2011 (3) TMI 614 - HC - Income Tax

Jewellery and unexplained cash - before CIT(A) the assessee furnished evidence for the first time to explain the jewellery as well as cash. His submission was that jewellery was belonging to the wife of the assessee which was duly disclosed in the income-tax return filed by the wife of the assessee for the assessment year 1989-90. In support thereof, the assessment order of the income-tax return filed by the wife of the assessee was produced. - Therefore, even in order to advance the cause of justice, this evidence was admitted, it cannot be said that no prejudice is caused to the revenue. - Decided against the revenue. Explained investment in shares and debentures - insofar as the assessee is concerned, he had explained the source and his explanation was accepted, viz., shares and securities found from the residence in the form of Shri Mitesh Patel and Smt. Jyotikaben Patel. Once this aspect is accepted, there could not be any addition in the income of the assessee. If further investigation was required for the aforesaid correlation, i.e., in case of Shri Mitesh Patel and Smt. Jyotikaben Patel, that aspect could not have been remitted back to the Assessing Officer for assessment while considering the assessment of the assessee. Peak credit - The Assessing Officer had made this addition on the basis of the diary seized from the premises of the assessee. While computing the peak credit, the Assessing Officer had arrived at an addition of Rs. 5,31,170 as being the excess outgo as per the diary. Simultaneously, the Assessing Officer added a sum of Rs. 7,34,480 to the peak credit as appearing on 24-11-1995. The Tribunal had sustained the addition of Rs. 7,34,480, but deleted the addition of Rs. 5,31,170 on the ground that the addition of both the excess outgo as peak credits cannot be sustained in view of the fact that when computation of peak credit, the outgo would also be considered in the peak credit calculated on the continuous inflow and outflow of the funds, only once addition is called for. On this basis, higher of the two is sustained. This approach of the Tribunal is again without blemish find that no question of law arises, these appeals are accordingly dismissed.

Summary

Issues:
1. Admission of fresh evidence under Rule 46(A) by the CIT(A).
2. Deletion of addition on account of unexplained investment in shares and debentures.
3. Deletion of addition made by the ACIT on account of peak credit.
4. Challenge to the order of the ITAT as being perverse.

Issue 1: Admission of fresh evidence under Rule 46(A) by the CIT(A):
The case involved additions related to jewellery and unexplained cash found during a search operation. The Assessing Officer made additions as the assessee failed to produce evidence explaining the items. However, the CIT(A) admitted fresh evidence under Rule 46A, citing insufficient opportunity given to the assessee. The Tribunal upheld this decision, noting that the Revenue did not challenge the merits of the lower authorities' orders. The Revenue argued that the assessee had ample time to provide evidence, but the court held that documentary evidence presented by the assessee was crucial and admitted to ensure justice. Consequently, the court found no substantial question of law.

Issue 2: Deletion of addition on account of unexplained investment in shares and debentures:
The Assessing Officer had added an amount for unexplained investments in shares and debentures. The assessee explained that the investments belonged to specific individuals, supported by statements and investigation reports. The CIT(A) accepted this explanation but remitted the case back to the Assessing Officer for further inquiry. However, the Tribunal rightly set aside this decision, emphasizing that once the source of investments was explained, no further additions were warranted. The court concurred, dismissing the Revenue's challenge and upholding the Tribunal's decision.

Issue 3: Deletion of addition made by the ACIT on account of peak credit:
The Assessing Officer made additions based on a seized diary, calculating peak credit and excess outgo amounts. The Tribunal deleted one of the additions, stating that only one addition could be sustained concerning peak credit and outgo funds. The court found the Tribunal's approach flawless, as it ensured consistency in peak credit calculations. Consequently, the court dismissed any challenge to this issue, affirming the Tribunal's decision.

Issue 4: Challenge to the order of the ITAT as being perverse:
The Revenue raised concerns about the ITAT's order, alleging it ignored relevant facts. However, the court found no merit in this argument, stating that the decisions made by the lower authorities were well-founded and legally sound. As no substantial question of law arose on any of the issues raised, the court dismissed the appeals accordingly.

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