2019 (4) TMI 2139 - AT - Income Tax

ITAT deletes Section 69A additions for diamond jewellery and unexplained money citing insufficient evidence and inadmissible diary entries

DCIT Cen Cir -8 (3) (Erstwhile DCIT CC-46) Versus Shri Prithviraj Kothari

DCIT Cen Cir -8 (3) (Erstwhile DCIT CC-46) Versus Shri Prithviraj Kothari - TMI Issues Involved:1. Deletion of addition of Rs. 44,40,906/- under Section 69A on account of unexplained jewellery.2. Deletion of addition of Rs. 54,000/- under Section 69A on account of unexplained money.Detailed Analysis:Issue 1: Deletion of Addition of Rs. 44,40,906/- under Section 69A on Account of Unexplained JewelleryFacts and Arguments:- The revenue challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting the addition of Rs. 44,40,906/- under Section 69A for unexplained jewellery.- The Assessing Officer (AO) had made the addition based on the improbability of the assessee purchasing high-value jewellery just before a search and converting cut and polished diamonds into jewellery.- The AO relied on the assessee's statement under oath under Section 132(4) and the Supreme Court decision in Sumati Dayal (2014) ITR 801 (SC).- The assessee provided a complete reconciliation of the jewellery, including invoices from M/s Raj International Ltd and valuation reports of family members' wealth tax returns.- The CIT(A) found that the assessee had furnished sufficient evidence, including purchase bills, remaking bills, and payment details, which the AO did not adequately disprove.Judgment:- The Tribunal upheld the CIT(A)'s decision, stating that the AO's presumptions could not replace concrete proof. The Tribunal emphasized that Section 69A could not be invoked based on mere presumptions and conjectures.- The Tribunal found no new facts or contrary judgments to rebut the CIT(A)'s findings and concluded that the CIT(A)'s decision was judicious and well-reasoned.- Resultantly, this ground raised by the revenue was dismissed.Issue 2: Deletion of Addition of Rs. 54,000/- under Section 69A on Account of Unexplained MoneyFacts and Arguments:- The revenue contested the CIT(A)'s deletion of the addition of Rs. 54,000/- under Section 69A for unexplained money, arguing that the assessee had accepted under oath that there was no evidence present at the time of the search.- The AO had linked the unexplained money to cash loan transactions noted in diaries belonging to Rakesh Kothari, which the AO presumed to be in lakhs.- The assessee argued that the notings in the diaries were personal dealings of Rakesh Kothari, who had already included these transactions in his application before the Settlement Commission under Section 245C(1).- The CIT(A) noted that the Settlement Commission had accepted these transactions as personal dealings of Rakesh Kothari and had already brought them to tax.Judgment:- The Tribunal agreed with the CIT(A) that the notings in the diaries could not be used as admissible evidence against the assessee under Section 34 of the Indian Evidence Act.- The Tribunal found that the AO's presumptions were not supported by any corroborative evidence.- The Tribunal upheld the CIT(A)'s findings, noting that the undisclosed transactions had already been taxed in the hands of Rakesh Kothari, and no new facts or judgments had been presented to challenge this.- Consequently, this ground raised by the revenue was also dismissed.Conclusion:The Tribunal dismissed the appeal filed by the revenue, upholding the CIT(A)'s decisions on both issues. The Tribunal found the CIT(A)'s findings to be judicious and well-reasoned, with no new evidence or contrary judgments presented to warrant a deviation. The appeal was dismissed with no order as to cost.