2016 (7) TMI 1536 - AT - Income Tax

High Court remands case to Assessing Officer to verify VDIS items match sales. Tribunal overturns additional tax, supports VDIS.

Shri Pukhraj D. Jain Versus The Income Tax Officer, Ward 1 (3), Hubli.

Shri Pukhraj D. Jain Versus The Income Tax Officer, Ward 1 (3), Hubli. - TMI Issues:1. Appeal against CIT(Appeals) order for assessment year 1998-99.2. Introduction of cash in the books of accounts related to sale of gold, silver, and diamonds declared under VDIS.Analysis:1. The appeal was filed against the CIT(Appeals) order for the assessment year 1998-99, challenging various grounds including additions under section 68 of the Act and interest charged under section 234B. The appellant disputed the findings of the CIT(A) and sought relief based on law, equity, and the circumstances of the case.2. The core issue revolved around the introduction of cash in the books of accounts concerning the sale of gold, silver, and diamonds declared under the Voluntary Disclosure of Income Scheme, 1997 (VDIS). The Assessing Officer (AO) raised concerns regarding discrepancies between the items declared under VDIS and those sold, leading to additions in the assessment.3. The matter was escalated to the Hon’ble High Court of Karnataka, which remanded it back to the AO for a specific finding on whether the items sold were the same as those disclosed under VDIS. The AO, despite the evidence presented by the assessee, made additional additions, which were upheld by the CIT(Appeals.4. However, upon review by the Tribunal, it was established that the same quantity of gold, silver, and diamonds declared under VDIS was indeed sold. The Tribunal examined the evidence provided by the assessee, including valuation reports, VDIS certificates, and sales documentation, concluding that the introduction of sale proceeds in the books of account was justified as the declared items were sold.5. The Tribunal found no merit in the revenue authorities' decision to make additional additions after accepting the declaration under VDIS and the tax deposited by the assessee. Consequently, the Tribunal set aside the CIT(Appeals) order and deleted the addition, allowing the appeal by the assessee in the interest of justice and equity.