2020 (4) TMI 288 - AT - Income Tax

Unexplained investment in gold and silver - assessee was in possession of 590 gms. gold and accordingly the value of the same at the relevant point of time has been added to the total income of the assessee after allowing 15% less towards alloy contents - HELD THAT - Though the CBDT Instruction was not available at the relevant point of time, however, there is no mention in the said instruction that the same will apply retrospectively or prospectively. However, the when the AO completed assessment for the year under consideration, it was very much available with the department as the AO has passed assessment order on 31.12.1998 and the CBDT Instruction No.1916 is dated 11.05.1994. It is also pertinent to mention here that in the case of the assessee earlier as directed to drop the proceeding initiated vide order dated 21.09.2013, passed by the Authorised Officer, Special Court, Bhubaneswar in Confiscation Case No.4/2009. Further the Hon ble High Court has observed that if the assessee is acquitted of the offence then the confiscated property is to be returned to him. So the natural corollary to this provision is that if there is no possibility of recording any conviction as in the case of death of the person affected and abatement of the criminal trial against him, a confiscation cannot be made as there is no possibility of the person affected being convicted for the offence under the P.C.Act. We are of the opinion that the addition made on account of possession of gold of 590 gms. worth of ₹ 2,17,350/- is not sustainable. Addition on account of possession of silver of 13 kgs. worth of ₹ 3,21,870/-, we have gone through the paper book at page 220 and found that the assessee was having 100 kgs. of silver since the year 1965. Therefore, it can safely be presumed that in the relevant assessment year the assessee must have 13 kgs. silver which he has already shown in the wealth tax return. Before us, ld. DR did not bring any cogent material on record to controvert the above facts. Accordingly, we direct the AO to delete the addition made on account of investment in gold and silver totaling to ₹ 3,21,870/-. Ground No.4 in the appeal of the assessee is allowed. Purchase of vehicles - Assessee explained that for purchase of the said vehicle the assessee has taken loan from his office and remaining amount has been paid from the bank on account of closure of term deposits and savings account - HELD THAT - We find that the assessee has got sanctioned of ₹ 42,000/- from his office as loan for purchase of car, copy of which is filed in the paper book at page 5 and remaining amount has been collected from the bank on account of term deposits and savings bank, a certificate in this regard has been issued by the United Bank of India, copy of which is filed at page 6. In the assessment order, the AO has also accepted that the assessee has sufficient bank balance to meet out for purchase of car, however, did not accept the explanation of the assessee and added the same to the total income of the assessee. In our opinion, on perusal of the above documents placed before us in the form of paper book, we are satisfied that the assessee has accumulated money for purchase of car from his office as loan and from the bank after closing the term deposits and savings account. Therefore, the addition made by the AO on account of purchase of car and confirmed by the CIT(A) is directed to be deleted.

Issues Involved:
1. Arbitrary and erroneous assessment orders.
2. Addition of income from house property.
3. Addition of interest income.
4. Addition of unexplained investment in gold and silver.
5. Addition of unexplained investment in house property.
6. Addition of unexplained investment in the purchase of a car.
7. Addition of unexplained investment/deposit/cash balance.
8. Non-acceptance of additional evidence by CIT(A).

Issue-wise Detailed Analysis:

1. Arbitrary and Erroneous Assessment Orders:
The assessee contended that the assessment orders were arbitrary, illegal, unjustified, and erroneous, passed without proper application of mind. This issue was raised in all the assessment years under consideration.

2. Addition of Income from House Property:
The assessee argued that the addition of income from house property was unjustified as the property income belonged to multiple independent assessees who had been filing returns and paying taxes on this income since 1986. The tribunal noted that the Assessing Officer (AO) did not accept the returns filed by the family members and considered the income as belonging to the assessee, leading to double addition.

3. Addition of Interest Income:
Similar to the house property income, the assessee claimed that the interest income belonged to multiple independent assessees. The AO, however, did not recognize these returns and added the interest income to the assessee's total income, resulting in double addition.

4. Addition of Unexplained Investment in Gold and Silver:
The tribunal addressed the addition of ?3,21,870 towards unexplained investment in gold and silver. The assessee provided evidence of possession of gold and silver through wealth tax returns and CBDT Instruction No.1916, which allows certain quantities of gold per family member. The tribunal found the addition unsustainable, citing precedents from the Delhi High Court and the jurisdictional High Court's judgment in Criminal Appeal No.479 of 2013, which directed the dropping of confiscation proceedings against the assessee.

5. Addition of Unexplained Investment in House Property:
The assessee argued that the house property belonged to Smt. Birajini Panda, an independent assessee, and the income from this property had been offered to tax by her. The tribunal noted that the AO did not accept these returns and added the investment to the assessee's income.

6. Addition of Unexplained Investment in Purchase of Car:
The tribunal considered the addition of ?1,30,000 towards the unexplained investment in the purchase of a car. The assessee provided evidence of a loan from his office and funds from bank term deposits and savings accounts. The tribunal found the addition unjustified and directed its deletion.

7. Addition of Unexplained Investment/Deposit/Cash Balance:
The assessee contested various additions towards unexplained investments, deposits, and cash balances, arguing that these belonged to multiple independent assessees. The tribunal noted that the AO did not accept the returns filed by these family members and added the amounts to the assessee's income.

8. Non-Acceptance of Additional Evidence by CIT(A):
The assessee filed additional evidence before the CIT(A), which was not accepted. The tribunal allowed the additional evidence, noting that the AO and CIT(A) refused to consider it on the grounds that it was fresh evidence during the appellate proceeding. The tribunal remitted the issues to the AO for verification of the additional evidence, directing the AO to provide a reasonable opportunity of hearing to the assessee.

Conclusion:
The tribunal partly allowed the appeals for statistical purposes. It directed the deletion of additions related to investment in gold and silver and the purchase of a car. Other issues were remitted to the AO for proper adjudication after considering the additional evidence filed by the assessee. The tribunal's observations for the assessment year 1992-1993 applied mutatis mutandis to the other appeals for assessment years 1993-1994, 1994-1995, and 1995-1996.

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