2017 (4) TMI 1185 - AT - Income Tax

Tribunal decision: Cheque payment upheld, silver investment addition reinstated. Revenue appeal partly allowed.

The DCIT Central, Circle- 2, Jaipur Versus Shri Vijay Mehta And Vice-Versa

The DCIT Central, Circle- 2, Jaipur Versus Shri Vijay Mehta And Vice-Versa - TMI Issues Involved:1. Deletion of addition of Rs. 35,00,000/- claimed by Revenue as unexplained cash investment.2. Restriction of addition on account of unexplained investment in silver articles from Rs. 2,43,515/- to Rs. 1,50,000/- and cross objection by the assessee against this addition.Issue-wise Detailed Analysis:1. Deletion of Addition of Rs. 35,00,000/-:The primary issue concerns whether the Rs. 35,00,000/- noted in a seized document was given in cash or by cheque to M/s Megha Realmart Pvt. Ltd. During the search operation, the assessee initially stated that he invested Rs. 35,00,000/- in cash in the Megha Realmart Project. However, during the assessment proceedings, the assessee clarified that this amount was given by cheque and provided documentary evidence, including ledger accounts and bank statements, to support this claim. The AO did not accept this explanation, considering it an afterthought since the assessee did not retract his earlier statement until the assessment proceedings. The CIT(A) deleted the addition after examining the evidence, noting that the ledger account and bank statements corroborated the assessee's claim of payment by cheque. The Tribunal upheld the CIT(A)'s decision, emphasizing that the addition cannot be sustained solely based on the statement without corroborating evidence. The Tribunal confirmed that the Rs. 35,00,000/- was indeed given by cheque, not in cash, and dismissed the Revenue's appeal on this ground.2. Restriction of Addition on Unexplained Investment in Silver Articles:During the search, 8.620 kg of silver articles were found. The AO initially accepted the explanation for gold ornaments but treated 50% of the silver articles as unexplained, making an addition of Rs. 2,43,515/-. The CIT(A) reduced this addition to Rs. 1,50,000/-. The assessee argued that the entire quantity of silver articles was reasonable and customary for the family, and no evidence of purchase was found during the search. The Tribunal noted that the AO had reasonably attributed 50% of the silver articles to customary gifts based on the family's social and financial standing. The Tribunal found this approach just and proper, setting aside the CIT(A)'s reduction and reinstating the AO's original addition of Rs. 2,43,515/-. Thus, the Tribunal allowed the Revenue's appeal on this ground and dismissed the assessee's cross objection.Conclusion:The Tribunal upheld the CIT(A)'s deletion of the Rs. 35,00,000/- addition, confirming it was paid by cheque. However, it reinstated the AO's original addition of Rs. 2,43,515/- for unexplained investment in silver articles, finding the AO's reasoning reasonable and justified. The Revenue's appeal was partly allowed, and the assessee's cross objection was dismissed.