2017 (1) TMI 508 - AT - Income Tax

Tribunal stresses concrete evidence for undisclosed income from jewellery purchases

P. Rama Devi Versus Dy. Commissioner of Incometax, Circle – 1 (1), Hyderabad.

The Tribunal upheld the addition of undisclosed income related to jewellery purchases, emphasizing the need for concrete evidence to support claims. ... Unexplained gold jewellery and silver articles - all found during the course of search - Held that:- Merely because the assessee places before the A.O. and CIT(A) a bank account copy, indicating the payment to Maharaj Shree Rajendra Jewellers, it would not indicate that it was only towards purchase of gold jewellery. There may be some other transaction with the said jeweller other than purchase of jewellery; At any rate it is for the assessee to prove that the jewellery of a specified description was purchased and ordinarily for such huge amounts there should be a bill indicating the nature of jewellery purchased with the hallmark stamp etc., Nowhere the assessee had stated that the jewellery seized was with hallmark stamping and guaranteed by seller in the form of invoice or bill. Therefore, we are of the opinion that the initial onus placed upon the assessee is not fully discharged. However it cannot be denied that a specified sum was paid by the assessee to jeweller, as recorded in the Axis Bank account copy. It is to be seen as to what was the rate prevailing on that date and whether the amount paid is sufficient to cover 340 grams of jewellery of specified karatage. Unless the description is available or given by the assessee to the A.O. it may be difficult, even for the A.O, to cross-verify the same. In the interest of substantial justice, the assessee has to furnish all the details before the A.O. to prove its point. We hereby give one more opportunity to the assessee to submit the details to the A.O. to substantiate the claim that the jewellery purchased in the month of May 2011 are included in the jewellery found during the search. - Decided in favour of assessee by way of remand. Issues:1. Addition of undisclosed income in the form of unexplained investment in jewellery.2. Dispute regarding the purchase of gold jewellery and its exclusion from undisclosed investment.Analysis:1. The assessee admitted undisclosed income related to jewellery purchases during a search operation. The Assessing Officer added a specific amount to the total income, leading to an appeal before the CIT(A). The CIT(A) noted discrepancies in the year of assessability and the purchase date of the jewellery. The contention was that the purchased jewellery should be excluded from the undisclosed investment. However, without conclusive evidence, the CIT(A) upheld the addition to the income.2. The appeal before the ITAT raised concerns about the exclusion of a specific amount representing purchased jewellery from the undisclosed investment. The argument was supported by bank statements but lacked detailed bills or physical evidence. The Tribunal highlighted the lack of evidence correlating the payment to the specific jewellery found during the search. Despite acknowledging the payment, the Tribunal emphasized the need for substantial proof to support the claim. The assessee was given another chance to provide necessary details to substantiate the purchase claim.Conclusion:The judgment addressed the issues of undisclosed income related to jewellery purchases and the necessity of concrete evidence to support claims. The Tribunal emphasized the importance of substantial proof in tax assessments, providing the assessee with an opportunity to furnish required details for verification.