| SooperKanoon Citation | sooperkanoon.com/69271 |
| Court | Income Tax Appellate Tribunal ITAT Chandigarh |
| Decided On | Nov-28-1997 |
| Reported in | (1999)69ITD218(Chd.) |
| Appellant | Dr. (Mrs.) Kamlesh Datta |
| Respondent | Assistant Commissioner of |
2. That the ld. CIT(A) has further erred in upholding a disallowance of Rs. 1,000 out of the telephone expenses for the alleged personal use of the telephone by the appellant which is arbitrary and unjustified.
3. That the ld. CIT(A) has further erred in upholding the addition of Rs. 51,600 on account of the alleged unexplained investment in the acquisition of jewellery which was duly explained before the authorities below and as such, no addition is called for.
4. That without prejudice to the above, no addition whatsoever for the alleged unexplained investment in jewellery can be made in the year under appeal inasmuch as the jewellery was admittedly declared in her wealth-tax returns for the assessment years 1981-82 to 1986-87 which was accepted as such.
5. That the ld. CIT(A) has further erred in upholding the addition of Rs. 1,000 on account of the value of Gold - Tax telephone which was explained to have been received as a gift and as such, no such addition is warranted and the same ought to have been deleted in full.
6. That the ld. CIT(A) has further erred in not allowing the ground of disallowance of part of the generator expenses for the alleged personal use of the same for the appellant's residence which is again arbitrary and unjustified.
2. With regard to ground No. 1, the ld. counsel for the assessee submitted that the assessee as well as her husband both are practising doctors. There was a search in their premises on 16-10-1986 when consumable stores and medicines were found valuing at Rs. 8,500. The explanation of the assessee was that she as well as her husband have not been showing any stocks of consumable stores/medicines either as an opening stock or closing stock and these were debited in the books as and when these were purchased. It was explained that the receipts on account of consultation fee and medicine etc. were credited to the profit & loss account. The Assessing Officer treated 50% of the consumable stores and medicines as un-explained in the hands of the assessee and 50% in the hands of her husband and made an addition of Rs. 4,250 which was upheld by the CIT(A). Shri Gupta submitted that the consumable stores like bandages, gauges etc. are purchased as and when needed and the Assessing Officer as well as the CIT(A) have not doubted the genuineness of the purchases debited in the books. The addition made is at 50% of the value of stock actually found during search. It was further submitted that these items of consumable stores can be treated at par with the items of stationeries which are of daily use in any business establishment and although some value of stationery item will always be at the end of the year, the same is not taken into consideration on the ground that the value of opening stock and closing stock will balance each other and it will not affect the actual profit earned by the assessee. The ld. D.R. supported the order of the CIT(A).
3. We have considered the rival submissions. As per the order passed by the Assessing Officer, it is clear that the value of consumable stores and medicines found from the premises of the assessee, where both of them were practising, were Rs. 17,000, 50% of which, i.e. Rs. 8,500 was considered as belonging to the assessee and out of that 50% was added to the income of the assessee. It is an admitted position that this value of consumable stores/medicines was as on 16-10-86. The assessee is a gynecologist and as such cotton gauges etc. are consumable stores and since the assessee has been following the method of debiting the stores as and when purchased in the books and these were not shown as either closing stock or opening stock, we are of the opinion that the departmental authorities were not justified in making any addition, in particular when the genuineness of the purchases have not been doubted by the Assessing Officer. Accordingly, the addition of Rs. 4,250 is directed to be deleted.
4. Ground No. 2 relates to the action of the departmental authorities in making an addition of Rs. 1,000 out of telephone expenses for personal use. The total expenditure debited on account of telephone in the case of the assessee was Rs. 6,718 and the Assessing Officer disallowed a sum of Rs. 1,344 at 1/5th for personal use. On appeal, the ld. CIT(A) reduced the disallowance to Rs. 1,000. After hearing the parties to the dispute, we are of the opinion that the order of the CIT(A) requires no interference as the personal use cannot be denied and disallowance cannot be called excessive. This ground is dismissed.
5. Ground Nos. 3 and 4 relate to the action of the Assessing Officer which has been upheld by the CIT(A) in making an addition of Rs. 51,600 on account of alleged unexplained investment in the acquisition of jewellery. At the time of search, 582 gms. of jewellery was found details of which are as under :-jewellery found at the residence 296 gms.jewellery found in locker 286 gms.
----- The assessee has explained that 485 gms. of jewellery belongs to her which she received at the time of her marriage either from her parents or in-laws. It was stated that the jewellery has been shown in the wealth-tax return for the assessment year 1980-81 and subsequent years which has been filed under the amnesty scheme on 30-9-86. It was submitted before the Assessing Officer that the wealth declared in the wealth-tax return had been accepted by the Assessing Officer and orders passed under section 16(3) on 30-3-88. It was stated that out of the remaining jewellery, 15 gms. belongs to Dr. Datta, husband of the assessee, and rest belongs to the children which they received on various ceremonial occasions as gifts from relatives. The Assessing Officer, however, held that the possession of jewellery to the extent of 300 gms. is explainable and the rest 282 gms. was treated as having been acquired by the assessee out of her income from undisclosed sources and accordingly an addition of Rs. 51,690 was made. The assessee appealed and the ld. CIT(A) for the reasons given in the impugned order upheld the action of the Assessing Officer.
6. Shri D. K. Gupta, the ld. representative of the assessee, submitted that the Assessing Officer has wrongly made the addition of Rs. 51,960 which has wrongly been upheld by the CIT(A). It was submitted that the assessee has filed returns of wealth from assessment year 1981-82 onwards under the amnesty scheme on 30-9-86 which date was prior to the date of search and these returns had been accepted by the Assessing Officer by passing an order under section 16(3). It was submitted that the acquisition of 485 gms. of jewellery found at the time of search belonging to the assessee has been explained to have been acquired by the assessee at the time of her marriage and balance 15 gms. belongs to her husband and 72 gms. belongs to the children which are stated to have been received on various ceremonial occasions as gifts from their relatives. The assessee did file returns of wealth declaring the value of jewellery right from assessment year 1981-82 onwards under the amnesty scheme on 30-9-86 which date was prior to the date of search and those returns were duly accepted by the Assessing Officer by passing an order under section 16(3). The returns for earlier years were not filed as the wealth of the assessee was not taxable in those years. Accordingly, it was submitted that once the source of acquisition was explained to be the receipt of gifts by the assessee from her parents and in-laws at the time of her marriage and that having been duly declared in the wealth-tax returns filed prior to the date of search, there was no justification for accepting only a part of the jewellery belonging to the assessee as having been received at the time of marriage and making the addition of Rs. 51,600 which should be deleted.
7. Smt. Parneet Mehal, the ld. D.R., supported the order of the CIT (A) and further submitted that since the factum of assessee having jewellery was found only at the time of search, i.e., on 16-10-86, the presumption is that it was acquired in the assessment year under consideration and since the assessee has no satisfactory explanation, the departmental authorities were more than reasonable in allowing benefit of 300 gms. to the assessee and have rightly added the value of 286 gms. as unexplained investment by the assessee in the assessment year under consideration.
8. We have considered the rival submissions. It is undisputed that the wealth-tax returns were filed by the assessee on 30-9-1986 which date is prior to the date of search. The total jewellery found was 585 gms.
out of which 15 gms. were stated to be belonging to her husband and 72 gms. to assessee's children and 485 gms. are stated to be belonging to the assessee. The value of 485 gms. has been duly declared by the assessee in the wealth-tax return filed under the amnesty scheme on 30-9-86 which returns have been duly accepted by the Assessing Officer by passing an order under section 16(3). Thus the source of acquisition of the jewellery at least in the assessment year 1981-82 for which the wealth-tax return was filed for the first time stands accepted by the departmental authorities. The reference of the Assessing Officer to the CBDT Circular No. 451 dated 17-1-86 and particular to question No. 8 is misplaced as that relates to the suppression or undervaluation of a particular asset in earlier years which were disclosed at a higher figure for taking advantage of the amnesty scheme. In the present case, it is quite customary in the case of lady assessee to have received jewellery at the time of marriage from their parents and in-laws and 485 gms. of jewellery cannot be considered as huge keeping in view the price of gold prevalent at the time of assessee's marriage. 15 gms. of jewellery which is claimed to be belonging to her husband consists of one wedding ring and a chain which cannot be called excessive by any standard and these items were also not seized by the Assessing Officer.
The 72 gms. of jewellery has been claimed to be belonging to the assessee's children which is also apparent from the sizes of those items which clearly indicate that they are not meant for adult. In this view of the matter, we are of the opinion that the departmental authorities were not justified in treating any of the items of jewellery belonging to the assessee as having been acquired out of undisclosed funds in the assessment year under consideration in the absence of any evidence to the contrary. Accordingly, the addition of Rs. 51,600 is directed to be deleted.
9. Coming to ground No. 5, the dispute is with regard to the addition of Rs. 1,000 on account of value gold tax telephone reduced by the CIT (A) out of Rs. 2,500, as her unexplained investment. Before us, Shri Gupta submitted that it is a digital telephone and keeping in view the profession of the assessee who is a gynecologist, the same was received as a gift from some of her patient and it has not cost her anything. It was submitted that it cannot be treated as the unexplained investment of the assessee out of undisclosed income. Smt. Parneet Mehal, the ld.D.R., on the other hand supported the order of the CIT (A) and further submitted that no evidence has been furnished by the assessee to support the contention that she has received this telephone as a gift.
She accordingly submitted that the departmental authorities were justified in taxing the same as assessee's income.
10. We have considered the rival submissions and gone through the orders passed by the Assessing Officer as well as the CIT(A). The assessee has not brought any evidence on record to support the contention that the digital telephone gold-tax was received by her as a gift and as such we are of the opinion that the departmental authorities were justified in making the disputed addition. Even assuming that it was actually received from a patient even then it will be as a payment in kind for professional services rendered by the assessee and its value ought to have been included in the professional receipts which was not done. Accordingly, we will uphold the addition of Rs. 1,000 made by departmental authorities.
11. Ground of appeal No. 6 was not pressed by the ld. counsel for the assessee which is dismissed as such.
1. I have gone through the order proposed by my learned brother A.M.but have not been able to persuade myself to agree with the findings and conclusions arrived at by him with respect to ground Nos. 3 and 4 of the assessee's appeal and my reasons for the same are as under.
2. Necessary facts and arguments of the parties are well-recorded in paras 5 to 7 of the order and, for sake of brevity, need not be repeated. Addition of Rs. 51,600 was made and confirmed on account of unexplained investment in the acquisition of jewellery.
3. After having heard the parties to the dispute, in my opinion, for the reasons recorded and finding of ld. first appellate authority on the issue, as reproduced below, the impugned addition deserves to be confirmed :- "5.2 Before me, the main argument advanced for the appellant was that the wealth-tax returns from assessment year 1981-82 onwards filed by the appellant on 30-9-1986 under the Amnesty Scheme, having been accepted by the ld. Assessing Officer, wherein the jewellery in question had been disclosed, the addition to be made on account of unexplained investment in the jewellery, if any, could only be made in assessment year 1981-82. In the alternative, it was argued that the jewellery received by the appellant at the time of her marriage was much more than accepted by ld. ITO. 5.3 I have carefully considered the arguments for the appellant and find no force in these. I do not agree with the argument for the appellant that assessment of wealth declared by the appellant under the Amnesty Scheme, would act as a legal bar on ld. Assessing Officer in making an addition of this kind in the year in which the jewellery was declared by the appellant. I agree with the reasons given by ld. Assessing Officer that, keeping in view the scope of the Amnesty Scheme, the issue, as to whether jewellery declared under the W.T. Act was explained, would arise in the year in which the appellant's ownership of the jewellery first came to notice which, in the instant case, would be the assessment year under consideration. If the appellant really wanted to take advantage of the Amnesty Scheme, then simultaneously with the declaration under the W.T. Act, the appellant should have also made a declaration under the I.T. Act in respect of that part of the jewellery, the acquisition of which she was not able to explained. If the appellant chose to make a declaration under the Amnesty Scheme in the manner she has, she is herself to blame for the extra wealth-tax which she may have paid for assessment years 1981-82 to 1986-87 in respect of the jewellery, the source of which has been held to be unexplained by ld. Assessing Officer. Regarding the quantum of jewellery which the appellant could have received at the time of her marriage, I agree with the estimate made by ld. Assessing Officer. The order of ld. Assessing Officer on this issue is accordingly confirmed." 4. In my opinion, the authorities below have dealt with the issue at length and have properly passed a valid and well-reasoned order on the issue. As no new material or evidence has been brought before us, in order to take a different view, the order of ld. first appellate authority deserves to be confirmed. It is confirmed and ground Nos. 3 and 4 fail.
5. In regard to other issues in the appeal, I do concur with the findings arrived at by my learned brother.
On a difference of opinion between the Members who heard this appeal, the following point of difference is referred to the Hon'ble President for the opinion of the Third Member :- "Whether, on the facts and in the circumstances of the case, the addition of Rs. 51,600 made by the lower authorities, should be confirmed as held by the Judicial Member or the addition should be deleted as held by the Accountant Member ?" 1. On a difference of opinion between the Members constituting the Division Bench, the following point of difference has been referred to me as a Third Member by the Hon'ble President under section 255(4) of the Income-tax Act, 1961 - "Whether, on the facts and in the circumstances of the case, the addition of Rs. 51,600 made by the lower authorities, should be confirmed as held by the Judicial Member or the addition should be deleted as held by the Accountant Member ?" 2. I have heard both the parties at length and have also perused the orders passed by the learned Members along with the material on record to which my attention was invited during the course of hearing. The facts of the case are to the effect that there were search and seizure operations on 16th October, 1986 in the case of the assessee who is a gynecologist by profession and also runs a maternity home. During the course of search, 582 gms. of jewellery were found, the details of which are as under :- The assessee explained that out of the aforesaid jewellery, 495 gms.
(wrongly taken at 485 gms.) belonged to her and which she had received at the time of her marriage either from her parents or in-laws. It was stated that the jewellery had been shown in the wealth-tax returns for the assessment year 1981-82 as also the subsequent years which had been filed on 30th Sept., 1986. It is noted that although these returns were filed under the Amnesty scheme, they were not accepted as such by the WTO who proceeded to frame an assessment under section 16(3) of the Wealth-tax Act. The wealth-tax assessment orders for assessment years 1981-82 and 1982-83 have been placed on record by the assessee's counsel who has further submitted that for the subsequent assessment years, the wealth was below the taxable limit and no returns were filed it was further stated that out of the remaining jewellery, 15 gms.
belonged to the husband of the assessee, i.e., Dr. Datta, and the rest i.e., 72 gms. belonged to the assessee's children and which they had received on various ceremonial occasions as gifts from relatives.
3. The aforesaid submissions found favour with the Assessing Officer only in part as he accepted jewellery to the extent of 300 gms. as explained and the balance of 282 gms. was treated as having been acquired by the assessee out of her income from undisclosed sources leading to an addition of Rs. 51,600. On further appeal, the CIT (Appeals) upheld the action of the Assessing Officer.
4. Being aggrieved, the assessee came up in appeal before the Tribunal and insofar as the addition of Rs. 51,600 was concerned, the case of the assessee was to the effect that returns of wealth for assessment year 1981 - 82 onwards had been filed on 30th Sept., 1986, that being a date prior to the date of search and these had been accepted by the Assessing Officer under section 16(3). It was reiterated that 495 gms.
of jewellery belonged to the assessee as having been acquired at the time of her marriage and the balance 15 gms. belonged to her husband and 72 gms. to the children, the same having been received as gifts from relatives on ceremonial occasions. It was also pointed out that returns for the years prior to assessment year 1981-82 were not filed as the wealth of the assessee was below the taxable limit. On the ground that the source of acquisition of the jewellery having been explained and the jewellery owned by the assessee having been declared in her wealth-tax returns filed prior to the date of search it was argued that there was no justification to make the addition and the same be deleted.
5. The case of the revenue, on the other hand, was that since the factum of assessee having jewellery came to light only at the time of search, i.e., 16th Oct., 1986, the presumption was that it was acquired in the assessment year under consideration and inasmuch as the assessee had no satisfactory explanation, the tax authorities were quite fair and reasonable in subjecting to tax only the value of 286 gms. allowing the benefit of 300 gms. to the assessee.
6. The ld. Accountant Member passed an order accepting the version of the assessee on the following main grounds :- 1. That the wealth-tax returns for the various assessment years beginning assessment year 1981-82 were filed by the assessee on 30th Sept., 1986, i.e., prior to the date of search.
2. That in the aforesaid wealth-tax returns, the assessee had declared jewellery to the tune of 495 gms. and this had been accepted by the WTO by framing an assessment under section 16(3).
3. Out of the total jewellery found, i.e., 585 gms., 15 gms. were stated to be belonging to the assessee's husband, 72 gms. to the assessee's children and the balance 495 gms. to the assessee herself.
4. It was quite customary in the case of lady assessees to have received jewellery at the time of marriage from their parents and in-laws and 495 gms. of jewellery could not be considerd as huge keeping in view the price of gold prevalent at the time of assessee's marriage. Similarly, 15 gms. of jewellery claimed to be belonging to her husband consisting of the wedding ring and a chain could not be considered excessive by any standard and that apart, these two items were not seized by the search party. On the same analogy, 72 gms. of jewellery was claimed to be belonging to the assessee's children and this was apparent from the size of the items which clearly indicated that they were not meant for adults.
In the final analysis, the ld. Accountant Member deleted the addition of Rs. 51,600.
7. The ld. Judicial Member passed a separate order insofar as the addition of Rs. 51,600 was concerned and vide para 3 of the dissenting order, he confirmed the view of the CIT (Appeals) from whose order he has reproduced relevant paras, i.e., 5.2 and 5.3. According to the ld.Judicial Member, the authorities below had, dealt with the issue at length and had passed valid and well-reasoned orders. According to him, no new material or evidence had been placed on record before the Tribunal in order to take a different view. He, therefore, confirmed the addition of Rs. 51,600.
8. Before me, the ld. counsel for the appellant vehemently supported the order of the ld. Accountant Member reiterating the various arguments advanced earlier before the Tribunal and which have been already summarised by me in the earlier part of my order. On a specific query from the Bench, the ld. counsel stated that the two orders of assessment under the Wealth-tax Act, i.e., for assessment years 1981-82 and 1982-83, wherein the jewellery to the extent of 495 gms. had been accepted in the case of the assessee, had become final as till date no action had been taken by the department either to reopen these assessments or to revise them under the relevant provisions of the Wealth-tax Act. He also made a statement to the effect that although some of the income-tax assessments for the preceding assessment years had been reopened, the question of making any addition on account of jewellery was not touched upon. It was the further submission that the assessee was married in 1968 and both she and her husband were enjoying good practice after having served in Government Institutions for a number of years and inasmuch as the family was one of status, the possession of jewellery weighing 582 gms. was not at all something abnormal. The further submission of the ld. counsel was to the effect that the ld. Judicial Member had not refuted or contradicted any of the points made by the ld. Accountant Member while allowing relief and he had merely confirmed the order of the CIT (Appeals). In support of the various arguments advanced, the ld. counsel placed reliance on a judgment of the Hon'ble Rajasthan High Court in the case of Jayanti Lal Patel v. Asstt. CIT.9. The ld. D.R., on the other hand, vehemently canvassed the revenue's case for sustaining the addition of Rs. 51,600 placing strong reliance on the decision of the learned Judicial Member.
10. After considering rival submissions, I am of the view that the addition of Rs. 51,600 cannot be sustained on the facts and circumstances of the case which have been adequately highlighted in the order passed by the learned Accountant Member. He has rightly taken note of the fact that the existence of the jewellery to the tune of 495 gms. stood accepted by the department in the wealth-tax assessments for assessment years 1981-82 onwards the returns in respect of which had been filed by the assessee prior to the date of search. In my opinion, it is not at all a relevant issue for deciding the present point of difference, whether the returns were filed under the Amnesty Scheme or otherwise, since it is not a point of dispute between the parties that the returns although filed in one go on 30th Sept., 1986 were voluntary and prior to any detection by the department. The ld. D.R., in the course of arguments before me canvassed a view to the fact that acceptance in the wealth-tax returns did not tantamount to explaining the source insofar as the income-tax assessment was concerned. There can be no two opinions on this line of argument but if that be so, then the relevant assessment year in which the addition should have been made would have been the assessment year 1981-82 and not 1987-88 as has been done in the present case. The department has also blown hot and cold since even after expressing such a view at the level of the Assessing Officer and the CWT (Appeals), 300 gms. of jewellery has been accepted and it is only the balance which has been added. Even the CWT (Appeals) in his order, which has been confirmed by the ld. Judicial Member, has laid undue stress on the Amnesty Scheme observing that the assessee should have also declared corresponding amounts by filing returns under the Income-tax Act overlooking the fact that in case the returns were not accepted as having been filed under the Amnesty Scheme, then these would become returns filed otherwise and required to be processed by the WTO in accordance with law and which has been so done.
11. The ld. Accountant Member has taken due note of the system prevailing in our society where it is customary for lady-assessees to have received jewellery at the time of their marriage from their parents and in-laws and he has noted as a fact that 495 gms. of jewellery could not be considered as excessive taking into account the price of gold prevalent at the time of the assessee's marriage. He has also found the balance jewellery to be quite reasonable and not at all excessive vis-a-vis 15 gms. attributed to the assessee's husband there being two items, i.e., wedding ring and a chain. Every Hindu male whatever his status in society does put on a wedding ring at the time of his marriage and insofar as the balance of 72 gms. of jewellery is concerned, it has been noted as a fact that the size of the various items clearly indicated that they were meant for children and not adults. Further, it is an accepted fact between the parties that the jewellery attributable to the husband and to the children was not seized at the time of search. In my opinion, the ld. Accountant Member has taken the correct view based on the facts of the case as also considering the system/custom prevailing in our society and keeping in mind the status of the assessee. In this view of the matter, I agree with the view taken by the learned Accountant Member in deleting the addition of Rs. 51,600.
12. The case will now go back to the Division Bench for passing an order in conformity with the majority view.