SOONU JAMSHED DAVAR, MUMBAI V. ITO 16(2)(3), MUMBAI

ITA 7522/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5841 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2005-2006
• Appeal Filed On: 19-12-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: S V JOSHI
• Keywords: Capital asset; Deemed to accrue or arise in india; Valuation report
• Section: 143(3); 69; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI SANJAY ARORA, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEM BER . / ITA NO. 7522 /MUM./2012 ( / ASSESSMENT YEAR : 200 5 06 ) M/S. SOONU JAMSHED DAVAR 2 ND FLOOR LAXMI NIWAS 22, DR. KASHIBAI NAVRANGE MARG GAMDEVI, MUMBAI 400 007 .. / APPELLANT V/S IN COME TAX OFFICER WARD 16(2)(3), MATRU MANDIR TARDEO, MUMBAI 400 007 .... / RESPONDENT ./ PERMANENT ACCOUNT NUMBER AFEPD6225K / ASSESSEE BY : MR. S.V. JOSHI / RE VE NUE BY : MR. R.K. SAHU / DATE OF HEARING 0 3 .0 3 .201 4 / DATE OF ORDE R 28.03.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE AFORESAID APPEAL S HAVE BEEN PREFERRED BY THE ASSESSEE CHALLENGING THE IMPUGNED ORDER DATED 29 TH OCTOBER 2012, PASSED BY THE LEARNED COMMISSIONER (APPEALS) X X V II , MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) R/W SECTION 263 OF THE M/S. SOONU JAMSHED DAVAR 2 INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) . THE GROUNDS RAISED BY THE A SSESSEE, READ AS UNDER: THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF ` 1,21,500 AND ` 1,94,927 MADE BY THE A.O. REPRESENTING SALE PROCEEDS OF ARTIFACTS AND JEWELLERY INHERITED BY HER FROM HER FATHER. 2 . BESIDES THE AFORESAID GROUND, THE ASSESSEE HAS ALSO RAI S ED FOLLOWING ADDITIONAL GROUND S , WHICH READ AS UNDER: 1. THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE ARTIFACTS WERE PERSONAL EFFECTS & PROFIT ARISING ON SALE OF SUCH PERSONAL EFFECTS WAS NOT CHARGEABLE TO TAX. 2. WITHOUT PREJUDICE TO T HE ADDITIONAL GROUND OF APPEAL NO.1, THE LEARNED CIT(A) OUGHT TO HAVE HELD THAT THE SALE PROCEEDS OF ARTIFACTS OF ` 1 , 21 , 500 AND JEWELLERY OF ` 1 , 94 , 927 ARE TAXABLE AS CAPITAL GAINS U/S 45 AND NOT AS INCOME FROM OTHER SOURCES. 3 . FACTS IN BRIEF : THE ASSESS EE IS AN INDIVIDUAL HAVING INCOME UNDER THE HEAD INCOME FROM BUSINESS , INCOME FROM OTHER SOURCES , AND INCOME FROM CAPITAL GAIN . WITH REGARD TO THE ADDITION ON ACCOUNT OF ARTIFACTS FOR ` 1,21,500, THE ASSESSEES CASE HAD BEEN THAT SHE HAD INHERITED CE RTAIN DECORATIVE ARTIFACTS , LIKE DECORATIVE VASES, DISPLAY PLATES, ETC., FROM HER FATHER WHO HAD DIED IN THE YEAR 1974. THE ASSESSEE, BEFORE THE ASSESSING OFFICER, SUBMITTED A VALUATION REPORT OF INVENTORY AND FURNITURE AS ON 8 TH JANUARY 1975, WHEREIN THE SAID ARTIFACTS WERE PART OF HOUSEHOLD ITEMS. I N THIS YEAR, THE ASSESSEE HAD SOLD THESE ARTIFACTS TO ONE MR. PHIROZE VAZIFDAR, FOR SUM OF ` 1,21,500 AND CONFIRMATION LETTER FROM THE SAID PERSON WAS ALSO FILED. IT WAS SUBMITTED THAT, FIRSTLY, IT WAS OLD ITEM S INHERITED FROM THE FATHER AND, SECONDLY, SUCH ARTIFACTS OF HOUSEHOLD ITEMS ARE NOT CAPITAL ASSETS AS M/S. SOONU JAMSHED DAVAR 3 DEFINED IN SECTION 2(14)(II). HOWEVER, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT GIVEN ANY EVIDENCE TO PROVE THAT THE ARTIFACTS WERE PERSONA L EFFECT OF HER LATE FATHER MR. JAMSHED A. DAVAR . ACCORDINGLY, HE ADDED ` 1,25,500, AS INCOME FROM OTHER SOURCES . 4 . REGARDING ADDITION OF ` 1,94,927, THE FACTS ARE THAT, THE ASSESSEE HAD SOLD GOLD JEWELLERY FOR SUM OF ` 1,94,927, DURING THE RELEVANT ASSE SSMENT YEAR , WHICH WAS SHOWN IN HER CAPITAL ACCOUNT. BEFORE THE ASSESSING OFFICER, IT WAS SUBMITTED THAT THE SAID JEWELLERY WERE INHERITED FROM HER LATE FATHER , MR. JAMSHED A. DAVAR. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH INCOME TAX RETURN, LAST BALANCE SHEET, CAPITAL ACCOUNT, BANK PASS BOOK OR ANY OTHER EVIDENCE, ETC., IN RESPECT OF HER LATE FATHER , TO SHOW THAT THE ASSESSEE HAD INHERITED THESE JEWELLERIES FROM HER FATHER. IN RESPONSE, THE ASSESSEE SUBMITTED THAT ALL THESE DOCUMENTS ARE NOT AVAILABLE SINCE HER FATHER DIED ON THE WAY BACK IN THE YEAR 1974 AND AFTER A GAP OF MORE THAN 30 YEARS, SUCH DOCUMENTS CANNOT BE PRODUCED. A COPY OF W ILL DATED 6 TH FEBRUARY 1972, WAS PRODUCED, HOWEVER, IN SUCH A WILL, THERE IS NO MENTION OF BEQUEATHING OF JEWELLERIES TO THE ASSESSEE. ACCORDINGLY, THE ASSESSING OFFICER TREATED THE SALE PROCEEDS OF JEWELLERY OF SUMS AGGREGATING TO ` 1,94,927 AS INCOME FROM OTHER SOURCES . 5 . EVEN THE LEARNED COMMISSIONER (APPEALS) CONFIRMED THE SAID ADDITION ON THE GROUND THA T NO EVIDENCE IN SUPPORT OF THE CLAIM COULD BE FURNISHED BY THE ASSESSEE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE HIM. ACCORDINGLY, THE SALE PROCEEDS OF THE ARTIFACTS AND THE JEWELLERY WERE CONFIRMED AS INCOME FROM OTHER SOURCES . 6 . BEFORE US, THE LEA RNED COUNSEL FOR THE ASSESSEE, ON THE ISSUE OF SALE OF ARTIFACTS SUBMITTED THAT IT IS NOT IN THE NATURE OF A CAPITAL ASSET M/S. SOONU JAMSHED DAVAR 4 AS THESE WERE ONLY DECORATIVE VASES AND DISPLAY PLATES AND NOT ANY KIND OF CAPITAL ASSETS AS DEFINED IN SECTION 2(14)(II). HE SUBMITT ED THAT BEFORE THE ASSESSING OFFICER AS WELL AS LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS FILED CONFIRMATION LETTER FROM THE PURCHASER AND HAS ALSO FURNISHED A VALUATION REPORT DATED 8 TH JANUARY 1975 GIVING INVENTORY AND VALUATION OF FURNITURE, ETC. , BELONGING TO LATER MR. JAMSHED A. DAVAR . THUS, THESE ITEMS HAVE WRONGLY BEEN HELD AS SALE OF ANY ASSETS. REGARDING SALE OF JEWELLERY, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD FURNISHED A SALE BILL DATED 27 TH APRIL 2004 OF M/S. JUGRAJ KANTILAL & CO., FOR THE SALE OF CERTAIN GOLD ORNAMENTS WEIGHING 399.850 GMS FOR ` 1,94,927. THE ASSESSEE HAD ALSO SUBMITTED A COPY OF VALUATION REPORT DATED 7 TH JUNE 1972, WHEREIN THE GOLD ORNAMENTS OF 760 GMS AND 361 GMS HAVE BEEN DULY MENTIONED A S WAS IN POSSESSION OF HER LATE FATHER MR. JAMSHED A. DAVAR. A COPY OF SUCH VALUATION REPORT HAS BEEN PLACED IN THE PAPER BOOK FROM PAGE 16 TO 19. HE ALSO SUBMITTED THAT THERE WAS A W ILL OF HER LATE FATHER DATED 6 TH FEBRUARY 1972, HOWEVER, THERE IS NO MENT ION OF ANY JEWELLERY , BUT FROM THE VALUATION REPORT DATED 7 TH JUNE 1992, IT CAN BE GATHERED THAT HER LATER FATHER HAD A HUGE QUANTITY OF JEWELLERY. ONCE IT HAS BEEN SHOWN THAT THE ASSESSEES FATHER WAS IN POSSESSION OF GOLD ORNAMENTS, THEN PRESUMPTION CAN BE DRAWN THAT SUCH GOLD ORNAMENTS HAD BEEN INHERITED FROM HER LATE FATHER, WHICH HAVE BEEN SOLD IN THIS YEAR. THUS, NO ADDITION SHOULD BE MADE. 7 . AS AN ALTERNATIVE SUBMISSION, THE LEARNED COUNSEL SUBMITTED THAT GOLD JEWELLERY IS A CAPITAL ASSET AND IF IT HA S BEEN SOLD IN THIS YEAR, THEN THE SAME SHOULD BE TAXED UNDER THE HEAD CAPITAL ASSETS AND BENEFIT OF INDEXATION SHOULD BE GIVEN. M/S. SOONU JAMSHED DAVAR 5 8 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, STRONGLY RELYING UPON THE ORDERS OF THE ASSESSING OFFICER AND TH E COMMISSIONER (APPEALS), SUBMITTED THAT THE ONUS WAS ON THE ASSESSEE TO SHOW THAT THE ARTIFACTS AND JEWELLERY HAVE BEEN INHERITED BY HER FROM HER LATE FATHER AND SUCH AN ONUS CAN ONLY BE DISCHARGED BY SOME CREDIBLE EVIDENCE AND NOT BY WAY OF EXPLANATION O R OLD VALUATION REPORT. THERE IS NO MENTION OF BEQUEATHING OF ANY JEWELLERY IN THE W ILL OF HER LATE FATHER, THEREFORE, IT CANNOT BE PRESUMED THAT THE ASSESSEE HAD RECEIVED THE JEWELLERY FROM HER FATHER , WITHOUT ANY FURTHER CORROBORATIVE EVIDENCE. 9 . WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL PLACED ON RECORD. WITH REGARD TO THE ADDITION ON ACCOUNT OF SALE OF ART E FACTS, IT IS SEEN FROM THE RECORDS THAT THE ASSESSEE HAD SOLD SOME DECO RATIVE VASES AND DI SPLAY PLATES, ETC., WHICH DO NOT COME WITHIN THE PURVIEW OF CAPITAL ASSETS AS DEFINED IN SECTION 2(14)( II ). IN ANY CASE, THE ASSESSEE HAD SUBMITTED THE VALUATION REPORT OF HOUSEHOLD ARTIFACTS AND FURNITURE S WHEREIN SUCH DECORATIVE VASES AND DISPLAY PLATE S HAVE BEEN MENTIONED. THUS, THE CONTENTION OF THE ASSESSEE APPEARS TO BE CORRECT , FIRSTLY, IT IS NOT A CAPITAL ASSET AND; SECONDLY, THESE ARE ONLY HOUSEHOLD DECORATIVE ITEMS WHICH ARE MENTIONED IN THE VALUATION REPORT DATED 8 TH JANUARY 1975. OTHERWISE ALS O, IT CANNOT BE PRESUMED THAT THE ASSESSEE MUST HAVE ACQUIRED THESE DECORATIVE ITEMS ON HERSELF IN THIS YEAR AND THEN SOLD THE SAME IN THIS YEAR , JUST TO MAKE SOME FICTITIOUS CAPITAL. UNDER THESE CIRCUMSTANCES, INSOFAR AS THE SALE OF ART E FACTS ARE CONCERNE D, WE DO NOT FIND ANY REASON TO SUSTAIN THE ADDITION OF ` 1,21,500 ON ACCOUNT OF SALE PROCEEDS OF ARTIFACTS , UNDER THE HEAD INCOME FROM OTHER SOURCES AND THE SAME IS HEREBY DELETED. M/S. SOONU JAMSHED DAVAR 6 10 . WITH REGARD TO THE AMOUNT RECEIVED BY WAY OF SALE OF JEWELLERY, IT IS SEEN THAT EXCEPT FOR VALUATION REPORT OF 7 TH JUNE 1972, THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE SHOWING THAT THE ASSESSEE HAD INHERITED THE SAID JEWELLERY FROM HER FATHER. EVEN THE W ILL DOES NOT MENTION ANY BEQUEATHING OF JEWELLERY TO THE ASSESSEE. THE RE IS NO REBUTTLE OF THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED C IT(A) THAT THE ASSESSEE COULD NOT PRODUCE ANY CORROBORATIVE EVIDENCE TO SHOW THAT THE ASSESSEE HAS, IN FACT, INITIATED THE SAME JEWELLERY FROM HER LATE FATHER, AS SHOWN IN THE VALU ATION REPORT DATED 7 TH JUNE 1972. THE ONUS IS UPON THE ASSESSEE TO SHOW NEXUS OF THE INHERITANCE OF THE JEWELLERY AND THE SALE OF JEWELLERY IN THIS YEAR. OTHERWISE, THE STATEMENT PROVIDES A DEEMING PRESUMPTION UNDER SECTION 69A, AGAINST THE ASSESSEE. ONCE THE ASSESSEE IS UNABLE TO GIVE PROPER EXPLANATION ABOUT THE NATURE AND SOURCE OF THE ACQUISITION OF THE JEWELLERY, THEN IT IS PRESUMED TO BE UNEXPLAINED MONEY OF THE ASSESSEE AND THE SAME IS DEEMED TO BE TREATED AS INCOME OF THE ASSESSEE UNDER SECTION 69 A OF THE ACT. THE EXPLANATION, WHICH HAS BEEN OFFERED BY THE ASSESSEE, HAS NOT BEEN FOUND TO BE SATISFACTORY AND IS NOT CORROBORATED BY ANY CREDIBLE EVIDENCE ON RECORD. THUS, FOR THE REASONS STATED ABOVE, WE ARE UNABLE TO ACCEPT THE ASSESSEES PLEA AND THE ADDITION CONFIRMED BY THE LEARNED COMMISSIONER (APPEALS) IS HEREBY UPHELD. 11 . REGARDING ALTERNATIVE CONTENTION OF THE LEARNED COUNSEL THAT IT IS A SALE OF A CAPITAL ASSET AND, THEREFORE, INDEXATION SHOULD BE GIVEN, WE FIND THAT SUCH AN ARGUMENT IS NOT TENAB LE IN THE EYES OF LAW FOR THE REASON THAT THE ASSESSEE HAS NOT BEEN ABLE TO DEMONSTRATE THAT IT HAS ACQUIRED THE CAPITAL ASSET BY WAY OF INHERITANCE AND ALSO THE DATE OF ACQUISITION. ONCE THE ASSESSEE HAS SOLD THE ORNAMENTS IN THIS YEAR, THE ONUS WAS ON T HE ASSESSEE TO PROVE THAT IT HAS BEEN ACQUIRED EITHER BY M/S. SOONU JAMSHED DAVAR 7 WAY OF INHERITANCE OR BY HERSELF IN THE EARLIER YEARS. IN ANY CASE, PROVISIONS OF SECTION 69A, SQUARELY CLINCHES THE ISSUE AND IN SUCH A SITUATION, THE LAW CLEARLY PROVIDES THAT IT HAS TO BE TREATED AS DEEMED INCOME OF THE ASSESSEE , IF THERE IS NO SATISFACTORY EXPLANATION WITH REGARD TO THE SOURCE OF ACQUISITION. CONSEQUENTLY, THE ALTERNATIVE CONTENTION OF THE LEARNED COUNSEL IS HEREBY REJECTED. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLO WED. 12 . 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. 28 TH MARCH 2014 ORDER PRONOUNCED IN THE OPEN COURT O N 28 TH MARCH 2014 SD/ - SANJAY AROR A ACCOUNTANT MEMBER SD/ - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 28 TH MARCH 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / TH E CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI