M/S Mangat Ram Niranjan Dass Vs Commissioner of Income Tax

The appellant through instant appeal under Section 260A of Income Tax Act, 1961 is seeking setting aside of order dated 03.03.2004 passed by Income Tax Appellate Tribunal in ITA-244/DEL of 1998 for the Assessment Year 1994-95.

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The appellant is a jeweller. It is trading in gold besides getting ornaments from customers and returning after carrying out job work. The Income Tax Authorities searched its premises on 16.12.1994 and seized documents. Apart from other issues, the Assessing Officer created demand against the petitioner with respect to alleged old jewellery. The appellant claimed that it had received old ornaments from its customers and returned after converting into jewellery items. The respondent rejected appellant’s claim on the ground that appellant failed to submit sufficient evidence in

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support of its claim. The authorities including Appellate Tribunal concluded that appellant had not received old gold articles from its customers whereas it was his purchase. The findings recorded by Tribunal with respect to issue involved herein are reproduced hereinbelow:-

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“3.7 We have considered the rival submissions of both the parties, perused the records and carefully gone through the orders of the tax authorities below and considered the plea and explanation of the assessee taken before the tax authorities below which were also reiterated before us.

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3.8 In the instant ground of appeal, the assessee has claimed that the gold ornaments lying with the assessee firm belonged to customers who had given the same to the assessee for remaking. On going through the record of the case of the assessee, it is found that the only details maintained by the assessee regarding these transactions are name and address of the customers, quantity of old gold ornaments received by the assessee, the date on which the same were received by the assessee, the date on which the new remade ornaments were given to the customers and the labour charges charged for remaking. Some of the addresses of the customers are incomplete. Except these details, the assessee has not maintained any other detail like whether the old ornaments were studded with 'nugs' or not. Their purity, the date on which the old gold ornaments after remaking were to be returned by the assessee to the customers.

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3.9 The law of evidence is that once the assessee claims that the gold ornaments found with it belonged to the customers which were received in the manner as recorded in his books, then the burden was upon the assessee to prove the genuineness of such transactions. In the instant case, the assessee itself has not led any evidence to prove the same as he has neither examined any such customer nor has examined any goldsmith from whom such old gold ornaments were got

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remade. The Assessing Officer tried to look into the genuineness of these transactions and verify the facts recorded in the books of the assessee pertaining to the customers gold and issued notices to few customers, whose addresses were available in the record of the assessee, but the notices were returned un-served by the postal authorities with different remarks. The Assessing Officer also examined one sunar Shri Jai Parkash, produced by the assessee, and in the light of this direct evidence and circumstantial evidence, the Assessing Officer analyzed the genuineness of the transaction by applying the law of probabilities and concluded that the transactions were not genuine. Now in the above facts, we would be examining whether the Assessing Officer was justified in treating the transactions to be ingenuine.

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3.10 In the instant case, admittedly the gaps between the date of receipt of old ornaments and returning the same, after remarking to the customers is about 6 to 7 months and that in all the cases, the quantity/weight of the old gold ornaments and the new ornaments, after remaking, remained the same. In our opinion, it is not possible that the quantity/weight of old ornaments and the ones made after remaking remained the same because the weight of the old ornaments includes the weight of 'nugs' etc. due to which the weight of remade ornaments is bound to decrease and so the weight of the gold ornaments before and after remaking is bound to be different and cannot remain the same. The only possibility where the weight of the remade ornaments may remain the same is if the assessee added the gold from its own side and charged for the same from the customers. In the instant case neither such plea was taken by the assessee nor such record was maintained by the assessee. Our this conclusion further gets strengthened from the statement of Shri Jai Parkash Sunar, recorded by the Assessing Officer wherein he stated that the quantity/weight of the old ornaments given to him for remaking by the assessee and the remade ornaments varied from the weight of old gold

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ornaments and whatever was left from the old gold ornaments, was returned to the assessee. However, he admitted that no details of ornaments made was maintained by him nor the details of the gold returned was verifiable from the vouchers of purchases/sale.

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3.11 It has also come on record that in almost all cases the new ornaments were got prepared from the old ornaments by the assessee from other goldsmiths within a week but the substantial quantity of old gold ornaments received from the customers by the assessee for remaking was returned to the customers after a period of 6-7 months. The assessee has not maintained any record of the details regarding the type of old ornaments received from the customers for remaking nor the type of new ornaments returned after remaking. In order to ascertain the genuineness of such type of transaction, the Assessing Officer tried to verify the same from the customers but due to the incomplete address, none could be examined by the Assessing Officer and in some cases the notices sent by the Assessing Officer were returned by the postal authorities unserved with remarks like 'incomplete address', 'left without address' etc.

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3.12 In the instant case of the assesse, we find that neither the assessee nor the goldsmiths from whom the assessee got the ornaments remade have maintained any proper details of the weight of old gold ornaments received for remaking and the weight of the new ornaments returned after remaking. Hence, we are of the opinion that on account of the facts and circumstances of the case of the assessee and applying the law of probabilities, the plea of the assessee that it received old gold ornaments for remaking from customers and returned the same after remaking and that the gold ornaments found with it belonged to the customers, cannot be believed and the consequence upon this finding, this plea of the assessee is rejected and it is held that the Assessing Officer by treating the gold ornaments, received by the assessee in the guise of

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customers gold, to be belonging to the assessee was justified in making the impugned addition of Rs.14,22,849 treating these transactions to be ingenuine.”

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Learned counsel for the appellant expressed his inability to controvert that findings recorded by Authorities including Tribunal are findings of fact, however, submits that liability was created on assumptions and surmises.

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Per contra , learned counsel for the respondent submits that Tribunal has recorded findings of fact which are disputed by appellant. The Tribunal has appreciated evidence on record and thereafter concluded that stand of appellant cannot be countenanced.

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We have heard learned counsel for the parties and perused the record with their able assistance.

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From the perusal of findings recorded by Appellate Tribunal, it is evident beyond the pale of doubt that Tribunal has considered evidence on record and thereafter, recorded its findings. The findings recorded by Tribunal are pure findings of fact. No question of law much less substantial question of law is involved. This Court while exercising power under Section 260A of Income Tax Act, 1961 cannot reappreciate evidence unless and until findings are recorded contrary to evidence on record or findings are based upon no evidence.

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We do not find any reason to form any opinion contrary to opinion formed by Tribunal. No question of law is involved, thus, appeal deserves to be dismissed and accordingly dismissed.

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