEE. DU RING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DERIVED INCOME FROM DIFFERENT SOURCES LIKE INCOME FROM HOUSE PROPERTY, BUSINESS INCOME, CAPITA L GAIN AND INCOME FROM OTHER SOURCES. DURING THE YEAR UNDER CONSIDERATION , THE APPELLANT HAD SHOWN LONG TERM CAPITAL GAIN ON SALE OF LAND, SHARES, AND JEWELLERY AS UNDER: ASSETS SALE PRICE ACQUISITION COST INDEX COST LONG TERM CAPITAL GAIN LAND 6,66,479/- 1,87,650/- 8,38,796/- (-) 1,72,317 /- SHARES 71,90,150/- 39,457/- 1,76,373/- (+) 70,13,77 7 JEWELLERY 35,76,000/- 24,12,669/- 1,07,84,630/- (-) 72,08,630/- THE LD. A.O. ISSUED NOTICE U/S. 142(1) ON 11.07.200 5 TO FURNISH COMPLETE DETAILS AND DOCUMENTARY EVIDENCE I.E. BILLS, DETAIL S OF PAYMENTS ETC. IN SUPPORT OF PURCHASE AND SALE OF JEWELLERY. THE APPELLANT W AS ASKED TO FURNISH COMPLETE NAME AND ADDRESS OF THE PARTY AND COPY OF HIS ACCOUNT IN THE BOOKS OF PURCHASER VIDE THE SAME LETTER. IN RESPONSE TO QUERY LETTER ISSUED BY THE A.O., SHRI R.C. DEOPURA, C.A. & A.R. OF THE ASSESSE E ATTENDED AND REQUESTED TO ADJOURN THE PROCEEDING FOR 12.08.2005, BUT, ON T HE SAID DATE, NO EVIDENCE / INFORMATION FILED BY THE LD. COUNSEL BEFORE THE A. O. THE APPELLANT VIDE LETTER DATED 12.08.2005, REQUESTED TO ADJOURN THE CASE FOR 15 TO 20 DAYS TO RESPOND ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 8 THE QUERY LETTER DATED 11.07.2005. ACCORDINGLY, TH E CASE WAS RE-FIXED FOR 26.08.2005. HOWEVER, ON THE DATE OF HEARING I.E. 2 6.08.2005, NEITHER LEGAL HEIR OF THE ASSESSEE, NOR A.R. ATTENDED AND NOR FU RNISHED THE DETAILS OF DOCUMENTS IN RESPECT OF LONG TERM CAPITAL GAIN / LO SS. LD. A.O. AGAIN ISSUED NOTICE U/S. 142(1) ON 10.10.2005 AND CASE WAS RE-FI XED FOR 21.10.2005 AND THE APPELLANT WAS ASKED TO FURNISH THE REQUIRED INF ORMATION ON THE SAID DATE. HOWEVER, THERE WAS NO COMPLIANCE TO THE TERMS OF TH AT STATUTORY NOTICE AS WELL. FOR THE SAKE OF NATURAL JUSTICE, VIDE NOTICE U/S. 142(1) DATED 08.11.2005, THE ASSESSEE WAS GIVEN FURTHER OPPORTUNITY FOR COMP LIANCE. THE FATE OF THAT NOTICE WAS ALSO REMAINED THE SAME. THE LEGAL REPRE SENTATIVE OF THE ASSESSEE NEITHER ATTENDED NOR FURNISHED ANY DETAILS AND DOCU MENTS. ON 22.11.2005, SHRI R.C. DEOPURA, LEARNED C.A. & A.R. ATTENDED AND VIDE LETTER DATED 22.11.2005 SIGNED BY THE FOUR LEGAL HEIRS OF THE AS SESSEE INCLUDING SMT. NIRMAL KUMARI V. CHAUHAN, WIFE OF THE ASSESSEE HAD REQUESTED FOR ADJOURNMENT TO FURNISH THE DETAILS AND DOCUMENTS CA LLED FOR. HEARING WAS THEREFORE, AGAIN RE-FIXED ON 29.11.2005. VIDE ORDE R SHEET ENTRY DATED 22.11.2005, THE A.R. ATTENDED AND FURNISHED THE ZER OX COPY OF BILLS AND CASH MEMOS AND COPY OF ACCOUNT PURPORTEDLY SINGED AND IS SUED BY ONE, M/S. BHAVIN JEWELLERS, 439, SAHAJANAND MARKET, PANKAR NA KA, AHMADABAD. THE ASSESSEE HOWEVER FAILED TO PRODUCE BOOKS OF ACCOUNT . COPY OF THE SAID ACCOUNT AS SUBMITTED BY THE ASSESSEE IS REPRODUCED AS UNDER: BHAVIN JEWELLERS 439, SAHAJANAND MARKET, PANKOR NAKA, AHAMADABAD. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 9 THE ACCOUNT OF SHRI MAHARAJA VIRENDRASHING N. CHAUH AN. CHHOTAUDEPUR FOR THE PERIOD 01 / 04 / 2002 TO 3 1 / 03 / 2003 AMOUNT PARTICULARS (CR.) AMOUNT PARTICULARS (DR) 1896720.00 BILL NO: 36 DT . 05/05/02 922240.00 BILL NO: 46 DT. 09/05/02 1082420.00 BILL NO: 37 DT. 05/05/02 868590.00 BILL NO: 47 DT. 10/05/02 596860.00 BILL NO: 38 DT. 06/05/02 815494.00 BILL NO: 48 DT. 10/05/02 326586.00 BILL NO: 49 DT. 11/05/02 215000.00 AMT. GIVIN BY CASH DT. 14/06/2002 215000.00 AMT. GIVIN BY CASH DT. 20/06/2002 213090.00 AMT. GIVIN BY CASH DT. 01/07/2002 3576000.00 TOTAL 3576000.00 TOTAL THE A.O. FURTHER OBSERVED THAT THE APPELLANT CLAIME D TO HAVE SOLD JEWELLERY ON 05.05.2002 (RS. 18,96,720/- AND RS. 10,82,420/-) AN D ON 06.05.2002 (RS.5,96,860/-) VIDE BILLS NUMBER 36, 37 & 38 RESPE CTIVELY AND PURCHASED JEWELLERY OF RS.9,22,240/- ON 09.05.2002, RS.8,68,5 90/- AND RS.8,15,494/- ON 10.05.2002 AND RS. 3,26,586/- ON 11.05.2002 VIDE BI LLS NUMBER 46,47, 48 & 49 AND CLAIMED TO HAVE RECEIVED THE DIFFERENCE PROC EEDS ON 14.06.2002 (RS.2,15,000/-), 20.06.2002 (RS.2,15,000/-) AND 01. 07.2002 (RS. 2,13,090/-). HE FURTHER OBSERVED THAT THE APPELLANT IS RESIDING IN A VILLAGE OF CHHOTAUDEPUR HAD GONE TO AHMADABAD FOR SALE OF LARGE QUANTITY OF JEWELLERY AND NOT ONCE BUT TWICE AND AGAIN AFTER TWO DAYS WENT FOR PURCHAS E OF JEWELLERY FROM THE SAME JEWELER AND NOT ONCE BUT FREQUENTLY ON 09.05.2 002, 10.05.2002 AND 11.05.2002 AND AGAIN WENT TO COLLECT THE CASH ON DI FFERENT DATES AS MENTIONED ABOVE. FURTHER, HE FOUND ALL THE PURCHASE BILLS WE RE FOUND TO BE IN CHRONOLOGICAL ORDER I.E. BILLS NOS. 36 TO 38. ALSO SALE BILLS WERE FOUND IN CHRONOLOGICAL ORDER STARTING FROM 46 TO 49. HE HAD OPINIONED THAT NOBODY ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 10 WOULD BELIEVE THAT IF THE PERSONS REQUIRE LIQUIDITY IN THE FORM OF CASH/BANK, THEN WHY THE APPELLANT HAD PURCHASED THE JEWELLERY JUST AFTER TWO DAYS AND WITHOUT RECEIVING THE SALE PROCEEDS. FURTHER, EVEN BALANCE PROCEEDS WERE CLAIMED TO HAVE BEEN RECEIVED IN CASH ON DIFFERENT DATES. THEREFORE, IN ORDER TO ASCERTAIN THE GENUINENESS OF THE SAID TRANSACTIO NS, A NOTICE U/S. 133(6) OF THE ACT WAS SENT TO THE SAID PARTY ON 05.12.2005 AT THE ADDRESS GIVEN BY THE ASSESSEE. THE CONTENTS OF THE SAID NOTICE DATED 05 .12.2005 ISSUED U/S. 133(6) OF THE ACT ARE REPRODUCED HEREUNDER: 'ASSESSMENT PROCEEDINGS U/S 143(3) OF INCOME TAX AC T, 1961 FOR ASST YEAR 2003-04 IS UNDER PROGRESS IN THE CASE OF ABOVE NAMED ASSESSEE (LATE SHRL VIRENDRASINGH N. CHOUHAN, CH HOTA-UDEPUR, DIST; BARODA FOR A.Y 2003-04). IT HAS BEEN STAT ED THAT HE HAD PURCHASED AND SOLD SOME GOLD AND DIAMOND ORNAMENTS TO YOU IN THE F.Y. 2002-03. IN THIS CONNECTION YOU ARE REQUESTED TO FURNISH THE FOLLOWING DETAILS AND DOCUMENTS BEFORE THE UNDERSIG NED. (I) PLEASE STATE AS TO WHETHER ANY SUCH TRANSACT IONS OF PURCHASE AND SALES OF GOLD AND DIAMOND ORNAMENTS WERE MADE WITH THE ABOVE NAMED ASSESSES IN THE F.Y. 2002-03. IF Y ES, GIVE COMPLETE DETAILS OF SUCH TRANSACTIONS. ALSO FURNIS H CERTIFIED COPY OF BILLS RAISED BY YOU AND ACCOUNT OF THE ABOV E NAMED PARTY AS APPEARED IN YOUR BOOKS FOR THE PERIOD FROM 01.04.2002 TO 31.03.2003 AND ALSO IN SUBSEQUENT YEARS. (II) GIVE DETAILS OF PAYMENTS RECEIVED AND PAID BY YOU TO/FROM THE ABOVE NAMED PARTY. ALSO FURNISH COMPLETE DETAILS O F DATE AND MODE OF PAYMENTS/RECEIPTS. PRODUCE BANK ACCOUNT AS WELL AS CASH BOOK, STOCK REGISTER, BILL-BOOK, PURCHASE & SA LES REGISTER FOR THE F.Y. 2002-03. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 11 (II) FURNISH YOUR PAN AND DETAILS OF WARD/CIRCL E WHERE YOU ARE ASSESSED TO TAX.' HE FURTHER OBSERVED THAT : 4.5 THE SAID NOTICE DATED 05/12/2005 ISSUED U/S. 13 3(6) OF THE ACT TO M/S. BHAVIN JEWELLERS OF AHMADABAD WAS RETURNED BACK BY THE POSTAL AUTHORITY WITH THE REMARKS NOT KNOWN . ON THE COVER OF THE NOTICE THE CONCERNED POST-MAN HAS REMARKED THAT THE RE IS NO SUCH PARTY AT THE GIVEN ADDRESS. 4.6 MEANWHILE, PAST CASE RECORDS OF THE ASSESSEE WE RE ALSO VERIFIED BY THE A.O. ON PERUSAL OF W.T. RECORDS, I T WAS NOTICED THAT THE ASSESSEE HAS FURNISHED HIS WEALTH-TAX RETURNS U P TO ASSESSMENT YEAR 1990-91. THEREAFTER THE ASSESSEE HAS NOT FURN ISHED ANY WEALTH-TAX RETURN. IT MEANS THAT FOR THE LAST SIX ASSESSMENT YEARS AND EVEN IN SUBSEQUENT ASSESSMENT YEARS THE ASSESSE E HAS NOT FURNISHED HIS WEALTH-TAX RETURNS, WHICH CLEARLY IND ICATES THAT ACCORDING TO THE ASSESSEE THERE WAS NO TAXABLE WEAL TH I.E. WEALTH EXCEEDING RS.15 LACS. IT WAS FURTHER NOTICED THAT AS PER WEALTH-TAX RETURNS OF EARLIER YEARS I.E. ASSESSMENT YEAR 1981- 82 TO 1990-91, THE ASSESSEE HAD NOT SHOWN ANY JEWELLERY IN HIS WEALTH- TAX RETURNS. THE FACTS CLEARLY ESTABLISH THAT THE ASSESSEE HAD NO JE WELLERY AS PER HIS WEALTH-TAX RETURNS. THESE FACTS WAS BROUGHT TO THE NOTICE OF THE ASSESSEE AND VIDE NOTICE U/S. 142(1) OF THE ACT DAT ED 05.12.2005 THE LEGAL HEIR OF THE ASSESSEE WAS ASKED TO EXPLAIN AND SHOW CAUSE AS TO WHY JEWELLERY CLAIMED TO HAVE BEEN SOLD SHOUL D NOT BE TREATED AS ASSESSEES UNDISCLOSED INVESTMENT FOR THE YEAR U NDER CONSIDERATION AND ALSO CAPITAL GAIN ON THE SAME SHO ULD NOT BE WORKED OUT ACCORDINGLY. HEARING IN THE MATTER WAS FIXED ON 14.12.2005. HOWEVER, ON THE DATE OF HEARING NEITHE R THE LEGAL HEIR ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 12 OF THE ASSESSEE NOR THE A.R ATTENDED NOR FURNISHED THE DETAILS AND DOCUMENTS OR ANY EXPLANATION IN THE MATTER. 4.7 A NOTICE U/S. 133(6) OF THE ACT DATED 14.12.20 05 WAS AGAIN ISSUED TO M/S. BHAVIN JEWELLERS OF AHMEDABAD. HOWE VER, THE SAID NOTICE WAS ALSO RETURNED BACK BY THE POSTAL AUTHORI TY . ON 16.12.2005, SHRI R.C.DEOPURA, C.A. AND SHRI RAMESH M. SONI, ACCOUNTANT OF L.H. OF THE ASSESSEE ATTENDED AND FUR NISHED WRITTEN SUBMISSION DATED 14.12.2005 . VIDE THE SAID SUBMISSION DATED 14.12.2005, THE LEGAL HEIR OF THE ASSESSEE CLAIMED THAT THE SAID JEWELLERY WAS ANCESTRAL AND ACQUIRED BY THE ASSESSE E AS A RULER OF CHHOTAUDEPUR IN THE YEAR 1947. AS PER THE PROVISIO NS OF I.T. ACT MARKET VALUE AS ON 01.04.1981 IS REQUIRED TO BE TAK EN INTO CONSIDERATION FOR CALCULATING INDEX COST AND THAT I S WHY THE YEAR IS MENTIONED AS 1981-82. TO SUBSTANTIATE, THE LEGAL H EIR OF THE ASSESSEE HAS FURNISHED AN AFFIDAVIT DATED 15.12.200 5 STATING THAT THE SAID JEWELLERY AND OTHER ASSETS WERE ACQUIRED I N 1947 BY THE ASSESSEE AS A LEGAL HEIR OF LATE MAHARAJA SHRI NATW ARSINHJI CHAUHAN. IN THE SUBMISSION DATED 14.12.2005, THE A SSESSEE FURTHER CLAIMED THAT BEING THE ANCESTRAL JEWELLERY OF THE A SSESSEE, THE SAME WAS NOT REQUIRED TO OFFER FOR TAX AND THEREFORE AND NOT OFFERED FOR TAX. 4.8 VIDE ORDER SHEET ENTRY DATED 16.12.2005 OF T HE A.O., THE FOLLOWING FACTS WERE BROUGHT TO THE NOTICE OF THE A.R AND ACCOUNTANT AND THEY WERE ASKED TO EXPLAIN/CLARIFY THE MATTER. (I) THEY WERE ASKED TO CLARIFY AND EXPLAIN THE SALE OF JEWELLERY WHEN THERE WAS NO SUCH JEWELLERY AS PER THE ASSESSEE'S WEALTH-TAX RETURNS FURNISHED UP-TO A.Y. 1990-91. THEY WERE FURTHER INFORMED THAT THE ASSESSE HAS NOT FURNISHED HIS WEALTH-TAX RETURNS FOR LAST SIX YEARS AND EVEN IN S UBSEQUENT YEARS TO THIS ASSESSMENT YEAR. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 13 (II) THEY WERE INFORMED THAT THE NOTICE U/S. 133(6) OF THE ACT SENT TO M/S. BHAVIN JEWELLERS OF AHMEDABAD TO WHOM THE ASSESSEE CLAIMED TO HAVE SOLD JEWELLERY IS RETURNED BACK BY THE POSTAL AUTHORITY WITH THE REMARKS 'NOT KNOWN' . THEY WERE ASKED TO CLARIFY AND EXPLAIN THE MATTER. THEY WERE FURTHER ASKED TO PROVIDE THIS OFFICE THE EXACT POST AL ADDRESS OF THE SAID CONCERN M/S. BHAVIN JEWELLERS OF AHMEDA BAD . (III) THEY WERE ASKED TO PRODUCE BOOKS OF ACCOUN T, BILLS & VOUCHERS, CASH BOOK AND BANK STATEMENTS AND PASS BO OK ETC . FOR VERIFICATION. THE RELEVANT PART OF THE ORDER SHEET ENTRY OF THE L D. A.O. DATED 16.12.2005 IS REPRODUCED HEREUNDER: 'SHRI R.C.DEOPURA, C.A. AND SHRI RAMESH M.SONI, ACCOUNTANT OF THE L.H. OF THE ASSESSEE ATTEN DED AND FURNISH WRITTEN SUBMISSION DATED 14.12.2005. THE SAME IS PLACED ON RECORDS. THE CASE IS DISCUSSED. THEY ARE ASKED TO CLARIFY THE SALE OF JEWELLERY AS THE SAME WAS NO T REFLECTED IN THE RETURN OF WEALTH FURNISHED FROM 1981-82 ONWARDS AND IT WAS FURTHER POINTED OUT THAT NO WEALTH TAX RETURN W AS FILED BY THE ASSESSES DURING LAST SIX ASSESSMENT YEARS AND A LSO IN SUCCEEDING ASSESSMENT YEARS. THEY ARE ALSO SHOWN T HE LETTER SENT TO BHAVIN JEWELLERS OF AHMADABAD, WHICH WAS RETURNED BACK BY THE POSTAL AUTHORITY UNDER REMARKS NOT KNO WN . THEY ARE ASKED TO CLARIFY THIS, FURNISH EXACT ADDRE SS OF JEWELLERY PURCHASER. PRODUCE ALL BOOKS OF ACCOUNT AND BILLS/VOUCHERS, BANK STATEMENTS, PASS BOOK, CASH BO OK ETC. FOR VERIFICATION. HEARING WAS FIXED ON 26.12.2005 AT 11.00 A.M. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 14 4.9 ON THE DATE OF HEARING BEFORE THE A.O. SHRI R.C. DEOPURA, C.A & A.R. AND SHRI RAMESH SONI, ACCOUNTANT ATTENDED AN D FURNISHED LETTER DATED 26.12.2005. VIDE THE SAID LETTER, THE LEGAL HEIR OF THE ASSESSEE, SMT. NIRMALKUMARI V. CHAUHAN CLAIMED THAT THEY WERE NOT HAVING OLD WEALTH-TAX CASE RECORDS OF THE ASSAS SEE. SHE THEREFORE, REQUESTED TO PROVIDE COPY OF WEALTH-TAX RETURNS OF THE ASSESSEE FILED IN THE CAPACITY OF INDIVIDUAL AS WEL L AS HUF STATUS SO AS TO RECONCILE THE ASSETS DECLARED AND ASSETS SOLD . VIDE THE SAID SUBMISSION IT WAS CLAIMED THAT THE ADDRESS OF M/S. BHAVIN JEWELLERS : HAS BEEN CHANGED AND FURNISHED PRESENT ADDRESS AS UNDER: M/S. BHAVIN JEWELLERS 900, SAHAJANAND MARKET , 4' H FLOOR, PANKAR NAKA, AHMEDABAD. THE CONTENTS OF THE LETTER DATED 26.12.2005 DULLY S IGNED BY THE LEGAL HEIR OF THE ASSESSEE AND SUBMITTED BY THE A.R ARE R EPRODUCED UNDER: 'WE REFERE TO THE HEARING DOTED 16.12.2005 AND THE OBSERVATIONS MADE BY YOU AND WOULD LIKE TO BEG TO SUBMIT AS UNDE R: REGARDING THE ASSETS DECLARED IN LAST W.T. RETURNS WE HAVE TO INFORM YOU THAT WE ARE UNABLE TO TRACE OUT THE W.T. RECORDS OF THE ASSESSEE AND THEREFORE HEREBY REQUEST YOU TO KINDLY ARRANGE TO PROVIDE US COPIES OF LAST W.T. RETURNS FILED BY THE ASSESSEE IN HIS INDIVIDUAL AS WELL AS HUF STATUS. ON RECEIPT OF THE SAME WE SHALL RECONCILE THE ASSETS AND GET BACK TO YOU REGARDING EXPLANATIONS FOR HOLDING JEWELLERY AND OTHER ASSETS. REGARDING THE POST SENT BY YOU TO THE JEWELER TO WH OM THE JEWELLERY WAS SOLD BY THE ASSESSEE DURING THE F.Y. 2002-03 (P REVIOUS YEAR ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 15 RELEVANT TO ASST. YEAR UNDER REFERENCE) AND RECEIVE D BACK FROM THE POSTAL AUTHORITY WITH THE REMARK NOT KNOWN WE HAV E TO CLARIFY THAT UPON INQUIRY THIS IS GATHERED THAT THERE IS A CHANC E OF ADDRESS OF THE JEWELER. THE PRESENT ADDRESS OF THE JEWELER IS AS UNDER: M/S. BHAVIN JEWELLERS 900, SAHAJANAND MARKET , 4' H FLOOR, PANKAR NAKA, AHMEDABAD. WE REQUEST YOU TO KINDLY COMMUNICATE AT THE ABOVE A DDRESS. WE HOPE YOU WILL FIND THE ABOVE IN ORDER AND BE KIN D ENOUGH TO PROVIDE US THE W.T. RECORDS FO THE ASSESSEE AS REQU ESTED ABOVE AT AN EARLY DATE. 4.10 FOR VERIFICATION OF THE GENUINENESS OF THE SAI D TRANSACTION, THE INSPECTOR OF THIS UNIT, SHRI J. S. PATEL WAS DEPUTE D TO SERVE THE NOTICE U/S.133 (6) OF THE ACT DATED 27.12.2005 IN T HE CASE OF M/S. BHAVIN JEWELLERS ISSUED AT THE NEW/PRESENT ADDRESS GIVEN BY THE ASSESSEE IN LAST SUBMISSION DATED 26/12/2005. THE INSPECTOR WAS ALSO DIRECTED TO MAKE FIELD INQUIRY AND ASCERTAIN A S TO WHETHER THE SAID PARTY I.E. M/S. BHAVIN-JEWELLERS IS EXISTED AT THE PRESENT ADDRESS OR PAST ADDRESS GIVEN BY THE ASSESSEE AND H AD ANY FINANCIAL OR BUSINESS RELATION WHAT-SO-EVER WITH TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION. 4.11 THE INSPECTOR VIDE HIS REPORT DATED 30.12.2005 HAS STATED THAT THE SAID PREMISES SITUATED AT 900, 4 TH FLOOR, SAHAJANAND MARKET, PANKAR NAKA, AHMADABAD WAS FOUND CLOSED. THERE WAS NO SUCH CONCERN IN THE NAME AND STYLE OF M/S. BHAVIN JEWELL ERS EITHER AT 900, SAHAJANAND MARKET, PANKAR NAKA (NEW ADDRESS P ROVIDED BY THE ASSESSEE) OR AT 439, SAHAJANAND MARKET, PANKAR NAKA (OLD ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 16 ADDRESS PROVIDED BY THE ASSESSEE). THE INSPECTOR F URTHER REPORTED THAT ON INQUIRY IT WAS GATHERED THAT EVEN IN THE EN TIRE BUILDING OF SAHAJANAND MARKET, THERE IS NO SUCH CONCERN FOUND T O HAVE BEEN WORKING OF EXISTED IN THE NAME AND STYLE OF M/S. BH AVIN JEWELLERS. 4.12 NON-EXISTENCE OF THE SO-CALLED CONCERN M/S. BH AVIN JEWELLERS WITH WHOM THE ASSESSEE CLAIMED TO HAVE CERTAIN TRAN SACTIONS OF PURCHASES AND SALES OF JEWELLERY COMBINED WITH ANOT HER FACT THAT THE ASSESSEE HAD NO JEWELLERY (AS PER ASSESSEES OWN W. T. RECORDS) TO SALE LEAD TO CREATED A CLEAR CUT DOUBT THAT THE ENT IRE STORY OF PURCHASE AND SALE OF JEWELLERY AND RECEIPT OF DIFFE RENCE PROCEEDS IN CASH (ON DIFFERENT DATES) IS NOTHING BUT A WILLFUL ATTEMPT ON THE PART OF ASSESSEE TO NEUTRALIZE THE PROFIT/GAIN EARNED IN SA LE OF SHARES JUST TO AVOID TAX LIABILITY. 4.13 IN VIEW OF THE ABOVE FACTS, A NOTICE U/S. 142( 1) OF THE ACT DATED 02.01.2006 WAS ISSUED AND THE FOLLOWING FACTS WERE BROUGHT TO THE NOTICE OF THE LEGAL HEIR OF THE ASSESSEE FOR EXPLAN ATION: (I) NO SUCH PARTY IN THE NAME AND STYLE OF M/S. BHA VIN JEWELLERS EXISTED ON THE ADDRESS GIVEN BY YOU. (II) IN THE RETURNS OF WEALTH FURNISHED UP TO ASSES SMENT YEAR 1991-92 YOU HAVE NOT DISCLOSED THE ANY JEWELLERY. NO WEALTH-TAX RETURNS FOR LAST SIX ASSESSMENT YEARS AND IN SUBSEQ UENT YEARS WERE FURNISHED. (III} BALANCE SALE PROCEEDS WERE CLAIMED TO HAVE BEEN RECEIVED IN CASH AND NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE S. (IV) THE ASSESSES WAS ASKED TO SHOW AS TO WHY TH E SO CALLED JEWELLERY TRANSACTION SHOULD NOT BE TREATED AS BOGU S AND CAPITAL LOSS DECLARED SHOULD NOT BE DISALLOWED. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 17 (V) THE ASSESSEE WAS FURTHER ASKED TO SHOW CAUSE AS TO WHY INVESTMENT IN JEWELLERY (CLAIMED TO HAVE BEEN SOLD) SHOULD NOT BE TREATED AS INVESTMENT FOR THE YEAR UNDER CONSIDERAT ION AND BE ADDED TO THE TOTAL INCOME AS UNDISCLOSED INVESTMENT FOR T HE YEAR UNDER CONSIDERATION. (VI) PROVIDE CORRECT ADDRESS OF M/S. BHAVIN JEWE LLERS, IF EXISTED. (VII) PRODUCE THE OWNER OF THE SO CALLED CONCERN M/S. BHAVIN JEWELLERS WITH FULL IDENTITY ALONG WITH HIS/ITS BOO KS OF ACCOUNT. 4.14 THE CONTENTS OF THE NOTICE U/S. 142(1) OF TH E ACT DATED 02.01.2006 IS REPRODUCED HEREUNDER: 'IN CONNECTION WITH THE ASSESSMENT PROCEEDINGS FOR A,Y, 2003-04, VIDE VARIOUS STATUTORY NOTICES ISSUED U/S 142(1) OF THE ACT DATED 11/07/2005, 10/10/2005, 08/11/2005 AND 05/12/2005 A ND ALSO ORDER SHEET ENTRIES DATED 27/07/2005, 12/08/2005, 22/11/2 005, 29/11/2005, 16/12/2005 AND 26/12/2005, YOU WERE ASK ED TO FURNISH EXACT POSTAL ADDRESS OF M/S. BHAVIN JEWELLERS OF AHMEDABAD FROM/TO WHOM YOU CLAIMED TO HAVE PURCHASED AND SOLD JEWELLE RY IN THE F.Y 2002-03 PERTAINING TO ASSESSMENT YEAR 2003-04. VIDE ORDER SHEET ENTRY DATED 16.12.2005 IT WAS POINTED OUT TO YOURE A.R. AND ACCOUNTANT THAT THE NOTICE UNDER SECTION 133(6) OF THE ACT SENT TO THE ABOVE NAMED PARTY I.E. M/S. BHAVIN JEWELLERS ON ADDRESS GIVEN BY YOU (M/S. BHAVIN JEWELLERS, 439/IIND FLOOR, SAHJ ANAND MARKET PANKO RNAKA, AHMADABAD) WAS RETURNED BACK BY THE PO STAL AUTHORITY WITH REMARKS NOT KNOWN. THEREFORE, THEY WERE AGA IN ASKED TO CLARIFY THE MATTER AND FURNISH THE EXACT POSTAL ADD RESS OF THIS PARTY. YOURE A.R. AND ACCOUNTANT VIDE YOUR LETTER DATED 2 6.12.2005 SUBMITTED TO THIS OFFICE ON 26/12/2005 FURNISHED AN OTHER ADDRESS (M/S. BHAVIN JEWELLERS, 900/IVTH FLOOR, SAHAJANAND MARKET, PANKOR ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 18 NAKA, AHMADABAD) OF THE SAID CONCERN, CLAIMING THIS ONE IS PRESENT ADDRESS OF THE SAID PARTY. ON ENQUIRY, IT WAS GATHERED THAT NO SUCH PARTY (M/S . BHAVIN JEWELLERS) IS EXISTED ON THE GIVEN ADDRESS. THE FA CTS CLEARLY INDICATE THAT YOU ARE FURNISHING INCORRECT INFORMATION AND T RYING TO MISLEAD THE DEPARTMENT. FURTHER, BALANCE SALE PROCEEDS OF THE SO CALLED SALE AND PURCHASE TRANSACTIONS ARE CLAIMED TO HAVE BEEN RECEIVED IN CASH AND NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCES . IN THE NUT SHELL, FROM THE SCRUTINY OF RECORDS, ENQ UIRY AND INVESTIGATION, THE FOLLOWING FACTS HAVE BEEN EMERGE D: THERE IS NO SUCH PARTY IN THE NAME AND STYLE OF M/S BHAVIN JEWELLERS EXITED ON THE ADDRESS GIVEN BY YOU (M/S. BHAVIN JEW ELLERS, 439/IIND FLOOR, SAHJANAND MARKET, PANKO RNAKA, AHMADABAD AND /OR M/S. BHAVIN JEWELLERS 900/IVTH FLOOR, SAHJANAND MARKET, PANKORNAKA, AHMADABAD). IN THE RETURN OF INCOME YOU CLAIMED TO HAVE ACQUIRE D/PURCHASED JEWELLERY IN THE A.Y. 1981-82 AND SHOWN THE SALE OF THE SAID JEWELLERY FOR RS.35,76,000/- IN THE A.Y. 2003-04 AN D ALSO SHOWN PURCHASES OF JEWELLERY FOR RS.29,32,910/- IN THE SA ME A.Y. 2003-04 FROM THE SAME PERSON. HOWEVER, ON VERIFICATION OF YOUR W.T. RECORDS FOR A.Y. 1981-82 ONWARDS, IT IS NOTICED THA T YOU HAVE NOT DISCLOSED ANY JEWELLERY IN THE RETURN OF WEALTH. F URTHER, YOU HAVE NOT FURNISHED YOUR W.T. RETURN FOR LAST SIX ASSESSMENT YEARS AND ALSO IN SUCCEEDING ASSESSMENT YEAR. BALANCE SALE PROCEEDS OF THE SO CALLED SALE AND PUR CHASE TRANSACTIONS ARE CLAIMED TO HAVE BEEN RECEIVED IN C ASH AND NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCES. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 19 IN VIEW OF THE ABOVE FACTS PLEASE SHOW CAUSE AS TO WHY YOUR CLAIM FOR LONG TERM CAPITAL LOSS OF RS.72,08,630/-(RS.1,0 7,84,630/- MINUS RS.35,76,000/-) ON ACCOUNT OF SO CALLED JEWELLERY T RANSACTIONS WITH THE SAID CONCERN M/S. BHAVIN JEWELLERS SHOULD NOT B E TREATED AS BOGUS AND ACCORDINGLY BE DISALLOWED. ALSO SHOW CAU SE AS TO WHY THE SAID JEWELLERY AMOUNTING TO RS.35,76,000/- CLAI MED TO HAVE SOLD BY YOU DURING THE YEAR UNDER CONSIDERATION SHOULD N OT BE TREATED AS YOUR UNDISCLOSED INVESTMENTS FOR THE YEAR UNDER CON SIDERATION. BEFORE FINALIZATION THE ASSESSMENT IN YOUR CASE, YO U ARE GIVEN A FINAL OPPORTUNITY TO JUSTIFY YOUR CLAIM FOR LONG TERM CAP ITAL LOSS AND FURNISH EXACT ADDRESS OF THE SAID PARTY I.E. M/S.BHAVIN JEW ELLERS FOR VERIFICATION OF YOUR CLAIM OF PURCHASE AND SELL OF JEWELLERY. YOU ARE ALSO ASKED TO PRODUCE IN PERSON BEFORE THE UNDERSIG NED THE OWNER OF THE SAID CONCERN WITH FULL IDENTITY (HAVING HIS PAN CARD, SALES TAX NO., LICENSE ISSUED BY THE GOVERNMENT DEPARTMENT, V OTER IDENTITY CARD ETC.) AND WITH HIS/ITS BOOKS OF ACCOUNT AND IN COME-TAX RECORDS. HEARING IN YOUR CASE IS RE-FIXED ON 10.01.2006 AT 1 1.30 A.M. PLEASE NOTE THAT IF YOU FAIL TO ATTEND AND FURNISH THE DET AILS AND DOCUMENTS CALLED FOR AS ABOVE, ASSESSMENT WILL BE FINALIZED O N THE BASIS OF DETAILS AVAILABLE ON RECORD AND ALSO AS PER THE NOT ICE UNDER SECTION 142(1) OF THE ACT DATED 05.12.2005. YOU ARE ASKED TO ATTEND THE HEARING ALONG WITH ALL THE DETAILS/DOCUMENTS AND PRODUCE ALL BOOKS OF ACCOUNT AND BILLS AND VOUCHERS FOR VERIFICATION. THIS MAY BE TREATED NOT ICE UNDER SECTION 142(1) OF THE ACT. HEARING IN THE MATTER WAS FIXED ON 10.01.2006. THE ASSESSEE'S A.R WAS ALSO PROVIDED THE COPY OF WEALTH-TAX RECORDS OF THE ASSESSEE FURNISHED IN THE STATUS OF INDIVIDUAL AS WELL AS HU F : ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 20 4.15 ON THE DATE OF HEARING I.E. 10/01/2006, SHRI R.C. DEOPURA. C.A & A.R ATTENDED. HOWEVER, HE HAS FAILED TO FURN ISH THE DETAILS AND DOCUMENTS CALLED FOR IN THE MATTER. HE ALSO FA ILED TO PRODUCE IN PERSON THE OWNER OF THE SO CALLED CONCERN M/S. BHA VIN JEWELLERS OF AHMEDABAD WITH WHOM THE ASSESSEE CLAIMED TO HAVE CE RTAIN JEWELLERY TRANSACTIONS FOR THE YEAR UNDER CONSIDE RATION. HE REQUESTED FOR ADJOURNMENT TO FURNISH ALL THE DETAIL S AND DOCUMENTS AS CALLED FOR VIDE VARIOUS STATUTORY NOTICES ISSUE D U/S.142(1) OF THE ACT, LATEST ON 02.01.2006. VIDE THE AFORESAID ORDE R SHEET ENTRY DATED 10.01.2006 IT WAS COMMUNICATED TO THE A.R. OF THE ASSESSEE THAT THIS WILL BE FINAL OPPORTUNITY FOR COMPLIANCE, ELSE THE ASSESSMENT WILL BE FINALIZED ON THE BASIS OF RECORDS AVAILABLE AND INFORMATION GATHERED ON INQUIRY. HEARING WAS RE-FIXED ON 17.01. 2006. 4.16 ON THE DATE OF HEARING I.E.17.01.2006, SMT. NIRMAL KUMARI V. CHAUHAN, WIFE & LEGAL HEIR OF THE ASSESSES, SHRI JAY PRATAPSINGH CHAUHAN, SON OF THE ASSESSEE, SHN R.C. DEOPURA , C.A AND SHRI RAMESH SONI, ACCOUNTANT ATTENDED. THEY PRODUCE THE SO CALLED EXTRACT OF CASH BOOK FOR VERIFICATION. HOWEVER, THE Y COULD NOT EXPLAIN AS TO HOW THE SAME WAS WRITTEN WITHOUT SUPPORTING E VIDENCES. ALSO IN THE SO FAILED CASH BOOK, A NUMBER OF ENTRIES WER E MADE IN THE NAMES OF DIFFERENT PERSONS CLAIMING THE SAME AS LOA NS/DEPOSITS RECEIVED. HOWEVER, THEY WERE NOT IN A POSITI ON TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINE SS OF THE SO- CALLED DEPOSITORS AND EXPLAIN SOURCE OF THEIR INCOM E. THE ENTIRE EXERCISE OF PREPARING ALSO CALLED ABSTRACT OF CASH BOOK IS NOTHING BUT TO EXPLAIN THE SAID CASH RECEIPTS FROM TH E SO-CALLED CONCERN M/S BHAVIN JEWELLERS, WITHOUT PUTTING ANY SINGLE PI ECE OF EVIDENCE. ALSO, THEY AGAIN FAILED TO PRODUCE THE OWNER OF THE SO CALLED CONCERN M/S. BHAVIN JEWELLERS OF AHMADABAD WITH WHOM THE AS SESSEE CLAIMED TO HAVE CERTAIN TRANSACTIONS OF PURCHASES A ND SALES OF ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 21 JEWELLERY. EVEN THEY COULD NOT FURNISH THE PRESENT ADDRESS O F THE SO CALLED CONCERN M/S. BHAVIN JEWELLERS. THEY FURTHER FAILED TO BRING ANY THING ON RECORD TO PROVE THE POSSESSION/OWNERSH IP OF JEWELLERY OF RS.35,76,000/- AS WEALTH-TAX RECORDS (W.T. RETUR N FURNISHED UP TO 1990-91, THEREAFTER NOT FURNISHED) OF THE ASSESSEE SHOWS NO JEWELLERY. EVEN, RETURN FURNISHED IN THE STATUS OF H.U.F. SHOWS JEWELLERY TO THE TUNE OF RS.2,10,000/- AS PER RETUR N FURNISHED UP-TO A.Y. 1992-93. THEY HAVE REQUESTED TO PROVIDE FURTH ER TWO DAYS TIME TO PRODUCE IN PERSON THE OWNER OF THE SAID CONCERN M/S. BHAVIN JEWELLERS AND OTHER DETAILS AND DOCUMENTS TO SUBSTA NTIATE CLAIM OF JEWELLERY TRANSACTIONS. THE ORDER SHEET ENTRY DATED 17.01.2006 WAS SIGNED B Y SRNT. NIRMAL KUMARI V. CHAUHAN, WIFE & LEGAL HEIR OF THE ASSESSE E, SHRL JAY PRATAPSINGH CHAUHAN, SON OF THE ASSESSEE, SHRI R.C. DEOPURA, C.A AND SHRI RAMESH SONI, ACCOUNTANT. AS PER THEIR REQU EST, HEARING IN THIS CASE WAS AGAIN FIXED ON 19.01.2006. IT WAS CO MMUNICATED TO THEM THAT NO FURTHER ADJOURNMENT WOULD BE GIVEN. 4.17 ON THE DATE OF HEARING SHRI R. C. DEOPURA, C.A ATTENDED AND FURNISHED WRITTEN SUBMISSION DATED 19.01.2006. VIDE THIS SUBMISSION THE L. H. OF THE ASSESSEE STATED THAT SHE IS STILI TRYING TO TAKE UP THE MATTER WITH M/S. BHAVIN JEWELLERS. VIDE THE ORDER SHEET ENTRY DATED 19.01.2006 IT WAS COMMUNICATED TO THEM THAT THOUGH A NUMBER OF OPPORTUNITIES WERE PROVIDED TO SUBSTANTIATE THEIR C LAIM FOR POSSESSION AND SALE OF JEWELLERY, HOWEVER NO SUCH D OCUMENTARY EVIDENCES WERE PRODUCED. TILL DATE THE L.H OF THE A SSESSEE COULD NOT PRODUCE THE OWNER OF THE SO CALLED CONCERN M/S. BHAVIN JEWELLERS OF AHMEDABAD. THE L.H. OF THE ASSESSEE A LSO FAILED TO BRING ANY THING ON RECORD TO SUBSTANTIATE EVEN THE POSSESSION OF JEWELLERY SAVE SELF CERTIFIED AFFIDAVIT, WHICH IS N O EVIDENTIAL WHILE ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 22 EVEN NO MATERIAL WAS PUT FORWARD TO SUBSTANTIATE WH ATEVER WHATEVER WRITTEN IN THE SAID AFFIDAVIT. 4.18 FROM THE DISCUSSION MADE IN THE FORGOING PA RA, FOLLOWING FACTS EMERGE: (I) AS PER WEALTH-TAX RECORDS OF THE AS ; SESSEE, THERE IS NO SUCH JEWELLERY IN HIS WEALTH-TAX RETURN FURNISHED UP-T O ASSESSMENT YEAR 1990-91. THIS FACT CLEARLY INDICATES THA T THE ASSESSEE HAD NO SUCH JEWELLERY IN HIS POSSESSION/OWNERSH IP. (II) EVEN IN THE RETURN FURNISHED FOR THE ASSESS MENT YEAR 1992-93 IN THE CAPACITY OF HUF, THE ASSESSES HAS SHOWN JEWELLE RY OF RS. 2,10,000/ -THIS FACTS CLEARLY INDICATES THE ASSESSE S HAS NO SUCH JEWELLERY IN HIS POSSESSION/OWNERSHIP EVEN IN THE S TATUS OF HUF. (III) THE SO CALLED CONCERN M/S. BHAVIN JEWELLERS IS NOT EXISTED AT THE ADDRESSES PROVIDED BY THE ASSESSEE. (IV) THE L.H. OF THE ASSESSEE EVEN COULD NOT FU RNISH THE PAN OF THE SAID PARTY WITH WHOM HE CLAIMED TO HAVE TRANSAC TION OF NEARLY OF RS.36 LAKHS, (V) THE L.H. OF THE ASSESSEE COULD NOT PRODUCE THE OWNER OF THE SO CALLED CONCERN M/S. BHAVIN JEWELLERS OF A HMYDABAD, THOUGH A NUMBER OF OPPORTUNITIES WERE PROVIDED TO HER. (VI) ON PERUSAL OF THE SO-CALLED PURCHASE AND SAL E BILLS PURPORTEDLY SIGNED & ISSUED BY M/S. BHAVIN JEWELLERS OF AHMEDAB AD, IT WAS NOTICED THAT THE SAME ARE SERIALLY/CHRONOLOGICALLY NUMBERED, THOUGH THE TRANSACTIONS WERE SHOWN ON DIFFERENT DATES. (VII) PURCHASE AND SALES WERE CLAIMED TO HAVE BEE N MADE ON DIFFERENT DATES WITH THE SAME PARTY. HOWEVER, NO PA YMENTS WERE ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 23 RECEIVED JUST AFTER SALES. FURTHER, THE BALANCE SA LE PROCEEDS WERE ALSO CLAIMED TO HAVE BEEN RECEIVED IN CASH ON TH REE DIFFERENT DATES WITH IN SPAN OF ALMOST A MONTH WHICH IS NOT P OSSIBLE IN JEWELLERY & TRANSACTIONS. THERE IS NO EXPLANATION A S TO WHY BALANCE SALE PROCEEDS WERE RECEIVED AFTER WEEKS AND IN INST ALLMENTS. (VIII) THE L.H. OF THE ASSESSEE COULD NOT FURNISH V ALUATION REPORT OF THE SO-CALLED JEWELLERY AND EXPLAIN AS TO HOW AND B Y WHOM THE VALUATION OF THE SO-CALLED ANTIQUE JEWELLERY WAS MA DE AS PRICE TAKEN FOR WORKING OF INDEXATION OF SO-CALLED JEWELLERY IS NO-WHERE NEAR TO THE PRICE PREVAILING IN THE A.Y. 1981-82. 4.19 ALL THESE FACTS CLEARLY LEAD TO A WISE CONCLUS ION THAT THE SO CALLED JEWELLERY TRANSACTIONS WITH SAID CONCERN BHA VIN JEWELLERS OF AHMEDABAD ARE NOTHING BUT SHAM/BOGUS TRANSACTIONS. THE.ENTIRE EXERCISE OF SO CALLED, PURCHASE AND SALE OF JEWELLE RY WAS MADE TO AVOID THE TAX PAYMENT ON CAPITAL GAIN EARNED ON SAL E OF SHARES. HAD THIS BEEN NOT SO, THE L.H OF THE ASSESSEE MIGHT HAVE PRODUCE IN PERSON THE OWNER OF THE SO CALLED CONCERN M/S. BHAV IN JEWELLERS OF AHMEDABAD WITH WHOM SHE CLAIMED THAT THE ASSESSEE H AD CERTAIN JEWELLERY TRANSACTIONS. THE ASSESSEE'S LEGAL HEIR COULD NOT BRING A SINGLE PIECE OF IOTA TO ESTABLISH THAT THE ASSESSEE HAD JEWELLERY WORTH RS.36 LACS IN HIS OWNERSHIP. THE ASSESSES'S L.H. ALSO COULD NOT EXPLAIN AS TO WHY THE SO CALLED JEWELLERY WAS N OT REFLECTED IN THE ASSESSEE'S RETURN OF WEALTH FURNISHED UP TO ASSESSM ENT YEAR 1990- 91. EVEN, SHE COULD NOT FURNISH VALUATION REPORT OF THE SO-CALLED JEWELLERY AND EXPLAIN AS TO HOW AND FROM WHOM THE V ALUATION OF THE SO-CALLED ANTIQUE JEWELLERY WAS MADE AS PRICE TAKEN FOR WORKING OF INDEXATION IS NO-WHERE NEAR TO THE PREVAILING PRICE IN THE A.Y. 1981- 82. THE L.H. OF THE ASSESSEE EVEN COULD NOT COLLE CT PAN OF THE SAID CONCERN M/S. BHAVIN JEWELLERS. LOOKING TO ALL THESE FACTS ENUMERATED IN DETAILS AS ABOVE, THERE REMAINS NO DOUBTS ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 24 THAT THE SO CALLED JEWELLERY TRANSACTIONS S HOWN BY THE ASSESSEE WITH M/S BHAVIN JEWELLERS ATE TOTALLY BOGUS. 4.20 HOWEVER, BEFORE INFERRING THE CONCLUSION IN RE SPECT OF THE SO- CALLED JEWELLERY TRANSACTIONS SHOWN BY THE ASSESSEE WITH M/S BHAVIN JEWELLERS, THE ADDL, C.I.T., RANGE-5, BARODA ISSUED A COMMISSION TO THE ADDL. DIRECTOR OF INCOME-TAX (INV.) - UNIT-1, A HMEDABAD FOR FURTHER ENQUIRY IN THE CASE OF M/S BHAVIN JEWELLERS OF AHMADABAD. VIDE REPORT DATED 31/01/2006 (RECEIVED BY FAX ON 31 /01/2006) ADDRESSED TO THE ADDL. C.I.T., RANGE-5, BARODA, IT HAS BEEN SUBMITTED BY THE DY. D.I.T. (INV.), UNIT-1(2), AHME DABAD THAT ON INQUIRY IT WAS GATHERED THAT SO CALLED CONCERN M/S BHAVIN JEWELLERS IS NOT EXISTED AT THE GIVEN ADDRESSES I.E. 439 OR 9 00, SAHJANAND MARKET, PAKORNAKA, AHMADABAD. IT WAS FURTHER COMMUN ICATED BY THE DY. D.I.T.(INV.), UNIT-1(2), AHMEDABAD THAT ON VERI FICATION OF PAN DATA BASE, IT WAS FOUND THAT THE SAID PARTY IS NOT ASSESSED TO TAX. THE RELEVANT PART OF THE REPORT SUBMITTED BY THE DY . D.I.T. (INV.), UNIT-1(2), AHMEDABAD IS REPRODUCED HERE UNDER: IN RESPECT OF M/S BHAVIN JEWELLERS OF AHMADABAD ENQUIRIES HAVE BEEN CARRIED OUT THROUGH INSPECTOR A ND IT IS ASCERTAINED THAT AT PRESENT THERE IS NO SUCH BUS INESS CONCERN EXISTS EITHER AT SHOP NO. 900 OR AT SHOP NO . 439 SAHJANAND MARKET, PAKORNAKA, AHMADABAD. FURTHER, VERIFICATION OF PAN DATA BASE ALSO, IT IS ASCERTAIN ED THAT THIS PARTY IS NOT ASSED TO TAX. LD. A.O. AFTER DISCUSSING IN GREAT LENGTH OF ALL TH E EVIDENCES COLLECTED DURING THE COURSE OF ASSESSMENT PROCEEDING HAD HELD THAT THIS TRANSACTION AS BOGUS/SHAM TO EVADE THE TAX ON LONG TERM CAPITAL GAIN EARNED AND ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 25 SOLD OF SHARES. THUS, HE DISALLOWED THE LONG TERM CAPITAL LOSS OF RS. 72,08,630/- IN THE ASSESSMENT ORDER. 9. BEING AGGRIEVED BY THE ORDER OF THE A.O., THE AS SESSEE CARRIED THE MATTER BEFORE THE CIT(A), WHO HAS ALLOWED THE APPEA L. THE OPERATIVE PORTION OF THE ORDER IS AS UNDER: 6.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WE LL AS THE SUBMISSION MADE AND ARGUMENTS PUT FOURTH BY THE AR OF THE APPELLANT FOR THIS ISSUE. I FIND THAT THE WHOLE IS SUE DEPEND UPON THE FACT WHETHER THE JEWELER IS IN EXISTENCE OR NOT ? THEN ONLY IT CAN BE HELD WHETHER THE TRANSACTION FOR SALE OF JEW ELLERY IS A GENUINE TRANSACTION OR A SHAM TRANSACTION. THE AO HAS FIRST WRITTEN AN INQUIRY LETTER U/S.133(6) TO THE JEWELER AND THEN DEPUTED HIS INSPECTOR AND PRIMA FACIE HELD THAT THE JEWELER IS NOT IN EXISTENCE. THE AR HAS HOWEVER, PLACED ON RECORD WH ICH ARE EITHER GOVT. CERTIFICATES OR CERTIFICATES ISSUED B Y A THIRD PARTY, WHICH CLEARLY SHOWS THAT THE JEWELER IS IN EXISTENC E AND ALSO DOING BUSINESS AT THE GIVEN ADDRESS. THE DOCUMENTS SUBMI TTED BY THE APPELLANT DURING THE COURSE OF APPEAL AS PER THE PR OVISIONS OF RULE 46A WERE SENT TO THE A.O. FROM THIS OFFICE VID E LETTER NO. BRD/CIT(A)/V-11/06-07 DATED 08/03/2007, HOWEVER INS TEAD OF MAKING SPECIFIC INQUIRIES ON THE BASIS OF EVIDENCES NOW PLACED ON RECORD, THE AO HAS RELIED ON THE EARLIER INQUIRIES ONLY. THUS THE AO HAS NOT TRIED TO FIND OUT FACTS OF THE CASE IN T HE LIGHT OF FRESH EVIDENCES. IN THE CONTEXT OF THE FRESH EVIDENCES J PLACED ON RECORD BY THE APPELLANT, I AM OF THE OPINION THAT T HE JEWELER DOES EXIST AT THE GIVEN ADDRESS AND THEREFORE THE TRANSA CTION OF SALE OF JEWELLERY CANNOT STRAIGHT AWAY BE CONSIDERED AS SHA M TRANSACTION. FURTHER, REGARDING EXISTENCE OF JEWEL LERY THE ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 26 APPELLANT HAS PLACED ON RECORD COPY OF VALUATION RE PORT OF A REGISTERED VALUER. BASED ON THE INVENTORY RECORDS OF THE ESTATE OF CHHOTAUDEPUR, AFFIDAVIT OF EX-MAHARANI OF CHHOTAUDE PUR(WIFE OF DECEASED APPELLANT), VALUATION REPORT OF A REGISTER ED VALUER AND OTHER RELEVANT PAPERS/DOCUMENTS, IT IS FAIRLY PRESU MED THAT THE JEWELLERY SOLD WERE THERE IN EXISTENCE PRIOR TO 1 ST APRIL, 1981. WHETHER THE JEWELLERY HAS BEEN SHOWN IN WT RETURNS OR NOT BY THE APPELLANT IS A SEPARATE MATTER AND REQUIRED TO BE D EALT WITH AS PER THE PROVISIONS OF WEALTH TAX ACT, AND CANNOT HAVE A NY BEARING ON THE MATTER OF CAPITAL GAINS. IN VIEW OF THE FOREGO ING DISCUSSION, I HEREBY DIRECT THE A.O. TO ALLOW CAPITAL LOSS OF RS. 72,08,630/- TO THE APPELLANT ARISEN ON ACCOUNT OF SALE OF JEWELLER Y. 10. NOW THE REVENUE IS BEFORE US. LD. SR. D.R. SUB MITTED THAT THIS JEWELLERY HAS NOT BEEN DISCLOSED BY THE APPELLANT I N THE WEALTH TAX RETURN. AT GIVEN ADDRESS, ON INQUIRY, NO JEWELER IN THE NAM E OF BHAVIN JEWELLERS WAS FOUND. THE DDIT INVESTIGATION ALSO HAS NOT FOUND T HE ABOVE JEWELER AT THE GIVEN ADDRESS. THE ONUS HAD BEEN SIFTED ON THE APP ELLANT TO SUBSTANTIATE THE LONG TERM CAPITAL LOSS CLAIMED IN RETURN. BHARATBH AI B. SONI WAS NOT PRODUCED BY THE APPELLANT FOR CROSS VERIFICATION AT THE TIME OF ASSESSMENT PROCEEDING. HE FURTHER FILED WRITTEN REPLY, WHICH IS AS UNDER: YOUR HONOUR'S MAY KINDLY REFER TO THE ABOVE AND HE ARING DATED 26/9/2012 WHERE BY HONORABLE MEMBERS HAD ASKE D FOR PAN DETAILS OF MR. BHAGWANDAS TRIBHOVANDAS SONI PROPRIE TOR BHAVIN JEWELERS. COPY OF THE PAN DETAILS IS BEING ENCLOSED FOR YOUR HONOUR'S KIND PERUSAL. AS REGARDS THE FACTS OF THE CASE, THE AO HAD DISALLOWED RS.72,08,630/- BEING LOSS ON ACCOUNT OF JWELLRERY AS THE SOURCES OF PURCHASE OF JWELLERY CLAIMED TO HAVE SOL D COULD NOT BE ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 27 ESTABLISHED INSPITE OF REPEATED OPPORTUNITIES WHICH HAS BEEN MENTIONED IN DETAIL BY THE AO IN HIS ASSESSMENT ORD ER. IT SEEMS THAT THE ASSESSEE CLAIMED LOSS ON ACCOUNT OF JWELLERY SIMPLY TO ADJUST PROFITS EARNED ON ACCOUNT OF SALE OF SHARES TO THE TUNE OF RS.70,13,777/-. IN ORDER TO SUBSTANTIATE T HE GENUINENESS OF PURCHASE AND SALE OF JWELLERY THE ASSESSEE, INITIAL LY CLAIMED TO HAVE PURCHASED AND SOLD JWELLERY FROM BHAVIN JWELLERS. H OWEVER, ON INQUIRY THE ADDRESS OF THE SAID JWELLER COULD NOT B E ASCERTAINED. LETTER, THE ASSESSEE CHANGED HER STAND STATING THAT THE JWELLERY WAS AN ANCESTRAL ONE AND RECEIVED AS A LEGAL HEIR OF LA TE MAHARAJA SHRI NATVARSINHJI CHAUHAN. REQUISITE AFFIDAVIT TO THIS EFFECT WAS FILLED. HOWEVER, ON PERUSAL OF VVT RETURNS OF THE ASSESSE T HE JWELLERY FOR THE AFORESAID VALUE OF RS.35,76,000/- WAS NOT FOUND REFLECTED IN THE WT RETURN. THE FACTS AND CIRCUMSTANCES OF THE CASE CLEARLY IND ICATE THAT THE LOSS OF JWELLERY OF RS.72,08,630/- WAS A COOKED UP AND A FTER THOUGHT STORY JUST TO NATURALIZE GAIN ON SALE OF SHARES OF RS.70,13.777/-. THIS IS SO, BECAUSE INITIALLY AS STATED THAT ABOVE THE A SSESSE CLAIMED TO HAVE PURCHASED AND SOLD JWELLERY FROM M/S BHAVIN JE WELLERS THE EXISTENCE OF THE SAID JWELLER AS STATED ABOVE COULD NOT BE ASCERTAINED AND FOUND GENUINE. ACCORDINGLY, THE PU RCHASE AND SALE OF JEWELLERY WAS HELD TO BE INGENUINE. FURTHER, TH E ACCOUNT OF LATE VIRENDRASING M. CHAUHAN REPRODUCED IN THE ASSESSMEN T ORDER AT PAGE - 5 REVEALS SERIOUS DEFECTS AS UNDER; A. THE ASSESSEE HAS CLAIMED TO HAVE SOLD JWELLERY VIDE BILL NO.36, 37 AND 38 DATED 5/5/2002 AND 6/5/2002 WHEREA S THE PURCHASES OF THE SAID JWELLERY CLAIMED IS DATED 9/5 /2002 VIDE BILL NO.46. MEANING THEREBY IS THAT THE ASSESSEE HA D NO JWELLERY ON THE DATE OF SALE I.E. 5/5/2002 AND 6/5/ 2002 AS THE ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 28 JEWELELRY IS CLAIMED TO HAVE BEEN PURCHASED ON 9/5/ 2002 I.E. AFTER THE DATE OF SALE. B. ALL THE TRANSACTION OF PURCHASE AND SALE AR E CLAIMED TO HAVE BEEN MADE BY WAY OF CASH. C. AS PER THE AFFIDAVIT OF BHARATBHAI BHAGWAN SONI PAGE NO.35 OF THE PAPER BOOK OF THE ASSESSEE THE SAID JWELLERY HAD CONFIRMED PURCHASE AND SALE OF JEWELLERY WHICH IS CONTRADICTORY. D. THE VALUATION REPORT SUBMITTED IN THE PAPER BOOK PAGE 36 INCLUDES MAINLY DIAMOND JEWELLERY. THE VALUE OF GO LD JEWELERY IS NEGLIGIBLE AND THE WEIGHT AND QUANTITY IN RESPECT OF GOLD JEWELLERY IS ALSO NOT MENTIONED IN THE VALUATI ON REPORT. E. IF THE ANCESTRAL JWELLERY IS SOLD, WHAT HAP PENED TO THE JWELLERIES CLAIMED TO HAVE PURCHASED AND SOLD. WHAT IS THE SOURCES OF INVESTMENT. THEREFORE, THE AO HAS SLIGHT LY ADDED UNDISCLOSED INVESTMENTS IN JWELLERY ON PROTECTIVE B ASIS. THE FACTS AND CIRCUMSTANCES OF THE CASE CLEARLY REV EAL THAT THE PURCHASE AND SALE OF JEWELLERY AND LOSS THERE FROM IS NOT A GENUINE TRANSACTION AS NARRATED IN DETAIL IN THE ASSESSMENT ORDER AND ACCORDINGLY THE ADDITION / DISALLOWANCE ON THE ISSU E IS REQUIRED TO BE SUSTAINED BY THE HON'BLE ITAT. AT THE OUTSET, LD. COUNSEL FOR THE APPELLANT RELIED ON TWO PAPER BOOKS FILED BY HIM AND ARGUED THAT LD. CIT(A) HAD PERUSED ALL THE EVIDENCES AND DECIDED IN THE CASE OF APPELLANT, AFTER GETTING THE REMAND REP ORT FROM THE A.O. HE FURTHER ARGUED THAT BHARATBHAI B. SONI, THE PROPRIETOR OF M /S. BHAVIN JEWELLERS IS ASSESSED TO TAX. HE HAS SALES TAX REGISTRATION NO. THE ADDRESS OF THE ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 29 JEWELLER HAD BEEN CERTIFIED BY THE CHARTERED ACCOUN TANT, RAJENDRA JINDAL & ASSOCIATES. HE HAD ALSO FIELD AFFIDAVIT OF BHARATB HAI B. SONI, DATED 15.11.2006. HE FILED THE COPY OF VALUATION REPORT MADE BY THE REGISTERED VALUER AS ON 24.03.1981 FOR WEALTH TAX PURPOSES, TH E COPY OF STATEMENT AND ACKNOWLEDGEMENT OF WEALTH TAX RETURN OF SHRI VIREND RASING M. CHAUHAN FOR A.Y. 1990-91. THUS, HE CLAIMED THAT THE CAPITAL LO SS CLAIMED BY THE APPELLANT IS JUSTIFIED. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. THE APPELLANT HAD NOT DISCLOSED THE JEWELL ERY IN WEALTH TAX RETURN IN PAST. ON GIVEN ADDRESS, THE INQUIRY WAS MADE THROU GH INSPECTOR AS WELL AS DDIT, NO PERSON IN THE NAME OF BHARATBHAI B. SONI W AS FOUND. THE RESIDENTIAL ADDRESS GIVEN ON PAN SHOWN FLAT NO. 100 , SANVILLA RAN HOUSE, MEMNAGAR, AHMADABAD, PIN CODE 380052 AND BUSINESS A DDRESS AT BHAVIN JEWELLERS, 5 TH FLOOR, NR. CHANDRA VILAS HOTEL, GANDHI ROAD, AHMAD ABAD, PIN CODE- 380001 AND PAN NO. AFSPS5563F, WHEREAS, IN SA LES TAX REGISTRATION, THE ADDRESS HAS BEEN SHOWN AS M/S. BH AVIN JEWELLERS, 900/4 TH FLOOR, SAHAJANAND MARKET, PANKOR NAKA, AHMADABAD. THIS ADDRESS HAS BEEN SHOWN BY THE DEMAND OF SALES TAX CHALLAN AT 43 9, IIND FLOOR, SAHAJANAND MARKET, PANKORNAKA, AHMEDABD, 380001, WH EREAS ON RETURN, THIS ADDRESS WAS GIVEN AS 23, DIVYA VASUNDHARA COM, MIRZ APUR ROAD, AHMADABAD, FOR A.Y. 03-04 ON SALE BILL (PAGE NO.6 O F PAPER BOOK) THE ADDRESS OF BHAVIN JEWELLERS HAD BEEN SHOWN AS 439, II FLOOR , SAHJANAND MARKET, PANKORNAKA, AHMADABAD-1, PHONE: [phone]. THUS, TH E ADDRESS GIVEN BY ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 30 THE PURCHASER OF JEWELLERY IS CONTRADICTORY. FURTH ER, THERE WAS NO JEWELLERY TRANSACTION IN PAST AND FUTURE WITH BHAVIN JEWELLER S OF THE APPELLANT. NO W.T. RETURN FILED EVEN FOR ALLEGED PURCHASE OF JEWELLERY IN SUBSEQUENT YEARS. TWICE THE A.O. HAD REQUESTED TO PRODUCE SHRI BHARATBHAI B . SONI FOR VERIFICATION BUT THE APPELLANT HAD NOT PRODUCED THE SAME BEFORE THE A.O. BY MERE FILING OF VARIOUS ADDRESSES OF THE PURCHASER AND COPY OF PURC HASE AND SALE BILL THE BURDEN CANNOT BE DISCHARGED BY THE ASSESSEE WHEN GE NUINENESS OF PURCHASE AND SALE BILL ARE DOUBTFUL. IN VIEW OF THE ABOVE AN D IN THE INTEREST OF JUSTICE, THIS ISSUE IS REQUIRED TO BE RESTORED BACK TO THE A .O. AND THE APPELLANT IS DIRECTED TO PRODUCE BHARATBHAI B. SONI, THE PROPRIE TOR OF BHAVIN JEWELLERS, AHMADABAD, FOR CROSS VERIFICATION ALONGWITH NECESSA RY EVIDENCE. THUS, WE SET ASIDE THE ORDER OF THE CIT(A). THE A.O. IS DIR ECTED TO GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT TO DECI DE THE REALITY OF THE TRANSACTION. 12. WHEN ISSUE REGARDING THE CLAIM OF THE LONG TERM CAPITAL LOSS HAS BEEN RESTORED BACK TO THE A.O., NO SEPARATE FINDING IS REQUIRED ON GROUND NO.4 & GROUND NO.1(D) OF C.O. I.E. PROTECTIVE ADDITION O F RS.35,76,000/- BEING UNACCOUNTED INVESTMENT IN JEWELLERY. 13. IN THE RESULT, THE REVENUES APPEAL AND ASSESSE ES C.O. FOR A.Y. 03-04 IS ALLOWED FOR STATISTICAL PURPOSE. 14. THE EFFECTIVE GROUNDS OF REVENUES APPEAL & ASS ESSEES C.O. FOR A.Y. 2004-05 ARE AS UNDER: ITA NO. 2595/AHD/2009 ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 31 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN ALLOWING CAPITAL LOSS OF RS.24, 46,727/- ON SALE OF JEWELLERY. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 29,69,250/- BEING UNACCOUNTED JEWELLERY AS THE SAME WAS NOT REFLECTED IN THE ASSESSEES W.T. RETURNS. C.O. NO. 246/AHD/2009 1. THE CIT(A) HAS RIGHTLY HELD THAT RS.24,46,727/- LOSS ON SALE OF JEWELLERY WAS A CAPITAL LOSS AND WAS ALLOWABLE/CARR YING FORWARD THE SAID CAPITAL LOSS. 2. THE LEARNED CIT(A) HAS ALSO RIGHTLY HELD THAT RS .29,69,250/- WAS NOT UNACCOUNTED JEWELLERY AND THEREFORE WAS LIABLE TO BE DELETED FROM ADDITION TO TOTAL INCOME. 3. ON FACTS AND CIRCUMSTANCES OF THE CASE AND AS PE R PROVISIONS OF LAW THE APPEAL FILED BY THE DEPARTMENT IS NOT MAINT AINABLE AND THEREFORE THE SAME BE DISMISSED. 15. IN GROUND NO.1 OF REVENUES APPEAL AND ASSESSEE S C.O., THE A.O. OBSERVED THAT THE APPELLANT HAD SHOWN LONG TERM CAP ITAL GAIN ON SALE OF LAND, SHARES AND JEWELLERY AS UNDER: ASSETS SALE PRICE ACQUISITION COST INDEX COST LONG TERM CAPITAL GAIN LAND 18,92,678/- 5,40,210/- 25,01,172/- SHARES 25,13,158/- 14,348/- 66,431/- JEWELLERY 26,69,250/- 12,95,200/- 59,96,776/- SHOP 90,000/- 81,918/- 1,72,533/- TOTAL (-)12,71,826/- THE A.O. HAD GIVEN REASONABLE OPPORTUNITY OF BEING HEARD AND ASSESSEES REPLY WAS CONSIDERED BY HIM. ON THAT BASIS, HE HAS CONCLUDED AS UNDER: ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 32 (I) AS PER WEALTH-TAX RECORDS OF THE ASSESSEE, THE RE IS NO SUCH JEWELLERY IN HIS WEALTH-TAX RETURN FURNISHED UP-TO ASSESSMENT YEAR 1990-91. THIS FACT CLEARLY INDICATES THAT THE ASSE SSEE HAD NO SUCH JEWELLERY IN HIS POSSESSION/OWNERSHIP. (II) EVEN IN THE RETURN FURNISHED FOR THE ASSESSMEN T YEAR 1992-93 IN THE CAPACITY OF HUF, THE ASSESSEE HAS SHOWN JEWE LLERY OF RS. 2,10,000/-. THIS FACTS CLEARLY INDICATES THAT THE ASSESSEE HAD NO SUCH JEWELLERY IN HIS POSSESSION/OWNERSHIP EVEN IN THE STATUS OF HUF. (III) THE SO CALLED CONCERN M/S. BHAVIN JEWELLERS I S NOT EXISTING AT THE ADDRESSES PROVIDED BY THE ASSESSEE OR AS CLAIME D TO BE STATED IN HIS SO CALLED AFFIDAVIT FILED ON BEHALF OF THE P ROPRIETOR OF M/S. BHAVIN JEWELLERS. AS THE FACTS ARE IDENTICAL WITH A.Y. 03-04 AND OUTC OME OF INQUIRY WAS ALSO SAME, THEREFORE, HE DISALLOWED THE LONG TERM CAPITA L LOSS OF RS.30,27,526/- ON SALE OF JEWELLERY, WHICH WAS ALLOWED BY THE CIT( A) ON THE BASIS OF OBSERVATION MADE IN A.Y. 03-04. THE ARGUMENT FOR B OTH THE SIDES ARE SIMILAR WITH A.Y. 03-04, AS DISCUSSED ABOVE, THE A.Y. 03-04 HAS BEEN RESTORED BACK TO THE A.O., WE ALSO FIND THAT THIS ISSUE IS IDENTI CAL WITH A.Y. 03-04. THEREFORE, THE SAME IS SET ASIDE FOR DE NOVO, AS PER THE OBSER VATIONS MADE IN A.Y. 03- 04. 16. GROUND NO.2 OF REVENUES APPEAL AND ASSESSEES C.O. FOR A.Y. 04-05 IS ALSO NOT ADJUDICATED AS MATTER HAS DEEP CONNECTION WITH LONG TERM CAPITAL LOSS OF JEWELLERY SOLD. THEREFORE, REVENUES APPEA L AND ASSESSEES C.O. FOR A.Y. 04-05 IS ALLOWED FOR STATISTICAL PURPOSE. ITA NOS. 1544 & 2595/AHD/2009 A. Y.03-04 & 04-05 & C.O. NOS.118 & 246/AHD/2009 A.Y.03-04 & 04-05 PAGE 33 17. IN THE COMBINED RESULT, THE REVENUES APPEAL AN D THE ASSESSEES C.O. FOR BOTH ASSESSMENT YEARS ARE ALLOWED FOR STATISTIC AL PURPOSE. THESE ORDERS PRONOUNCED IN OPEN COURT ON 31/01/2013 SD/- SD/- ( MUKUL KR. SHRAWAT ) (T.R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. '#$ / APPELLANT 2. &'#$ / RESPONDENT 3. )*)+ ' ', / CONCERNED CIT 4. ' ',- ' / CIT (A) 5. 01'' +, ' ''' +, 34 * / DR, ITAT, AHMEDABAD 6. 167 89 / GUARD FILE. BY ORDER/ , :/3' )' ' ''' +, 34 * <