Shri V.S. Gaitonde, Accountant Member.

1. These appeals have been filed by the assessee and the revenue respectively and arise out of the order of the CIT(A) Pune dt. 14-3-1986. As common points are involved the appeals were heard together and are disposed by a common order.

2. The facts may briefly be stated as below. Shri Abbasbhai Lokhandwala is being assessed to incomes and wealths for the last several years. The family history was given to theO by the letter dt. 30-4-1984 (page 7 of the compilation). The assessee, a resident of United Apartments, East Street, Pune has a family consisting of his wife (Mehfuzabai - 48 years), son (Juzer - 26 years), daughter-in-law - Maria (20 years) and daughter (Rashida - 20 years). Shri, Abbasbhai was employed by a jeweller in Bombay. In about 1955 he came to Poona and is engaged in the business of bringing goods of glass, plywood, etc., initially for a firm called Nazerally Abdulbusain & Sons. Later on, the activities extended to the firm Ws A.E. Lokhandwala & Sons and reflections. He was married in 1958 and Smt. Mehfuzabai is also assessed separately for income-tax and wealth-tax showing income from packagings, interest, dividend, etc. Shri Juzer though only a student of law at present was stated to have been helping his father and mother in their businesses and drawing remuneration, commission, etc., from them. Shri Abbasbhai and his wife have been declaring their returns on income net after deduction of outgoing on account of payment to Juzer. Neither Shri Abbasbhai nor his wife have ever maintained any books of account but they have data supporting their return version for the various years. They had disclosed under the 1975 VD. Scheme regarding some jewellery. They have also been declaring certain jewellery in their wealth-tax assessment. Whatever jewellery has been sold, was offered for capital gains tax.

3. Action u/s 132 on the premises occupied by the assessee led to discovery of jewellery in excess of that accounted for in the wealth-tax returns. Shri Abbasbhai was called upon to explain the origin of funds which enabled him to acquire such jewellery. The total jewellery found had a gold content of 1121.5 grams beyond that declared in the wealth-tax returns. When asked to explain the origin of the funds the assessee reconciled the position as below:

Explanation regarding voluntary disclosure and receipts of Maria was accepted after making certain adjustments; ultimately theO arrived at a figure of 610.4 grams the acquisition of which remained unexplained. The assessee’s explanation that these ornaments were acquired from time to time out of accounted resources was rejected. The explanation of the assessee was that since there were no books of account incomes were estimated. With these estimated incomes themselves as a starting point the cash account was prepared to show that a sum of Rs. 86,000 was available in the family over a period of years from 1-4-1972 with initial cash of Rs. 2,000. The ITO did not give much credence to this version. Actually, the assessee’s explanation regarding the destination of the sum of Rs. 86,000 was that only about Rs. 40,000 were utilised for acquiring the ornaments and that the remaining 46,000 were utilised by acquiring some other investments like furniture, etc., which has been accepted by the WTO. ITO added Rs. 1,19,925 u/s 69A being the value of 610.40 grams (sic).

4. Aggrieved by the decision of theO, the assessee filed an appeal before the CIT(A) who confirmed the same in the case of Abbasbhai. As theO had also made a protective assessment in the case of Smt. Mehfuzabai the CIT(A) has cancelled the same. Against the latter the revenue has come in appeal.

5. On behalf of Shri Abbasbhai Shri Sathe took us through the various facts which we have mentioned above. Shri Sathe took us through the cash account now prepared and submitted that all the figures therein are those which are already reflected in the income-tax and wealth-tax returns of the two parties above, the only exception being the estimate of household expenses. Shri Sathe agreed that as far as payment of salary to Juzer is concerned there was no specific mention in the income-tax returns but the corresponding liability on account of the amounts payable to Juzer were shown in the wealth-tax returns and have also been accepted by the authorities below. The entire issue thus centres round the question whether the cash account as prepared by the assessee could be given any credence beyond that already given by the authorities below. Shri Sathe pointed out that even at the time of search the daughter-in-law Maria has stated clearly that the jewellery belonged not to Abbasbhai alone but also Smt. Mehfuzabai. Unfortunately, neither Abbasbhai nor Mehfuzabai were present at the time of search but they had reiterated their contention to theO in the letters mentioned earlier. It is true that in letter dt. 7-5-1984 the assessee’s representative did say that going on panchnama basis is redundant and that only overall picture should be taken. This does not, however, mean that Abbasbhai accepted that all the jewellery not reflected in the wealth-tax return owe their origin to the undisclosed income of Abbasbhai alone.

6. Winding up his arguments, Shri Sathe submitted that a pragmatic approach is necessary in cases of this type taking into consideration the smallness of the amount involved in terms of quantity of gold which on account of high prices of gold have saddled the assessee with very high tax liability. The peculiar facts in which the assessee been put disabling him from producing proper evidence have to be taken note of. It is well known that one does not always keep vouchers for all the purchases made. The assessee did make a positive statement that all the purchases were made from Santosh Pedhi of Centre Street. Unfortunately, on account of change of management and death of original partner with whom Shri Abbasbhai was having regular contacts it has not been possible to produce evidence regarding the actual dates of purchase of the various pieces of ornaments. Further, when Shri Abbasbhai had filed an affidavit explaining the above version it would not be proper to reject the same without even going through the formality of cross-examination. Thus, the cash-flow statement and the explanation emanating therefrom deserve to be accepted.

7. Without prejudice to the above contentions, Shri Sathe submitted that a specific point was raised before the CIT(A) questioning the propriety of saddling Shri Abbasbhai alone with full responsibility for explaining the entire jewellery. It is on record that the jewellery was found in two cupboards in a room which was occupied both by Abbasbhai and Mehfuzabai. The description of the ornament as per panchnama would indicate that majority of the ornaments are those generally worn by ladies. If there is any unexplained jewellery at all the same could be considered at least proportionately in the hands of Mehfuzabai.

8. In reply, the DR submitted that what we have to see is the applicability of sec. 69-A. There is no dispute that the assessee was found in possession of jewellery which was not reflected in the wealth-tax returns. Shri Roy submitted that every explanation given by the assessee has been considered sympathetically. The quantity for which the explanation is rejected is worked as below:

A deduction has been given for 9 grams in excess of 10 grams admitted by Abbasbhai linked with disclosure figures. 49.10 grams were explained with reference to actual vouchers of earlier period. The net figure is thus 668.50 - 59.10 =610.40 gm.

Shri Roy further contended that the W.T. returns of earlier years are sacrosanct and it cannot be said that the assessee had omitted showing the items of jewellery in respective wealth-tax returns although he did in fact have them. The burden in such cases is heavily on the assessee and it cannot be said to have been discharged by merely filing an affidavit. Relying on Sri Krishna v. CIT [1983] 142 ITR 618 (All.), Shri Roy submitted that such self-serving affidavits have little evidential value. The explanation has therefore, been rightly rejected. Coming to the cash-flow statement, Shri Roy submitted that this statement too has little evidential value. Firstly it was prepared in 1984 with effect from 1-4-1972. It may be that some of the figures derive support from the corresponding wealth-tax returns filed long before the search but from this alone, it cannot be said that the cash-flow statement deserves any credence. In these cash-flow statements the figure of withdrawal itself is a balancing figure arrived at to tally the cash balance at the end of a particular year with that shown in the corresponding wealth-tax return. These withdrawals cannot therefore, be said to be available in cash. Again, there is no reason why the assessee should make any withdrawals in excess of his legitimate requirements and hold the same in cash so as to be available for acquiring jewellery prior to the commencement of accounting period. The whole exercise of preparing cash-flow statement smacks of cooked up evidence to support an otherwise unsupportable case. Actually, theO has been more than liberal in accepting the destination of the surplus, if any, with items other than the jewellery to the extent of nearly Rs. 46,000. Lastly, the figure of Rs. 40,000 arrived at by the assessee as available for buying jewellery from time to time does not cover all the items because even the dates of alleged purchases on prevailing rates of gold on these dates are not available.

9. Regarding the alleged ground before the CIT(A) that Shri Abbasbhai alone should not be saddled with full responsibility, Shri Roy submitted that there was no such specific ground in the grounds of appeal before the CIT(A). The assessee should not therefore, be permitted to make out a new case at this late stage in particular, Shri Roy referred to the letter dt. 7-5-1984 (page 15 of the compilation No. 3) and submitted that no portion of unexplained jewellery can be identified with the undisclosed income of Smt. Mehfuzabai.

10. In his rejoinder, Shri Sathe submitted that the ground regarding wrong fixation of full liability on Abbasbhai was taken orally before the CIT(A). It is however, admitted that there is no discussion in the CIT(A)’s order. Shri Sathe submitted that as the CIT(A) was hearing both the appeals together, in the interest of justice, the CIT(A) should himself have examined the issue. One can understand fixation of liability wholly on Abbasbhai if Smt. Mehfuzabai had no business activity. From her returns, it is quite clear that she was holding substantial business income and that she was disclosing the same long before the raid took place.

11. On an examination of the issues, we hold that the explanation has been rightly rejected by the authorities below as far as the total jewellery of 610.4 grams is concerned. As rightly pointed out by the DR sec. 69-A comes into full play in this case. Both Shri Abbasbhai and Smt. Mehfuzabai have been assessed regularly to income-tax and wealth-tax, and the ornaments found at the time of search to the extent quantified by theO cannot be said to have been explained with reference to the past available records or from alleged gifts. There is absolutely no evidence on the point. We also find considerable force in the argument of Shri Roy that the cash-flow statement now prepared does not deserve as much credence as the assessee’s representative would like it to have. If this deserves any credence at all the same has already been done by the authorities below when they allowed the assessee to identify the other investments like scooter, etc., to the extent of Rs. 46,000. It is for the assessee to show the exact mode of acquisition of the impugned jewellery. As the parties having failed, we hold that the addition of total sum in the two cases together Rs. 1,19,925 is justified.

12. We do However, find considerable force in the argument of Shri Sathe that since the ornaments were found in a room occupied by Abbasbhai and Mehfuzabai and since the description of the ornaments does give an indication of possible acquisition by Mehfuzabai also from the undisclosed income, it would not be proper to saddle Shri Abbasbhai alone with full responsibility. There is doubtless an element of guess work involved in such matters. But circumstantial evidence is in favour of allocation. In our opinion, it would be reasonable to divide the sum added by theO in the case of Abbasbhai in the proportion of 2: 1. The latter part may be added in the case of Mehfuzabai. In deciding such issues, one cannot go by technicalities. The letter of the assessee dt. 7-5-1984 to theO cannot be taken as an authority for the proposition that Shri Abbasbhai had taken upon himself whole responsibility for explaining the entire unexplained jewellery. The offer was made in this letter without prejudice. Besides, when the CIT(A) was hearing both the appeals together and one of the appeals was a protective assessment, the CIT(A) should have examined this aspect also. It is not however, necessary to send the matter back to the CIT(A). To this extent, both the assessee’s and the department’s appeal are treated as partly allowed as far as this ground is concerned.

13. The second point in appeal is regarding the loss claimed in respect of partnership in the name of Printo Board Production. Shri Sathe submitted that this loss is genuine and has been actually suffered by Shri Abbasbhai. Shri Sathe could not however, give sufficient details as to the actual years when such losses were incurred and were actually suffered by the assessee. After looking into the material on record we hold that no case has been made to warrant an interference with the conclusion of the authorities below. Accordingly this ground of appeal raised by Abbasbhai fails.

14. The third ground of appeal in the Abbasbhai’s case is regarding the loss on account of chit fund. Shri Sathe took us through the various statements given by the assessee from time to time about the contributions to chit fund and explained that this would show that the contributions made represented the actual business ventures. Although no profit or loss was shown in the past from the various statements it should be clear that the loss has been incurred and should be allowed. The claim would fall u/s 28. Reliance was also placed on CIT v. Kovur Textiles & Co. [1982] 136 ITR 61 (AP) [LQ/TelHC/1980/10] but this is clearly distinguishable, in that, it was a case of interest assessable under other sources. On facts also, Shri Sathe could not tell us how exactly the present accounting period has been chosen for considering the amounts as having become irrecoverable. The Sudarshan Chit Fund went in liquidation on 18-11-1991. There have been appeals and litigation but so far nothing definite can be said.

15. In reply, the DR invited our attention to the orders of the authorities below the contents of which we have already summarised above.

16. On an examination of the various facts, we hold that the authorities below were justified in rejecting the claim. This ground of appeal therefore, fails.

17. In the result, both the appeals are partly allowed.

Per Shri TA. Bukte, Judicial Member - I have carefully gone through the order passed by the learned Accountant Member. Though I fully agree with his conclusions in respect of other grounds of appeal, but as far as ground regarding addition of Rs. 1, 19,925 is concerned, I do not agree with his conclusions arrived at in para 11 of his order. I give my own reasons as follows.

2. There is no doubt that the assessee and his wife never maintained books of account. On the basis of the data they have filed the Income-tax returns and Wealth- tax returns. The assessee and his wife are being assessed to both Income-tax and Wealth-tax since long. Both of them have disclosed gold jewellery in their wealth-tax returns as well as under the 1975 Voluntary Disclosure Scheme. When the search was conducted in their premises, the assessee and his wife were not found present and some more jewellery were found at the time of search over and above the jewellery declared in the Wealth-tax returns and the voluntary disclosure scheme. The assessee was required to explain the acquisition of such jewellery of 1121.5 grams.

3. The assessee furnished the explanation that 10 grams of gold was left over from the voluntary disclosure of the assessee himself, 102.90 grains of gold jewellery was left over from voluntary disclosure of wife Mehfuzabai, 150 grams was left over by daughter-in-law, 198 grams claimed to have been received from mother before death in January 1984 and acquired during 1958 to 1972 out of common funds.

4. The ITO accepted the explanation in respect of the jewellery of the assessee’s daughter-in-law Smt. Maria. He came to the conclusion that gold jewellery of 610.4 grams had still remained to be explained. The assessee explained that these ornaments were acquired from time to time from the accounted sources. Incomes were estimated although no books of account were maintained. The assessee prepared cash-flow statement showing balance of Rs. 86,000 (for the correctness, the figure is mentioned at Rs. 86,660). Balance of Rs. 46,660 was utilised for purchasing furniture, scooter, and certificates from Unit Trust of India etc. This explanation was found unsatisfactory by theO. The ITO valued the gold jewellery of 610.4 grams at Rs. 1,19,925 and added the same to the income of the assessee u/s 69A of the Income-tax Act, 1961 as on the date of search.

5. When the dispute was taken before the CIT(A), the CIT(A) confirmed the additions made to the assessee’s income and cancelled the protective assessment made on the assessee’s wife Mrs. Mehfuzabai. The learned advocate Shri K.A. Sathe for the assessee has explained that all the figures as shown in cash-flow statement were reflected in the Income Tax and Wealth Tax returns of the assessee and wife. He also explained that the lower authorities have accepted the liabilities shown in the Wealth Tax returns as salary payable to the assessee’s son Juzer, though not shown in the Income Tax Return. According to him, the only point for consideration was whether cash-flow statement was acceptable or not. Shri Sathe has stressed upon the statement of the daughter-in-law Smt. Maria who stated that at the time of search the jewellery found belongs to the assessee’s wife also. The assessee never agreed that all the jewellery not disclosed in the Wealth Tax return belonged to him alone. Shri Sathe also urged to take a pragmatic approach because of spiralling prices of gold ornaments and the assessee need not be put into difficulties and should not be saddled with high tax liabilities. He also urged to take judicial note of the assessee’s peculiar position disabling him from producing proper evidence. According to Shri Sathe, it is needless to say that one does not always keep vouchers for all the purchases made. It would be difficult for every one to produce evidence in respect of every item of gold ornaments or jewellery found in his house. He urged that this common knowledge requires to be taken into consideration and it need not be brushed aside easily. Similarly, the assessee also cannot keep vouchers of all the gold ornaments intact for a longer period, but he has fairly stated that all the purchases were made from Santosh Pedhi of Centre Street. The assessee has filed his affidavit in this respect. He was not cross-examined. Therefore, Shri Sathe urged that rejection of the assessee’s explanation by theO and the CIT(A) is not proper and their orders require interference.

6. The learned departmental representative, Shri A. Roy submitted that possession of jewellery is admitted and the same was not reflected in the wealth-tax returns. He has submitted that theO gave deduction for 9 grams in excess of 10 grams admitted by Abbasbhai linked with disclosure figures 49.10 grams were explained with reference to actual vouchers for earlier period. Thus total deduction of 59.10 grams is allowed from 668.50 grams, leaving balance of 610.40 gms. According to the learned departmental representative, the wealth-tax returns must be given credit and should not be discarded. He has contended that the assessee has not discharged burden cast upon him. He also urged that what is required to see is applicability of sec. 69A. No reliance should be placed on the affidavit filed by the assessee in view of the Wealth Tax returns on record. He has tried to justify the rejection of the explanation given by the assessee. So far as the cash flow statement is concerned, Shri Roy has tried to contend that it has little evidentiary value. According to him, it was prepared in 1984 with effect from 1-4-1972 and the figures derive support from the wealth-tax returns filed long before the search. The figure of withdrawal is a balancing figure in the cash flow statement. According to him, no cash was available with the assessee. There was no reason for him to make withdrawals in excess for legitimate requirements. Preparation of cash flow statement, according to him, is cooked up one and it has no creditworthiness. According to him, a sum of Rs. 40,000 does not cover purchases of all the gold ornaments from time to time.

7. Shri Roy submitted that so far as the assessment of the value of gold jewellery is concerned in the hands of the assessee’s wife in equal share, it cannot be done firstly because jewellery was found in one room and secondly, jewellery declared by the assessee’s wife is not included. According to him, the entire liability can be fixed on the assessee only.

8. Smt. Mehfuzabai is also filing Income-tax and Wealth Tax Returns. She has been assessed by the same ITO. She was holding substantial business income. Therefore, Shri Sathe urged to assess this in the hands of the assessee’s wife equally.

9. What is to be considered is whether the explanation given by the assessee is just, proper and convincing. The affidavits are on record. Cash flow statement prepared cannot be discarded because it is prepared from 1-4-1972. It also cannot be discarded because it reflects the figures from the wealth-tax returns. If the affidavits coupled with cash flow statement is accepted, then the entire addition as made by the lower authorities requires to be deleted from the hands of the assessee. It would not be correct to say that cash flow statement is not credit- worthy. Much of acquisition of jewellery is fully explained in the affidavits and explanation and there is no doubt why it should not be accepted. It is true that there is no direct evidence, but at the same time, it would not be proper to shut our eyes to the reality of the situation that it is impossible for any person to explain every item with proper evidence purchased in past several years. I do not find substance in the department’s allegations also except being too rigid on technical grounds.

10. By taking the rates of gold during the relevant years, there is every possibility that the assessee might have purchased gold from the cash balance of Rs. 86,660 and there is nothing wrong to accept the affidavit and the explanation. In my opinion, there is much substance which requires to be accepted. After taking into consideration the facts on record and the arguments advanced on behalf of both, I am of the opinion that the addition made by theO and confirmed by the CIT(A) does not appear proper to the extent of Rs. 1,19,925 on account of value of gold jewellery found in the search over and above gold disclosed in the Wealth Tax returns and that requires to be deleted. I direct theO to delete the same.

11. In the result, assessee succeeds and appeal on this ground is allowed.

Reference under sec. 255(4) of the Income Tax Act, 1961

The following difference of opinion is referred to the President, Income Tax Appellate Tribunal under section 255(4) of the Income Tax Act, 1961:

"Whether, on the facts and in the circumstances of the case, the addition of Rs. 79,950 being the value of gold jewellery of 406.9 grams is justified "

Reference under sec. 255(4) of the Income Tax Act, 1961:

The following difference of opinion is referred to the President, Income Tax Appellate Tribunal, under sec. 255(4) of the Income Tax Act, 1961:

"Whether, on the facts and in the circumstances of the case, the addition of Rs. 39,975 being the value of gold jewellery of 203.5 grams is justified"

ORDER (OPEN COURT DICTATION)

Per Shri George Cheriyan, Senior Vice President - ITA No. 682/PN/1986 is an appeal for the assessmentyear 1984-85 filed by Shri Abbasbhai E. Lokhandwala and ITA No. 907/PN/1986 is an appeal for the same assessmentyear filed by the Revenue in the case of the wife Smt. M.A. Lokhandwala.

2. To put the facts very briefly, there was a search conducted by the Department on 21-3-1984 at the residence of Shri Abbasbhai E. Lokhandwala, hereinafter referred to as "AEL". In the bedroom occupied by "AEL" and his wife Smt. M.A. Lokhandwala, hereinafter referred to as "MAL", certain jewellery was found. Both the husband and the wife were out of station on 21-3-1984 at the time of search. Those who were present included the son Juzer, the daughter-in-law Maria and the daughter Rashida. Eventually, the Income-tax Officer went into the question as to whether the source of the jewellery which was found during the search was explained or not. For this purpose, he went into the wealth-tax returns filed by "AEL" and "MAL" and other statements given by them and others about the receipt of gold jewellery by the daughter-in-law etc. The conclusion arrived at by theO was that out of 1121 gms. of jewellery found, there was adequate explanation to the extent of 511 gins. and the investment in the balance of 610 gms. was unexplained. At the value of Rs. 1,950 per 10 grams, the price came to Rs. 1,19,925. This amount was included in the hands of "AEU and also on a protective basis in the hands of "MAL". The reasoned assessment order is in the case of "MAL".

3. The matter was taken up in appeal to the CIT(A) and the Commissioner (Appeals) upheld the assessment in the case of "AEL" but the assessment being protective in the case of "MAL", he cancelled the same. "AEL" appealed to the Tribunal and the Revenue appealed against the cancellation of the protective assessment in the case of "MAL".

4. When the Tribunal came to bear the case, the learned Accountant Member was of the view that the source of acquisition of the jewellery was not established and he held, therefore, that the value thereof was taxable. However, he considered that it would be equitable to make an apportionment in the ratio of 2:1 and, therefore, 2/3rd of the value, i.e., Rs. 79,950 was held to be taxable in the hands of "AEL" representing the value of 406.9 gms. of jewellery and the balance amount of Rs. 39,975 representing the value of gold jewellery of 203.5 gms. was held to be taxable in the hands of "MAL".

5. The learned Judicial Member considered the contentions of the assessee which have been dealt with elaborately by the learned Accountant Member and he was of the view that there was force in the contention that the jewellery might have been acquired over a period of years and he virtually accepted the contention that no jewellery was acquired in the period 1-4-1983 to 31-3-1984 which is the previous year relevant to the assessmentyear 1984-85. He, therefore, directed deletion of the entire amount of Rs. 1,19,925 as far as this assessmentyear is concerned.

6. Since there was a difference of opinion in the two appeals, the following point of difference was referred to me in the case of "AEL":—

"Whether, on the facts and in the circumstances of the case, the addition of Rs. 79,950 being the value of gold jewellery of 406.9 grams is justified"

and the following point of difference in the case of "MAL":—

"Whether, on the facts and in the circumstances of the case, the addition of Rs. 39,975 being the value of gold jewellery of 203.5 grams is justified"

7. I have had the benefit of hearing the learned counsel for the assessee and the learned Departmental Representative who took me through the mass of evidence which have been dealt with in the orders of the learned Members. In substance, there was a voluntary disclosure made in 1975 by both "AEL" and "MAL" when certain jewellery was disclosed. This was stated to have been acquired prior to 1958. When the jewellery now under consideration was not shown in the Disclosure in 1975, the contention of the Revenue was that at least in 1975 it did not exist and according to the learned Departmental Representative the case clearly falls under the provisions of sec. 69A which reads as under:—

"69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."

He stated that merely because a sort of cash-flow statement was prepared by the assessees to show that they could have been in possession of funds to the extent of about Rs. 86,000 on 31-3-1983 and had pointed to the disposal of those funds as relating to the acquisition of jewellery over the years valued at the time of acquisition at Rs. 40,000 and to the acquisition of some other assets like Units of the Unit Trust of India, some two wheelers etc., it did not follow that any inference could be drawn that the jewellery was not purchased in the accounting period 1-4-1983 to 31-3-1984. It was emphasised by the learned Departmental Representative that the onus was on the assessee to establish this and this has not been discharged even considering the affidavits filed by "AEL" and "MAL".

8. The learned counsel for the assessee, however, has brought on record certain assessment orders framed subsequent to these proceedings. These assessment orders are in the re-opened wealth-tax proceedings of both "AEL" and "MAL". These wealth-tax assessments were re-opened under the provisions of sec. 17(1)(a) of the WT Act.

9. For the assessmentyear 1983-84, i.e., the valuation date 31-3-1983, in the re- opened assessment made on 30-3-1990 in the case of "AEL", there is the following observation:—

"In the Income-tax assessment for AssessmentYear 1984-85 the investment in jewellery weighing 610,500 grams valued at Rs. 1,19,925 was taxed in the assessee’s hands. Value of jewellery is now shown at Rs. 70,000. The difference is added to the assessee’s wealth on the same lines as per the Wealth-tax assessment for AssessmentYear 1984-85."

In the case of "MAL" on protective basis also, the addition was made as under:—

"In the Income-tax assessment for AssessmentYear 1984-85 the investment in jewellery weighing 610.50 grams valued at Rs. 1,19,925 was taxed in the hands of the assessee as a protective measure. Value of jewellery is now shown at Rs. 54,840. The difference is added to the assessee’s wealth as a protective measure on the same lines as per the wealth-tax assessment for AssessmentYear 1984-85."

The learned counsel for the assessee submitted that these additions made in the assessmentyear 1983-84 could have been made only if the, jewellery was in existence on 31-3-1983. Otherwise the question of making the additions for the assessmentyear 1983-84 would not arise. This being the position, he submitted the assessee had clearly discharged the onus of showing that the jewellery existed prior to 1-4-1983. As long as this was established under the provisions of sec. 69A, no addition could be made in the assessmentyear 1984-85 for which the first day of the previous year was 1-4-1984. He also went on to submit that on a similar basis even for the assessmentyear 1980-81 additions had been made in the re-opened wealth-tax assessments, which showed that the jewellery was, in existence much earlier.

10. The learned counsel stated that as far as the additions to the net wealth were concerned in the revised assessments the only challenge by the assessee in the appeals which were pending was against inclusion of the value of the entire jewellery in the hands of "AEL" and "MAW. The assessee was not disputing the existence of the jewellery on 31-3-1983 which formed the basis of the inclusion of the value of the assets in the revised wealth-tax assessments.

11. In view of the aforesaid wealth-tax assessments relied on by the learned counsel for the assessee, the point of difference gets dissolved. The jewellery is taken to have been in existence on 31-3-1983. If that be so, then no addition can be made in the assessmentyear 1984-85 for jewellery having been acquired out of undisclosed income. It, therefore, follows that on the facts and in the circumstances of the case, I have to agree with the Judicial Member that the addition of Rs. 79,950 being the value of gold jewellery of 406.9 grams was not justified in the assessment of "AEL" and the addition of Rs. 39,975 being the value of gold jewellery of 203.5 grams was not justified in the assessment of "MAL" in so far as the assessmentyear 1984-85 is concerned for which the points of difference have been referred to me.

12. The points of difference are answered accordingly and the case will now go back to the Bench for passing consequential order in accordance with the opinion of the majority.