2013 (10) TMI 149 - HC - Income Tax

High Court dismisses appellant's appeal on income addition under Section 68 of Income Tax Act

The High Court allowed the Revenue's appeal, leading to the dismissal of the appellant's appeals concerning the addition of large credits as income under ... Addition u/s 68 of the Income Tax Act - purchase of gold ornaments - stock in trade - payment of local taxes – Held that:- If the transaction is genuine, the assessee would have accounted purchase of old gold paying tax under Section 5A and paid sales tax on corresponding sales turnover of new jewellery - This is of course only a corroboration of facts and even if assessee has paid sales tax accounting bogus purchases, nothing stands in the way of the Income Tax Department in making addition under Section 68 - Court had found that if deposits had been received, it would have been included as old stock of gold and tax would have been paid under Section 5A and thereafter the court also proceeded to hold that this could been corroboration of the appellant's case. Thereafter, the court also observed that even if tax is paid, it is open to the tribunal to take a view in favour of the Revenue - Even though sales tax records revealing purchase of gold from nine persons and payment of tax under Section 5A of the KGST Act was made available, there is no reference at all to the same - Appellant can move under Section 254(2) of the Income Tax Act for rectification – Decided against the Assessee. Issues:1. Addition of large credits as income under Section 68 of the Income Tax Act.2. Tribunal's decision in favor of the Revenue.3. Appellant's complaint regarding non-compliance with the court's direction in the earlier appeal.Analysis:1. The judgment pertains to the addition of large credits by way of gold deposits to the appellant's income under Section 68 of the Income Tax Act. Initially, the tribunal ruled in favor of the appellant, but upon appeal by the Revenue, the High Court allowed the appeal and remanded the matter. Subsequently, the tribunal found in favor of the Revenue, dismissing the appeals filed by the appellant. The tribunal rejected the appellant's claim that the gold deposits were from various parties, citing contradictions in statements obtained from the alleged depositors.2. The appellant raised a complaint regarding non-compliance with the court's direction in the earlier appeal. The court had highlighted the importance of considering whether the appellant accounted for the purchase of gold ornaments and paid taxes under Section 5A, suggesting that such compliance could corroborate the appellant's case. However, the appellant contended that there was no mention of the sales tax records showing the purchase of gold and payment of taxes under Section 5A in the tribunal's order. The court suggested that the appellant could seek rectification under Section 254(2) of the Income Tax Act if necessary.3. In light of the absence of evidence regarding the consideration of the sales tax records in the tribunal's order, the court declined to delve into the matter further. The court stated that without any record indicating that the evidence was not considered, the appeals were dismissed. The court emphasized the appellant's right to seek rectification under Section 254(2) of the Income Tax Act while dismissing the appeals.