TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 41
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....umatharaju and Shri Kota Sandeep, the employees of M/s. Fusion Jewels of South were apprehended on June 15, 2011 by the police while staying at Rainbow Lodge in Hyderabad in whose possession gold jewellery weighing 8691.400 grams was found. The Director of Income-tax, Investigation, Hyderabad received information from the police on the same day about the seizure of gold from the said three persons. The Additional Director of Income-tax, Investigation, immediately proceeded to the police station and recorded the statements of these three persons under section 131 of the Income-tax Act (hereinafter called as an "Act"). According to the statement given by these said three persons, they were deputed by the firm M/s. Fusion Jewels of South for selling gold ornaments weighing 8.5 kgs but they were not carrying any documents like way-bills issued by the Commercial Tax Department for going out of the Karnataka State for doing business in gold ornaments. On the basis of the warrant of authorisation, gold ornaments weighing 8691.400 grams valued at about Rs. 1,96,42,564 were seized by the Additional Director of Income-tax, Investigation, Hyderabad from all these three persons. On the basis o....
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....nor the firm could conclusively prove that the stock belonged to the firm. Therefore the additions on account of unexplained jewellery found from these three persons are to be made under section 69 of the Act. The Assessing Officer accordingly made the substantive addition of Rs. 72,78,290 in the hands of Shri Kota Sandeep for possessing jewellery at 3216.500 grams, Rs. 66,71,604 in the hands of Shri Pavidi Aswathnarayana for possessing of jewellery of 2945.400 grams and Rs. 57,23,170 in the hands of Shri Hanumantharaju for possessing jewellery of 2945 grams. In order to protect the interest of the Revenue, the Assessing Officer has also made a protective addition of Rs. 1,96,42,564 for the entire jewellery found and seized in the hands of the firm i.e., Fusion Jewels of South. 5. Aggrieved, the individuals as well as the firm preferred an appeal before the Commissioner of Income-tax (Appeals) and the Commissioner of Income-tax (Appeals) re-examined the entire issue and has held that before making addition in the hands of individuals i.e., employees of the firm, the Assessing Officer should have brought on record the individual capacity to have had enough financial resources for h....
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....ls) failed to note (i) that the learned Assessing Officer himself in the remand report dated August 4, 2014 has stated that the declaration was made with the expectation that the three employees and the gold jewellery would be released. (ii) that the admission made has no evidentiary value. Hence the addition made/confirmed deserves to be deleted. 5. The learned Commissioner of Income-tax (Appeals) ought to have noted that the simultaneous enquiry at Bangalore on June 15, 2011 had confirmed the appellant's claim, which has not been contradicted either by the Additional Director of Income-tax or by the Assessing Officer at any stage. 6. The learned Commissioner of Income-tax (Appeals) has failed to note that the appellant-firm had accounted for the entire 8.5kgs. of the gold jewellery seized in its books of account. 7. The learned Commissioner of Income-tax (Appeals) is not justified in confirming the addition of 4,542.72 gms. of the balance gold jewellery when the finding was given only in respect of 4,148.680 gms. impliedly accepting that the balance of gold jewellery weighing 4,542.72 gms. was accounted and explained. 8. The assessment is based on the action unde....
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....jewellery from the employees of the assessee-firm in Hyderabad statement of the partners of the firm Shri Rajesh and Shri Arjun were recorded by the Additional Director of Income-tax and both of them have admitted that they have extra gold ornaments weighing 4.184 kilo gms. and they have offered the value of the same at Rs. 87,10,800 to tax but while filing the return of income, they did not offer this income to tax. The learned Departmental representative further invited our attention to the stock summary filed by the assessee according to which the bullion gold was 1412.540 gms., gold was 4869.565 gms. and gold labour 4146.680 gms. aggregating to 10,428.785 gms. In their explanation, it was admitted by the partners of the assessee- firm that the gold labour means the gold received for making jewellery or repair either from the jeweller or from the customers. Therefore, once the jewellery or the gold received for the manufacture of customised jewellery or specific jewellery or for repair and that gold does not belong to the assessee-firm, how it can be sent to Hyderabad for its sale or approval. At the most, the gold and bullion can only be used for preparing the jewellery for its....
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....tax during the assessment year 2011-12. The statement made by Shri Rajesh is extracted hereunder for the sake of reference : "I want to admit that out of 8.5 kgs. of gold jewellery, we will not able to produce evidence for 4.148 kgs. of gold ornaments. On behalf of all my partners, I admit Rs. 87,10,800 as additional income earned by our firm M/s. Fusion, Jewels of South during the previous year relevant to the assessment year 2011-12. The additional income of Rs. 87,10,800 earned during financial year 2010-11 was not recorded in the books of account of firm. The same is invested in the form gold ornaments of 4.148 kg. I am offering the same for the assessment year 2011-12. The income of Rs. 87,10,800 is admitted over and above the regular income of the firm for the assessment year 2011-12. I under take to pay taxes and file return of income. To avoid protracted litigation I have voluntarily come forward to admit additional income for the assessment year 2011-12. I request the department to take lenient view and not to levy penalty and not to initiate prosecution in our case." The statement of Shri Rajesh was also accepted by Shri Arjun, managing partner of the firm and he has a....