2016 (8) TMI 1451 - AT - Income Tax

Declaration under VDIS - bullion converted from the jewellery was sold by the assessee AND diamonds sold - whether what was sold and declared in the return of income is nothing but the gold and diamond declared in the VDIS, 1997? - HELD THAT - Since the declaration under VDIS was accepted by the department and therefore there is no dispute on the fact of declaration of the jewellery items valued at ₹ 4,84,100. The assessee produced the bill dt.17.12.1997 issued by Sri Balaji Refinery, Hubli whereby the gold jewellery was converted into bullion. As per the said bill the gross weight of jewellery is shown as 1406.55 gms and net weight is shown as 1249.500 gms which was converted into 1245.200 gms. The items shown in the conversion bill and VDIS declaration do match without any discrepancy. The bullion converted from the jewellery was sold by the assessee vide billdt.18.12.1997. Subsequently, the assessee has also sold the diamonds vide bill dt.16.2.2008. All these records were produced by the assessee before the Assessing Officer. It is manifest from the documents produced by the assessee that the gold jewellery items which were converted into bullion are identical as jewellery shown in the VDIS, 1997. The diamond items are also matching in the weight in carats a shown in the declaration of VDIS, 1997 and purchase bill. Therefore as far as the quantity and items which are declared in the VDIS, 1997 and which are subject matter of conversion and subsequent sale, there is no discrepancy. Thus assessee has established the facts by producing the relevant record that what was sold and declared in the return of income is nothing but the gold and diamond declared in the VDIS, 1997. Accordingly the addition made by the Assessing Officer is deleted and the appeal of the assessee is allowed. - Decided in favour of assessee.

Summary

Issues:
Interpretation of income declaration under Voluntary Disclosure of Income Scheme (VDIS), 1997 for assessment year 1998-99.

Analysis:
The case involved a dispute regarding the source of deposits made in a bank by the assessee, who had declared additional income under the VDIS, 1997. The Assessing Officer rejected the explanation provided by the assessee for the source of the deposits, leading to an addition of a substantial amount under Section 68 of the Income Tax Act, 1961. Both the CIT (Appeals) and the Tribunal upheld the addition. However, the matter was remanded by the High Court to the Assessing Officer for further examination. In the subsequent proceedings, the Assessing Officer again made the addition, contending that the items declared under VDIS were jewellery, while the items declared in the return were gold bullion and loose diamonds. The assessee challenged this action before the CIT (Appeals) but was unsuccessful.

Before the Tribunal, the assessee's representative argued that the jewellery declared under VDIS was converted into gold and diamonds, supported by certificates from jewelers and relevant bills. The representative highlighted that the quantities of converted items matched the quantities declared under VDIS. Reference was made to similar cases where such conversions were accepted by the Assessing Officer. In contrast, the Departmental Representative maintained that the assessee had failed to prove that the declared jewellery items were subsequently sold as gold and diamonds.

Upon reviewing the evidence presented, the Tribunal noted that the details of items declared under VDIS matched the conversion records and subsequent sales made by the assessee. The Tribunal observed that the assessee had produced bills and documents proving the conversion and sale of the items in question. Citing precedents and considering the matching quantities and items, the Tribunal concluded that the assessee had substantiated that the sold items were indeed the same as those declared under VDIS. Consequently, the addition made by the Assessing Officer was deemed unjustified, and the appeal of the assessee was allowed.

In conclusion, the Tribunal ruled in favor of the assessee, emphasizing that the evidence provided sufficiently demonstrated that the items sold were originally declared under VDIS. The Tribunal highlighted the matching quantities and items, supported by bills and certificates, to refute the Assessing Officer's contention. As a result, the addition made under Section 68 of the Income Tax Act, 1961 was revoked, and the appeal of the assessee was upheld.