2017 (6) TMI 1152 - AT - Income Tax

Addition of return of share application money - Held that - Revenue has nowhere doubted the fact that the funds flew towards the said concern through the very same bank account of the assessee. Thus find that the occasion to consider and ponder on the issue why its premises after a few years were found to be locked is not a relevant issue for the purposes of the present case. As noted the third party evidence showing flow of money to the said concern by way of the Bank statement of the assessee and again the flow back by RTGS from M/s D.U. Securities Pvt. Ltd. to the very same bank account where existence of M/s D.U Securities Pvt. Ltd. is not in doubt and the consistent unrebutted explanation that it was for share application money all fully support the claim of the assessee. Accordingly, in the afore-mentioned peculiar facts and circumstances, find that the addition on facts has wrongly been made and sustained and accordingly is directed to be deleted. - Decided in favour of assessee. Claim of sale of jewellery - Held that - Considering the fact that the written submissions dated 16.08.2013 were filed before the CIT(A) as part of which have been reproduced in page 4 of the impugned order while considering the first ground it is also seen that it is accompanied by an affidavit of Smt. Santosh Devi, W/o-Late Sh. Dwarka Das, Aged 65 years and R/o-1/5265. Balbir Nagar, Shahdara, Delhi-110032 affirming the fact that ornament weight 440 grams was gifted by her to her son-in-law on 10.02.1989 i.e. date of his marriage anniversary. The said affidavit is dated, attested and notarized on 25.03.2013. There is nothing on record to rebut the fact that the specific jewellery was not sold to M/s Gupta Jewellers P.Ltd. whose M.D. as per the claim of the assessee itself was produced for cross-verification before the AO. This assertion of fact in the assessment order also stands unrebutted. In these circumstances, find no justification for denial of assessee s claim. Being satisfied by the consistent explanation offered and supported by affidavit of the donor on record alongwith copy of the Bill of M/s Gupta Jewellers Pvt. Ltd. through whom the jewellery was sold, I find that the addition on facts has wrongly been made and sustained. Accordingly, the addition is directed to be deleted.- Decided in favour of assessee.

Summary

Issues Involved:
1. Addition of ?5,54,300/- related to the return of share application money.
2. Addition of ?5,76,920/- related to the sale of jewelry.

Issue-Wise Detailed Analysis:

1. Addition of ?5,54,300/- Related to the Return of Share Application Money:
The assessee contested the addition of ?5,54,300/- made by the Assessing Officer (AO) on the grounds that this amount was the return of share application money from M/s D.U. Securities Private Limited. The AO had required the assessee to explain the RTGS receipt of ?5,54,300/- in the assessee's disclosed saving bank account. The assessee explained that the payments for acquiring shares were made through cheques, and since no shares were allotted, the amount was returned by RTGS to the same bank account.

The AO did not accept this explanation because the notice sent to M/s D.U. Securities Pvt. Ltd. came back unserved with the comment "always locked." The tax authorities presumed that the concern was not in existence, and thus, the transaction was not genuine.

Upon reviewing the material available on record, it was found that the payments were indeed made from the assessee's bank account to M/s D.U. Securities Pvt. Ltd. and were returned by RTGS. The AO's presumption about the non-existence of the concern was based on the fact that the office was always locked, which was explained by a notice from the Debt Recovery Tribunal affixed at the premises.

The Tribunal concluded that the tax authorities misdirected themselves by holding the assessee liable for the future conduct of M/s D.U. Securities Pvt. Ltd. The consistent explanation and evidence provided by the assessee demonstrated that the transaction was genuine. Therefore, the addition of ?5,54,300/- was directed to be deleted.

2. Addition of ?5,76,920/- Related to the Sale of Jewelry:
The assessee also contested the addition of ?5,76,920/- made by the AO on the grounds that this amount was from the sale of jewelry gifted by the assessee's mother-in-law. The assessee provided an affidavit from the mother-in-law, stating that she had gifted the jewelry weighing 440 grams, which cost ?1,75,000/- on 10.02.1989, to the assessee on his marriage anniversary. The jewelry was sold to Gupta Jewellers Pvt. Ltd. for ?5,76,920/-.

The AO did not accept the explanation because the assessee failed to produce the donor for verification. The AO also recorded that the assessee's counsel offered to surrender the amount on the condition that no penalty would be levied, which was not accepted by the AO.

The Tribunal found that the direction to produce the donor was given only a day before the assessment order was passed, leaving no time for the assessee to comply. Additionally, the affidavit from the mother-in-law and the receipt from Gupta Jewellers Pvt. Ltd. supported the assessee's claim. The Tribunal concluded that the addition was wrongly made and sustained, and thus, directed the deletion of the addition of ?5,76,920/-.

Conclusion:
In conclusion, the Tribunal allowed the appeal of the assessee, directing the deletion of both additions of ?5,54,300/- related to the return of share application money and ?5,76,920/- related to the sale of jewelry. The order was pronounced in the open court on 17th January, 2017.