A.SHIHABUDEEN vs. THE COMMERCIAL OF INCOME TAX, KOTTAYAM

This is a case where large credits by way of deposit of gold were found and it was added to the income of the appellant under Section 68 of the Income Tax Act. Originally, the tribunal had held in favour of the appellant. Revenue came before this Court in appeal and this Court allowed the appeal and remanded the matter with certain observations. The tribunal after considering the matter, has found in favour of the Revenue and dismissed the appeals filed by the appellant.

The tribunal found that the case of the appellant that the gold was available on the basis of deposits made by various parties, cannot be believed. Various circumstances were relied on in arriving at the said conclusion. Statements were obtained from the so-called depositors of gold and contradictions were brought out rendering the version of the appellant unacceptable.

We heard the learned counsel for the appellant and the learned counsel appearing for the Revenue.

Learned counsel for the appellant would only raise one complaint before us. He would point out the following portion of the Judgment of this Court in the earlier appeal: “When the Assessing Officer and the first appellate authority considered the genuineness of each and every case of deposit alleged to have been received by the appellant, it was the duty of the Tribunal to have considered the evidence in a realistic manner and to make reasonable inference and decide the case reasonably. Even though assessee is a dealer in gold ornaments who has registration under the KGST Act and is filing returns, strangely none of the authorities have chosen to consider whether assessee has accounted purchase of all these gold ornaments and paid purchase tax under Section 5A because deposits are admittedly taken as stock in trade and used in business. Therefore, if the transaction is genuine, the assessee would have accounted purchase of old gold paying tax under Section 5A and paid sales tax on corresponding sales turnover of new jewellery. This is of course only a corroboration of facts and even if assessee has paid sales tax accounting bogus purchases, nothing stands in the way of the Income Tax Department in making addition under Section 68, if justified.” He would contend that there was non-compliance of the said direction. In other words, he would contend that this Court had found that if deposits had been received, it would have been included as old stock of gold and tax would have been paid under Section 5A and thereafter the court also proceeded to hold that this could been corroboration of the appellant's case. Thereafter, the court also observed that even if tax is paid, it is open to the tribunal to take a view in favour of the Revenue. The complaint is that even though sales tax records revealing purchase of gold from nine persons and payment of tax under Section 5A of the KGST Act was made available, there is no reference at all to the same. Learned counsel for the Revenue would submit that there is no reference to the same in the order. We feel that if that is the case of the appellant, the appellant can move under Section 254(2) of the Income Tax Act for rectification. In such circumstances, we are of the view that we need not consider the matter in these Appeals, as the orders stand now, nothing is brought on record for us to come to the conclusion that even though the records were produced, they were not considered. Without prejudice to the right of the appellant, if so advised, to move under Section 254(2) of the Income Tax Act, the Appeals are dismissed. = K. M. JOSEPH JUDGE = K. RAMAKRISHNAN JUDGE kbk. ////