2011 (3) TMI 605 - HC - Income Tax

Bogus purchase and sale - Deleting the addition - Sale of jewellery - The revenue submits that the matter is covered by judgment of the Court, CIT v. Sh. Tejinder Singh HUF (2011 -TMI - 203492 - PUNJAB AND HARYANA HIGH COURT) in favour of the revenue - Therein it was held that the case of the assessee was required to be individually gone into to ascertain genuineness of the claim for capital loss - The finding in the case of M/s Bemco/Manoj Aggarwal Jewellers (Bemco) and M/s Bishan Chand Mukesh Kumar (BCMK) could not have been mechanically relied upon - Accordingly, the matter was remanded to the Tribunal for fresh decision.

Summary

Issues:
1. Justification of deletion of addition made by AO on sale of jewellery
2. Acceptance of ITAT decision without appeal to High Court
3. Following of previous ITAT orders challenged as perverse
4. Acceptance of genuineness of sale of jewellery by ITAT
5. Assessment of individual genuineness of capital loss claim

Analysis:

Issue 1:
The first issue revolves around the justification of the deletion of the addition made by the Assessing Officer (AO) on account of the transaction of sale of jewellery. The High Court was tasked with determining whether the Income Tax Appellate Tribunal (ITAT) was justified in law and on facts in deleting the said addition without proper appreciation of the evidence on record and the facts of the case.

Issue 2:
The second issue pertains to the acceptance of the ITAT decision without filing an appeal before the High Court. The High Court had to consider whether the decision of the ITAT became final due to the non-filing of an appeal by the Department, despite the Department's disagreement with the ITAT's decision.

Issue 3:
The third issue involves the ITAT's reliance on its previous orders, which were challenged as perverse. The High Court had to assess whether the ITAT in Amritsar was justified in following its previous order, which itself had followed a decision of the Special Bench of the ITAT in New Delhi, despite the challenge to the latter decision.

Issue 4:
The fourth issue questions the ITAT's acceptance of the genuineness of the sale of jewellery by the assessee, despite alleged conflicts with the normal human conduct test as laid down by the Supreme Court in specific cases. The High Court had to determine whether the ITAT's decision was justifiable in light of the conflicting conduct of the assessee.

Issue 5:
The fifth issue involves the assessment of the individual genuineness of the claim for capital loss by the assessee. The High Court referred to a previous judgment where it was held that the genuineness of the claim needed to be individually examined, rather than mechanically relying on previous decisions. Consequently, the High Court decided in favor of the revenue and remanded the matter to the Tribunal for a fresh decision in accordance with the law.