Smt. B.Sreedala Devi, CHENNAI V. DCIT, CHENNAI

ITSSA 89/CHNY/2008

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5920 (ITAT-CHENNAI)
• Duration Of Justice: 11 year(s) 14 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 30-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T R SENTHIL KUMAR SR
• Assessee Lawyers: G BASKAR
• Keywords: Unexplained investment; Gift; Principle of natural justice; Set aside
• Section: 264; 158BC; 48; 73; 22

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , , ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.(SS).A. NO. 89/CHNY/2008 / BLOCK PERIOD : 1993-94 TO 1997-98 SMT. B. SREEDALADEVI, NO.2, 9 TH CROSS STREET, DR. R.K. SALAI, MYLAPORE, CHENNAI- 600 004. [PAN: ABHPS 1785L] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(2), NEW NO. 46, (OLD NO. 108), MAHATMA GANDHI ROAD, CHENNAI 600 034. ( / APPELLANT) ( #$& /RESPONDENT ) & ' / APPELLANT BY : SHRI. G. BASKAR, ADVOCATE #$& ' / RESPONDENT BY : SHRI.T.R. SENTHIL KUMAR, SR. STANDING COUNSEL ' /DATE OF HEARING : 16.10.2019 ' /DATE OF PRONOUNCEMENT : 14.01.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER PASSED BY THE AO U/S. 158BC R.W.S. 254 DATED 05.12.2008. 2. IN THE CASE OF SMT. B. SREEDALA DEVI, THE ASSESS EE, CONSEQUENT TO THE SEARCH ACTION, PROCEEDINGS U/S. 158BC WAS INIT IATED. THE :-2-: IT(SS)A NO.89/CHNY/2008 ASSESSMENT U/S. 158BC WAS PASSED ON 31.10.1997 DETE RMINING THE UNDISCLOSED INCOME AT RS. 92,99,100/-. SUBSEQUENTL Y, THE ASSESSEE FILED A PETITION U/S. 264 BEFORE THE CIT. THE CIT SET ASIDE THE ASSESSMENT U/S. 264 VIDE PROCEEDINGS IN C.NO. 1742/ 23/97-98 DATED 09.05.2001 WITH A DIRECTION TO THE AO TO REDO THE A SSESSMENT AFRESH. THEREAFTER, THE ASSESSING OFFICER PASSED ORDER U/S. 158BC R.W. 264 ON 31.03.2003 DETERMINING UNDISCLOSED INCOME FOR ASSES SMENT YEAR 1993- 94 TO ASSESSMENT YEAR 1997-98. AGGRIEVED AGAINST T HAT ORDER THE ASSESSEE FILED APPEAL BEFORE THE ITAT. 3. THE HONBLE ITAT DISPOSED THE APPEAL VIDE ITS OR DERS IN IT(SS)A NO. 76/MDS/2003 DATED 28.12.2007 IN WHICH CERTAIN I SSUES WERE REMITTED BACK TO THE AO FOR A FRESH CONSIDERATION. THE AO AS PER THE ORDER U/S. 158BC R.W. 264 HEARD ON VARIOUS DATES VI Z., 11.07.08, 10.09.08, 16.10.08 & 24.11.08 AND THEN PASSED AN OR DER ON 05.12.2008. AGGRIEVED AGAINST THAT ORDER THE ASSES SEE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS OF APPEAL: (A) THE ASSESSING AUTHORITY ERRED IN PASSING THE I MPUGNED ORDER, WHICH IS CONTRARY TO THE DIRECTIONS OF THE HON'BLE TRIBUNAL, BY ITS ORDER DATED 8.12.2007. (B)THE ASSESSING AUTHORITY ERRED IN VIOLATING THE P RINCIPLES OF NATURAL JUSTICE, IN SO FAR AS NO OPPORTUNITY AT ALL WAS GRANTED TO T HE APPELLANT PRIOR TO THE PASSING OF THE IMPUGNED ORDER. :-3-: IT(SS)A NO.89/CHNY/2008 (C) THE ASSESSING AUTHORITY ERRED IN MAKING AN ADDI TION OF RS'5,07,123/-PERTAINING TO THE ALLEGEDLY UNEXPLAINE D FOREIGN REMITTANCES' HE OUGHT TO HAVE SEEN THAT THE AMOUNTS HAVE BEEN RECEIVED THROUGH NORMAL BANKING CHANNELS AND 'CONFI RMATIONS HAVE BEEN RECEIVED TO THIS EFFECT. LN ANY EVENT THE ADDI TION IS OF A SUM OF RS.5,07,123L- WHICH IS INCORRECT IN SO FAR AS, PER THE EARLIER PARAGRAPH THE UNEXPLAINED AMOUNT IS STATED TO BE ONLY RS'3,00 ,000/-' (D) THE ASSESSING AUTHORITY ERRED IN ADDING A SUM O F RS'10,80,000/- AS UNEXPLAINED INVESTMENT IN PROPERTY AND OUGHT TO HAVE SEEN THAT THE AMOUNT HAD BEEN RECEIVED BY WAY OF LOAN FROM TH E ASSESSEE'S FATHER-IN-LAW' THE ASSESSING AUTHORITY ERRED IN NOT CONSIDERING THE SPECIFIC EVIDENCE FILED BEFORE HIM IN THIS REGARD. (E) THE ASSESSING AUTHORITY ERRED IN ADDING A SUM O F RS.3,85,2691-, WHICH REPRESENTED THE TRANSFER OF THE PROCEEDS FROM THE BANK ACCOUNT IN BANK OF LNDIA ON ITS CLOSURE TO THE BANK ACCOUNT IN LNDIAN BANK. THE ADDITION HAS BEEN MADEON UNJUSTIFIED AND UNTENABLE GROUNDS' (F) THE ASSESSING AUTHORITY ERRED IN GRANTING ONLY 5% DEDUCTION TOWARDS STONES AND FOREIGN MATERIALS IN THE VALUATI ON OF GOLD JEWELLERY' (G) THE ASSESSING AUTHORITY ERRED IN NOT ADOPTING T HE AVERAGE MARKET VALUE IN RESPECT OF .THE VALUATION OF SILVER ARTICL ES AND ERRED IN MAKING AN ADDITION OF . 2,39,814/- IN THIS REGARD. (H) THE ASSESSING AUTHORITY ERRED IN MAKING AN ADDI TION OF RS.70,000/- ON ACCOUNT OF TRAVELLERS CHEQUE ALLEGE DLY PURCHASED BY THE APPELLANT. HE OUGHT TO HAVE SEEN THAT THE ADDITION IS ERRONEOUS AND LIABLE TO BE CANCELLED. (I) ANY OTHER GROUNDS THAT MAY BE RAISED AT THE TIM E OF PERSONAL HEARING. 4. THE PLEA RAISED IN GROUND NO.1 SHALL BE EXAMINE D WHILE THE ISSUES ARE CONSIDERED IN MERIT, INFRA. ON GROUND N O. 2, WE FIND THAT IN THE CONSEQUENT ASSESSMENT ORDER PASSED BY THE AO TO THE ITAT ORDER, :-4-: IT(SS)A NO.89/CHNY/2008 THE AO HAS MENTIONED THAT THE HEARING IS TAKEN PLAC E ON 11.07.2008, 10.09.2008, 16.10.2008 & 24.11.2008. IN THE ABSENC E OF SPECIFIC MATERIAL AGAINST SUCH FINDINGS, THE CORRESPONDING G ROUNDS ARE DISMISSED. 4.1 ON ISSUE NO. C, THE LD. AR SUBMITTED THAT FOREI GN GIFTS OF RS. 20 LAKHS RECEIVED FROM SHRI. SATHIYAMOORTHY OF SINGAPO RE NO CERTIFICATE WAS FILED AT THE TIME OF ORIGINAL ASSESSMENT. BUT DURING THE SET ASIDE PROCEEDINGS, MRS. SATHIYAMOORTHY WAS EXAMINED BY TH E ADI (INV) AND THE GIFT OF RS. 17 LAKHS WAS ACCEPTED BY THE AO. A S PER THE AO, THE LETTER FROM CORPORATION BANK DID NOT GIVE ANY INDIC ATION THAT THE ASSESSEE RECEIVED RS. 3 LAKHS THROUGH ORIENTAL BANK OF COMMERCE (OBC). IN THIS REGARD THE LD. AR SUBMITTED THAT TH OUGH THE UNEXPLAINED PORTION WAS ONLY RS. 3 LAKHS, ADDITION OF RS. 5,07, 123/- WAS MADE BY THE AO WHICH IS NOT CORRECT AND HENCE THE ADDITION COULD AT BEST BE RS. 3 LAKHS. THOUGH, THE AO HAS STATED THAT AMOUNT NO T IN DISPUTE IS RS. 2,17,123/-, FAILS TO REDUCE THE SAME FROM TOTAL UN DISCLOSED INCOME. THE BALANCE UNDISCLOSED INCOME COULD AT BEST BE RS. 3 LAKHS ONLY. MRS. SATHIYAMOORTHY WAS EXAMINED BY THE ADI(INV) AND THE GIFT OF RS. 17 LAKHS WAS ACCEPTED BY THE AO IN RESPECT OF THE BALA NCE RS. 3 LAKHS IT WAS SUBMITTED THAT THE SAME WAS RECEIVED AS GIFT TH ROUGH ORIENTAL BANK OF COMMERCE WHICH WAS NOT ACCEPTED BY THE AO. THE ASSESSEE :-5-: IT(SS)A NO.89/CHNY/2008 SUBMITTED A LETTER DATED 25.03.2003 FROM THE MANAGE R OF CORPORATION BANK ADDRESSING TO THE MANAGER OF STATE BANK OF IND IA, OVERSEAS BRANCH, WHEREIN THE DETAILS OF THREE INSTRUMENTS OF RS. 1 LAKH EACH DRAWN BY ORIENTAL BANK OF COMMERCE IN FAVOUR OF SMT . P. SREEDALA DEVI DATED 14.06.1993 WAS PRESENTED TO THEM. THE LETTER FROM CORPORATION BANK CONFIRMS THAT THE DRAFT HAD BEEN PAID BY THE S BI, OVERSEAS BRANCH ON 20.06.1993 AND THE BANK HAS REQUIRED FOR CERTIFI CATE TO THE EXTENT FROM THE SBI. NO CONFIRMATION RECEIVED TILL NOW MA Y BE DUE TO LONG LAPSE OF TIME. THEREFORE, THE LD. DR SUBMITTED THA T RS. 3 LAKHS PAID BY SBI HAS BEEN CONFIRMED BY THE NATIONALISED BANK, PR OVES THE GENUINENESS OF CREDIT THROUGH FOREIGN REMITTANCE. THEREFORE, IT MAY BE TREATED AS SUFFICIENT EVIDENCE AND HENCE THE ADDITI ON BE DELETED. 5. PER CONTRA, THE LD. DR SUBMITTED THAT OUT OF THE SUM OF RS. 20 LAKHS, EVIDENCE WAS FILED BY THE ASSESSEE AT THE TI ME OF ORIGINAL ASSESSMENT FOR RS. 17 LAKHS BY WAY OF RECEIPT UNDER FOREIGN REMITTANCE IMMUNITY SCHEME. FOR THE BALANCE OF RS. 3 LAKHS, T HE ASSESSEE COULD NOT FILE SUCH RECEIPT OF FOREIGN REMITTANCE AND THE REFORE IT WAS TREATED AS UNEXPLAINED. IN THE PROCEEDINGS CONSEQUENT TO T HE ITAT ORDER ALSO, THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE FOR FOR EIGN REMITTANCE. ALTHOUGH, THE ASSESSEE HAS MENTIONED THAT SHE HAS R ECEIVED RS. 3 LAKHS AS GIFT THROUGH ORIENTAL BANK OF COMMERCE, NO CERTI FICATE TO THIS EFFECT :-6-: IT(SS)A NO.89/CHNY/2008 WAS FILED AT THE TIME OF ORIGINAL ASSESSMENT. EVEN THE LETTER FROM THE CORPORATE BANK DID NOT GIVE ANY INDICATION THAT THE ASSESSEE RECEIVED RS. 3 LAKHS THROUGH ORIENTAL BANK OF COMMERCE . TH EREFORE, RS. 3 LAKHS TREATED AS UNDISCLOSED INCOME IS CORRECT AND HENCE, HE SUPPORTED THE ORDER OF THE LD. AO. WITH REGARD TO THE COMPUTATIO N ERROR ALLEGED, THE LD. DR SUBMITTED THAT THE ISSUE MAY BE REMITTED BAC K TO THE AO FOR A DUE EXAMINATION. 6. WE HEARD THE RIVAL SUBMISSIONS. THIS ITAT SET A SIDE THE MATTER AND SENT BACK TO THE AO FOR FRESH CONSIDERATION OF THE EVIDENCE ON THE POINT AND PASSING A FRESH ORDER. SINCE, THE ASSESSE E COULD NOT SUPPORT WITH SATISFACTORY EVIDENCE, THE ADDITION SUSTAINED BY THE AO NEEDS TO BE CONFIRMED. HOWEVER, WITH REFERENCE TO THE COMPUTAT IONAL ERROR POINTED OUT BY THE LD. AR THAT THE UNDISCLOSED INCOME SHOUL D HAVE BEEN RS. 3 LAKHS INSTEAD OF RS. 5,07,123/-, WE DEEM IT FIT TO REMIT THIS ISSUE BACK TO THE AO FOR A DUE EXAMINATION AND IF THE ASSESSEES CLAIM IS FOUND CORRECT TO ALLOW THE SAME. 7. WITH REGARD TO THE ADDITION OF RS. 10,80,000/- A S UNEXPLAINED INVESTMENT IN THE COMMERCIAL COMPLEX AT LLOYDS ROAD IN ASSESSMENT YEAR 1995-96, IN THE ORIGINAL ASSESSMENT, THE TOTAL VALUE OF INVESTMENT INCLUDING STAMP DUTY AND REGISTRATION CHARGES WAS F OUND TO BE OF RS. :-7-: IT(SS)A NO.89/CHNY/2008 RS.14,30,000/- BEING RS.12.5 LAKHS AND RS.1.8 LAKHS , RESPECTIVELY. THE ASSESSEE EXPLAINED SOURCES TO THE EXTENT OF RS.3.5 LAKHS. BALANCE RS.10.80 LAKHS WAS TREATED AS UDL. THE ASSESSEE C LAIMED THAT RS. 9 LAKHS WAS PAID BY THE ASSESSEES FATHER-IN-LAW SHRI . D.S. RAJAMANICKAM (SINCE DECEASED) . THE AO MADE ADDITION WITHOUT DU E EXAMINATION. THEREFORE, THIS TRIBUNAL SET ASIDE THE ISSUE AND SE NT BACK TO THE AO FOR PASSING A FRESH ORDER AFTER CONSIDERING ALL THE DE TAILS AND EVIDENCES RELIED ON BY THE ASSESSEE. 8. IN THIS REGARD, THE LD. AR SUBMITTED THAT THE AS SESSEE PURCHASED THE COMMERCIAL PROPERTY ON 29TH MARCH, 19 96 FOR RS. 12,50,000/- FROM A.S.M.ABDUL WAHID WITH THE FUNDS P ROVIDED BY THE ASSESSEES FATHER-IN-LAW MR.D.S.RAJAMANICKAM (SINCE DECEASED). OUT OF THE SAID SUM OF RS.12,50,000/-, A SUM OF RS.9,00,00 0/- HAD BEEN REPAID BY THE ASSESSEE TO MR.D.S.RAJAMANICKAM BY CHEQUES A S FOLLOWS: DATE CHEQUE NO AMOUNT (IN RS.) 22.03.1997 INDIAN BANK CHEQUE NO. 837981 50,000/- 22.03.1997 INDIAN BANK CHEQUE NO. 837982 50,000/- 27.03.1997 INDIAN BANK CHEQUE NO. 837983 5,00,000/- 03.04.1997 INDIAN BANK CHEQUE NO. 837981 3,00,000/- THE BALANCE OF RS. 3,50,000/- IS STATED TO BE OUTST ANDING. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE WITH REG ARD TO THE REPAYMENT AND HENCE ADDED A SUM OF RS.10,80,000/- (RS.9,00,00 0/- AND RS.1,80,000/- TOWARDS STAMP DUTY AND REGISTRATION C HARGES). :-8-: IT(SS)A NO.89/CHNY/2008 9. THE AO FAILED TO NOTE THE FOLLOWING: A. AFFIDAVIT FILED BY MR.A.S.M.ABDUL WAHID DATED 04.11 .2000 (PAGE 40 OF PB)STATING THAT NEGOTIATIONS FOR SALE WAS CAR RIED OUT BY MR.RAJAMANICKAM AND ALSO THE CASH FOR THE PURCHASE WAS PAID BY HIM EVEN THOUGH THE PURCHASER WAS SHOWN AS MRS.SREE DALA DEVI IN THE DEED. B. THOUGH THE FUNDS WERE EARLIER PAID BY THE APPELLANT 'S FATHER-IN- LAW, THE APPELLANT LATER REPAID THE FUNDS RECEIVED VIA INDIAN BANK CHEQUES AS STATED ABOVE AND ALSO SUBMITTED A LETTER FROM THE INDIAN BANK DATED 31'T OCTOBER, 2000 (PAGE 37 OF PB ) WHEREIN THE SENIOR MANAGER OF INDIAN BANK HAS CONFIRMED DEB IT OF RS.5,00,000/- AND RS.3,00,000/- ON 27TH MARCH, 1997 AND 3 RD APRIL, 1997 RESPECTIVELY. THE AO IN THE 1 ST ROUND REJECTED THE CONTENTION OF THE ASSESSEE ST ATING THAT THE SAME CERTIFICATE WAS PRODUCED BY THE APPEL LANT IN SUPPORT OF INVESTMENT IN KOTTIVAKKAM PROPERTY; FAILING TO NOTE THAT THE INVESTMENT IN PLOT AT KOTTIVAKKAM AMOUNTS TO RS 3,18,652/- AS STATED IN PAGE NO.8 OF THE ORDER U/S. 158BC DATED 3ST MARCH, 2003 (PAGE 46 OF PB). THE ASSESSEE ISSUED AN INDIAN BANK CHEQUE FOR RS.3,00,0 00/- IN FAVOUR OF MR. A.S. MOHAMMAD HASSAN AND BALANCE OF RS.18,652/- WAS MADE OUT OF HER SAVINGS. THUS IT IS THIS RS.3,00,000/- WHICH HAS BEEN CONFIRMED :-9-: IT(SS)A NO.89/CHNY/2008 BY THE SENIOR MANAGER, INDIAN BANK IN HIS CERTIFICA TE ALONG WITH THE PAYMENTS MADE TO MR.D.S.RAJAMANICKAM FOR RS.8,00,00 0/-. THE AO HAS GROSSLY ERRED IN NOT NOTING THAT THE SENIOR MANAGE R, INDIAN BANK HAD COVERED BOTH THE TRANSACTIONS RELATING TO PAYMENT I N RESPECT OF PROPERTY AT KOTTIVAKKAM AND AT LLOYD'S ROAD. THEREFORE, THE LD. AR SUBMITTED THAT THE ASSESSEES FATHER-IN-LAW PROVIDED FUNDS FO R PURCHASE OF PROPERTY, LATER REPAID BY APPELLANT. BANK CONFIRMA TION PROVIDED FOR PAYMENT IN FAVOUR OF THE FATHER IN LAW. THUS THE A PPELLANT PRAYS FOR DELETION OF ADDITION OF RS.9 LAKHS OUT OF RS.10,80, 000/-. 10. PER CONTRA, THE LD. DR SUBMITTED THAT EVEN DURI NG THE CONSEQUENT PROCEEDINGS TO THE ORDER OF THE ITAT, THE ASSESSEE WHEN ASKED TO FURNISH THE DETAILS FOR THE SOURCES FOR THE INVEST MENT MADE, THE AR SUBMITTED THAT THE SUM OF RS. 12 LAKHS TAKEN FROM L OAN FROM ASSESSEES FATHER-IN-LAW, MR. D.S.RAJAMANICKAM, IN SUPPORT OF THAT FILED A COPY OF THE AFFIDAVIT FILED BY MR. A.S.M.ABDUL WAHID, WHO W AS THE SELLER OF THE PROPERTY IN THE SAID AFFIDAVIT, IT WAS STATED THAT THE NEGOTIATION FOR THE PURCHASE OF THE PROPERTY WAS DONE BY SHRI. RAJAMANI CKAM, AND THEREFORE, ON THIS BASIS, IT WAS CLAIMED THAT THE A MOUNT OF INVESTMENT HAS BEEN MET FROM LOAN FROM SHRI. RAJAMANICKAM. AT THE TIME OF THE ASSESSMENT COMPLETED EARLIER, THE ASSESSEE CLAIMED THAT THE TOTAL INVESTMENT IN THE PROPERTY WAS RS. 12,50,000/- AND THAT A SUM OF RS.9 :-10-: IT(SS)A NO.89/CHNY/2008 LAKHS WAS PAID BY SHRI RAJAMANICKAM ON VARIOUS DATE S TO THE SELLER. APART FROM THESE DETAILS, NO OTHER DETAILS LIKE INC OME TAX ASSESSMENT WERE FILED IN RESPECT OF D.S. RAJARNANICKAM WHO IS SINCE DECEASED. ONE OF THE DOCUMENTS THAT WAS RELIED BY THE ASSESSEE AT THE TIME OF ORIGINAL ASSESSMENT WAS THE COPY OF THE LETTER ISSUED BY THE INDIAN BANK , TO THE EFFECT THAT RS. 9 LAKHS WAS PAID BY SHRI. RAJAMANIC KAM TO THE SELLER. THIS EVIDENCE WAS REJECTED BY THE ASSESSING OFFICER AT THAT TIME SINCE THE SAME WAS CITED AS EVIDENCE IN RESPECT OF INVEST MENT IN ANOTHER PROPERTY AT KOTTIVAKKAM. THEREFORE, THE AMOUNT INVE STED HAS TO BE TREATED AS UNDISCLOSED INCOME MADE BY THE ASSESSEE. THE TOTAL VALUE OF INVESTMENT INCLUDING STAMP DUTY AND REGISTRATION CH ARGES COMES TO RS. 14,30,000/- ( RS. 12,50,000 PLUS RS. 1,80,000). OUT OF THIS, THE ASSESSEE HAS EXPLAINED SOURCES TO THE EXTENT OF RS. 3,50,000/- ONLY. THEREFORE, THE BALANCE OF RS. 10,80,000/- IS TREATE D AS UNDISCLOSED. 11. WE HEARD THE RIVAL SUBMISSIONS. THE CORE ISSUE IS WHETHER THE AMOUNT STATED TO HAVE BEEN PAID BY SHRI. RAJAMANICK AM, THE ASSESSEES FATHER-IN-LAW IS GENUINE OR NOT. IN THIS REGARD, T HOUGH THE ASSESSEES FATHER-IN-LAW WAS STATED TO BE AN ASSESSEE AND HE F ILED HIS RETURNS UPTO AY 1996-97, IT IS SEEN THAT THE ASSESSEE HAS NOT PL ACED ANY MATERIAL TO JUSTIFY THAT THE IMPUGNED INVESTMENT HAS GONE FROM SHRI. :-11-: IT(SS)A NO.89/CHNY/2008 RAJAMANICKAMS ACCOUNT. THEREFORE, WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS MADE BY THE ASSESSEE. FURTHER, A PLEA WAS MADE THAT ATLEAST THE DISALLOWANCE COULD BE RESTRICTED TO THE EXTENT OF RS. 9 LAKHS AND THE BALANCE OF RS. 1,80,000/- INCURRED TOWARD STAMP DUTY AND REGISTRATION CHARGES BE ALLOWED. WE HAVE CONSIDERE D THE ASSESSEES PLEA AND FIND THAT THE SOURCES FOR THIS RS. 1,80,00 0/- HAS ALSO NOT BEEN EXPLAINED BY THE ASSESSEE. THEREFORE, THE CORRESPO NDING GROUNDS OF THE ASSESSE FAIL. 12. THE NEXT ISSUE IS ADDITION OF RS.3,85,269/- REP RESENTING PROCEEDS FROM BANK OF INDIA TO INDIAN BANK A.Y.1995-96. THE RE BEING ONE MONTH DELAY IN DEPOSIT IN RECEIPT OF AMOUNT FROM IN DIAN BANK AND DEPOSIT IN BANK OF INDIA, THE AO TREATED THIS SUM A S UNEXPLAINED DEPOSIT. THE LD. AR SUBMITTED THAT THE ASSEESSEE HA D CLARIFIED THAT IT RELATES TO PROCEEDS FROM THE CLOSURE OF SAVINGS BA NK ACCOUNT NO.2718 MAINTAINED WITH BANK OF INDIA, USMAN ROAD BRANCH ON 10.11.1995 AND SETTLED BY THE BANK BY ISSUE OF PAY ORDERS FOR RS.3 ,84,859/- AND RS.410/-. THE APPELLANT DEPOSITED THE SAME WITH IND IAN BANK AND CREDITS WERE RECEIVED ON 16.12.1995. (PAGES 73 TO 7 5 OF PB). VIDE PARA 12 OF THE CIT'S DIRECTIONS DATED 28.03.2003 (PAGE 6 9 OF PB) HE HIMSELF CONCLUDES 'MOREOVER, THE ASSESSEE'S AUTHORISED REPR ESENTATIVE HAS FAILED TO FILE A COPY OF THE STATEMENT OF ACCOUNT F ROM THE BANK OF INDIA :-12-: IT(SS)A NO.89/CHNY/2008 TO STRESS THEIR CLAIM FURTHER. IN THE ABSENCE OF CO PY OF THE ACCOUNT FROM BANK OF INDIA TO SUBSTANTIATE THE CREDIT OF RS.3,85 ,269/-, THE ASSESSING OFFICER'S ACTION IN BRINGING TO TAX OF RS.3,85,269/ - IS UPHELD. HOWEVER, IF THE ASSESSEE IS ABLE TO PRODUCE THE EVIDENCE SUBSEQ UENTLY ON THIS POINT THE ASSESSMENT MAY BE RECTIFIED ALLOWING DEDUCTION. ' THE BANK STATEMENT WAS OBTAINED SUBSEQUENTLY (PAGE 74 OF PB) WHICH CONCLUSIVELY PROVES THE TRANSFER. THE AO MERELY REJ ECTED THE EXPLANATION OF THE APPELLANT STATING THAT THERE HAS BEEN A GAP OF ONE MONTH FROM THE DATE OF CLOSURE ON 10.11.1995 TO THE CREDIT ON 16.12.1995. HE FAILED TO APPRECIATE THAT THE PAYMEN T WAS RECEIVED BY PAY ORDERS IN ODD FIGURES AND IT WAS NOT CASH. A PA Y ORDER HAD A VALIDITY OF 6 MONTHS AND HENCE CAN BE DEPOSITED AT ANY TIME BEFORE IT EXPIRES. THE APPELLANT HAD DEPOSITED THE PAY ORDER WITHIN A MONTH'S TIME OF THE CLOSURE OF BANK ACCOUNT AND THE SAME HAS BEEN CREDI TED IN THE INDIAN BANK ACCOUNT. BY NO STRETCH OF IMAGINATION, THE AMO UNT COULD BE CATEGORISED AS UNEXPLAINED DEPOSIT AND THE ADDITION NEEDS TO BE DELETED IN TOTO. THEREFORE, THE LD. AR SUBMITTED THAT THE A MOUNT DEPOSITED IN INDIAN BANK RELATES TO CLOSURE PROCEEDS OF BANK OF INDIA AND HENCE IS FULLY EXPLAINED WITH ADEQUATE PROOF. THE APPELLANT PRAYS FOR DELETION OF ENTIRE ADDITION OF RS.3,85,269/-. :-13-: IT(SS)A NO.89/CHNY/2008 13. IN THIS REGARD, THE LD. DR SUBMITTED THAT THE A O HAS SEEN THAT THE DEPOSIT WITH THE INDIAN BANK WAS MADE ON 16.12. 1995 WHEREAS THE AMOUNTS SAID TO HAVE BEEN RECEIVED FROM BANK OF IND IA WAS RECEIVED ON 10.11.1995. THUS, THERE IS A TIME GAP OF NEARLY ONE MONTH WHICH IS NOT EXPLAINED. THEREFORE, THE AO REJECTED THE ARGUMENTS OF THE ASSESSEE'S AND TREATED THE SUM AS UNEXPLAINED DEPOSIT. THEREF ORE, THE LD. DR SUPPORTED THE ORDER OF THE AO. 14. WE HEARD THE RIVAL SUBMISSION. IT IS SEEN FROM PG. 74 OF THE PAPER BOOK FROM THE ASSESSEES BANK OF INDIA, USMAN ROAD ACCOUNT ON 10.11.1995, PAY ORDERS OF RS. 3,84,859/- AND RS. 41 0/- WAS ISSUED TO THE ASSESSEE ON ACCOUNT OF CLOSURE AND THE BANK OF INDIA BY ITS LETTER 29.07.2003 CONFIRMED THE SAME WHICH IS KEPT IN PG. NO. 73 OF THE PAPER BOOK. THE ASSESSEE PLEADS A PAY ORDER HAD A VALIDIT Y OF 6 MONTHS AND IT CAN BE DEPOSITED ANY TIME BEFORE IT EXPIRES. THE A PPELLANT HAD DEPOSITED THE PAY ORDER WITHIN A MONTH'S TIME OF TH E CLOSURE OF BANK ACCOUNT AND THE SAME HAS BEEN CREDITED IN THE INDIA N BANK ACCOUNT. BY NO STRETCH OF IMAGINATION, THE AMOUNT COULD BE CATE GORISED AS UNEXPLAINED DEPOSIT AND THE ADDITION NEEDS TO BE DE LETED IN TOTO. IN THE FACTS AND CIRCUMSTANCES, UNLESS OTHERWISE THE A O RECORDS A FINDINGS THAT THE IMPUGNED AMOUNTS HAS BEEN USED BY THE ASSE SSEE ELSEWHERE WITHIN A PERIOD OF 6 MONTHS FROM THE DATE OF ISSUE, THE ASSESSEES :-14-: IT(SS)A NO.89/CHNY/2008 SUBMISSION MERITS CONSIDERATION. THEREFORE, THIS I SSUE IS REMITTED BACK TO THE AO FOR AN EXAMINATION AND IN CASE THE IMPUGN ED AMOUNT WAS NOT CLAIMED AS SOURCE WITHIN A PERIOD OF 6 MONTHS TOWAR DS ANY INVESTMENTS OR DRAWINGS, THE AO SHALL ALLOW THE ASSESSEES CLAI M. THEREFORE, THIS ISSUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 15. THE NEXT ISSUE IS WITH REGARD TO THE GROUND NO. F, THAT THE AO ERRED IN GRANTING ONLY 5% DEDUCTION TOWARDS STONES AND FOREIGN MATERIALS IN THE VALUATION OF GOLD JEWELLERY FOR AY 1997-98. THE LD. AR SUBMITTED THAT THE AO PROVIDED 5% DEDUCTION TOWARDS STONES AND FOREIGN MATERIALS, 12% DEDUCTION WAS ALLOWED ON THE MARKET RATE OF 22 CT GOLD OF RS.400 PER GM. THE APPELLANT HAD SUBMITT ED BEFORE THE HON'BLE TRIBUNAL A WORKING SHOWING VALUATION OF GOL D JEWELLERY (PAGE 76 OF PAPER BOOK). THE WORKING OF APPELLANT AND AO ARE CAPTURED AS BELOW: A. QUANTITY OF GOLD PARTICULARS WORKING OF AO WORKING OF ASSESSEE GROSS WEIGHT OF JEWELLERY 3,885 GMS 3,885 GMS LESS: TOWARDS STONES @ 5% 194.25 GMS LESS: 15% TOWARDS FOREIGN MATERIAL LIKE LAC, BEADS, STONES, FOILS, TASSELS, IVORY, THREADS ETC 583 GMS LESS: 16.5% TOWARDS IMPURITIES TO ARRIVE AT 24 CARAT PURITY OF GOLD 54 5 GMS :-15-: IT(SS)A NO.89/CHNY/2008 NET WEIGHT 3690.75 GMS 2757 GMS B. VALUE OF 22 CT GOLD PARTICULARS WORKING OF AO WORKING OF ASSESSEE MARKET RATE OF 24 CT GOLD 384 MARKET RATE OF 22 CT 400 LESS: 12% DISCOUNT 48 NET RATE 352 384 C. VALUE OF GOLD PARTICULARS WORKING OF AO WORKING OF ASSESSEE NET WEIGHT 3690.75 GMS 2757 GMS NET RATE RS. 352 PER GM RS. 384 PER GM NET VALUE 12,99,144/ - 10,58,688/ - AND PLEADED THAT BASED ON ABOVE EXPLANATION THE ADD ITION COULD ONLY BE RS.10,58,688/- INSTEAD OF RS.12,99,144/- MADE. IN T HIS REGARD, THE LD. DR SUBMITTED THAT THE AO FOR DETERMINING THE VALUE FOR 3885 GMS OF GOLD , ADOPTED RS. 400 BEING THE MARKET VALUE OF GO LD JEWELLERY FOR 22 CT. ON APPEAL, THE HONBLE ITAT DIRECTED THE AO TO ADOPT THE VALUE OF 22 CT. GOLD AFTER DEDUCTION @ 12% AND ALSO SUITABLE DISCOUNT ON ACCOUNT OF STONES AND FOREIGN MATERIALS. IN THE PRO CEEDINGS CONSEQUENT TO THE ITAT ORDER, THE ASSESSEE CLAIMED 15% TOWARDS FOREIGN MATERIALS, STONES AND A FURTHER 16.5% TOWARDS IMPURITY AND ARR IVED THE VALUE OF :-16-: IT(SS)A NO.89/CHNY/2008 GOLD JEWELLERY 2757 GMS @ 384 PER/GM. AS PER THE D IRECTIONS OF THE HONBLE ITAT, FROM THE MARKET VALUE OF 22CT. GOLD J EWELLERY, ONLY 12% DISCOUNT HAS TO BE ALLOWED AND FURTHER SUITABLE DED UCTION HAS TO BE CONSIDERED ONLY FOR STONES, FOREIGN MATERIALS ETC. THE MARKET VALUE OF 22CT. IS 400 PER GM AND ON THIS 12% DEDUCTION IS AL LOWED. THEREFORE, THE RATE THAT IS TO BE TAKEN FOR VALUATION SHOULD B E AT 352 PER/GM AND HENCE THE AO ADOPTED THIS RATE. SINCE, THE AO CONS IDERED THAT 5% WOULD BE A JUSTIFIABLE QUANTUM TOWARDS STONES AND F OREIGN MATERIALS, HE ALLOWED ONLY 5% TOWARDS STONES ETC. THE LD. AR SUB MITTED THAT BEYOND THIS PERCENTAGE THE ASSESSEE SHOULD LAY MATERIAL IN SUPPORT OF ITS CLAIM WHICH HAS NOT BEEN MADE. 16. WE HEARD THE RIVAL SUBMISSIONS. THE ITAT HAS C LEARLY RECORDED IN ITS ORDER THAT THE AO SHOULD VALUE THE GOLD JEWELL ERY AND SILVER ARTICLES AS PER THE PREVAILING MARKET RATE. THE VALUATION S HOULD BE AT THE RATE OF 22 CT. GOLD AFTER 12% DISCOUNT AND SUITABLE DISC OUNT ON ACCOUNT OF STONES AND FOREIGN MATERIALS. ACCORDINGLY, THE ORD ER OF THE AO QUA ISSUE NOS. 8 & 9 IS SET ASIDE WITH A DIRECTION TO T HE AO TO PASS A FRESH ORDER AFTER CONSIDERING THE NECESSARY REDUCTION AND DISCOUNT AS PER THE PREVAILING MARKET RATE. THUS, THERE IS MERIT IN T HE SUBMISSION MADE BY THE LD. DR. SINCE, THE ASSESSEE HAS NOT PLACED ANY MATERIAL FOR :-17-: IT(SS)A NO.89/CHNY/2008 WARRANTING MORE THAN 5% DISCOUNT TOWARDS STONE, FOR EIGN MATERIAL ETC., WE DO NOT FIND ANY MERIT IN THE CORRESPONDING GROUN DS OF THE ASSESSEE. 17. THE NEXT ISSUE IS NOT ADOPTING AVERAGE MARKET V ALUE IN RESPECT OF VALUATION OF SILVER ARTICLES (RS.2,39,814/- ADDITIO N) A. Y.1997 -98. THE AO RETAINED THE VALUE OF SILVER ARTICLES AS WAS ALR EADY ASSESSED IN THE EARLIER ORDER, STATING THE RATE ADOPTED TO BE THE P REVAILING MARKET PRICE. IN THIS REGARD, THE LD. AR SUBMITTED THAT WITH RESP ECT TO SILVER ARTICLES, GROSS WEIGHT OF 32.65 KILOS WAS BROUGHT TO TAX IN T HE HANDS OF THE APPELLANT AT THE RATE OF RS.7,345 PER KILO STATING THAT THE HON'BLE INCOME TAX APPELLATE TRIBUNAL HAD OBSERVED THAT FOR THE SILVER ARTICLES THE PREVAILING MARKET VALUE HAS TO BE ADOPTED. THE AO FAILED TO APPRECIATE THE VIEW OF THE INCOME TAX APPELLATE TRI BUNAL WITH RESPECT TO THE VALUATION OF GOLD JEWELLERY AND SILVER ARTIC LES AS PER THE PREVAILING MARKET VALUE COULD NOT BE RESTRICTED TO RATE AS FOR THE ASSESSMENT YEAR 1997-98, BUT COULD ONLY MEAN THE PREVAILING MARKET RATE FOR THE RESPECTIVE ASSESSMENT YEARS AND HENCE THE AVERAGE M ARKET RATE ALONE NEEDS TO BE CONSIDERED AND VALUATION DONE. THUS, TH E VALUE OF SILVER ARTICLES NEED TO BE VALUED AT RS.6,508 PER KILO BEI NG THE AVERAGE MARKET RATE FOR SILVER FOR THE BLOCK PERIOD (PAGE 77 OF P8 ). ALSO, THE AO DID NOT PROVIDE FOR ANY ALLOWANCE WITH RESPECT TO THE IMPUR ITIES IN ORDER TO :-18-: IT(SS)A NO.89/CHNY/2008 ARRIVE AT THE MARKET RATE OF 9960 TOUCH. THE ASSE SSEE ALSO FURNISHED THE VALUE OF SILVER AS UNDER: PARTICULARS WORKING OF AO WORKING OF ASSESSEE NET WEIGHT 32.65 KGS 32.65 KGS LESS: 15% FOR IMPURITIES TO ARRIVE AT 9960 TOUCH - 4.9 KGS BALANCE 32.65 KGS 27.75 KGS NET RATE RS. 7,345 PER GM RS. 6,507 PER GM NET VALUE RS. 2,39,814/ - 1,80,597/ - AND PLEADED FOR DEDUCTION OF 15% FOR IMPURITIES TO ARRIVE AT 9960 TOUCH AND PRAYS THAT THE SAME BE ALLOWED AT THE TIME OF V ALUATION OF SILVER ARTICLES AND THE VALUE OF SILVER ARTICLES BE CONSID ERED AT RS.1,80,597/-. 18. PER CONTRA, THE LD. DR SUBMITTED THAT 32.65 KGS WAS BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE @ 7345 PER/KG IN T HE ORDER PASSED ON 31.03.2003. ON ASSESSEES APPEAL, THE ITAT HAS OBS ERVED THAT FOR SILVER ARTICLES THE PREVAILING MARKET VALUE HAS TO BE ADOPTED. THE WORKING OF THE ASSESSEE IS NOT ACCEPTABLE SINCE WHA T IS TO BE ADOPTED IS ONLY THE PREVAILING RATE WHICH IS RELEVANT FOR AY 1 997-98. THE PREVAILING MARKET RATE APPLICABLE FOR AY 1997-98 IS ONLY RS. 7 345. THEREFORE, THE LD. DR SUBMITTED THAT THE AO HAS CORRECTLY NOT UNDE RTAKEN ANY MODIFICATION. :-19-: IT(SS)A NO.89/CHNY/2008 19. WE CONSIDERED THE RIVAL SUBMISSIONS. THE UNACC OUNTED INCOME HAS TO BE ASSESSED IN THE YEAR IN WHICH SUCH ASSET WAS ACQUIRED/ UNEARTHED. IN THE ASSESSEES CASE, SINCE, THE ASSE SSEE COULD NOT FURNISH THE PERIOD IN WHICH IT WAS ACQUIRED, THE AO HAS ASS ESSED THE YEAR IN WHICH SUCH ASSET WAS UNEARTHED BY THE REVENUE (03.1 0.1996), ADOPTING THE VALUE PREVAILED IN THAT YEAR. THEREFORE, WE DO NOT FIND ANY MERIT IN THE ASSESSEES SUBMISSIONS AND HENCE, THE CORRESPON DING GROUNDS ARE DISMISSED. 20. THE NEXT ISSUE IS ADDITION OF RS.70,000/- ON AC COUNT OF TRAVELLERS CHEQUE ALLEGEDLY PURCHASED - A.Y:1997-98. THE AO MA DE AN ADDITION OF RS.70,000/- BEING TRAVELLERS CHEQUE PURCHASED FOR U S$ 2000/- DURING APRIL, 1996 BASED ON THE PHOTOCOPY OF THE PASSPORT HELD BY THE ASSESSEE. IN THIS REGARD, THE LD. AR SUBMITTED THAT THERE ARE SOME MISTAKES REGARDING THE ENTRY OF TRAVELLERS CHEQUE A ND THE APPELLANT HAD NOT PURCHASED THESE TRAVELLERS CHEQUE DURING THE RE LEVANT ASSESSMENT YEAR. THE PASSPORT DOES NOT BEAR SUCH ENTRY AND HEN CE PLEADED TO DELETE THE ADDITION. 21. PER CONTRA, THE LD. DR INVITED OUR ATTENTION T O THE ORDER OF THE AO, WHEREIN HE HAS RECORDED THAT THE ASSESSEE HAD P URCHASED TRAVELLER :-20-: IT(SS)A NO.89/CHNY/2008 CHEQUE US$ 2000/- DURING APRIL, 1996 FROM THE PHOT OCOPY OF THE PASSPORT HELD BY THE ASSESSEE. 22. WE HEARD THE RIVAL SUBMISSIONS AND REMIT THIS I SSUE BACK TO THE AO TO FURNISH THE PHOTOCOPY OF THE PASSPORT HELD BY THE ASSESSEE AND AFTER AFFORDING EFFECTIVE OPPORTUNITY TO THE ASSESS EE DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 23. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON 14 TH JANUARY, 2020 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, / /DATED: 14 TH JANUARY, 2020 JPV '#0121 /COPY TO: 1. & / APPELLANT 2. #$& /RESPONDENT 3. 3 ) ( /CIT(A) 4. 3 /CIT 5. 1# /DR 6. 6 /GF