Delhi High Court

Smt. Urmila Gambhir vs Commissioner Of Income Tax, New ... on 23 December, 2009

Author: A.K.Sikri

*          IN THE HIGH COURT OF DELHI AT NEW DELHI

+     ITA 12/2006

                                      Reserved on:    4th, November,2009
                                 Date of Decision: 23rd December, 2009

      SMT. URMILA GAMBHIR
      LEGAL HEIR OF LATE SHRI SUBHASH GAMBHIR
      1/14, WEST PATEL NAGAR, NEW DELHI-8 ..... Appellant

                           Through:   Mr. Prem Nath Monga, Adv.

                  versus

      COMMISSIONER OF INCOME TAX, NEW DELHI
                                         ..... Respondent

                           Through:   Mr. Sanjeev Sabharwal, Adv.

    % CORAM:
      HON'BLE MR. JUSTICE A.K. SIKRI
      HON'BLE MR. JUSTICE SIDDHARTH MRIDUL

      1.     Whether reporters of local papers may be allowed to see
             the judgment?
      2.     To be referred to the Reporter or not?
      3.     Whether the judgment should be reported in
             the Digest?
                             JUDGMENT

A.K. SIKRI, J.

1. The Appellants are the legal heirs of late Sh. Subhash Gambhir

who was the assessee in this case. He was one of the Promoter

Directors of M/s. D.D. Industrial Corporation Limited (hereinafter

referred to as "the company"). On 29th August, 1996 a search was

conducted by the Revenue department under Section 132 of the

Income Tax Act at the residential premises of the assessee i.e. 1/14,

West Patel Nagar, New Delhi as well as at the premises of the

company at its registered office at Karampura, New Delhi. Certain

documents were found and seized during the search which included

Annexure A-6, a loose sheet of paper and jewellery from the bank

lockers was also seized. After the search, the Assessing Officer (AO)

issued notice dated 12th February, 1997 under Section 158BC of the

Act to the assessee. Similar notice dated 11th December, 1997 was

issued to the company as well. Enquiries were thereafter made,

particularly regarding Annexure A-6 which was, as mentioned above,

a sheet of paper and contained following hand written text:

             "Architect                      140.00
             Mutation                        150.00
             Brokerage                       650.00
             Expenses for Register           172.09
             K. Lal (M.M. Suri)                50.00
             Registration for name etc.      100.00
             Cost of L.                      50500.00
                                             ---------------
                                             51,762.00
                                            ========="

2. According to the Assessing Officer the figures were in hundreds

and the dot in between the figures had no meaning. For example,

against the Architect where the figure of 140.00 is mentioned, it

actually meant Rs.14,000/-. In this way the total consideration in

respect of agricultural land purchased by the assessee in village

Bhigan, Tehsil Gannaur, District Sonepat was Rs.51,76,200/-. The

Company submitted its reply dated 23rd July, 1997 inter alia stating

that the company had purchased the said agricultural land which was

duly recorded by it in its books of account. It never made any

investment of Rs.51,76,200/- nor Annexure A-6 mentions such a

payment.

3. The Assessing Officer, however, issued letter dated 16th

September, 1997 requiring the company to show cause as to why

Rs.51,76,200/- be not treated as company's unexplained investment.

The company was also required to produce certain persons whose

names were mentioned in Annexure A-6 page 34. In this letter A.O.

also mentioned about another loose paper pages 4 and 5 of Annexure

A-6 which according to the A.O. revealed the rate of land Rs.17 to 20

lacs per acre.

4. On 19th September, 1997, the company made detailed reply to

the A.O.'s letter dated 16th September, 1997 categorically denying any

such investment of Rs.51,76,200/- in the purchase of land. The

company also explained that page no.34 of Annexure A-6 had no

relation with pages 4 and 5 of Annexure A-6. No photocopies of pages

4 and 5 of Annexure A-6 which were only shown to the counsel of the

company was made available to the company. The company denied

pages 4 & 5 of Annexure A-6 suggesting land rate @17 to 20 lac per

acre. In support of its case, the company also submitted affidavits of

the vendors of the land from whom the pieces of Agricultural land

were purchased as per details given in its earlier letter dated 23 rd

July, 1997 appearing at pages 47 to 51, particularly page 49. The

company also placed on A.O.'s record the report dated 29th July, 1997

of the valuer for the valuation of the land purchased. This valuation

was done as on January, 1997. The explanation, however, was not to

the satisfaction of the A.O. who passed orders dated 31st October,

1997 in the case of the company making addition of Rs.51,76,200/- on

protective basis.

5. On 15th September, 1997, the A.O. issued letter to the assessee

on the basis of Annexure A-6 requiring him to explain as to why

addition of Rs.34,71,135/- (Rs.51,76,200 (-) Rs.16,97,065/-) be not

treated as undisclosed income for the assessment year 1996-97. The

assessee replied to the same on 19th September, 1997 giving similar

explanation which were given by the company in the case of the

assessee. On 30th September, 1997, the A.O. passed order under

Section 158-BC on the Appellant inter alia making addition of

Rs.51,76,200/- on account of undisclosed income being the investment

in the purchase of land at village Bhigan. The A.O. also made further

addition of Rs.8,86,794/- as the Appellant's undisclosed income from

alleged investment in the purchase of jewellery relating the same to

the assessment year 1997-98.

6. As far as addition on account of jewellery is concerned, the

assessee's explanation was that the jewellery found with him included

jewellery worth Rs.10,96,379/- which beloned to his mother-in-law

Smt. Raj Rani Kapoor and was kept with him for safe custody. The

assessee had also furnished reconciliation of jewellery found from the

premises and jewellery owned by the assessee and his family

members vide his letter dated 16th September, 1997, however,

explanation of the assessee was rejected by the A.O. resulting in the

aforesaid addition.

7. The additions made by the A.O., as aforesaid, were challenged in

appeal before the Income Tax Appellate Tribunal (ITAT). The ITAT by

a common order passed both in the case of the assessee and the

company upheld the two additions made in the case of the assessee as

his undisclosed income under Section 158B(b) of the Income Tax Act.

The A.O. also had made the protective addition of Rs.51,76,200/- in

the hands of the company which was deleted by the ITAT. Against the

order of the ITAT, present appeal is preferred in which following two

questions of law were framed while admitting the appeal:

"A. Whether on the facts and in the circumstances of the case and on the true interpretation of Section 158 BB(b) of the Act, there was any material for the ITAT in upholding that loose paper Annexure A- 6 page 34 in the total of which was Rs.51762/-

                    found   on    search      represented      the   sum     of
                    Rs.51,76,200/-    was     the   assessee's    undisclosed

income for the block period relating the same to the assessment year 1996-97.

B. Whether on the fact and in the circumstances of the case, the ITAT was right in law to hold that the sum of Rs.8,86,794/- representing the alleged unexplained investment in the purchase of jewellery found on search represented the appellants undisclosed investment for the Asst. Year 1997-98."

We now take up discussion on these questions.

Re: Question No.1

8. The learned counsel for the Appellant submits that the

impugned order passed by the ITAT is erroneous in point of law and is

legally vitiated. The impugned order passed by the ITAT has also

been questioned as perverse and legally unsustainable in the eyes of

law. The Appellant contends that Annexure A-6, page 34 is a loose

sheet of paper unsigned, undated, it gives no particulars of any land,

area, size or location or Khasra No. of any land. It is a vague

document and admits of no such interpretation of purchase of any

land for value Rs.51,76,200/- by the Appellant. The scribbling on a

loose sheet has no evidentiary value in the eyes of law. There is no

search material with the A.O. to support this loose sheet of paper to

sustain addition of Rs.51,76,200/-. The document does not speak for

itself and is a dumb document unsupported in material particulars of

any search material and needs to be rejected having no evidentiary

value. There is no warrant to read 51762/- as Rs.51,76,200/-.

Reliance is placed on 296 ITR 619 (Del.)-CIT vs. Girish

Chaudhary, which is a Division Bench judgment of this Court against

which even SLP filed by the revenue in the Supreme Court has since

been rejected vide order dated 15th February, 2008. It was argued

that the Appellant had made no purchase of any agricultural land. It

was the company which purchased Agricultural land, which was duly

recorded in the books as per its Balance Sheet as on 31st March, 1996.

The details of the investment in land, including the names and

addresses of the vendors and the price paid was duly disclosed by the

company in its letter dated 23rd July, 1997 addressed to the A.O. who

issued show cause to the company. The vendors of the land had even

filed affidavits in support of the transactions, correctness which have

remained uncontroverted. The assumption that the Appellant as one

of the Promoter Directors made investment in the purchase of

agricultural land for the company was totally misplaced and

unfounded, based on no evidence, but on surmises and conjectures on

which no assessment could be founded in law. The ITAT, it is

contended, merely reproduced the A.O.'s order and concluded by para

22 of their order by saying that Annexure A-6, page 4 and 5 supported

the Revenue's case for reading Annexure A-6 page 34 to be

Rs.51,76,200/-, the land rate in the area was Rs.17 to 20 lacs per acre

and the land purchased in the name of the company being

approximately the same area, the A.O. was justified in making

addition. The Appellant contends that the impugned order of the ITAT

is based on no facts or evidence. Annexure A-6, pages 4 and 5 was

not made available to the assessee even though stated to be found and

seized from assessee's residence. Reliance therefore on such a

document thus totally vitiated the impugned order passed by the

ITAT. Even the company was not given copy of any such document.

9. The learned counsel further pointed out that the said document

was not even made available to the ITAT by the Revenue, nor was it

made available to this Court even after time was taken by the learned

Senior Standing Counsel for the Revenue to do so. The impugned

order of the ITAT which takes support from Annexure A-6, pages 4

and 5 to sustain its conclusion vide para 22 of its order is thus legally

vitiated. It is a blatant case of violation of principles of natural

justice. The order of the ITAT is also perverse. Independently

Annexure A-6 page 34 has no legs to stand on being a dumb document

which otherwise also lacks all the necessary details to sustain any

addition. Learned counsel has also relied upon the decision of the

Supreme Court in the case of Central Bureau of Investigation vs.

V.C. Shukla-(1998) 3 scc 410 (SC). It is further pointed out that

the letter dated 15th September, 1997issued by the A.O. to the

Appellant requiring it to explain about Annexure A-6, page 34. This

notice to the assessee by the A.O. makes no mention of Annexure A-6

page 4 and 5 and yet the ITAT has taken support of this document to

reach its conclusion vide para 22 of its order. This further vitiates the

impugned order of the ITAT which also needs to be declared as

perverse.

10. Mr. Monga also argued that Section 158BB(b) read with Section

69 casts burden on the Revenue to prove any undisclosed income

which may be attributed to the assessee. This burden in the present

case has not been discharged by the Revenue. The Revenue has by

reaching its conclusion acted only on surmises and conjectures

without there being any such material to support its findings and

conclusions. No material has been found to show that the assessee in

the present case has invested any amount in the purchase of land.

The fact that the assessee happens to be one of the Promoter

Directors of the company and, therefore, could be deemed to have

invested some amount which is interpreted to be a fabulous figure of

over Rs.51 lacs for the purchase of land in the name of juristic person

which is totally different under the law is too far fetched to sustain the

conclusion reached by the ITAT which is final fact finding authority

and has to act on some material and not to go by irrelevant and

erroneous consideration, basing their conclusion on mere conjectures

and surmises. The ITAT has to act judicially and has to weigh all the

pros and cons of the case far and against the assessee to reach its

conclusion. Learned counsel has in this regard referred to the case of

Lalchand Bhagat Ambica Ram vs. Commissioner of Income-tax,

Bihar and Orissa-37 ITR 288 (SC). It is submitted that this having

not been done by the ITAT in the present, the impugned order is

legally vitiated and cannot be sustained in the eyes of law. There

being thus no cogent and reliable material found on search, the

impugned addition of Rs.51,76,200/- could not legally be sustained.

11. Learned counsel for the Respondent has refuted the statement

referred to the decisions of the authorities below had taken view on

the facts on record which should not be interfered with. The detailed

submission in this behalf shall be taken note of while discussing the

issue.

12. To summarize, the contention of learned counsel for the

Appellant is that Annexure A-6 which is a loose sheet of paper is a

dumb document with no evidential value and, therefore, could not

have been relied upon by the authorities below for arriving at any

conclusion much less for the authorities on making additions in the

income of the assessee; there was no causing connection between that

paper and purchase of agricultural land at village Bhigan, Tehsil

Gannaur, District Sonepat; there was no basis for arriving at figure of

Rs.51,76,200/- even on the basis of the said document; in any case the

deed regarding that land was in the name of the company and

addition could not have been made at the hands of the assessee; the

said document was not made available to the ITAT by the Revenue

and, therefore, reliance thereupon amounted to violation of principles

of natural justice; the burden was on the Revenue to prove any

undisclosed income at the hands of the assessee, which was not

discharged by the Revenue.

13. It is not in dispute that these very arguments were raised by the

assessee before the A.O., in the appeal before the CIT(A) and

thereafter before the ITAT as well. The ITAT has discussed the order

of the A.O. in detail, on the basis of which the A.O. made the

additions. What is not in dispute is that a document including

Annexure A-6 were found and seized from the premises of the

assessee during the search. The assessee did not disown this

document or stated that it did not belong to him. His explanation was

that this document had no connection with the purchase of the land

by M/s. D.D. Industrial Corporation Limited at village Bhigan, Tehsil

Gannaur, District Sonepat. It is only a rough estimate of the cost of

setting up of a new project in and around Gurgaon and that this paper

did not have any description of khasra number of any land and it also

did not contained address of any person. In this backdrop, the A.O.

dealt with the aforesaid contention to find out as to whether the

document has any connection with purchase of land by M/s. D.D.

Industrial Corporation Limited at village Bhigan, Tehsil Gannaur,

District Sonepat or it related to setting up of a new project in and

around Gurgaon only. Since there was no denial that the said paper

was related to the purchase of the property, it was for the assessee

was to demonstrate how it was related to the proposed purchase of

land in and around Gurgaon. The A.O. found that the assessee had

failed to furnish any details of land which he proposed to purchase in

and around Gurgaon. No project details, which he was planning to

have at the said land, had been furnished by the assessee. He had

also failed to produce Mr. K. Lal (M.M. Suri) against whom 50.00 is

mentioned in the said sheet of paper. He also observed that nature of

the figures in the paper clearly suggested that they were not

appropriate expenses to be paid but expenses actually incurred on

various accounts mentioned in the said paper. Commenting upon the

figures mentioned, which could only be in hundreds, the A.O. opined

that it was highly improbable that the architect fee would only

Rs.140/-, mutation charges would be only Rs.150/- and the brokerage

would be only Rs.650/-. Therefore, he concluded that the figures were

in hundreds. Proceeding further on that basis, according to him cost

of land was Rs.50,50,000/- and other expenses Rs.16,08,500/- and in

this manner total cost of land came to Rs.66,58,500/-. If the

brokerage of Rs.65,000/- is to be taken into consideration, it comes

within the range of 0.75 to 1% of the cost of land which was keeping

in view of the prevalent brokerage. Further, significant finding

arrived at by the A.O. and noted by the Tribunal are as under:

"12. The AO further observed that the assessee in his statement recorded on 19.10.96 admitted having met and discussed regarding project with Shri K. Lal from the office of Shri M.M. Suri, consultant for the projects. However, the assessee and any of his company had not shown any expenses on a/c of consultancy charges paid to Shri K. Lal. No consultant would provide consultancy without charging the fees. The payment of Rs.5000/- shown at page 34 of Annexure A-6 to Shri K. Lal would show the relationship between the assessee, paper and Shri K. Lal. This would further prove that this paper relate to the land purchased for DD Industrial Corpn., which had started its activities subsequent to the search. The assessee itself had admitted having discussed regarding negotiation with foreign company and its components for project at Gannaur with Shri K. Lal in the month of May & June 96 in his reply to question 7 & 8 of the statement recorded on 19.11.96. Thus the AO observed that this proved the close nexus between Shri K. Lal, the page and the land at village Bhigan.

13. The AO also observe that page 36 of Annexure AA- 140 was the site plan for the said land and no expenses of this a/c had been shown to have incurred in the books. The expenses/payment to architect and Shri K. Lal as reflected in page 34 of Annexure A-6 would further substantiate that this paper related to the unaccounted

expenditure of the assessee on a/c of purchase of land at village Bhigan for DD Indl. Corpn. The assessee failed to furnish the details of the persons who had made this site plan. When specifically confronted in question no.14. The assessee replied that one Shri S.K. Arora had made this plan.

............................

15. The AO further noted that page 4 & 5 of Annexure A-6 which were the sketches of the land in village Bhigan showed the land rate was thus arranging from 17 lakhs to 20 lakhs per acre. Thus the AO observed that this also proved that the consideration of Rs.1600,000/- for 4 acres of land shown by the assessee in its books of a/c was understated value of land. The unexplained investment had been shown in page 34 of Annexure A-6."

14. On that basis he arrived at a finding that the said sheet of paper

was connected with purchase of loan at village Bhigan, Tehsil

Gannaur, District Sonepat in the name of M/s. D.D. Industrial

Corporation Limited. Since the company was incorporated in January,

1996 only and it had not started its functions, there was no occasion

of generation of unaccounted or accounted income for the company.

For this reason he made actual additions in the income of the

assessee who was the promoter of the said company and protective

assessment was made in the name of the company.

15. CIT as well as ITAT have confirmed the aforesaid findings. The

ITAT observed that once it is found that slips were found from the

possession and control of the assessee, then onus was upon the

assessee to prove the contents of the slips, since these contents of the

slip was within the knowledge of the assessee and he fails to

discharge this onus.

16. The discussion in this behalf is summed up in the following

manner:

"22. On consideration of the matter we are of the view that these papers pertain to the land in the village Bhigan and the rates shown were ranging between Rs.17 lacs and Rs.20 lacs per acre and not as claimed by the assessee. The finding given by the AO on examination of the matter that figure shown at page 3 & 4 of Annexure A-6 is hundred appears to be correct. We find in agreement with the reasoning assigned by the AO in arriving at the said conclusion. We, therefore, uphold the order of the AO passed in this regard. Since the addition made substantively in the hands of Late Subhash Gambhir is upheld, we direct to delete the addition made protectively in the company (M/s. D.D. Indl. Corpn.)"

17. It is clear from the above that after analyzing facts/material,

findings of facts are arrived at to the effect that the said sheet of

paper relates to actual transactions and did not depict or reflect

rough estimate of the cost of setting up of a new project in and around

Gurgaon, explanation sought to be given by the assessee, which he

failed to establish. In the facts and circumstances of the case, we,

therefore, cannot treat it to be a dumb paper and are unable to accept

this contention of the learned counsel for the assessee. Concurrent

findings are arrived at by all the three authorities below and it is not a

case where these findings can be treated as perverse. In view

thereof, reliance placed upon the judgment of this Court in Girish

Chaudhary (supra) or the judgment of Supreme Court in V.C.

Shukla (supra) and Lalchand Bhagat Ambica Ram (supra) would

not be of any assistance. This question is thus answered in the

affirmative i.e. in favour of the Revenue and against the assessee.

Re: Question No.2

18. In so far addition on account of jewellery is concerned Mr.

Monga submitted that during the course of search proceedings, the

Appellant was found to be in possession of jewellery worth

Rs.54,70,063/- both at residence and bank lockers. Vide letter dated

25th July, 1997 in reply to the A.O.'s query, the total shortfall of

jewellery including the silver utensils was valued at Rs.6,44,416/-

which was surrendered as undisclosed income of the Appellant in the

return filed pursuant to notice under Section 158 BC of the IT Act. It

is further submitted that in reply to the A.O.'s letter dated 15th

September, 1997, the shortfall explained was of Rs.6,07,698/-. The

A.O. while framing assessment under Section 158 BC made addition

of Rs.8,86,794/- relating to the assessment year 1997-98 estimating

unexplained jewellery at Rs.15,31,210/- giving credit of surrender at

Rs.6,44,416/-, he further added Rs.8,86,791/- as assessee's

undisclosed income for the block period. It is stated that in the appeal

filed before the ITAT Appellant objected to the addition of

Rs.8,86,791/- and contended that its explanation inter alia of jewellery

worth Rs.10,96,370/- belonging to his mother-in-law deserved to be

accepted in view of evidence produced and if that was accepted, the

difference calculated at Rs.15,31,210/- as alleged unexplained

jewellery would not be there. The ITAT without appreciating the

correspondence between the Appellant and the A.O. and without

taking into account the material placed on the record estimated the

addition at Rs.8,86,791/- as Appellants undisclosed income on the

ground that they agreed with the A.O.'s finding that the possession of

jewellery belonging to Smt. Raj Rani, the mother-in-law of assessee

had already been considered by the Revenue in framing assessment in

the case of Urmila Gambhir D/o Smt. Raj Rani. It is thus argued that

the ITAT did not have the benefit of the A.O.'s order passed in the

case of Smt. Urmila Gambhir as no such document was placed on

their record. The finding recorded by the ITAT is simply based on the

A.O.'s order without application of its own mind and addition

confirmed without taking into account any material at all. The entire

evidence in the shape of correspondence exchanged between the A.O.

and the assessee on the issue has been ignored from consideration by

the ITAT. It is also submitted that the ITAT has acted arbitrarily,

capriciously and failed to follow the law laid down by the Supreme

Court in Lalchand Bhagat Ambica Ram (supra). It is further

submitted that the impugned order on this issue is thus legally

vitiated resulting in the miscarriage of justice and also in violation of

principles of natural justice.

19. We find that the addition of Rs.8,86,794/- on account of

unexplained jewellery is worked out by the AO on the basis that

during the course of search at the residence and other locker of the

assessee, the following jewellery was found:

             1/14 West Patel Nagar              22,43,506.00
             1/14 West Patel Nagar              3,33,053.00
             Locker at Punjab & Sind Bank       14,68,195.00
             Patel Nagar (in joint name with
             His wife)

             Bank of India, Karol Bagh
             (in the name of Urmila Gambhir

And her brother Sharavan Kapoor) 14,25,309.00

--------------------

54,70,063.00

--------------------

20. The value of the jewellery as per wealth tax return of Shri

Subhash Gambhir, his wife Smt. Urmila Gambhir and his unmarried

daughter was as under:

Subhash Gambhir (Valuation report dated 31.3.95 15,46,783.00

Smt. Urmila Gambhir-wife-do- 14,05,927.00

Ms. Bhavna Gambhir-daughter 31.3.92 52,641.00

--------------------

30,05,351.00

--------------------

21. The assessee was thus required to furnish the source of

jewellery. The assessee vide his letter dated 25th July, 1997 stated

that out of jewellery found at the residence and the locker with the

Bank of India, Karol Bagh Branch held by his wife jointly with his

brother, jewellery amounting to Rs.10,96,379/- belongs to his mother-

in-law, Smt. Rajrani Kapoor. The assessee further submitted that this

jewellery was received by his mother-in-law by way of will left by the

father of his mother-in-law, who expired in 1977. Thus he submitted

that this jewellery should be reduced out of total jewellery of

Rs.54,70,063/-. The assessee gave the details of working of total gold

in terms of quantity which has been extracted at page 3 of the

assessment order. The Assessing Officer has mentioned that the

assessee had surrendered the amount of Rs.6,44,000/- that is

[Rs.1,92,066 + Rs.4,45,000/- + Rs.7,350/-] as his unexplained

investment in the jewellery. This amount had been shown by the

assessee as his undisclosed income for the assessment year 1997-98

in his return of income in Form 2B. The Assessing Officer after taking

into consideration the above reply of the assessee and the facts of the

case and also the locker in Bank of India, Karol Bagh branch, held by

Smt. Urmila Gambhir, wife of the assessee jointly with her brother

and that certain papers belonging to her mother found in the same

locker treated the jewellery of Rs.14,25,309/- exclusively in the hands

of Smt. Urmila Gambhir as per details given below:-

        i)     Total value of jewellery filed by
               Urmila Gambhir in Wealth Tax return
               for A.Y. 1995-96                        14,05,927.00

        ii)    Total appreciated value of above
               jewellery as on 29.8.96                 18,38,520.00

        iii)   Total jewellery found in the locker
               in Bank of India                        14,25,309.00

        iv)    Value of the jewellery belonging
               to mother of Smt. Urmila Gambhir and
               kept in the locker along with certain
               papers                                   1,72,887.00

        v)     Value of jewellery belonging to the
               assessee (iii-iv)                       12,52,422.00

        vi)    Value of the jewellery in excess
               of jewellery found in the locker
               belonging to Urmila Gambhir to be
               considered in the assessment
               proceedings of the assessee i.e.
               Shri Subhash Gambhir (ii-v)             5,86,098.00

22. The contention of the assessee that the jewellery amounting to

Rs.10,96,379/- belonging to his mother-in-law was mixed in the

jewellery found at the residence and in the locker of Indian Bank,

Karol Bagh was rejected by the Assessing Officer by observing that

the same did not require any further consideration as this issue had

been considered in the hands of Smt. Urmila Gambhir. The Assessing

Officer further observed that the contention of the assessee regarding

wealth tax return filed by his mother-in-law and will found at the time

of search in the locker had duly been considered while arriving at the

above figure. Thus, he worked out the unexplained investment in the

jewellery in the hands of the assessee at Rs.40,44,774/- and after

reducing the value of jewellery at Rs.25,13,564/- as shown in the

wealth tax return of Shri Subhash Gambhir, Smt. Urmila Gambhir and

Miss Bhavana Gambhir and also taking appreciation factor as on 20 th

August, 1996 into consideration arrived at the unexplained jewellery

of Rs.15,31,210/-. From the unexplained jewellery of Rs.15,31,210/-,

the Assessing Officer further reduced the surrendered amount of

Rs.6,44,416/-. Thus the total addition made on account of unexplained

jewellery came to Rs.8,86,794/-.

23. It is thus clear that jewellery which was found during search

was of the value of Rs. 54,70,063/- out of this the assessee and his

wife and unmarried daughter had disclosed the jewellery worth

Rs.30,05,351/- in the wealth tax returns. In these circumstances, the

assessee was supposed to give satisfactory source of jewellery worth

Rs.24.65 lacs. As per the A.O. he could not give the explanation to the

extent of Rs.8,86,794/-. The A.O. while holding so, did not accept the

contention of the assessee that jewellery amounting to Rs.10,96,379/-

belonging to his mother-in-law was mixed in the jewellery found at his

residence and in the locker. In fact this is the only bone of contention.

If this aspect is accepted then entire jewellery stands accounted for.

The ITAT has simply affirmed the findings of the A.O. without

discussing the explanation of the assessee in this behalf. Entire

discussion on this behalf in the order of the Tribunal reads as under:-

"27. After having heard the parties and perusal of the records, we find no infirmity in the impugned order inasmuch as the claim of the assessee that the jewellery amounting to Rs.10,96,379/- belonging to her mother in law and has been mixed up in the jewellery found during search has been duly considered in the hands of Smt.

Urmila Gambheer. Further the appreciation has been given to the value of the jewellery declared in the wealth tax return of the above named persons. Hence, this ground of the assessee is dismissed."

24. The A.O. in the assessment order had only stated that this

aspect was dealt with in detail while considering the case of Smt.

Urmila Gambhir. There is no independent discussion by the A.O. in

the assessment order passed by him in the case of the assessee.

Because of this reason, grievance of the assessee is that the order of

the Tribunal is without reasons and ITAT did not have the benefit of

A.O.'s order passed in the case of Smt. Urmila Gambhir as no such

document was placed on their record. The entire evidence in the

shape of correspondence exchange between the A.O. and the assessee

on the issue has been ignored from consideration by the Tribunal.

This is a formidable argument put forth by the learned counsel for the

assessee as is clear from the aforequoted portion of the Tribunal's