2023 (5) TMI 743 - HC - Income Tax

Addition u/s 69A - seized gold bullion and ornaments - ITAT deleted the addition - Whether the order of Tribunal is perverse in not considering the factual trial of the transaction where identity of the original purchaser as well as the identity of the seized gold remain undisclosed - HELD THAT - Tribunal found that the original challans seized with the gold, bullion and gold jewellery supported the claim of the assessee - claim of the assessee has been supported and proved by independent verification done by the investigation wing with third party jewellers in Chennai. Only reason based on which the assessing officer made the addition was on the ground that the gold, bullion lacked distinctive identification numbers on the challans. The correctness of this finding was considered by the learned Tribunal and the learned Tribunal agreed with the finding recorded by the CIT(A) at page 4 of the order dated 30th October, 2019. The Tribunal has extracted the relevant paragraphs at the said order. From paragraph 8 of the impugned order we find that the factual findings recorded by the CIT(A) was not controverted by the department and the Tribunal having been satisfied with the factual conclusion arrived at by the CIT(A) agreed with the same and dismissed the revenue's appeal. Stand taken by the assessee that the gold and ornaments were given to him for the purpose of making jewellery and for polishing was established and proved. The matter being entirely factual and the CIT(A) and the Tribunal having concurrently held in favour of the assessee on facts - No substantial questions of law.

Summary

Issues involved:
The judgment involves issues related to the dismissal of the revenue's appeal under Section 260A of the Income Tax Act, 1961 by the Income Tax Appellate Tribunal. The key questions of law raised by the revenue for consideration include the deletion of additions made under Section 69A of the Act for seized gold bullion and ornaments, failure to establish the identity of the original purchaser of the seized gold, timing discrepancies in the purchase invoice, applicability of section 292C(1) regarding ownership of assets, and reliance on CIT(A) observations regarding asset ownership.

Issue i) Deletion of additions under Section 69A:
The revenue challenged the order of the Commissioner of Income Tax, Appeals regarding the addition of undisclosed income under Section 69A for seized gold and jewelry. The department contended that the assessee failed to provide identification numbers for the seized items, and explanations provided by various parties should not have been accepted. However, the assessee explained that the gold and jewelry were intended for manufacturing and polishing, supported by corroborative statements from involved parties.

Issue ii) Identity of original purchaser:
The revenue argued that the Tribunal overlooked the lack of disclosure regarding the identity of the original purchaser of the seized gold. The assessee maintained that the source of the gold and jewelry was adequately explained and supported by statements from parties involved in the transactions.

Issue iii) Timing discrepancies in purchase invoice:
The revenue questioned the timing discrepancy in the purchase invoice produced by the assessee, which was dated after the seizure of gold bullion. The assessee justified the timing difference by explaining the intended use of the gold for manufacturing and polishing purposes.

Issue iv) Applicability of section 292C(1):
The revenue contended that section 292C(1) should apply as the assessee failed to establish actual ownership of the assets found in their custody during the search. The assessee argued that statements and verifications from involved parties confirmed the legitimate purpose of the seized gold and jewelry.

Issue v) Reliance on CIT(A) observations:
The revenue raised concerns about the Tribunal relying on CIT(A) observations regarding asset ownership. The Tribunal found that the factual findings supported the assessee's explanations and dismissed the revenue's appeal based on the evidence and verification provided.

Separate Judgement:
The Hon'ble Acting Chief Justice T.S. Sivagnanam and the Hon'ble Justice Hiranmay Bhattacharyya presided over the case. The appeal filed by the revenue was dismissed, and the stay application was also rejected based on the established facts and evidence presented during the proceedings.