Case Law Details
Geeta Subhash Dalal (L/h. of Late Subhash B. Dalal) Vs DCIT (ITAT Ahmedabad)
In the case of Geeta Subhash Dalal Vs DCIT before ITAT Ahmedabad, a search operation revealed gold jewellery in a locker jointly owned by the assessee’s wife, Smt. Geeta Dalal, and her daughter, Ms. Kanan Dalal, residing in the UK. During the search, Smt. Geeta Dalal claimed the jewellery belonged to her daughter, and an affidavit from Ms. Kanan Dalal confirmed it was received as gifts from family during key life events. However, the Assessing Officer (AO) added ₹6,16,620 as unexplained income under Section 69A of the Income Tax Act, citing frequent locker operations by the assessee’s wife and lack of supporting purchase documentation.
The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO’s decision, emphasizing that no purchase bills or other documentary evidence substantiated the source of the jewellery. The CIT(A) noted that while an affidavit and confirmation letter were presented, they did not adequately explain the acquisition of the jewellery, leading to the conclusion that it remained unexplained.
Upon appeal, ITAT Ahmedabad considered the facts, particularly the joint ownership of the locker and the practical necessity for Smt. Geeta Dalal to operate it given her daughter’s residence abroad. The tribunal found the affidavit and confirmation letter credible and noted the absence of evidence to counter the claims made by the assessee and her daughter. ITAT emphasized that ownership cannot solely be presumed based on frequent locker operations, especially when the locker was jointly held, and the daughter was settled overseas.
Relying on the affidavit and considering the cultural context of families storing jewellery for daughters, ITAT deleted the addition, concluding that the AO’s presumption lacked substantial basis. This judgment reaffirms the importance of joint ownership and credible affidavits in assessing ownership of assets during tax proceedings.
The ruling reflects ITAT Ahmedabad’s balanced approach to evidence, ensuring that cultural practices and practical realities are considered in tax assessments. Judicial precedents like CIT v. Anwar Ali (1970) and Krishna Electricals v. CIT (2015) underscore the principle that the onus of proof shifts when plausible explanations are provided by taxpayers.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals12, (in short “Ld. CIT(A)”), Ahmedabad vide order dated 04.10.2024 passed for A.Y. 2018-19.
2. The assessee has taken the following grounds of appeal:-
“1. On the facts and in the circumstances of the case and in law, the ld. Commissioner of Income Tax (Appeals] [hereinafter referred to as the ld. CIT (Appeals) for the sake of brevity] has grossly erred in confirming the addition of Rs. 6,16,620/- u/s. 69A of the Act, being unexplained jewellery without considering the merits of the case and prays your honour to kindly delete the same.
2. On the facts and in the circumstances of the case and in law, the ld. CIT (A) has grossly erred in not considering the facts that the locker operated during search operations was in the joint name of the appellant, her daughter, Ms. Kanan Dalai & (husband of Ms. Kanan Dalai), Settled in United Kingdom. The ld. CIT (Appeals] has failed to appreciate the facts that while recording statement on oath, the appellant has categorically stated that the jewelley found from the locker, belongs to her daughter and in support of the same, the appellant has duly produced an affidavit of Ms. Kanan Dalal, a daughter & valuation report of Government Approved Valuer. Further, the ld. CIT has failed to appreciate the facts that neither the AO nor the ld. CIT(Appeals) himself have not raised any objections regarding these facts that the jewellery found from the locker, do not belong to the daughter of the appellant.
3. On the facts and in the circumstances of the case and in law, the ld. CIT (Appeals) has grossly erred in contending that the appellant has not produced documentary evidence, such as purchase bills or invoices that therefore, the impounded jewellery remains unexplained, whereas the appellant has duly produced the evidences in the form of an affidavit of Ms. Kanan Dalai, during assessment proceedings & even appellate proceedings.
4. On the facts and in the circumstances of the case and in law, the ld. CIT (Appeals) has failed to appreciate the facts that In India, it is common trend and customs to keep the jewellery of the daughters, though they are married, with her mother. Further, the ld. CIT (Appeals) has also failed to appreciate the facts that nowhere, in the entire Act, it is prohibited that the daughter, after marriage, cannot keep her jewellery with her mother.
5. In view of the above, both the assessing officer & even the ld. CIT (Appeals) have interpreted the subject matter in arbitrary manner and therefore, the appellant prays your honour to treat the jewellery as explained and delete the impugned additions.
6. The appellant craves liberty to add, alter or amend any of the aforesaid ground or grounds, if necessary.”
3. The brief facts of the case are that during the course of search action at the residential premises of the assessee, a locker key for locker No. 543 at Karnataka Bank Ltd. was seized and impounded. The said locker was in the joint name of Smt. Geeta Dalal (wife of the assessee) and Ms. Kanan Dalal (daughter of the assessee). Out of the gold jewellery found and inventorised from the aforesaid locker, in the statement of oath of Smt. Geeta Dalal on 03.10.2017, she stated that the gold jewellery belongs to her daughter Ms. Kanan Dalal. During the course of assessment proceedings, the assessee vide submission dated 18.11.2019 submitted the “confirmation letter” of the Ms. Kanan Dalal, her daughter, who had settled in UK stating that the gold jewellery belonged to her and her family members. However, the Assessing Officer noted that no supporting evidence was submitted for the source of acquisition of jewellery. The Assessing Officer noted that the said locker was frequently operated by Smt. Geeta Dalal and therefore, the presumption is that the gold jewellery belonged to Smt. Geeta Dalal. Accordingly, the Assessing Officer made an addition of unexplained jewellery amounting to Rs. 6,16,620/- as unexplained income of the assessee under Section 69A of the Act.
4. In appeal, Ld. CIT(A) dismissed the appeal of the assessee with the following observations:
“5.3 On perusal of the submission provided by the legal heir of the appellant, it is observed that during the statement recorded on 03.10.2017 u/s 132(4) of the Act, Smt. Geeta Dalai, the appellant’s wife, had stated that the jewellery placed in the locker belonged to her daughter. Further, during the course of the assessment proceedings, the appellant submitted a confirmation from Ms. Kanan Dalai, who is settled in the UK, stating that the gold jewelry belonged to her and her family members. However, it is pertinent to note that the AO, in the assessment order, referenced a letter dated 29.11.2019 submitted by the late Shri Subhash Dalai, the appellant. In this letter, the appellant requested that any addition on account of the gold jewellery found and seized from Locker No. 543 be made in his case. In light of this request, the AO proceeded to make the addition of the unexplained gold jewelry in the hands of the appellant. Further, it is an undisputed fact that no documentary evidence, such as purchase bills or invoices, was furnished either during the assessment proceedings or in the appellate proceedings. As a result, the source of acquisition of the seized jewellery valued at Rs.6,16,620/- remains unexplained due to the absence of supporting documentary evidence. Further, the case laws relied upon by the legal heir of the appellant are clearly distinguishable on the facts of the case, as discussed herein above. Therefore, the action taken by the AO to make an addition for the unexplained jewellery in the hands of the appellant is justified. Accordingly, addition of Rs.6,16,620/- is confirmed. Ground of appeal no.1 is dismissed.”
5. The assessee is in appeal before us against the aforesaid order passed by Ld. CIT(A).
6. The Counsel for the assessee drew our attention to Page 9 of the Paper Book viz. statement of the assessee under Section 132(4) of the Act, wherein at the time of search itself, the assessee had submitted that the jewellery belonged to her daughter Ms. Kanan S. Dalal. The assessee submitted that the locker is jointly held in the name of Smt. Geeta Dalal (legal heir of late Subhash B. Dalal) and Ms. Kanan Dalal (daughter of the assessee). Further, Affidavit of Ms. Kanan Dalal dated 18.11.2019 was also filed stating that the jewellery which was seized belongs to her and her family members and that the said jewellery was received by her from her parents and relatives at the time of her marriage and the occasion of the birth of her children and on other occasions. It is also not a disputed fact that the locker was jointly held by the assessee along with her daughter. The Counsel for the assessee submitted that just because the assessee is operating the locker (which was jointly held by the assessee and her daughter) cannot lead to the inference that the jewellery lying in the locker belonged to the assessee alone, especially keeping in light the fact that the daughter was residing in UK and it was not practically possible for her to operate the locker. Accordingly, in light of the above facts, it was submitted that there is no basis for sustaining the addition and accordingly, looking into the instant facts the additions are liable to be deleted.
7. In response, Ld. D.R. placed reliance on the observations made by the Assessing Officer and Ld. CIT(A) in their respective orders.
8. We have heard the rival contentions and perused the material on record.
9. On going through the facts of the instant case, we observe that it is an undisputed fact that the locker was in the joint name of the assessee and her daughter. At the time of search itself, the assessee had given a categorical statement that the jewellery in the said locker belonged to her daughter, who was now a resident of UK. The daughter of the assessee had also filed an Affidavit dated 18.11.2019 stating that the jewellery seized from the locker belonged to her and that the same was received from her parents and relatives at the time of her marriage, on the occasion of birth of her children and on other occasion etc. We observe that nothing has been brought on record to dispute the veracity of the statement of the assessee or the contents of the Affidavit filed by the daughter of the assessee. The only reason for the addition was that since the locker was being regularly operated by the assessee, the natural presumption would be that the jewellery found in said locker, belonged to the assessee only. However, in our considered view, looking into the instant facts, no such presumption can necessarily be drawn, looking into the fact that the locker in question was jointly held by the assessee and her daughter. Ms. Kanan Dalal, the daughter of the assessee was residing in UK and hence it was practically not possible for her to operate the locker and further, the daughter of the assessee also filed an Affidavit stating that the jewellery impounded from the locker belonged to her and her family members. Accordingly, looking into the assessee’s set of facts, in our considered view, the additions made by the Assessing Officer are liable to be deleted.
10. In the result, the appeal of the assessee is allowed.
This Order is pronounced in the Open Court on 20/02/2025
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