2005 (6) TMI 206 - AT - Income Tax

Summary

Issues:
- Addition under section 68 for sale of VDIS jewellery
- Reduction of long-term capital loss

Analysis:
1. Addition under section 68 for sale of VDIS jewellery:
- The assessee appealed against the addition of Rs. 7,66,519 under section 68 for the sale of VDIS jewellery to M/s Bishan Chand Mukesh Kumar Saraf as bogus.
- The AO found discrepancies in signatures and non-cooperation of the purchaser, leading to the addition.
- The CIT(A) observed that the AO did not raise enquiries regarding the purchaser's existence during assessment and relied on direct enquiries with the purchaser.
- The CIT(A) noted that the purchaser confirmed the transaction but failed to appear before the Investigation Wing, creating doubt.
- The assessee provided evidence of sale through cheques and bills, proving the transaction's genuineness.
- Citing legal precedents, the Tribunal emphasized the need for evidence disclosure and opportunity for rebuttal, leading to the deletion of the addition.

2. Reduction of long-term capital loss:
- The AO reduced the long-term capital loss claimed by the assessee from Rs. 2,13,512 to Rs. 31,696.
- The Tribunal directed the AO to provide necessary relief to the assessee following the deletion of the addition under section 68.
- Consequently, the appeal of the assessee was allowed, and the addition of Rs. 7,66,519 was deleted, with directions for relief on the reduced long-term capital loss.