No Addition on Unaccounted Income on Inclusion of Sale of Jewellery as LTCG in ROI: ITAT quashes Assessment Order and Penalty [Read Order]

The Delhi bench of Income tax appellate tribunal (ITAT) quashed the assessment order and penalty which was passed by Deputy Commissioner of Income Tax (DCIT) and held that No addition could be made on unaccounted income since the assesse already included sale of jewellery as Long term capital gain in return of Investment.

Smt. Nirmal Uppal, the assessee was an employee of the office of the Accountant General and earning salary and rental income from house property. She claimed that during the relevant financial year she sold her jewellery for the sale consideration of Rs. 27,02,000/-.

The search and seizure operation conducted in the Jindal Bullion Ltd. (JBL) Group on 05.01.2017 found that it was systematically engaged in cash transactions with a number of entities. The data name of a suspect beneficiary of accommodation entry was found and it was found that the real beneficiary was the assessee.

A notice was issued and Sh. Parul Ahluwalia, director and formal employee of JBL was confronted with the loose sheets detail. On 03.12.2015, Rs. 27,42,000/- was received in cash and on 05.12.2015, JBL issued a cheque of State Bank of India payable to the assessee.

The  Commisioner of Income Tax [CIT(A)] had erred in dismissing the appeal of the assessee against the order of penalty passed by the respondent. The Commisioner of Income Tax (CIT)(Appeals) grossly erred in law and facts, not providing sufficient opportunity to the assessee in re-characterizing the addition of Rs. 27,02,00,0/- made under section 68 of the Income Tax Act.

The  Counsel for the appellant submitted that the  respondent had failed to take into consideration the fact that the assessee was not maintaining books of accounts, and that the revenue had failed to appreciate that the assessee was an old lady of 84 years who had sold her ancestral jewellery and other jewellery. It was also submitted that in the return of income from the sale of jewellery has been reported as a long term capital gain which amounts to double taxation.

The counsel for the respondent defended the orders of the Tax Authorities and submitted that the tax authorities had detailed the trail of transactions in the seized material. The assessee/appellant had made available a return of income and computation of total income for the relevant years showing a long term capital gain of 27,02,000/- by way of sale consideration. The respondent discarded the fact of sale of jewellery, instead taking the explanation of the transaction as admission of facts.

The two-member bench comprising (N.K.Billaiya) accountant member (Anubhav Sharma) judicial member stated that  the assessee is a former Central Government Employee who retired from the office of Accountant General, it can be assumed that she must have been holding some jewellery.

The respondent, without trying to make any further inquiries from the assessee to ascertain the truthfulness of her holding of the jewellery, proceeded to out rightly discard the explanation.

The assessee was required to give explanation of the reasons for receiving the credit entry in her bank which she has given on the basis of the invoice issued by the JBL. To discredit the same and to connect the assessee with the pseudonymous entries of cash, some evidence or circumstance based on preponderance of probability was required to be shown by the respondent-revenue.

While allowing the appeal, the Court quashed the impugned assessment order and penalty order.

To Read the full text of the Order CLICK HERE

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