2013 (7) TMI 116 - HC - Income Tax

Undisclosed investment - CIT deleted addition of undisclosed income - Held that - CIT deleted the entire amount by elaborate discussion of the issue - It was during the course of the search that such jewellery has been found at the residence of the assessee. The statements of different family members were recorded. The confirmation/ affidavit of the father, mother, wife of the assessee claiming jewellery were also recorded. In such background, the CIT (Appeals) noted that the jewellery belonged to different family members and it also relied on a circular of the CBDT, which permitted customary owning of such jewellery by the ladies. Resultantly, it deleted the entire amount - Decided in favour of assessee. Interest on cash loans - CIT deleted - Tribunal deleted entire amount of cash loans - Held that - When the amount of cash loans itself had been deleted, the issue of making addition by way of interest on such question would not arise. Moreover, the Tribunal also regarded absence of any material worth the name to indicate any proof of charge of interest on cash loans and hence, the Tribunal committed no error at all in dealing with the issue in question - Decided in favour of assessee.

Summary

Issues:
1. Addition of undisclosed investment in jewellery
2. Addition of interest calculated on cash loans
3. Addition made on undisclosed interest income

Issue 1: Addition of undisclosed investment in jewellery
The Tax Appeal challenged the Tribunal's decision to delete the addition of Rs. 10,73,550 made by the Assessing Officer regarding undisclosed investment in jewellery. The CIT (Appeals) supported the deletion by discussing the issue elaborately, considering statements and confirmations from family members. The CIT (Appeals) noted that the jewellery belonged to different family members and relied on a CBDT circular allowing customary owning of such jewellery by ladies, leading to the deletion of the entire amount. The Tribunal concurred with the CIT (Appeals) findings, stating that the remaining jewellery was covered by the circular and already reflected in the books of accounts. The High Court upheld the decisions of the lower authorities, emphasizing that no further review was necessary due to the thorough consideration given to the factual aspects.

Issue 2: Addition of interest calculated on cash loans
The second and third questions in the appeal related to the deletion of Rs. 91,17,075 made by the Assessing Officer on account of interest calculated on cash loans. The Assessing Officer added interest on cash loans given by different persons, which the CIT (Appeals) later deleted, stating that there was no justification for the addition as the cash loans were already removed. The CIT (Appeals) directed the Assessing Officer to recalculate the interest based on disclosed cash loans. The Tribunal, upon review, also deleted the entire sum and interest, noting the absence of material supporting the charge of interest on cash loans. The High Court agreed with the Tribunal's decision, emphasizing that no legal question arose as the issue was adequately addressed by the authorities based on the factual matrix presented.

In conclusion, the High Court dismissed the Tax Appeal, upholding the decisions of the lower authorities regarding the deletion of additions related to undisclosed investment in jewellery and interest calculated on cash loans. The Court emphasized the thorough consideration given to the factual aspects by the CIT (Appeals) and the Tribunal, stating that no legal questions necessitated further review.