2016 (8) TMI 1451 - AT - Income Tax

Tribunal rules in favor of assessee, deems addition under Section 68 unjustified.

Sri Jayantilal J Jain Versus Income Tax Officer, Ward 1 (4), Hubballi.

Sri Jayantilal J Jain Versus Income Tax Officer, Ward 1 (4), Hubballi. - TMI Issues:Interpretation of income declaration under Voluntary Disclosure of Income Scheme (VDIS), 1997 for assessment year 1998-99.Analysis:The case involved a dispute regarding the source of deposits made in a bank by the assessee, who had declared additional income under the VDIS, 1997. The Assessing Officer rejected the explanation provided by the assessee for the source of the deposits, leading to an addition of a substantial amount under Section 68 of the Income Tax Act, 1961. Both the CIT (Appeals) and the Tribunal upheld the addition. However, the matter was remanded by the High Court to the Assessing Officer for further examination. In the subsequent proceedings, the Assessing Officer again made the addition, contending that the items declared under VDIS were jewellery, while the items declared in the return were gold bullion and loose diamonds. The assessee challenged this action before the CIT (Appeals) but was unsuccessful.Before the Tribunal, the assessee's representative argued that the jewellery declared under VDIS was converted into gold and diamonds, supported by certificates from jewelers and relevant bills. The representative highlighted that the quantities of converted items matched the quantities declared under VDIS. Reference was made to similar cases where such conversions were accepted by the Assessing Officer. In contrast, the Departmental Representative maintained that the assessee had failed to prove that the declared jewellery items were subsequently sold as gold and diamonds.Upon reviewing the evidence presented, the Tribunal noted that the details of items declared under VDIS matched the conversion records and subsequent sales made by the assessee. The Tribunal observed that the assessee had produced bills and documents proving the conversion and sale of the items in question. Citing precedents and considering the matching quantities and items, the Tribunal concluded that the assessee had substantiated that the sold items were indeed the same as those declared under VDIS. Consequently, the addition made by the Assessing Officer was deemed unjustified, and the appeal of the assessee was allowed.In conclusion, the Tribunal ruled in favor of the assessee, emphasizing that the evidence provided sufficiently demonstrated that the items sold were originally declared under VDIS. The Tribunal highlighted the matching quantities and items, supported by bills and certificates, to refute the Assessing Officer's contention. As a result, the addition made under Section 68 of the Income Tax Act, 1961 was revoked, and the appeal of the assessee was upheld.