2004 (7) TMI 647 - HC - Income Tax

Justification of ITAT's relief on undisclosed Jewellery - search and seizure operations u/s 132 - sale of land - additions related to unexplained loose papers - Whether of the case the learned ITAT was justified in giving relief of undisclosed jewellery of 190.85 grams even though the Assessing Officer and the CIT(A) had given relief as per the CBDT Instruction No. 1916, dated 11-5-1994 though the W.T. Returns were not filed by the family members for the block assessment period? - HELD THAT -Undoubtedly, non-appearance of Smt. Chandra Kanta Pandit may be one of the factors which has also relevance and can be taken into consideration but it is not possible to hold as a matter of law that every material on record must be discarded merely because of non-appearance of Smt. Chandra Kanta Pandit before the Assessing Officer and it would render all other materials unreliable and incredible and not relevant and on that basis, finding cannot be reached. In fact, in the letter submitted by the assessee, which has been quoted by the Assessing Officer in his order, gives a complete and comprehensive picture and explain the material which is placed in support of his explanation in this regard. If the status of Gopal Sharma who admits himself to be author of the three loose sheets prepared at the instance of the seller of land Smt. Chandra Kanta Pandit, the finding reached by the Tribunal cannot be held to be vitiated so as to give rise to a substantial question of law. Thus, the Tribunal accepted the submissions made by the assessee that the transaction does not belong to the assessee. It cannot be said that the finding is such to which no person of ordinary prudence will reach on the basis of material on record or that is founded on irrelevant consideration. The finding does not call for any interference under the domain of section 260A of the Act, which envisages only to consider and decide substantial questions of law arising out of the Tribunal s order and not to re-appreciate the evidence and reach the finding on its own by the High Court. As a result of aforesaid discussion, the appeal fails and is hereby dismissed.

Summary

Issues Involved:
1. Justification of ITAT's relief on undisclosed jewellery.
2. Deletion of additions related to unexplained loose papers.

Summary:

Issue 1: Justification of ITAT's relief on undisclosed jewellery

The appeal concerns the assessment of block years 1988-89 to 1998-99 following search and seizure operations u/s 132 at the assessee's premises. The Assessing Officer (AO) found jewellery weighing 1435 grams and, after allowing credit for 794.15 grams declared in wealth-tax returns, treated 640.85 grams as unexplained, adding its value of Rs. 2,68,600 as unexplained investment. The CIT(A) provided further exemption of 450 grams based on CBDT Instruction No. 1916, dated 11-5-1994, and Karnataka High Court's decision in Smt. Pati Devi v. ITO [1999] 240 ITR 727, retaining 190.85 grams as undisclosed. The ITAT accepted the assessee's explanation regarding the acquisition of jewellery and deleted the entire addition, considering the CBDT circular and the status of the assessee's family. The Tribunal found the explanation about the jewellery received during marriage and other ceremonies plausible and not in excess of family status. The High Court upheld the Tribunal's decision, stating that the exclusion was not solely based on the CBDT circular but also on the explanation provided by the assessee, which was found plausible.

Issue 2: Deletion of additions related to unexplained loose papers

The AO added Rs. 42,27,900 based on loose papers found during the search, which the assessee claimed belonged to Smt. Chandra Kanta Pandit. The Tribunal accepted the assessee's explanation, supported by the statement of Shri Gopal Sharma, who confirmed the transactions related to the sale of agricultural land by Smt. Chandra Kanta Pandit. The High Court found that the Tribunal's decision was based on the appreciation of evidence and did not give rise to a substantial question of law. The Tribunal's finding that the transactions did not belong to the assessee was upheld, and the addition was deleted. The High Court emphasized that its role u/s 260A is to consider substantial questions of law, not to re-appreciate evidence.

Conclusion:

The appeal was dismissed, and the Tribunal's findings on both issues were upheld, with no order as to costs.