B.M. Kothari, Accountant Member - (1.) THE assessee derives income from salary as Managing Director of M/s. Ugomi Private Limited, income from property and other sources. Proceedings of search under Section 132 of the Income-tax Act, 1961 was carried out at the residence of the appellant on 16-1-1982. THE only point of dispute in this appeal relates to an addition of Rs. 46,232 made by the ITO on account of difference in the value of certain diamond ornaments found during the course of search. THE other ground taken by the assessee relates to invalidity of interest charged under Sections 139(8) and 215 of the Income-tax Act.
(2.) During the course of search, diamond ornaments mentioned at Sr. Nos. 40 to 45 of the Annexure-A to the Panchnama dated 21-1-1982 were found, which was valued by the Valuer appointed by the Income-tax department at an aggregate sum of Rs. 75,300. Para 10 of the order passed under Section 132(5) dated 15-4-1982 reveals that Shri Gautam produced at the time of search a bill of M/s. V.J. Jewellers for Rs. 22,568 in respect of purchase of 17.35 carats of diamonds and the bill for labour charges for Rs. 6,500 to explain the sources of acquiring the aforesaid items of diamond ornaments valued by the department at an aggregate value of Rs. 75,300. The total value of the diamond jewellery in question according to the assessee works out to Rs. 29,068 (Rs. 22,568 + Rs. 6,500) as against the value of Rs. 75,300 determined by the department's Valuer. The difference of Rs. 46,232 was added by the ITO by rejecting the aforesaid explanation submitted by the assessee. The CIT(A) confirmed the order passed by the ITO in this regard. In the ground No. 1 of assessee's appeal submitted before the Tribunal, the amount of addition appears to have wrongly been mentioned at Rs. 68,019 as against the addition of only Rs. 46,232 made by the ITO. However, in ground No. 5 which summarises the assessee's prayer for grant of relief, the amount of addition required to be deleted has been stated at Rs. 46,232.
(3.) BEFORE us, the learned counsel for the assessee contended that during the contemporary period of search, the aforesaid bill for purchase of diamond and bill for making charges of the diamond ornaments were submitted before the authorised Officers, on the basis of which the diamond jewellery in question was released. The assessee also wrote a letter on 18-1-1982 to the Officer in charge of search operations under Section 132 requesting that the assessee may be allowed to keep his Valuer also present at the time of valuation, so that the Departmental Valuer may not value the ornaments on high side. The assessee did not receive any response from the said authority and was not allowed to have the benefit of presence of his Valuer. He further invited our attention towards his letter dated 12-4-1982 in which again a reference of the aforesaid letter submitted to the DDI was given. It was further contended that the value adopted by the Departmental Valuer is extremely high and cannot be accepted unless the assessee is given an opportunity to cross-examine the Departmental Valuer. The assessee submitted that the aforesaid diamond ornaments are fully verifiable from the purchase bills obtained from M/s. V J. Jewellers coupled with the bill for labour charges. The payment was made to M/s. V.J. Jewellers by cheques. There is no evidence that the assessee paid higher price that the one shown in the purchase bill and the bill for labour charges. He submitted that this matter is just like invoking the provisions of Section 52(2) without any basis. He also relied upon the judgment of Hon'ble Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 (SC). It was further contended that the department has not discharged its burden of proving that the value stated in the purchase bill is not true and correct. In the absence of any material or evidence on records, the addition made by the ITO ought to have been deleted by the learned CIT(A). He also relied upon the decision of ITAT, Ahmedabad in the case of Babyland Hostel v. ITO [1988] 31 TTJ (Ahd.) 136 and decision of ITAT Delhi Bench in the case of Mohinder Kumar Bhatia v. ITO [1986] 16 ITD 627.;