M.L. Sachdeva V. Income Tax Officer, Ward 1(1), Faridabad

ITA/83/2012

AI Insights

The case involves M.L. Sachdeva, the legal heir of Shri Walaya Ram Sachdeva, who appealed against the order of the Income Tax Appellate Tribunal, which had upheld the addition of Rs. 14,30,000 to the income of the deceased for the assessment year 2004-05. The addition was made on the grounds that the sale of jewelry, which purportedly resulted in a capital loss, was not substantiated by credible evidence. The Tribunal found the documentary evidence provided by the assessee, including a valuation report and sales invoices, to be insufficient and unconvincing, leading to the conclusion that the jewelry was not genuinely sold.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 796040 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 13-09-2012
• Assessment Year: misc
• Other Referred Cases: Lal Chand Bhagat Ram, Mehta Parikh & Co.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: TEJINDER JOSHI
• Assessee Lawyers: S K GULATI
• Keywords: Assessment Year 2004-05; Capital loss; Income Tax; Jewellery Sale; Unexplained income
• Section: 260A

Judgement Text

"ITA No.83 of 2012 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.83 of 2012(O&M) Date of decision: 13.09.2012 M.L.Sachdeva -----Appellant Vs. Income Tax Officer, Ward 1(1), Faridabad ----Respondent CORAM:- HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MR. JUSTICE GURMEET SINGH SANDHAWALIA Present:- Mr. S.K.Gulati, Advocate for the appellant. Mr. Tejinder Joshi, Advocate for the revenue. Ajay Kumar Mittal,J. CM Nos.11221 and 11222 CII of 2012 1. There is a delay of 40 days in filing and 259 days in refiling the appeal. 2. After hearing learned counsel for the parties, the applications are allowed. The delay in filing and refiling the appeal is condoned. ITA No.83 of 2012 3. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 7.1.2011, Annexure 'C' passed by the Income Tax Appellate Tribunal, Delhi Bench 'E' New Delhi in ITA No.2034/Del/2008 for the assessment year 2004-05, claiming following substantial questions of law:- a) Whether ITAT was correct in law in reversing the finding of learned Commissioner (Appeals) and thereby upholding the addition of Rs.14,30,000/- made by the AO which was based on presumptions, assumptions, surmises ITA No.83 of 2012 2 and conjectures? b) Whether the addition was correct in law when the possession of jewellery and sale of the same was genuinely established by the assessee with the necessary documentary evidence? c) Whether the learned ITAT has placed selective reliance on circumstantial evidence in support of assessment order while ignoring the sufficient documentary evidence furnished by the assessee and therefore the order of ITAT is perverse on this account? d) Whether the order of learned ITAT is perverse in law and on facts? 4. On 9.7.2012, notice of motion was issued to consider only questions No.(a) and ( c) reproduced above. 5. Briefly, the facts as narrated in the appeal may be noticed. The appellant is legal heir of the assessee Shri Walaya Ram Sachdeva who died on 24.2.2004 at the age of 89 years. Return for the assessment year 2004-05 was filed on 24.2.2005 declaring income at ` 89,790/- including capital loss of ` 6,81,859/- on account of sale of jewellery for ` 14.3 lacs. In the financial years 2001-02 and 2002-03, the assessee sold jewellery amounting to ` 7.2 lacs and ` 25.8 lacs respectively. During the assessment proceedings, the Assessing officer asked the assessee to establish the genuineness of the sale of jewellery worth `14.3 lacs. The appellant produced sale invoices and submitted that sale consideration had been received through account payee cheques. The appellant also produced valuation report dated 15.7.2003 by the approved valuer showing the value of the jewellery at ` 4,56,125/- as on 1.4.1981. The Assessing officer rejected the documentary evidence furnished by the assessee and concluded that no such sale of jewellery ITA No.83 of 2012 3 was made by the assessee. The Assessing Officer treated the amount of ` 14,30,000/- deposited in the bank account of the assessee as income out of unexplained sources and added the same to the income of the assessee. Aggrieved by the order, the appellant filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] alongwith application under Rule 46A (1)(b) (c ) of the Income Tax Rules, 1962 (in short, “the Rules”) for production of additional evidence. Vide order dated 10.3.2008, Annexure 'B', the CIT(A) allowed the appeal. Aggrieved thereby, the department filed an appeal before the Tribunal. Vide order dated 7.1.2011, Annexure 'C', the Tribunal allowed the appeal. Hence the present appeal by the appellant. 6. The issue that arises for consideration in this appeal is whether the sale of jewellery to the tune of ` 14.3 lacs which was effected by Shri Walaya Ram Sachdeva during his life time was a genuine transaction or not. The Tribunal while reversing the finding of the CIT(A) in para 8 noticed that the assessee was unable to show that Shri Walaya Ram Sachdeva was possessed of the alleged diamond jewellery during his life time. While dispelling the contention of the appellant, the Tribunal in para 8 had recorded as under:- “8. We have duly considered the rival contentions and gone through the record carefully. The first essential condition required to be proved by the assessee in order to claim long term capital loss is that Walaya Ram was possessing alleged diamond jewellery which was alleged to have been sold on 24.7.2003. There is no direct evidence available with the assessee in this connection. He relied upon circumstantial evidence. The first evidence referred by the assessee is the valuation report of Shri Surinder Kumar Gupta who valued the jewellery on 15.7.2003. ITA No.83 of 2012 4 According to the assessee, he is a registered valuer. He has valued the jewellery, therefore, he has seen the jewellery. When this valuer was called for by the Assessing Officer for recording his statement he disclosed that he is not maintaining any record regarding issuance of valuation certificate. He prepared the valuation certificate, issued it to the concerned persons and kept one copy but he was unable to produce the record exhibiting the copies prepared by him not only with that of assessee but in respect of other cases when he gave the certificate. To our mind, being a registered valuer, he is expected to keep a regular record in the shape of some register etc. wherein Sr.No. could be given. Either he was not maintaining the record or knowingly he did not produce it before the Assessing Officer. In the valuation report also, he has not given any serial number. Thus, this evidence is not of such a credence which can absolve an assessee from his duty to disclose the value of assets in the wealth tax returns in order to claim that he was possessing a particular asset. This document can be a corroborative piece of evidence but independently it is not sufficient to say that Walaya Ram was possessing diamond jewellery. The other evidence submitted by the assessee is sales invoices. According to the inquiry of the Assessing Officer, M/s Shubham Gems did not carry out its business on the given address. An affidavit of Shri VG Kothari has been filed. This affidavit was sworn on 29.3.2005. Why this affidavit was not filed by the assessee during the assessment proceedings. If Shri V.G Kothari has died then from where these documents had come to the possession of the assessee. What was the occasion, the deponent had given this affidavit. This affidavit does not lead the case of the assessee anywhere. It only disclosed that M/s Shubham Gems had operated at the given address. Thus, either assessee has anticipated the situation that existence of ITA No.83 of 2012 5 Shubham Gem would be inquired at some stage. The notice under section 143(2) was issued by the Assessing Officer on 27.2.2006. The affidavit was sworn on prior to that date. Prima facie, these documents appear to us as a concocted affairs which have been created by some entry provider. Shri Kothari was a young man of 23 years as alleged in this affidavit. According to the assessee, the diamonds were sold in July 2003 at that time he must be 22 years young boy. We fail to understand why an experienced person like Walayam Ram went to such a lad at a distance of more than 1000 Kms for sale of his beloved diamonds which were kept by him from the last more than 50 years and not disclosed to anyone. The story does not appeal to us a plausible one. As far as the case laws relied upon by the assessee are concerned, we are of the opinion that these are not applicable on the facts of the present case. In the case of Lal Chand Bhagat Ram, Hon'ble Supreme Court has observed that if finding of fact arrived at by the ITAT is on mere suspicion and conjecture then higher appellate forum would be entitled to interfere and set aside the same. In the case of Mehta Parikh & Co. (supra), Hon'ble Mumbai High Court apart from dealing with other issues has considered a factor whether the Hon'ble High Court can direct the ITAT to make a reference on a question which was not sought by either parties. Thus, both the cases are not applicable on the given facts. The basic principle of appreciation of the facts and circumstances is that whenever any explanation of a defence of an assessee based on number of facts supported by evidence and circumstances required consideration whether the explanation is sound or not must be determined not by considering the weight to be attached to each single fact in isolation but by assessing the cumulative effect of all the facts in their setting as a whole. We are of the view that it is an attempt to create capital ITA No.83 of 2012 6 without paying any tax, it is not a genuine claim. Learned CIT(Appeals) failed to appreciate the facts in right perspective. He was not justified in deleting the addition. We allow the appeal of the revenue set aside the order of learned CIT(Appeals) and restore that of the Assessing Officer.” 7. Learned counsel for the appellant made a feeble attempt to dislodge the findings recorded by the Tribunal but was unable to substantiate his pleas. An effort was made to show that the aforesaid finding was perverse. Nothing was disclosed in the wealth tax returns. Further, the evidence which had been produced was of recent origin in the form of sale invoice or report of valuer. Initially, the onus which was placed upon the assessee was required to be discharged by providing unimpeachable evidence which could not have been created i.e. in the form of some document of past nature. The assessee had failed to produce any such material. The view which has been taken by the Tribunal is a plausible view. Moreover, if two views are possible and one view has been adopted, in appeal under Section 260A of the Act, it would not be open for this Court to record a different finding unless the same is shown to be erroneous or perverse in any manner. 8. Finding no merit in the appeal, the same is dismissed. (Ajay Kumar Mittal) Judge September 13, 2012 (Gurmeet Singh Sandhawalia) 'gs' Judge "