2013 (1) TMI 570 - HC - Income Tax

Addition made u/s 68 - unexplained receipt - assessee could not prove the sale of jewellery - ITAT deleted the addition - Held that - The assessee had submitted sufficient material and evidence to show that he was in possession of the requisite jewellery as the same was declared under the Voluntary Disclosure of Income Scheme, 1997, which was also accepted and tax was paid. Further, Sri Bishan Chand, partner of M/s. Bishan Chand Mukesh Kumar was examined on oath by AO who categorically stated that he had purchased the jewellery in question from the respondent assessee and had made the payment through bank draft. Assessment under the Delhi Sales Tax Act had also been made on the turnover and further, all the purchases and sales have been accepted by the Assessing Authority under the Income Tax Act while completing the assessment for the instant year under Section 143 (3) - order of the Tribunal does not suffer from any legal infirmity as no unaccounted receipt is confirmed - in favour of assessee.

Summary

Issues:
Appeal under Section 260(A) of the Income Tax Act against the Tribunal's order on addition of Rs. 13,50,000 under section 68 of the IT Act 1961.

Analysis:
The case involved an appeal regarding the addition of Rs. 13,50,000 made by the Assessing Officer under section 68 of the Income Tax Act, 1961. The respondent, engaged in building, construction, and property sale activities, declared an income of Rs. 10,02,585 for the Assessment Year 2000-01. Re-assessment proceedings were initiated based on information alleging bogus sale of jewellery. The respondent submitted documents, including Voluntary Disclosure of Income Scheme declaration, sales vouchers, and bank drafts to prove the genuineness of the transactions. The Assessing Officer, however, assessed the income at Rs. 31,21,220, including the unexplained accretion in assets of Rs. 13,50,000.

The Commissioner of Income Tax (Appeals) allowed the appeal, stating that the addition of Rs. 13,50,000 as unexplained receipt from the jewellery sale to M/s. Bishan Chand Mukesh Kumar should be deleted. The Commissioner relied on the evidence presented by the respondent, including the confirmation of transactions by Sri Bishan Chand and the acceptance of purchases and sales by the Assessing Authority under the Income Tax Act.

The Revenue appealed to the Income Tax Appellate Tribunal, which upheld the Commissioner's decision to delete the addition. The Tribunal found that the Revenue failed to establish its case, while the respondent provided sufficient evidence to prove the genuineness of the jewellery sale. The Tribunal concluded that the Commissioner was justified in deleting the addition.

During the hearing, the Revenue's counsel argued that the Tribunal erred in accepting the respondent's case, citing a statement alleging bogus transactions by M/s. Bishan Chand Mukesh Kumar. However, the Court found the argument misconceived, as the respondent had submitted substantial material and evidence to support the jewellery possession, including acceptance under the Voluntary Disclosure of Income Scheme and payment of tax. Additionally, the partner of M/s. Bishan Chand Mukesh Kumar confirmed the purchase of jewellery and payment through a bank draft. The Court upheld the Commissioner's decision and dismissed the appeal, stating that the order did not suffer from any legal infirmity.