2016 (9) TMI 114 - HC - Income Tax

Tax Tribunal rejects Revenue's appeal, upholds deletions by Commissioner, High Court affirms decision

Commissioner of Income Tax Tiruchirapalli Versus Smt. S. Jayalakshmi Ammal Rep. by Shri S. Natarajan L/H of N. Somasundaram

Commissioner of Income Tax Tiruchirapalli Versus Smt. S. Jayalakshmi Ammal Rep. by Shri S. Natarajan L/H of N. Somasundaram - [2017] 390 ITR 189 Issues Involved:1. Assessment of the value of immovable properties.2. Addition towards excess stock of gold jewellery.3. Addition towards excess stock of silver articles.4. Addition towards difference in the cost of construction.5. Addition towards inadequate drawings.6. Levy of surcharge.Issue-wise Detailed Analysis:1. Assessment of the Value of Immovable Properties:The Commissioner of Income Tax (Appeals) reduced the assessment value from Rs. 31,00,000/- to Rs. 5,00,000/-. The Tribunal held that there was no material found during the search to justify the addition of Rs. 5,00,000/-. The Tribunal noted inconsistencies in the dates of the statement recorded under Section 132(4) of the Income Tax Act, 1961, and doubted the reliability of the statement. The Tribunal concluded that without corroborative evidence, the addition could not be sustained.2. Addition Towards Excess Stock of Gold Jewellery:The Commissioner of Income Tax (Appeals) deleted the addition of Rs. 86,000/- towards the excess stock of 215 grams of gold jewellery, considering the excess as negligible. The Tribunal upheld this decision, noting that the reconciliation statement provided by the assessee was reasonable and that the Assessing Officer's addition was unwarranted.3. Addition Towards Excess Stock of Silver Articles:The Commissioner of Income Tax (Appeals) treated the excess stock of 39 Kgs of silver articles, valued at Rs. 2,90,000/-, as undisclosed income. The Tribunal did not specifically address this issue in the detailed analysis provided.4. Addition Towards Difference in the Cost of Construction:The Commissioner of Income Tax (Appeals) revised the cost of construction, allowing for self-supervision and high rates, reducing the addition. The Tribunal found that no books of account or material evidence were found during the search to justify the addition of Rs. 83,700/-. Therefore, the Tribunal set aside the addition, agreeing with the appellate authority that the valuation report obtained after the search was not sufficient evidence.5. Addition Towards Inadequate Drawings:The Commissioner of Income Tax (Appeals) reduced the addition from Rs. 3,00,000/- to Rs. 2,00,000/-, accepting the appellant's plea. The Tribunal did not specifically address this issue in the detailed analysis provided.6. Levy of Surcharge:The Commissioner of Income Tax (Appeals) upheld the levy of surcharge of Rs. 2,10,360/-, stating that the first schedule clearly imposes a surcharge on taxes levied under Section 113. The Tribunal did not specifically address this issue in the detailed analysis provided.Conclusion:The Tribunal concluded that the Revenue did not provide sufficient corroborative evidence to support the additions made by the Assessing Officer. Statements recorded under Section 132(4) of the Income Tax Act, 1961, without corroborative material, should not be treated as conclusive evidence. The Tribunal upheld the deletions and reductions made by the Commissioner of Income Tax (Appeals) and dismissed the appeals filed by the Revenue. The High Court affirmed the Tribunal's decision, answering all substantial questions of law in favor of the respondent/assessee and dismissing the tax case appeals.