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2021 (7) TMI 1245 - AT - Income TaxExpenses of purchase of gold bars - HELD THAT - Assessee is dealing in gold bullion which is purchased and sold at the market rates applicable on day to day basis. The quantity of gold bullion purchased was 16,469.09 grams and the quantity sold was 16,335.07 grams. This shows that the transactions were not just squaring up the balances but the actual transactions took place. Assessee had accounted for the profits and losses involved in the transactions and had paid the income tax applicable. Assessee and M/s N.K. Gold Medallion Pvt. Ltd. charged and paid VAT as applicable. Turnover declared for the F.Y. 2013-14 by M/s Swaran Traders, proprietorship concern of the assessee, proves the substantial sales to multiple parties. CIT(A) has given a detailed finding and there is no need to interfere with the finding of the CIT(A) and the Ld. DR could not controvert the same. Ground Nos. 1 to 5 are dismissed. Addition u/s 68 - HELD THAT - The dispute was pending in Company Law Board. There was no business in this company since 2011. Due to this dispute, requisite papers like balance sheet etc. were not filed with the Registrar of companies and income tax department. As regards, the source of the amounts received, the company had sold a property of the company for ₹ 12,15,000/-, out of which ₹ 10,00,000/- was received in the bank before days of the transaction with the assessee. The copy of the sale deed is attached. Out of the same sum ₹ 9,80,000/- was transferred to Mrs. Rekha Gupta for which copy of the bank statement was produced by the assessee before the CIT(A). These facts were not disputed by the AO at the time of filing remand report before the CIT(A). As regards to the loan amounting from M/s Anant Shree Financial Services Pvt. Ltd., the Director of this company has mentioned about this loan to Rekha Gupta. Mr. Siddharth Gupta, the Director of this company filed memorandum and articles of association along with Income Tax Return. This is also one of the companies in which Mrs. Rekha Gupta is one of the Directors. The other Directors are family members. The assessee has again mentioned the dispute with her son pending in Company Law Board. This company sold a property out of which was received in bank just before the day of transaction between the company and Mrs. Rekha Gupta. The copy of the sale deed was produced before the CIT(A). Out of the above amount was transferred to the assessee. Thus, these facts were also not disputed by the AO in the remand report. The findings of the CIT(A) do not need any interference - Ground No. 6 is dismissed.
Issues Involved:
1. Allowance of expenses for the purchase of gold bars. 2. Adherence to Rule 46A of the Income Tax Rules, 1962. 3. Discharge of primary onus by the assessee under Section 37(1) of the IT Act, 1961. 4. Genuineness of the purchase transactions. 5. Creditworthiness of lenders and genuineness of transactions regarding unsecured loans. Detailed Analysis: 1. Allowance of Expenses for the Purchase of Gold Bars The Revenue challenged the allowance of expenses amounting to ?4.57 crores for the purchase of gold bars from M/s N.K. Medallion Gold Pvt. Ltd. The Revenue argued that the assessee did not produce adequate evidence beyond purchase bills, failed to explain discrepancies between bills, and did not furnish proof of gold transportation and delivery. Additionally, the Revenue questioned how such purchases could be made without any payment, especially since the credit period in gold trading is typically one week. The CIT(A) allowed the expenses, stating that the party was genuine despite non-reply to a notice issued under Section 133(6) of the Income Tax Act, 1961. 2. Adherence to Rule 46A of the Income Tax Rules, 1962 The Revenue contended that the CIT(A) admitted additional evidence without adhering to Rule 46A, which restricts the production of new evidence unless specific conditions are met. The CIT(A) admitted the additional evidence, reasoning that it was not available during the assessment proceedings and the Assessing Officer did not provide ample opportunity to the assessee to present it. The Tribunal upheld this decision, noting that the CIT(A) rightly admitted the additional evidence and adhered to Rule 46A. 3. Discharge of Primary Onus by the Assessee under Section 37(1) of the IT Act, 1961 The Revenue argued that the assessee failed to discharge the primary onus of proving that the expenditure of ?4,57,42,900 was genuinely incurred for business purposes. The Tribunal found that the assessee provided sufficient evidence, including purchase invoices, VAT charges, and confirmations from M/s N.K. Medallion Gold Pvt. Ltd., demonstrating the genuineness of the transactions. The Tribunal noted that the Assessing Officer did not dispute the existence of the party or the transaction's genuineness. 4. Genuineness of the Purchase Transactions The Tribunal observed that the assessee purchased and sold gold bullion at market rates, with the transactions being recorded in the books of both parties involved. The Tribunal cited the Delhi Tribunal's judgment in Eland International Pvt. Ltd. v. Deputy Commissioner of Income Tax and the Jaipur Bench's judgment in Shubh Laxmi Export v. ITO, which supported the genuineness of purchases even if the parties did not confirm transactions under Section 133(6). The Tribunal upheld the CIT(A)'s detailed findings, noting no need for interference. 5. Creditworthiness of Lenders and Genuineness of Transactions Regarding Unsecured Loans The Revenue also challenged the genuineness of unsecured loans amounting to ?39,25,000, arguing that the lenders did not have commensurate income. The CIT(A) accepted the genuineness of loans from Mr. Anil Gupta and Ms. Nupur Gupta, deleting the additions. For loans from M/s Divya Shree Financial and Capital Services Pvt. Ltd. and M/s Anant Shree Financial Services Pvt. Ltd., the CIT(A) found sufficient evidence, including bank statements and sale deeds, supporting the transactions. The Tribunal upheld the CIT(A)'s findings, noting that the Assessing Officer did not dispute these facts in the remand report. Conclusion The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The Tribunal found that the assessee provided adequate evidence to support the genuineness of the purchase transactions and the creditworthiness of the lenders, adhering to Rule 46A of the Income Tax Rules, 1962. The Tribunal noted that the CIT(A) provided detailed findings, and there was no need for interference.
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