1992 (11) TMI 131 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 4,65,598 on account of unexplained jewellery seized from the premises of the assessee.
2. Deletion of the addition of Rs. 1,52,417 made by the Assessing Officer on account of diamond jewellery found at the time of survey not recorded in the books of accounts.

Detailed Analysis:

1. Addition of Rs. 4,65,598 on account of unexplained jewellery:

The Revenue appealed against the CIT(A)'s order which deleted the addition of Rs. 4,65,598 made by the Assessing Officer. The jewellery was found during a survey at the business premises of the assessee, who claimed it belonged to customers. The Assessing Officer rejected this explanation for several reasons, including the lack of an order book, incomplete registers, and the absence of identification tags on the jewellery.

The CIT(A) found the Assessing Officer's findings faulty, citing that the assessee was transitioning from a partnership to a sole proprietorship and was using certified goldsmiths due to licensing issues. The CIT(A) emphasized that the GS-13 registers and delivery vouchers were maintained and that the jewellery was returned to customers after the survey.

The Revenue contested this, arguing that the GS-13 registers were not maintained according to the law and that the assessee failed to produce customers or their addresses. The Tribunal found the CIT(A)'s findings erroneous, noting that the GS-13 registers did not contain customer addresses and that the assessee had inspected the records after the survey, which could have influenced the preparation of delivery vouchers.

The Tribunal upheld the Assessing Officer's finding that the jewellery belonged to the assessee but remitted the issue back to the Assessing Officer to allow the assessee to explain the source of acquisition of the jewellery, as required under Section 69A of the Income Tax Act.

2. Deletion of the addition of Rs. 1,52,417 on account of diamond jewellery:

The Assessing Officer had added Rs. 1,52,417 for diamond jewellery found during the survey, which the assessee claimed was received on approval from M/s Gokul Das & Co. The CIT(A) deleted this addition, accepting the assessee's explanation corroborated by the statement from M/s Gokul Das & Co. and the fact that the jewellery was for display at the new showroom.

The Tribunal agreed with the CIT(A), noting that the assessee had provided a plausible explanation supported by evidence, including the statement from M/s Gokul Das & Co. and payment records. The Tribunal found the Revenue's rejection of the explanation unjustified and upheld the deletion of the addition.

Conclusion:

The Tribunal partly allowed the Revenue's appeal, upholding the finding that the jewellery belonged to the assessee but remitting the issue of explaining the source of acquisition back to the Assessing Officer. The Tribunal upheld the deletion of the addition related to the diamond jewellery.