1991 (2) TMI 423 - AT - Income Tax

Summary

Issues:
1. Dispute over the addition of Rs. 46,232 on the value of diamond ornaments found during a search.
2. Validity of interest charged under sections 139(8) and 215 of the Income-tax Act.

Analysis:

Issue 1:
The appellant, deriving income from various sources, disputed the addition of Rs. 46,232 made by the ITO due to a variance in the valuation of diamond ornaments found during a search. The appellant argued that the valuation by the department's Valuer was excessively high and requested an opportunity to cross-examine the Valuer. The appellant provided purchase bills and labor charges as proof of the diamond ornaments' value. The department failed to prove the purchase invoice's value was incorrect and did not examine the jeweler from whom the diamonds were purchased. The Tribunal found that the appellant had sufficiently proven the source of acquisition, and the addition was unjustified. The burden lay on the department to prove the purchase invoice's value was inaccurate, which they failed to do. The Tribunal directed the ITO to delete the addition of Rs. 46,232.

Issue 2:
Regarding the interest charged under sections 139(8) and 215, no arguments were presented by the appellant. The Tribunal directed the ITO to provide consequential relief in this regard. The appeal was partly allowed, with the addition of Rs. 46,232 being deleted.

In conclusion, the Tribunal ruled in favor of the appellant, stating that the addition on the value of diamond ornaments was unjustified due to the department's failure to prove the purchase invoice's value was incorrect. The ITO was directed to delete the addition, and consequential relief regarding interest charged was ordered.