2017 (7) TMI 614 - HC - Income Tax

Appeal favors Assessee in income dispute over concealed jewelry, criticizes Tax Commissioner's lack of inquiry

The appeal was disposed of in favor of the Assessee, affirming the Tribunal's decision to delete the enhanced income related to concealed jewellery seized ... Enhanced income on account of jewellery - Held that:- Commissioner of Income Tax itself did not carry out necessary inquiry and merely substituted his view for the view of the Assessing Officer. Approach of the learned CIT to be rather contradictory in this respect. While he has accused the Assessing Officer of having accepted that the Jewellery represented undisclosed income of the assessee's wife and daughter without establishing that they were capable of earning such income. He himself readily believes that the assessee had utilised this concealed income without having carried out any such enquiry in respect of the assessee. We therefore find it to be a simple case of mere substitution of the opinion of the learned CIT for the view as held by the Assessing Officer in the order u/s.158BC. Traveling expenses addition - Held that:- As observed that the sum of ₹ 12,00,000/was offered for taxation in this respect in the assessment of M/s.D.C.Silk Mills Pvt. Ltd., and was assessed and subjected to tax. It was observed that the Foreign Trips were in connection with the business of the Company. The said finding is a finding of fact. It was also observed that the Assessee's wife and daughter were regular assesses of long standing and had sufficient sources of income of their own to bear their own travelling expenses. Issues:1. Validity of the order passed under Section 158BC of the Income Tax Act.2. Legality of the Commissioner of Income Tax's order under Section 263 against the Assessing Officer's order.3. Justification of enhancing the Assessee's income for the block period.4. Tribunal's decision to delete the enhanced income.5. Taxability of jewellery seized and travelling expenses.6. Adequacy of explanation provided by the Assessee regarding the seized jewellery.7. Assessment of travelling expenses as perquisites.Analysis:1. The Assessing Officer issued an order under Section 158BC of the Income Tax Act. Subsequently, the Commissioner of Income Tax passed an order under Section 263 against the Assessing Officer's order, directing an enhancement of the Assessee's income for the block period. This led to an appeal by the Assessee before the Tribunal, which was allowed, prompting the Revenue to file the present appeal.2. The learned counsel for the Revenue argued that the Tribunal erred in deleting the enhanced income related to the concealed jewellery seized, amounting to Rs. 26,67,547. The Assessee's explanation regarding the seized jewellery was deemed unsatisfactory, with the counsel contending that even the travelling expenses of the Assessee's family should be taxable. The Tribunal's decision was challenged based on the Commissioner (Appeals) having a different perspective.3. The Tribunal's direction to enhance the income by Rs. 26,67,547 for the seized jewellery was scrutinized. It was noted that the jewellery was seized from a joint locker of the Assessee, his wife, and daughter, who had their independent sources of income. The Assessing Officer had accepted their explanations, which the Tribunal found reasonable. The Commissioner of Income Tax's lack of inquiry and mere substitution of views were highlighted.4. Regarding the travelling expenses of Rs. 12,00,000, it was revealed that this amount was already offered for taxation in the assessment of another entity and was related to business trips. The Assessee's family members had sufficient income to cover their expenses. The Tribunal upheld these findings as factual, dismissing the Revenue's contentions.5. The judgment emphasized that no substantive question arose based on the facts presented. Consequently, the appeal was disposed of, affirming the Tribunal's decision in favor of the Assessee.