2022 (12) TMI 699 - HC - Income Tax

Addition as value of explained jewellery - quantum of unexplained income in the form of jewels in the hands of the respective appellants as above - undisclosed income in the form of unaccounted jewelers - HELD THAT - A reading of the impugned orders of the Appellate Tribunal and the grounds of appeals raised by the respective appellants reveals that no substantial question arises for consideration for being answered in these appeals. The dispute pertains to only quantum of unexplained income in the form of jewels in the hands of the respective appellants as above. Though the learned Standing Counsel for the respondent submitted that the matter can be remitted back to the Assessing Officer for determination, the learned counsel for the appellants insisted for a order on merits of the respective appeals. We find no merits in these appeals as no substantial question of law arises for consideration. Appellate Tribunal is the ultimate fact finding authority. In appeal, we cannot come to a different conclusion on facts. These appeals are therefore liable to be dismissed . Impugned order is set aside and the case is remitted back to the AO, i.e. Deputy Commissioner of Income Tax, Central Circle-II, to pass a fresh order on merits in accordance with law in line with the direction of the Tribunal. Entire exercise shall be completed by the AO in the respective cases, within a period of three months from the date of receipt of a copy of this order.

Issues Involved:
1. Justification of the Appellate Tribunal in reversing the order of the Commissioner of Income Tax (Appeals) regarding unexplained jewelry.
2. Applicability of the Finance Act, 2001, to 'Block Assessment' for searches conducted on January 5, 2001.
3. Nature of the proviso inserted in Section 113 by the Finance Act, 2002.
4. Determination of unexplained income in the form of jewelry.

Detailed Analysis:

1. Justification of the Appellate Tribunal in reversing the order of the Commissioner of Income Tax (Appeals) regarding unexplained jewelry:
The appellants challenged the Income Tax Appellate Tribunal's decision to reverse the Commissioner of Income Tax (Appeals)'s order, which had accepted the appellants' explanations for the possession of jewelry. The Tribunal found that the appellants frequently changed their explanations and failed to provide documentary evidence supporting their claims. The Tribunal concluded that the first appellate authority had deleted the addition based merely on the appellants' explanations without any evidence, which is not permissible under the law. Consequently, the Tribunal restored the addition of Rs.9,27,676/- as unexplained jewelry, reversing the appellate authority's decision.

2. Applicability of the Finance Act, 2001, to 'Block Assessment' for searches conducted on January 5, 2001:
The court framed additional substantial questions of law to determine whether the Finance Act, 2001, was applicable to 'Block Assessment' under Chapter XIV-B for searches carried out on January 5, 2001, and whether the proviso inserted in Section 113 by the Finance Act, 2002, is classificatory in nature. However, the judgment does not provide a detailed analysis or conclusion on these specific questions, focusing instead on the primary issue of unexplained jewelry.

3. Nature of the proviso inserted in Section 113 by the Finance Act, 2002:
Similar to the previous issue, the court framed this question but did not delve into a detailed discussion or conclusion within the provided judgment. The primary focus remained on the assessment and explanation of the jewelry.

4. Determination of unexplained income in the form of jewelry:
The appellants argued that the seized jewelry was either ancestral, purchased from sale proceeds, received as marriage gifts, or given by in-laws. The Tribunal, however, found inconsistencies and a lack of documentary evidence supporting these claims. The Tribunal partially allowed the Revenue's appeal, directing the Assessing Officer to consider part of the jewelry as explained based on the appellants' lineage and probable inheritance but maintained that a significant portion remained unexplained. The Tribunal's decision was based on the lack of concrete evidence and the appellants' changing explanations.

Conclusion:
The High Court found no substantial question of law arising from the appeals, emphasizing that the Appellate Tribunal is the ultimate fact-finding authority. The court dismissed T.C.A.No.232 of 2011 and remitted T.C.A.No.768 of 2009 back to the Assessing Officer for a fresh assessment in line with the Tribunal's reasoning. The court directed the Assessing Officer to complete this exercise within three months, thereby disposing of the appeals and closing the connected miscellaneous petitions without costs.

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