2018 (4) TMI 1057 - AT - Income Tax

Unexplained investment in property u/s 69 - Held that - As per CIT(A) Assessee had not filed his return of income from A.Y 2007-08 - though Assessee has not filed return of income from A.Y 2007-08 onwards, yet his submission of maintaining books of accounts & further the preparation of cash book after the search has little credibility and is against human probabilities. He has also noted that in the absence of any contemporaneous evidences of cash payments, amount has been rightly considered to be out of his explained source of income by the Assessing Officer. AR has not brought any material on record to controvert the findings of CIT(A) - Decided against assessee. Unexplained investment in gold jewellery and silver utensils u/s. 69A - Held that - A.R. s contention that at the time of search the inventory of silver was made in the name of wife of Assessee, while making the assessment in the hands of Assessee s wife, no addition has been made has not been controverted by Revenue. Thus no addition of silver in the hands of Assessee is called for. - Decided in favour of assessee Unexplained investment in KVPs - Held that - Assessee had failed to show the source of opening cash balance and had also not furnished any evidence of availability of cash in his hand. Refereeing to AR s submission that he had withdrew ₹ 90,000/- from his savings bank account and it was used for purchase of KVPs it has not been controverted by Revenue - we are of view that credit to the extent of ₹ 90,000/- be granted and the addition is, therefore, restricted to the balance amount of ₹ 80,000/-. - Decided partly in favour of assessee.

Summary

Issues Involved:
1. Addition on the ground of unexplained investment in property under Section 69.
2. Addition for possession of silver articles under Section 69A.
3. Addition on the ground of unexplained investment in Kisan Vikas Patra (KVPs) under Section 69.

Issue-wise Detailed Analysis:

1. Unexplained Investment in Property:
The Assessee purchased property for ?4,00,500, with evidence of payment for only ?2,00,000. The Assessing Officer (AO) treated the remaining ?2,00,500 as unexplained investment under Section 69. The Commissioner of Income Tax (Appeals) [CIT(A)] partially upheld this by accepting cheque payments totaling ?2,63,843 but found no credible evidence for cash payments of ?1,36,657, thus retaining this amount as unexplained. The Tribunal found no reason to interfere with CIT(A)’s findings, noting the lack of contemporaneous evidence and credibility of the Assessee's cash book. Therefore, the ground raised by the Assessee was dismissed.

2. Possession of Silver Articles:
During a search, gold jewelry and silver utensils were found. The AO added the value of these items as unexplained investment under Section 69A, totaling ?25,95,507. The CIT(A) accepted the Assessee's explanation for the gold jewelry based on CBDT Instruction No. 1916, considering it within permissible limits and thus explained. However, for the silver utensils weighing 10.595 kg valued at ?2,57,460, the CIT(A) did not find the Assessee’s explanation credible and retained this amount as unexplained. The Tribunal, noting that the inventory of silver was made in the name of the Assessee’s wife and no addition was made in her assessment, concluded that no addition in the hands of the Assessee was justified. Thus, this ground was allowed in favor of the Assessee.

3. Unexplained Investment in KVPs:
KVPs amounting to ?8,51,500 were found, with ?1,70,000 invested during the year. The AO added this as unexplained investment under Section 69 due to lack of evidence for the opening cash balance and the Assessee not filing returns from 2006-07 onwards. The CIT(A) upheld this, citing the unreliability of the Assessee’s cash book. The Tribunal, however, accepted the Assessee’s claim of withdrawing ?90,000 from a savings bank account and used for KVPs, thus granting credit for this amount and restricting the addition to ?80,000. Consequently, this ground was partly allowed.

Conclusion:
The Tribunal partly allowed the appeal, dismissing the ground related to unexplained investment in property, allowing the ground related to silver articles, and partly allowing the ground related to KVPs by restricting the addition to ?80,000. The order was pronounced on April 9, 2018.