2018 (2) TMI 1695 - AT - Income Tax

Reopening of assessment - Unexplained investments addition made u/s 69 - Held that - In the present case investments of jewellery is duly reflected in the books of accounts of the assesses. Therefore there is no scope of applying the provision of section 69. Apart from the above source of funds is evidenced by the payments from disclosed bank accounts. Therefore the source of investments is also properly and satisfactorily explained by the assesses. The additions made by the AO and confirmed by CIT(A) cannot be sustained and the same is directed to be deleted. - Decided in favour of assessee.

Summary

Issues:
Appeals against orders of C.I.T.(A)-10, Kolkata for A.Y. 2010-11 - Reopening of assessments under section 147 - Addition made under section 69 of the Income Tax Act, 1961.

Analysis:
The case involved two Assessees who purchased jewellery from Minal Gems, Mumbai. The Assessing Officer (AO) reopened assessments based on information received regarding bogus entries provided by Bhawarlal Jain Group, to which Minal Gems belonged. The AO concluded that the purchases were not genuine and made additions to the income of both Assessees.

In the case of Smt. Kusum Bhura, the AO considered the purchase as unexplained investment under section 69 of the Act due to lack of evidence for the purchase. Similarly, in Shri Shrenik Bhura's case, the AO deemed the investment as made from an unexplained source. The CIT(A) upheld the AO's orders, leading to appeals before the Tribunal by the Assessees.

During the appeal, the Assessees argued that the purchases were genuine, supported by evidence of payments through cheques and reflected in their books of accounts. They contended that the additions under section 69 of the Act were unjustified. The Tribunal carefully considered the submissions and noted that the investments in jewellery were recorded in the books of accounts and the sources were explained through payments from disclosed bank accounts.

The Tribunal referred to section 69 of the Act, which deals with unexplained investments, and observed that since the investments were reflected in the books of accounts and the sources were adequately explained, the provision of section 69 did not apply in this case. Consequently, the Tribunal held that the additions made by the AO and confirmed by the CIT(A) were not sustainable. Therefore, the Tribunal allowed the appeals by the Assessees, directing the deletion of the additions.

In conclusion, the Tribunal ruled in favor of the Assessees, highlighting that the additions made under section 69 of the Act were not justified as the investments were properly recorded in the books of accounts and the sources were adequately explained through payments from disclosed bank accounts.