2023 (7) TMI 1502 - AT - Income Tax

Addition u/s.69B - gold, bullion found in the locker of the assessee for which the explanation given by the assessee along with supporting documents were not found convincing by the AO - as submitted that during the search proceedings, gold bullion of 2.5 kg was found in the locker of the assessee for which a precise explanation could not be offered by the assessee while recording the statement u/s. 132 HELD THAT - Undoubtedly, the document of Will furnished by the assessee was executed much prior to the date of search and assessment proceedings, the same was further substantiated as a genuine document when the statement of Notary Public was recorded and the Notary Public had also put an affirmative stamp on the claim of the assessee with regard to aforesaid documents by confirming authenticity of the same. The observations of the AO that certain other external documents like income tax return, wealth tax return pertaining to late Smt. Devki Devi Agrawal, who had executed the Will could not be made available by the assessee, without establishing the document of Will as an ingenuine document, is devoid of merits, therefore, the same cannot be accepted. AO while rejecting the explanation of the assessee could not bring upon any finding or material that can dislodge the contention of the assessee, in such circumstances, the evidence produced in the form of certain documents by the assessee, cannot be considered as an afterthought only because while the statement u/s. 132 of the Act during the search proceedings recorded the assessee was unable to come up with a spontaneous explanation for the same. CIT(A) has very thoughtfully considered the facts of the case and has offered a very reasonable finding against the observations of the AO. We, therefore, do not see any reason to interfere with the findings of the CIT(A) in deleting the addition made by the AO. Thus, we dismiss the appeal of the revenue.

Summary

Issues Involved:

1. Validity of the addition made under Section 69B of the Income Tax Act, 1961.
2. Validity of search assessment made under Section 143(3) read with Section 153A due to alleged mechanical approval under Section 153D.

Issue-wise Detailed Analysis:

1. Validity of the Addition under Section 69B:

The primary issue in this appeal was whether the addition of Rs. 80,99,676/- made by the Assessing Officer (AO) under Section 69B of the Income Tax Act, 1961, was justified. The AO made this addition on account of unexplained gold bullion found in the assessee's locker during a search operation. The assessee claimed that the gold bullion was inherited through a Will executed by the grandmother, Smt. Devki Devi Agrawal. The AO rejected this explanation, considering it an afterthought, as the Will was not mentioned during the initial search proceedings. The AO also noted the absence of supporting documents like income tax returns or wealth tax returns of the deceased, Smt. Devki Devi Agrawal, to verify the source of the gold bullion.

The Commissioner of Income Tax (Appeals) [CIT(A)], however, accepted the assessee's explanation and deleted the addition. The CIT(A) found the Will to be genuine, supported by the Notary Public's statement who confirmed notarizing the Will in the presence of the testator. The CIT(A) held that the AO's decision was based on assumptions and lacked concrete evidence to dispute the genuineness of the Will. The Tribunal agreed with the CIT(A), noting that the AO failed to disprove the Will's authenticity and that the assessee had sufficiently substantiated the claim. The Tribunal concluded that the CIT(A) rightly deleted the addition, and thus, the appeal by the revenue was dismissed.

2. Validity of Search Assessment under Section 143(3) read with Section 153A:

The assessee raised a legal ground under Rule 27 of the ITAT Rules, 1963, challenging the validity of the search assessment made under Section 143(3) read with Section 153A. The assessee argued that the approval granted under Section 153D was mechanical and lacked application of mind, rendering the assessment invalid. However, since the Tribunal decided the main appeal on merits, upholding the CIT(A)'s decision to delete the addition, it did not address this legal ground. Consequently, the cross-objection filed by the assessee became infructuous and was dismissed.

Conclusion:

The Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision to delete the addition under Section 69B. The Tribunal found that the assessee had adequately substantiated the claim regarding the gold bullion with the Will, and the AO's rejection of the explanation was not supported by substantial evidence. The legal ground raised by the assessee regarding the validity of the search assessment was not addressed, as the main appeal was decided on merits. The cross-objection of the assessee was dismissed as infructuous.