2013 (8) TMI 671 - AT - Income Tax

Unexplained income - Father of the assessee Shri Lalta Prasad Garg has executed Will in favour of the assessee and other family members - Deceased father having jewellery with him and given the same to the assessee and other family members through Will - Sold the same jewellery to M/s. Kalicharan Durga Prasad of Gwalior - In the case of one of the family member Shri Rajan Garg, the AO did not make any addition in this case and accepted the claim of receipt of jewellery through the Will and receipt of sale consideration of the said jewellery - The purchase of jewellery by M/s. Kalicharan Durga Prasad is supported by bills and books of account who has also made statement before the AO for purchase of jewellery from the assessee and other family members - All the entries are recorded in their books of account The above informations obtained from commercial tax officer, Gwalior u/s. 133(6) by the AO to show that the jewellery was purchased by M/s. Kalicharan Durga Prasad, which is also disclosed in the Sales Tax Return. Therefore, the purchase of jewellery from the assessee and their family members are not in dispute - The returned income of the purchaser has been accepted by the AO also Held that - Revenue has not produced any material to contradict the findings of facts recorded by the ld. CIT(A) - ld. CIT(A) on proper appreciation of evidences on record correctly deleted the addition of Rs.65,00,000/-. As regards the addition of Rs.20,00,000/-, assessee produced agreement to sale dated 06.06.06 before the AO through which the assessee received advance of Rs.20,00,000/- from Shri Kaushal Kishore Pawaiya - Shri Pawaiya, admitted in his statement of giving of advance of Rs.20,00,000/- in cash to the assessee - Purchaser of the property has admitted giving of advance to the assessee In case of doubt in the minds of the AO of execution of agreement to sale, no examination of the marginal witnesses who have signed the agreement to sale to find out the truth in the matter, was done Also, Shri Kaushal Kishore Pawaiya has maintained regular books of account which were produced before the AO in which availability of Rs.20,00,000/- as cash with him have been specifically mentioned - Plot of land was available to the assessee for sale at the time of entering into agreement to sale - Authorities of the Revenue department have not asked the purchaser to prove source of the source. The purchaser also in his statement explained the reasons for giving the advance in cash to the assessee because he was not maintaining bank account for the last ten years - The assessee in view of the above facts and circumstances and evidences on record has been able to prove identity of the purchaser, genuineness of the transaction and the amount actually received from the purchaser as advance Appeal allowed Decided in favor of Assessee.

Summary

Issues Involved:
1. Addition of Rs. 65,00,000/- on account of sale of jewelry.
2. Addition of Rs. 20,00,000/- on account of advance money received against the agreement of sale of a plot.
3. Protective additions in the cases of other family members.

Detailed Analysis:

1. Addition of Rs. 65,00,000/- on account of sale of jewelry:

The assessee filed a return declaring income from job work, interest, and long-term capital gain. During a search, Indian currency of Rs. 82,14,500/- was recovered from Shri Shailendra Kumar Tamotia, who stated that this amount was received from the assessee as an advance against the sale of his house. The assessee admitted to paying Rs. 85,00,000/- in cash, sourced from the sale of jewelry belonging to his family members and an advance against the proposed sale of his property. The AO made an addition of Rs. 65,00,000/- treating it as unexplained, citing a lack of satisfactory evidence regarding the acquisition and sale of jewelry.

The assessee challenged this addition before the CIT(A), providing detailed submissions and evidence, including a will from his deceased father, sales bills, and statements from family members confirming the sale of jewelry. The CIT(A) found the AO's rejection of the evidence to be based on assumptions and deleted the addition of Rs. 65,00,000/-. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not dispute the genuineness of the will or the sale of jewelry, and the purchaser confirmed the transactions.

2. Addition of Rs. 20,00,000/- on account of advance money received against the agreement of sale of a plot:

The AO also made an addition of Rs. 20,00,000/- as unexplained, received as an advance from Shri Kaushal Kishore Pawaiya for the sale of a plot. The AO doubted Shri Pawaiya's financial capacity to pay this amount and treated the source as unexplained.

The assessee contested this addition before the CIT(A), presenting the agreement of sale, statements, and balance sheet of Shri Pawaiya. However, the CIT(A) confirmed the addition, finding the evidence insufficient to prove Shri Pawaiya's capacity to advance Rs. 20,00,000/-.

The Tribunal, however, set aside this addition, noting that the agreement to sale was genuine, Shri Pawaiya admitted to giving the advance, and his regular books of account showed the availability of cash. The Tribunal concluded that the assessee satisfactorily proved the receipt of Rs. 20,00,000/-.

3. Protective additions in the cases of other family members:

The AO made protective additions in the cases of Smt. Poonam Garg, Ku. Roma Garg, and Smt. Tara Garg, based on the same jewelry sale transactions. The CIT(A) deleted these protective additions, following the order in the case of the main assessee, Shri Raghav Garg.

The Tribunal upheld the CIT(A)'s decision, noting that since the substantive additions were deleted in the case of Shri Raghav Garg, the protective additions in the hands of the other family members would not stand.

Conclusion:
The Tribunal dismissed the departmental appeals and allowed the appeal of the assessee, confirming the deletion of the addition of Rs. 65,00,000/- and setting aside the addition of Rs. 20,00,000/-. The protective additions in the cases of other family members were also dismissed.