Shri Kanhiyalal Agarwal, Prop. Vs. A.C.i.T. - Court Judgment

Excerpt:
1. this is an appeal filed by the assessee against the block assessment order dated 28.11.1997 of acit, circle-1(1), agra pertaining to block period 01.04.1986 to 03.11.1996.2. in the present appeal the assessee has raised as much as 8 grounds.however, at the time of hearing it was submitted by the learned a.r.that the assessee does not wish to press ground no. 1 & 8, as such, the same are dismissed as withdrawn. it was also submitted that ground no.6 & 7 are general in nature, accordingly, no adjudication is required thereon. the effective ground agitated by the assessee are grounds no.2 to 5 which read as under: (2) because the addition of rs. 19,03,027/- as investment in silver bullion is unjustified and illegal. excepting approx 26 kg., it did not belong to the assessee......

Judgment:
1. This is an appeal filed by the assessee against the Block Assessment Order dated 28.11.1997 of ACIT, Circle-1(1), Agra pertaining to Block Period 01.04.1986 to 03.11.1996.

2. In the present appeal the assessee has raised as much as 8 grounds.

However, at the time of hearing it was submitted by the learned A.R.that the assessee does not wish to press ground No. 1 & 8, as such, the same are dismissed as withdrawn. It was also submitted that ground No.6 & 7 are general in nature, accordingly, no adjudication is required thereon. The effective ground agitated by the assessee are grounds No.2 to 5 which read as under: (2) Because the addition of Rs. 19,03,027/- as investment in silver bullion is unjustified and illegal. Excepting approx 26 Kg., it did not belong to the assessee. Assessee's replies dated 6.1.97; 20.10.97 and 17.11.97 and the evidence have not been correctly appreciated.

(3) Because the addition of Rs. 8,72,713/- as investment in silver ornaments is unjustified and illegal. The valuation as added is also not correct. These ornaments did not belong to the assessee, and were not assessable in his hands. Assessee's replies and evidence have not been correctly appreciated. Making charges estimated at 10% are also imaginary, and very high.

(4) Because on the facts on record, the addition of Rs. 50,787/- as undisclosed cash is wrong and unjustified. It was proved by cogent evidence. Confirmation of Dalai and details of ornaments sold were wrongly ignored.

(5) Because the addition of Rs. 3,89,545/- as unexplained investment in shares is unjustified and illegal. Assesee's replies are not correctly appreciated and considered. These shares do not belong to the assessee.

3. The assessee's residential premises at 9/200-E, Moti Katra, Agra and 6/19, Hing Ki Mandi, Agra alongwith the business premises at Chaubey ji ka Phatak, Kinari Bazar Agra, in the name and style of M/s Kanhiyalal Anil Kumar was subjected to action under Section 132(1) on 03.11.1996.

Certain ornaments and valuables were found and seized which were not shown in the books of accounts of the assessee. Accordingly after requiring the assessee to file its return for the block period 01.04.1986 to 03.11.1996 the A.O. proceeded to make certain additions in the return filed on 29.09.1997.

4. With regard to the additions challenged before the Tribune vide ground No. 1 the relevant facts as per the Block Assessment Order are that from the residence 9/200-E, Moti Katra silver bullion weighing 265.9 Kgs. was seized. The assessee was required to explain the source thereof. As per the Block Assessment Order the assessee filed written submission dated 06.10.1997 stating that 240 kgs. of silver bullion belonged to the assessee's two sons namely Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal equally. The said silver bullion was stated to be originally belonging to the father of the assessees Late Shri Bhajan Lai Agarwal who was carrying silver bullion business at Kherly, District Alwar, Rajasthan. A few days prior to his death in 1968 the said silver was given to his wife Late Smt. Narmata Devi (mother of the assessee). As per the assessee's version the said silver bullion continued to remain in her possession as her property. After her death in 1983 the said silver bullion was taken by the assessee and distributed equally as per the will of the assessee's mother between the two sons after their marriage. Accordingly, it was submitted that the said silver found at the residence was owned by his two sons living in the same house and did not belong to the assessee.

5. The balance silver weighing 25.900 kgs. approximately was accepted by the assessee as belonging to the him. The said silver was stated to have been acquired by the assessee in 1975-76 A.Y. and had been disclosed by him under the VDIS of 1975. Reliance for the same was placed upon the Treasury Challan of the Income Tax deposit of Rs. 6,350/- dated 16.12.1975.

The said explanation was not accepted by the ACIT. With regard to the ownership of 240 Kgs. by the sons of the assessee and the declaration under the VDIS of 25.900 Kgs. for the following reasons: (i) The assessee has not adduced any evidence with regard to inheritance of the silver bullion by his two sons namely S/Shri Anil Kumar Agarwal and Manoj Kumar Agarwal.

(ii) The assessee has not produced any copy of will written by his father or mother in support of his contention.

(iii) During the assessment proceedings, it was noticed that Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal have neither disclosed above assets in their personal balance sheet nor filed wealth tax returns disclosing the same.

(iv) Further Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal are salaried employees of M/s Kanhaiya Lal Anil Kumar which deals in the business of silver ornaments.

(v) Had assessee's parents actually given silver bullion to him to be distributed between his sons they should have done so in case of Shri Madan Lal Agarwal also, who is assessee 's real brother. As no silver bullion has been given by assessee's parents to his brother this supports the fact that assessee is trying to mislead the department and escape from tax net.

(vi) Even if it is assumed for a while that silver bullion was inherited from parents. The same would not have been lying idle for long without being used in the business.

(i) The assessee has failed to file copy of the Disclosure Certificate issued by the learned Commissioner of Income Tax, Agra.

In the absence of above certificate it cannot be verifiable as to what assets was disclosed by the assessee under the above Scheme.

(ii) The assessee has not adduced any evidence that the silver disclosed was lying with him as such and was not utilised for any other purpose.

(iii) As the assessee is dealing in the silver ornaments bullions, the disclosure if any made should have been accounted for in the books of accounts or credited to his capital account in the relevant assessment year. But the same has not been filed.

(iv) Only filing a copy of Challan of Rs. 6,250/- for the A.Y. 1975-76 under Voluntary Disclosure Scheme, is not the sufficient reason that the disclosure was made for the same silver bullion seized during the search.

Thus, the total investment in the silver bullion will be treated as unexplained and added to the income of the assessee for the block period. The total value of silver bullion was taken as per valuation report dated 03.11.1996 at Rs. 19,03,027/- for 276.804 Kg. The is added Under Section 69 of I.T. Act, 1961. (Addition - Rs. 19,03,027/-.) 7. Learned A.R. reiterated the submissions made before the ACIT.Inviting attention to Paper Book page No. 101 which is copy of the letter 06.10.1997, it was submitted that it has been agitated on behalf of the assessee that residential house at 9/200-E, Moti Katra, Agra is a residential house owned by Shri Anil Kumar Agarwal and his wife Smt.

Anita Agarwal and is occupied and used as a residential house by the two sons of the assessee Shri Anil Kumar Agarwal and Shri Manoj kumar Agarwal along with their wifes and Kum. Shashi Agarwal, unmarried daughter of the assessee. Inviting specific attention to page No. 103 of the Paper Book it was submitted that only the ownership of 25.900 Kgs. was owned by the assessee as belonging to himself for which reliance had been placed upon the disclosure made under VDIS of 1975.

It was submitted that the said claim of the assessee had been rejected by the A.O. holding that the challan relied upon by the assessee did not prove the ownership of the assessee. It was submitted that the department may examine the same if the copy of the Reserve Bank TC deposit of Rs. 6,250/- was not considered to be adequate. Inviting attention to page No. 104 of the Paper Book, it was submitted that it had been agitated by the assessee that the certificate of disclosure issued by the CIT, Agra was not traceable with the assessee and consequently the same could not be filed. In the circumstances, it was prayed on behalf of the assessee that in the eventuality the evidence relied upon by the assessee was not considered to be sufficient to delete the addition, the issue may be restored to the file of the A.O.for verification on facts.

8. With regard to the ownership of 240 kgs. of silver, inviting attention to the very same page No. 104 of the Paper Book it was submitted that it had been claimed that the same belonged to Shri Anil Kumar and Shri Manoj Kumar, sons of the assessee, the silver had flowed to them from the assessee's father Shri Bhajan Lal who carried silver/bullion business at Kherly, District Alwar, Rajasthan. The said silver it was submitted relying upon the said page of the Paper Book had been given to his wife i.e. assessee's mother Smt. Smt Narvada Devi by the assessee's father a few days before his death in 1968. The same continued to be in the possession of assessee's mother as her property and shortly before her death in 1983 the said silver was given to the assessee by his mother expressing her desire that the same be given equally to his two sons i.e. Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal. Inviting attention to Paper Book No. 118 it was submitted that the confirmation with respect to ownership of silver was filed by Shri Anil Kumar and Shri Manoj Kumar and it had been clarified by the A.O. vide letter dated 20.10.1997 that the mother of the assess Smt. Narvada Devi left no written will. Accordingly, the insistence for production of will cannot be complied with. Moreover, the sons of the assessee Shri Anil Kumar and Shri Manoj Kumar did not do any silver business and receipt of silver to them was not assessable as income, as such, was not reflected in the return of income. However, the ownership of the said silver it was argued has been confirmed by them and the assessee had no right, title or interest in it. In the circumstances to add the same in the hands of the assessee it was submitted is not justified. It was submitted that it had been requested by the assessee to the A.O. as per page 118 of the Paper Book that the addition may be considered in the hands of the sons and is not justified in the facts and circumstances in the hands of the assessee. Inviting attention to Paper Book page No. 83 and 84 it was submitted that the confirmations of the two sons had been filed with regard to the ownership of the said silver. Attention was also invited to Paper Book page No. 130 which is the affidavit dated 5 November, 1997 of Shri Girraj Prasad Agarwal affirming that his maternal grand father Shri Bhajan Lal carried on silver business at Kherly, District Alwar, Rajasthan and the deponent at that time sat with his maternal grand father to learn silver business till he died in 1968 and prior to his death while he was ill Shri Bhajan Lal required Shri Girraj Prasad in 1968 to bring him silver bullion of about 240 kgs. from the shop which the deponent as per the affidavit brought with the assistance of one employee from the shop.

The said silver was shown to his wife Smt. Narvada Devi in the presence of the deponent by Shri Bhajan Lal who asked her to take the same as an absolute owner and after few days Shri Bhajan Lal died in 1968.

Referring to the said page it was submitted that after the death of her husband, Smt. Narvada Devi lived with Shri Kanhiyalal and before her death in 1983 the said silver bullions were handed over to Shri Kanhiyalal with the desire to distribute the same equally amongst his two sons Shri Anil Kumar & Shri Manoj Kumar. The said transaction took place in the presence of the deponent. Accordingly, in these circumstances it was submitted that the suspicion of the A.O. as to why the said silver bullion was given to the children of the assessee and not to her other son it was submitted stood fully explained. It was submitted that the said gesture by the old widow lady to the sons of that son who took care of her in her old age is a common situation in Indian families and cannot be brushed aside. On the basis of the above, it was submitted that in the hands of the assessee no addition could have been made and the same may be considered in the hands of the sons.

9. Learned D.R., on the other hand, placed heavy reliance upon the Assessment Order. It was his submission that apart from the self-serving statement of the assessee there is no other evidence on record either in the form of a will of the mother of the assessee or any other document to come to the conclusion that the said silver has been gifted to the assessee's sons by the assessee's mother. It was his submission that the action of the A.O. should be upheld. With regard to the ownership/of 25.900 Kgs. of silver which according to the assessee has been disclosed under the VDIS 1975. He had no objection if the issue is restored for verification.

10. We have heard the rival submissions and perused the material available on record. On a careful consideration of the same, we are of the view that no doubt there is no direct evidence on record with regard to the fact of gifting the silver bullion of 240 kgs. by the assessee's mother to her sons since admittedly no written will was executed by Smt. Narvada Devi. However, the said situation is a common situation in the Indian scenario. The fact that the assessee's father was carrying on silver business at Kherly, District Alwar, Rajasthan stands unrebutted on record. The fact that before his death 240 kgs. of silver bullion were handed over to his wife Smt. Narvada Devi has also not been rebutted. The suspicion entertained by the A.O. that Smt.

Narvada Devi handed over the said bullion received from her husband to only one son i.e. assessee and not to the other with the expressed desire that the same may be distributed equally amongst his sons Shri Anil Kumar and Shri Manoj Kumar also stands addressed by the affidavit of Shri Giraj Prasad, grandson of Shri Bhajan Lal since the widow Smt.

Narvada Devi resided and messed with Shri Kanhiyalal i.e. the assessee and his family. The factum of residing and messing only with one son i.e. the assessee also stands unrebutted on record. Accordingly, in the light of these unrebutted facts when juxtaposed with the confirmations of the sons of the assessee who also accept the ownership of the said silver bullion received through the grandmother, the case of the department hinges only on suspicions. In the face of thee peculiar facts and circumstances, we are of the view that the addition on account of the silver bullion in the hands of the assessee to the extent of 240 kgs. of silver is not maintainable and the same has to be considered in the hands of his sons Shri Anil Kumar and Shri Manoj Kumar who are assessees in their own right.

11. Similarly with regard to the ownership of 25.900 Kgs. which is owned by the assessee as belonging to himself, however, contended that it has been disclosed in VDIS of 1975. Taking into consideration the rival submissions, we are of the view that in the circumstances it would be appropriate to restore the issue for verification back to the file of the A.O. with the direction to decide the same in accordance with law by way of a speaking order after giving the assessee an opportunity of being heard.

12. The next issue agitated by the assessee in the present appeal is the addition of Rs. 8,72,713/-. The relevant facts as recorded in the impugned order read as under: (7.2) During the course of assessment proceedings the assessee was required to explain about the source of investment of 20.403 Kg. of silver ornaments. Vide his reply dated 6.10.1997 the assessee has stated that 20.403 Kg. of silver ornaments were given to Shri Dinesh Prasad Seth a day before seizure after vibrator polishing and he further stated that he never meant to surrender these silver ornaments for taxation as the same was not done under free will but under some mistake.

At the time of recording statement of Shri Dinesh Prasad Seth during search he was confronted with the piece of paper which was found from his possession, wherein polishing of 20.150 Kg. of silver ornaments were mentioned. In his statement Shri Dinesh Prasad Seth has stated that these ornaments, in fact, belonged to Shri Kanhaiya Lal Agarwal and the piece of paper was signed by Shri Kanhaiya Lal Agarwal. On the basis of above and the fact that Sahri Kanhaiya Lal Agarwal had himself admitted the ownership of the above silver ornaments vide his statement on oath recorded during the course of search at 6/19, Hing Ki Mandi, Agra, the same is being considered in the hands of Shri Kanhaiya Lal and will be added as unexplained investment in silver ornaments.

The balance 45 Kg. of silver ornaments was found from the bed room occupied by Shri Dinesh Prasad Seth, but he could not explain the same at the time of search. It was stated by him that these silver ornaments were purchased by him from different shops situated at Choubejee Ka Phatak, Kinari Bazar, Agra. But he had failed to produce any voucher and/or name and addresses of the shops from where these ornaments were purchased. In fact, Shri Dinesh Prasad Seth was working as carrier in premises No. 6/19, Hing Ki Mandi, Agra belonging to the assessee was being utilised by him. As these silver ornaments were found from the residential premises of the assessee and Shri Dinesh Prasad Seth has failed to substantiate the ownership of the same, the same is being added as unexplained investment in silver ornaments.

350.52 Kg. of silver ornaments were seized from the assessee's shop at Choubejee Ka Phatak, Kinari Bazar, Agra. On being asked abut these ornaments, it was stated that these ornaments were received from Shri Manoj Kumar Agarwal from vibrator polishing job belonging to several customers. Further it was stated that these ornaments were related to dalali business of Shri Manoj Kumar Agarwal. On being enquired about the names and addresses of the persons from whom the alleged silver ornaments were received for polishing work Shri Manoj Kumar Agarwal failed to furnish the same. Neither he could produce the receipt with respect of silver ornaments nor produced any person for verification of the above facts. As these silver ornaments were seized from the shop of the assessee and the assessee has failed to prove his contention that these ornaments belonged to some one else the same is treated as unexplained investment in the silver ornaments and will be added to the income of the assessee for the block period.

As per valuation report dated 20.10.1997 these silver ornaments weighing 412.143 Kg. was valued at Rs. 8,16,904/- @ Rs. 7,060/- per Kg. as on 20.10.1997. It was argued by the assessee that Departmental Valuer has valued the ornaments for the rate of silver as on 20.10.97 whereas the same should have been taken as on the date of search. Thus, the rate of silver will be taken @ Rs. 6,875/- per Kg. (on the date of valuation) adopted b the Departmental Valuer. The average purity of silver as per Valuation Report comes to 28%. At this purity cost of 412.143 Kg. of silver ornaments comes to Rs. 7,93,375/-. To arrive at the actual cost of investment in silver ornaments making charges has also to be considered which generally comes at about 10% of the cost of ornaments. Though assessee has contended that this figure is high but had failed to substantiate his contention. Therefore, after adding the 10% for making charges the total value of silver ornaments worked out at Rs. 8,72,714/- (793375 + 79338) will be added to the income of the assessee as unexplained investment in the silver ornaments Under Section 69 of I.T Act, 1961. (Addition 13. Rs. 8,72,713/-) 14. Learned A.R. invited attention to Paper Book page No. 48 to 50 on the basis of which it was submitted that admittedly during the search of the residence premises 6/19-B Hing ki Mandi Shri Dinesh Kumar Seth, son of late Shri Mahan Ram Seth, resident of village and post office Barbeega, Distt. Shekpura, Bihar was found residing in one of the rooms and from his possession silver ornaments etc. had been found. It was submitted that his statement was recorded on 03.11.1996 wherein he has admitted that he visits Agra and resides with the assessee for 3 - 4 days. The visits from his village in Bihar for purchasing of silver ornaments and thereafter for making sales in his village and he also brings silver ornaments from his village for polish etc. It was further submitted on behalf of the assessee inviting attention to page 48 that from the possession of Shri Dinesh Prasad Seth silver ornaments, Coins etc. weighing 65 Kgs. was found and in his reply Shri Dinesh Kumar Seth accepted the fact that he had made purchases from Kinari Bazar, Agra for making further sales and he had also brought alongwith him 7 kgs.

silver ornaments for polish etc.

15. Pointing to Paper Book page No. 49 it was submitted by the learned A.R. that certain receipt of S.K.Y. Company was found in the possession of Shri Dinesh Prasad Seth showing that jewellery worth 20.150 kgs. had been polished and in that the name of the assessee was found mentioned.

As a result of this, it was submitted by the ld. A.R. that during the tense atmosphere prevailing during the search Shri Dinesh Prasad Seth stated that the same could be explained by Shri Kanhiyalal and the assessee i.e. Kanhiyalal under mistake and confusion surrendered the same as his own. However, immediately thereafter on realizing the mistake since the same was not got polished for the assessee but in fact had been polished for Shri Dinesh Prasad Seth. The surrender was retracted. It was submitted that Shri Dinesh Prasad Seth was residing at the premises of the assessee and as per Paper Book page No. 49 in response to a specific query stated that he has business relationship with the assessee and that he visits Agra from his area i.e. Bihar two to three times in a year for making purchases etc. and for getting old wedding ornaments polished etc. As such, he has only business relation with the assessee. As a result of which the assessee allows him to stay for a few days for making purchases and getting his ornaments polished on which he gets 2% commission. It was submitted by the learned A.R.that since Shri Dinesh Prasad Seth was unknown at Agra and while getting these ornaments polished etc. he may have referred the name of the assessee, as such, his name may have been mentioned in the paper found in the pocket of Shri Dainesh Prasad Seth. The fact that it pertained to Shri Dinesh Prasad Seth, the addition it was submitted cannot be made in the hands of the assessee.

16. In these circumstances, it was argued by the learned A.R. that undue emphasis has been laid on the fact that the silver ornament found from the bed room occupied by Shri Dinesh Prasad Seth for reasons best known to the department the material facts are being ignored mainly that he had brought with him from his village ornaments for polishing etc. weighing about 7 kgs. odd and silver ornaments weighing 45 Kgs.

had been found from the same bed room which had been stated to have been purchased from different shops situated in Kinari Bazar, Agra.

Simply because the vouchers were not saved by Shri Dinesh Prasad Seth in these circumstances it was argued how the addition can be made in the hands of the assessee as the ownership was accepted by Shri Dinesh Prasad Seth. The fact that they were found from the bed room in his occupation it was argued is also a fact on record. Similarly undue emphasis it was argued has been laid on the fact that in regard to polish of silver ornaments weighing about 20 kgs. odd the name of Shri Kanhiyalal was found to have been mentioned. The explanation that the surrender was made under confusion at the time of the search due to the sole reason that the name of the assessee was found therein and subsequently since in fact it did not pertain to the assessee and was pertaining to Shri Dinesh Prasad Seth it was submitted have been ignored.

17. With regard to the silver ornaments weighing to 350.52 Kgs. which was seized from the assessee's shop Chaubey ji ka Phatak, Kinari Bazar, Agra it had been explained that these ornaments were received from Shri Manoj Kumar Agarwal for vibrator polishing job and these ornaments belonged to different customers. It was submitted that this fact has also been ignored that these ornaments related to Dalali business of Shri Manoj Kuamr Agarwal. It was submitted that in these circumstances simply because they were found at the shop it has been presumed that the same necessarily belonged to the assessee. The Department has placed undue emphasis it was argued on the fact that the assessee could not produce the receipt with respect to the ownership of the silver ornament nor any person for verification and the fact Shri Manoj Kumar Agarwal did not furnish information from whom the alleged ornaments were received by him for polishing job.

18. In regard to this fact it was submitted inviting attention to Paper Book page No. 102 that it had been submitted before the A.O. that Shri Anil kumar and Shri Manoj Kumar had regular earnings from Dalali etc.

Inviting attention to Paper Book page No. 105 it was emphasised that in fact ornaments weighing 360 Kgs. approximately were received through Shri Manoj Kumar, Dalai for vibrator polishing belonging to several customers and the assessee in this was to get only polishing charges payable to polishing worker at Rs. 40/- per kg plus assessee's own service charges a @ Rs. 5/- per kg. It was submitted that confirmation of Sahri Manoj Kumar, Dalai had been filed wherein it had been stated that these ornaments were not of pure silver and in fact they have very little silver content and the purity of silver would be around 20%.

Inviting attention to the said letter date 06.10.1997 at page 105 of the Paper Book it was submitted that it has been requested from the A.O. that the purity may be ascertained from the registered Valuer and the request of the assessee was that with regard to the ornaments weighing approximately 360 kgs. The facts may be considered in the hands of Shri Manoj Kumar Agarwal in whose case block assessment proceedings were also being undertaken and the same ought not be considered in the hands of the assessee. Similarly, arguments it was submitted with regard to checking the purity content was also made in the case of the ornaments weighing 20 kgs. and 45 kgs. which were found in the room occupied by Shri Dinesh Prasad Seth.

19. Paper Book page No. 84 was again referred to in support of the argument that confirmation of Shri Manoj Kumar Agarwal with regard to the Dalali business pertaining to getting polishing etc. done on silver ornaments through his father of various silver ornaments taken from different customers had been filed before the A.O. wherein it had been claimed that 368 kgs. of silver ornaments found from the shop premises of his father in fact pertained to him i.e. Shri Manoj Kumar Agarwal in order to get them polished and returned to its customers. The silver content it was argued by the learned A.R. in these ornaments was stated to be 20.22%. Apart from this there were another batch of 11.900 kgs.

of silver which had been found from the room of Shri Manoj Kumar Agarwal had also been in connection with his business of old ornament polished which had not been taken to the shop. Similarly in the next letter dated 20.10.1997 found placed at Paper Book pages 116 to 119 it was submitted that further clarification has been given to the A.O.Referring to Paper Book page No. 118 it was submitted that the A.O. was again requested that since the ownership for polishing work etc. of 350.52 Kgs. was accepted by the son Shri Manoj Kumar and the assessee had denied the ownership right from the beginning, the addition if any was to be considered in Block Assessment proceedings of his son Shri Manoj Kumar. Since these ornaments it was submitted according to the consistent stand of the father and the son pertained to the customer of the son as they were received for getting the polishing etc. by the assessee from Shri Manoj Kumar, Dalai whose confirmation letter is on record, as such, the assessee in these circumstances is not able to address the aspect of the names and addresses of the customers which particulars would be addressed by Shri Manoj Kumar, Dalai/Broker. It was clarified that the assessee does not do the polishing etc. and in fact gets it done through different workers and the assessee only charges Rs. 5/- per kg. as its commission. As such, it was argued with regard to the silver ornaments for polishing etc. Shri Manoj Kumar Agarwal alone is answerable whose confirmation letter is on record.

20. It was further addressed that the average purity of silver as per the valuation report comes to 28% whereas the same was 20.22%, on the basis of which cost of investment in silver ornaments has been worked out and making charges of 10% thereon has been levied which it was argued is not justified. As such, as an alternative argument, valuation report was also assailed.

21. Learned D.R., on the other hand, placed heavy reliance upon the Block Assessment Order on the basis of which it was submitted that the story that the assessee made a surrender of 20.403 kgs. of silver ornaments in confusion is an after thought since admittedly the receipt was found from Shri Dinesh Prasad Seth wherein the name of the assessee was found mentioned. Similarly with regard to the claim of Shri Dinesh Prasad Seth with regard to the silver ornaments found from the bed room in his occupation it was submitted the claim of purchases made by him cannot be accepted since necessary vouchers in support of the said purchase were not available with him. Similarly with regard to 350.52 kgs. of silver ornaments seized from the shop premises of the assessee it was submitted that the same has rightly been assessed in the hands of the assessee and the story that it belonged to the vibrator polishing business of Shri Manoj Kumar Agarwal it was argued also cannot be accepted. Since the name and particulars of the customers from whom these silver ornaments were received could not be given by the assessee. With regard to the valuation report it was submitted by the learned D.R. that these silver ornaments weighing 412.143 kgs. had been valued as per the valuation report at the rate of Rs. 7,060/- per kg. as on 20^th October, 1997. It was submitted that the A.O. himself has accepted the arguments of the assessee and applied silver @ Rs. 6,875/- per kg. as on 03.11.1996 i.e. date of search, as such, valuation is correct.

22. We have heard the rival submissions and perused the material available on record. On a careful consideration of the same, we are of the view that in the face of the consistent stand of the assessee before the A.O. supported by the confirmation of Shri Manoj Kumar Agarwal, son of the assessee in whose case Block Assessment proceedings were also going on, the maintainability of the addition should be considered in the hands of the son. In the facts of the case under consideration apart from the fact that the silver ornaments were found from the shop premises of the assessee, there is nothing on record to consider the same in the hands of the assessee. No reason has been given by the A.O. nor advanced by the learned D.R. as to why the same should not be assessed in the hands of the son. Simply because the father was unable to given the particulars of the customers from whom these ornaments had been received by his son to our mind is not a cogent enough reason to sustain the addition in the hands of the father. In the face of the confirmation of Shri Manoj Kumar Agarwal and the consistent request of the assessee that these silver ornaments had been found at the shop only for getting polished and thereafter was to be returned back through the son to the customers of his son since they had been received through Shri Manoj Kumar Agarwal who stood by this fact cannot be brushed aside without assigning any reason. In the absence of reasons for rejecting the arguments advanced, we are of the view that in the peculiar facts and circumstances, the addition we are of the view should be considered in the hands of the son and cannot be sustained in the hands of the assessee.

23. Similarly with regard to the silver ornaments found from the bed room occupied by Shri Dinesh Prasad Seth, we are of the view that simply because the receipts were not available with him is not a cogent enough reason to consider the ownership of the said ornaments in the hands of the assessee, especially in the background that Shri Dinesh Prasad Seth in his statement recorded under oath at the time of search submits that he makes 2-3 trips in a year from his village in Bihar for making these purchases in order to sell these silver ornaments in his hometown which is the source of his livelihood. Further the fact that during the trips he brings silver ornaments for polishing etc. and the receipt to this effect was found from his pocket pertaining to 20.403 kgs. of silver ornaments also cannot be ignored. It is seen that as per Paper Book page No. 106, as per this very document Rs. 2,000/- had been paid to the workman for polishing work. Accordingly the fact that the receipt found from the possession of Shri Dinesh Prasad Seth the submission of Shri Dinesh Prasad Seth made at the time of search and the argument of the assessee all along that it had no relevance to the assessee and as such simply because his name was found in the said receipt as he was a known person in Agra as compared to Shri Dinesh Prasad Seth who was an unknown entity the addition on account of these peculiar facts cannot be made in the hands of the assessee since eminently these ornaments were got polished for certain customers and the fact that it has been consistently argued. No rebuttal on facts has come from the department except the argument that in the receipt the name of the assessee was mentioned. Why the argument that the name of assessee was mentioned for the polishing work as he was known at Agra as opposed to Shri Dinesh Prasad Seth who was an unknown person has been left unaddressed. Another fact which needs to be kept in mind is that nowhere has there been any denial to the fact that these silver ornaments and their receipts was not found from the room occupied by Shri Dinesh Prasad Seth who stated on oath that he visited Agra two to three times a year for making purchases of silver ornaments and on account of the business relationship enjoyed with the assessee he happened to be found to be in occupation and in possession of the stated silver ornaments. Accordingly, on account of the facts brought out herein above in detail, we are of the view that ground No. 3 raised by the assessee deserves to be allowed.

24. Vide the next ground the assessee has also challenged the addition of Rs. 50,787/- which was made by the ACIT in regard to the cash seized from the residence and shop of the assessee. The explanation of the assessee was that it was of the sales proceeds of gold ornaments received by him at the time of his marriage in 1957 weighing 128.550 gms. through the Dalai. The claim of the assessee was rejected in view of the fact that necessity for selling the gold ornaments in the face of sufficient cash balance was questioned by the A.O. Moreover, the name and address of the Dalai through whom the sale was effected was not mentioned by the assessee and simply photocopy of Dharamkanta receipt was filed. The same was not accepted since apart from mention of the weight, amount and the name of the assessee, no signature of any person was found on this receipt. Moreover, even the description of the ornament stated to be sold was not found mentioned there. Accordingly, addition of Rs. 50,770/- was made.

25. On behalf of the assessee it was submitted that the amount of Rs. 50,787/- had been explained before the A.O. as sale proceeds received in cash on sale of assessee's own gold ornaments weighing 128.550 gms.

(approximately 11 tolas) which has been received by him at the time of his marriage in 1957. Inviting attention to Paper book page No. 104 which is letter addressed to A.O., it was submitted that the sale proceeds from the said gold ornaments had been kept by the assessee at his shop. The same was stated to have been made through Dalai on 24^th October, 1996. Dharamkanta weighment receipt in support of the said assertion was relied upon. Attention was invited of the Bench to Paper Book page No. 85 and 85-A which is the Dharamkanta receipt of Shri Sarafa Committee, Kinari Bazar, Agra dated 24.10.1986 wherein the name of the assessee is also found mentioned. Paper Book page No. 115 was referred to wherein the confirmation of the Dalai has been referred who affirms the transaction. Confirmation vide letter dated 25.10.1997 of Shri Montu Alias Nanak Chand Jain was heavily relied upon.

26. The learned A.R. relying upon the Paper Book page No. 115 submitted that Shri Montu has affirmed that he is in the business of Dalali of gold and silver ornaments and has accepted that he has sold the jewellery weighing 128.550 grams on 24.10.1996 for Rs. 50,842/- on which after deducting his Dalali charges of Rs. 55/- he has handed over the payment of Rs. 50,787/- to the assessee on 24^th October, 1996. It was submitted that Shri Montu has confirmed that the Dharamkanta receipt has been written by him. As such, it was submitted by the learned A.R. that without rejecting the evidence on record the addition cannot be sustained. It was further submitted by him that simply because there was no cash requirement to sell the jewellery itself is not a sufficient reason for rejecting the claim. Jewellery can be sold if it is broken etc. and it is for owner to decide to retain the same till cash requirement or to sell it at his convenience. Inviting attention to Paper Book page No. 117 it was submitted that before the A.O. it had been given in writing that the confirmation of the Dalai which gives his complete postal address had been filed and accordingly the assessee does not know the purchaser. However, the Dharamkanta it was argued is owned by Sarafa Committee, a registered body and is located at Chaubey ji ka Phatak, Agra. The gold ornaments which were sold it was submitted consisted of broken chains, rings and buttons etc. which the assessee had received at the time of his own marriage in 1957, as such, addition based on suspicion should not be confirmed.

27. Learned D.R. on the other hand places reliance upon the Assessment Order. It was his submission that in the facts the evidence of the ornament sold has not been found mentioned in the Dharamkanta receipt.

As such, it was argued the claim of the assessee has rightly been rejected.

28. We have heard the rival submissions and perused the material available on record. On a careful consideration of the same, we are of the view that in the peculiar facts and circumstances of the case the addition of Rs. 50,787/- in the hands of the assessee is not warranted.

The evidence relied upon by the assessee has not been rebutted. Simply because the particulars of the jewellery sold are not mentioned in the Dharamkanta receipt by itself is not a cogent enough reason. In the face of the confirmation of the Dalai the addition cannot be sustained.

Accordingly being satisfied by the explanation offered by the assessee, addition of Rs. 50,787/- is ordered to be deleted. Ground No. 4 raised by the assessee as such is allowed.

29. Vide ground No. 5 the assessee has challenged the addition of Rs. 3,89,545/-. The relevant facts are found recorded in para 7.4 of the impugned order which reads as under: During the course of search and seizure operation huge number of shares certificates were seized in respect of various names. The summary of the same is as under:Name of the share holders Face value as mentioned inS/Shri the share certificates-------------------------- -------------------------- The assessee has filed return for the block period on 29.09.1997 wherein he has surrendered undisclosed value of shares amounting to Rs. 5,21,200/- in the following names: When enquired about these share certificates in the name of other persons, it has been stated by the assessee that they all relate to the share dalali business of Shri Anil Kumar Agarwal and have nothing to do with the assessee. It was further stated that these shares certificates were given by these persons to Shri Anil Kumar Agarwal for sale remained unsold and are lying with him. The assessee had only filed a confirmatory letter of his son Shri Anil Kumar Agarwal wherein he had stated that these shares were received from various persons for sale but could not be sold due to slump in share market.

The contention of the assessee is not acceptable in view of the facts that the assessee had himself surrendered the amount of Rs. 5,21,200/- being undisclosed value of share. The assessee is unable to produce even a single person for verification that the shares belonged to them. Simply filing a confirmatory letter does not prove that these shares seized from the residential premises belonged to other persons. On going through the share certificates it has been noticed that the shares mostly belonged to the period 1.4.92 to 31.3.1996 wherein share market index was quite high and investment of undisclosed income was utilised in purchasing of shares in benami names also. Hence, the face value of the remaining shares i.e. Rs. 3,89,545/- (Rs. 910745 - 521200) is being added to the income of the assessee as unexplained investment in shares Under Section 69 of IT. Act, 1961. (Addition - Rs. 3,89,545/-).

30. Learned A.R. invited attention to Paper Book page No. 82 which gives the complete details of shares. Inviting attention to Paper Book page No. 83 it was pointed out that Shri Anil Kumar Agarwal has filed a confirmation letter stating that the shares in the name of different parties found during the search at 9/200E Moti Katra Agra on 3^rd November, 1996 from an Attachi/Brief case from his bed room i.e.

bedroom of Shri Anil Kumar which were with him in order to sell the same. As such, the same should not be considered in the hands of the assessee. Pointing to the said confirmation letter it was submitted that Shri Anil Kumar has affirmed that he deals in share business and he had received the shares from different parties for carrying out subsequent sales. However, on account of a slump in the market these were not/could not be sold. Pointing to the said confirmation it was stated that Shri Anil Kumar Agarwal had categorically stated that in these shares his father does not have any interest and they pertained only to his share business activity. Attention was invited to written submissions before the A.O. dated 06.10.1997 at page 108 and 109 wherein identical submissions were made by the assessee before the A.O.Inviting attention to the same it was submitted that therein the assessee in all fairness stated that these shares had nothing to do with the assessee and as such may be considered in the hands of the son. It was submitted the son's confirmatory letter in support of the said assertion was also on record. In this background, without assigning any reason for rejecting the arguments the addition in the hands of the assessee it was argued cannot be sustained. Attention was also invited to Paper Book page No. 120. Inviting attention to paper Book page 122 wherein the A.O. with regard to surrender of Rs. 52,120/- in regard to unexplained investment in the shares in the name of the assessee and other family members it was submitted the A.O. required the assessee to give the actual figure of investment as the amount related to was only on the basis of face value of the shares and as such did not take into consideration the actual investment with regard to premium paid or the market value of the shares on the date of purchase. Inviting attention to Paper Book page No. 128 it was submitted that the assessee had taken the value of the shares at the face value and the aggregate was shown at Rs. 5,21,200/-. However, at the time of search the value was considerably lower than this also. It was submitted that the share market has gone down so much that in regard to some of the shares their value was nil or between Rs. 2/- and Rs. 3/- per share. Accordingly the market price of the assessee's share as on the date of search would not exceed Rs. 1,50,000/-. Inviting attention to the specific fact of the case it was submitted that as per page 9 of the Assessment Order the A.O. as per his summary has considered the amount of Rs. 9,10,745/- and the assessee surrendered an amount of Rs. 5,21,200/- which stood either in his name or in the name of some of his family members to the extent it belonged to him which totalled to Rs. 5,21,200/-. It was his submission that out of the following 7 family members in regard to which the shares of Rs. 6,69,040/- had been found. Out of this the following amounts stood already surrendered as such an amount of Rs. 59,300/- stood considered.

Out of this as per page 82 the remaining amount of Rs. 3,200/- pertaining to Smt. Anita Agarwal stood already disclosed in 1996-97 A.Y. and Rs. 49,100/- stood disclosed by Jerna again for 1996-97 A.Y.and Rs. 7,000/- for Shri Manoj in 1996-97 A.Y. Accordingly necessary adjustment needs to be made in the surrendered amount made by the assessee. In support of the said submission attention was invited to Paper Book Pages 91-1, 91-2, 92, 92-1, 93 & 94. With regard to the remaining, it was his submission that the same is to be considered in the hands of Anil Kumar in whose room from a brief case the said shares were found in order to make sales for different persons which he had received in connection with his share Dalali business. It was further submitted that whatever was relatable to the assessee or for that matter has been declared by different family members in their return has to be considered there. However, the other names namely Monika Jain, Praveen Gargh, Mahesh Chand Jain, Manoj Kumar Lavania etc. were neither the family members nor related to the assessee and in the face of confirmation of Shri Anil Kumar Ajvirwal who confirms they were related to his share business in the face of the fact they were found in his room these facts it was argued cannot be ignored.

32. We, have heard the rival submissions and perused the material available on record. On a careful consideration of the same, we are of the view that in the peculiar facts and circumstances of the case the income which has already been assessed in different family members has to be considered there. As such, in view of the surrender of Rs. 5,21,200/-. The amount of Rs. 59,300/- is to be reduced from the addition of Rs. 3,89,545/-. With regard to the remaining amount in view of the fact that the same has been confirmed having been belonging to the son of the assessee consistently right form beginning both by the father and the son as pertaining to the share business of Shri Anil Kumar, the addition has to be considered in the hand of his son and not in the hands of the assessee. Accordingly, for the reasons stated herein above, the addition is deleted. Ground No. 5 raised by the assessee is allowed.

33. In the result, appeal filed by the assessee is partly allowed for statistical purposes.

1. In this appeal, the effective grounds of appeal are No. 2 to 5.

First of all, I deal with ground No. 2 which reads as under: Because the addition of Rs. 19,03,027 as investment in silver bullion is unjustified and illegal. Excepting approx 26 kg, it did not belong to the assessee. Assessee 's replies dated 6.10.97; 27.10.97 and 17.11.97 and the evidence have not been correctly appreciated.

2. During the course of search Under Section 132(1) of the Act which was conducted at business premises on 3.11.1996 at 9/200-E, Moti Katra, Agra, silver bullion weighing 265.9 kgs was seized. The assessee was required to explain the source of silver found during the course of search. As per the block assessment order, the assessee filed written submissions dated 6.10.1997 stating that 240 kgs of silver bullion belonged to the assessee's two sons namely Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal equally. The said silver bullion was stated to be originally belonging to the father of the assesses late Shri Bhajan Lal Agarwal who was carrying silver bullion business at Kherly, District Alwar, Rajasthan. A few days prior to his death in 1968, the said silver was given to his wife late Smt. Narmata Devi (mother of the assessee). As per the assessee's version, the said silver bullion continued to remain in her possession as her property. After her death in 1983, the said silver bullion was taken by the assessee and distributed equally as per the will of the assesee's mother between her two sons after their marriage. Accordingly, it was submitted that the said silver found at the residence was owned by his two sons living in the same house and did not belong to the assessee.

3. The balance silver weighing 25/00 kgs approximately was accepted by the assessee as belonging to him. The said silver was stated to have been acquired by the assessee in AY 1975-76 and had been disclosed by him under the VDIS of 1975. Reliance for the same was placed upon the Treasury Challan of the Income Tax deposit of Rs. 6,350/- dated 16.12.1975.

4. The said explanation was not accepted by the ACIT with regard to the ownership of 240 Kgs by the sons of the assessee and the declaration under the VDIS of 25.900 kgs for the following reasons: (i) The assessee has not adduced any evidence with regard to inheritance of the silver bullion by his two sons namely S/Shri Anil Kumar Agarwal and Manoj Kumar Agarwal.

(ii) The assessee has not produced any copy of will written by his father or mother in support of his contention.

(iii) During the assessment proceedings, it was noticed that Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal have neither disclosed above assets in their personal balance sheet nor filed wealth tax returns disclosing the same.

(iv) Further Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal are salaried employees of M/s Kanhaiya Lal Anil Kumar which deals in the business of silver ornaments.

(v) Had assessee's parents actually given silver bullion to him to be distributed between his sons they should have done so in case of Shri Madan Lal Agarwal also, who is assessee's real brother. As no silver bullion has been given by assessee's parents to his brother, this supports the fact that assessee is trying to mislead the department and escape from tax net.

(vi) Even if it is assumed for a while that silver bullion was inherited from parents, the same would not have been lying idle for long without being used in the business.

5. I do not agree with the draft order of the ld. J.M., especially with reference to the acceptance of explanation for investment in 1240 kgs.

Ld. JM has accepted the same as per reasons given in para 11 of her order which reads as under: We have heard the rival submissions and perused the material available on record. On a careful consideration of the same, we are of the view that no doubt there is no direct evidence on record with regard to the fact of gifting the silver bullion of 240 kgs by the assessee's mother to her sons since admittedly now written will was executed by Smt. Narvada Devi. However, the said situation is a common situation in the Indian scenario. The fact that the assessee's father was carrying on silver business at Kherly, District Alwar, Rajas than stands unrebutted on record. The fact that before his death 240 kgs. of silver bullion were handed over to his wife Smt. Narvada Devi has also not been rebutted. The suspicion entertained by the AO that Smt. Narvada Devi handed over the said bullion received from her husband to only one son i.e. assessee and not to the other with the express desire that the same may be disturbed equally amongst his sons Shri Anil Kumar and Shri Major Kumar also stands addressed by the affidavit of Shri Giraj Prasad, grandson of Shri Bhajan Lal since the widow Smt. Narbada Devi resided and messed with Shri Kanyaiyalal i.e. the assessee and his family. The factum of residing and messing only with one son i.e.

the assessee also stands unrebutled on record. Accordingly, in the light of these unrebutted facts when juxtaposed with the confirmation of the sons of the assessee who also accept the ownership of the said silver bullion received through the grandmother, the case of the department hinges only on suspicion. In the face of the peculiar facts and circumstances, we are of the view that the addition on account of the silver bullion in the hands of the assessee to the extent of 240 Kgs of silver is not maintainable and the same has to be considered in the hands of his sons Shri Anil Kumar and Shri Manoj Kumar who are assessees in their own right.

6. After perusal of the assessment order, submission of the ld. AR and the draft order, I find that the version of the appellant was accepted without any semblance of evidence on record. The AO had given sufficient reasons for not accepting the explanation of the assessee as reproduced in this order and given at page 4 to 5 of his order As per the facts of the case already mentioned, I find no evidence whatsoever regarding the fact that appellant's father late Shri Bhajan Lal Aggarwal owned silver bullion to the extent of 240 kg. Secondly, if it is conceded for the sake of argument that Shri Bhajan Lal owned 240 kg of silver bullion, there is no evidence whatsoever on record that silver bullion was passed on to his wife late Smt. Narvada Devi a few days before his death in 1968. Again there is no evidence whatsoever that after the death of Smt. Narvada Devi, silver bullion was distributed between her two sons Shri Anil Kumar and Shri Manoj Kumar after their marriage. There is no evidence with record to inheritance of silver bullion by his two sons namely Shri Anil Kumar and Shri Manoj Kumar. The appellant could not produce any will by his father or mother in support of his contention. The appellant deals in the business of silver bullion S/Shri Anil Kumar and Shri Manoj Kumar are employees of the proprietary firm of M/s Kanhaiya Lal Anil Kumar. The AO had rightly arrived at the conclusion that there was no evidence whatsoever that silver bullion was lying with the assessee's son for more than 15 years. It was held in the case of CIT v. Smt. Jayalaxmi Devraian 286 ITR 412 (Ker.) that to show that article found in possession of person did not belong to him, the onus of proof was on that person in whose possession the available article or things were found. In this case, it was held as under: Held, allowing the appeal, that the sworn statement given by the assessee's brother-in-law would show that the gold ornaments were brought to the shop by the assessee's brother on the morning of the day previous to the day of search, and were received by the assessee's husband, who handed them over for preparing new ornaments, and that they were yet to be converted into new bangles.

But what was seized from the premises of the assessee were newly made bangles. There was overwhelming evidence to show that the new bangles found at the time of search were not accounted for and there was no evidence for their source. Consequently, it could safely be concluded that the new bangles belonged to the assessee and the burden lay heavily on her to dislodge this presumption. Without any reliable documents, the subsequent statements of the customers could not be accepted, even if they were men of standing or men of means.

No reliable document such as a J register as required under the gold control rules was kept or produced at the time of search. The Tribunal had wrongly placed the burden of proof on the Revenue. It is trite law that a person who is in possession of an article has to prove its source. The wrong application of law amounted to an error of law giving rise to a substantial question of law within the meaning of Section 260A of the Income Tax Act, 1961. The orders of the Tribunal and the Commissioner (Appeals) were liable to be set aside and the order of the Assessing Officer restored.

7. In this case, reliance can also be placed on the case of CIT v.Durga Prasad More 82 ITR 540 (SC). In this case it was held that "In case where the party relied on self-serving recitals and document it was for that party to establish the truth of those recitals; the taxing authorities were entitled to look into the circumstances to find out the reality of such recitals." Therefore, having regard to the facts of the case and relevant case laws on the subject, I could not persuade myself to agree with the draft order by the learned J.M. In my opinion, the AO had rightly made addition for unexplained investment in silver bullion weighing 240 kg seized from the residence of the appellant.

8. As regards the balance silver bullion being 25.900 kg approx., this issue appears to be rightly restored to the AO for verification of facts regarding declaration under VDIS of 1975.

1. On a difference of opinion between the two members, the President Income Tax Appellate Tribunal has referred the case Under Section 255(4) to me as Third Member on the following point for my opinion: Whether under the facts and circumstances of the case, source of silver bullion weighing 240 kgs. seized from the residence of the appellant during the course of search Under Section 132(1) of the I.T. Act, can be considered explainable? Whether the addition for unexplained silver bullion weighing 240 kgs. was sustainable? 2. A search Under Section 132(1) of the Act was conducted at business premises of the assessee on 3.11.1996 at 9/200-E, Moti Katra, Agra.

During the course of search silver bullion weighing 265.9 kgs was seized. The assessee explained that 240 kgs of silver bullion originally belonged to the father of the assesses late Shri Shajan Lal Agarwal who Was carrying Silver buition business at Kherly, District Alwar, Rajasthan and was lying with the mother after it was given to her a few days prior to his death in 1968, and it continued to remain in her possession as her property. It was found at the residence owned by his two sons living in the same house. It belonged to the assessee's two sons namely Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal equally as inherited from the mother on her death in 1983.

3. The said explanation was not accepted by the ACIT for the reasons: (i) that the assessee has not adduced any evidence with regard to inheritance of the silver bullion by his two sons namely S/Shri Anil Kumar Agarwal and Manoj Kumar Agarwal; (ii) that the assessee has not produced any copy of will written by his father or mother in support of his contention; (iii) that during the assessment proceedings, it was noticed that Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal have neither disclosed above assets in their personal balance sheet nor filed wealth tax returns disclosing the same; (iv) that Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal are salaried employees of M/s Kanhaiya Lal Anil Kumar which deals in the business of silver ornaments; (v) that had assessee's parents actually given silver bullion to him to be distributed between his sons they should have done so in case of Shri Madan Lal Agarwal also, who is assessee's real brother. As no silver bullion has been given by assessee's parents, to his brother, this supports the fact that assessee is trying to mislead the department and escape from tax net and (vi) that even if it is assumed for a while that silver bullion was inherited from parents, the same would not have been lying idle for long without being used in the business.

4. On appeal, the Judicial Member accepted the explanation of the assessee and observed: We have heard the rivel submissions and perused the material available on record. On a careful consideration of the same, we are at the view that no doubt there is no direct evidence on record with regard to the fact of gifting the silver bullion of 240 kgs by the assessee 's mother to her sans since admittedly now written will was executed by Smt. Narvida Devi However; the said situation is a common situation in the Indian scenario. The fact that the assessee's father was carrying on silver business at Kherly, District Alwar, Rajasthan stands unrebutted on record. The fact that before his death 240 kgs. of silver bullion were handed over to his wife Smt. Narvada Devi has also not been rebutted. 'The suspicion entertained by the AO that Smt.-Narvada Devi handed over the said bullion received from her husband to only one son i.e., assessee and not to the other with the express desire that the same may be disturbed equally amongst his son of Shri Anil Kumar and Shri Major Kumar also stands addressed by the affidavit of Shri Giraj Prasad, grandson of Shri Bhajan Lal since the widow Smt. Narvada Devi resided and messed with Shri Kanyaiyalal i.e. the assessee and his family. The factum of residing and messing only with one son i.e.

the assessee also stands unrebutted on record. Accordingly, in the light of these unrebutted facts when juxtaposed with the confirmation of the sons of the assessee who also accept the ownership of the said silver bullion received through the grandmother, the case of the department hinges only on suspicion, in the face of the peculiar facts and circumstances, we are of the view that the addition on account of the silver bullion in the hands of the assessee to the extent of 240 Kgs of silver is not maintainable and the same has to be considered in the hands of his sons Shri Ami Kumar and Shri Manoj Kumar who are assessees in their own right.

5. The Accountant Member, however, observed that there was no semblance of evidence on record; that the AO had given sufficient reasons for not accepting the explanation of the assessee to the effect that no evidence whatsoever regarding the fact that assessee's father late Shri Bhajan Lal Agarwal owned silver bullion to the extent of 240 kg; that even otherwise there is no evidence whatsoever on record that silver Dullion Was passed OH to his wife late Smt. Narmada Devi a few days before his death In 1968; that again there is no evidence whatsoever that after the death of Smt. Narvada Devi, silver bullion was inherited or distributed between her two sons, Shri Anil Kumar and Shri Manoj Kumar after their marriage; that the assessee deals in the business of silver bullion whereas S/Shri Anil Kumar and Shri Manoj Kumar are employees of the proprietary firm of M/s Kanhaiya. Lal Anil Kumar. He referred to the case of CIT v. Smt. Jayalaxmi Devrajan 286 ITR 412 (Ker.) to hold that article found in possession of person did not belong to him, the onus of proof was on that person in whose possession the available article or things were found. He also referred to case-of CIT v. Durga Prasad More 82 ITR 540 (SC). In this case, it was held that "In case where the party relied on self-serving recitals and document, it was for that party to establish the truth of those recitals, the taxing authorities were entitled to look into the circumstances to find out the reality of such recitals." In his opinion, the AO had rightly made addition for unexplained investment in silver bullion weighing 240 kgs seized from the residence of the appellant.

6. Learned Counsel of the assessee invited attention to the letter 06.10.1997 and submitted that it has been agitated on behalf of the assessee that residential house at 9/200-B, Moti Katra, Agra is a residential house owned by Shri Anil Kumar Agarwal and his wife Smt.

Anita Agarwal and is occupied and used as a residential house by the two sons of the assessee, Shri Anil Kumar Agarwal and Shri Manoj Kumar Agarwal along with their wives and Kum, Shashi cannot be said that the seizure was from the possession of the assessee. It is submitted that the confirmation with respect to ownership of silver was filed by Shri Anil Kumar and Shri Manoj Kumar and it had been clarified to the A.O.vide letter dated 20.10.1997 that the mother of the assess Smt. Narvada Devi left no written will; that the two sons of the assessee did not do any silver business and receipt of silver to them was not assessable as income, as such, was not reflected in the return of income; however, the ownership of the said silver has been confirmed by them and the assessee had no right, title or interest in it. In the circumstances to add the same in the hands of the assessee it was submitted is not justified. It was submitted that the assessee had requested the A.O. to consider the addition in the hands of the sons. An affidavit dated 5^th November, 1997 of Shri Girraj Prasad Agarwal who claimed to have sat with his maternal grand father to learn silver business till he died in 1968 affirming that his maternal grand father Shri Bhajan Lal carried on silver business at Kherly, District Alwar, Rajasthan and that prior to his death while he was ill, Shri Bhajan Lal required Shri him in 1968 to bring him silver bullion of about 240 kgs, from the shop which he brought with the assistance of one employee from the shop; that the said silver was shown to his wife Smt. Narvada Devi in his presence by Shri Bhajan Lal who asked her to take the same as an absolute owner and that after few days Shri Bhajan Lal died in 1968. The deponent also averred that after the death of her husband, Smt. Narvada Devi lived with Shri Kanhiyalal and before her death in 1983 the said silver bullions were handed over in his presence to Shri Kanhiyalal with the desire to distribute the same equally amongst his two sons Shri Anil Kumar & Shri Manoj Kumar, Reliance is placed on The decision of Supreme Court in Mehta Parikh & Co. 30 ITR 181(SC). It was submitted that such is not an uncommon feature in Indian families, rather a good gesture by the old widow lady to the grandsons who took care of aged parents and this fact cannot be brushed aside. It is therefore submitted that no addition in the hands of the assessee could have been made.

7. Learned D.R. placing reliance on the Assessment Order submitted that no evidence whatsoever is there on record either in the form of a will of the mother or any other document. It was the self-serving statement of the assessee that the said silver has been gifted to the assessee's sons by the assessee's mother. He therefore submitted that the action of the A.O. requires to be upheld.8. Parties are heard and their rival submissions considered. On a careful consideration of the rival submissions and the material brought on record, one thing is clear that the silver bullion was seized from the house belonging to two sons who claimed the ownership of the silver bullion. Though, there is no direct evidence to prove the factum of gift of the silver bullion of 240 kgs, by the assessee's mother to her son and admittedly no will was executed by her, but that could however, be the situation because of common features prevailing in the Indian families. Looking to the circumstantial evidence and material on record it. The fact that the assessee's father was carrying on Silver business at Kherly, District Alwar, Rajasthan stands; the fact that before his death 240 kgs. of silver bullion were handed over to his wife Smt.

Narvada Devi as averred in the affidavit of Shi Girraj Prasad Agarwal, the claim of the assessee deserves to be accepted. The suspicion entertained by the A.O. that Smt. Narvada Devi handed over the said bullion received from her husband to her only one son i.e., assessee and not to the other with the expressed desire that the same may be distributed equally amongst his sons Shri Anil Kumar and Shri Manoj Kumar also stands explained by the affidavit stating that she resided with the assessee and his family who had taken care of in her old age.

The confirmations of the sons of the assessee also affirmed the ownership of the said silver bullion received through the grandmother.

Non-disclosure of the silver bullion by the two sons in their wealth-tax returns were stated to be not liable to tax under the Wealth-Tax Act. On these facts and circumstances, the addition on account of the silver bullion in the hands of the assessee to the extent of 240 kgs. of silver may not be justified and the same has to be considered in the hands of his sons Shri Anil Kumar and Shri Manoj Kumar who are assessees in their own right.

9. It is true that in CIT v. Smt. Jayalaxmi Devrajan (supra) Kerala High Court observed that to prove an article found in possession of a person did not belong to him, the onus of proof is on that person in whose possession the available article or things are found. In this case, the sworn statement given by the assessee's brother-in-law though did show that the gold ornaments were brought to the shop by the assessee's brother on the morning of the day previous to the day of search, and were received by the assessee's husband, who handed them over for preparing new ornaments, and that they were yet to be converted into new bangles but What was seized from the premises or the assesses were newly made bangles, For that there was overwhelming evidence to show that the new bangles round at the time of search were not accounted for and there was no evidence for their source.

Consequently, it was safely concluded that the new bangles belonged to the assessee and the burden lay heavily on her to dislodge this presumption. The facts in the present case are altogether different.

What was found in search in this case, is the same silver for which an affidavit and confirmations were filed stating that they belong to the two sons and the circumstances under which and how that silver come in their possession were also explained. Nothing was found in converted form as was in the case before the Kerala High Court. There was overwhelming evidence in that case as observed by the Court, to show that the new bangles found at the time of search were not accounted for and there was no evidence for their source, whereas in the present case nothing of that sort is appearing. Again in the case of CIT v. Durga Prasad More (supra) it was held that, in case where the party relied on self-serving recitals and document, it was for that party to establish the truth of those recitals, the taxing authorities were entitled to look into the circumstances to find out the reality of such recitals.

Whatever was possible to prove the fact that silver belonged to the two sons of the assessee was placed before the authorities and department did not find anything to the contrary except the suspicion.

10. One should not forget the observations of the Supreme Court in the case of Mehta Parikh &. Co. (supra) to the effect the where the person who gave the affidavit was not cross-examined, it would not be open to the revenue to challenge the correctness of the statement made therein.

In this present case the affidavits given by Shri Giriraj Prasad Agrawal was not subject to cross-examination nor the confirmation of the two sons claiming the ownership of the silver was refuted and therefore, the Revenue cannot ignore these two documents and make the addition in the hands of the assessee. On these facts and circumstances, the source of silver bullion of 240 kg. seized from the residence of assessees, during the course of search under Section 132(1) can be considered explained, and therefore, no addition, on this account is sustainable, and the same is required to be deleted.

11. In the result, the appeal of the assessee, on this point, is to be allowed.

(1) Because the computation of undisclosed income' made by the A/O is incorrect. The exemptions under Chapter VIA etc. amounting to Rs. 1,00,274/- allowed in assessments from 88-89 to 96-97 have been wrongly withdrawn.

(2) Because the addition of Rs. 19,03,027/- as investment in silver bullion is unjustified and illegal. Excepting approx 26 Kg., it did not belong to the assessee. Assessee's replies dated 6.1.97; 20.10.97 and 17.11.97 and the evidence have not been correctly appreciated.

(3) Because the addition of Rs. 8,72,713/- as investment in silver ornaments is unjustified and illegal. The valuation as added is also not correct. These ornaments did not belong to the assessee, and were not assessable in his hands. Assessee's replies and evidence have not been correctly appreciated. Making charges estimated at 10% are also imaginary, and very high.

(4) Because on the facts on record, the addition of Rs. 50,787/- as undisclosed cash is wrong and unjustified. It was proved by cogent evidence. Confirmation of Dalai and details of ornaments sold were wrongly ignored.

(5) Because the addition of Rs. 3,89,545/- as unexplained investment in shares is unjustified and illegal. Assessee' s replies are not correctly appreciated and considered. These shares do not belong to the assessee.

(6) Because the impugned additions are wholly unjustified and illegal inasmuch as they are not based upon material or evidence found/seized as a result of search constituting assessee's undisclosed income. Evidence on record is not correctly appreciated.

(8) Because on the facts, the Income tax charges @ 60% under Section 113 of the I.T. Act is illegal and incorrect.

2. Ground No. 1 & 8 are not pressed and hence, they are rejected.

Ground No. 2 has been restored to the file of Assessing Officer for deciding the same in accordance with law as per para 12 of the order of Hon'ble Judicial Member and para 8 of the order of Hon'ble Accountant Member. Accordingly this ground of assessee is allowed, but for statistical purposes.

3. Ground No. 4 has been allowed as per para 29 of the order of Hon'ble Judicial Member. Hence, this ground of assessee is allowed.

4. Ground No. 5 is also allowed in favour of the assessee as per para 33 of the order of Hon'ble Judicial Member.

5. In respect of ground No. 3, there was a difference of opinion between the Hon'ble Members. The matter was referred to Third Member by Hon'ble President. As per majority view, the issue is decided in favour of the assessee. Accordingly, this ground of assessee is allowed.

6. As a result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the court on 12.03.2008.