2014 (6) TMI 702 - AT - Income Tax

ITAT upholds CIT (A) decisions on interest, jewelry, and bank deposits but remands share trading issue for review

DCIT, Central Circle 20, New Delhi Versus Mr. Sanjeev Kumar

The ITAT partially allowed the appeal, upholding the CIT (A)'s decisions to delete additions related to interest on KVP/NSC and unexplained investment in ... Accrual of interest earned on KYP/NSC – Investment in KVP/NSC found during search and seizure - Held that:- The total investment in KVP / NSC was of Rs.5,65,000/- which has not been disputed by the revenue - interest @ 8% comes to Rs.45,200/- CIT (A) has rightly allowed the relief of Rs.18,120/- out of the total addition on account of interest accrued on KVP / NSC of Rs.63,320 – Decided against Revenue. Deletion of share trading through broker – Held that:- CIT (A) has granted the relief on the basis of a statement of account showing sales and purchase of shares through Credential Stock Broker Limited for the period 01.04.2007 to 31.03.2008 - there was additional evidence filed by the assessee which has been considered by the CIT (A) for granting the relief to the assessee - the CIT (A) has violated the Rule 46A of the Income-tax Rules, 1962 – thus, the matter is remitted back to the CIT(A) for fresh adjudication – Decided in favour of Revenue. Deletion of unexplained bank deposits – Held that:- The amount is not a cash deposit in the bank account of assessee - The narration in the bank statement itself shows that it was an amount credited in the bank account of the assessee by clearing - CIT (A) was justified in deleting this addition - the amount in the bank account of the assessee in the name of Manoj Joshi - credit entries in the bank account of the assessee were explained by the bank account itself or by narration – Decided against Revenue. Deletion of unexplained investment in jewellery – Held that:- Income taxable in the hands of Anshu Mittal for the AY 2007- 08 to cover the jewellery weighing 800 grams found with Sanjeev Kumar - the jewellery weighing approximately 800 grams. kept with Shri Sanjiv Kumar (brother of Mrs. Anshu Mittal) for design change/repairs included in Rs.24 lacs disclosed - The surrendered amount has been accepted by the Income-tax Department which is evident from the assessment order in the name of Anshu Mittal – Decided against Revenue. Issues:1. Addition of interest on KVP/NSC2. Addition on share trading through stock broker3. Addition on unexplained bank deposits4. Unexplained investment in jewellery found during searchIssue 1: Addition of interest on KVP/NSCThe appeal pertains to the deletion of an addition of Rs.18,120 out of the total addition of interest earned on KVP/NSC. The CIT (A) found the total investment in KVP/NSC to be Rs.5,65,000 with interest accrued at Rs.45,200. The ITAT upheld the relief granted by the CIT (A) as the total investment and interest were not disputed by the revenue, leading to the dismissal of the appeal on this ground.Issue 2: Addition on share trading through stock brokerThe issue involved the deletion of an addition of Rs.2,64,580 on share trading through a stockbroker. The CIT (A) based the relief on a statement of account showing sales and purchases of shares. The ITAT found that the CIT (A) admitted additional evidence without affording the Assessing Officer an opportunity to review it, violating Rule 46A. Consequently, the issue was remanded back to the CIT (A) for proper consideration.Issue 3: Addition on unexplained bank depositsThe appeal challenged the deletion of an addition of Rs.5,35,967 on account of unexplained bank deposits. The ITAT analyzed various entries and bank statements to determine the legitimacy of the deposits. It was found that most entries were adequately explained by the bank statements or narrations, leading to the dismissal of the revenue's appeal on this ground.Issue 4: Unexplained investment in jewellery found during searchThe issue concerned the deletion of an addition of Rs.6,46,878 towards unexplained investment in jewellery discovered during a search operation. The ITAT noted that the jewellery was included in the undisclosed income of another individual, which was accepted by the Income-tax Department. As the jewellery was accounted for and taxed in the hands of the other individual, the ITAT upheld the CIT (A)'s decision to delete the addition, dismissing the revenue's appeal on this issue.In conclusion, the ITAT partially allowed the appeal for statistical purposes, addressing each issue raised by the revenue in detail and providing reasoned judgments for each.