IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 935 of 2011 For Approval and Signature:
HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the judgment ?
4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
========================================================= COMMISSIONER OF INCOME TAX-I - Appellant(s) Versus ASHISH SURENDRA JAIN PROP OF M/S MANISHA MARKETING -
Opponent(s) ========================================================= Appearance :
MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, =========================================================
CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI
and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 21/06/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA)
1. The present Tax Appeal under section 260 of the Income Tax Act, 1961 (hereafter referred to as the `Act' for the sake of brevity) has been preferred by the Revenue against order dated 20.01.2011 of the Income Tax Appellate Tribunal, Ahmedabad, Branch `D' in ITA No.2780/Ahd/2008. The appellant has raised following two questions pressing them as substantial questions of law:
“(1) Whether the Appellate Tribunal is right in the law and on facts in deleting the addition of Rs.32,47,288/- made by the Assessing Officer as income from undisclosed sources?
(2) Whether the Appellate Tribunal has properly appreciated the facts and the evidence on record so as to delete the addition made by Assessing Officer and whether the order of the Appellate Tribunal is perverse?”
2. The relevant facts involved in the appeal with reference to which the aforementioned questions are raised are that the assessee had in his return of income for the assessment year 1998-99 declared total income of Rs.1,83,437/-. The assessee had under the Voluntary Disclosure of Income Scheme (VDIS) also declared gold ornaments and jewelery of the value of Rs.10,81,758/-. The assessment in case of respondent assessee was reopened by issuing notice under section 148 of the Act. The reopening of the assessment was actuated on the basis of the information gathered during a search operation carried out on 14.03.2000 under section 132 of the Act at Bombay in case of one Galaxy Exports. According to the Department the said Galaxy Exports was making accommodation entries in its books for purchase of jewellery and in that the respondent assessee was shown to have sold diamonds and gold jewellery worth Rs.1,71,200/-.
3. The Assessing Officer passed order under section 143(3) read with section 147 of the Act on 23.03.2005 making addition of Rs.32,47,288/- treating as income from undisclosed sources. The CIT(A) while considering the appeal of the assessee against the order of assessing officer deleted the addition made by the assessing officer. The appellate Commissioner was of the view that the order of the Assessing Officer was without any independent enquiry, but it rested only on the information gathered during search and investigation at M/s. Galaxy Exports, further taking note that the Income Tax Appellate Tribunal, Bombay had rejected the case of the Department against said M/s. Galaxy Exports and its associates holding that all the findings against them were presumptions and assumptions. The second aspect observed by the Commissioner (Appeals) was that the physical movement of diamonds from Ahmedabad to Bombay was duly explained by the assessee. The gold and diamond articles were small in their size capable of being carried personally in an easy and convenient way. He accepted the explanation of the assessee that they were carried personally through travelling and in person after inquiring about the price in the market. The assessee had signed the acknowledgment also immediately on receipt of the price of the ornaments. He, therefore, concluded that the declaration made in the VDIS was correct and not bogus.
4. The Revenue appealed before the Income Tax Appellate Tribunal. The Tribunal considered the order of the Assessing Officer and that of the CIT(A) and reached its findings as under:
“It is pertinent to note that the assessment of the assessee was reopened in connection with search and investigation to one of the parties M/s. Galaxy Export, Mumbai. The assessee had sold diamonds of Rs.1,71,200/- to M/s. Galaxy Export out of the total sale proceeds of Rs.32,47,288/-. The remaining sale proceeds were verified by the Assessing Officer by summons to parties, verifying their books, clearance certificate from Bank and verifying records at Bank and documents submitted by the assessee. .......... To sum up, prima facie, it appears that the Assessing Officer made the addition of Rs.32,47,288/- on doubts and suspicion and the Learned Commissioner of Income Tax (Appeals) has given cogent reason for deleting the same. We, therefore incline to uphold the order of Learned Commissioner of Income tax (Appeals).”
5. The aforesaid affirming findings of the Tribunal are based on appreciation of facts and material on record. The original addition of income by the Assessing Officer was based on the search operation against the third party M/s. Galaxy Exports. However, the whole basis of addition stood disappeared when the case of the Department against the said M/s. Galaxy Exports was not accepted by the competent jurisdictional Tribunal.
6. Moreover, section 71 of the Act provides that information contained in the declaration of VDIS could not be used against the declarant. The disclosures in the VDIS and the declarations therein had been accepted by the Department. Coupled with these aspects, when the ground on which the Assessing Officer made the addition failed to sustain itself, there was nothing to support the addition of the amount. In the circumstances, the order of the Tribunal and the findings recorded therein were eminently justified. No substantial question of law arises for consideration. Therefore, the present Tax Appeal cannot be entertained.
7. Accordingly, this Tax Appeal is dismissed.
(V.M. SAHAI, J.) (N.V. ANJARIA, J.) (SN DEVU PPS)