Subhash Verma vs Assistant Commissioner Of Income ...
2011 Latest Caselaw 3513 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

+                            ITA NO. 782/2010

%                    DATE OF DECISION: 25TH JULY, 2011

SUBHASH VERMA                              ....APPELLANT
         THROUGH: MR. BHARAT BERIWAL, ADVOCATE FOR THE
                  APPELLANT.

               VERSUS

ASSISTANT COMMISSIONER OF INCOME TAX       ....RESPONDENT
          THROUGH: MS. SURUCHI AGARWAL, ADVOCATE FOR THE
                      RESPONDENT.
KORAM:
HON'BLE MR. JUSTICE A.K. SIKRI
HON'BLE MR. JUSTICE M.L. MEHTA

1.     Whether reporters of Local papers be
       allowed to see the judgment?             No.

2.     To be referred to reporter or not?       No.

3.     Whether the judgment should be reported
       in the Digest?                         No.


M.L. MEHTA, J.(ORAL)
*

1. Present appeal has been filed by the appellant challenging order

dated 30.10.2009 of the Income Tax Appellate Tribunal ('Tribunal' for

short) in the appellate proceedings for block assessment period from

01.04.1995 to 04.03.2002.

2. Briefly stating, a search and seizure operation was conducted on

the appellant and his father Shri Janardhan Verma under Section

132(1) of the Income Tax Act, 1961 ('the Act' for short) on 04.30.2002.

It is gathered that during the search following items were found and

seized by the Department from the searched premises: (i) loose papers

and documents (diary, etc.) containing in Annexure A-1 to A-9; (ii) cash

amounting to `2,03,550/- out of which a sum of `2,00,000/- was seized;

and (iii) gold and silver jewellery valuing at `8,89,900/-

3. In the present appeal filed by the appellant we are only

concerned with some of the additions made by the Assessing Officer,

some of which were confirmed and others were deleted by the CIT(A).

The Tribunal restored the order of the Assessing Officer on all these

items.

4. With respect to item relating to addition on account of jewellery,

the appellant explained that 244 grams of gold ornaments were stock

in trade of his business whereas 783.28 grams of gold belonged to

customers who had given their old gold ornaments for repair or for

converting the same into ordered jewellery. The appellant explained

that at the time of taking custody/receiving of old gold ornaments of

the customers from them, receipts were issued to the customers on

paper and entries were made in this regard in the diary. In this regard

reference was made to Annexure A-8 seized by the department, which

allegedly contained the details of all the jewellery received from the

various customers.

5. CIT(A) accepted the explanation of the jewellery valued to the

extent of `5,90,587/- and consequently modified the order of the

Assessing Officer and confirmed the additions of `1,27,623/- only. The

Tribunal did not agree with deletion of `5,90,587/- and consequently

set aside the order of the CIT(A) in this regard and restored the order

of the assessing officer.

6. With regard to item relating to addition of `1,60,000/-, appellant

explained that out of total consideration of `2,30,000/- paid by his wife

Smt. Laxmi Devi for the purchase of Plot No.47, Bhagat Vihar property,

`1,60,000/- came from the sale of an old property at Roorkee and

balance consideration of `70,000/- was out of the past savings of Smt.

Laxmi Devi. This plea of the appellant was not accepted by the

Assessing Officer who observed that amount of `1,60,000/- which

allegedly came from the sale of Roorkee property on 16.01.1995 was a

three years old transaction before the purchase of plot No. 47, Bhagat

Vihar and hence this was not acceptable to the Assessing Officer. He,

accordingly, treated `2,30,000/- as unexplained investment and added

to the income of the appellant. The CIT(A) accepted the explanation at

`1,60,000/- from the sale proceeds of Roorkee property. He, however,

did not accept the explanation regarding `70,000/- out of past savings

of Smt. Laxmi Devi. Consequently, he disallowed the addition of

`1,60,000/-, while maintained the addition of `70,000/-. The Tribunal

reversed the findings of the CIT(A) in this regard and restored the order

of the Assessing Officer regarding the addition of `1,60,000/- as an

unexplained income of the appellant.

7. With respect to item relating to addition of `1,50,000/- on

account of unexplained cash found during search, the plea of the

assessee was that it belonged to one Raghunath Singh, who had given

the money for purchase of jewellery. This plea of the assessee was not

accepted by the Assessing Officer. The CIT(A) as well as the Tribunal

maintained this addition.

8. We have heard the learned counsel for the appellant and also for

the revenue and perused the records.

9. With regard to the stock of jewellery, the appellant sought to

explain that 244 grams of gold belonged to his business and 283.28

grams of gold belonged to his customers who had given either for

repair or for making of new jewellery. He also stated that gold jewellery

weighing 300-400 grams including a tagri belonged to his wife Smt.

Laxmi Devi and that jewellery weighing 400-450 grams belonged to his

brother's wife Smt. Suman Soni. He stated that these jewellery were

lying in his shop for repair and polishing etc. The Assessing Officer

noticed that no account books, purchase stock or sale voucher and

also no stock register etc. were being maintained by the appellant. In

the absence of these, he took the gold and silver jewellery stock

available with the appellant as on 4.3.2002 as closing stock of last year

which was valued at `1,46,460/-. In addition to this he also accepted

the explanation regarding 58 grams of jewellery valuing at `25,230/-

thereby totaling to `1,71,690/-. He thus treated the balance of

`7,18,210/- (`8,89,900/- (-)`1,71,690/-) as unexplained income of the

appellant. While accepting the explanation of 58 grams, he discussed

the details of the entries as mentioned in annexure A-8 which was

alleged by the appellant to be maintained in respect of gold items

received from the customers for repair/polish etc. Before the CIT(A),

affidavits were submitted, as mentioned in annexure A-8. The CIT(A),

though, did not admit those affidavits, but, proceeded to record that

the jewellery of 783.23 grams as explained. He also straight away

accepted the explanation regarding jewellery alleged to be belonging

to appellant's wife Smt. Laxmi Devi and his brother's wife Smt. Suman

Soni respectively weighing 93.5 grams and 127.60 grams. The

Tribunal has rightly set aside the order of CIT(A) in this regard and

restored the order of Assessing Officer. It is noted that in his

statement recorded on oath the assessee had not stated any jewellery

belonging to his wife or his sister-in-law to be lying in the shop. The

Tribunal rightly recorded this plea to be an afterthought. With regard

to the jewellery weighing 783.28 grams alleged to be belonging to

customers for repair and polish, the CIT(A) was influenced by the

explanation given by the appellant even while not admitting the

affidavit of those customers. It is noted by the Tribunal that the

appellant in his statement recorded immediately after the search had

stated that 400 grams of gold belonged to the customers and balance

to him, whereas he had filed affidavits in respect of 783.28 grams of

jewellery. The Tribunal noted that there were certain affidavits where

jewellery was given in the month of February 2002. He rightly noticed

that from the details of annexure A-8 we may see that jewellery was

given for repairs and was lying with the appellant for a period of more

than six months to four years. He rightly recorded that no customers

would give gold jewellery for repair or polish for such a long time. We

do not find any infirmity in the findings recorded by the Assessing

Officer and the Tribunal in this regard.

10. With regard to addition of `1,60,000/- made by the Assessing

Officer and which was disallowed by the CIT(A), but confirmed by the

Tribunal, we are of the view that this was a finding of fact recorded by

the Assessing Officer and the Tribunal and there was no perversity

therein. It was a finding of fact recorded by both, the Assessing Officer

as well as the Tribunal and rightly so that merely because the property

was sold three years back, it cannot be believed that the appellant was

having sale amount in house and utilized for purchase of property on

15.10.1998. There was no documentary evidence much less any books

of accounts to substantiate the plea of the appellant that `1,60,000/-

was the amount out of sale proceeds and was kept in the house for all

this period. The observations made in 127 ITR 807 are on peculiar

facts and are not applicable to the present case. We are not inclined to

interfere with this finding of facts of the Tribunal.

11. With regard to the addition of `1,50,000/- which was recovered in

cash during search, the plea of the appellant was not accepted by all

the three authorities below that this money was given to the appellant

by Shri Raghunath Singh on 03.03.2002 i.e. a day before the search for

the purpose of purchasing jewellery. The Tribunal has rightly held that

neither Raghunath Singh was produced before the Assessing Officer for

the purpose of verification of facts nor his affidavit was filed. This plea

was an afterthought inasmuch as the affidavit of Raghunath Singh was

not filed before the assessing officer but only before the CIT(A).

Moreover, no such contention was made by the appellant in his

statement recorded on oath after the search. We do not find any

perversity in this finding of the authorities below. No question of law

arises. Consequently, the appeal stands dismissed.

(M.L.MEHTA) JUDGE

(A.K.SIKRI) JUDGE JULY 25, 2011 awanish