2014 (11) TMI 376 - AT - Income Tax

Unexplained investment in purchases of silver, job charges and undisclosed profit earned deleted Held that - All the papers were considered in the case of M/s.Mahashakti Jewellers and addition was made - The papers are not pertaining to the assessee - the papers relate to the business of M/s. Mahashakti Jewellers assesse is an employee of M/s.Mahashakti Jewellers and the finding of certain papers relating to M/s. Mahshakti Jewellers cannot be said unusual - Moreover absolute inference cannot be drawn u/s.132(4A) particularly when appellant had admitted in clear terms that certain papers in Annexure A-1 relate to the business of M/s.Maheshakti Jewellers - the AO was unjustified in making addition on account of investment in purchase of silver, payment of job charges for making silver ornaments and on profit earned the order of the CIT(A) is upheld Decided against revenue. Unexplained deposit in bank account Held that - CIT(A) was of the view that the deposit made by the assessee on 04/10/1994 in SB A/c. was duly disclosed while furnishing return in the AY 1995-96 much prior to the date of search Decided against revenue. Undisclosed income from job work Held that - CIT(A) was of the view that the assessee was a partner in firm known as M/s. Mahashakti Jewellers upto AY 1993-94, therefore he thought it appropriate to restrict the addition to the extent of ₹ 1,28,392/- out of addition of ₹ 3,46,392 the order of the CIT(A) is upheld Decided against revenue. Determination of undisclosed income on account of household expenses Held that - The estimation in block assessment is to be made on the basis of the material found during the course of search and any estimation is beyond the purview of the block assessment the order of the CIT(A) is upheld Decided against revenue. Unexplained cash found at the time of search Held that - CIT(A) has given a finding on fact that Smt. Savitridevi, w/o assessee admitted in her primary statement i.e. in the statement before the start of the search that there may be about ₹ 2000 to ₹ 3000 of cash at her residence and there was also cash belonging to her father which was kept at her residence for the treatment who was hospitalized at Ahmedabad after he met with an accident Decided against revenue. Unexplained investment in gold ornaments Held that - The gold ornaments were found during the course of search weighing 263gms. from a locker in the joint names of the assessee and his wife the gold ornaments belonged to him and his wife - The CIT(A) has rightly accepted the explanation given by the assessee since this kind of practice is prevalent in the society that the bride and bridegroom at the time of marriage are given certain gifts in the form of gold ornaments the order of the CIT(A) is upheld Decided against revenue. Low withdrawals for household expenses Held that - CIT(A) was rightly of the view that the AO was not justified in making this addition because no evidence whatsoever was found during the course of search on the basis of which it could be said that appellant had spent more on house hold expenses than disclosed by him while filing returns for the block period prior to the date of search - No information was also brought on record by the AO on the basis of which it could be said appellant s withdrawals for house hold expenses made by the assessee and his wife were insufficient for meeting the family expenses of the assessee which comprised of two adult members and one small child thus, the order of the CIT(A) is upheld Decided against revenue.

Issues Involved:
1. Deletion of addition based on seized papers related to unexplained investment in silver, job charges, and undisclosed profit.
2. Deletion of addition on account of unexplained bank deposit.
3. Allowing relief from addition made on account of undisclosed income from job work.
4. Justification of estimating undisclosed income for household expenses.
5. Deletion of addition based on unexplained cash found during search.
6. Deletion of addition regarding unexplained investment in gold ornaments.
7. Deletion of addition due to low withdrawals for household expenses.

Issue-wise Detailed Analysis:

1. Deletion of Addition Based on Seized Papers:
The Revenue contended that the CIT(A) erred in deleting the addition of Rs. 14,05,341 made on the basis of seized papers (Annexure A-1) related to unexplained investment in silver, job charges, and undisclosed profit. The CIT(A) found that these papers were already considered in the case of M/s. Mahashakti Jewellers, where an addition of Rs. 9,68,000 was made. The CIT(A) concluded that the papers pertained to M/s. Mahashakti Jewellers and not the assessee. The Tribunal upheld this finding, noting that the Revenue did not provide contrary evidence.

2. Deletion of Addition on Account of Unexplained Bank Deposit:
The Revenue challenged the deletion of Rs. 10,000 added due to unexplained bank deposits. The CIT(A) found that this amount was disclosed in the return for AY 1995-96, prior to the search. The Tribunal upheld this finding, as the Revenue did not present any contradicting evidence.

3. Allowing Relief from Addition on Undisclosed Income from Job Work:
The Revenue argued against the CIT(A)'s decision to allow relief of Rs. 2,18,000 out of an addition of Rs. 3,46,392 for undisclosed income from job work. The CIT(A) noted that the assessee was a partner in M/s. Mahashakti Jewellers until AY 1993-94 and restricted the addition to Rs. 1,28,392. The Tribunal found no infirmity in the CIT(A)'s order, as the AO's estimation was deemed improper.

4. Justification of Estimating Undisclosed Income for Household Expenses:
The Revenue contested the CIT(A)'s decision that the AO was unjustified in estimating undisclosed income for household expenses. The CIT(A) held that such estimation should be based on material found during the search, not mere estimation. The Tribunal agreed, finding no reason to interfere with the CIT(A)'s order.

5. Deletion of Addition Based on Unexplained Cash Found During Search:
The Revenue appealed against the deletion of Rs. 10,000 added due to unexplained cash found during the search. The CIT(A) accepted the explanation that the cash belonged to the assessee's father for medical treatment. The Tribunal upheld this finding, as the Revenue did not provide contrary evidence.

6. Deletion of Addition Regarding Unexplained Investment in Gold Ornaments:
The Revenue challenged the deletion of Rs. 1,06,910 added for unexplained investment in gold ornaments. The CIT(A) accepted the assessee's explanation that the gold was received as gifts during marriage and other social occasions. The Tribunal upheld this finding, noting that such practices are common and the Revenue did not provide evidence to the contrary.

7. Deletion of Addition Due to Low Withdrawals for Household Expenses:
The Revenue contested the deletion of Rs. 3,00,506 added due to low withdrawals for household expenses. The CIT(A) found no evidence during the search to suggest higher household expenses than disclosed. The Tribunal upheld this finding, agreeing that additions based on estimation are not permissible in block assessments.

Conclusion:
The appeals by the Revenue in IT(ss)A No.206/Ahd/2013 and IT(ss)A No.207/Ahd/2013 were dismissed. The appeal by the Assessee in IT(ss)A No.208/Ahd/2013 was dismissed as not pressed. The Tribunal upheld the CIT(A)'s findings across all issues, noting the lack of contrary evidence from the Revenue.

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