2002 (8) TMI 256 - AT - Income Tax

Tribunal Upholds Income Treatment for Unexplained Jewellery; Partial Relief on Interest Issue

SMT. RAJ BAHRI. Versus ASSISTANT COMMISSIONER OF INCOME TAX.

SMT. RAJ BAHRI. Versus ASSISTANT COMMISSIONER OF INCOME TAX. - TTJ 086, 567, Issues Involved:1. Addition of Rs. 2 lakhs on account of unexplained jewellery.2. Charging of interest under sections 215/217 and 244A of the IT Act.Detailed Analysis:1. Addition of Rs. 2 lakhs on account of unexplained jewellery:The primary issue in both appeals (ITA No. 614/Asr/1994 and ITA No. 725/Asr/1998) concerns the addition of Rs. 2 lakhs, which the assessee surrendered during search operations. The assessee contended that this amount should be split over four earlier assessment years, while the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] treated it as income for the year in which the locker was last operated.Facts of the Case:- The assessee filed a return of income on 9th June 1988, declaring Rs. 24,623, and a revised return on 17th Feb 1991, declaring Rs. 2,12,120.- A search on 19th Oct 1987 revealed jewellery weighing 446.300 gms at the residence and 1087.500 gms in a locker. The total jewellery found was 1880.600 gms.- The jewellery was explained partly as inherited and partly as surrendered under section 132(4) of the IT Act, with the surrendered jewellery valued at Rs. 2 lakhs.Assessment and Appeals:- The AO invoked section 69A, treating the unexplained jewellery as income for the financial year 1987-88, relevant to the assessment year 1988-89, and included Rs. 2 lakhs as income for that year.- The CIT(A) directed the AO to verify the locker operation dates, which revealed the locker was last operated on 22nd May 1987, within the financial year 1987-88. Thus, the CIT(A) upheld the AO's decision to treat the entire Rs. 2 lakhs as income for the assessment year 1988-89.Tribunal's Findings:- The Tribunal noted that the presumption under section 69A is rebuttable, but the assessee failed to provide evidence of jewellery acquisition in earlier years.- The assessee's claim of an agreement with the search officers to spread the surrender over four years was unsupported by evidence.- The Tribunal upheld the CIT(A)'s decision, stating the AO rightly treated the entire Rs. 2 lakhs as income for the assessment year 1988-89, as the assessee could not substantiate the claim of split acquisition.2. Charging of interest under sections 215/217 and 244A of the IT Act:Contention:- The assessee argued that the charging of interest under sections 215/217 was against the law and facts of the case.Tribunal's Decision:- The Tribunal restored this issue to the AO for fresh consideration, directing the AO to decide the matter afresh and in accordance with the law after providing a reasonable opportunity of being heard to the assessee. The assessee was allowed to present additional evidence in support of their contention.Conclusion:- The appeal in ITA No. 614/Asr/1994 was dismissed.- The appeal in ITA No. 725/Asr/1998 was partly allowed for statistical purposes, specifically regarding the issue of interest under sections 215/217.