2014 (8) TMI 521 - AT - Income Tax

Admission of additional evidence under Rule 46A Income from sale of Jewellery treated as income from other sources Held that - On verification of bank statement of the assessee and her mother, the CIT(A) reached to a conclusion that the facts are clear from the statement itself as the transaction happened on the very same date - the assessee has also produced confirmation from the same parties to whom jewellery was sold - the transactions entered were held to be genuine - CIT(A) also pointed out that the AO should have taken help of local ITO/Inspector to strengthen his action but the AO failed to do so - the addition made by the AO was not found to be sustainable revenue could not point out any fact emerging out of order that any additional evidence was admitted and considered by the CIT(A) in contravention of Rule 46A of the Income Tax Rules, 1962 without affording due opportunity to rebut the same and examining and verifying the same for the AO Decided against Revenue.

Summary

Issues:
Admission of additional evidence without opportunity to AO, deletion of addition under 'income from other sources' based on jewellery sale transactions.

Analysis:

Issue 1: Admission of additional evidence
The appeal involved a challenge by the revenue against the admission of additional evidence by the CIT(A) without affording the AO an opportunity to comment on it. The revenue contended that the CIT(A) erred in admitting the evidence in contravention of Rule 46A. However, the CIT(A) had considered the evidence and concluded that a close nexus existed between the receipt of money into the bank account and its immediate transfer to the mother's account on the same date. The CIT(A) found the transactions genuine based on confirmations from the parties to whom the jewellery was sold. The Tribunal, after careful perusal, upheld the CIT(A)'s decision, noting that the AO should have sought help from local authorities for verification. The Tribunal found no merit in the revenue's argument and dismissed the appeal.

Issue 2: Deletion of addition under 'income from other sources'
The second issue pertained to the deletion of an addition of Rs. 10 lakhs made by the AO under 'income from other sources' related to the sale of jewellery. The AO had concluded that the sale transactions were not genuine and added the amount to the total income of the assessee. The CIT(A) partially allowed the appeal, accepting the explanations provided by the assessee. The Tribunal observed that the CIT(A) had verified the bank statements and confirmations from the parties involved, leading to the deletion of the addition. The Tribunal found no reason to interfere with the CIT(A)'s decision, as the transactions were deemed genuine. The Tribunal dismissed the appeal of the revenue and the cross objections of the assessee, as they did not survive after the main ground of the revenue's appeal was rejected.

In conclusion, the Tribunal upheld the CIT(A)'s decision to admit additional evidence and delete the addition under 'income from other sources,' finding the transactions genuine based on the evidence presented. The appeal of the revenue and the cross objections of the assessee were dismissed, and the order was pronounced on 7.8.2014.