2015 (3) TMI 96 - HC - Income Tax

Unexplained gold ornaments - CIT(A) concluded that AO was not justified in treating the gold ornaments, belonging to the family diety and purchased by Shri Chandra Prakash, as unexplained investment - Held that - The facts mentioned by the Commissioner of Incometax as noticed and also the averments contained in the memo of appeal indicate that necessary opportunity was allowed to the Assessing Officer to meet the stand of the assessee about the ornaments purchased by Shri Chandra Prakash. AO was not justified in not accepting the explanation of the appellant in respect of gold ornaments weighing 241 grams, which the appellant had claimed that the same belonged to the family diety. In fact, at the time of search also such gold ornaments were there on the family diety and the same were also not seized. The family deity is quite old and it seems the custom of appellant's family. The AO was also not justified in drawing adverse inference in respect of gold ornaments weighing 150 grams purchased by Sh. Chander Prakash in respect of whom proceedings u/s 148 were already initiated. - Decided in favour of assessee.

Summary

Issues:
1. Justification of treating gold ornaments as unexplained investment by the Assessing Officer
2. Adequacy of opportunity provided to the Assessing Officer to controvert facts

Analysis:

1. The High Court reviewed a case where the Income Tax Appellate Tribunal had earlier concluded that the Assessing Officer was not justified in treating gold ornaments, belonging to the family deity and purchased by an individual, as unexplained investment. The Court settled a substantial question of law regarding the justification of deleting the additions made by the Assessing Officer. The Commissioner of Income-tax held that the Assessing Officer was not justified in rejecting the explanation provided by the appellant regarding the gold ornaments and concluded that the addition on account of unexplained investment in gold ornaments was not justified. The Court noted that the material was available to justify the purchase of the ornaments, and the Assessing Officer had the opportunity to meet the contentions raised by the assessee. Thus, the appeal challenging the deletion of additions was dismissed.

2. The Court observed that the issue regarding the gold ornaments was not raised before the Income Tax Appellate Tribunal initially but was presented before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax considered the arguments from both sides and concluded that the Assessing Officer was not justified in drawing adverse inferences regarding the gold ornaments. It was noted that the Assessing Officer had the opportunity to address the contentions raised by the assessee, as accepted by both the Commissioner of Income-tax (Appeals) and the Income Tax Appellate Tribunal. Therefore, the Court found that adequate opportunity was provided to the Assessing Officer to counter the facts presented by the assessee, leading to the dismissal of the appeal.