2012 (12) TMI 18 - AT - Income Tax

Addition on account of sale of pawned ornaments out of money lending business - assessee engaged in business of purchase and sale of silver ornaments CIT(A) granted relief, in set aside proceedings however, in the absence of any submission, the amount was added to total income assessee contesting the same on ground that addition was deleted by CIT(A) in the first round of appellate proceedings and so the addition be deleted AY 96-97 - Held that - No infirmity found in the order passed by CIT(A) and this ground of assessee s appeal is rejected. Addition on account of alleged unaccounted cash found at the time of survey AY 96-97 - Held that - Since the books of account were not produced before the AO at the time of survey and the cash is found at the beginning of year and that subsequently and the appellant has failed to explain the source of cash found, the AO was thus justified in treating the cash as unexplained and the addition is therefore rightly confirmed by CIT(A) Addition on account of alleged excess stock on the date of survey AY 96-97 - Held that - From the order of CIT(A), it is evident that assessee could not produce evidences of such stock of silver and in support of the excess stock found at the time of survey. After considering all aspect of the matter, we feel in the interest of justice, this issue be restored back to the file of CIT(A) for fresh adjudication - ground of assessee s appeal is allowed for statistical purposes. Dismissal of appeal for A.Y.1995-96 on the ground of delay in filing appeal - assessee contesting the same on ground that appeal was dismissed ex parte Held that - CIT(A) dismissed the appeal only on the ground of delay but CIT(A) has not given any decision on merit of the case. After considering all aspects of the mater, in the interest of justice, this appeal is restored back to the file of CIT(A) to decide afresh. Since the quantum appeal has been restored back to the file of CIT(A), hence, appeal contesting penalty u/s 271(1)(c) is also remitted back to the file of CIT(A) for fresh decision

Issues Involved:
1. Confirmation of addition of Rs.35,000/- on account of sale of ornaments out of money lending business.
2. Confirmation of addition of Rs.1,10,240/- on account of alleged unaccounted cash found at the time of survey.
3. Confirmation of addition of Rs.7,55,800/- on account of alleged excess stock on the date of survey.
4. Non-condonation of delay in filing of appeal and non-adjudication of various grounds related to additions in ITA No.1022/Ahd/2009.
5. Confirmation of levy of penalty u/s. 271(1)(c) in ITA No.1330/Ahd/2009.

Detailed Analysis:

1. Confirmation of Addition of Rs.35,000/- on Account of Sale of Ornaments Out of Money Lending Business:
The assessee argued that the addition of Rs.35,000/- on account of the sale of ornaments out of money lending business was unjustified. The Assessing Officer (AO) observed that the assessee engaged in money lending and sold mortgaged ornaments when borrowers failed to repay loans. The CIT(A) upheld this addition, referencing similar decisions in previous years where the CIT(A) had wrongly deleted the addition, and the matter was restored to the AO for providing telescoping benefits. The Tribunal found no infirmity in the CIT(A)'s order and rejected this ground of appeal.

2. Confirmation of Addition of Rs.1,10,240/- on Account of Alleged Unaccounted Cash Found at the Time of Survey:
The assessee contended that the cash found during the survey was from the money lending business and silver ornaments trading, and it should not be treated as unaccounted. However, the AO and CIT(A) noted that the assessee failed to produce books of account or explain the source of cash. The CIT(A) confirmed the addition under Section 69A of the Income-tax Act. The Tribunal upheld the CIT(A)'s decision, finding no reason to interfere with the order.

3. Confirmation of Addition of Rs.7,55,800/- on Account of Alleged Excess Stock on the Date of Survey:
The assessee argued that there was no specific question asked about the excess stock of silver weighing 102.886 kg, and no admission was made regarding this excess stock. The AO and CIT(A) noted that the assessee failed to provide details or evidence of the stock during the survey and assessment proceedings. The CIT(A) confirmed the addition of Rs.7,55,800/- for unaccounted stock. The Tribunal, considering the lack of evidence provided by the assessee, restored the issue back to the file of the CIT(A) for fresh adjudication after giving a reasonable opportunity to the assessee.

4. Non-condonation of Delay in Filing of Appeal and Non-adjudication of Various Grounds Related to Additions in ITA No.1022/Ahd/2009:
The assessee's appeal for A.Y. 1995-96 was dismissed by the CIT(A) due to a delay of 443 days in filing the appeal. The assessee explained that personal problems and his wife's illness caused the delay. The Tribunal found that the CIT(A) dismissed the appeal solely on the ground of delay without considering the merits. In the interest of justice, the Tribunal restored the appeal back to the file of the CIT(A) for a fresh decision after giving a reasonable opportunity to the assessee.

5. Confirmation of Levy of Penalty u/s. 271(1)(c) in ITA No.1330/Ahd/2009:
The assessee challenged the confirmation of penalty u/s. 271(1)(c) of the Act. The penalty was levied by the Income Tax Officer, Ward-1, Dahod. Since the quantum appeal was restored back to the file of the CIT(A), the Tribunal also remitted this appeal back to the CIT(A) for a fresh decision after providing a reasonable opportunity to the assessee.

Conclusion:
In the combined result, the assessee's appeal in ITA No.1023/Ahd/2009 is partly allowed for statistical purposes, and the other appeals in ITA No.1022 and 1330/Ahd/2009 are allowed for statistical purposes.

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