Manjudevi H Jain, Hubli V. ITO, Hubli

ITA 1509/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0251 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1998-1999
• Appeal Filed On: 29-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAVISHANKAR S V
• Keywords: Wrong claim; Valuation report

Judgement Text

ITA.1509 TO 1512/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER 1. ITA NO.1509/BANG/2015 (ASST. YEAR : 1998-99) 2. ITA NO.1510/BANG/2015 (ASST. YEAR : 1998-99) 3. ITA NO.1511/BANG/20 15 (ASST. YEAR : 1998-99) 4. ITA NO.1512/BANG/201 5 (ASST. YEAR : 1998-99) 1. SMT. MANJUDEVI H JAIN, C/O, SMT. KAILASHI DEVI G. AGRAWAL, ITAGI MARUTI GALLI, HUBBALLI PAN : ABEPJ7417P 2. SMT. LEELA DEVI R. JAIN, C/O, JKAY ENTERPRISES, KOPPILAR ROAD, HUBBALLI PAN : AEXPJ6759C 3. SMT. SUSHILADEVI G. JAIN, C/O, JKAY ENTERPRISES, KOPPILAR ROAD, HUBBALLI PAN : ABFPJ5705K 4. SMT. KAMALA DEVI J. JAIN, C/O, JKAY ENTERPRISES, KOPPILAR ROAD, HUBBALLI PAN : AFKPJ0319J .. APPELLANTS V. INCOME TAX OFFICER, WARD - 2(2), HUBBALLI .. RESPONDENT ITA.1509 TO 1512/BANG/2015 PAGE - 2 ASSESSEES BY : SHRI. RAVISHANKAR S. V, ADVOCATE REVENUE BY : SMT. SWAPNA DAS, JCIT HEARD ON : 22.06.2016 PRONOUNCED ON : 30 .06.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS BY DIFFERENT ASSESSES FOR ASSESS MENT YEAR 1998-99 AGAINST ORDERS OF CIT (A), HUBLI. SINCE THE FACTS LEADING TO THESE APPEALS FALL WITHIN THE SAME COMPASS, ALL THESE APPEALS ARE DEALT WITH THROUGH THIS COMMON ORDER. 02. FACTS OF THE CASE ARE THAT THESE ASSESSEE HAD F ILED RETURNS FOR THE IMPUGNED ASSESSMENT YEAR DECLARING INCOME, AS UNDER : TABLE NO.1 SL.NO. NAME OF THE ASSESSEE INCOME DECLARED RS. 1. SMT. MAJULADEVI H. JAIN 1,26,750/- 2. SMT. LEELADEVI R. JAIN 1,27,900/- 3. SMT. SUSHILADEVI G. JAIN 1,26,900/- 4. SMT. KAMALADEVI J. JAIN 1,75,791/- 03. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTED BY THE AO THAT THESE ASSESSEES HAD CREDITED CERTAIN AMOUNTS I N THEIR ACCOUNTS WHICH WERE EXPLAINED AS COMING OUT OF THE SALE PROCEEDS O F GOLD / DIAMONDS. THESE ARE LISTED HEREUNDER : ITA.1509 TO 1512/BANG/2015 PAGE - 3 TABLE NO.2 SL. NO NAME OF THE ASSESSEE REALISATION FROM SALE OF GOLD RS. REALISATION FROM SALE OF DIAMOND RS. TOTAL 1. SMT. MAJULADEVI H. JAIN 1,03,680 11,95,000 12,98,680 2. SMT. LEELADEVI R. JAIN 16,480 11,50,000 11,66,48 0 3. SMT. SUSHILADEVI G. JAIN 9,05,365 11,00,000 20,05,365 4. SMT. KAMALADEVI J. JAIN 8,38,770 12,25,000 20,63,770 04. ALL THESE ASSESSEE HAD TAKEN ADVANTAGE OF VDIS, 1997 (VDIS IN SHORT). UNDER THIS SCHEME ASSESSEES HAD DECLARED JEWELLERY VALUED AS UNDER: TABLE NO.3 SL. NO NAME OF THE ASSESSEE GOLD JEWELLERY RS. DIAMONDS RS. 1. SMT. MAJULADEVI H. JAIN 5,36,873 3,25,000 2. SMT. LEELADEVI R. JAIN 5,44,840 3,10,000 3. SMT. SUSHILADEVI G. JAIN 5,78,507 2,90,000 4. SMT. KAMALADEVI J. JAIN 5,08,860 3,50,000 05. WHEN QUERIES WERE RAISED ABOUT THE SOURCE OF TH E GOLD/DIAMOND SOLD, ASSESSEES STATED BEFORE THE AO THAT THESE WERE THE JEWELLERY DECLARED UNDER ITA.1509 TO 1512/BANG/2015 PAGE - 4 VDIS SCHEME AFTER CONVERTING IT TO BULLION. HOWEVER , AO DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEES. ACCORDING TO HIM , THE CONCERNS TO WHICH ASSESSEES HAD CLAIMED TO HAVE SOLD THE GOLD AND DIA MONDS NEVER WORKED FROM THE ADDRESSES GIVEN BY THE ASSESSEE. AS PER T HE AO, LANDLORD OF THE BUILDING WHOSE PREMISES WERE SHOWN AS THE ADDRESS O F M/S. MLJ, ONE AMONG THE CONCERNS WHO HAD PURCHASED THE BULLION / DIAMOND, HAD STATED THAT NO SUCH LEASE WAS GIVEN BY THEM TO MLJ AND NO POSSESSION WAS GIVEN. AS PER THE AO, THE SAID MLJ OCCUPIED THE PREMISES O NLY DURING THE PERIOD 27.03.1998 TO 30.11.1998. FURTHER AS PER THE AO, M /S. BALAJI REFINERY, THROUGH WHICH ASSESSEES HAD CLAIMED THE JEWELLERY T O HAVE BEEN ASSAYED INTO BULLION NEVER EXISTED. AS PER THE AO, A LARG E NUMBER OF SIMILAR ASSESSEES WHO HAD DECLARED GOLD JEWELLERY THROUGH V DIS RETURN, HAD CLAIMED SALE OF SUCH GOLD THROUGH MLJ FOR SHOWING S OURCE. THE INFERENCE DRAWN BY THE AO WAS THAT SUCH SALES COULD NOT HAVE BEEN EFFECTED IN A SHORT SPAN OF FOUR MONTHS TIME AND MLJ COULD NOT HA VE DONE BUSINESS TO THE TUNE OF RS.20 CRORES IN SUCH A SHORT SPAN OF TI ME. THUS THE AO HELD IN ALL THE ABOVE CASES THAT THE SOURCE FOR THE CREDITS MENTIONED AT TABLE NO.2 ABOVE WERE NOT PROVED BY THE ASSESSEES AND ADDITION S WERE MADE ACCORDINGLY. SIMILAR INFERENCES WERE MADE WITH REG ARD TO DIAMOND SALES CLAIMED BY THE ASSESSEES. ITA.1509 TO 1512/BANG/2015 PAGE - 5 06. AGGRIEVED, ASSESSEES MOVED IN APPEAL BEFORE THE CIT (A), WHO AFTER EXAMINATION OF THE VDIS SCHEME HELD THEY WERE TRYIN G TO MISUSE THE SCHEME. HE NOT ONLY CONFIRMED THE ORDER OF AO BUT ALSO DIRECTED ENHANCEMENT OF THE INCOME. 07. AGGRIEVED BY THIS, ASSESSEES HAD MOVED BEFORE T HIS TRIBUNAL AND THIS TRIBUNAL HAD DISMISSED SUCH APPEALS, WITH FOLLOWING OBSERVATIONS : ITA.1509 TO 1512/BANG/2015 PAGE - 6 ITA.1509 TO 1512/BANG/2015 PAGE - 7 ITA.1509 TO 1512/BANG/2015 PAGE - 8 08. ASSESSEES THEREAFTER CHALLENGED THE ORDER OF TH E TRIBUNAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT. HONBLE JUR ISDICTIONAL HIGH COURT VIDE ITS JUDGMENTS IN ITA.2152 TO 2154 AND 21 58/2008, DT.23.09.2008, HELD AS UNDER : ITA.1509 TO 1512/BANG/2015 PAGE - 9 ITA.1509 TO 1512/BANG/2015 PAGE - 10 09. BUT FOR THE CHANGE IN FIGURES, THE JUDGMENTS CA RRIED THE SAME DIRECTION. PURSUANT TO THE ABOVE DIRECTIONS OF THE HONBLE JURISDICTIONAL HIGH COURT, CASES WERE AGAIN CONSIDERED BY THE AO. NOTICES WERE ISSUED TO THE ASSESSEES. CLAIM OF THE ASSESSEES WERE THAT THE GOLD ORNAMENTS WHICH WERE GIVEN FOR MELTING WITH M/S. BALAJI REFIN ERY, HUBLI, WAS THE VERY SAME WHICH WAS SHOWN BY THEM IN VDIS DECLARATI ONS. ASSESSEES AGAIN RELIED ON THE BILLS OF THE CONCERNS TO WHICH SALE OF GOLD AND SILVER WERE MADE. AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE BILLS ISSUED BY M/S. BALAJI REFINERY, HUBLI, FOUND THAT WEIGHT OF THE JEWELLERY DECLARED BY THE ASSESSEES, IN THE VALUATI ON REPORT SUPPORTING THE VDIS DECLARATIONS WERE DIFFERENT FROM THE WEIGHT OF GOLD / BULLION THAT WERE SOLD. AS PER THE AO ASSESSEES COULD NOT PROVE THAT WHAT WAS SOLD BY THEM WERE THE SAME GOLD JEWELLERY WHICH WERE DECLAR ED IN THE VDIS DECLARATIONS. FURTHER AS PER THE AO NEITHER OF THE CONCERN TO WHOM ASSESSEE CLAIMED SALES VIZ., M/S. SHRI. MAHALAXMI J EWELLERS IN THE CASE OF ITA.1509 TO 1512/BANG/2015 PAGE - 11 GOLD AND M/S. HUNNEY EXPORTS / M/S. B. ASHOK KUMAR & CO.,IN THE CASE OF DIAMONDS WERE TRACEABLE. AO ALSO NOTED THAT SOM E OF THE ITEMS OF GOLD JEWELLERY DECLARED IN VDIS COMPRISED OF ANTIQUE ITE MS AND ASSESSEES WHO WERE FINANCIALLY SOUND WOULD NOT HAVE SOLD SUCH OLD GOLD JEWELLERY. FURTHER AS PER THE AO, IF AT ALL THE ASSESSEES WANT ED TO SELL THE JEWELLERY THEY WOULD HAVE SOLD IT DIRECTLY WITHOUT MELTING AN D SHAPING IT AS BULLION. THUS HE REACHED A CONCLUSION THAT WHAT WAS SOLD BY THE ASSESSEES WERE NOT THE GOLD JEWELLERY WHICH WERE DECLARED BY THEM IN V DIS. HE DID NOT ACCEPT THE SOURCE FOR THE CREDITS. ADDITIONS WERE MADE ONCE AGAIN. 10. AGGRIEVED, ASSESSEES MOVED IN APPEAL BEFORE THE CIT (A) ONCE MORE. CIT (A) NOTED THAT M/S. BALAJI REFINERY, HUBLI THRO UGH WHICH ASSESSEES CLAIMED TO HAVE MELTED THE GOLD AND SILVER ARTICLES TO BULLION, NEVER EXISTED IN THE ADDRESS GIVEN BY THE ASSESSEES. AS PER THE CIT (A), LETTERS ADDRESSED TO M/S. BALAJI REFINERY, HUBLI WERE RETURNED UNSERV ED. CIT (A) ALSO NOTED THAT GOLD AND SILVER REFINERY ASSOCIATION, HUBLI, H AD WRITTEN TO THE AO THAT NO SUCH REFINERY CALLED M/S. BALAJI REFINERY E VER DID ANY REFINERY WORK SINCE 15 YEARS. FURTHER AS PER THE CIT (A), THE IN SPECTOR DEPUTED BY THE AO HAD ENQUIRED NEAR JAIN MANDIR, KESHAVAPUR, HUBLI , AS WELL AS AZAD COLONY, HUBLI, WHERE, AS PER ASSESSEES, M/S. BALAJI REFINERY FUNCTIONED. ITA.1509 TO 1512/BANG/2015 PAGE - 12 AS PER THE CIT (A), INSPECTOR HAD ALSO VERIFIED WIT H THE OWNERS OF VARIOUS BUILDINGS IN KESHAVPUR, WHO VOUCHED THAT NO SUCH BU ILDING NAMED, AZAD COMPLEX, EXISTED NOR THEY NEW ANY BALAJI REFINERY. THUS ACCORDING TO CIT (A) ASSESSEES WERE UNABLE TO SHOW THAT THE GOLD AND DIAMOND JEWELLERY WHICH WERE DECLARED BY THEM IN THEIR VDIS RETURNS WERE CONVERTED THROUGH THE CONCERN CALLED M/S. BALAJI RE FINERY, NOR WERE THEY ABLE TO SHOW THAT ANY SALE THEREOF WERE EFFECTED TH ROUGH ANY CONCERN CALLED MLJ OR M/S. B. ASHOK KUMAR & CO., OR M/S. HUNNEY EX PORTS. THUS THE CIT (A) UPHELD THE ORDER OF THE AO. 11. NOW BEFORE US, LD. AR SUBMITTED THAT THE ONUS O N THE ASSESSEES TO SHOW THAT GOLD AND DIAMOND JEWELLERY DECLARED IN VD IS RETURNS WERE MELTED AND CONVERTED INTO BULLION AND SOLD WAS DISC HARGED. HONBLE JURISDICTIONAL HIGH COURT HAD CLEARLY HELD THAT IF THE ASSESSEES WERE ABLE TO SHOW THAT THE SALES WERE OF THE VERY SAME G OLD AND DIAMOND JEWELLERY WHICH WERE DECLARED IN VDIS, THEN THE SOU RCE FOR THE CREDITS STOOD EXPLAINED. AS PER THE LD. AR, M/S. BALAJI RE FINERY HAD CLEARLY GIVEN THE DETAILS OF THE JEWELLERY ITEMS WHICH WERE GIVEN TO THEM FOR MELTING. LABOUR CHARGES WERE ALSO PAID BY THE ASSE SSEES. LD. AR SUBMITTED THAT COPIES OF BILLS ISSUED BY M/S. BALAJ I REFINERY CLEARLY ITA.1509 TO 1512/BANG/2015 PAGE - 13 PROVED CONVERSION OF THE ORNAMENTS INTO BULLION. A S PER THE LD. AR, ASSESSEES CONCERNED HAD CONVERTED THE GOLD AND DIAM OND JEWELLERY TO BULLION AND SEPARATED OUT THE PRECIOUS STONES, SINC E IF SOLD DIRECTLY AS JEWELLERY, THE ITEMS WOULD HAVE FETCHED MUCH LESSER AMOUNT. AS PER THE LD. AR IF ON AN ENQUIRY CONDUCTED AFTER TWELVE YEARS BY THE AO, M/S. BALAJI REFINERY WAS FOUND NOT AVAILABLE AT THE PREMISES MENTIONED, ASSESSEES COULD NOT BE BLAMED. THUS ACC ORDING TO HIM, ASSESSEES HAD DONE WHAT ALL WAS NECESSARY AND POSSI BLE TO PROVE THAT THE GOLD AND DIAMOND JEWELLERY WHICH WERE CONVERTED THROUGH M/S. BALAJI REFINERY, WERE THE SAME WHICH WERE SOLD TO O NE OR OTHER CONCERNS WHO WERE DOING GOLD / BULLION BUSINESS. L D. AR HAS ALSO PLACED BEFORE US COPIES OF ASSESSMENT ORDERS PASSED BY THE AO IN THE CASE OF ONE SHRI. SHAILESH V. PATEL AND SHRI. VITHA LBHAI N. PATEL, FOR THE ASSESSMENT YEAR 1998-99, WHERE ON SIMILAR SET O F FACTS THE CREDITS WERE ACCEPTED. 12. PER CONTRA, LD. DR STRONGLY SUPPORTING THE ORDE RS OF AUTHORITIES BELOW SUBMITTED THAT AO HAD DONE DETAILED ENQUIRIES INTO THE BILLS SUBMITTED BY THE ASSESSEES FOR MELTING THE GOLD JEW ELLERY AS WELL AS FOR SELLING THE GOLD AND DIAMONDS. AS PER THE LD. DR IT WAS QUITE ITA.1509 TO 1512/BANG/2015 PAGE - 14 UNUSUAL THAT BOTH THE REFINERY WHO MELTED THE GOLD AND DIAMOND JEWELLERY AND THE SHOPS WHICH BOUGHT THE GOLD AND D IAMONDS WERE NON-EXISTENT AT THE TIME OF ENQUIRY. GOLD AND SILV ER MERCHANTS ASSOCIATION OF HUBLI, HAD ALSO CONFIRMED THAT NO SU CH REFINERY EVER FUNCTIONED IN THAT PARTICULAR ADDRESS. THUS ACCORD ING TO HIM ASSESSEES WERE MAKING BOGUS CLAIMS AND SHOULD NOT BE ALLOWED TO GET AWAY WITH SUCH CLAIMS. AS PER THE LD. DR ADDITIONS WERE RIGH TLY MADE BY THE AO AND CONFIRMED BY THE CIT (A). 13. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL CONTENTIONS. EVIDENCE FURNISHED BY THE ASSESSEES IN SUPPORT OF T HEIR CONTENTION THAT WHAT WERE SOLD BY THEM WAS THE SAME GOLD JEWELLERY AFTER CONVERTING IT INTO BULLION HAS BEEN PERUSED BY US. CASE OF ON E OF THE ASSESSEES, NAMELY SMT. MANJUDEVI H. JAIN IS TAKEN AS AN EXAMP LE. THE VALUATION REPORT DT.13.10.1997, BILL FROM M/S. BALA JI REFINERY, DT.03.11.1997, PURCHASE INVOICE DT.07.01.1998 ISSUE D BY MLJ AND PURCHASE MEMO DT.22.01.1998 OF M/S. HUNNEY EXPORTS ARE REPRODUCED HEREUNDER : ITA.1509 TO 1512/BANG/2015 PAGE - 15 ITA.1509 TO 1512/BANG/2015 PAGE - 16 ITA.1509 TO 1512/BANG/2015 PAGE - 17 14. WHAT WE NOTE IS THAT ALL THE ITEMS WHICH WERE APPEARING IN BILL ISSUED BY M/S. BALAJI REFINERY WERE ALSO MENTIONED IN THE VALUATION REPORT FILED IN SUPPORT OF THE VDIS DECLARATIONS. GROSS WEIGHT ALSO TALLIES. PURCHASE INVOICE ISSUED BY THE CONCERN WHICH PURCHASED THE G OLD AND DIAMONDS ALSO SHOWS THE SAME WEIGHT OF BULLION AS MENTIONED IN TH E BILL OF M/S. BALAJI ITA.1509 TO 1512/BANG/2015 PAGE - 18 REFINERY AND SAME CARETAGE OF DIAMONDS MENTIONED IN THE VALUATION REPORT. CASE OF THE REVENUE IS THAT M/S. BALAJI REFINERY, W HICH MELTED THE ORNAMENTS AND THE CONCERN TO WHICH THE GOLD / BULLI ON WERE SOLD WERE NOT FOUND IN KESHAVPUR, HUBLI. ASSESSEES WERE REPEATED LY QUESTIONED ABOUT THIS DURING THE COURSE OF SECOND ROUND OF PROCEEDIN GS. INSPECTORS REPORT RELIED ON BY THE AO WAS BASED ON AN ENQUIRY DONE MO RE THAN 15 YEARS AFTER THE EVENT. THERE WAS NO WAY ASSESSEES COULD ENSURE THAT M/S. BALAJI REFINERY CONTINUED TO DO ITS BUSINESS ALL THROUGH. MUCH RELIANCE HAS BEEN PLACED BY THE AO ON A LETTER ISSUED BY GOLD AND SIL VER REFINERY WELFARE ASSOCIATION, HUBLI, WHEREIN IT WAS MENTIONED THAT N O REFINERY CALLED M/S. BALAJI REFINERY, DID ANY REFINERY WORK IN HUBLI SIN CE 15 YEARS. HOWEVER, IT IS NOT NECESSARY THAT EVERY REFINERY SHOULD BE A ME MBER OF AN ASSOCIATION. A GLANCE AT THE BILL ISSUED BY M/S. BALAJI REFINERY DOES SHOW THAT IT WAS HOLDING A LICENCE. A LOOK AT THE PURCHASE BILL ISS UED BY THE CONCERNS SHOW THAT THEY WERE HAVING KST AND CST REGISTRATION NUMBERS. IN THE CASE OF M/S. HUNNEY EXPORTS EVEN THEIR PA NUMBER WA S THERE. IN MY OPINION, THESE EVIDENCE DO TILT THE CASE IN FAVOUR OF THE ASSESSEES. ASSESSEES HAD DONE WHATEVER POSSIBLE, WITHIN THEIR MEANS TO SHOW THAT THE GOLD AND DIAMOND SOLD BY THEM WERE THE SAME GOLD AN D DIAMOND DECLARED IN VDIS, AFTER CONVERSION. ASSESSEES HAD SUBMITTED COPIES OF BILLS ISSUED ITA.1509 TO 1512/BANG/2015 PAGE - 19 BY M/S. BALAJI REFINERY WHICH DID SHOW SIMILAR DETA ILS OF GOLD AND DIAMOND AS RETURNED IN THE VDIS. IN SUCH SITUATION WE ARE OF THE OPINION THAT ASSESSEES HAD DISCHARGED THEIR ONUS TO SHOW TH AT THE GOLD AND DIAMOND SOLD BY THEM WERE THE SAME WHICH WERE DECLARED BY T HEM IN THE VDIS DECLARATIONS. REASONING GIVEN BY THE AO THAT ANTIQ UE JEWELLERY WOULD NOT HAVE BEEN SOLD BY THE ASSESSEES IS ONLY A SURMISE A ND CANNOT DISLODGE THE EVIDENCE FILED BY THE ASSESSEE. FURTHER THERE IS N OTHING ON RECORD TO SHOW THAT THE GOLD JEWELLERY WHICH WERE SOLD BY THE ASSE SSEE WERE ANTIQUE IN NATURE. IN SUCH CIRCUMSTANCES, I AM OF THE OPINION THAT THE LOWER AUTHORITIES FELL IN ERROR IN DISBELIEVING THE SOURCE FOR CREDIT S SHOWN BY THE ASSESSEES CONCERNED. I HAVE NO HESITATION IN DELETING THE AD DITIONS MADE IN THE HANDS OF THE ASSESSEES. 15. IN THE RESULT, APPEALS OF ALL THE ASSESSEES STA ND ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2016. SD/- (ABRAHAM P GEORGE) ACCOUNTANT ME MBER MCN ITA.1509 TO 1512/BANG/2015 PAGE - 20 COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME-TAX 4. COMMISSIONER OF INCOME-TAX(A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR