2015 (9) TMI 1356 - AT - Income Tax

Revenue's Appeal Dismissed: Additions for Unaccounted Assets Not Justified

The Revenue's appeal challenging various additions on account of unaccounted jewellery, sarafi business, and investment in commodity trading was ... Addition made on account of unaccounted jewellery - CIT(A) deleted the addition - Held that:- No infirmity in the above order of the CIT(A). He treated gold ornament as explained considering the CBDT Instruction No. 1916 dated 11th May, 1994. He has also referred to various decisions of ITAT wherein a view has been taken that such circular is to be considered even during the assessment proceedings. We find that before the Assessing Officer also this circular was referred by the assessee’s counsel. However, Assessing Officer allowed credit only in respect of five married ladies that to 400 gms each as against 500 gms each as prescribed in the Board’s Circular. Assessing Officer has not allowed any credit in respect of unmarried daughters and male members of the family. The CIT(A) allowed the relief only as per the instruction of CBDT. In view of above, we do not find any infirmity in the order of CIT(A). The same is sustained - Decided against revenue. Addition on account of unaccounted sarafi business - CIT(A) allowed part relief - Held that:- No infirmity in the order of CIT(A). He has recorded the finding that the assessee has made another disclosure of ₹ 5 lacs in respect of unaccounted payment to brokers. Those payments are also recorded in the same seized pages and were part of the total payments made by the assessee at ₹ 76,30,540/-. Therefore, he reduced the addition to the extent of ₹ 5 lacs. This factual finding recorded by CIT(A) has not been controverted before us. We, therefore, find no justification with the finding of the CIT(A) in this regard. - Decided against revenue. Addition made on account of unaccounted investment in commodity trading - CIT(A) deleted the addition - Held that:- No justification to interfere with the order of the CIT(A). He has recorded the finding that various papers were found and seized from the assessee’s premises in which details of payments made by the assessee were mentioned. In those details, the payment of only ₹ 5 lacs to the brokers was mentioned and not ₹ 7,50,000/-. Therefore, the addition made by the Assessing Officer was only on the basis of statement of some brokers which was found to be contrary to the facts on record by the CIT(A). This finding of the CIT(A) has not been controverted at the time of hearing before us. We, therefore, uphold his order - Decided against revenue. Computation of interest u/s.234A, 234B & 234C - Held that:- As submitted by the learned counsel that assessee has already filed an application u/s. 154 before the Assessing Officer requesting him to first adjust the cash seized against the tax liability and thereafter, compute interest u/s. 234A, 234B & 234C. He, therefore, submitted that only request at this stage is to direct the Assessing Officer to dispose of assessee’s application u/s.154 expeditiously. The ld. DR has not objection to the above request of the assessee’s counsel and he stated that even without direction of the ITAT, the Assessing Officer is supposed to dispose of the application filed u/s. 154 by any assessee. In view of above, we direct the Assessing Officer to dispose of the assessee’s application, if any, filed u/s. 154 in accordance with law at an early date. - Decided in favour of assessee as directed Issues Involved:1. Addition on account of unaccounted jewellery.2. Addition on account of unaccounted sarafi business.3. Addition on account of unaccounted investment in commodity trading.4. Computation of interest under sections 234A, 234B, and 234C.Issue-wise Detailed Analysis:1. Addition on account of unaccounted jewellery:The Revenue's appeal challenged the deletion of an addition of Rs. 30,55,312/- made for unaccounted jewellery. During a search, 4444.25 grams of jewellery were found. The Assessing Officer (AO) allowed credit for 2000 grams, considering 400 grams per married lady, and treated the remaining 2444.25 grams as unexplained.The CIT(A) deleted the addition, noting that the jewellery belonged to multiple family members, including married daughters, nieces, and others, and not solely to the assessee. The CIT(A) referred to CBDT Instruction No. 1916, which allows 500 grams for married ladies, 250 grams for unmarried ladies, and 100 grams for male members. The CIT(A) concluded that the entire 4444.25 grams were explained and deleted the addition.The ITAT upheld the CIT(A)'s decision, finding no infirmity in treating the jewellery as explained per the CBDT instruction and previous ITAT decisions. The AO's restrictive allowance was not justified, and the CIT(A) correctly applied the circular's guidelines.2. Addition on account of unaccounted sarafi business:The Revenue appealed against the CIT(A)'s relief of Rs. 5 lacs out of a total addition of Rs. 6,30,240/- for unaccounted sarafi business. Papers found during the search indicated loans of Rs. 76,30,240/-, while the assessee disclosed Rs. 70 lacs as unaccounted income. The AO added the difference of Rs. 6,30,240/-.The CIT(A) sustained only Rs. 1,30,240/-, noting that the assessee had already disclosed an additional Rs. 5 lacs for payments to brokers, which were part of the total payments. The CIT(A) rejected the peak credit principle but found the additional disclosure credible.The ITAT upheld the CIT(A)'s decision, agreeing that the additional Rs. 5 lacs disclosure was part of the total payments and should be credited, reducing the addition to Rs. 1,30,240/-.3. Addition on account of unaccounted investment in commodity trading:The Revenue challenged the deletion of Rs. 2,50,000/- for unaccounted investment in commodity trading. The AO based the addition on a broker's statement indicating a Rs. 7,50,000/- payment, while the assessee admitted only Rs. 5 lacs.The CIT(A) deleted the addition, noting no evidence of the extra Rs. 2,50,000/- payment in the seized records. The CIT(A) found the AO's reliance on the broker's statement unsubstantiated without corroborative evidence.The ITAT upheld the CIT(A)'s decision, agreeing that the addition was unjustified based on the available evidence, which only supported the Rs. 5 lacs payment.4. Computation of interest under sections 234A, 234B, and 234C:The assessee raised an additional ground regarding the computation of interest, arguing that the seized cash should be adjusted against the tax liability before computing interest. The assessee had filed an application under section 154 for this adjustment.The ITAT directed the AO to dispose of the assessee's application under section 154 expeditiously, as required by law.Conclusion:All issues raised by the Revenue were dismissed, and the CIT(A)'s decisions were upheld. The ITAT found no infirmities in the CIT(A)'s findings and provided directions for the expeditious handling of the assessee's application regarding interest computation.