2018 (2) TMI 423 - AT - Income Tax

Unaccounted investment in Jewellery added to the total income of the assessee - Held that - It is undisputed fact that assessee has filed wealth tax return for A.Y.2008-09, wherein total Jewellery has been shown. Coordinating Bench in assessee s own case for Asst. Year 2009-10 held that no denial that no incriminating material was found at the time of search proceedings. It is also an undisputed fact that prior to the date of search, the assessee had filed Wealth Tax Returns. The only evidence which came to the notice of the search party were the Wealth Tax Returns filed by the assessee. In our considered opinion, the Wealth Tax Returns of the Group, by any stretch of imagination, cannot be considered as incriminating material in the hands of the assessee. Except for this, there is nothing on record to suggest any incriminating material/document/evidence - We allow the appeal of the assessee and direct the Assessing Officer to delete the addition.

Summary

Issues:
1. Jurisdiction of Assessing Officer under section 153A of the Act.
2. Addition of unaccounted jewellery in total income.

Analysis:

Issue 1: Jurisdiction of Assessing Officer under section 153A of the Act
The appellant challenged the order of the Commissioner of Income Tax(Appeals) on the grounds that the Assessing Officer's order under section 153A of the Act was without jurisdiction and bad in law. The appellant contended that no incriminating material for the Assessment Year under consideration was found during the search proceedings under section 132 of the Act. The appellant argued that the addition made by the Assessing Officer should be deleted as it lacked legal basis. The appellant submitted details regarding the acquisition of jewellery found during the search proceedings, including information on gold ornaments received on various occasions, jewellery received during engagement, and jewellery purchased out of withdrawals. Despite the appellant's submissions, the Assessing Officer made an addition of unaccounted investment in jewellery to the total income of the assessee.

Issue 2: Addition of unaccounted jewellery in total income
The appellant appealed the addition of ?10,89,388/- of alleged unaccounted jewellery in the total income. The appellant argued that the Assessing Officer should delete this addition while computing the total income. The appellant cited a judgment of the Coordinating Bench in a previous case related to the appellant, where it was held that assessments made without any incriminating material are illegal and bad in law. The Coordinating Bench emphasized that the Wealth Tax Returns filed by the assessee prior to the search proceedings cannot be considered as incriminating material. Relying on this judgment, the Tribunal directed the Assessing Officer to delete the addition of ?10,89,388/- in line with the legal principles established in the previous case.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the Assessing Officer to delete the addition of ?10,89,388/- while computing the total income. The Tribunal's decision was based on the lack of incriminating material found during the search proceedings and the legal precedent established in a previous case related to the appellant.