Following a CBDT circular regarding non-seizure of gold upto 500 gms possessed by a married woman, the ITAT Mumbai granted partial relief to assessee, a lady by exempting the sale consideration of 500 gms of gold received by her. The bench, however, directed the income tax department to tax the sale consideration of balance amount of gold in excess of 500 gms as the assessee could’nt prove the source of her undisclosed income.
Assessee invested some money in her bank accounts and earned interest income out of it. She has not disclosed the same in her income tax or wealth tax returns. The department asked the assessee to explain the source. During the proceedings, the assessee claimed that she is a mohmadam by birth and had received a meher of 4 kg of gold ornaments and 150 kg of Sliver utensil during her marriage. Regarding the source of FDRs, assessee explained that the said investment was made out the sale of those gold to her close relatives. However, she couldn’t prove the transaction with evidence.
The department rejected the above contentions and brought the same to tax under the provisions of the Income Tax Act by treating the said amount as her undisclosed income.
On second appeal filed by the assessee, the bench noted that the assessee has not brought on record any evidences of buying gold/silver by way of invoices or cheque payments to substantiate its claim that she bought gold/silver from time to time from her PIN money or gifts. Further, she has not submitted any details of family background and status of the family including their earnings and assetsin support of her claim. In addition, she never declared these holdings of gold /silver in income/wealth tax returns.
In this factual background, the bench observed that story of sale of gold ornament/silver in cash to close relatives was set up by the assessee after the assessee was cornered by Revenue and it does not inspire confidence , thus her contentions are hereby rejected because neither the purchase/holding of gold ornaments/silver is proved nor the genuineness of the sale of gold ornaments/silver stood proved.
“However, we cannot also shut our eyes to reality of Indian lives wherein there is a love, pride and preference of Indian households to invest and hold gold ornaments etc for their usage as well for rainy days wherein gold can be sold to tide over financial difficulties. However, we also note that there is a CBDT instruction/guidelines no. 1916 dated 11th May, 1994 which although relates to non-seizure of gold during the course of search operation u/s 132 which has duly considered Indian traditions and culture , wherein it is permitted by CBDT not to seize gold ornaments and jewellery in case of married lady to the tune of 500 gram in the course of search operations where no wealth tax returns are filed by said married lady and hence we are of the view that the explanation of the assessee of holding of the gold ornament/jewellery to the tune of 500 gram stand accepted , while the rest of the theory of selling balance of the gold /silver as put forward by the assessee stood rejected and it is held that the assessee could not substantiate the genuineness of the transaction for the balance quantity of sale of gold ornaments/silver and hence after giving credit for value of gold to the tune of 500 gms, rest of the amount shall be charged to tax in the hands of the assessee as undisclosed income . While for sale of 500 gram of the gold , the same shall be brought to tax by computing income from capital gains for which the assessee shall submit necessary details which shall be verified by the AO in accordance with law,” the bench said.
Read the full text of the Order below.
