Income already Disclosed under Pradhan Mantri Garib Kalyan Yojana, 2016 can’t be treated as Unexplained Income: ITAT [Read Order]

ITAT - Pradhan Mantri Garib Kalyan Yojana - income - unexplained income - Taxscan

The Income Tax Appellate Tribunal (ITAT), Jaipur Bench held that income already disclosed under Pradhan Mantri Garib Kalyan Yojana (PMGKY), 2016 can not be treated as unexplained income under section 68 of the Income Tax Act.

The assessee, Nawal Kishore Soni is an individual carrying on the business of trading in Bullion i.e. gold and silver as the proprietor of M/s R.B. Jewellers, Jaipur. The assessee is also known in trade with the name of Babulal Lawat.

The AO in assessment order mainly on the ground that the assessee has not provided the names and addresses of those parties to whom he has sold gold rejected the explanation of assessee while accepting the explanation of assessee in respect to entry of Rs. 1,10,00,000.

The assessee admitted profit at Rs. 45,00,000 and disclosed that income in PMGKY, 2016 and paid due tax. The assessee has not noted the name of the person to whom gold was sold. In unrecorded transactions neither the purchaser informs his name neither assessee require it as the dealing is cash-based and even if name and address are given the person will not be found there or will deny it.

Thus when the entries clearly reveal that transactions are of unrecorded purchase and sale of gold which AO also admits in assessment order than simply that name and address of purchasers are not provided the entire amount of sale cannot in law be treated as undisclosed income, only profit earned from said transactions which has been admitted by the assessee at Rs. 45,00,000/- can only be assessed to tax.

The issue under consideration is whether the CIT(A) was right in deleting the addition made by the AO on account of unexplained investment in the purchase of gold.

The tribunal observed that when the transactions are of unrecorded purchase and sale of gold, which AO also admits in the assessment order, then simply that name and address of purchasers are not provided the entire amount of sale cannot in law be treated as undisclosed income, only profit earned from said transactions which has been admitted by appellant at Rs. 45,00,000/- can only be assessed to tax more so when the appellant has disclosed in PMGKY the said undisclosed income of Rs. 45,00,000/- and paid tax in accordance with the scheme and received certificate therefor from Pr. Commissioner of Income Tax, hence the same disclosed income cannot be included as income is assessed as per Section 199-I of PMKGY.

The two-member bench of Ramesh C Sharma and Sandeep Gosain observed that the assessee had disclosed in PMGKY the said undisclosed income of Rs. 45,00,000 and paid tax in accordance with the scheme and received a certificate therefore from Pr. Commissioner of Income Tax, hence the same disclosed income cannot be included as income in the assessment as per Section 199-I of PMGKY.

“However Ld. A.O. has allowed credit of amount of disclosed income in PMKGY from total income as so the addition on this account is restricted to Rs. 45,00,000/- and balance is deleted. In view of the above facts and submissions made hereinabove the Ld. CIT(A) is correct in deleting the addition of Rs.2,57,00,000/- made by the AO on account of alleged undisclosed investment in purchase of Gold,” the ITAT said.

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