2016 (7) TMI 1536 - AT - Income Tax

Declaration under VDIS - Introduction of cash in the books of accounts of the assessee on sale of sliver and diamonds which were declared under Voluntary Disclosure of Income Scheme, 1997 (VDIS) - HELD THAT - Same quantity of silver and diamonds which were declared under VDIS was sold. Though the assessee has declared the silverware in different form under VDIS, but in sale bill the assessee has sold silver bullion and diamonds separately. The assessee has filed evidence with respect to conversion of silverware into silver bullion and diamonds. Since the same quantity which was disclosed under VDIS was sold, I find no justification in making the addition on introduction of sale proceeds in the books of account. Once the Revenue has accepted the declaration under VDIS and accepted the tax deposited by the assessee, it should not have made a further addition on account of introduction of sale proceeds of the said jewellery in the books of account. I therefore find no merit in the addition made by the revenue authorities. Accordingly, I set aside the order of the CIT(Appeals) and delete the addition.

Summary

Issues:
1. Appeal against CIT(Appeals) order for assessment year 1998-99.
2. Introduction of cash in the books of accounts related to sale of gold, silver, and diamonds declared under VDIS.

Analysis:
1. The appeal was filed against the CIT(Appeals) order for the assessment year 1998-99, challenging various grounds including additions under section 68 of the Act and interest charged under section 234B. The appellant disputed the findings of the CIT(A) and sought relief based on law, equity, and the circumstances of the case.

2. The core issue revolved around the introduction of cash in the books of accounts concerning the sale of gold, silver, and diamonds declared under the Voluntary Disclosure of Income Scheme, 1997 (VDIS). The Assessing Officer (AO) raised concerns regarding discrepancies between the items declared under VDIS and those sold, leading to additions in the assessment.

3. The matter was escalated to the Hon’ble High Court of Karnataka, which remanded it back to the AO for a specific finding on whether the items sold were the same as those disclosed under VDIS. The AO, despite the evidence presented by the assessee, made additional additions, which were upheld by the CIT(Appeals.

4. However, upon review by the Tribunal, it was established that the same quantity of gold, silver, and diamonds declared under VDIS was indeed sold. The Tribunal examined the evidence provided by the assessee, including valuation reports, VDIS certificates, and sales documentation, concluding that the introduction of sale proceeds in the books of account was justified as the declared items were sold.

5. The Tribunal found no merit in the revenue authorities' decision to make additional additions after accepting the declaration under VDIS and the tax deposited by the assessee. Consequently, the Tribunal set aside the CIT(Appeals) order and deleted the addition, allowing the appeal by the assessee in the interest of justice and equity.