1982 (6) TMI 72 - AT - Income Tax

ITAT rules in favor of assessee, overturns addition for gold purity discrepancy.

The ITAT, in a case involving the addition of Rs. 22,630 under section 69A for a discrepancy in gold purity and sale of ornaments, overturned the lower ... - Issues:- Addition of Rs. 22,630 under section 69A based on discrepancy in gold purity and sale of ornaments.Analysis:The appeal before the Appellate Tribunal ITAT Amritsar involved the sole issue of an addition of Rs. 22,630 made by the Income Tax Officer (ITO) under section 69A for the assessment year 1978-79. The assessee initially filed a return showing an income of Rs. 18,040, which was later revised to Rs. 28,019, citing the omission of capital gain from the sale of gold jewelry. The ITO questioned the origin of the gold used for making the ornaments sold by the assessee, as it was of higher purity than the gold declared previously. Consequently, the ITO treated the sale proceeds of the ornaments as income from undisclosed sources under section 69A.The assessee challenged the ITO's decision before the Appellate Authority Commissioner (AAC), Rohtak, but the appeal was dismissed, upholding the addition of Rs. 22,630. The assessee then appealed to the ITAT, arguing that a similar issue had been decided differently in another case. The ITAT considered the facts and reversed the lower authorities' findings. The ITAT emphasized that the discrepancy in gold purity was not substantial, and the assessee had provided a plausible explanation for the source of the jewelry sold. The ITAT concluded that the assessee had satisfactorily explained the acquisition of the jewelry and overturned the addition under section 69A.After analyzing the case, the ITAT found the circumstances to be identical to the precedent case and decided to vacate the lower authorities' finding that the Rs. 22,630 represented income from undisclosed sources chargeable under section 69A. The ITAT held that the amount should be deleted from the assessment of the assessee's total income, ultimately allowing the appeal.