2017 (12) TMI 1169 - HC - Income Tax

Addition on account of jewellery holding that the same belonged to the 3 wives of the assessee - returns filed by the 3 wives under the presumptive Tax Scheme - We find that the Tribunal in dealing with this issue had accepted the explanation of the assessee that the amounts mentioned in the receipts found, which were in the name of the assessee, related to the disclosed income of his wives. The view taken by the Tribunal, on the facts and circumstances before it, we find, is a plausible view. Hence, we answer question (a) in the affirmative in favour of the assessee. Block assessment - addition of unexplained expenditure - cash payments during financial year 1995-96 and also from 1st April, 1996 to 7th August, 1996 as per seized document - Held that - The Tribunal was of the view, inter alia, that if the recordings of the regular books of accounts be not up to date, that does not mean the entries, which can be verified from other primary books, would relate to undisclosed income of the assessee for the purpose of block assessment. The transactions, it appeared to the Tribunal, pertained to the regular business process of the assessee which stood disclosed before the department. It held that simply because some transactions were recorded in some of the seized documents, per se, they do not become undisclosed transactions. The assessee had explained the expenditure as out of huge cash withdrawals made by him. On that basis the Tribunal was of the opinion the transactions under consideration formed part of the regular books of accounts of the assessee and therefore this addition was deleted. Revenue was unable to demonstrate before us that this opinion of the Tribunal, on the facts noted by it, was perverse. We accordingly answer this question and all others related to it in favour of the assessee.

Issues Involved:
1. Deletion of addition of ?1,83,923/- for jewellery.
2. Deletion of proposed addition of ?22,39,000/- for undisclosed investment in house property.
3. Deletion of addition of ?2,06,000/- and ?3,00,580/- for cash payments not reflected in the cash book.
4. Deletion of addition of ?1,03,729/- for unexplained expenditure in land.
5. Deletion of addition of ?10,333/- being interest on the loan taken for land purchase.
6. Deletion of addition of ?35,15,299/- being the undisclosed income for the block period.
7. Deletion of addition of ?48,400/- found during the course of search.

Issue-wise Detailed Analysis:

1. Deletion of addition of ?1,83,923/- for jewellery:
The Tribunal deleted the addition of ?1,83,923/- made by the Assessing Officer (AO) for the financial years 1994-95, 1995-96, and 1996-97 on account of jewellery. The AO found receipts in the name of the assessee for the purchase of gold ornaments, which were not entered in the cash books. The assessee explained that the jewellery belonged to his three wives, who had filed returns under the presumptive tax scheme. The Tribunal accepted this explanation, noting that the wives had filed Form 4A for the relevant years. The High Court upheld the Tribunal's decision, stating that the explanation was inherently possible under Chapter XIV-B and that the Tribunal's view was plausible.

2. Deletion of proposed addition of ?22,39,000/- for undisclosed investment in house property:
This issue was not pressed by the Revenue during the hearing, as it related to matters of regular assessment. The High Court noted that the Tribunal had disapproved the proposed addition on the ground that there was no material evidence to support it.

3. Deletion of addition of ?2,06,000/- and ?3,00,580/- for cash payments not reflected in the cash book:
The AO added these amounts as undisclosed income, stating that the payments were not entered in the cash books. The Tribunal deleted the addition, noting that the assessee had provided copies of regularly disclosed bank accounts showing cash withdrawals for the payments. The High Court upheld the Tribunal's decision, stating that the transactions pertained to the regular business process of the assessee and were disclosed before the department.

4. Deletion of addition of ?1,03,729/- for unexplained expenditure in land:
This issue was not pressed by the Revenue during the hearing, as it related to matters of regular assessment. The High Court noted that the Tribunal had deleted the addition, finding that the assessee had failed to link the expenditure with any specific source of income.

5. Deletion of addition of ?10,333/- being interest on the loan taken for land purchase:
This issue was not pressed by the Revenue during the hearing, as it related to matters of regular assessment. The High Court noted that the Tribunal had directed the deletion of the addition, finding that the interest on the loan was not related to the purchase of land.

6. Deletion of addition of ?35,15,299/- being the undisclosed income for the block period:
The Tribunal deleted the addition of ?35,15,299/- made by the AO as undisclosed income for the block period. The High Court upheld the Tribunal's decision, stating that the transactions under consideration formed part of the regular books of accounts of the assessee and were disclosed before the department.

7. Deletion of addition of ?48,400/- found during the course of search:
The AO added ?48,400/- found during the search as undisclosed income. The Tribunal deleted the addition, accepting the assessee's explanation that the amount was part of regular business transactions. The High Court upheld the Tribunal's decision, stating that the explanation was plausible and the transactions were disclosed before the department.

Conclusion:
The High Court upheld the Tribunal's decisions on all the issues, finding the explanations provided by the assessee to be plausible and the Tribunal's views to be reasonable. The appeal was disposed of in favor of the assessee.

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