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TMI Blog2023 (12) TMI 1042X X X X Extracts X X X X X X X X Extracts X X X X ..... s 68 - transaction of sale of jewellery out of receipt of gift of jewellery - HELD THAT:- The opinion of the Assessing Officer for not accepting the explanation offered by the assessee as not satisfactory is necessarily required to be based on proper appreciation of material and other attending circumstances available on record. The Assessing Officer has to form his opinion objectively with reference to the materials available on record and not merely on surmises and conjecture. Application of mind is a sine qua non for framing the opinion of the Assessing Officer. Since in the present set of facts the assessee has offered proper explanation based on documentary evidences and the evidences so filed by the assessee were not found to be in-genuine or fake, therefore, genuineness of the sale transaction of jewellery by the assessee could neither be disputed nor Section 68 could be invoked to make addition in the income of the assessee. The legal proposition with respect to applicability of Section 68 has also been settled by the Hon ble Supreme Court in Commissioner of Income Tax Vs. P. Mohanakala[ 2007 (5) TMI 192 - SUPREME COURT] which also helps the assessee in the present set of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1961. 7. Aggrieved, the revenue filed ITA No. 1809/Kol/2009 and the assessee filed ITA/2002/Kol/2009 before the Income Tax Appellate Tribunal (ITAT), Bench-B, Kolkata which were decided by the impugned common order dated 23rd April, 2010. By the impugned common order, the ITAT dismissed the appeal of the revenue and partly allowed the appeal filed by the assessee. The Tribunal made ad hoc addition of Rs. 4,00,000/- in the GP rate disclosed by the assessee and sustained the addition of Rs. 9,00,000/- under Section 68 of the Act, 1961. 8. Aggrieved with the order of the ITAT, the assessee filed the present appeal under Section 260A of the Act, 1961. It is stated by learned counsel for the respondent that the Income Tax Department has not filed any appeal against the impugned order of the Tribunal. Submission on behalf of the Appellant/Assessee: 9. Learned counsel for the appellant submits that the addition on the point of GP Rate is totally baseless and without reference to any adverse material on record. The only thing which has been made the basis is the earlier year GP rate whereas each year being an independent unit of assessment, addition solely on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ussion Findings: 11. We have carefully considered the submissions of learned counsels for the parties and perused the records of appeal. 12. This appeal was admitted on the following substantial questions of law; (i) Whether in the facts and circumstances of the instant case, the Tribunal was justified in making an ad hoc addition of Rs. 4,00,000/- to the gross profit computed by the assessee without assigning any reason, having disagreed with the order of assessment and appellate authority rejecting the gross profit percentage adopted by the assessee and the findings of the Tribunal to this extent is arbitrary, unreasonable and perverse ? (ii) Whether in the facts and circumstances of the instant case, the order of the Tribunal, in complete disregard of the evidences produced by the assessee, was justified in making an addition of Rs. 9,00,000/- under Section 68 of the Act and the findings of the Tribunal to this extent is arbitrary, unreasonable and perverse ? Re: Substantial question of law No.(i) 13. We find that the Tribunal itself has recorded a finding that sale turn-over of the assessee has substantially increased during the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on any material could be recorded by the assessing officer or the Tribunal to dispute the transaction of sale of jewellery. No finding has been recorded by the assessing officer or the Tribunal that M/s. Bhootnath Jewellers (P) Ltd. is a fake concern or the transaction of sale is fake. Under the circumstances, the explanation submitted by the assessee for receipt of consideration for sale of jewellery through account payee cheques could not be disbelieved. The findings recorded by the Tribunal to uphold the addition of Rs. 9,00,000/- under Section 68 of the Act, 1961 is, thus, perverse. 15. Bare reading of Section 68 of the Act, 1961 suggests that there has to be credit of amount in the books maintained by the assessee during the assessment year relevant to the previous year and the assessee could not offer explanation about the nature and source of such credit found in the books or the explanation offered by him is not satisfactory. It is only then the sum credited may be charged to income tax as income of the assessee of that previous year. The phrase the assessee offers no explanation about the nature and source or the explanation offered by him is not satisfactory in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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