By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
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2 (2008) 114 ITD 1 (Agra) (TM)
Kanhaiyalal Agarwal v. ACIT
A.Y. : Block period 1-4-1996 to 3-11-1996
Dated : 7-11-2007
S. 69 — Unexplained investments — In a search operation
conducted at assessee’s business premises, silver bullion weighing 265.9 kgs was
seized —Assessee explained that 240 kgs of the same was inherited by the
assessee’s two sons from assessee’s mother — Ownership of the bullion was
affirmed by the assessee’s sons — Held, the addition on this account in the
hands of the assessee was not justified, and same had to be considered in the
hands of his sons who were assessees in their own right.
Facts :
During the course of a search operation u/s.132(1) conducted
at the business premises of the assessee, silver bullion weighing 265.9 kgs was
seized. The assessee explained that 240 kgs of the silver bullion originally
belonged to his father, who was carrying on silver bullion business, and he gave
the same to his wife prior to his death. The same then continued to remain in
the possession of the assessee’s mother as her property. The silver bullion was
further inherited by the assessee’s sons from their grandmother, and was found
at their residence. The Assistant Commissioner did not accept the explanation
and made the addition as unexplained investment in the hands of the assessee.
On assessee’s appeal before the Tribunal, the judicial member
accepted the assessee’s explanation, and deleted the addition. However, the
accountant member opined that the AO was correct in making the addition. Owing
to the difference in opinion, the matter was referred to Third Member.
The Third Member observed that :
1. On consideration of the rival submissions made, and the
material brought on record, it was clear that the silver bullion was seized
from the house belonging to the two sons of the assessee, who claimed
ownership of the same. Though there was no direct evidence to prove the factum
of gift of the silver bullion of 240 kgs by the assessee’s mother to her
grandsons, as no Will was executed by her, but that could, however, be the
situation because of the common features prevailing in the Indian families.
2. Based on the circumstantial evidence and material on
record, i.e., the fact that the assessee’s father was carrying on
silver business, and before his death, 240 kgs of silver bullion was handed
over to his wife, the claim of the assessee needs to be accepted.
3. The suspicion entertained by the AO that the assessee’s
mother had handed over the said bullion received from her husband to the
assessee to be distributed equally among his two sons stood explained by the
affidavit stating that she resided with the assessee and his family, who had
taken care of her in old age.
4. The ownership of the bullion was affirmed by the
assessee’s sons. Non-disclosure of the silver bullion by the two sons in their
wealth tax returns was stated to be not liable to tax under the Wealth Tax
Act.
5. On these facts and circumstances, the addition on
account of the silver bullion made in the hands of the assessee to the extent
of 240 kgs of silver might not be justified, and the same had to be considered
in the hands of his sons who were assessees in their own rights.
Cases referred to :
(i) CIT v. Smt. Jayalaxmi Devrajan, (2006) 286 ITR
412 (Ker.),
(ii) CIT v. Durga Prasad More, (1971) 82 ITR 540
(SC),
(iii) Mehta Parikh & Co. v. CIT, (1956) 30 ITR 181
(SC).
