SITADEVI N PODAR Vs. SECOND INCOME TAX OFFICER
INCOME TAX APPELLATE TRIBUNAL
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S.N. Rotho, Accountant Member -
(1.) THIS appeal has been filed by the assessee against the order dated 13-10-1981 of the Commissioner (Appeals) relating to the assessment year 1975-76, the previous year of which ended 31-3-1975. The assessee is an individual. During the previous year under consideration, she sold silver utensils for Rs. 4,05,959. The details of the utensils sold are as below :
The assessee had not declared the details of the utensils in the original return, but had declared the same in the revised return, filed before the original assessment was made. The claim of the assessee was that the silver utensils were personal effects, and so were not capital assets within the meaning of Section 2(14) of the Income-tax Act, 1961 ("the Act"). Hence, no capital gains arose out of their sale. The ITO accepted the above contention of the assessee, and completed the original assessment on 20-11-1975, without including any amount as capital gains in the total income.
(2.) Subsequently, the Commissioner started proceedings under Section 263(1) of the Act on the ground that the silver utensils were not personal effects, and so they were capital assets on the sale of which capital gains arose to the assessee. Since no capital gain was charged to tax in the original assessment he proposed to revise the order under Section 263 accordingly. The assessee gave a written reply explaining that the nature of the silver utensils were such that they were held for personal use. After considering the reply of the assessee, the Commissioner dropped the proceedings under Section 263 and intimated the same to the assessee by his letter dated 30-3-1975.
Subsequently, the ITO reopened the assessment under Section 147(6) of the Act on 27-3-1980. The reason recorded for reopening the assessment is as below:
27-3-1980: On scrutiny of the assessee's statement of accounts relevant to assessment year 1975-76 it is seen that the assessee has sold silver utensils for Rs. 4,05,959 which sum has been credited to the capital account of the assessee. In her return, the assessee has not declared any capital gain on this sale nor has he claimed any exemption in this respect in her return. Now in view of the Supreme Court decision in H.H. Maharaja Rana Hemant Singhji v. CIT  103 ITR 61 holding that silver articles are not deemed to be 'effects' meant for personal use and this information having come to my knowledge subsequent to the computation of original assessment, I have reason to believe that gain on sale of silver utensils has escaped assessment. Hence, action under Section 147(6) for the assessment year 1975-76 is necessary.
The assessee objected to the reopening of the assessment under Section 147(6), which was overruled by the ITO. Reliance was placed by the assessee on the decision of the Tribunal in the case of Ramadevi R. Poddar (IT Appeal No. 1031 (Bom.) of 1981 dated 29-9-1981) for the proposition that the silver utensils were actually personal effects held for personal use. The ITO did not agree. He held the utensils to be not personal effects and calculated capital gains at Rs. 3,44,828 and brought the same to tax accordingly.
(3.) THE assessee appealed to the Commissioner (Appeals), and contended that the action of the ITO was not justified. THE Commissioner (Appeals), however, held that the decision in the case of H.H. Maharaja Rana Hemant Singhji (supra) came to be known by the ITO after he completed the original assessment, and that the said decision constituted "information" so that the assessment was validly reopened under Section 147(6). On merits, he also agreed with the ITO that the utensils under consideration were not personal effects. Hence, he confirmed the reassessment as made by the ITO.;
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