2019 (7) TMI 440 - HC - Income Tax

Addition u/s 69 - value of gold and diamond in Peak in WPS account - addition based on materials available on record including the seized material - Tribunal deleted the addition after calling remand report - HELD THAT - In the instant case, the details were culled out from the books maintained by the assessee. The assessee, no doubt, did not offer convincing explanation before the AO, but raised a plea before the Tribunal that they are willing to produce all the names of their customers as well as their workers who can be examined. Tribunal was convinced with the stand taken by the assessee and therefore, granted an opportunity to the assessee to do so and called for a remand report. Statements were recorded from the customers and the job workers and the identity of the customers and job workers was not disputed by the Revenue, as they had produced proper proof of identity. The explanation offered by the assessee read with the statements given by the customers and job workers was found to satisfactory to the Tribunal. This satisfaction being recorded by the Tribunal is a satisfaction on the facts placed before it. Exercising power u/s 260A, we cannot venture into the factual thicket to state that the satisfaction recorded by the Tribunal was unfounded. Therefore, in our considered view, the Tribunal was right in granting relief to the assessee. - Decided against revenue

Summary

Issues:
1. Deletion of addition on account of value of gold and diamond in Peak in WPS account.
2. Consideration of materials available on record.

Analysis:
1. The appellant filed an appeal under Section 260A of the Income Tax Act against the order passed by the Income Tax Appellate Tribunal regarding the addition of a specific amount on account of the value of gold and diamond in the Peak in WPS account for the assessment year 2002-03.

2. The main issue was whether the Tribunal was justified in deleting the addition despite the Assessing Officer and the Commissioner of Income-tax (Appeals) confirming the addition and not considering the materials available on record.

3. The Tribunal called for remand reports from the Assessing Officer based on the stand taken by the assessee that they had details of customers who entrusted gold for making ornaments. The Tribunal reviewed the remand reports and the details provided by the assessee, including names and addresses of customers and workers involved in the process.

4. The Tribunal found that the customers and workers were examined under oath, and their identities were established through official documents like Ration Cards, Driving Licenses, and Voter's Identity cards. The Tribunal granted relief to the assessee after reviewing the sworn statements and other connected records.

5. The Revenue contended that the Tribunal granted relief without the assessee producing such records before the Assessing Officer. However, the Court noted that the Revenue had complied with the Tribunal's orders to submit remand reports, making it too late to raise such a contention.

6. The additions were made under Section 69 of the Act, which deals with unexplained investments. In this case, the Tribunal was satisfied with the explanations provided by the assessee after examining the customers and workers, whose identities were verified.

7. The Court held that the Tribunal's satisfaction with the explanations and evidence presented by the assessee was based on the facts before it, and as per Section 260A of the Act, the Court could not question the Tribunal's findings unless they were unfounded.

8. A previous judgment of the High Court of Allahabad was distinguished from this case as it involved doubts about the creditworthiness of parties providing gold, which was not the situation in the present case. The Court dismissed the appeal, answering the substantial question of law against the Revenue.