Tribunal grants appeal, deletes additions for share application money and jewelry sale.

The Tribunal allowed the appeal of the assessee, directing the deletion of both additions of Rs. 5,54,300/- related to the return of share application money and Rs. 5,76,920/- related to the sale of jewelry.

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Issues Involved:
1. Addition of Rs. 5,54,300/- related to the return of share application money.
2. Addition of Rs. 5,76,920/- related to the sale of jewelry.

Issue-Wise Detailed Analysis:

1. Addition of Rs. 5,54,300/- Related to the Return of Share Application Money:
The assessee contested the addition of Rs. 5,54,300/- made by the Assessing Officer (AO) on the grounds that this amount was the return of share application money from M/s D.U. Securities Private Limited. The AO had required the assessee to explain the RTGS receipt of Rs. 5,54,300/- in the assessee's disclosed saving bank account. The assessee explained that the payments for acquiring shares were made through cheques, and since no shares were allotted, the amount was returned by RTGS to the same bank account.

The AO did not accept this explanation because the notice sent to M/s D.U. Securities Pvt. Ltd. came back unserved with the comment "always locked." The tax authorities presumed that the concern was not in existence, and thus, the transaction was not genuine.

Upon reviewing the material available on record, it was found that the payments were indeed made from the assessee's bank account to M/s D.U. Securities Pvt. Ltd. and were returned by RTGS. The AO's presumption about the non-existence of the concern was based on the fact that the office was always locked, which was explained by a notice from the Debt Recovery Tribunal affixed at the premises.

The Tribunal concluded that the tax authorities misdirected themselves by holding the assessee liable for the future conduct of M/s D.U. Securities Pvt. Ltd. The consistent explanation and evidence provided by the assessee demonstrated that the transaction was genuine. Therefore, the addition of Rs. 5,54,300/- was directed to be deleted.

2. Addition of Rs. 5,76,920/- Related to the Sale of Jewelry:
The assessee also contested the addition of Rs. 5,76,920/- made by the AO on the grounds that this amount was from the sale of jewelry gifted by the assessee's mother-in-law. The assessee provided an affidavit from the mother-in-law, stating that she had gifted the jewelry weighing 440 grams, which cost Rs. 1,75,000/- on 10.02.1989, to the assessee on his marriage anniversary. The jewelry was sold to Gupta Jewellers Pvt. Ltd. for Rs. 5,76,920/-.

The AO did not accept the explanation because the assessee failed to produce the donor for verification. The AO also recorded that the assessee's counsel offered to surrender the amount on the condition that no penalty would be levied, which was not accepted by the AO.

The Tribunal found that the direction to produce the donor was given only a day before the assessment order was passed, leaving no time for the assessee to comply. Additionally, the affidavit from the mother-in-law and the receipt from Gupta Jewellers Pvt. Ltd. supported the assessee's claim. The Tribunal concluded that the addition was wrongly made and sustained, and thus, directed the deletion of the addition of Rs. 5,76,920/-.

Conclusion:
In conclusion, the Tribunal allowed the appeal of the assessee, directing the deletion of both additions of Rs. 5,54,300/- related to the return of share application money and Rs. 5,76,920/- related to the sale of jewelry. The order was pronounced in the open court on 17th January, 2017.

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