Shri Jagannath R.Kabra, Ahmedabad V. The Income tax Officer,Cent.Ward-1(1), Ahmedabad

ITA 779/AHD/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2411 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 29-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANITA HARDASANI
• Keywords: Capital asset; Valuation report
• Section: 68

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA.NO.779/AHD/2012 / ASSTT. YEAR: 2004-2005 JAGANNATH R. KABRA 3, RAJESH APARTMENT B/H. AJANTA SHOPPING CENTRE ASHRAM ROAD AHMEDABAD 380009. PAN : ABPPK 4723 N VS ITO, CENT. WARD 1(1) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI SAKAR SHARMA, AR REVENUE BY : ANITA HARDASANI, SR.DR / DATE OF HEARING : 29/02/2016 / DATE OF PRONOUNCEMENT: 01 /03/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD.COMMISSIONER INCOME-TAX (APPEALS)-I, AHMEDABAD D ATED 30.7.2010 PASSED FOR THE ASSTT.YEAR 2004-05. 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.10,80,437/- WHICH WA S ADDED BY THE AO WITH THE AID OF SECTION 68 OF THE INCOME TAX ACT. ITA NO.779/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED HIS RETURN OF INCOME ON 14.10.2014 DECLARING TOTAL INCOME AT RS.5 3,500/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND N OTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT WAS SERVED UPON THE ASSESSEE ON 18.7.2005. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THA T THERE IS INCREASE IN THE PROPRIETORS CAPITAL TO THE TUNE OF RS.11,60,752/- . THE AO OBSERVED THAT THE ASSESSEE HAS BROUGHT ADDITIONAL CAPITAL OF RS.10,80 ,437/-. HE DIRECTED THE ASSESSEE TO EXPLAIN THE SOURCE OF ADDITIONAL CAPITA L. IN RESPONSE TO THE QUERY OF THE AO, IT WAS CONTENDED BY THE ASSESSEE THAT HE HAS DECLARED DIAMOND JEWELLERY IN VDIS RETURN FILED IN 1997. THE ASSESS EE HAS DECLARED 978 PIECES OF DIAMONDS WITH THEIR TOTAL WEIGHT WAS 73.48 CARAT . HE HAS SOLD 975 PIECES OF DIAMOND HAVING WEIGHT OF 73.250 CARAT. THE ASSES SEE HAS FILED COPY OF BILL ISSUED BY JEWELER VIZ. JOHNSON JEWELLERS, 2294 MANE KCHOWK, AHMEDABAD. THE LD.AO HAS REJECTED THE EXPLANATION OF THE ASSES SEE ON THE GROUND THAT A PERUSAL OF THE VALUATION REPORT AVAILABLE ALONG WIT H VDIS RETURN, THE DETAILS OF ITEMS DECLARED BY THE ASSESSEE, IF COMPARED WITH TH E ALLEGED SALE OF DIAMONDS, THEN, THERE IS A VARIATION IN CARAT AS WELL AS IN P IECES. ACCORDING TO THE AO, THE ASSESSEE FAILED TO ESTABLISH A DIRECT NEXUS BET WEEN NATURE OF JEWELLERY DECLARED IN THE VDIS VIS--VIS THE JEWELLERY SOLD D URING THIS YEAR, AND WHOSE VALUE HAS BEEN INTRODUCED AS CAPITAL. 4. THE APPEAL TO THE LD.CIT(A) DID NOT BRING ANY RE LIEF TO THE ASSESSEE. THE LD.CIT(A) HAS CONFIRMED THE CONCLUSION OF THE A O BY OBSERVING AS UNDER: 7. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. I FIND THAT THERE IS NO MATERIAL TO HOLD THAT DIAMONDS, WHICH A RE CLAIMED TO BE SOLD BY THE APPELLANT DURING THE YEAR UNDER CONSIDE RATION, ARE THE SAME WHICH WERE DISCLOSED BY THE APPELLANT IN THE VDIS O F 1997. IN THE MODERN ERA, IT IS HIGHLY UNBELIEVABLE THAT APPELLAN T COULD NOT SELL THE DIAMONDS STUDDED IN WHITE METAL. THE QUALITY AND QU ANTITY OF DIAMONDS COULD BE EASILY ASCERTAINED BY MODERN EQUIPMENTS, E VEN WHEN ITA NO.779/AHD/2012 3 DIAMONDS ARE STUDDED IN WHITE METAL. THE APPELLANT' S INTENTIONS ARE ALSO APPARENT FROM THE FACT THAT NO LONG CAPITAL GA IN INCOME, WHICH ACCRUED DUE TO SALE OF DIAMONDS, HAS BEEN DECLARED IN THE RETURN OF INCOME. AS SUCH, I HAVE NO HESITATION IN HOLDING TH AT THE APPELLANT HAS FAILED TO SATISFACTORILY EXPLAIN THE CREDIT OF RS.1 0,80,437/- IN IT'S CAPITAL ACCOUNT AND ACCORDINGLY, ADDITION OF THE SAME IS CO NFIRMED. 5. BEFORE US, THE LD.COUNSEL FOR THE ASSESSEE CONTE NDED THAT IN THE VDIS THE ASSESSEE HAS DISCLOSED 978 PIECES OF DIAMOND. HE HAS SOLD 975 PIECES OF DIAMOND. AS FAR AS THE DIFFERENCE OF THREE PIECES ARE CONCERNED, THESE THREE PIECES MIGHT HAVE BEEN KEPT BY THE JEWELLER TOWARDS HIS LABOUR CHARGES. AS FAR AS CARATS ARE CONCERNED, THERE IS NO MAJOR VARI ATION. THE ASSESSEE HAS PRODUCED VDIS DECLARATION, COPY OF VALUATION REPORT AND SALE BILL OF THE JEWELLERY. HE ALSO RELIED UPON THE ORDER OF THE IT AT, THIRD MEMBER DECISION RENDERED IN THE CASE OF UTTAMCHAND P. JAIN VS. ITO 103 ITD 1 (MUM) (TM). 6. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ERS OF THE REVENUE AUTHORITIES BELOW. 7. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. A PERUSAL OF THE VALUATION REPORT SUB MITTED ALONG WITH VDIS DECLARATION IT REVEALS THAT ONE OF THE ITEMS DECLAR ED BY THE ASSESSEE IS BRACELET IN WHITE METAL, 116 PIECES OF DIAMONDS HAVING 8.12 CARAT WERE STUDDED IN THIS ITEM OF JEWELLERY. SIMILARLY, OTHER ITEMS OF JEWLL ERY VIZ. BANGLES, PENDENT, RING, EAR-RING ETC. IN THE BILL, THE JEWELER, WHO PURCHASED THESE ITEMS HAS NOWHERE NOTED OR DESCRIBED THE NATURE OF JEWELLERY HE HAS PURCHASED. IT IS A SIMPLE BILL OF TOTAL DIAMONDS. ACCORDING TO THE AS SESSEE, THE DIAMONDS WERE TAKEN OUT FROM WHITE METAL. THE VALUATION OF METAL IN THE BRACELET DECLARED BY THE ASSESSEE WAS OF RS.6372 OUT OF TOTAL VALUE O F RS.38,852/- INCLUDING DIAMONDS. THIS SHOWS THAT IT WAS OF WHITE GOLD MET AL. WHAT HAPPENED TO THIS METAL HAS NOWHERE BEEN EXPLAINED BY THE ASSESSEE. WE ARE MAKING THIS ITA NO.779/AHD/2012 4 REFERENCE TO THESE ITEMS ONLY WITH A VIEW TO IDENTI FY WHETHER THE ASSESSEE HAS DEMONSTRATED THE NEXUS BETWEEN THE JEWELERY DECLARE D BY THE VDIS VIS--VIS SOLD DURING THE YEAR. THE ASSESSEE HAS NOT OFFERED EVEN CAPITAL GAIN ON SALE OF DIAMONDS. ON AN ANALYSIS OF THE NATURE OF JEWELLER Y MENTIONED IN THE VDIS RETURN AS WELL AS PERUSAL FROM THE SALE BILL AVAILA BLE AT PAGE NO.5, IN THE LIGHT OF THE OBJECTIONS MENTIONED BY THE LD.REVENUE AUTHO RITIES, WE ARE OF THE VIEW THAT THE ASSESSEE FAILED TO ESTABLISH THE NEXUS BET WEEN BOTH THE JEWELLERIES. THEREFORE, IT COULD NOT BE SAID THAT SAME JEWELLERY WAS SOLD BY THE ASSESSEE AND OUT OF THE SALE PROCEEDS A CAPITAL CONTRIBUTION HAS BEEN MADE DURING THE YEAR. AS FAR AS ORDER OF ITAT IN THE CASE OF UTTAM CHAND P. JAIN VS. ITO (SUPRA) IS CONCERNED, FACTS ARE QUITE DISTINGUISHA BLE. IF AN ASSESSEE MADE DECLARATION OF JEWELLERY IN VDIS THEN PRESUMPTION O F ITS POSSESSION IS TO BE DRAWN BUT WHETHER THE SAME WAS SOLD IS TO BE PROVED ON FACTS. THE ASSESSEE HAS NEITHER SHOWN CAPITAL GAIN NOR MAINTAINED/SUBMI TTED DETAILS OF CAPITAL ASSETS IN THE RETURN FOR EARLIER YEARS. WE DO NOT FIND ANY ERROR IN THE ORDER OF THE REVENUE AUTHORITIES. CONSEQUENTLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE COURT ON 1 ST MARCH, 2016 AT AHMEDABAD. SD/- SD/- ( MANISH BORAD ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 01/03/2016