ITO, Ludhiana V. Smt. Monica Thapar, Ludhiana

ITA 58/CHANDI/2007

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4506 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-07-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 12-01-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: S K MUKHI
• Keywords: Income from undisclosed sources; Valuation report
• Section: 147; 69; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.58/CHD/2007 ASSESSMENT YEAR : 1998-99 THE INCOME TAX OFFICER, VS SMT. MONICA THAPAR, WARD VI(2), 2958, GURDEV NAGAR, AAYAKAR BHAWAN, LUDHIANA. RISHI NAGAR, LUDHIANA. PAN: ABUPT-5883A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI J.S.NAGAR RESPONDENT BY : SHRI S.K.MUKHI DATE OF HEARING : 24.07.2013 DATE OF PRONOUNCEMENT : 24.09.2013 O R D E R PER SUSHMA CHOWLA, J.M. : THE PRESENT APPEAL ARISES FROM THE ORDER OF THE HO N'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE'S OWN CASE IN ITA NO . 540 OF 2008 DATED 18.05.2012. THE HON'BLE HIGH COURT HAD UPHEL D THE RE- ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 148 OF THE ACT BEING VALID. HOWEVER, THE ISSUE ON MERITS WAS REMANDED B ACK TO THE TRIBUNAL FOR FRESH DECISION IN ACCORDANCE WITH LAW, IN VIEW OF THE RATIO LAID DOWN BY THE HON'BLE HIGH COURT IN CIT LUDHIANA VS S HRI PREM PAL, PROPRIETOR IN ITA NO. 155 OF 2008 DATED 14.12.2010. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPEAL FILED BY THE REVENUE IN ITA NO. 58/CHD/2007 AND CROSS OBJECTIONS FILED B Y THE ASSESSEE IN CO NO. 10/CHD/2007 RELATING TO ASSESSMENT YEAR 1998 -99 WERE DECIDED BY THE TRIBUNAL VIDE ORDER DATED 18.01.2008. THE T RIBUNAL, IN-TURN 2 FOLLOWING THE RATIO LAID DOWN IN SHRI PREM PAL VS I TO IN ITA NO. 257/CHD/2003 ORDER DATED 31.05.2007 HAD HELD THAT T HE ISSUES ARISING IN THE PRESENT CASE WERE IDENTICAL TO THE ISSUE IN THE CASE OF SHRI PREM PAL, PROPRIETOR (SUPRA) AND IT WAS, THUS HELD THAT THE A SSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER IN RE-OPENING THE ASSESSMENT IN THE IMPUGNED ASSESSMENT YEAR WERE NOT VALID. THE C ROSS OBJECTIONS FILED BY THE ASSESSEE WERE THUS, ALLOWED AND THE AP PEAL OF REVENUE DEALING WITH THE MERITS OF THE ADDITION WAS HELD TO BE INFRUCTUOUS IN VIEW OF QUASHING THE ASSESSMENT FRAMED BY THE ASSES SING OFFICER. 3. THE REVENUE FILED AN APPEAL AGAINST THE ORDER OF THE TRIBUNAL AND THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ITA NO. 540 OF 2008 VIDE JUDGEMENT DATED 18.05.2012, IN-TURN FOLLOWING THE R ATIO LAID DOWN BY THE HON'BLE HIGH COURT IN CIT LUDHIANA VS PREM PAL, PROPRIETOR (SUPRA) HELD THE PROCEEDINGS INITIATED UNDER SECTIO N 148 OF THE ACT TO BE VALID AND THE MATTER WAS REMANDED BACK TO THE TRIBU NAL TO DECIDE THE ISSUE ON MERITS. CONSEQUENTLY, THE GROUND OF APPEA L NO. 2 RAISED BY REVENUE IS LISTED FOR ADJUDICATION, WHICH READS AS UNDER : THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE T HE LD. CIT(APPEALS)-II LUDHIANA HAS ERRED IN DELETING THE ADDITION OF RS.2147176/- MADE UNDER SECTION 69A OF INCOME-TAX ACT,1961. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE HAD FILED DECLARATION UNDER VDIS SCHEME, 1997. HOWEVER, THE ASSESSEE WAS NOT ABLE TO DEPOSIT THE TAX ON THE DECLARED AMOUNT OF R S.10,19,809/- AND HENCE, THE DISCLOSURE MADE BY THE ASSESSEE WAS NOT ACCEPTED BY THE COMMISSIONER OF INCOME-TAX. THE ASSESSEE HAD MADE THE SAID DISCLOSURE OF RS.10,19,809/- ATTRIBUTABLE TO VALUE OF JEWELLERY ACQUIRED DURING THE YEAR 1986-87 FROM UNDISCLOSED SOURCES. THE ASSESSEE HAD ENCLOSED THE VALUATION REPORT DATED 17.12.1997 VALU ING THE JEWELLERY AS 3 ON 1.4.1987, ALONGWITH THE SAID DECLARATION. AN AF FIDAVIT WAS ALSO FILED BY THE ASSESSEE DECLARING THAT THE JEWELLERY WAS AC QUIRED IN THE YEAR 1986-87. AS THE ASSESSEE HAD FAILED TO MAKE THE PA YMENT OF TAXES ON THE DISCLOSED INCOME UNDER THE VDIS SCHEME 1997, TH E SAID INFORMATION WAS USED FOR INITIATING THE PROCEEDINGS UNDER SECTION 147 OF THE INCOME-TAX ACT BY ISSUING NOTICE UNDER SECTI ON 148 OF THE ACT. THIS SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE W HY THE SAID AMOUNT DECLARED BY THE ASSESSEE SHOULD NOT BE ADDED AS INC OME UNDER SECTION 69A OF THE ACT AS THE ASSESSEE WAS FOUND TO BE THE OWNER OF THE JEWELLERY DURING THE FINANCIAL YEAR 1997-98. THE R EPLY OF THE ASSESSEE IS REPRODUCED BY THE ASSESSING OFFICER UNDER WHICH, FIRST IT WAS EXPLAINED THAT THE INITIATION OF PROCEEDINGS IN ASS ESSMENT YEAR 1998-99 WERE INCORRECT AND VOID, AS THE ASSESSEE ALONGWITH THE SAID DECLARATION HAD FILED AN AFFIDAVIT AND MENTIONED THAT THE JEWEL LERY WAS ACQUIRED IN THE ASSESSMENT YEAR 1987-88. FURTHER REFERENCE WAS MADE TO THE VALUATION REPORT FROM APPROVED VALUER AS ON 01.04.1 987 FROM WHICH, AS PER ASSESSEE, IT WAS CLEAR THAT THE JEWELLERY WAS A CQUIRED IN THE ASSESSMENT YEAR 1987-88. THE NEXT PLEA OF THE ASSE SSEE BEFORE THE ASSESSING OFFICER WAS THAT THE PROVISIONS OF SECTIO N 69A WERE NOT APPLICABLE AS THE TWO INGREDIENTS OF THE SAID SECTI ON WERE NOT SATISFIED. THE LAST PLEA OF THE ASSESSEE WAS THAT THE SAID JEW ELLERY WAS PURCHASED IN ASSESSMENT YEAR 1987-88 AND NOT IN ASSESSMENT YE AR 1998-99. IT WAS FURTHER CLAIMED BY THE ASSESSEE THAT THE ASSESSEE SUBMITTED DOCUMENTARY EVIDENCE IN SHAPE OF BILLS, WHICH PROVE D THAT IT WAS PURCHASED IN 1987-88. . THE ASSESSING OFFICER, HOWEVER WAS OF THE VIEW THAT THE PROCEEDINGS UNDER SECTION 148 OF THE ACT WERE RIGHTLY INITIATED AND THE UNDISCLOSED INVESTMENT IN THE JE WELLERY HAD TO BE ASSESSED IN THE HANDS OF THE ASSESSEE IN THE ASSESS MENT YEAR 1998-99. 4 THE VALUE OF THE JEWELLERY WAS COMPUTED ON THE BASI S OF MARKET RATE OF GOLD AND AN ADDITION OF RS.21,47,176/- WAS MADE IN THE HANDS OF THE ASSESSEE. 5. THE CIT(APPEALS), THOUGH UPHELD THE INITIATION O F RE-ASSESSMENT PROCEEDINGS UNDER SECTION 148 OF THE ACT, BUT VIDE PARA 13.3 HELD THAT THE UNDISCLOSED INCOME PERTAINED TO ASSESSMENT YEAR 1987-88 IN VIEW OF VALUATION REPORT OF THE JEWELLER AS ON 01.04.198 7 AND ALSO THE AFFIDAVIT FILED BY THE ASSESSEE THAT IT HAD ACQUIRE D THE JEWELLERY DURING THE YEAR 1986-87. THE CIT(APPEALS), FROM THE RECOR D ALSO NOTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSEE FILED BEFORE THE ASSESSING OFFICER THE RATES IN THE FINANCIAL YE AR 1986-87 FROM A JEWELLER M/S GIAN CHAND RAM DASS. THE CIT(APPEALS) WAS OF THE VIEW THAT THERE WAS NO MATERIAL IN POSSESSION OF THE ASS ESSING OFFICER TO ARRIVE AT THE CONCLUSION THAT THE UNDISCLOSED INCOM E WAS EARNED IN FINANCIAL YEAR 1997-98 AND IT WAS, THUS HELD THAT T HERE WAS NO JUSTIFICATION IN THE SAID ADDITION OF RS.21,47,176/ -. THE TRIBUNAL IN THE FIRST ROUND OF THE APPEAL HAD NOT ADJUDICATED UPON THE SAID ISSUE AS THE RE-ASSESSMENT PROCEEDINGS INITIATED UNDER SECTION 1 48 OF THE ACT WERE HELD TO BE INVALID. 6. SIMILAR ISSUE IN RESPECT OF THE DECLARATION OF J EWELLERY UNDER THE VDIS SCHEME, 1997 AND NON-PAYMENT OF TAX ON THE DIS CLOSED INCOME AND CONSEQUENT ADDITION OF THE VALUE OF JEWELLERY I N THE HANDS OF THE ASSESSEE AROSE BEFORE THE TRIBUNAL IN THE CASE OF S HRI PREM PAL, PROPRIETOR (SUPRA). THE TRIBUNAL IN ITA NO. 257/CH D/2003 IN APPEAL RELATING TO ASSESSMENT YEAR 1998-99 VIDE ORDER DATE D 21.05.2007 HELD THE INITIATION OF PROCEEDINGS UNDER SECTION 147/148 TO BE UNJUSTIFIED. THE HON'BLE HIGH COURT IN AN APPEAL FILED BY THE RE VENUE REPORTED IN 330 ITR 499 (P&H) UPHELD THE INITIATION OF RE-ASSES SMENT PROCEEDINGS 5 UNDER SECTION 147/148 OF THE ACT WHEREIN A DECLARAT ION WAS MADE PURSUANT TO THE SCHEME UNDER VDIS 1997 AND THE SAID DECLARATION COULD NOT BE ACCEPTED BECAUSE OF NON-PAYMENT OF THE DUE T AXES ON THE SAID DISCLOSED INCOME. THE HON'BLE HIGH COURT HELD THAT SUCH INFORMATION WAS MATERIAL TO THE FORMATION OF BELIEF THAT THERE WAS ESCAPEMENT OF INCOME IN THE HANDS OF THE ASSESSEE. HOWEVER, IN V IEW OF THE SAID DECLARATION, WHERE THE ASSESSEE HAD JEWELLERY OR VA LUABLES, THE SAME WOULD BE DEEMED TO BE THE INCOME FOR THE FINANCIAL YEAR IN WHICH THE SAID VALUABLES WERE FOUND WITH THE ASSESSEE. THE H ON'BLE HIGH COURT FURTHER HELD THAT IN CASES WHERE THE ASSESSEE OFFER S AN ACCEPTABLE EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISIT ION THEREOF TO REBUT THE STATUTORY PRESUMPTIONS, THEN NO ADDITION IS TO BE MADE IN THE HANDS OF THE ASSESSEE. 7. THE ISSUE, THUS HAS BEEN SET ASIDE TO THE TRIBUN AL IN VIEW OF THE ABOVESAID DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF PREM PAL (SUPRA). 8. THE APPEAL WAS LISTED FOR HEARING ON 30.07.2012 FOR WHICH NOTICE WAS ISSUED TO THE ASSESSEE. HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE AND THE CASE WAS ADJOURNED TO 27.08.2012. THE COUNSEL FOR THE ASSESSEE APPEARED ON 27.08.2012, WHO WAS DIRECTED T O FILE THE POWER OF ATTORNEY ON THE NEXT DATE OF HEARING I.E. 17.10.201 2. THE MATTER WAS FURTHER ADJOURNED TO 11.12.2012 AT THE REQUEST OF T HE COUNSEL FOR THE ASSESSEE ON 17.10.2012. AS THE BENCH DID NOT FUNCTI ON ON 11.2.2012, ANOTHER NOTICE WAS ISSUED TO THE ASSESSEE AND THE A PPEAL WAS FIXED FOR HEARING ON 11.04.2013. AGAIN AT THE REQUEST OF THE ASSESSEE, CASE WAS ADJOURNED TO 25.04.2013 AND THEN TO 16.07.2013. IT WAS POINTED OUT TO THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAID WOUL D BE THE LAST OPPORTUNITY OF HEARING. THE LD. AR FOR THE ASSESSE E ON THE EARLIER DATE 6 OF HEARING HAD POINTED OUT THAT THE ASSESSEE IS IN APPEAL BEFORE THE HON'BLE SUPREME COURT AND THE CASE MAY BE KEPT PEND ING. THE SAID REQUEST OF THE ASSESSEE WAS REJECTED AND THE MATTER WAS FIXED FOR HEARING ON 16.07.2013. HOWEVER, ON 16.07.2013, A RE QUEST WAS MADE BY THE LD. DR FOR THE REVENUE AND APPEAL WAS ADJOURNED FOR HEARING TO 24.07.2013. THE APPEAL WAS HEARD ON 24.07.2013 IN THE PRESENCE OF BOTH THE AUTHORIZED REPRESENTATIVES. 9. THE LD. AR FOR THE ASSESSEE FILED WRITTEN SUBMIS SIONS, WHICH READ AS UNDER : I) ON MERITS : HOWEVER, SINCE ON MERITS THE HON'BLE PUNJAB AND HARYANA HIGH COURT HAS SET ASIDE THE ISSUE BEFO RE THIS HON'BLE ITAT HAVING HELD THE ISSUANCE OF NOTICE U/S 148 OF THE INCOME TAX ACT, 1961 FOR THE A.Y. 1998-99 BEING THE YEAR IN WHICH DECLARATION WAS MADE BY THE APPELLAN T AS VALID WHEREIN HON'BLE PUNJAB AND HARYANA HIGH COURT HAS RELIED UPON THE JUDGMENT OF CIT VS PREM PAL GANDHI (P&H) WHEREIN HON'BLE HIGH COURT HAS HELD THAT ISSUANCE O F NOTICE U/S 148 AS VALID BUT HAS SET ASIDE THE MATTER TO TH E HON'BLE TRIBUNAL FOR FRESH DECISION ON MERITS IN ACCORDANCE WITH LAW AS PER LAST PARA OF THE SAID JUDGMENT, WHICH IS REPROD UCED HEREIN BELOW FOR KIND ATTENTION OF THIS HON'BLE BENCH: 'ACCORDINGLY WE ANSWER THE QUESTION IN FAVOUR OF REVENUE, ALLOW THESE APPEALS AND SET ASIDE THE IMPUGNED ORDERS AND REMAND THE MATTER TO THE TRIBUNAL FOR FRESH DECISION ON MERITS IN ACCORDANCE WITH LAW' II) HENCE RESPECTFULLY FOLLOWING THE FINDIN GS OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT REGARDING ISSUANCE OF NOTICE U/S 148 FOR THE A.Y. 1998-99 BEING THE YEAR UNDER APPEA L ON MERITS UNDER NO CIRCUMSTANCES THE ADDITION OF THE IMPUGNED AMOUNT ON ACCOUNT OF JEWELLERY HAVING ACQUIRED IN T HE A.Y. 1987-88 CAN BE ADDED IN THE A.Y. 1998-99 FOR WHICH AMPLE EVIDENCE HAS BEEN PROVIDED BY THE APPELLANT IN ITS DECLARATION UNDER VDIS SCHEME 1997 WHICH HAS THOUGH BEEN ADMITT ED AND REFERRED BY VARIOUS AUTHORITIES BELOW IN THEIR RESPECTIVE ORDERS WHICH ARE ON RECORD BEFORE THIS HON'BLE BENC H. KINDLY REFER TO A.O/S ORDER PAGE 2 PARA 5(II) AND (III); CIT (A )'S ORDER PAGE 1 PARA 3; ITAT'S ORDER PAGE 2 PARA 3. III) FURTHERMORE, TO SUBSTANTIATE THE STAND OF THE APPEL LANT A SIMPLE EXAMPLE IS BEING QUOTED HERE THAT IS TO SA Y THAT IF A SEARCH U/S 132 OF THE INCOME TAX ACT, 196 1 IS CONDUCTED IN THE A.Y. 1998-99 WHEREI N CERTAIN DOCUMENTS/SALE DEED OF PURCHASE OF SOME PROPERTY AR E SEIZED WHICH CLEARLY DEPICTS THAT TH E IMPUGNED PROPERTY WAS PURCHASED IN THE A.Y. 1987-88 UNDER NO 7 CIRCUMSTANCES CAN SUCH AMOUNT FOR PUR CHASE OF PROPERTY CAN BE ADDED IN THE A.Y. 1998-99 BEING THE YEAR OF DETECTION OF SALE DEED. IV) FURTHERMORE, THE LD A.O., IS NOT JUSTIFIED IN HOLDING THE IMPUGNED AMOUNT OF JEWELLERY AS PERTAINING TO A.Y. 1998-99 AND MAKING THE ADDITION WITHOUT CONSIDERING THE FAC T THAT THE DECLARATION BY THE PETITIONER WAS MADE ON ACCOUNT OF THE IMPUGNED JEWELLERY FOR A.Y. 1987-88, WHICH WAS SUP PORTED WITH DECLARATION IN FORM 56D ALONGWITH AFFIDAVIT OF THE PETITIONER AS SUPPORTED BY APPROVED VALUERS REPORT AND ALSO THE RATES OF JEWELLERY AS ON 01.04.1987 SO THAT SO THE ADDITION COULD ONLY BE VALID FOR A.Y. 1987-88 A ND NOT FOR 1998-99 FOR WHICH THERE WAS NO SUPPORTING MATERIAL WITH THE ASSESSING AUTHORITY SO THE ORDER OF A.O., IS PERVER SE. V) ALSO THE PERVERSITY OF THE ORDERS OF ID A.O., IS AP PARENT FROM THE FACT THAT THE A.O., HAS APPLIED THE RATES OF JE WELLERY AS ON 31.08.1998 BY PRESUMPTION THAT THE JEWELLERY WAS AC QUIRED IN YEAR ENDING 31.03.1998 AND THUS HAS MADE THE ADDITI ON OF RS. 21,47,476/- AS AGAINST JEWELLERY DECLARED AND A CQUIRED AS PER DECLARATION IN VDIS IN THE A.Y. 1997-98 OF RS. 10,19,809/-. VI) ALSO THERE IS NO MATERIAL ON RECOR D BEFORE THE AUTHORITIES BELOW EXCEPT THE DECLARATION MADE BY TH E APPELLANT TO HOLD THE IMPUGNED JEWELLERY HAVING BEE N ACQUIRED IN A.Y. 1998-99 AND EVEN OTHERWISE UNDER NO CIRCUMSTAN CES THE ASSESSEE BEING A LADY CAN EARN UNDISCLOSED INCOME T O THE EXTENT OF RS. 21,47,176/- AS SO EVEN SUPPORTED BY THE JUDGMEN T OF HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CIT, ERNAKULA M VS P.K. NOORJAHAN (SMT) 237 ITR 570 SC. VII) ALSO KINDLY REFER TO THE EARLIER JUDGMENT O F THIS HON'BLE TRIBUNAL DATED 18.01.2008 WHEREIN THIS HON'BLE TRI BUNAL IN PARA 6 PAGE 4 BY FOLLOWING THE JUDGMENT OF SHRI PREM PAL AND THAT OF INDER KUMAR BACHHANI HUF VS ITO (LUCKNOW BENCH) 99 ITD 621 HAD EVEN GIVEN INDIRECT FINDINGS ON MERITS TH AT EXCEPT FOR THE DECLARATION, AFFIDAVIT AND VALUATIO N REPORT THERE WAS NO OTHER MATERIAL WITH THE DEPARTMENT TO HOLD THAT ANY JEWELLERY OR ANY PROPERTY WAS ACQUIRED IN THE A.Y. 1998-99. VIII) ALSO KINDLY REFER TO THE JUDGMENT OF PREM PAL VS IT O BY THIS HON'BLE BENCH DATED 31.05.2007 AT PAGE 7 WHEREIN IT WAS HELD: 'THE MATERIAL SO RELIED UPON CLEARLY POINTS OUT THAT THE ASSETS IN QUESTION WERE ACQUIRED IN THE ASSESSMENT YEAR 1986-87 AND 1987-88 AND NOT IN 1998-99.' HENCE THIS HON'BLE TRIBUNAL HAS EVEN ON MERITS HAS CLEARLY HELD THAT THE ASSETS WERE ACQUIRED IN A.Y. 1986-87. HENC E NO ADDITION CAN BE MADE IN 1998-99 FOR WHICH WE RESPECTFULLY PR AYETH IN THIS APPEAL ALSO. COPY OF THE ORDER OF ITAT IN THE CASE OF PREM PAL VS ITO BY THIS HON'BLE BENCH DATED 31.05.2007 IS ATTAC HED HEREWITH. HENCE WE HEREBY PRAY THAT THE PRESENT APPEAL MAY KI NDLY BE ALLOWED AND THE ADDITION MADE BY THE ID A.O., TO TH E EXTENT OF RS. 21,47,176/-IS BAD IN LAW BEING NOT PERTAINING TO TH E YEAR ON VARIOUS GROUNDS TAKEN BY THE A.O., IN ITS ORDER AND AS REBUTTED BY THE APPELLANT IN-ITS SUBMISSIONS (SUPRA). 8 10. THE LD. AR FOR THE ASSESSEE VEHEMENTLY STATED T HAT THE SAID JEWELLERY WAS PURCHASED BY THE ASSESSEE IN ASSESSME NT YEAR 1986-87 FOR WHICH THE NECESSARY EVIDENCE BY WAY OF VOUCHERS AND BILLS WERE FILED BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE SAID BILLS WERE MISPLACED BY THE ASSESSEE AND AN APPLICATION UNDER RIGHT TO INFO RMATION ACT WAS MOVED BY THE ASSESSEE ON 15.07.2013 FOR COLLECTING THE SAID INFORMATION AVAILABLE ON RECORD WHICH AS PER THE LD . AR FOR THE ASSESSEE HAS NOT BEEN SUPPLIED UP-TO-DATE. FURTHER, IT WAS PLEADED BY THE LD. AR FOR THE ASSESSEE THAT ALL THE DOCUMENTS I.E. THE BI LLS AND VOUCHERS RELATING TO THE SAID JEWELLERY WERE BEFORE THE AUTH ORITY AND UNLESS SOMETHING IS REBUTTED BY THE ASSESSING OFFICER, NO ADDITION WAS POSSIBLE IN THE CASE. RELIANCE WAS PLACED ON CIT V S P.K.NOORJAHAN 237 ITR 570 (S.C) FOR THE PROPOSITION THAT UNDER NO CIRCUMSTANCES, IT COULD BE PRESUMED THAT THE ASSESSEE HAD EARNED INCO ME TO MAKE THE SAID INVESTMENT IN THE PERIOD OF 9 MONTHS OF THE FINANCI AL YEAR. 11. THE LD. DR FOR THE REVENUE PLACING RELIANCE ON THE ORDER OF THE ASSESSING OFFICER POINTED OUT THAT THERE IS NO FIND ING THAT THE BILLS AND VOUCHERS WERE FILED BEFORE THE ASSESSING OFFICER. FURTHER, IT WAS FURTHER POINTED OUT BY LD. DR FOR THE REVENUE THAT THE ASSESSEE HAD FAILED TO FILE COPIES OF THE SAID BILLS AND VOUCHER S EVEN DURING THE PRESENT PROCEEDINGS. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE ADDITION OF RS. 21,47,176/- MADE UNDER SECTION 69A OF THE INCOME TA X ACT. THE ASSESSEE HAD DECLARED JEWELLERY AMOUNTING TO RS. 10 ,19,809/- ACQUIRED DURING THE YEAR 1986-87 UNDER THE VDIS SCHEME 1997. HOWEVER, THE 9 ASSESSEE FAILED TO DEPOSIT THE TAX ON THE SAID DECL ARATION AND THE DISCLOSURE MADE BY THE ASSESSEE WAS NOT ACCEPTED BY THE COMMISSIONER OF INCOME TAX . THE ASSESSEE HAD FILED AN AFFIDAVI T ALONGWITH THE SAID DECLARATION UNDER WHICH IT WAS CLAIMED THAT THE SAI D JEWELLERY WAS ACQUIRED IN THE YEAR 1986-87. FURTHER, THE ASSESSE E HAD ALSO FILED VALUATION REPORT OF REGISTERED VALUER DATED 17.12.1 997, WHO IN-TURN HAD VALUED THE JEWELLERY AS ON 1.4.1987 AT RS. 10,1 9,809/-. THE SAID DISCLOSURE WAS MADE BY THE ASSESSEE IN THE FINANCIA L YEAR 1997-98 UNDER THE VDIS SCHEME 1997. THE ASSESSING OFFICER IN VIEW OF THE FAILURE OF THE ASSESSEE TO SUBSTANTIALLY PROVE THE INVESTMENT IN JEWELLERY IN ASSESSMENT YEAR 1987-88, INCLUDED THE VALUE OF JEWELLERY AT THE MARKET RATE OF GOLD AMOUNTING TO RS. 21,47,1 76/- AS INCOME FROM UNDISCLOSED SOURCES IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 1998-99. THE ASSESSEE WAS AGGRIEVED BY THE SAID AD DITION MADE BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 1998-99. THE CIT(APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE IN VIEW OF THE DE CLARATION AND AFFIDAVIT FILED BY THE ASSESSEE UNDER WHICH IT WAS CLAIMED THAT THE SAID JEWELLERY WAS PURCHASED IN THE FINANCIAL YEAR 1986- 87. 13. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS PREM PAL (SUPRA) HAD HELD THAT THE INITIATION OF PR OCEEDINGS FOR RE- ASSESSMENT UNDER SECTION 148 OF THE ACT RELATING TO ASSESSMENT YEAR 1998-99 WAS JUSTIFIED WHEREIN THE DECLARATION WAS M ADE IN THE FINANCIAL YEAR 1997-98 AND THE ASSESSEE HAVING NOT PAID THE T AXES, THE SAID DECLARATION WAS HELD TO BE NEVER MADE. IT WAS FURT HER HELD BY THE HON'BLE HIGH COURT THAT THE ASSESSING OFFICER WAS, THUS JUSTIFIED IN INITIATING PROCEEDINGS FOR RE-ASSESSMENT UNDER SECT ION 148 OF THE ACT AND HOLDING THAT THE VALUABLES FOUND WERE LIABLE TO BE ADDED TO THE INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 1998-99 IN THE ABSENCE OF 10 VALID EXPLANATION. IT WAS FURTHER HELD THAT THE ADDITION COULD BE SET ASIDE IF THE EXPLANATION OF THE ASSESSEE WAS FOUND TO BE ACCEPTABLE. THE HON'BLE HIGH COURT FURTHER HELD, IT COULD NOT HAVE BEEN SAID THAT NO RE-ASSESSMENT COULD AT ALL BE MADE ON THE BASIS OF DECLARATION SHOWING THE ASSESSEE AS THE OWNER OF THE VALUABLES IN THE FINANCIAL YEAR MERELY BECAUSE THE DECLARATION STATED THAT THE ACQU ISITION OF VALUABLES WAS MUCH EARLIER. THE HON'BLE HIGH COURT CONCLUDED BY HOLDING SUCH DECLARATION BY ITSELF WAS NOT ENOUGH TO REBUT THE STATUTORY PRESUMPTION UNDER SECTION 69A UNLESS THE ASSESSEE S UBSTANTIATED THE SAME. 14. IN VIEW OF THE ABOVESAID RATIO LAID DOWN BY THE HON'BLE HIGH COURT, WE FIND NO MERIT IN THE REPEATED PLEAS OF TH E ASSESSEE IN THIS CASE THAT NO ADDITION COULD BE MADE IN THE INSTANT ASSESSMENT YEAR AS THE ASSESSEE HAD DECLARED THAT THE SAID JEWELLERY W AS PURCHASED IN THE ASSESSMENT YEAR 1987-88 WHICH IN-TURN WAS SUPPORTED BY THE AFFIDAVIT FILED BY THE ASSESSEE AND ALSO THE VALUATION REPORT OF REGISTERED VALUER. THE HON'BLE HIGH COURT IN CIT VS PREM PAL (SUPRA) H AD CLEARLY LAID DOWN THE PROPOSITION THAT THERE IS A STATUTORY PRES UMPTION UNDER SECTION 69A OF THE ACT THAT WHERE THE ASSESSEE IS FOUND TO POSSESS JEWELLERY OR VALUABLES, THE SAME CAN BE DEEMED TO BE INCOME FOR THE FINANCIAL YEAR IN WHICH VALUABLES ARE FOUND WITH THE ASSESSEE. TH E SAID PROPOSITION LAID DOWN BY THE HON'BLE HIGH COURT IN CIV VS PREM PAL (SUPRA) IS WITH THE RIDER THAT WHERE THE ASSESSEE OFFERS AN AC CEPTABLE EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION THEREOF, THE STATUTORY PRESUMPTION AGAINST THE ASSESSEE AS LAID DOWN UNDER SECTION 69A OF THE ACT, THUS CAN BE REBUTTED. THE ONUS, THUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE SAID JEWELLERY HAS BEEN ACQUIRED IN THE YEAR OTHER 11 THAN THE YEAR IN WHICH THE ASSESSEE WAS FOUND TO BE IN POSSESSION OF THE SAID JEWELLERY I.E. IN THE PRESENT CASE, IN ASSESSM ENT YEAR 1998-99. 15. NOW COMING TO THE EXPLANATION OF THE ASSESSEE W ITH REGARD TO THE SOURCE OF ACQUISITION OF THE SAID ITEMS OF JEWELLER Y IN THE EARLIER YEAR I.E. ASSESSMENT YEAR 1987-88, THE LD. AR FOR THE AS SESSEE HAS VEHEMENTLY TIME AND AGAIN ARGUED THAT THE SAID JEWE LLERY WAS NOT ACQUIRED DURING THE FINANCIAL YEAR UNDER CONSIDERAT ION BUT WAS ACQUIRED IN THE ASSESSMENT YEAR 1986-87 WHICH IN-TURN IS EVI DENCED BY THE AFFIDAVIT FILED BY THE ASSESSEE AND ALSO VALUATION REPORT OF THE REGISTERED VALUER, WHICH DOCUMENTS WERE FILED ALONG WITH THE DECLARATION FILED UNDER THE VDIS SCHEME 1997. THE ASSESSEE HAS FAILED TO FURNISH THE REQUISITE DOCUMENTS DURING THE COURS E OF HEARING. HOWEVER, AFTER CLOSE OF THE HEARING, THE ASSESSEE B Y WAY OF LETTER FILED ON 31.7.2013, HAS PLACED ON RECORD THE BILLS OF PUR CHASE OF JEWELLERY IN THE YEAR 1987 ALONGWITH THE COPY OF VALUATION REPOR T FROM THE REGISTERED VALUER OF JEWELLERY. REQUEST WAS MADE T O FILE THE SAID BILLS ALONGWITH THE VALUATION REPORT IN THE INTEREST OF J USTICE. IN THE FIRST INSTANCE, NO COGNIZANCE OF THE SAID DOCUMENTS CAN B E TAKEN AS THE HEARING OF THE APPEAL HAD CONCLUDED ON 24.7.2013 AN D THE ASSESSEE HAS FURNISHED THE ABOVESAID DOCUMENTS ON 31.7.2013. TH E ASSESSEE WAS AFFORDED VARIOUS OPPORTUNITIES AND THE MATTER WAS A DJOURNED FROM DATE TO DATE AT THE REQUEST OF THE ASSESSEE TO FURNISH T HE ABOVESAID DOCUMENTS, WHICH WERE NOT FILED BEFORE THE CLOSE OF THE HEARING. FURTHER, PERUSAL OF THE SAID DOCUMENTS REFLECTS THA T THE ASSESSEE HAD DECLARED DIFFERENT ITEMS OF GOLD AND DIAMOND JEWELL ERY VALUED AT RS. 10,19,809/- AS ON 1.4.1987 VIDE VALUATION REPORT OF REGISTERED VALUER DATED 26.12.1997. THE LIST OF JEWELLERY COMPRISED OF THE FOLLOWING ITEMS : 12 13 16. THE ASSESSEE HAS ENCLOSED THE ISSUE VOUCHER AND BILLS OF THE VARIOUS ITEMS OF JEWELLERY PURCHASED BY HER FROM ON E SHRI GIAN CHAND RAM DASS JEWELLERS, JALANDHAR. THE DETAILS OF THE B ILLS ARE AS UNDER : S.NO. INVOICE NO. & DATE DESCRIPTION GROSS RATE AMOUNT (RUPEES) 1. 103/ 32 BANGLES 1157.360 GMS. 285 ,355/- 14.1.87 9 KADA 2 BRACELETS 2. 121/ 6 KUNDAN SETS 871.290 GMS. 21 6,040/- 21.2.87 3. 103/ 4 SET 1181.020 GMS. 285690/- 6.1.87 2 RANI HAAR 1 SET 1 RANI HAAR WITH MOTI 4. 111/ 14 PENDANT 334.500 GMS. 82960/- 22.1.87 2 KADA 1 CHAIN 1 RATTAN CHOWK 5. 119/ 6 BANGLES 126.270 GMS. 151118/- 17.2.87 6 BANGLES WITH 60.270 GMS. STONE 6. 115/ 3 SETS 241.950 GMS. 122674/- 7.2.87 1 SET WITH RUBIES 27.120 GMS. 1 TOPS 3 RINGS 16.600 GMS. 17. THE LD. AR FOR THE ASSESSEE CLAIMS THAT THE ASS ESSEE HAD PURCHASED ALL THE ITEMS OF JEWELLERY IN FINANCIAL Y EAR 1986-87. THE PERUSAL OF THE BILLS FILED BY THE ASSESSEE DOES NOT INSPIRE CONFIDENCE AS THE BILLS THOUGH ISSUED IN THE MONTH OF JANUARY AND FEBRUARY,1987 ARE KIND OF IN SERIATUM ORDER. THE BILL ISSUED ON 6.1. 1987 IS NUMBERED 103, THEREAFTER BILL DATED 14.1.1987 IS NUMBERED 108, BI LL DATED 22.1.1987 IS NUMBERED 111, THEN DATED 7.2.1987 IS NUMBERED 115, BILL DATED 17.2.1987 IS NUMBERED 119 AND FINALLY BILL DATED 21 .2.1987 IS NUMBERED 121. THE ASSESSEE IS RESIDENT OF LUDHIANA AND ALL THE PURCHASES HAVE BEEN MADE FROM JALANDHAR ON SHORT INTERVALS. FURTH ER, THE ASSESSEE HAD DECLARED ITEMS OF DIAMOND JEWELLERY AND THE ITEM NO . 6 TALKS OF ONE SINGLE PIECE OF DIAMOND VALUED AT RS. 44,000/- ALON GWITH GOLD OF RS. 91,030/-. THE ASSESSEE HAS FAILED TO FURNISH ON RE CORD ANY BILL EVIDENCING THE PURCHASE OF THE SAID ITEM. FURTHER, THE ONUS CAST UPON 14 THE ASSESSEE DOES NOT STAND DISCHARGED MERELY BY FI LING THE ALLEGED PURCHASE BILLS OF VARIOUS ITEMS OF GOLD AND DIAMOND JEWELLERY. THE ASSESSEE HAD TO ESTABLISH THE SOURCE OF INVESTMENT IN THE SAID ASSETS TO THE TUNE OF RS. 10,19,800/- IN THE SAID YEAR. NO EV IDENCE HAS BEEN FILED ON RECORD TO EXPLAIN AND JUSTIFY THE SOURCE OF INVE STMENT IN THE SAID ASSETS. ON VERIFICATION OF THE DETAILS OF PERMANEN T ACCOUNT NUMBER OF THE ASSESSEE , IT REFLECTS THE DATE OF BIRTH OF TH E ASSESSEE TO BE 21.5.1972. THE ASSESSEE IN THE YEAR 1986-87 WAS A BOUT 14 YEARS AND IT IS DIFFICULT TO COMPREHEND THAT HOW A MINOR OF 14 Y EARS HAD COLLECTED FUNDS TO THE TUNE OF MORE THAN RS. 10 LACS TO MAKE THE AFORESAID INVESTMENT. 18. THE LD. AR FOR THE ASSESSEE HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS SMT. P. K.NOORJAHAN (SUPRA). IN THE FACTS OF THE CASE BEFORE THE HON'B LE SUPREME COURT, THE ASSESSEE WAS A MUSLIM LADY AND WAS AGED ABOUT 20 YE ARS DURING THE RELEVANT YEAR UNDER CONSIDERATION. THE ASSESSEE HA D CLAIMED TO HAVE PURCHASED LAND IN ERNAKULAM FOR A SUM OF RS. 34,628 /- AND RS. 25,908/- THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURC E OF INVESTMENT WAS THAT THE SAME WERE FINANCED OUT OF SAVINGS FROM THE INCOME OF THE PROPERTIES WHICH WERE LEFT BY HER MOTHERS FIRST HU SBAND. THE SAID EXPLANATION WAS NOT ACCEPTED. THE TRIBUNAL HELD TH AT EVEN THOUGH THE EXPLANATION ABOUT THE NATURE AND SOURCES OF THE PUR CHASE MONEY WAS NOT SATISFACTORY BUT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, IT WAS NOT POSSIBLE FOR THE ASSESSEE TO EARN THE AMOUNT INVEST ED IN THE PROPERTIES. IT WAS FURTHER HELD BY THE TRIBUNAL THAT SECTION 69 OF THE ACT CONFER ONLY DISCRETION ON THE ASSESSING OFFICER TO DEAL WI TH THE INVESTMENT AS INCOME OF THE ASSESSEE, BUT IT DID NOT MAKE IT MAND ATORY TO BE ASSESSED AS INCOME OF THE ASSESSEE WHERE THE EXPLANATION OF THE ASSESSEE WAS 15 REJECTED. THE HIGH COURT AGREED WITH THE VIEW OF T HE TRIBUNAL. THE HON'BLE SUPREME COURT OBSERVED THAT THE WORD MAY IN SECTION 69 CANNOT BE READ AS SHALL WHICH CLEARLY INDICATES THE INTENTION OF THE PARLIAMENT IN ENACTING SECTION 69 WAS TO CONFER DIS CRETION ON THE INCOME TAX OFFICER IN THE MATTER OF TREATING THE SO URCE OF INVESTMENT WHICH HAS NOT BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE AS INCOME OF THE ASSESSEE AND THE INCOME TAX OFFICER IS NOT O BLIGED TO TREAT SUCH SOURCE OF INVESTMENT AS INCOME IN EVERY CASE WHERE THE EXPLANATION OFFERED BY THE ASSESSEE IS FOUND TO BE NOT SATISFAC TORY. THE HON'BLE APEX COURT FURTHER HELD THE QUESTION WHETHER THE SOURCE OF INVESTMENT SHOULD BE TREATED AS INCOME OR NOT UNDER SECTION 69 HAS TO BE CONSIDERED IN THE LIGHT OF FACTS OF EACH CASE. IN OTHER WORDS, THE DISCRETION HAS BEEN CONFERRED ON THE INCOME-TAX OFF ICER UNDER SECTION 69 OF THE ACT TO TREAT THE SOURCE OF INVESTMENT AS THE INCOME OF THE ASSESSEE IF THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT FOUND SATISFACTORY AND THE SAID DISCRETION HAS TO BE EXER CISED KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PARTICULAR CASE. 19. WE FIND THAT THE RELIANCE PLACED BY THE LD. AR FOR THE ASSESSEE UPON THE RATIO LAID DOWN IN CIT VS SMT. P.K.NOORJAH AN IS MISPLACED. IN FACT, THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT VS SMT. P.K.NOORJAHAN, WHEN APPLIED TO THE FACTS OF TH E PRESENT CASE BEFORE US, ESTABLISHES THE CASE OF THE REVENUE THAT THE SOURCE OF INVESTMENT AS EXPLAINED BY THE ASSESSEE TO BE MADE IN FINANCIAL YEAR 1986-87 CANNOT BE ACCEPTED IN THE FACTS OF THE CASE KEEPING IN MIND THAT THE ASSESSEE, AT THE AGE OF 14 YEARS COULD NOT HAVE EARNED INCOME TO MAKE THE ABOVESAID INVESTMENTS OF MORE THAN 10 L ACS. IN VIEW THEREOF, WHERE THE EXPLANATION OFFERED BY THE ASSES SEE WAS NOT FOUND TO BE SATISFACTORY AND THE ASSESSEE HAVING CLAIMED TO BE THE OWNER OF THE 16 JEWELLERY, WHICH CAME TO THE KNOWLEDGE OF THE DEPAR TMENT IN ASSESSMENT YEAR 1998-99, WAS DEEMED TO BE THE INCOM E OF THE SAID YEAR IN VIEW OF THE PROVISIONS OF SECTION 69A OF THE ACT AND WAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 1998-99. 20. THE LD. AR FOR THE ASSESSEE, TIME AND AGAIN HAS POINTED OUT THAT THE SAID JEWELLERY WHICH WAS DECLARED TO BE PURCHAS ED IN A FINANCIAL YEAR 1986-87 CANNOT BE INCLUDED AS INCOME FROM UNDI SCLOSED SOURCES IN THE HANDS OF THE ASSESSEE IN ASSESSMENT YEAR 1998-9 9. IN THE ABOVESAID FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSE SSEE HAS FAILED TO OFFER AN EXPLANATION ABOUT THE NATURE AND SOURCE OF ACQUISITION OF THE SAID ITEMS OF JEWELLERY IN FINANCIAL YEAR 1986-87, STATUTORY PRESUMPTION PROVIDED UNDER SECTION 69A OF THE ACT COMES INTO PL AY AND THE VALUE OF THE SAID JEWELLERY IS DEEMED TO BE INCOME OF THE AS SESSEE FOR THE SAID FINANCIAL YEAR I.E. 1998-99. THE SAID ISSUE STANDS SETTLED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS PREM PAL (SUP RA) WHEREIN HON'BLE HIGH COURT HAS HELD THAT THE ASSESSING OFFI CER WAS JUSTIFIED IN INITIATING THE PROCEEDINGS FOR RE-ASSESSMENT UNDER SECTION 148 OF THE ACT AND HOLDING THAT THE VALUABLES FOUND WERE LIABL E TO BE ADDED TO THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1998 -99 IN THE ABSENCE OF VALID EXPLANATION. AS POINTED OUT HEREIN ABOVE, THE ASSESSEE IN THE PRESENT CASE HAS FAILED TO JUSTIFIABLY EXPLAIN THE SOURCE OF INVESTMENT IN THE SAID ITEMS OF JEWELLERY IN FINANCIAL YEAR 1986- 87 AND IN RESPECT OF ONE ITEM OF JEWELLERY, NO BILL OF ACQUISITION HAD B EEN FILED AND CONSEQUENTLY, THE MARKET VALUE OF JEWELLERY AS ON 3 1.3.1998 I.E. THE YEAR IN WHICH THE ASSESSEE WAS FOUND TO BE IN POSSE SSION OF THE SAID ITEMS OF JEWELLERY AMOUNTING TO RS. 21,47,176/- IS TO BE ADDED AS 17 INCOME OF THE ASSESSEE UNDER SECTION 69A OF THE AC T. REVERSING THE ORDER OF CIT(APPEALS), WE ALLOW THE GROUND NO. 2 RA ISED BY THE REVENUE. 21. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHO WLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 24 TH SEPTEMBER,2013 POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH