MR. ULLAL KAKKETOTA BAVA,MANGALURU vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, MANGALURU

The learned CIT(A)-2, Panaji erred in Passing the Order in the manner he did.

The Appellant craves leave to add, amend or alter any of the forgoing grounds.

The brief facts of the case are that the assessee is an individual carrying business of trading in fish & also a partner in the M/s. Niyaz Sea Foods, M/s. Jewel House & M/s. U.K. Ice and Cold Storage. The assessee filed his return of income on 10.10.2014 declaring a total income of Rs. 31,38,400/- u/s. 139(1) of the I.T. Act. The return was processed u/s. 143(1) of the Act. A search and seizure operation u/s. 132 of the Act was carried out on 08.02.2018 at the business as well as residential premises of the assessee. During the course of search and seizure operations, certain incriminating materials were found and seized and Rs. 66.00/- lakhs cash was seized from the residence of the assessee. The assessee was issued notice u/s. 153A of the Act on 14.01.2019 for filing return of income. In response to the notice, the assessee filed return of income on 22.02.2019 declaring income of Rs. 31,30,100/-. Subsequently, other statutory notices were issued to the assessee. During the search, certain bills regarding purchase of golds were found at the residence of the assessee. In reply to question No.10 of the statement recorded on 08.02.2018 during the search operations, the assessee stated that the gold purchases were made for gifting to his granddaughter but . Mr. Ullal Kakketota Bava had not explained the source for the purchase of these golds. The following bills evidences the purchase of golds:- Sl.No. Date Amount Mode of payment 1 20.09.2013 1,62,000 cash 2 20.09.2013 3,73,805 cash 3 20.09.2013 1,46,000 cash TOTAL 6,81,805 2.1 During the course of assessment proceedings, the AO noted that the above purchase of golds were not recorded in the books of accounts & satisfactory explanations were also not offered by the assessee. Accordingly, it was added into the total income of the assessee u/s. 69A of the Act.

Aggrieved from the above order of the AO, the assessee filed appeal before the ld.CIT(A) and the ld.CIT(A) after relying on many case laws, confirmed the order of the AO.

Aggrieved from the above order of the ld.CIT(A), the assessee filed appeal before the Income tax Appellate Tribunal.

The ld.AR reiterated the submissions made before the lower authorities and he further submitted that the assessee will get benefit of CBDT instruction No.1916 dated 11.05.1994, whereas the revenue authorities have not granted the benefit of this instruction issued by the CBDT and the amount of investment was made only Rs. 6,81,805/-. The assessee is earning sufficient income and the assessee purchased the gold from unutilized past savings and drawings. He also submitted that during the course of search and seizure operations, no other golds were found, which was unrecorded by the assessee.

After hearing the rival contentions, we noted that during the course of search u/s.132 of the Act conducted 08.02.2018, three gold bills noted (supra) were found, which was not recorded in the books of accounts of the assessee and the source also could not be explained during the course of assessment proceedings as well as during the course of search. Therefore, the AO treated it as unexplained investment. On perusal of the assessment order, the addition made by the AO is only for the unexplained investment in the gold purchases. We found substance on the submission of the ld.AR. The Assessing Officer has got the benefit of the CBDT Instruction No.1916 dated 11.05.1994, which was suppose to be followed by the revenue authorities. It is a settled law that the circulars/instructions issued by the CBDT is binding on the revenue. This position was confirmed by the Hon’ble Apex Court in the case of Commissioner of Customs vs. Indian Oil Corporation Ltd., reported in [2004] 136 taxman 491/267 ITR 272. During the course of hearing, the ld.AR submitted that there were female family members also in his family but he was not able to prove number of family members of the assessee, accordingly, the assessee is eligible for the benefit of the instruction noted (supra). Since in this case, it is not clear as how many family members are in the family of the assessee and quantity of gold purchased also.