Case Law Details
ACIT Vs Sharada Narayanan (ITAT Bangalore)
ITAT Bangalore held that non-registration of will doesn’t lead to any inference against its genuineness. Thus, jewellery inherited from mother in law based on non-registered will be capital assets and sell thereof results into long term capital gain.
Facts- The assessee has claimed capital gains of Rs.6,29,20,349/- arising out of sale of jewellery of Rs.7,09,53,800/-. This capital gains is stated to be reinvested in purchase of a residential house for an amount of Rs.6,00,00,000/-excluding stamp duty and registration charges. The total rein-vestment as per computation of total income is Rs.6,45,00,000/-.
On going through the sale bills, it is seen that during the year the assessee has shown total jewellery of Rs.7,12,63,800/- though the assessee has claimed sale of jewellery at Rs.7,09,53,800/-.
Notably, the long term capital gains claimed by the assessee and deduction of Section 54F of the Act amounting to Rs.6,29,29.348/- is rejected by AO and the amount received by her from M/s. Navarathan Jewellers through RTGS/Cheques amounting to Rs. 7,12,63,800/- is treated as her Income under the head Income from other sources and brought to tax U/s.56 of the Act. However, CIT(A) quashed the assessment order.
Conclusion- In the case of Ishwardeo Narain Singh vs Srn. Kamta Devi and Ors. AIR 1954SC 280, 1953 (1) BLJR 690, it was held by the Supreme Court that non-registration of the will cannot be held as a reason for the invalidity of the will. Registration of will is not Compulsory.
Held that CIT(A) is not justified in giving the findings with regard to existence of long term capital assets in the form of jewellery acquired through the Will from Late Kasturi Shoury and consequently granting the relief which is incorrect without reconciling the quantity of jewels mentioned in the Will vis-à-vis Valuation Certificate issued by the Navarathan Jewellers Pvt. Ltd. In our opinion, this issue has to be required to be re-examined at the end of CIT(A)/NFAC and the assessee is directed to reconcile the quantum of jewellery inherited through the impugned Will along with valuation report issued dated 28.5.2015 by Navarathan Jewellers Pvt. Ltd., No.85, Bangalore-1 valuing the jewellery as on 31.3.2015 vis-à-vis with the quantum of sale of jewellery.
FULL TEXT OF THE ORDER OF ITAT BANGA-LORE
This appeal by revenue is directed against order of NFAC for the as-sessment year 2016-17 dated 28.7.2023 passed u/s 250 of the Act. The revenue has raised follow-ing grounds of appeal:
1. The Id. CIT(A) erred in not considering the fact that the assessee had duly responded certain notices issued to him by submitting the copy of Will vide his submission dated 26.12.2018. This clearly shows that the assessee co-operated in as-sessment proceedings.
2. The Id. CIT(A) allowed the grounds of ap-peal without considering the fact that the assessee has failed to prove the existence of long term cap-ital asset in the form of jewellery in the hands of her mother in law. The WT return of assessee’s mother in law was never produced to evidence the availability of asset for testamentary succes-sion
3. The Id. CIT(A) erred in not considering the fact that the quantum of jewellery alleged to have been received by the assesses and the quantum of jewellery claimed to have sold to M/s. Navarathan jewellers does not tally. The gross weight of the jewellery shown in the WT return filed by the assessee alleged to have received through Will is 7243 grams and the gross weight of jewellery sold to M/s. Navarathan jewellers is 26038.97grams
4. The CIT(A) also did not consider that the assessee failed to furnish the list and description of the jewellery which is alleged to have received by her by way of a Will in FY 2014-15 and also failed to furnish description and list of the jewellery which has been sold to M/s. Navarathan jewellers.
2. Facts of the case are that as per the computation of total income, the assessee has claimed capital gains of Rs.6,29,20,349/- arising out of sale of jewellery of Rs.7,09,53,800/-. This capital gains is stated to be reinvested in purchase of a residential house through a registered sale deed dated 09-02-015 situated at No.223, Defence Colony, HAL II Stage, Indiranagar, Bengaluru, consisting of ground plus three floors of 7000 sq.ft. and site area of 4000 sq. ft. for an amount of Rs.6,00,00,000/-excluding stamp duty and registration charges. The total rein-vestment as per computation of total income is Rs.6,45,00,000/-. The computation of capital gains as claimed by the assessee is given as under:-
|
Description |
Amount in Rupees |
| Sale consideration of jewellery Inherited through Will | 7,09,53800 |
| LESS: Cost of Acquisition | 80,33,452 |
| 6,29,20,348 | |
| Investment in new property | 6.45,00,000 |
2.1 As per the assessee’s submissions she has inherited jewellery from her late mother in law Smt. Kasturi Shoury who passed away on 28-06-2007 by way of Will which was disclosed only on 28-06-2014. Copy of the Will has been furnished as per which the assessee has received portion of the jewellery of Smt. Kasturi Shoury which is stated in the Will to be kept in a locker at Vijaya Bank, Thippasandra, Bengaluru. The Will is only notarized. On page 2 of the Will, it is stated that “I further wish to state that this Will of mine is handed over to my husband Mr. K. M Shoury who shall disclose the contents of this Will after a period of 7 years from my demise,” The Will has been disclosed only seven years after the assessee’s death on 28-06-2007 which is 28-06-2014. It is claimed by the assessee that the Will was disclosed on 28-06-2014 i.e. F.Y. 2014-15, and accordingly, she become the owner of this jewellery. This alleged inherited gold and diamond jewellery was sold by the assessee for Rs.7,09,53,800/-. The assessee has claimed that the jewellery has been sold to M/s. Navrathan Jewellers, Jayanagar, Bengaluru, on various dates from June 2015 to Feb. 2016. On going through the Wealth tax returns filed by the assessee for the assessment year 2015-16, it is found that the assessee has admitted following gold jewellery totalling to Rs.4.31,94.407/-. The details of the same are as under-
|
Description |
Amount [Rs.] |
| Jewellery – personal | 52.81,570 |
| Jewellery – through Will | 3,79,12,837 |
| TOTAL | 4,31,94,407 |
2.2 In the return of net wealth in Schedule JE jewellery, the assessee has disclosed the following information:
|
Description |
Unit | Gross Weight |
Net weight of precious metal |
Total value of ewellery as per Schedule ill |
Net Amount [Rs.] |
| Jewellery – through Will | Grams | 7243 | 372.00 | 3,79,12,837 | 3,79,12,837 |
| Jewellery -personal | Grams | 2173 | 15.79 | 52,81,570 | 52,81,570 |
| Total | 9416 | 387.79 | 4,31,94,407 | 4,31,94,407 |
2.3 It is claimed by the assessee that during the year relevant to the Asst, Year 2016-17 she has sold gold jewellery Rs. 7,09,53,800/- to M/s. Navarathan Jewellers Pvt. Ltd., Bangalore on various dates from June 2015 to February 2016. In support the assessee has furnished sales vouchers issued by M/s, Navarathan Jewellers. To verify the genuineness of this trans-actions, summons U/s.131 of the I T Act dated 04-12-2018 was issued to M/s. Navaratnan Jewellers. In response to the summons issued, the Accounts Manager of M/s. Navrathan Jewellers appeared and submitted copy of the purchase register for purchase of old jewellery. As per the purchase register majority of the purchases of old jewellery including purchases above rupees one lakh have been only mentioned as “Sundry parties” but in the case of the assessee Smt. Sharada Narayanan the purchase register shows specific entry as “Sharada Narayan”. In response to the specific question in this regard M/s. Navarathan Jewellers has stated that the party name only in respect of purchase above Rs.5 lakhs is mentioned otherwise it is not mentioned. However, this answer of M/s. Navrathan Jewellers cannot be accepted since there are one or two entries where even for below five lakh purchases party name has been mentioned such as on Nov. 2 of 2015, purchase of Rs.40,860/~ is made from Smt. S Archana and on 16-12-2015, purchase of Rs.2,96,370/- from Shri Shivaprasad D N. By and large the entire purchase register shows sundry parties and the explanation given is not convincing. Copies of bills given to other customers for purchase of jewellery have not been fur-nished for verification. M/s. Navarathan Jewellers were asked specific questions during the state-ment recorded U/s.131 of the I T Act in response to the summons issued to them. The specific questions and answers are reproduced below:
1. Do you prepare any slip for description of the jewellery or maintain any register for the description of the jewellery purchased. If yes, can you please produce the same.
Answer: No, we do not maintain any Register for description of the jewellery. Rough estimation is done on an estimate sheet and when the purchase is done through, the estimation sheet is not preserved, since the purchase bill is already raised.
Q.No.5 Do you enter the names of the sellers in your purchase register?
Answer: Yes, we enter the names of the sellers in the purchase register if the purchase is exceeding Rs.5 lakhs. For other purchases, we give the description as sundry parties. The total purchases of Jayanagar branch for the year 2015-16 is Rs.22,02,71,984/-.
2.4 On going through the purchase bill of M/s. Navarathan Jewellers furnished, it is seen that the bills are for purchase of “Old gold, mixed gold jewellery” only indicating gross weight – and in certain bills the details of diamond, precious stones and solitaires with caratage has been indicated. Gross sale amount has been indicated in the bill which is stated to be transferred through RTGS/Cheque to the assessee. The bill does not contain details of the description of the jewellery, gross weight of each item, the reduction in weight for wastage, gold purity and stone weight which is the normal procedure when any old gold jewellery is sold to any jeweller. On going through the sale bills, it is seen that during the year the assessee has shown total jewellery of Rs.7,12,63,800/- though the assessee has claimed sale of jewellery at Rs.7,09,53,800/-. The details of the same are as under:
|
DATE OF |
PARTICULARS | GROSS WT. |
AMOUNT |
| 30.06.2015 | GOLD | 3475.1 | 7537500 |
| 06.07.2015 | GOLD PLUS DIAMONDS/STONES | 2245.88 | 5888500 |
| 12.07.2015 | GOLD PLUS DIAMONDS/STONES | 765.85 | 5677800 |
| 02.08.2015 | GOLD PLUS DIAMONDS/STONES | 872.65 | 4535000 |
| 13.08.2015 | GOLD PLUS DIAMONDS/STONES | 725.85 | 5875000 |
| 30.08.2015 | GOLD PLUS DIAMONDS/STONES | 555.87 | 7140000 |
| 02.09.2015 | GOLD | 137.65 | 310000 |
| 24.01.2016 | GOLD | 4128.2 | 8050000 |
| 27.01.2016 | GOLD | 4568.5 | 9075000 |
| 30.01.2016 | GOLD | 3880.5 | 7875000 |
| 02.02.2016 | GOLD | 2470.85 | 5050000 |
| 07.02.2016 | GOLD | 2202.07 | 4250000 |
| TOTAL | 26038.97 | 71263800 |
2.5 Thus, during the FY 2015-16 the assesses has sold gold jewellery of Rs.7,12,63,800/- containing 26038.97 grams including diamonds and precious stones. Thus, there is a discrepancy in the description disclosed in the wealth tax return as well as description mentioned in the above bills.
2.6 It is clear from the above facts the ld. AO narrated that:
(I), the assessee has failed to prove the existence of long term capital asset in the form of Jewellery in the hands of her mother in law which has been be-queathed to her by way of Will,
(ii) The assessee has also failed to give any evidence regarding filing of return of income or wealth by her mother in law.
(iii) The assessee has failed to furnish original Will for further examination about its genuineness.
(iv) The quantum of jewellery alleged to have been received by the assessee and the quantum of jewellery claimed to have sold to M/s. Navarathan Jewellers does not tally. The gross weight of the jewellery shown in the WT return filed by the as-sessee alleged to have received through Will is 7243 grams and the gross weight of jewellery sold to M/s. Navarathan Jewellers is 26038.97 grams.
(v) The assessee has failed to furnish the list and description of the jewellery which is alleged to have received by her by way of a Will in FY 2014-15 and also failed to furnish description and list of the jewellery which has been sold to M/s. Nava-rathan Jewellers.
2.7 In view of the above facts, the long term capital gains claimed by the assessee and deduction of Section 54F of the Act amounting to Rs.6,29,29.348/- is rejected by ld. AO and the amount received by her from M/s. Navarathan Jewellers through RTGS/Cheques amounting to Rs. 7,12,63,800/- is treated as her Income under the head Income from other sources and brought to tax U/s.56 of the Act. Penalty proceedings U/s.271(1)(c) of the Act initiated for fur-nishing inaccurate particulars of income by the ld.AO. Based on the above discussion, the assess-ment is concluded by the ld. AO as under;
| Description | Amount (in rupees) | Amount (in rupees) |
| Income from profession – consultancy | 7,00,500 | |
| Income from business – Metamorphosis | 17,50,000 | |
| TOTAL | 24,50,500 | |
| Income from house property | 5,25,084 | |
| Income from other sources-as admitted Income from other sources: As discussed above. | 1,18,815 7,12,63,800 | |
| TOTAL | 7,43,58,199 | |
| ROUNDED OFF | 7,43,58,200 |
On appeal, NFAC partly allowed the appeal of the assessee. Against this, the revenue is in appeal before us.
3. First ground for our consideration is that assessee has filed Will vide her submission dated 26.12.2018 as the assessee has cooperated with the assessment proceedings. These facts have not been considered by ld. CIT(A).
4 The ld. D.R. submitted that the ld. CIT(A) has quashed the assessment order on the reason of violation of principles of natural justice since there is substantial discrepancy between show cause notice issued and addition made. He has observed that the ld. AO has concluded the assessment without offering an opportunity to the assessee, which is liable to be obliterated. Accordingly, assessment has been quashed by NFAC. According to the ld. D.R., this finding of the NFAC is not correct as the assessee has filed a copy of Will vide her submission dated 26.12.2018 and cooperate with the assessment proceedings.
5. The ld. A.R. submitted that the learned assessing officer has issued a Summon which was dated 26.12.2018, fixing the hearing on 27.12.2018 whereas the date on which it was signed was 29.12.2018. The assessee had appeared before the learned assessing officer on 26.12.2018 and submitted the original Will for verification and the learned assessing officer has acknowledged the same. The Assessment order was passed by making an addition of INR 7,12,63,800/. The learned AO has not given any show cause notice to the assessee or an adequate opportunity to explain any additions made in the impugned assessment order.
5.1 He submitted that as per the Instruction No 20/2015 [F.No 225/269/2015-ITA-II], Dated 29.12.2015 it given that in
” all cases under scrutiny, where the Assessing officer proposes to make additions or disallowances the assessee would be given a fair opportunity to explain his position on the proposed additions/disallowance in accordance with the principle of natural justice. In this regard, the assessing officer shall issue an appropriate show cause notice duly indicating the reasons for the proposed additions/disallowances along with necessary evidences/reasons forming the basis of the same. Before passing the final order against the pro-posed additions/disallowances, due consideration shall be given to the submissions made by the assessee in response to the show cause notice.”
5.2 He submitted that in the case of RMSJ Private Limited Vs National Faceless Assessment Centre (Delhi High Court) W.P.(C) 13553/2021, it was held that
“Since in the present case, the impugned or-der has been passing without issuing a show cause notice, the impugned assessment order dated 8th September, 2021 issued under Section 143(3) read with Section 144B of the Act is set aside and the Respondent is directed to issue a show cause notice within four weeks. The Respondent is at liberty to issue a draft assessment order/show cause notice to the petitioner and thereafter, the proceedings shall continue in accordance with law”.
5.3 He further submitted that the Delhi High Court in the case of Maruti Suzuki India Ltd V Addl CIT TPO (2010) WP (c) 6876 of 2008 has opined that
“non issue of proper show cause notice can be fatal to the proceedings under income tax act. “
5.4 He submitted that in the case of Biecco Lawrie Ltd Vs State of West Bengal AIR 2009 SCW5779 the Hon’ble Supreme Court observed as under: –
“One of the essential ingredients affair hearing is that a person should be served with a proper notice i.e. a person has a right to notice. Notice should be clear and precise to give the other parti/adequate information of the case he must meet and make an effective defense. Denial of notice and opportunity to respond result in making the administrative decision as vitiated. The adequacy of notice is a relative term and must be decided with reference to each case.
But generally, a notice to be adequate must contain the following:
a) Time, place, and nature of hearing
b) Legal authority under which hearing is to be held.
c) Statement of specific charges which a per-son must meet.”
5.5 He submitted that in the case of Uma Nath Pandey V State of UP AIR 2009 SC 2375, Supreme court observed as under;
“Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given for the purpose should be adequate to enable him to make a representation. In the absence of a notice of the kind and such reasonable opportunity the order passed becomes wholly vitiated. Thus, it is but essential that a party should be put on notice of the case before any adverse order is passed against him”
5.6 He submitted that the learned assessing officer has passed the Assessment without serving a show cause notice to the assessee which is gross violation of the law of the land. Thus, the Assessing officer erred in passing the order without issuing a proper show cause notice to the assessee.
6. We have heard the rival submissions and perused the materials available on record. In our opinion, the assessee filed return of income on 18.7.2016. Assessee’s case was limited for scrutiny and notice u/s 143(2) of the Act was issued vide letter dated 29.6.2017. The reason for selection of scrutiny was to verify the deduction claimed by assessee u/s 54F of the Act and the ld. AO has called for various information so as to complete the assessment and after giving due opportunity of hearing to the assessee. The case was heard by ld. AO on 27.7.2017, 23.7.2018, 3.10.2018, 12.10.2018 & finally the assessment order was passed on 30.12.2018 and the assessment has been completed. It cannot be said that there is any violation of principles of natural justice, so as to annul the assessment. Accordingly, we allow this ground taken by the revenue.
7. With regard to the next ground Nos.2, 3 & 4, as per the assessment order, the ld. AO has observed that as per the assessee’s submissions she has inherited jewellery from her late mother -in-law, Smt. Kasturi Shoury, who passed away on 28-06-2007 by way of Will which was disclosed only on 28-06-2014. Copy of the Will has been furnished as per which the assessee has received a portion of the jewellery of Smt. Kasturi Shoury which is stated in the Will to be kept in a locker at Vijaya Bank, Thippasandra, Bengaluru. The Will is only notarized. On page 2 of the Will, it is stated that “I further wish to state that this Will of mine is handed over to my husband Mr. K. M Shoury who shall disclose the contents of this Will after a period of 7 years from my demise.” The Will has been disclosed only seven years after the assessee’s mother-in-law death on 28-06-2007 which is 28-06-2014. It is claimed by the assessee that the Will was disclosed on 28-06-2014 i.e. F.Y. 2014-15, and accordingly, she became the owner of this jewellery.
Sale of jewellery:-
7.1 This alleged inherited gold and diamond jewellery was sold by the assessee for Rs.7,09,53,800/-. The assessee has claimed that the jewellery has been sold to M/s. Navarathan Jewellers, Jayanagar, Bengaluru, on various dates from June 2015 to Feb. 2016. Copy of the purchase bill of M/s. Navarathan Jewellers has been furnished.
Non-furnishing of information :-
7.2. During the course of assessment proceedings, the assessee was asked to furnish original copy of Will, death certificate of mother-in-law Late Kasturi Shoury, Wealth tax returns etc., vide letter dated 05.12.2018. But, the assessee has not filed this information till 13. 12.2018. Under the circumstances, a letter was issued to the JCIT, Range 4(2) seeking directions under the provisions of section 144A of the Income Tax Act.
Issuance of directions U/s. 144A:-
7.3. On 20.12.2018, the assessee filed a written submission addressed to undersigned and copy endorsed to JCIT, Range 4(2). In her written submis-sion, the AO has asked for furnishing information viz. original Will for verification, including copies of Wealth Tax returns filed by Late Kasturi Shoury (mother-in-law of the assessee). It is further stated by assessee that to issue directions to the AO not to travel beyond the reasons for selection of Lim-ited Scrutiny.
7.4. The JCIT, Range 4(2) issued a letter to the assessee stating that the enquiry initiated vide letter dated 05.12.2018 by the AO is well within the scope of limited scrutiny. The case has been selected for limited scrutiny to verify whether deduction from capital gains is claimed correctly. The issue of deduction u/s. 54 F will arise on sale of long term capital assets. In this case, sale of jewellery has been claimed by assessee to the extent of Rs.7,09,53,800/-. Evidence in respect of the purported sale of jewellery being a long term capital asset is to be verified. It is in this context that the will of Late Kasturi Shoury (assessee’s mother-in-law). Her death certificate and Wealth Tax returns filed by her are to be furnished. The exact date of receipt of jewellery which is purportedly received in terms of the will wherein it is stipulated that the will should be opened after 7 years from the date of the death of her mother-in-law, Late Kasturi Shoury, is also required. In this context, if any Wealth Tax returns have been filed by assessee after receipt of inheritance, may also to be furnished. The original will is also required for verification of the claim of inheritance.
7.5 Further, the assessee has filed written submissions on 26.12.2018 before the JCIT, Range 4(2). In the written submission, it is explained by the assessee that Late Kasturi Shoury expired on 28th June, 2007 and details other Income Tax returns and Wealth Tax re-turns sought is more than 10 years old, hence, the assessee requires time to source the same and file it. The assessee has filed copy of the Wealth tax returns filed by her for the assessment year 2014-15 (without valuation report in support of jewellery disclosed in the return.)
7.6 The JCIT, Range 4(2) vide letter dated 26.12.2018 has issued direc-tion under section 144A of the Act. The relevant portion of the same is re-produced as under: –
“In this case, it is found that the case has been selected for scrutiny for the reasons ‘Whether deduction from capital gains has been claimed correctly’ The issue of deduction u/s. 54 F will arise on sale of long term capital assets i.e. sale of jewellery to the extent of Rs. 7,09.53, 800/, Thus, evidence in respect of the purported sale of jewellery being a long term capital asset requires verification. It is in this context that the Will of Late Kasturi Shoury (mother-in-law of the assessee), her death certificate and Wealth Tax Returns filed by her are required for verification. The exact date of receipt of jewellery which is purportedly received in terms of the Will wherein it is stipulated that the Will should be opened after / y e a r s from the date of the death of mother- in-law, Late Kasturi Shoury, is also required. Considering the above facts, the information called for by the AO is within the reasons for selection of case for scruti-ny.
Perusal of the records reveals that during the year the assessee has admitted sale of gold jewellery of Rs.7,09,53,800/- and filed copies of pur-chase vouchers issued by M/s. Navarthan Jewellers, Bengaiuru. The AO has obtained a copy of pur-chase bills in respect of assessee as well as purchase register from Mis. Navarathan Jewellers for the financial year 2015-16 relevant to the A. Y. 2016-17. On verification, it is found that during the fi-nancial year under consideration the assessee has sold gold jewellery to the tune of Rs.7,12,63,800/~ though the assessee has claimed at Rs.7,09,53,800/- only. The AO is hereby di-rected to verify the purchase register thoroughly as well as sale vouchers and work out the correct amount of sale of jewellery.
In this case, the burden lies on the assessee to prove that the assets in question is a long term capital asset and claim made in the return under sec. 54F is in accordance with the income Tax Act. Thus, the AO is hereby directed to verify the following documents/facts:-
1. The original Will
2. Death certificate of Late. Kasturi Shoury.
3. Wealth tax returns filed by Late. Kasturi Shoury.
4. Date of receipts of jewellery in the hands of the assessee as per Will.
5. Verify with whom jewellery in question was kept from the period 28.06.2007to 28.06.2014.
6. Gross weight of jewellery/ precious metal received by the assessee as per Will of Late Kasturi Shoury.
7. Valuation of jewellery/precious metal dis-closed in the wealth tax returns filed by the assessee for the AY 2015-16 and earlier years, if any.
8. Details of sale consideration shown in the return for the A. Y. 2016-17
Alternatively, the AO is further directed to re-calculate the proportionate disallowance as proposed by her in the para no. 6 of the letter dated 13.12.2018 after considering the correct amount on sale considerations discussed in para no. 5 of this letter.
The objection raised by the assesses at point No. 11,12 and 13 of written submission dated 26.12.2018 may also be verified and take necessary action, in this regard”.
7.7 The AO carried out the examination of the assessee’s claim and following is the result of his findings after his examination: ” As per the assessee’s submissions she has inherited jewellery by way of Notarized Will from her late mother-in-law Smt. Kasturi Shoury who passed away on 28-06-2007. The Will has been disclosed only on 28-06-2014, since it is stated in the Will that the Will should be opened only 7 years after her death. On page 2 of the Will, it is stated that ” further wish to state that this will of mine is. handed over to my husband Mr. K. M. Shoury who shall disclose the contents of this Will after a period of 7years from my demise.” The reason for this deferment of the reading of the Will is not stated in the Will. No reason has been adduced by the assessee for this deferment clause in the Will.
7.8 The ld. AO vide letter dated 05-12-2018, the assessee was asked to produce the Original Will for verification. Since there was no response from the assessee, Summons U/s. 131 of the dated 26-122018 was also issued to the assessee. However, there was no response even to the summons issued by this office. Copy of the Will has been furnished by the assessee’s AR vide reply dated 26-12-2018 to the ld. AO. Subsequent to the 144A directions given by the JCIT, Range 4(2), Bangalore, the assessee’s AR appeared before the CIT and has produced the original Will and the JCIT had directed to the assessee to produce the same before the Assessing Officer for necessary verification. However, the original will has not been produced before AO in support of sum-mons issued U/s. 131 of the Act Since the original will has not been produced before AO, therefore, the authenticity of the photocopy of the will is not substantiated and the genuineness of this Will is not proved by the assessee.
7.9 As per the terms of the Will, it is seen that the major portion of the assets being jewellery of late Smt. Kasturi Shoury is stated to be bequeathed to the assessee who is the second daughter in law, and so stated to be kept in a locker at Vijaya Bank, Thippasandra, Bengaluru. The assessee has not produced any evidence to support her claim that the jewellery was kept in the locker with Vijaya Bank after the demise of her mother-in-law. Only a small portion of the jewel-lery is stated to be bequeathed to the elder daughter in law and which is stated to be in the custody of the deceased’s husband Shri K M Shoury. The third son who is unmarried, surprisingly is stated to have been bequeathed only Rs. 12 lakhs. There is no reason given in the will as to why there is such an unequal distribution of the assets of the deceased Smt Kasturi Shoury, among her three children and why there is such a marked favouritism in bequeathment of jewellery to the assessee who is her second daughter in law. Confirmations have not been filed from the father-in-law of the assessee and the two brothers in law of the assessee regarding the genuineness of the Will.
7.10 In fact, the Will also states that the late Smt. Kasturi Shoury has a 20% of share in a flat at No. 306 at Bhairavi Dhrupad Apartments and this asset is surprisingly not bequeathed to anybody. Therefore, it appears that this document being an “alleged Will has been prepared just for the specific purpose of being a source for certain alleged jewellery to be owned by the assessee and which subsequently undergoes a sale to result in approximately Rs.7 crores being received by RTGS/Cheque in the assessee’s bank account.
7.11 This Will which is claimed to be notarised has been witnessed by the deceased’s husband and the other witness is stated to be a Mrs. Kamalamma from Domlur, Ban-galore, who has affixed only her thumb impression on this alleged document. No address and other details of this person is mentioned in the Will to corroborate the fact of this person being a witness to this Will. Since the assessee did not respond to the Summons issued by the ld. AO to produce the original Will and answer for the queries regarding this Will, no further verification was possible from late Smt. Kasturi Shoury’s husband, her other children and daughter-in-law and even the credentials Of Smt. Kamalamma who is a witness could not be ascertained.
7.12 The Annexure-l, and II, to the Will gives the list of jewellery which is bequeathed to the two daughters in law of the deceased, Smt. Kasturi Shoury. As per this list, there is only a brief general description of the jewellery, where it is stated that the jewellery is of gold, the weight of each item of jewellery and the cartage of the stones has not been stated.
7.13 Filing of Income Tax/Wealth Tax Returns by Late Kasturi Shoury: In this case, the burden lies on the assessee to establish the genuineness of the Will and receipt of the gold jewellery in the year 2014-15 on account of such Will. But, the assessee failed to establish her claim during the course of assessment proceedings. Thus, the claim of the assessee in this regard is not acceptable by the ld. AO.
Wealth Tax returns filed by assessee:
7.14. On going through the Wealth tax returns filed by the assessee for the assessment year 2015-16, the NFAC found that the assessee has admitted following gold jewellery totalling to Rs.4,31,94,407/-.
Sale of Jewellery:
7.15 It is claimed by the assessee that during the year relevant to the Asst. Year 2016-17 she has sold gold jewellery Rs.7,09,53,800/- to M/s. Navarathan Jewellers Pvt. Ltd., Bangalore on various dates from June 2015 to February 2016. In support the assessee has furnished teles vouchers issued by M/s. Navarathan Jewellers. To verify the genuineness of these transactions, summons U/s. 131 of the I T Act dated 04-12-2018 was issued to M/s. tyavarathan Jewellers. In response to the summons issued, the Accounts Manager of M/s. Navrathan Jewellers appeared and submitted a copy of the purchase register for purchase of old jewellery. As per the purchase register majority of the purchases of old jewellery including purchases above rupees one lakh have been only mentioned as “Sundry parties” but in the case of the assessee Smt. Sharada Naravanan the purchase register shows a specific entry as “Sharada Narayan”. In response to the specific question in this regard Ms. Navarathan Jewellers has stated that the party name only in respect of purchase above Rs.5 lakhs is mentioned otherwise it is not mentioned. However, this answer of M/s. Navrathan Jewellers cannot be accepted since there are one or two entries where even for below five lakh purchases party name has been mentioned such as on Nov. 2 of 2015, purchase of Rs.40,860/- is made from Smt. S Archana and on 16-12-2015, purchase of Rs.2,96.3701-from Shri Shvaprasad D N. By and large the entire purchase register shows sundry parties and the explanation given is not convincing. Copies of biils given to other customers for purchase of jewellery have not been furnished for verification. M/s. Navarathan Jewellers were asked specific questions during the statement recorded u/s. 131 of the I T Act in response to the summons issued to them.
7.16 Para 16 of the assessment order is as follows:
“CONCLUSION:
16. It is clear from the above facts narrated in the above paragraphs that
(i). The assessee has failed to prove the existence of a long term capital asset in the form of jewellery in the hands of her mother in law which has been bequeathed to her by way of Will.
(ii) The assessee has also failed to give any evidence regarding filing of return of income or wealth by her mother-in-law.
(iii) The assessee has failed to furnish original Will for further examination about its genuineness.
(iv) The quantum of jewellery alleged to have been received by the assessee and the quantum of jewellery claimed to have sold to M/s. Navarathan Jewellers does not tally. The gross weight of the jewellery shown in the WT return filed by the assessee alleged to have received through Will is 7243 grams and the gross weight of jewellery sold to M/s. Navarathan Jewellers is 26038.97 grams.
(v) The assessee has failed to furnish the list and description of the jewellery which is alleged to have been received by her by way of a Will in FY 2014-15 and also failed to furnish description and list of the jewellery which has been sold to M/s.Navarathan Jewellers”.
7.17 Vide paragraph 17 of the Assessment order, the long term capital gains claimed by the assessee and deduction of Section 54F of the Act amounting to Rs.6,29,29,348/- was rejected by the AO and the amount received by the appellant from M/s. Navarathan Jewellers through RTGS/Cheques amounting to Rs. 7,12,63,BOO/-was treated as appellant’s Income under the head Income from other sources and brought to tax U/s. 56 of the Act. This is the subject matter of appeal for adjudication.
As per assessee: “PROVIDING DETAILS WHICH IS MORE THAN 10 YEARS OLD.
7.18 The assessee has failed to prove the existence of a long-term capital asset in the form of jewellery in the hands of her mother-in-law which has been bequeathed to her by way of Will.
7.19 The Mother-in-Law of the assessee Late Mrs Kasturi Shoury expired on 28.06.2007. The present assessment is related to the Asst. Year 2016-17 and the mother-in-law of the assessee expired in the Asst. Year 2008-09. The proceedings of the assessment were conducted during the financial year 2018-19.
7.20 Rule 6F (5) of the Income Tax Rules, 1962 states the following:
“The books of account and other documents specified in sub-rule (2) and sub-rule(3) shall be kept and maintained for a period of six years from the end of the relevant assessment year. The proceedings of the assessment were conducted during 201920. The details requested by the learned income tax officer were for the assessment year 2008-09. The learned assessing officer is asking the details of deceased person which is against the spirit of law.
Law of Limitation is generally regarded as procedural an its object is not to create any right but to prescribe periods within which legal proceedings be instituted for enforcement of rights which exist under substantive law.
On expiry of the period of limitation, the right to sue comes to an end and if a particular right of action has become time barred under the earlier statute of limitation the right is not revived by the provision of the latest statute. Honourable Supreme Court in the case of Thirumala Chemicals Ltd v Union of India (2011) 6 SCC 739 (Para 23, 26, 29 to 32).
7.21 Thus the learned assessing officer erred in asking the details which are more than ten years old and from a person who is no alive.
WEALTH TAX RETURN OF THE ASSESSEE.
7.22 The assessee has failed to give any evidence regarding filing of return of income or wealth by her mother-in-law. As stated above the mother-in-law of the assessee expired on 28.06.2007. The learned assessing officer is asking for information beyond the period as
specified in Rule 6(F)(5). This is against natural justice. Hence the learned assessing officer erred in asking the evidence beyond the time specified in Rule 6(F)(5).
FURNISHING OF ORIGINAL WILL
7.23 The assessee has failed to furnish original Will for further examination about its genuineness. The assessee has filed a letter dated 26.12.2018 to the learned assessing officer. The learned officer on 26.12.2018 has personally acknowledged the receipt of the same. The first paragraph of the letter states “We are herewith producing the original Will of Late Mrs Kasturi Shoury for your verification. Kindly verify the same and acknowledge the same”. The learned assessing officer has verified and acknowledged the same personally. In spite of verifying the original, the learned assessing officer has stated that the appellant has failed to produce the original Will. Further the Joint Commissioner of Income Tax, Range 4(2), Bangalore has given directions u/s. 144A of the Act to the assessing officer. In the said direction para 3 the Joint Commissioner of Income Tax, has stated “In response, Shri Deepesh Wagle, CA, authorized representative of the assessee attended on 26.12.2018 and furnished written submission dated 26.12.2018. The copy of the same has also endorsed you. During the course of hearing, the assessee was asked to furnish the required information including the Original Will before the Assessing Officer for necessary verification”
7.24 The Joint Commissioner of Income Tax has clearly stated that the authorised representative has submitted written submission dated 26.12.2018 and along with that the original Will was produced before the Joint Commissioner of Income Tax also. In page number 6 of the assessment order in para (H) the Learned Assessing Officer states Copy of the Will has been furnished by the assessee’s AR vide reply dated 26.12.2018. Subsequent to the 144A directions giv-en by the JCIT, Range 4(2), Bangalore, the assessee’s AR appeared before the JCIT and has produced the original Will and the JCIT had directed to the assessee to produce the same before the Assessing Officer for necessary verification. However, the original Will has not been produced before NFAC in support of summons issued U/s 131 of the Act. The Learned Assessing Officer is accepting that the original Will was produced before the Joint Commissioner of Income Tax on 26.12.2018. The original Will was produced before the directions given by the Joint Commissioner of income Tax. Learned Assessing Officer is stating subsequent to the 144A directions given by the Joint Commissioner of In-come Tax, the assessee’s AR appeared before the JCIT and has produced the original Will. This is not correct. The Learned Assessing Officer accepts that the original Will was produced before the JCIT and the same is stated in the 144A directions of the JCIT. The original Will was produced before the 144A directions and not subsequent to the 144A directions. Further the Learned Assessing Officer is stating a summons U/s 131 and she has not mentioned the date of the Summons. She has not given any Summons as stated by her in the Assessment Order. Thus the original Will was produced before the Joint Commissioner of Income Tax and also before the Learned Assessing Officer. Thus, the Learned Assessing Officer erred in stating that the assessee has failed to furnish original will for further examination.
WEIGHT OF THE JEWELLERY:
7.25 The assessee in her wealth tax returns has given the weight of the jewellery and the weight of the precious metals. The Learned Assessing Officer has quoted only the weight of the Jewellery and not the weight of the precious metal. The value of stones is higher than the value of the Jewellery. Further the consultant of M/s Navarathan ]ewellers Private Limited, Mr Dungarmal has made a sworn statement before the Learned Assessing Officer on 07.12.2018. In the sworn statement for question number 3 he has stated “No, we don’t write the description of the jewellery in the purchase bill. Copies of the purchase bills have already been submitted. Now I am producing herewith the original bills for your verification. As can be seen from a sample of a bill dated 06-07-2015, wherein jewellery weighing 2245.88 gross weight has been purchased by us. It includes diamond 25.62 ct, precious stones of 40.65 and polki 19.85 grams. The total amount given to the customer is Rs.58,88,500/+ which comes to approximately Rs. 26277- per gram including cost of stones- ie, diamond, precious-stones and polki. The split up of gold and stones will be aroundRs.41,87,725/- for gold value and Rs. 16,39, 800/- is for diamond jewellery and Rs.60,975/- is for precious stones, verified in our purchase register which is produced before you. This can be cross verified in our purchase register which is produced before you. The assessee is not a valuator or jeweller. The assessee for the purpose of filing the Wealth Tax Return has made a valuation of the jewellery and accordingly she has prepared the Wealth Tax Return. The valuation report is enclosed herewith for your kind perusal. As per the valuation report the total weight as mentioned in the valuation report was quoted in the Wealth Tax Return. The Learned Assessing Officer failed to appreciate the value mentioned in the valuation report and took only the weight mentioned for the reasons known to her. It’s an acceptable practice to value the jewellery from valu-ator who is recognised by the Income Tax Department. M/s Navarathan Jewellers Private Limited is a recognised valuator by the Income Tax Department and the assessee has taken the weight as quoted in the valuation report. Valuation report is prepared to obtain the value of the jewellery and not the weight of the jewellery. The value mentioned in the report is taken and the assessee has paid Wealth Tax for the same value. Thus the Learned Assessing Officer erred in not taking the value of Jewellery and taking only the weight of the Jewellery”
DESCRIPTION OF THE JEWELLERY.
7.26 The assessee has failed to furnish the list and description of the jewellery which is alleged to have been received by her by way of a Will in FY 2014-15 and also failed to furnish description and list of the jewellery which has been sold to M/s Navarathan Jewellers. The assessee has furnished the copy of the invoices for the jewellery sold to M/s Navarathan Jewellers Private Limited vide his letter dated 09.10.2018 before the ld AO. The assessee has also furnished the copy of the wealth tax return along with the valuation report of the jewellery obtained from M/s Navarathan jewellers Private Limited. Thus, the assessee has provided the jewel-ery inherited and a/so the jewellery sold to M/s Navarathan Jewellers Private Limited. The Learned Assessing Officer erred in stating that the assessee has not provided the details.
7.27 The NFAC has considered the submissions of the appellant and the findings of the AO in the assessment order. It was observed that the fact of the matter is that as per the computation of total income, the assessee had claimed capital gains of Rs.6,29,20,349/- arising out of sale of jewellery of Rs.7,09,53,8007-. This capital gains is stated to be reinvested in purchase of a residential house through a registered sale deed dated 09-02-2015 situated at No.223, Defence Colony, HAL I Stage, Indiranagar, Bengaluru, consisting of ground plus three floors of 7000 sq.ft. and site area of 4000 sq.ft. for an amount of Rs.6,00,00,000/-excluding stamp duty and registration charges. The total reinvestment as per computation of total income is Rs.6,45,00,000/.
7.28 The AO found that it is a notarized Will of late Mrs Kasturi Shoury. At the same time, the AO while acting on the contents of the Will, analysing the contents of the Will Deed, and also the manner in which the properties are bequeathed and also finding that an asset owned by Late Mrs Kasturi Shoury was not figuring in the Will deed; the AO disbelieving the existence of “WILL DEED” of Late Mrs. Kasturi Shoury, and says that the original Will was not produced for verification.
To quote the AO:
(i) On page 2 of the Will, it is stated that ” further wish to state that this will of mine is handed over to my husband Mr. K. M. Shoury who shall disclose the contents of this Will after a period of 7years from my demise.” The reason for this deferment of the reading of the Will is not stated in the Will. No reason has been adduced by the assessee for this deferment clause in the Will.
(ii) Vide this office letter dated 05-12-2018 the assessee was asked to produce the Original Will for verification. Since there was no response from the assessee, Summons U/s. 131 of the dated 26-12-2018 was also issued to the assessee. However, there was no response even to the summons issued by this office. Copy of the Will has been fur-nished by the assessee’s AR vide reply dated 26-12-2018. Subsequent to the 144A directions given by the JCIT, Range 4(2), Bangalore. At para 11 (ii) of the assessment order at page 6 the AO stated the assessee’s AR appeared before the JCIT and has produced the original Will and the JCIT had directed to the assessee to produce the same before the Assessing Officer for necessary verification. However, the original will has not been produced before AO in support of summons issued U/s. 131 of-the Act.
(iii). As per the terms of the Will, it is seen that the major portion of the assets being jewellery of late Smt. Kasturi Shoury is stated to be bequeathed to the assessee who is the second daughter in law, and so stated to be kept in a locker at Vijaya Bank, Thippasandra, Bengaluru. The assessee has not produced any evidence to support her claim that the jewellery was kept in the locker with Vijaya Bank after the demise of her mother-in-law.
7.29 Late Smt. Kasturi Shoury has a 20% of share in a flat at No. 306 at Bhairavi Dhrupad Apartments and this asset is surprisingly not bequeathed to anybody. Only a small portion of the jewellery is stated to be bequeathed to the elder daughter in law and which is stated to be in the custody of the deceased’s husband Shri K M Shoury. The third son who is unmarried, surprisingly is stated to have been bequeathed only Rs. 12 lakhs. There is no reason given in the will as to why there is such an unequal distribution of the assets of the deceased Smt. Kasturi Shoury, among her three children and why there is such a marked favouritism in bequeathment of jewellery to the assessee who is her second aughter in law. Confirmations have not been filed from the father-in-law of the assessee and the two brothers in law of the assessee regarding the genuineness of the Will.
7.30 This Will which is claimed to be notarised has been witnessed by the deceased’s husband and the other witness is stated to be a Mrs. Kamalamma from Domlur, Bangalore, who has affixed only her thumb impression on this alleged document. No address and other details of this person is mentioned in the Will to corroborate the fact of this per-son being a witness to this Will. Since the assessee did not respond to the Summons issued by this Office to produce the original Will and answer for the queries regarding this Will, no further verifica-tion was possible from late Smt. Kasturi Shoury’s husband, her other children and daughter-in-law and even the credentials Of Smt. Kamalamma who is a witness could not be ascertained.
Filing of Income Tax/Wealth Tax Returns by Late Kasturi Shoury:
7.31 In this case, the burden lies on the assessee to establish the genuineness of the Will and receipt of the gold jewellery in the year 2014-15 on ac-count of such Will. But, the assessee failed to establish her claim during the course of assessment proceedings. Thus, the claim of the assessee in this regard is not acceptable. The totality of the situation was that the AO disbelieved the existence of original Will of late Mrs Kasturi Shoury and denied the benefit of deduction under sec.54F as there is no sale of long term capital asset and consequently, the entire sale proceeds of jewellery was included as income from other sources under section 56 of the Act. While the appellant says ‘that she produced the original will deed of Late Mrs Kasturi Shoury before AO for verification, the AO denies that the assessee did not produce the original will deed for verification. Under these circumstances, by a letter dated 10-2-2020, the NFAC had called for a remand report from the AO and following is the text of the said letter:
” I am directed to request that the appellant has submitted certain documents along with the appeal as well as written submissions (Copy en-closed). You are requested to comment specifically on the following assertions of the Appellant.
1. Whether Original Will was furnished before the A.O. and acknowledged on 26/12/2018.
2. Whether Summons for 27/12/2018 not issued on 26/12/2018 as it is seen to be digitally signed on 29/12/2018
3. Whether these was Absence of any show cause notice in the final addition during
the Assessment proceedings.
4. Whether opportunity to be heard was pro-vided to the assessee under section 129 of the Income Tax Act, 1961 as there was change in incum-bent of the office? “
7.32 The AO did not furnish his remand report on the above specific points. Therefore, the AO was issued a reminder on 7-7-2023 to furnish the remand report. The AO did not furnish the remand report and in the circumstances of the case, the disposal of appeal can-not be kept pending any longer for the A0’s remand report. The appeal is adjudicated on merits of the case. These are the vital points for consideration. On the facts and in the circumstances of the case whether there is a sale of long term capital asset for the appellant to claim benefit of ^deduction under section 54F of the Act? And if so, how and if not why not? The undisputed fact is that Mrs Kasturi showry, the mother-in-law of the appellant is no more and a death certificate was filed to this extent. It is an undisputed fact that the Will Deed executed by Late Mrs Kasturi Showry is a notarized Will Deed. While the appellant claims that the original Will deed was produced for verification before the AO as well as the JCIT, the AO denies this statement of the assessee and the AO , on the other hand, did not furnish his remand report as per this office directions dated 102-2020 and even after a reminder letter dated 6-7-2023. The AO noted the fact that it is a notarized Will. Prima facie, a Will Deed can be even on a plain paper and does not require registration. A Will is a legal declaration of the intention of a person (testator) with respect to his property or estate, which he desires to take effect after his death. The following essentials of a Will must be kept in mind:
(i) The Will must be executed by the testator, i.e., the person making the Will (or by some other person in the testator’s presence and under his directions; if it is not possible for the testator to affix his signature, he may also put his thumb impression);
(ii) The signature should be placed in such as manner that it appears that it was intended to give effect to the Will;
(iii) The Will should be signed by the testator in the presence of two witnesses (other than the beneficiaries under a Will), and the witnesses must also attest (i.e., sign).
7.33 It was the argument of assessee that in India, registration of Wills is not compulsory. A Will is not a compulsorily registrable document under section 17 of the Registration Act, 1908, (Act), and according to section 18 (e) it is the testator’s choice as to whether he wishes to register it. There is no stamp duty payable. But if one chooses to register a Will with the applicable registrar/sub-registrar of assurances, the registration provides evidence that the proper parties had appeared before the registering officer and the latter had attested the same after ascer-taining their identity. Once a Will is registered, it is placed in the safe custody of the Registrar and cannot be tampered with, destroyed, mutilated or stolen. However, non-registration of a Will does not lead to any inference against its genuineness. It doesn’t have to be executed before a notary public. The provisions governing an executor of a Will are set out in the Indian Succession Act, 1925, (Act). In the case of Ishwardeo Narain Singh vs Srn. Kamta Devi and Ors. AIR 1954SC 280, 1953 (1) BLJR 690, it was held by the Supreme Court that non-registration of the will cannot be held as a rea-son for the invalidity of the will. Registration of will is not Compulsory, Supreme Court, the Apex Court in India held. Documents are notarized to prevent fraud. Notarization gives an added level of protection and proof of authenticity, so that someone can’t just write up a contract and forge your signature and try to enforce it. It is the notary’s responsibility to make sure that the signer knows what they have signed (this is called having testamentary capacity) and that they signed it voluntarily and not because of any undue influence. After the notary public has watched someone sign, they will stamp the document with an official seal.
7.34 In view of the above, the NFAC observed that it is entirely a dis-cretion for the testator, in this case, late Mrs Kasturi Shoury, as to how and in what proportion she wants to bequeath her “properties. It’s not a concern for the tax department and thereby to doubt a copy of Will Deed when the original Will Deed was claimed to have been produced before the AO and a receipt has been obtained from him having produced the original Will deed. It’s not the depart-ment’s business to know : “There is no reason given in the will as to why there is such an unequal distribution of the assets of the deceased Smt. Kasturi Shoury, among her three children and why there is such a marked favouritism in bequeathment of jewellery to the assessee who is her second daughter in law” as pointed out and remarked by the AO in the assessment order. Again, it’s none of department’s business and not at all connected to point out in the assessment order that” Only a small portion of the jewellery is stated to be bequeathed to the elder daughter in law and which is stated to be in the custody of the deceased’s husband Shri K M Shoury. The third son who is unmar-ried, surprisingly is stated to have been bequeathed only Rs. 12 lakhs. There is no reason given in the will as to why there is such an unequal distribution of the assets of the deceased Smt. Kasturi Shoury, among her three children and why there is such a marked favouritism in bequeathment of jewellery to the assessee who is her second daughter law. Confirmations have not been filed from the father in law of the assessee and the two brothers in law of the assessee regarding the genuine-ness of the Will.”. Secondly, the possibility of human preponderance requiring to prove as to why there was a so much waiting period for implementation of the directions contained in the Will Deed.in this case, the testator, Mrs Kasturi Shoury kept the waiting period seven years for opening up the Will Deed and then to distribute her assets among the beneficiaries to whom she bequeathed her assets, it’s equally correct to say that” This Will which is claimed to be notarized has been wit-nessed by the deceased’s husband and the other witness is stated to be a Mrs. Kamalamma from Domlur, Bangalore, who has affixed only her thumb impression on this alleged document. No ad-dress and other details of this person is mentioned in the Will to corroborate the fact of this person being a witness to this Will. Since the assessee did not respond to the Summons issued by this Office to produce the original Will and answer for the queries regarding this Will , no further verification was possible from late Smt. Kasturi Shoury’s husband, her other children and daughter-in-law and even the credentials Of Smt. Kamalamma who is a witness could not be ascertained.”, as depart-ment is not a party to contest the Will Deed. Therefore, the AO’s observations listed above to disbe-lieve the Will Deed thereby holding that there is no capital asset with the appellant to sell and then claim the benefit of deduction under section 54F is not correct. The assessee has filed her wealth tax returns as per the information extracted in the assessment order and the assessee has shown the jewellery inherited from her mother-in-law for assessment year 2015-16 (the first year of inher-itance of jewellery after the demise of her mother-in-law) at Rs.3,79, 12,837. This admission in the wealth tax return filed by the assessee clearly shows her inheritance of jewellery from her mother-in-law. This is found in the assessment order as extracted by the AO. Thirdly, it is not correct to insist for production of tax returns ang wealth tax returns of Late Mrs Kasturi Shoury to establish the owner-ship of jewellery held by that deceased assessee and her ability to prove the bequest to her kith and kin. It’s more than 10 years old documents as contended by the appellant. The appellant also vehe-mently contends that Rule 6F (5) of the Income Tax Rules, 1962 states the following: “The books of account and other documents specified in sub rule (2) and sub-rule(3) shall be kept and maintained for a period of six years from the end of the relevant assessment year. In the circumstances of the facts of the case, the AO’s observations that “Since the original will has not been produced before me, therefore, the authenticity of the photocopy of the will is not substantiated and the genuine-ness of this Will is not proved by the assessee” deserves to be quashed. Moreover, the appellant submitted that : “The Honourable Joint Commissioner of Income Tax has clearly stated that the authorised representative has submitted a written submission dated 26.12.2018 and along with that the original Will was produced before the Honourable Joint Commissioner of Income Tax also. In page number 6 of the assessment order in para (ii) the Learned Assessing Officer states Copy of the Will has been furnished by the assessee’s AR vide reply dated 26.12.2018. Subsequent to the 144A directions given by the JCIT, Range 4(2), Bangalore, the assessee’s AR appeared before the JCIT and has produced the original Will and the ]ClT had directed to the assessee to produce the same before the Assessing Officer for necessary verification”. The difference in weight of gold jewellery as per the sale bills was explained by the appellant. The purchase of jewellery by M/s Navarathan Jew-ellers Private Limited, and paying the sale price was confirmed in this case. To quote the AO in the assessment order, the AO stated as part of verification of sale of jewellery: ” To verify the genu-ineness of this transactions, summons Us. 131 of the I T Act dated 04-12-2018 was issued to M/s. Navarathan Jewellers. In response to the summons issued, the Accounts Manager of M/s. Nav-rathan Jewellers appeared and submitted copy of the purchase register for purchase of old jewellery. As per the purchase register majority of the purchases of old jewellery including purchases above rupees one lakh have been only mentioned as “Sundry parties” but in the case of the assessee Smt. Sharada Naravanan the purchase register shows specific entry as “Sharada Narayan”. In response to the specific question in this regard Ms .Navarathan Jewellers has stated that the party name only in respect of purchase above Rs.5 lakhs is mentioned otherwise it is not mentioned.”. Above all, the inheritance of jewellery from the appellant’s mother-in-law was declared in the wealth tax returns of the appellant and therefore, taking totality of the situation, I agree with the appellant that there existed a long term capital asset which was inherited from her mother-in-law which was sold resulting into long term capital gains. Therefore, the appellant is entitled to the bene-fit of deduction under section 54F of the Act. Another thing which merits a mention is that the AO proceeded to tax the sale price of jewellery sold as assessee’s income under section 56 of the Act under the head “other sources”. In the circumstances of the case, the NFAC concluded that the sale price of inherited jewellery cannot be taxed as other source income and it’s the long-term capital as-set of the assessee inherited from her mother-in-law. The AO is incorrect to deny the benefit of de-duction under section 54F of the Act as claimed by the assessee. Hence, NFAC directed the ld. AO to delete the addition made under the head as other source income and grant the assessee the benefit of deduction under section 54F of the Act. Against this revenue is in appeal before us.
8. We have heard the rival submissions and perused the materials available on record. The main contention of the ld. D.R. is that the valuation reports furnished by the assessee from Navarathan Jewellers Pvt. Ltd. dated 28.5.2015 valuing the jewellery as on 31.3.2015 does not tally with the quantity and weight of jewels at 26038.97 gms. and it was only gross 7243 gms. Jewellery inherited from impugned Will. As such, the ld. CIT(A) is not justified in giving the find-ings with regard to existence of long term capital assets in the form of jewellery acquired through the Will from Late Kasturi Shoury and consequently granting the relief which is incorrect without recon-ciling the quantity of jewels mentioned in the Will vis-à-vis Valuation Certificate issued by the Nava-rathan Jewellers Pvt. Ltd. In our opinion, this issue has to be required to be re-examined at the end of CIT(A)/NFAC and the assessee is directed to reconcile the quantum of jewellery inherited through the impugned Will along with valuation report issued dated 28.5.2015 by Navarathan Jewellers Pvt. Ltd., No.85, Bangalore-1 valuing the jewellery as on 31.3.2015 vis-à-vis with the quantum of sale of jewellery. Accordingly, the issue in dispute is remitted to the file of CIT(A)/NFAC for reconsideration to decide the same afresh. It is needless to say that an opportunity of proper hearing to be given to the assessee before deciding the issue in accordance with law. Accordingly, ground Nos.2,3 & 4 are partly allowed for statistical purposes.
9. In the result, appeal of the revenue is partly allowed for statistical purposes.
Order pronounced in the open court on 2nd Feb, 2024
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