2017 (8) TMI 926 - HC - Income Tax

Addition towards investment in gold - whether the gold in question was acquired by the assessee from out of his earnings abroad - balance of probability - ITAT deleted the addition - Held that - We are inclined to agree with the learned counsel for the Revenue. A reading of the order of the Tribunal itself would show that while it was the burden of the assessee to prove the source of his acquisition of the gold ornaments, the Tribunal has proceeded putting the onus on the Revenue. That apart, the Tribunal has also ignored the fact that the assessee did not explain or produce any material substantiating his contention that the gold was acquired outside the country or that the acquisition was from out of his earnings. In the absence of any evidence to that effect, according to us, the Tribunal has misdirected itself in appreciating the case of the Revenue and has arrived at the impugned conclusions, which to say the least, are perverse. - Decided in favour of the Revenue and against the assessee

Summary

Issues: Challenge to deletion of addition towards investment in gold by Tribunal.

Analysis:
1. Issue 1: Deletion of addition towards investment in gold by Tribunal.
- The appeal by the Revenue challenged the Tribunal's deletion of an addition of ?12,29,074 towards investment in gold. The Tribunal justified the deletion based on the assessee's explanation that the gold ornaments were acquired from earnings in Dubai. The Tribunal emphasized the assessee's substantial earnings in Dubai, frequent visits to India, and the absence of evidence contradicting the source of acquisition.
- The Tribunal's reasoning highlighted the assessee's work history in Dubai, family settlement in Dubai since 1997, and the availability of funds supported by salary certificates. The Tribunal found the assessee's explanation plausible, considering the international nature of activities and financial status. The Tribunal concluded that the balance of probability favored the assessee, leading to the deletion of the addition.
- The questions of law framed for appeal included whether the Tribunal was correct in deleting the addition towards investment in gold and if the burden of proof lay on the assessee. The Revenue contended that the Tribunal misdirected itself by placing the onus on the Revenue instead of the assessee to prove the source of acquisition of the gold ornaments.
- The High Court, after considering the arguments, agreed with the Revenue. It noted that the Tribunal had erred in shifting the burden of proof onto the Revenue and disregarding the lack of evidence from the assessee regarding the source of acquisition of the gold. The High Court found the Tribunal's conclusions to be perverse due to the misdirection in appreciating the case of the Revenue.
- Consequently, the High Court set aside the Tribunal's order to the extent challenged, ruling in favor of the Revenue and against the assessee. The appeal was disposed of in favor of the Revenue, overturning the Tribunal's deletion of the addition towards investment in gold.

This detailed analysis outlines the key points of contention, the Tribunal's rationale for deletion, the framing of legal questions, arguments presented by both parties, and the High Court's decision to set aside the Tribunal's order.