A.N.MUTHIAH, CHENNAI V. ITO NON CORPORATE WARD-21(2), CHENNAI

ITA 2188/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4746 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 24-07-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R ANITHA
• Assessee Lawyers: J V NIRANJAN
• Keywords: Income from undisclosed sources; Salary income; Opportunity of being heard; Set aside; Capital Gains
• Section: 143(3); 250; 201; 143(2); 43; 68; 132; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , ' , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.2188/CHNY/2019 ( ( /ASSESSMENT YEAR: 2011-12 SHRI A.N.MUTHIAH, NO.5A, II FLOOR, GARDEN COURT APARTMENTS, NO.5/6, ASPIRAN GARDEN, 1 ST STREET, KILPAUK, CHENNAI-600 010. V . THE INCOME TAX OFFICER, NON-CORPORATE WARD-21(2), AAYKAR BHAVAN, 121, M.G. ROAD, CHENNAI-600 034. [PAN: AAJPM 8551 D ] ( + /APPELLANT) ( ,-+ /RESPONDENT) + . / APPELLANT BY : MR.J.V.NIRANJAN, ADV. ,-+ . /RESPONDENT BY : MS.R.ANITHA, JCIT . /DATE OF HEARING : 14.11.2019 . /DATE OF PRONOUNCEMENT : 10.02.2020 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER : THIS APPEAL FILED BY ASSESSEE IS DIRECTED AGAINST APPELLATE ORDER DATED 25.04.2019 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-9, CHENNAI (HEREINAFTER CALLED THE CIT(A )), IN ITA NO.30/CIT(A)-9/2014-15 FOR ASSESSMENT YEAR (AY) 201 1-12, THE APPELLATE PROCEEDINGS BEFORE LEARNED CIT(A) HAD ARISEN FROM A SSESSMENT ORDER DATED 25.03.2014 PASSED BY LEARNED ASSESSING OFFIC ER (HEREINAFTER CALLED ITA NO.2188/CHNY/2019 :- 2 -: THE AO) U/S.143(3) OF THE INCOME-TAX ACT, 1961 ( HEREINAFTER CALLED THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY ASSESSEE IN MEM O OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBUNAL, CHENNAI (HE REINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. THE ORDER OF LEARNED COMMISSIONER IS CONTRARY T O LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER HAS FAILED TO NOTE THAT ADDITIONS CAN BE MADE ONLY ON THE BASIS OF ENTRIES IN THE BOOKS OF ACCOUNTS AND THE A PPELLANT BEING A SALARIED EMPLOYEE IS NOT REQUIRED TO MAINTAIN ANY BOOKS AND THUS NO BOOKS WE RE MAINTAINED BY HIM AND THEREFORE IT FOLLOWS THAT NO ENTRIES COULD HAVE BEEN MADE BY THE APPELLANT IN HIS NONEXISTENT BOOKS AND THIS BEING THE CASE, THE ASSESSING OFFICER OUGHT TO HAVE KNOWN THAT MERE DEPOSITS IN THE BANK ACCOUNT DO NOT FALL WITHIN THE FOUR CORNERS OF THE SECTION 68 OF THE ACT. 3. THE LEARNED COMMISSIONER OUGHT TO HAVE KNOWN TH AT IN TERMS OF SECTION 68, ONLY SUMS CREDIT TO THE BOOKS OF ACCOUNTS MAINTAINED IN THE P REVIOUS YEAR IS COVERED IN THE SAID SECTION AND THIS BEING THE CASE, DEPOSITS IN THE BA NK ACCOUNT IS NOT COVERED UNDER THIS SECTION AND HENCE CANNOT BE ADDED TO INCOME. 4. THE LEARNED COMMISSIONER OUGHT TO HAVE KNOWN TH AT PASS BOOK OF THE APPELLANT IS NOT 'BOOKS OF ACCOUNT' MAINTAINED BY THE APPELLANT AND HENCE INVOCATION OF SECTION 68 IS WRONG AND OUGHT TO HAVE SET ASIDE THE ORIGINAL ORDE R, BUT HAS INSTEAD CHOSEN TO CONFIRM THE SAME THEREBY MAKING HIS ORDER OTIOSE AND HENCE THE SAME OUGHT TO BE SET ASIDE IN LIMINE. 5. THE LEARNED COMMISSIONER OUGHT TO HAVE APPRECIA TED THAT THERE IS NO REQUIREMENT ON PART OF THE APPELLANT TO FILE ANY WEALTH TAX RETURN AND THIS BEING THE CASE, NON-FILING OF THE SAME CANNOT BE HELD AGAINST THE APPELLANT TO NEGATE THE SUBSTANTIAL CONTENTION OF THE APPELLANT THAT THE CASH DEPOSITS ARE MADE FROM THE PROCEEDS OF SALE OF GOLD. 6. THE LEARNED COMMISSIONER OUGHT TO HAVE KNOWN TH AT WHEN THE CBDT ITSELF ALLOWS 500 GRAMS OF GOLD TO BE HELD WITHOUT ANY RECORDS, THEN THE SALE PROCEEDS OF THE SAID QUANTITY IS ALSO EXEMPT FROM ANY RECORDS AND THIS BEING THE CAS E, IT WOULD BE A TRAVESTY OF THE LAW TO BRING INTO THE AMBIT OF TAXATION AN AMOUNT WHICH IS OUTSIDE THE SCOPE OF LAW. 7. THE LEARNED COMMISSIONER HAS FAILED TO NOTE THE DECISION OF THE HON'BLE ITAT IN CIT V BHAICHAND 141 !TR 67, WHERE IN IT HAS BEEN HELD THA T THE BANK PASS BOOK IS NOT BOOKS OF ACCOUNTS AS CONTEMPLATED IN SECTION 68 OF THE ACT. 8. THE LEARNED COMMISSIONER IS WRONG IN HIS FINDI NG THAT IN AS MUCH AS CAPITAL GAINS TAX IS NOT PAID ON THE SALE OF GOLD, THE SAME IS TO BE ADDED BACK AS INCOME FROM OTHER SOURCES IN THE ABSENCE OF ANY ENABLING PROVISION FOR THE SA ME. 9. THE LEARNED COMMISSIONER OUGHT TO HAVE KNOWN TH E DECISION OF THE ITAT IN SHANTA DEVI V CIT 171 ITR 532 , WHEREIN THE CONDITIONS PRE CEDENT FOR INVOCATION OF SECTION 68 HAVE BEEN LAID DOWN AND IN AS MUCH AS NONE OF THE C ONDITIONS EXIST, HE OUGHT TO HAVE SET ASIDE THE ORIGINAL ORDER. 10. THE APPELLANT CRAVES LEAVE TO FILE ADDITIO NAL GROUNDS AT THE TIME OF HEARING. ITA NO.2188/CHNY/2019 :- 3 -: 3. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE IS AN BANK EMPLOYEE, DRAWING INCOME FROM SALARY. THE CASE WAS SELECTED FOR SCRUTINY BY REVENUE UNDER CASS. THERE WAS AIR INFO RMATION REGARDING CASH DEPOSIT EXCEEDING RS. 10,00,000/- VIZ. RS. 3 2,52,142/- IN SAVING BANK ACCOUNT OF ICICI BANK. DURING ASSESSMENT PROC EEDINGS CONDUCTED BY AO U/S 143(3) READ WITH SECTION 143(2) OF THE 19 61 ACT, THE AO ASKED ASSESSEE, INTER-ALIA, TO FURNISH COPIES OF BANK ST ATEMENT, SOURCES OF CASH DEPOSIT IN BANK ACCOUNTS AND OTHER RELEVANT DETAILS . THE ASSESSEE SUBMITTED DETAILS FOR CASH DEPOSITS IN THE BANK INC LUDING THAT SOME OF THE AMOUNT HAS COME FROM SALE OF JEWELLERY. THE AO MA DE ENQUIRIES WITH THE BUYERS OF JEWELRIES AS CLAIMED BY ASSESSEE BY ISS UING LETTERS FOR SEEKING CONFIRMATIONS ABOUT GENUINENESS OF THESE TRANSACTIO NS OF SALE OF JEWELRIES BY ASSESSEE TO THESE PARTIES, BUT LETTERS SENT BY T HE AO WERE EITHER RECEIVED BACK WITH REMARKS THAT NO SUCH PERSON WAS AVAILABLE AT THE GIVEN ADDRESS OR NO REPLIES WERE RECEIVED BY AO FR OM THESE ALLEGED BUYERS CONFIRMING PURCHASE OF GOLD JEWELLERY FROM A SSESSEE , WHICH LED AO TO MAKE ADDITIONS FOR VARIOUS CASH DEPOSITS IN THE BANK TO THE TUNE OF RS. 9,49,200/- TO THE INCOME OF THE ASSESSEE IN THE HAN DS OF THE ASSESSEE, WHICH REMAINS UNEXPLAINED WHILE REST OF CASH DEPOSI T OUT OF TOTAL CASH DEPOSITS OF RS. 32,52,142/- IN SB A/C WITH ICICI BANK WAS ACCEPTED BY THE AO, VIDE ASSESSMENT ORDER DATED 25.03.2014 PASS ED BY AO U/S 143(3) OF THE 1961 ACT. ITA NO.2188/CHNY/2019 :- 4 -: 4. AGGRIEVED BY AN ASSESSMENT FRAMED BY AO U/S 143( 3) OF THE 1961 ACT, THE ASSESSEE FILED FIRST APPEAL WITH LD.CIT(A), WHO ASKED AO TO VERIFY GENUINENESS OF CLAIM OF ASSESSEE TO HAVE DEPOSITED CASH IN HIS BANK ACCOUNT OUT OF SALE OF JEWELLERY . THE LEARNED CIT( A) WAS PLEASED TO CALL FOR REMAND REPORT FROM THE AO. THE AO MADE ENQUIRI ES, HOWEVER, SATISFACTORY EXPLANATION COULD NOT BE OBTAINED AND THE ASSESSEE ITSELF HAD ADMITTED BEFORE AO THAT RS. 2,66,000/- OUT OF TOTAL ADDITIONS OF RS.9,49,200/- BE TREATED AS UNEXPLAINED INCOME OF T HE ASSESSEE. THE LD.CIT(A) UPHELD ADDITIONS AS WERE MADE BY THE AO TO THE TUNE OF RS. 9,49,200/- BY DISMISSING APPEAL FILED BY THE ASSESS EE , VIDE APPELLATE ORDER DATED 25.04.2019 PASSED BY LEARNED CIT(A), B Y HOLDING AS UNDER: 7.3 CIT(A)S DECISION 7.3.1 AO STATED IN THE ASSESSMENT ORDER THAT THERE WAS AIR INFORMATION REGARDING CASH DEPOSITS OF RS.32,52,142/- IN THE SA VINGS BANK ACCOUNT WITH ICICI BANK OF THE APPELLANT. DURING THE ASSESS MENT PROCEEDINGS, AO HAS EXAMINED THE SOURCES OF CASH DEPOSITS AND ADDED RS.9,49,200/- AS INCOME FROM OTHER SOURCES AS UNEXPLAINED CASH CREDI T. THE RELEVANT PORTION OR THE ASSESSMENT ORDER IS ALSO REPRODUCED ABOVE. AS CAN BE SEEN FROM PARA 7.2 ABOVE, DURING THE APPELLATE PROCEEDIN GS, INITIALLY A REMAND REPORT WAS CALLED FOR AND THE AO HAD ALSO SUBMITTED THE REMAND REPORT. SUBSEQUENTLY, A SUPPLEMENTARY REMAND REPORT WAS ALS O SOUGHT WHICH WAS ALSO SUBMITTED THEREAFTER, THE CONTENTS OF THE LETT ER SEEKING REMAND REPORT AS WELL AS THE REMAND REPORT RECEIVED FROM T HE AO ARE REPRODUCED IN PARA 7.2 ABOVE. 7.3.2 FURTHER, DURING THE APPELLATE PROCEEDINGS ON 23/04/2019 AS PER THIS OFFICE ORDER SHEET NOTING, SHRI SRIDHARAN, CA AND S HRI A.N. MUTHIAH, THE APPELLANT HIMSELF, APPEARED AND STATED THE FOLLOWIN G: I) THE APPELLANT HAS NEVER EVER FILED WEALTH TAX RE TURN. II) THE PURCHASE BILLS OF THE JEWELLERY SOLD ARE NO T AVAILABLE. III) THE SALE OF JEWELLERY AND THE RECEIPT OF CONSI DERATION IS ONLY CASH AND NOT BY CHEQUE. ITA NO.2188/CHNY/2019 :- 5 -: IV) THE SALE OF JEWELLERY IS ONLY DURING THE YEAR U NDER CONSIDERATION AND NOT EARLIER OR LATER YEARS. THE SALE CONSIDERATION WAS UTILIZED TO REPAY THE LOANS AND TO SHARE BROKERS PARTLY IN CASH AND PARTL Y BY CHEQUE. V) THEY ARE NOT ABLE TO ESTABLISH THAT THE SALE OF JEWELLERY WAS-AT A RATE HIGHER THAN THE MARKET VALUE TO THESE PERSONS. 7.3.3 THE FINDINGS OF THE AO AS PER THE ASSESSMENT ORDER, REMAND REPORT DATED 11/09/2017 AND SUPPLEMENTARY REMAND REPORT DA TED 09/04/2018 HAVE BEEN PERUSED. FURTHER, THE WRITTEN AND ORAL SU BMISSIONS MADE BY THE AR AND THE APPELLANT HAVE ALSO BEEN CONSIDERED. FOL LOWING ARE RELEVANT FOR DECIDING THE ISSUE UNDER CONSIDERATION AND SIMULTAN EOUSLY THE ISSUE UNDER CONSIDERATION IS ALSO ADJUDICATED AS UNDER: I) DURING THE REMAND PROCEEDINGS, AO HAS CAUSED NE CESSARY ENQUIRIES AND SUBMITTED A DETAILED REMAND REPORT DATED 11/09/2017 .;WHEREIN AS PER THE TABLE IN PAGE NOS.3,4,5&6, AO HAS POINTED OUT THE D ISCREPANCY IN FIGURES WITH RESPECT TO ALLEGED TRANSACTION IN JEWELLERY. F URTHER, IN THE LAST PARAGRAPH OF THE REMAND REPORT, IN PAGE NO.6, AO HA S ALSO CATEGORICALLY STATED THAT THE APPELLANT EVEN FAILED TO GIVE THE ' ADDRESS OF MRS. PRAMOLA AND MR. G. RUBEN FOR THE AMOUNT OF RS.1,50,000/. FU RTHER, AO HAS ALSO STATED THAT SHRI S. BALASUBRAMANIAN AND SHRI GURU S HANKAR HAVE DENIED GIVING ANY CASH TO THE APPELLANT TOWARDS PURCHASE O F JEWELLERY. II) A COPY OF THE REMAND REPORT DATED 11/09/2017 WA S PROVIDED TO THE APPELLANT, SEEKING HIS RESPONSE. IN RESPONSE, ON 27/10/2017, THE APPELLANT FILED A WRITTEN SUBMISSION, THE RELEVANT PORTION OF WHICH IS REPRODUCED HEREUNDER:- '...3. THE ASSESSEE ACCEPTS FOR THE FOLLOWING ADDIT IONS SUGGESTED IN THE REMAND REPORT: SL.NO. PARTICULARS AMOUNT REMARKS 1 DEPOSIT ON 15/12/2010 17000 IN PARA 1 2 BALASUBRAMANIAN 49500 IN PARA 3 SL.NO.5 3 GURUSHANKAR 49500 IN PARA 3 SL.NO.6 4 PRAMOLA AND G. RUBEN 150000 IN PARA 2 THE ASSESSEE OUT OF RS.9,49,200/- HAS NO OBJECTION FOR ADDITIONS MENTIONED ABOVE AMOUNTING TO RS.2,66,000/ -.' AS CAN BE SEEN FROM THE ABOVE WRITTEN SUBMISSION, T HE APPELLANT HIMSELF HAS ACCEPTED THE ADDITION OF RS.2,66,000/- OUT OF T HE TOTAL ADDITION OF RS.9,49,200/-. III) AS PER THE SUPPLEMENTARY REMAND REPORT DA TED 09/04/2018, AO HAS STATED THAT FROM THE VERIFICATION MADE IN RESPECT O F SALE OF JEWELLERY, THERE WAS LOT OF VARIANCE BETWEEN APPELLANT'S CLAIM AND T HE INFORMATION FROM THE ITA NO.2188/CHNY/2019 :- 6 -: ALLEGED PURCHASERS (I.E. AMOUNT PAID, WEIGHT OF GOL D PURCHASED ETC.). FURTHER, AO HAS CATEGORICALLY STATED THAT THE ALLEG ED PURCHASERS COULD NOT PRODUCE ANY EVIDENCE FOR PAYMENT OF CASH TOWARDS PU RCHASES EXCEPT FURNISHING CONFIRMATION LETTERS. IV) AO HAS ALSO POINTED OUT THAT CERTAIN PART IES HAVE CATEGORICALLY DENIED TRANSACTIONS AND THE APPELLANT HIMSELF ADMIT TED THE SAME. THEREFORE, AO CONCLUDED THAT IT IS CLEARLY ESTABLIS HED THAT THE SOURCE FOR CASH DEPOSITS ARE NOT FROM SALE OF JEWELLERY AS CLA IMED BY THE APPELLANT AND THESE ARE INCOME FROM OTHER SOURCES. MOREOVER, AO HAS ALSO STATED THAT ENTIRE ADDITION IS MADE AS UNEXPLAINED CASH CR EDIT, AND THEREFORE, THERE IS NO QUESTION OF CAPITAL GAINS FOR THE CASE UNDER CONSIDERATION. V) THE APPELLANT HAS CATEGORICALLY STATED HE HAS NEVER EVER FILED WEALTH TAX RETURN. FURTHER, THE APPELLANT HAS ALSO STATED THAT PURCHASE BILLS OF THE ALLEGED JEWELLERY SOLD DURING THE YEAR ARE N OT AVAILABLE. ALLEGED SALE OF JEWELLERY AND RECEIPTS OF CONSIDERATION IS STATE D TO BE IN CASH AND NOT BY CHEQUE. ALLEGED SALE OF JEWELLERY IS ONLY DURING TH E YEAR UNDER CONSIDERATION AND NOT DURING EARLIER OR LATER YEARS . VI) THE APPELLANT HAS STATED THAT THE SALE CONSIDE RATION WAS UTILIZED TO REPAY THE LOAN AND ALSO TO PAY THE SHARE BROKERS, P ARTLY IN CASH AND PARTLY BY CHEQUE. IT IS ALSO PERTINENT TO MENTION HERE THA T NO SUCH INCOME FROM SHARES ARE DECLARED IN THE RETURN OF INCOME AND THE REPAYMENT OF LOAN BY CASH ALSO ATTRACTS VARIOUS PENALTY PROVISIONS AS PE R THE ACT. FURTHER, THE APPELLANT HAS NOT FURNISHED ANY DOCUMENTARY EVIDENC E WITH RESPECT TO THE UTILIZATION OF THE ALLEGED SALE CONSIDERATION TOWAR DS REPAYMENT OF LOAN AND PAYMENTS MADE TO SHARE BROKERS. VII) THE APPELLANT HAS NOT SOLD ANY JEWELLERY TO A NY REGISTERED DEALER OR A SHOP DEALING WITH GOLD JEWELLERY. THERE IS NO CONTE MPORARY EVIDENCE THAT ALLEGED SALE AND PURCHASE IS RECORDED BY THE ALLEGE D PURCHASE PARTIES BY WAY SALES TAX RETURNS, ETC. VIII) DURING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS STATED THAT THESE JEWELLERIES WERE ALLEGEDLY SOLD TO VARIOUS INDIVIDU ALS, HOWEVER, THE APPELLANT WAS NOT ABLE TO ESTABLISH SALE OF JEWELLE RY TO THESE PERSONS WAS AT A RATE HIGHER THAN THE MARKET RATE. UNDER NORMAL CIRCUMSTANCES, IF ANYONE WISHES TO SELL JEWELLERY, IT WOULD BE SOLD T O A DEALER OR SHOP WHO IS DEALING IN GOLD JEWELLERY. MOREOVER, AO HAS RIGHTLY POINTED OUT THE DISCREPANCY WITH RESPECT TO THE AMOUNTS AS WELL AS WEIGHT OF JEWELLERY IN RESPECT OF CERTAIN PARTIES AND CERTAIN PARTIES HAVE ALSO CATEGORICALLY DENIED TRANSACTION. WHEREVER PARTIES HAVE DENIED THE TRANS ACTION, APPELLANT, HIMSELF HAS ACCEPTED THE SAME AS UNDISCLOSED INCOME OF THE APPELLANT. HOWEVER, WHEREVER THERE ARE CERTAIN DISCREPANCY AND SOURCE OF CASH PAYMENTS WAS NOT EXPLAINED BY THE CONCERNED PERSONS , THE APPELLANT HAS NOT ACCEPTED THE SAME AS UNDISCLOSED INCOME. IX) THE APPELLANT HIMSELF HAS ACCEP TED UNDISCLOSED INCOME OF RS.2,66,000/- AFTER LOT OF EFFORTS BY THE DEPART MENT BOTH DURING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING REMAND PRO CEEDINGS. IT IS ONLY ITA NO.2188/CHNY/2019 :- 7 -: WHEN THE APPELLANT WAS CORNERED WITH CONTRADICTIONS ASCERTAINED OUT OF THE ENQUIRIES MADE, THE APPELLANT HAD ADMITTED THE SAID INCOME OF RS.2,66,000/-. X)THE APPELLANT HAS NEVER EVER FILED WEALTH TAX RET URN AND ALSO DOES NOT HAVE THE PURCHASE BILLS FOR THE ALLEGED JEWELLERIES SOLD DURING THE YEAR. ON PERUSAL OF DOCUMENTS ON RECORD, IT IS SEEN THAT THE APPELLANT HAS SOLD JEWELLERIES TO THE EXTENT OF 382.93 GM. IN THIS REG ARD, THE CBDT'S INSTRUCTION NO.1916 DATED 11/05/94 IS RELEVANT WHIC H IS REPRODUCED HEREUNDER: 'INSTANCES OF SEIZURE OF JEWELLERY OF SMALL QUANTIT Y IN THE COURSE OF OPERATION UNDER SECTION 132 HAVE COME TO THE NOTICE OF THE BOARD. THE QUESTION OF A COMMON APPROACH TO SITUATION WHERE SE ARCH PARTIES COME ACROSS ITEMS OF JEWELLERY HAS BEEN EXAMINED BY THE BOARD AND FOLLOWING GUIDELINES ARE ISSUED FOR STRICT COMPLIANCE: I) IN THE CASE OF A WEALTH-TAX ASSESSEE, GOLD JEWEL LERY AND ORNAMENTS FOUND IN EXCESS OF THE GROSS WEIGHT DECLARED IN THE WEALTH-TAX RETURN ONLY NEED TO BE SEIZED. II) IN THE CASE OF A PERSON NOT ASSESSED TO WEALTH -TAX GOLD JEWELLERY LAND ORNAMENTS TO THE EXTENT OF 500 GMS PER MARRIED LADY 250 GMS PER UNMARRIED LADY AND 100 GMS PER MALE MEMBER OF THE F AMILY NEED NOT BE SEIZED....' AS CAN BE SEEN FROM THE ABOVE INSTRUCTION OF CBDT, THE CBDT ITSELF HAS LAID SOME BENCHMARK OF POSSESSING 100 GM PER MALE M EMBER WHEREVER WEALTH TAX RETURN IS NOT FILED. THEREFORE, THE APPE LLANT'S CONTENTION THAT HE SOLD 382.93 GM DURING THE YEAR UNDER CONSIDERATION FOR WHICH NO DETAILS OF EARLIER PURCHASES ARE AVAILABLE CANNOT BE ACCEPTED TO BE CORRECT. XI) IN THIS REGARD, RELIANCE IS ALSO PLACED ON THE DECISION OF THE HON'BLE SUPREME COURT OF INDIA IN THE FOLLOWING CASES: 1. CIT VS. DURGA PRASAD MORE 82 ITR 540 (SC) 2. SUMATI DAYAL VS. CIT 214 ITR 801 (SC) 3. CIT VS. P. MOHANAKALA 291 ITR 278 (SC) THE HON'BLE SUPREME COURT WHILE DEALING WITH PRINCI PLES OF PREPONDERANCE OF PROBABILITIES HAS HELD THAT CERTAIN TRANSACTIONS CANNOT BE JUST ACCEPTED ON THE FACE VALUE AND ONE HAS TO ANALYSE THE PREPON DERANCE OF PROBABILITIES BASED ON ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE UNDER CONSIDERATION. XII) IN CASE THE CONTENTION OF THE APPELLANT R EGARDING SALE OF JEWELLERY IS TO BE ACCEPTED, STILL IT IS NOT UNDERSTOOD AS TO WHY THE APPELLANT HAS NOT DECLARED CAPITAL GAIN/CAPITAL LOSS ON ACCOUNT OF AL LEGED SALE OF JEWELLERY. THIS ITSELF GOES TO ESTABLISH THAT THE APPELLANT HA S NOT ACTUALLY SOLD JEWELLERY AND IN CASE THE APPELLANT HAS SOLD JEWELL ERY, HE WOULD HAVE ITA NO.2188/CHNY/2019 :- 8 -: DECLARED CAPITAL GAIN/CAPITAL LOSS AS PER THE INCOM E TAX RETURN. IT IS ALSO PERTINENT TO MENTION HERE THAT THE RETURN OF INCOME FILED IS DULY VERIFIED AND EVEN PROSECUTION PROCEEDINGS COULD BE INITIATED FOR WRONG VERIFICATION OF INCOME-TAX RETURN. THEREFORE, THIS ALSO GOES TO ESTABLISH THAT THE APPELLANT HAS NOT EARNED ANY CAPITAL GAIN/CAPITAL L OSS ON ACCOUNT OF SALE OF JEWELLERY. XIII) AS STATED BY THE AO IN THE SUPPLEMENTARY REMAND REPORT, THE APPELLANT HAS NOT DISCHARGED PRIMARY ONUS CAST UPON HIM U/S 68 OF THE ACT AS THE SOURCE OF CASH PAID BY THE ALLEGED PURCHASER S HAVE NOT BEEN ESTABLISHED. XIV) AS THE PRIMARY ONUS CAST UPON THE APPELLAN T OF ESTABLISHING THE SOURCE OF CASH ALLEGEDLY RECEIVED IS NOT ESTABLISHE D, IT IS HELD THAT THE AO HAS RIGHTLY TREATED THESE RECEIPTS AS UNEXPLAINED C ASH CREDIT. 7.3.4 IN VIEW OF THE ABOVE DISCUSSION AND ALSO AFTE R CONSIDERING ALL THE FACTS AND CIRCUMSTANCES OF THE CASE UNDER CONSIDERA TION AND THE PRINCIPLES OF PREPONDERANCE OF PROBABILITIES, IT IS HELD THAT THE ALLEGED TRANSACTION IN JEWELLERY IS A SHAM TRANSACTION WHICH IS ALSO PARTL Y ACCEPTED BY THE APPELLANT TO THE EXTENT OF RS.2,66,000/-. IN VIEW O F THESE FACTS, IT IS HELD THAT THE AO HAS RIGHTLY ADDED RS.9,49,200/- AS UNEX PLAINED CASH CREDIT. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 5. AGGRIEVED BY AN AFORESAID APPELLATE ORDER PASSED BY LEARNED CIT(A), THE ASSESSEE FILED SECOND APPEAL WITH TRIBUNAL. TH E LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THERE IS A GAP OF SIX YEARS IN RECORDING OF STATEMENTS BY THE AO OF THE BUYERS OF JEWELLERRY, D URING REMAND REPORT PROCEEDINGS CONDUCTED AT BEHEST OF DIRECTIONS OF LE ARNED CIT(A) AND HENCE, SATISFACTORY EXPLANATION COULD NOT BE PROVID ED. THE LEARNED COUNSEL FOR THE ASSESSEE EXPLAINED THAT ASSESSEE I S SALARIED EMPLOYEE WITH ICICI BANK AND THERE IS NO REQUIREMENT FOR ASS ESSEE TO MAINTAIN BOOKS OF ACCOUNTS. THE LD.DR, ON THE OTHER HAND, S UBMITTED THAT DETAILED ENQUIRES WERE MADE BY REVENUE AND ASSESSEE COULD NO T SATISFACTORILY EXPLAIN SOURCES OF CASH DEPOSITS. THE LEARNED DR W OULD ARGUE THAT ASSESSEE HIMSELF ADMITTED THAT RS. 2.66 LAKHS SHOULD BE ADDED TO THE ITA NO.2188/CHNY/2019 :- 9 -: INCOME OF THE ASSESSEE AS HE COULD NOT EXPLAIN THE SALE OF JEWELLERY TO THAT EXTENT. IT WAS SUBMITTED BY LEARNED DR THAT E NQUIRIES MADE WITH SEVERAL PARTIES TO WHOM ASSESSEE HAS CLAIMED TO HAV E PURPORTEDLY SOLD JEWELLERIES HAVE DENIED TO HAVE PURCHASED JEWELLER Y FROM THE ASSESSEE. SOME OF NOTICES SENT TO THESE PARTIES HAVE RETURNED BACK AND SOME OF THE PARTIES HAVE DENIED TO HAVE PURCHASED JEWELLERY FRO M THE ASSESSEE. IT WAS SUBMITTED THAT ASSESSEE HAS CLAIMED TO HAVE SOL D 382.93 GRAMS OF GOLD JEWELLERY . IT IS SUBMITTED BY LEARNED DR THA T SAID GOLD JEWELLERY WAS NOT DECLARED IN WEALTH TAX RETURN . IT WAS SUBMITTE D BY LEARNED DR THAT THIS CLAIM OF GOLD JEWELLERY IS AN AFTERTHOUGHT AS ASSESSEE WAS CORNERED BY REVENUE IN SCRUTINY PROCEEDINGS . IT WAS SUBMITTED BY LEARNED DR THAT INFORMATION WAS RECEIVED BY AO THROUGH AIR THAT MOR E THAN RS. 32 LAKHS WAS DEPOSITED IN CASH IN SAVING BANK ACCOUNT BY THE ASSESSEE IN HIS BANK ACCOUNT . 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. WE HAVE OBSERVED THAT ASSESSEE IS A SALARIED EMPLOY EE WITH ICICI BANK. THE CASE OF THE ASSESSEE WAS SELECTED FOR FRAMING S CRUTINY ASSESSMENT UNDER CASS. THERE WAS AIR INFORMATION WITH AO THAT ASSESSEE HAS DEPOSITED RS. 32,52,142/- IN CASH IN HIS SAVING BANK ACCOUNT MAIN TAINED WITH ICICI BANK , DURING THE YEAR UNDER CONSIDERAT ION. THE ASSESSEE WAS ASKED BY AO TO EXPLAIN SOURCES OF CASH DEPOSITS IN HIS BANK ACCOUNT. THE ASSESSEE COULD NOT SATISFACTORILY EXPLAIN SOURCES O F CASH DEPOSITS TO THE ITA NO.2188/CHNY/2019 :- 10 -: TUNE OF RS. 9,49,200/- IN HIS BANK ACCOUNT DURING ASSESSMENT PR OCEEDINGS, WHICH LED AO TO MAKE ADDITIONS TO THE INCOME OF THE ASSESSEE WHICH WERE LATER CONFIRMED BY LEARNED CIT(A). THE ENQUIRIES W ERE MADE BY AO IN ASSESSMENT PROCEEDINGS AS WELL AS IN THE REMAND PRO CEEDINGS CONDUCTED BY THE AO AS DIRECTED BY LEARNED CIT(A), WHEREIN MO ST OF THE PARTIES DENIED TO HAVE TRANSACTED TO HAVE PURCHASED JEWELLE RY FROM ASSESSEE OR SATISFACTORY EXPLANATION WAS NOT FORTHCOMING FROM T HESE ALLEGED BUYERS . SOME OF THE PARTIES COULD NOT BE LOCATED. THE ASSES SEE ITSELF ADMITTED THAT RS. 2,66,000/- OUT OF TOTAL ADDITIONS MADE OF RS. 9 ,49,200/- BE ADDED TO HIS INCOME AS UNEXPLAINED CASH DEPOSIT IN HIS BANK ACCOUNT. IT IS PERTINENT TO MENTION THAT ASSESSEE HAD NOT DECLARED ANY CAPIT AL GAIN EARNED ON SALE OF JEWELLERY IN RETURN OF INCOME FILED WITH RE VENUE. WE HAVE ALSO OBSERVED THAT ASSESSEE HAS NOT FILED ANY WEALTH TAX RETURN WITH THE DEPARTMENT NOR ANY EVIDENCE IS FILED AS TO DECLARAT ION OF THE SAID JEWELLERY IN RETURN OF INCOME R FILED WITH REVENUE FOR THIS YEAR OR FOR EARLIER ASSESSMENT YEARS AND THE SAID GOLD JEWELLER Y OF 382.93 GRAMS WERE NEVER DISCLOSED BY ASSESSEE TO THE DEPARTMENT. THE ASSESSEE ALSO COULD NOT PRODUCE PURCHASE BILLS FOR PURCHASE OF TH E JEWELLERY TO THE TUNE OF 382.93 GMS. THE SALE OF THE JEWELLERY AS CLAIMED BY ASSESSEE TO HAVE BEEN MADE DURING THE YEAR UNDER CONSIDERATION WAS N OT TO REGISTERED GOLD JEWELERS BUT WERE ALL CLAIMED TO BE MADE TO PRIVATE INDIVIDUALS. THE SALE CONSIDERATION FOR THE ENTIRE SALE OF JEWELLERY AS C LAIMED BY ASSESSEE WAS IN CASH AND NONE OF THE PARTY PAID SALE CONSID ERATION THROUGH BANKING ITA NO.2188/CHNY/2019 :- 11 -: CHANNEL. THUS, IN OUR CONSIDERED VIEW KEEPING IN V IEW TOTALITY OF CIRCUMSTANCES ON THE TOUCH STONE OF PREPONDERANCE O F PROBABILITIES, THE ENTIRE TRANSACTION FOR SALE OF GOLD JEWELLERY IS A N AFTERTHOUGHT AND A SHAM TRANSACTION WHICH IS CLAIMED BY ASSESSEE AS HE WAS CORNERED BY REVENUE. THUS, WE HOLD THAT ASSESSEE COULD NOT SATISFACTORIL Y EXPLAIN TRANSACTIONS FOR SALE OF GOLD JEWELLERY. THE AMOUNTS WERE DEPOSI TED IN CASH IN THE BANK ACCOUNT MAINTAINED BY ASSESSEE AND ONUS WAS ON ASSE SSEE TO SATISFACTORILY EXPLAIN SOURCES OF CASH DEPOSIT IN H IS BANK ACCOUNT WHICH IN THE INSTANT CASE, THE ASSESSEE FAILED TO SATISFACTO RILY EXPLAIN AND SECTION 68 IS CLEARLY APPLICABLE. REFERENCE IS DRAWN TO DEC ISION OF HONBLE PUNJAB AND HIGH COURT IN THE CASE OF SUDHIR KUMAR SHARMA ( HUF) V. CIT REPORTED IN (2014) 46 TAXMANN.COM 340(P&H HC) . THE HONBLE SUPREME COURT DISMISSED SLP FILED AGAINST AFORESAID DECISION OF H ONBLE PUNJAB AND HARYANA HIGH COURT WHICH IS REPORTED IN (2016) 69 TAXMANN.COM 219(SC). HOWEVER, VIDE CBDT INSTRUCTION NUMBER 1916 DATED 11.05.1994 WHICH STIPULATES THAT IN CASE OF MALE MEMBER , 100 GRAMS OF GOLD JEWELLERY COULD BE TREATED AS HELD EXPLAINED , WE G IVE BENEFIT OF THE AFORESAID CBDT INSTRUCTION TO THE ASSESSEE IN TERMS OF AFORESAID CBDT INSTRUCTION, WHILE REST OF THE SALE OF JEWELLERY A S CLAIMED BY ASSESSEE COULD NOT BE ACCEPTED AND THE SALE CONSIDERATION OF 282.92 GRAMS OF GOLD JEWELLERY AS CLAIMED BY ASSESSEE IS TO BE HELD AS U NEXPLAINED AS INCOME FROM UNDISCLOSED SOURCES IN THE HANDS OF ASSESSEE W HICH IS TO BROUGHT TO TAX IN THE HANDS OF ASSESSEE. HOWEVER, THE ASSESS EE WILL BE REQUIRED TO PAY TAX ON CAPITAL GAIN ARISING FROM SALE OF SAID 1 00 GM OF GOLD JEWELLERY ITA NO.2188/CHNY/2019 :- 12 -: AS PER PROVISIONS OF THE 1961 ACT. THE AO IS DIRECT ED TO BRING CAPITAL GAINS ON SALE OF 100 GM OF JEWELLERY TO TAX IN THE HANDS OF ASSESSEE IN ACCORDANCE WITH LAW, WHILE REST OF SALE CONSIDERATI ON IS TO BE BROUGHT TO TAX AS UNEXPLAINED INCOME. THE ASSESSEE IS DIRECTED TO FILE BEFORE AO COMPUTATION FOR WORKING OF CAPITAL GAINS ON SALE OF 100 GMS OF GOLD JEWELLERY , FOR VERIFICATION BY THE AO. THE MATTER IS REMANDED TO AO TO THAT EFFECT. THE AO SHALL PROVIDE PROPER AND ADEQUA TE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO. 2188 /CHNY/2019 FOR AY: 2011-12 IS PARTLY ALLOWED AS IND ICATED ABOVE. ORDER PRONOUNCED ON THE 10 TH DAY OF FEBRUARY, 2020 IN CHENNAI. SD/- SD/- ( . . . ) ( N.R.S. GANESAN ) /JUDICIAL MEMBER ( ' ) ( RAMIT KOCHAR ) /ACCOUNTANT MEMBER /CHENNAI, 2 /DATED: 10 TH FEBRUARY, 2020. TLN . ,'3 43 /COPY TO: 1. + /APPELLANT 4. 5 /CIT 2. ,-+ /RESPONDENT 5. 3 , /DR 3. 5 ( ) /CIT(A) 6. ( /GF