2019 (7) TMI 672 - HC - Income Tax

Unexplained investment in jewellery - addition of 11065 grams - assessee filed affidavits from 15 persons to substantiate his case which was rejected by AO and CIT(A) on the ground that they were stereo-type affidavits - Tribunal accepted affidavits and explanation of gold deposits of his relatives and those relatives numbering 15 persons produced their PAN numbers as well as the Wealth Tax returns and VDIS returns - HELD THAT - The evidence produced by the assessee before the AO was held to be sufficient to explain the gold and jewellery which were seized at the time of search in assessee's premises Details of the claim of gold deposits from relatives and the extent to which it was accepted and extend to which it was supported by the Wealth Tax and VDIS returns of respective persons. Where the assessee asserts that it had received as gold deposits from its family members/relative more than what it was stated at the time of search and such assertion is supported by affidavits and corroborative evidences likes VDIS declaration of the giver/creditor and copies of Wealth Tax returns of the giver/creditors, in our opinion it was incorrect to brush it aside. Lower authorities simply went by a presumption that the claim was an after thought. Gold deposits agreements stipulates a return on investments to the credit and therefore this cannot be deemed gratuitous transactions With regard to the claim of the assessee in respect of 1042 grams of gold jewellery belonging to the gold-smith, since the Tribunal has remanded this issue for fresh consideration to the Assessing Officer, we find there is no ground to interfere with the same. Revenue referred to case of Principal Commissioner of Income-tax (Central)-1 Vs. NRA Iron Steel (P). Ltd. 2019 (3) TMI 323 - SUPREME COURT which can be of no assistance to the revenue in this appeal on account of the factual position therein. - We find that factual details have been reappraised by the Tribunal to come to the conclusion as held in the impugned order. - Decided against revenue

Summary

Issues:
1. Deletion of addition towards unexplained investment in jewellery based on affidavits obtained by the assessee.
2. Verification of jewellery list in affidavits obtained by the assessee.
3. Correctness of deletion of addition towards unexplained investment in jewellery by the Income-tax Appellate Tribunal.
4. Examination of jewellery list provided by goldsmiths in affidavits obtained by the assessee.

Analysis:
1. The Tax Case Appeal involved the deletion of the addition towards unexplained investment in jewellery based on affidavits obtained by the assessee from relatives/family members. The Tribunal found the evidence produced by the assessee to be sufficient to explain the gold and jewellery seized during the search at the assessee's premises. The Tribunal considered the purity of the jewellery, variations in quantity, and the supporting documentation provided by the relatives to substantiate the claims made by the assessee. The Tribunal concluded that the lower authorities had wrongly dismissed the claims as an afterthought, emphasizing the importance of corroborative evidence in such cases.

2. The issue of verification of the jewellery list provided in the affidavits obtained by the assessee was raised in the appeal. The Tribunal directed the Assessing Officer to examine and verify the details of the jewellery claimed by the assessee in respect of gold deposits received from relatives. The Tribunal highlighted the significance of considering the supporting documents, such as VDIS declarations and Wealth Tax returns of the relatives, to assess the credibility of the claims made by the assessee. The Tribunal emphasized that gratuitous transactions should not be presumed without proper evaluation of the evidence presented.

3. The correctness of the deletion of the addition towards unexplained investment in jewellery by the Income-tax Appellate Tribunal was a crucial aspect of the appeal. The Tribunal's decision to grant relief to the assessee was based on a thorough examination of the factual evidence presented during the proceedings. The Tribunal scrutinized the claims made by the assessee, the explanations provided, and the supporting documentation to arrive at the conclusion that the assessee had substantiated the source of the gold and jewellery seized during the search. The Tribunal's findings were upheld, dismissing the revenue's appeal.

4. Regarding the examination of the jewellery list provided by the goldsmiths in the affidavits obtained by the assessee, the Tribunal remanded this specific issue for fresh consideration to the Assessing Officer. The Tribunal acknowledged the need for further assessment of the 1042 grams of gold jewellery belonging to the goldsmith and deemed it necessary for the Assessing Officer to reevaluate this particular aspect. The Tribunal's decision to remand this issue indicated a meticulous approach to ensure a comprehensive review of all relevant details before making a final determination.

In conclusion, the High Court dismissed the revenue's appeal, emphasizing that no substantial question of law arose for consideration based on the detailed analysis and findings presented in the Tribunal's order. The judgment underscored the importance of thorough examination of evidence, verification of claims, and proper assessment of supporting documents in cases involving unexplained investments in jewellery.