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2016 (12) TMI 348 - AT - Income TaxAddition u/s 68 - unexplained possession of jewelry and cash - Held that - Once the assessee has produced prima facie relevant material and documentary evidences of the entries in the balance sheet, then the onus shifts upon the AO for carrying out some kind of inquiry or verification of the evidences filed and explanation furnished. In the context of Indian social customs, the gifting of cash and jewellery from parents, grandparents, relatives, near and dear ones cannot be ruled out. The jewellery and cash received at the time of marriage for a woman is considered to be Stridhan which is even recognized under law. Therefore, the presumption and pre-ponderance of probabilities goes in favour of the assessee that she was in possession of the jewellery and cash. The assessee s explanation and evidence have not been dislodged by the AO by bringing any contrary material on record. The AO has proceeded to make the entire addition u/s 68 of the Act simply on the basis of presumption and assumptions which has been confirmed by the ld. CIT(A). IThus the lower authorities have failed to carry out any inquiry or verifications to justify the various additions made u/s 68 of the Act. Accordingly, we reverse the order of ld. CIT(A) and direct the AO to delete all the additions. - Decided in favour of assessee
Issues:
Challenge to order of Commissioner of Income Tax (A) under section 143(3) for assessment year 2008-09. Analysis: The appeal was filed by the assessee against the order of the Commissioner of Income Tax (A) challenging the assessment order under section 143(3) for the assessment year 2008-09. The case involved the assessee declaring total income and long term capital loss on the sale of jewellery. The Assessing Officer (AO) noted discrepancies in the cash deposits and cheques made by the assessee and required proof of the source of credits. The assessee provided affidavits from grandparents regarding the jewellery received at birth and during marriage. The AO added the cash deposits and jewellery sale proceeds to the total income of the assessee, considering them as sham transactions and unexplained cash credits. The AO also added interest received by the assessee to the total income. The first appeal before the CIT (A) upheld the AO's decision, stating lack of proof for jewellery existence and grandparents' capacity to gift. The CIT (A) confirmed the addition under section 68 of the Act. The assessee then appealed to the ITAT. The ITAT considered the submissions and evidence presented by the assessee, including affidavits, balance sheets, bank statements, and sales bills. The ITAT noted that the AO did not conduct sufficient investigation or verification of the documents provided by the assessee. The ITAT observed that the onus was on the AO to verify the evidence once the assessee had produced relevant material. The ITAT highlighted the Indian social customs of gifting cash and jewellery during marriage and recognized the concept of "Stridhan." The ITAT found that the lower authorities had not justified the additions made under section 68 of the Act based on mere presumptions and assumptions. Therefore, the ITAT reversed the CIT (A)'s order and directed the AO to delete all the additions made. In conclusion, the ITAT allowed the appeal of the assessee, emphasizing the failure of the lower authorities to conduct proper inquiry or verification before making additions to the assessee's total income. The ITAT's decision was based on the lack of substantiated evidence against the assessee's claims and the failure to follow due process in assessing the additions under section 68 of the Act.
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