2011 (1) TMI 201 - HC - Income Tax

Search - block assessment AO did not accept the explanation of the Assessee in respect of jewelery and added as addition in his income - According to the Assessee, jewelery was of different customers - The CIT(A) had called for the remand report asking the Assessing Officer to examine the person whose list was given by the Assessee - Tribunal, after considering the report, accepted the explanation of the Assessee - No illegality Appeal dismissed

Summary

Issues:
1. Block assessment by the Income-tax department regarding jewelry found during a search.
2. Dispute over the ownership of the jewelry leading to addition in the Assessee's income.
3. Appeal before the Commissioner Income-tax (Appeals) and subsequent remand report.
4. Appeals filed by both the Department and the Assessee before the Income Tax Appellate Tribunal.
5. Tribunal's decision on the ownership of the jewelry and the Department's appeal.

Analysis:
1. The Income-tax department conducted a search at the shop and residence of the Assessee, finding jewelry among other items. A block assessment was made for the period, and the Assessing Officer added the value of the jewelry to the Assessee's income.

2. The Assessee filed an appeal before the Commissioner Income-tax (Appeals) challenging the addition. The CIT(A) partly allowed the appeal, accepting some of the Assessee's contentions and deleting part of the jewelry addition. However, the dispute over ownership remained unresolved.

3. Both the Department and the Assessee appealed to the Income Tax Appellate Tribunal. The Tribunal allowed both appeals but differed on the jewelry issue. The Assessee's appeal was allowed, and the Department's appeal was dismissed, leading to the Department's present appeal.

4. The Assessee claimed that the jewelry belonged to different customers and M/s Laxmi jeweler. The CIT(A) sought a remand report to verify this claim. The Tribunal, after reviewing the report, accepted the Assessee's explanation, finding sufficient evidence to support the claim of ownership.

5. The Tribunal concluded that the jewelry indeed belonged to the persons claimed by the Assessee, emphasizing that this was a finding of fact with no identified illegality. As a result, the Department's appeal was dismissed for lack of merit. The judgment upheld the Tribunal's decision on the ownership of the jewelry, resolving the dispute in favor of the Assessee.