THE issue before the Bench is - Whether if during search operation in assessee's premises, a locker key of another assessee was seized, the market value of jewellery stored in such locker is to be added in the income of searched assessee as deemed income. YES is the answer.
Facts of the case
The assessee is an individual. On 19 March 1986, a search action u/s 132 was carried out by the revenue in respect of the appellant's premises. During the course of the search, a locker key belonging to one Mrs. Sujata Malani was seized, who at the relevant time was staying with the assessee. On 28 July 1986, the locker of Mrs. Malani (the key to which was seized on 20 March 1986) was opened by the revenue. On opening the locker, jewellery valued in the aggregate of Rs.2.53 lakh was found therein. In the course of proceedings u/s 132(5), the revenue accepted the explanation of Mrs. Malani that jewellery valued at Rs2.41 lakh out of Rs.2.53 lakh belonged to the assessee. AO had not accepted the assessee's explanation of source of the jewellery found in Mrs. Malani's locker as being a gift received from Mrs. Shashikala L. Dhoot. Consequently, AO added the cost of the jewellery which as deemed income u/s 69A. On appeal, CIT(A) did not interferes with the order of AO. On further appeal, Tribunal dismissed the assessee's appeal and had not accepted the contention that as the locker key belonging to Mrs. Malani had been seized on 20 March 1986, the addition of deemed income u/s 69A to be made on account of jewellery found on opening of the locker on 28 July 1986 can only be in the AY 1986-87 and not for the AY 1987-88. Tribunal further held that in terms of Section 69A, the financial year in which an assessee was found to be owner of any jewellery and for which no sufficient explanation was offered, then the value of such jewellery can be deemed to be income of the assessee in such financial year in which the jewellery was found.
++ the locker key which was seized by the department during the course of the search on 20 March 1986, did not belong to the appellant. Thus on that date the quantum of jewellery in the locker of Mrs. Malani which belonged to the appellant could not be ascertained/forecast. The normal presumption would be the jewellery in the locker of Mrs. Malani would belong to her and not to another person. Therefore, it is only on opening of the locker of Mrs. Malani on 28 July 1986, did the revenue find the jewellery and also that some part thereof, belonged to the appellant as claimed by the appellant and as also declared by Mrs. Malani in her assessment proceedings as recorded in the order of her Assessing Officer at Kolkata on 25 November 1986. Thus it is only in the previous year relevant to the Assessment Year 1987-88 i.e. financial year 1 April 1986 to 31 March 1987 that the appellant was found to be the owner of the jewellery in the locker belonging to Mrs. Malani. In view of the above, so far as the first question is concerned, we find no infirmity in the impugned order of the Tribunal and the same is answered in the affirmative in favour of the revenue and against the assessee;
++ at no point of time, the jewellery found in the locker was sourced from the cash received by the appellant from M/s Industrial Meters Ltd. The case of the appellant has always been the jewellery found in the locker was a gift received by him on 27 January 1986 from his aunt. This theory of gift being received from his aunt was not accepted by the authorities under the Act including the Tribunal. Thus the deemed income being the cost of jewellery found in the locker of Mr. Malani being assessed to tax in Assessment Year 1987-88 cannot be found fault with. In the circumstances, the second question as framed has to be answered in negative i.e. in favour of the revenue and against the appellant-assessee. Accordingly the appeal is dismissed.