2017 (12) TMI 681 - HC - Income Tax

Undisclosed gold jewellery - It was argued that it displayed in the marriage after hving been taken out from the stock and subsequently placed back in the stock - Held that - We find that the document B-31 relied against the assessee records entries that were considered adverse both to the assessee, and also his brother. The nature of these entries and the manner in which they have been recorded is same in both cases. The document having been read by the Tribunal in favour of the assessee s brother, we do not see how the Tribunal could have read it differently in the case of the present assessee. Perhaps, the only reason to read it differently was because of mistake that crept in the order of the Tribunal when it recorded that certain gold jewellery had been seized from the assessee. However, as has already been noted above, no gold jewellery was seized from the assessee. Thus, the case of the assessee and his brother, Ravindra Kishore was same and identical. There is thus, no material to justify the addition on account of undisclosed gold jewellery. - Decided in favour of assessee.

Summary

Issues:
1. Interpretation of document paper No. B-31 in block assessment cases.
2. Justification for not accepting the claim of the appellant regarding ownership of gold jewellery.

Analysis:
1. The appeal involved substantial questions of law related to the interpretation of document paper No. B-31 in block assessment cases under the Income Tax Act. The Tribunal had to determine whether the claim of the appellant, one of the partners in M/s Kishore Jewellers, should be accepted based on the document, especially in comparison to a similar case involving his brother, Ravindra Kishore, where the claim was accepted by the Tribunal.

2. The core issue revolved around the ownership of gold jewellery seized during search proceedings under Section 132(1) of the Income Tax Act. The assessing officer made additions to the undisclosed income of the appellant and his brother, alleging possession of jewellery acquired from undisclosed income based on document No.B-31. The appellant and his brother explained that the jewellery was used for marriage ceremonies and returned to the firm's stock. However, the explanation was rejected, leading to additions in their undisclosed income.

3. The Tribunal's findings were crucial in this case. While the Tribunal accepted the explanation in Ravindra Kishore's case, it disbelieved the appellant's explanation, leading to sustained additions in his undisclosed income. The discrepancy in treatment despite identical circumstances raised concerns about the fairness and consistency of the Tribunal's decisions.

4. A significant development was the revelation that no jewellery had been seized from the appellant during the search proceedings, contrary to the Tribunal's findings. This fact, supported by official affidavits, aligned the appellant's case with that of his brother, where the Tribunal's decision was in favor of the appellant's explanation.

5. Ultimately, the High Court found that the Tribunal's decision to add the amount to the appellant's undisclosed income was unjustified. Given the low quantum of the addition and the precedent set in the appellant's brother's case, where the addition was set aside, the Court ruled in favor of the appellant, setting aside the addition entirely. The Court emphasized the similarity between the cases and the lack of material to support the addition, leading to a favorable judgment for the appellant.