HETAL NISHITH MERCHANT, MUMBAI v. ITO, 21(3)(3), MUMBAI

ITA 3068/MUM/2010 | 2006-2007
Pronouncement Date: 09-09-2011 | Result: Allowed

Appeal Details

RSA Number 306819914 RSA 2010
Assessee PAN AAIPP7539B
Bench Mumbai
Appeal Number ITA 3068/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 20 day(s)
Appellant HETAL NISHITH MERCHANT, MUMBAI
Respondent ITO, 21(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 09-09-2011
Date Of Final Hearing 05-09-2011
Next Hearing Date 05-09-2011
Assessment Year 2006-2007
Appeal Filed On 19-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI P.M. JAGTAP ACCOUNTANT MEMBER I.T.A. NO. 3068/MUM/2010. ASSESSMENT YEAR : 2006-07. MRS. HETAL NISHITH MERCHANT THE INCOME-TAX OFFICER 9/A NAV MANGAL SOCIETY VS. 2(3)(3) MUMBAI. 167 S.V. ROAD VILE PARLE (W) MUMBAI 400 056. PAN AAIPP 7539B APPELLANT. RESPONDENT. APPELLANT BY : SHRI TORAL J. SHAH. RESPONDENT BY : SHRI V.V. SHASTRI.. DATE OF HEARING : 05-09-2011 DATE OF PRONOUNCEMENT : O R D E R. PER P.M. JAGTAP A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF LEARNED CIT(APPEALS)-32 DATED 21-01-2010 AND THE SOLITARY I SSUE ARISING OUT OF THE SAME RELATES TO THE ADDITION OF RS.2 95 000/- MADE BY TH E AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) TREATING THE SALE PROCEEDS OF GOLD AS INCOME OF THE ASSESSEE FROM OTHER SOURCES. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF SUPPLYING FLOWERS TO VARIOUS HOTELS AND OTHER CLIENTS. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y HER ON 31-07-2006 DECLARING TOTAL INCOME OF RS.1 71 846/-. IN THE SAID RETURN LONG TERM CAPITAL LOSS OF 2 ITA NO.3068/MUM/2010 ASSESSMENT YEAR : 2006-07. RS.13 408/- ARISING FROM SALE OF GOLD ORNAMENTS AT RS.2 95 000/- WAS DECLARED BY THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCE EDINGS THE ASSESSEE WAS CALLED UPON BY THE AO TO EXPLAIN THE SOURCE OF GOLD ORNAME NTS SOLD BY HER IN VIEW OF THE FACT THAT NO SUCH ORNAMENTS WERE REFLECTED IN THE B ALANCE SHEETS FILED BY THE ASSESSEE FOR THE EARLIER YEARS. IN REPLY A COPY OF WILL AND PROBATE OF HER MOTHER WAS FILED BY THE ASSESSEE ALONG WITH A VALUATION RE PORT OF GOLD ORNAMENTS IN SUPPORT OF HER EXPLANATION THAT THE GOLD ORNAMENTS WERE INHERITED BY HER FROM MOTHER. THIS EXPLANATION OF THE ASSESSEE HOWEVER WAS NOT FOUND ACCEPTABLE BY THE AO. ACCORDING TO HIM THE ASSESSEE HAD FAILED T O TAKE THE SAID GOLD ORNAMENTS IN HER BALANCE SHEET EVEN AFTER A PERIOD OF MORE TH AN 15 YEARS WHICH WAS NOT ACCEPTABLE. HE HELD THAT THE SALE OF GOLD ORNAMENTS WAS SHOWN BY THE ASSESSEE BY TAKING AN ENTRY FROM THE MARKET IN ORDER TO TAKE TH E BENEFIT OF LONG TERM CAPITAL GAIN AND IN REALITY THERE WERE NO SUCH GOLD ORNAMEN TS EVER EXISTED WITH THE ASSESSEE. HE THEREFORE TREATED THE SALE PROCEEDS OF GOLD ORNAMENTS AMOUNTING TO RS.2 95 000/- AS INCOME OF THE ASSESSEE FROM OTHER SOURCES AND THE SAID AMOUNT WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSE E IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 13-10-2008. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3) A N APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) AND IT WAS REITERATED ON BEHALF OF THE ASSESSEE BEFORE THE LEARNED CIT(APPEALS) THAT SHE H AD INHERITED GOLD ORNAMENTS SOLD DURING THE YEAR UNDER CONSIDERATION FROM HER L ATE MOTHER. IT WAS SUBMITTED THAT THERE WAS DOCUMENTARY EVIDENCE IN THE FORM OF WILL AND PROBATE OF HER MOTHER AS WELL AS THE VALUATION REPORT AS FILED BEFORE THE AO TO ESTABLISH THE SOURCE OF GOLD ORNAMENTS SOLD BY THE ASSESSEE IN THE YEAR UNDER CO NSIDERATION AND THE AO WAS NOT JUSTIFIED IN BRUSHING ASIDE THE SAID EVIDENCE MEREL Y ON THE GROUND THAT THE GOLD ORNAMENTS WERE NOT REFLECTED IN THE BALANCE SHEET O F THE ASSESSEE. IT WAS CONTENDED 3 ITA NO.3068/MUM/2010 ASSESSMENT YEAR : 2006-07. THAT THERE IS NO SUCH REQUIREMENT OF LAW TO REFLECT THE GOLD ORNAMENTS INHERITED BY THE ASSESSEE FROM HER MOTHER IN THE BALANCE SHEET. 4. THE LEARNED CIT(APPEALS) DID NOT FIND MERIT IN T HE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE BEFORE HIM AND PROCEEDED TO CONFIRM THE ADDITION OF RS.2 95 000/- MADE BY THE AO ON THIS ISSUE FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 3.3 OF HIS IMPUGNED ORDER : I HAVE CAREFULLY CONSIDERED THE ISSUE. WHAT IS MA TERIAL IN THIS CASE IS THE PROBABILITY OF THE JEWELRY RECEIVED ON THE DEAT H OF THE APPELLANTS MOTHER REMAINING IN HER POSSESSION RIGHT FROM 1989 TILL 20 06. THE DESCRIPTION OF THE PURCHASE BILL OF OM JEWELLERS PVT. LTD. SHOWS THAT 437 GMS. WEIGHT OF 22 CT JEWELRY WHOSE NET WEIGHT IS ALSO 437 GMS HAS BEEN SOLD AT THE RATE 675 PER GM. ON THE OTHER HAND THE VALUATION REPORT DATED 0 3-01-89 DESCRIBED THE JEWELLERY PASSING ON BY WILL AS ONE LOT OF MISCELL ANEOUS GOLD ORNAMENTS CONSISTING OF GOLD AND MINA SET BANGLES NECKLACES EAR RINGS RINGS CHAINS TOTAL ESTIMATED GOLD WEIGHT 500 GMS. THUS THERE IS A CLEAR CUT DIFFERENCE IN THE DESCRIPTION OF JEWELLERY PURPORTEDLY RECEIVED O N WILL AS AGAINST THE GOLD ORNAMENTS CLAIMED TO HAVE BEEN SOLD. THE FACT OF TH E MATTER IS THAT MISCELLANEOUS GOLD ORNAMENTS ARE GOLD AND MINA SET FOR WHICH ESTIMATED GOLD WEIGHT IS 500GMS. ON THE OTHER HAND WHAT HAS BEEN CLAIMED TO HAVE BEEN SOLD TO THE JEWELER IS 22CT GOLD ORNAMENTS WHO SE GROSS WEIGHT AND NET WEIGHT ARE THE SAME. THEREFORE THE IMPURITIES IN M INA SETS AND THE INCREASE IN GROSS WEIGHT ON ACCOUNT OF THIS IN COMPARISON TO THE NET WEIGHT IS NOT AT ALL ACCOUNTED FOR IN THE PURCHASE BILL OBTAINED BY THE APPELLANT. UNDER THESE CIRCUMSTANCES IT IS HIGHLY IMPROBABLE THAT THE APP ELLANT WOULD HAVE SOLD THE SAME JEWELLERY WHICH WAS RECEIVED BY HER ON ACCOUNT OF THE WILL. IF THAT WAS SO IT WOULD HAVE DEFINITELY FOUND MENTION IN ANY O F THE DOCUMENTS OF THE APPELLANT IN THE PAST 20 YEARS. THE APPELLANT IS A REGULAR TAX PAYER ASSISTED BY QUALIFIED CAS AND SHE WOULD HAVE KNOWN THE UTILITY OF BRINGING INTO THE BOOKS THE ASSETS WHICH HAVE BEEN PASSED ON BY THE A PPELLANTS PARENTS. CONSIDERING THESE FACTS THE ACTION OF THE LD. AO I N TREATING THE SALE BILL OF THE JEWELLERY AS BOGUS AND BRINGING TO TAX A SUM OF RS.2 95 000/- S INCOME FROM OTHER SOURCES IS UPHELD. THIS GROUND OF APPEAL IS ACCORDINGLY DISMISSED. 4 ITA NO.3068/MUM/2010 ASSESSMENT YEAR : 2006-07. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS) THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. ALTHOUGH THE LEARNED DR HAS STR ONGLY RELIED ON THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE AND HAS POINTED OUT THE DIFFERENCE IN THE DESCRIPTI ON OF JEWELLERY AS SHOWN IN THE VALUATION REPORT FILED BY THE ASSESSEE AND AS REFLE CTED IN THE RELEVANT BILL FOR SALE OF JEWELLERY THE FACT REMAINS TO BE SEEN IS THAT THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED GOLD ORNAMENTS FROM HER LATE MOTHER WAS DU LY SUPPORTED BY DOCUMENTARY EVIDENCE IN THE FORM OF WILL AND PROBATE OF HER MOT HER AS WELL AS THE VALUATION REPORT OF THE JEWELLERY OBTAINED WAY BACK IN THE YE AR 1989 PRIOR TO THE DEATH OF HER MOTHER. IT IS NO DOUBT TRUE THAT THERE IS SOME DIFF ERENCE IN THE DESCRIPTION OF JEWELLERY AS GIVEN IN THE SAID VALUATION REPORT AND AS REFLECTED IN THE RELEVANT SALE BILL. THIS MARGINAL DIFFERENCE HOWEVER IS REQUIRE D TO BE APPRECIATED AND UNDERSTOOD KEEPING IN MIND THE FACT THAT THE JEWELL ERY WAS INHERITED BY THE ASSESSEE IN THE YEAR 1989 WHEREAS THE SAME WAS SOLD AFTER A LONG GAP OF 15 YEARS. MOREOVER NO ENQUIRY WHATSOEVER WAS MADE BY THE AO WITH THE CONCERNED PARTY TO WHOM THE OLD GOLD ORNAMENTS WERE SOLD BY THE ASSESS EE BEFORE TREATING THE SAID SALE TO BE BOGUS. EVEN THE ACTION OF THE AUTHORITIE S BELOW IN NOT ACCEPTING THE EXPLANATION OF THE ASSESSEE ABOUT THE SOURCE OF JEW ELLERY WHICH WAS DULY SUPPORTED BY THE DOCUMENTARY EVIDENCE IN THE FORM OF WILL PR OBATE AND VALUATION REPORT ON THE GROUND THAT THE SAID JEWELLERY WAS NOT TAKEN IN TO HER BALANCE SHEET BY THE ASSESSEE IN OUR OPINION IS NOT WELL FOUNDED AS TH ERE IS NO STATUTORY PROVISION WHICH REQUIRES THE ASSESSEE TO BRING THE JEWELLERY INHERITED BY HER FROM MOTHER INTO THE BALANCE SHEET. AS SUCH CONSIDERING ALL TH E FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE ADDITION OF RS.2 95 000/- MADE BY THE AO ON 5 ITA NO.3068/MUM/2010 ASSESSMENT YEAR : 2006-07. ACCOUNT OF SALE PROCEEDS OF GOLD ORNAMENTS SHOWN BY THE ASSESSEE TREATING THE SAID SALE AS BOGUS WAS NOT SUSTAINABLE AND THE LEARNED C IT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE SAME. THE ADDITION MADE BY THE AO AN D CONFIRMED BY THE LEARNED CIT(APPEALS) ON THIS ISSUE IS THEREFORE DELETED A ND THIS APPEAL OF THE ASSESSEE IS ALLOWED. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED ON THIS 9 TH DAY OF SEPT. 2011. SD/- SD/- (R.V. EASWAR) (P.M. J AGTAP) PRESIDENT. ACC OUNTANT MEMBER MUMBAI DATED: 9 TH SEPT. 2011. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR H-BENCH. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR ITAT MUMBAI BENCHES MUMBAI. WAKODE