M.S. Sanklecha, J. - (1.) THESE four appeals under Section 260A of the Income Tax Act, 1961 (the 'Act') impeach the common order dated 7 December 1999 passed by the Income Tax Appellate Tribunal (the 'Tribunal') in respect of four appellants/assessees (belonging to the same group). The impugned order concerns itself with an assessment for the block period 1 April 1996 to 11 December 1996.
(2.) ALL these four appeals were admitted on the following substantial question of law: "(A) Whether on the facts and circumstances of the case and in law the Tribunal was right in holding that the seized jewellery represented unaccounted income of the appellant when documentary evidence was found at the time of search to show that part of it belonged to the appellants father, late mother and the minor children who were wealth -tax and income -tax assessees in the earlier years." So far as Appeal No. 1135/2000 (Pragna R. Shah) and 1136/2000 (Priti Paras Shah) are concerned, besides Question A above, the appeal was admitted on the following additional substantial question of law: "(B) Whether on the facts and circumstances of the case and in law the Tribunal erred in rejecting the cash method of accounting followed by the assessee and substituting the mercantile method in relation to the accrued interest on loan advanced to the landlord - Regarding Question No.A:
(3.) BRIEFLY the facts leading to these appeals are as under: (a) The appellants/assessees are a part of the family group engaged in the business of trading in electronic items including its export to African countries. Besides the group also carries on the business of bill discounting. On 11 October 1996, a search and seizure operation under Section 132 of the Act was undertaken by the officers of the revenue at the residence and office premises of the appellants/assessees group. During the course of search, gold jewellery, diamond jewellery and silver articles were found in the possession of the appellants/assessees. (b) On 12 October 1996, Paras Shah (one of the appellants herein) made a statement on oath under Section 132(4) of the Act in response to Question 21 as under: "Q. 21 During the search total gold and diamond jewellery found 2153 gms. and diamonds valuing at Rs. 7,16,930/ - and for Rs. 83,075/ - on person. Kindly explain to whom these items belong and the source of acquisition with relevant documentary evidences. Ans. Myself and my family members were Wealth Tax payees and till the old limit and as per the Wealth Tax Valuation Reports of total gold jewellery of 2064 gms. was already declared in the relevant years. My mother expired in 1990 had a jewellery as per a Valuation report dated 31.3.88, had a jewellery of Rs. 2,34,070/ - which is given to the lady members. However, I have made valuation of jewellery belongings to all my family members which is in total 34.69.5 gms. as in July 1996. Considering the gap for which I am not in a position to produce bills, etc. and declared Rs. 1 lakhs on a/c, this gap. Regd. the diamond jewellery one to two items are tallying regd. the rest I make a request that jewellery on person may not be seized, value of which is in total Rs. 1,50,195/ - (Rs. One Lakh Fifty Thousand One Hundred Ninety Five), I voluntarily declare as my income in addition to the balance Rs. 4,66,560/ - (Rs. Four Lakh Sixty Six Thousand Five Hundred Sixty). In the nut shell on account of jewellery my total disclosure is Rs. 7,16,750/ - (Rs. Seven Lakhs Sixteen Thousand Seven Hundred and Fifty)." Thus the appellants offered/declared as a group the total amount of Rs. 7.66 lacs (being undisclosed gold jewellery) and Rs. 4.66 lacs (being undisclosed diamond jewellery) to tax. (c) On 14 November 1996, on opening of the bank locker, jewellery valued at Rs. 4.60 lacs was found. At that time, Mr. Paras Shah made a statement on oath under Section 132(4) of the Act and in response to Question 2 replied as under: "Q.2 During the course Bank Locker Search operation of lockers No. & L 3236, gold jewellery valued as per Valuation Report of M/s. S.C. Kapoor dated 14.11.96 at Rs. 4,63,280/ - was found. Please explain the nature of possession and the source of acquisition of the said jewellery items? Ans. These items which are mostly ladies items have been acquired by me and my family members within the last four -five years. Some of the items might have been received by gifts also. However, since we do not have any supporting documentary evidence for the same in our possession, I hereby offer the value thereof approp., i.e. Rs. 4,60,000/ - (Rs. Four Lakhs Sixty Thousand Only), as my additional income u/s. 132(4) of the Act I shall be paying the taxes thereon, in time as per law." Thus the aforesaid jewellery was also offered to tax as the appellant did not have any supporting documentary evidence to establish its purchase. (d) Thereafter on 30 November 1996, Mr. Paras Shah addressed a communication to the Additional Director of Income Tax seeking to explain the jewellery found in the possession of the group on 11 October 1996 and 14 November 1996 as under: "This copy of reports were handed over to ADIT Mr. Sanjay Mishra and Department Valuer Mr. Suresh Kapoor at the time of search on 11th Oct. 1996 at my residence. This we have already informed you earlier also. The valuation was done as at 31st March 1996, for filling Wealth -tax return on or before the due date. All our jewellery seized by department percent matches with this valuation reports.";