2014 (4) TMI 894 - HC - Income Tax

Assessment u/s 153C - Addition of income from business and jewellery business - Whether the Tribunal is right in confirming the estimated addition of income from business and jewellery business - Held that - Tribunal held that there was sufficient evidence found at the time of search to show that assessee was having substantial gold and silver jewellery business apart from what was returned by the assessee in books of accounts and there was surplus stock of more than Rs.95 lakhs and odd and the assessee was unable to establish that admission made by him at the time of search was not correct - the AO was justified in estimating the income of the assessee from jewellery business for various years - the AO did not give any reduction for the income returned in the regular returns - Tribunal held that the additions made however took note of the materials gathered and hence were to be sustained - thus, the Tribunal directed the AO to exclude the income of Rs.1,05,528/- and Rs.89,702/- returned by the assessee in the returns filed for 2000-01 and 2001-02 while confirming the addition. CIT(A) was justified in taking the view that the excess stock found at the time of search could be considered for assessment only in the assessment years relevant to the previous year in which the search was conducted the Tribunal directed the AO to ensure that the amount was included in the income of the assessee in the assessment the issue is a pure question of fact - there was no factual error in the order passed or no perversity shown in the finding of the Tribunal thus, the appeal cannot be admitted Decided against Assessee.

Summary

Issues:
Assessment of undisclosed income from money lending and jewellery business for various assessment years.

Analysis:
The judgment involved the assessment of undisclosed income from money lending and jewellery businesses for multiple assessment years. The assessee was engaged in jewellery and money lending businesses and a search revealed discrepancies in income disclosures. The Assessing Officer made additions based on unexplained investments and surplus stock found during the search. The Commissioner of Income Tax (Appeals) canceled some additions, citing lack of evidence tying them to relevant assessment years.

The Revenue appealed, arguing that the assessee failed to disclose income from the finance business before the search, and substantial interest income was discovered post-search. The Income Tax Appellate Tribunal noted that the assessee only reported income from jewellery business pre-search and admitted substantial surplus stock post-search. The Tribunal found the undisclosed finance business income liable for assessment, as the assessee failed to disclose it for decades.

Regarding the jewellery business, the Tribunal upheld the Assessing Officer's estimation of income based on seized evidence and discrepancies in regular returns. The Tribunal reversed the Commissioner's decision, sustaining the additions but directed exclusion of certain disclosed amounts for specific years.

In the case of excess stock of gold and silver jewellery, the Tribunal agreed with the Commissioner that it should be assessed for the relevant year of the search. As the assessee had already reported the income for that year, the additions were deleted. The Tribunal directed inclusion of the amount in the assessment for the subsequent year.

The High Court dismissed the Tax Case (Appeals), stating that no substantial question of law arose from the factual findings of the lower authorities. The Court found no errors or perversity in the Tribunal's decision, leading to the rejection of the appeals.

Overall, the judgment addressed the assessment of undisclosed income from money lending and jewellery businesses, emphasizing the importance of proper disclosure and evidence tying income to specific assessment years.