BHURAT SUNILKUMAR Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) Though matter is listed for Admission, by consent of learned Advocates appearing for parties, we have heard the appeal on merits by formulating the following substantial questions of law:

(2.) Appellants voluntarily disclosed gold and diamond jewellery under Section 65(1) of VDIS 1997, which was accompanied by a valuation report in respect of declared items, reflecting itemwise weight with other particulars. The declaration as submitted by the appellants came to be accepted by the Commissioner of Income Tax and a Certificate under Section 68(2) of VDIS 1997 came to be issued.

(3.) Appellants filed income tax returns for Assessment Year-1998-99 under Section 139 of the Income Tax Act, 1961 (for short 'IT Act') by declaring negative income from sale of above said VDIS declared gold and diamond jewellery items, which gold had been converted into bullion after smelting and separating the diamonds through a goldsmith - M/s. Balaji Refinery, represented by its Proprietor Sri. Chaganlal. During the scrutiny assessment, affidavit of the goldsmith was also produced by the assessees to prove the fact of smelting. Valuation reports which was accompanying the declaration and which had been accepted by the Commissioner of Income Tax, were also produced in the said assessment proceedings. Original purchase invoices for sale of above VDIS in favour of M/s. Shree Mahalakshmi Jewellers and M/s. Sheetal Exports were also produced. However, assessing officer rejected the capital gains income from sale of VDIS declared items and entire sale consideration of the said items came to be charged to tax under Section 68 of the IT Act by assessment order dated 26.03.2001. Appeal filed by the assessee before Commissioner of Income Tax as well as appeal preferred before the Income Tax Appellate Tribunal being aggrieved by the rejection of appeal by CIT(A), also did not yield any result and both the appeals came to be dismissed. Hence, this appeal by the assessees.