1999 (11) TMI 118 - AT - Income Tax

Summary

Issues:
1. Estimation of income from the profession of goldsmith
2. Addition of alleged undisclosed stock of silver ornaments

Analysis:

1. Estimation of income from the profession of goldsmith:
The first issue in this case pertains to the estimation of the assessee's income from the profession of goldsmith. The Deputy Commissioner of Income Tax (Appeals) confirmed an addition to the declared income, estimating it at Rs. 33,000 as opposed to the declared amount of Rs. 10,000. The assessee argued that the income should be accepted based on various documents and explanations provided. The assessee highlighted discrepancies in the income declared for different assessment years and presented evidence to support the declared income of Rs. 20,000 as reasonable. After considering all relevant facts, the tribunal directed the Assessing Officer to restrict the income from the profession at Rs. 28,000, providing relief of Rs. 5,000 to the assessee.

2. Addition of alleged undisclosed stock of silver ornaments:
The second issue revolves around the addition made by the Assessing Officer concerning alleged undisclosed stock of silver ornaments. The AO observed silver ornaments weighing 5.235 kgs during a survey and made an addition of Rs. 26,698 after allowing for impurity. The Deputy Commissioner of Income Tax (Appeals) directed half of the silver ornaments to be considered as stock-in-trade and the other half as an investment from unexplained sources. The assessee contended that the stock found was part of the normal quantity of stock-in-trade kept by a business dealing in silver ornaments. The tribunal agreed with the assessee, noting the long history of the business and the lack of justification for the addition. Consequently, the tribunal directed the AO to delete the addition made on account of the alleged unexplained investment in silver ornaments, granting relief to the assessee.