An appeal is a continuation of assessment proceedings. Assessment proceedings complete when appeal against order of assessment is decided by Tribunal CIT vs. Mayur Foundation (2005) 274 ITR 562(Guj.)

Delhi High Court on conversion of stock in trade to capital asset has held that “The conversion of stock-in-trade into investments would not immediately yield any business income/loss as an Assessee cannot be held to trade with itself [Kikabhai Premchand v. CIT: [1953] 24 ITR 506 (SC)]. In the year in which the asset is sold, difference between the value at which the asset was held as stock-in-trade and the market value on the date of its conversion as investment would have to be treated as business income/loss and the difference between the market value of the asset as on the date of conversion and the value at which it is sold would be in the nature of capital gains.[Para 29] Further the period during which asset held as stock in trade not to be included for computing period of holding u/s 2(42A) Abhinandan Investment Ltd. [2015] 63 taxmann.com 263 (Delhi) NOVEMBER 19, 2015

Recovery—Garnishee proceedings—In order to institute garnishee proceedings there should be a subsisting relationship between the garnishee and the assessee of which the ITO gets information and which could reasonably lead to recovery of arrears—Where the garnishee, in response to garnishee order dt. 18th June, 1959, replied that there was no subsisting contract with the assessee, later on entered into contract with the assessee in March, 1960, and made payment of Rs. 20,000 to the assessee and again on second garnishee notice dt. 27th March, 1961, nothing was due from garnishee to the assessee, the ITO was not justified in demanding the payment of Rs. 20,000 on the ground that the same was made in contravention of earlier order dt. 18th June, 1959-BUDHA PICTURES(Supreme Court)(1967) 65 ITR 0620

Guidelines for seizure of jewellery and ornaments in course of search

Instances of seizure of jewellery of small quantity in course of operations under section 132 have come to the notice of the Board. The question of a common approach to situations where search parties come across items ofjewellery, has been examined by the Board and following guidelines are issued for strict compliance.

   (i)  In the case of a wealth-tax assessee, gold jewellery and ornaments found in excess of the gross weight declared in the wealth-tax return only need be seized.

  (ii)  In the case of a person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms. permarried lady, 250 gms. per unmarried lady and 100 gms per male member of the family need not be seized.

(iii)  The authorised officer may, having regard to the status of the family, and the custom and practices of the community to which the family belongs and other circumstances of the case, decide to exclude a larger quantity of jewellery and ornaments from seizure. This should be reported to the Director of Income-tax/Commissioner authorising the search at the time of furnishing the search report.

(iv)  In all cases, a detailed inventory of the jewellery and ornaments found must be prepared to be used for assessment purposes.

These guidelines may please be brought to the notice of the officers in your region.

Instruction : No. 1916, dated 11-5-1994.

JUDICIAL ANALYSIS

EXPLAINED IN - The above instructions are explained in Harakchand N. Jain v. Asstt. CIT [1998] 61 TTJ (Mum.) 223, with the following observations :

        “(ii)  A perusal of the above circular shows that in case of person not assessed to wealth-tax gold jewellery and ornaments to the extent of 500 gms.per married lady, 250 gms. per unmarried lady and 100 gms. per male member of the family need not be seized. It further provides that having regard to the status of the family and custom and practice of the community to which the family belongs, the officer may exclude a large quantity of jewellery and ornaments and seizure. In the present case, there are four male members in the family, the assessee and his three sons. Similarly, there are two married ladies and one unmarried lady. The learned counsel for the assessee submitted that the jewellery of the assessee and his wife was low and was received by various occasions, like marriage delivery, birth, etc. and the jewellery belonged to the children was also received in similar occasions. On the other hand, the learned Departmental Representative argued that the assessee has not provided any evidence to explain the source of the investment in the jewellery.

         (iii)  On careful consideration of the rival submission we find that the assessee has not placed on record any evidence to prove that the jewellery has been received as gift by him by producing the GT return or any other evidence. However, we are conscious of the fact that in Indian society everyone receives gifts at the time of marriage and other occasions. Therefore, keeping in view the number of family members we are of the view that further rebate of 500 gms. out of the entire jewellery may be treated as explained. The balance 426 gms. of jewellery may be treated as addition under section 69A of the Income-tax Act.”