2013 (12) TMI 1512 - AT - Income Tax

Unexplained investment - addition to gold jewelery - Held that - Assessee has not offered any explanation either before the Assessing Officer or the Commissioner of Income Tax (Appeals) for excess jewellery found in the course of search as to why it should not be treated as unexplained income. The Commissioner of Income Tax (Appeals) also observed that excess jewellery is arrived only after accounting for all jewellery for which explanation has been offered and accepted. In the circumstances, we do not find any infirmity in the orders passed by the Commissioner of Income Tax (Appeals) in confirming the assessments made by the Assessing Officer. - Decided against assessee.

Summary

Issues:
Common issue: Addition of unexplained investment in gold jewellery in assessment year 2009-10.

Analysis:
1. Background: The appeals were filed by the assessees for the assessment year 2009-10, challenging the addition of Rs. 2,32,670 and Rs. 4,70,018 as unexplained investment in gold jewellery in their respective cases.

2. Assessing Officer's Action: The Assessing Officer treated the excess jewellery found during the search in the assessees' cases as unexplained investment and completed the assessments accordingly. The Commissioner of Income Tax (Appeals) upheld the assessments made by the Assessing Officer.

3. Appellant's Argument: The counsel for the assessees pleaded for the deletion of the addition or at least some relief, arguing that there was no valid reason given for treating the excess jewellery as unexplained investment. The appellant emphasized the lack of justification for the addition and requested its deletion in the interest of justice.

4. Departmental Representative's Response: The Departmental Representative supported the orders of the lower authorities, maintaining the validity of the assessments and the addition of unexplained investment in gold jewellery.

5. Judicial Review: The Commissioner of Income Tax (Appeals) noted that the excess jewellery was found during a search conducted on the appellant, and assessments were completed accordingly. The appellant's arguments based on circulars and previous court decisions were considered, but the Commissioner upheld the addition of unexplained jewellery due to the lack of explanation provided by the appellant.

6. Court Decision: Upon reviewing the orders, the judges found that the assessees did not offer any explanation for the excess jewellery found during the search. The judges agreed with the Commissioner of Income Tax (Appeals) that the addition of unexplained investment in gold jewellery was justified, as it was arrived at after considering all explanations provided and accepted. Consequently, the appeals of both assessees were dismissed, affirming the assessments made by the Assessing Officer and upheld by the Commissioner of Income Tax (Appeals).

In conclusion, the court upheld the addition of unexplained investment in gold jewellery in the assessment year 2009-10, emphasizing the importance of providing valid explanations for assets found during searches to avoid such additions.