2023 (1) TMI 531 - AT - Income Tax

Addition on protective basis u/s 69A - genuineness and ownership of fine gold - whether the impugned gold seized by the Revenue belongs to the assessee and sent to assessee on account of purchases or for job work? - HELD THAT - Admittedly, the facts brought on record by the AO are crucial but we note that such mismatch was never confronted to the assessee for his rebuttal. Thus, it appears to us that some details has been used by the AO against the assessee behind his back which is not desirable under the provisions of law. There were various documents which have been furnished by the assessee during the proceedings before the respective authorities as elaborated in the preceding paragraph. With respect to the same, no iota of doubt was raised by the revenue. In fact, the assessee has shown payments against the purchases which were duly recorded in the books of accounts and reported in GST return by both the parties i.e assessee and seller M/s Brij Mohan Jewellers. In the absence of any infirmity in all these details, it seems to us that the assessee is being faced certain difficulties. On one hand, the assessee has made the payment against the purchases but failed to take the delivery of the gold which was purchased by him. One of the party being Seller has denied to have made sales to the assessee whereas in the case on hand both the buyer and the seller have admitted to have carried out the transaction of purchase and sales. Thus, what appears is this that the case on hand is stronger than the case cited above. It is for the reason that the transaction on hand for the purchase and sale is duly supported based on the documentary evidence which have not been disputed or doubted by the authorities below. It is the settled law for the additions made under the provisions of section 69A of the Act, the onus lies upon the Revenue to establish that the assessee is found owner of money, bullion, jewellery or other valuable article which is not recorded in the books of accounts. Assessee failed to offer an explanation about the nature and source of acquisition of such money, bullion, jewellery or other valuable article. In the case on hand no cogent material brought on record suggesting that impugned gold is unaccounted and assessee failed to offer an explanation. As such both the assessee and the seller duly recorded the transaction of sale and purchase of fine gold weighing 949.18 gram. The seller confirmed to have made sale to the assessee vide tax invoice dated 26 October 2017 and received payment against such sale. Therefore, merely for the reason that the seller behind the back of the assessee stated that he physically handed over the gold to the assessee instead of making courier, the documentary evidences in the form of tax invoice, proof of payment, and recording of transactions in books of account cannot be brushed aside. n view of the above and after considering the facts in totality and in the light of the principles laid down in RAKESHKUMAR BABULAL AGARWAL 2022 (3) TMI 527 - GUJARAT HIGH COURT we are inclined to hold that the assessee is the owner of the gold. Hence, the ground of appeal of the assessee is allowed.

Summary

Issues Involved:
1. Ownership and genuineness of fine gold weighing 949.18 grams.
2. Validity of the protective addition made by the Assessing Officer (AO).
3. Adequacy of documentary evidence provided by the assessee.
4. Procedural fairness in the assessment process.

Detailed Analysis:

1. Ownership and Genuineness of Fine Gold Weighing 949.18 Grams:
The primary issue was whether the fine gold weighing 949.18 grams belonged to the assessee or was sent for job work by M/s Brij Mohan Jewellers. The assessee claimed to have purchased the gold, supported by various documents such as the tax invoice, ledger copies, bank statements, GST returns, and stock registers. Conversely, the AO contended that the gold parcel did not contain the names of the sender and receiver and lacked documentary evidence. The AO also noted discrepancies in the dates of the transaction and courier, leading to doubts about the genuineness of the transaction. The CIT(A) found that the substantive addition was already made in the hands of the seller, M/s Brij Mohan Jewellers, and thus deleted the protective addition in the hands of the assessee.

2. Validity of the Protective Addition Made by the AO:
The AO made a protective addition of Rs. 29,01,486/- in the hands of the assessee, citing the failure to substantiate the actual ownership of the seized gold. However, the CIT(A) deleted this addition, observing that the gold was already added in the hands of the seller on a substantive basis. This decision was upheld, considering that the substantive addition in the seller's hands had reached finality and was not challenged further.

3. Adequacy of Documentary Evidence Provided by the Assessee:
The assessee provided extensive documentary evidence to support the claim of ownership, including purchase invoices, payment details, and GST returns. These documents were not disputed by the authorities. However, the AO doubted the genuineness of the transaction due to the mismatch in the dates of the courier and the purchase invoice. The CIT(A) and the Tribunal found the documentary evidence credible and noted that the transaction was duly recorded in the books of accounts of both parties, thereby supporting the assessee's claim.

4. Procedural Fairness in the Assessment Process:
The Tribunal noted that certain crucial facts were not confronted with the assessee, which is against the principles of natural justice. The AO used details against the assessee without providing an opportunity for rebuttal. The Tribunal emphasized that any evidence used against a party must be shared with them for a fair defense. The Tribunal also referred to a similar case (CIT vs. Mahendra N. Shah) to highlight the importance of procedural fairness.

Conclusion:
The Tribunal concluded that the assessee is the rightful owner of the gold, supported by credible documentary evidence. The protective addition made by the AO was deleted, and the appeal filed by the assessee was allowed. The Tribunal emphasized the need for procedural fairness and transparency in the assessment process, aligning with the principles laid down by the Hon'ble Gujarat High Court in similar cases.