2017 (1) TMI 817 - AT - Income Tax

Unexplained cash credit - addition u/s 68 - Held that - In the statement of facts the revenue has repeated the observations of the A.O. There is no dispute that the purchase of gold ornaments was duly supported by purchase bills which was subsequently confirmed by M. Ruhi Exports. It is also not in dispute that subsequently the assessee had sold the gold so purchased. We fail to understand, when the A.O. has accepted the capital gains then he has also accepted the cost of purchase, then how can he treat the purchase amount as unexplained cash credit. Considering the facts in totality, we do not find any merit in this grievance of the revenue and the same is dismissed. Addition made u/s. 69 - Held that - After carefully perusing the relevant documentary evidences field before us in the form of a paper book, we find that the amounts shown to have paid by Shri Ankit C. Shah and Shri C.S. Shah (HUF) are duly reflected in their respective pass book. It is also an undisputed fact that there was a typographical error in respect of the dates of payment. It is also true that Shri C.S. Shah (HUF) has paid the amount on three different dates although the A.O. tried to find out the payment of ₹ 9,00,050/- as a total figure. Thus we do not find any merit in this grievance of the revenue and the same is dismissed. Capital gain - possession of the impugned gold ornaments sold during the year under consideration - Held that - There is no dispute that the assessee was showing 1238.67 gms of gold from 1993-94. It is also not in dispute that in the year 2006-07, the assessee had purchased gold weighing 3417.64 gms. Merely, because the sale bills had two different addresses of the assessee, the same cannot be brushed aside lightly. More over as find from the findings of the First Appellate Authority, both the addresses are in fact of the same residential flat. Since the capital gains have arisen from the gold sold during the year the acquisition of which have been successfully explained by the assessee, we do not find any merit in the impugned grievance of the revenue and the same is dismissed.

Summary

Issues Involved:
1. Deletion of addition made under Section 68 of the Income Tax Act for unexplained credit.
2. Deletion of addition made under Section 69 of the Income Tax Act for unexplained investment.
3. Deletion of addition made under Section 69A of the Income Tax Act for unexplained money.
4. Determination of Short Term Capital Gains.

Issue-wise Detailed Analysis:

1. Deletion of Addition under Section 68 for Unexplained Credit:
The Revenue challenged the deletion of ?11,84,124/- added under Section 68, which was shown as outstanding for the purchase of gold. The Assessing Officer (AO) treated this amount as unexplained credit, questioning the genuineness of the transaction. However, the assessee provided confirmation from M. Ruhi Exports, including PAN details and other relevant documents. The CIT(A) found the transaction genuine and deleted the addition, noting that the AO had accepted the Short Term Capital Gains from the sale of the same gold, thus implicitly accepting the purchase cost. The Tribunal upheld the CIT(A)'s decision, dismissing the Revenue's grievance.

2. Deletion of Addition under Section 69 for Unexplained Investment:
The AO added ?5,00,000/- and ?9,00,000/- under Section 69, treating them as unexplained investments towards the purchase of a flat. The assessee clarified that these amounts were paid by Shri Ankit C. Shah and Shri C.S. Shah (HUF) on different dates, supported by ledger accounts and bank passbooks. The CIT(A) was convinced by the evidence and deleted the additions. The Tribunal found no error in CIT(A)'s findings and dismissed the Revenue's grounds.

3. Deletion of Addition under Section 69A for Unexplained Money:
The AO added ?13,50,250/- under Section 69A, treating the sale proceeds of gold as unexplained money. The assessee provided detailed computation of capital gains, supported by sale and purchase bills. The CIT(A) accepted the evidence, confirming the possession and sale of gold, and directed the AO to accept the capital gains as returned by the assessee. The Tribunal upheld this decision, noting no merit in the Revenue's grievance.

4. Determination of Short Term Capital Gains:
The AO questioned the assessee's claim of Short Term Capital Gains, alleging discrepancies in the sale bills and gold quantity. The assessee provided a detailed computation of capital gains, supported by documentary evidence. The CIT(A) accepted the computation, confirming the genuineness of the transactions. The Tribunal found the evidence satisfactory and dismissed the Revenue's appeal.

Conclusion:
The Tribunal upheld the CIT(A)'s decisions on all grounds, finding no merit in the Revenue's appeals. The additions made by the AO under Sections 68, 69, and 69A were deleted, and the Short Term Capital Gains as returned by the assessee were accepted. The appeal filed by the Revenue was dismissed.