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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-2, Coimbatore in ITA No.32/16-17 dated 04.04.2019. The assessment was framed by the
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Income Tax Officer, Non-Corporate Ward 2(4), Coimbatore for the assessment year 2013-14 u/s.143(3) of the Income Tax Act, 1961, (hereinafter ‘the Act’) vide order dated 30.03.2016.
At the outset, it is noticed that this appeal is time barred by limitation by 11 days as the order of CIT(A) is dated 04.04.2019 and the order of CIT(A) was served on assessee on 22.04.2019. The assessee filed this appeal before Tribunal on 01.07.2019 thereby there is a delay of 11 days. The assessee has filed affidavit for condonation of delay, stating that he was on business trip and was not able to attend his daily office work. As the delay is small, just of 11 days, which was not contested by Revenue, hence, seeing the reason cited, we condone the delay and admit the appeal.
The only issue in this appeal of assessee is as regards to the order of CIT(A) in directing the AO to take full consideration of Rs.1,72,32,320/- being the investment in the account of M/s.GG Jewellery in the books of assessee firm by applying provisions of section 45(5) of the Act.
Brief facts are that the assessee filed his return of income for the relevant assessment year 2013-14 on 31.03.2015. During the
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course of scrutiny assessment proceedings, the AO noted that there is substantial increase in capital in the year and higher interest expenditure is claimed against new capital added in work-in- progress. The AO noted that the assessee admitted during the course of survey u/s.133A of the Act on the business premises of the assessee on 24.04.2016 that this increase in capital was due to conversion of gold weighing 4163.740 grams, claimed to have been declared in VDIS 1997, as stock in trade of firm M/s. GG Jewellery of which assessee is a partner. The AO made addition of the entire amount of Rs.1,65,92,320/- as additional investment on conversion of gold by invoking the provisions of section 45(5) of the Act. Aggrieved, assessee preferred appeal before CIT(A).
The CIT(A) also confirmed the action of the AO and directed the AO to assess the capital gain by taking sum of Rs.1,72,32,320/- as full value of consideration being the amount recorded in the books of the firm M/s. GG Jewellery by applying the provisions of section 45(3) and not 45(5) of the Act. The CIT(A) observed in para 5.3 as under:- “5.3 I am of the opinion that the provisions of section 45(3) shall apply to the case and the additions ought to have been made under the head Capital gains u/s.45(3) and not u/s.68. Thus the order of the AO requires
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modification in this regard. AO is directed to assess the capital gains by taking Rs.1,72,32,320/- as full value of consideration being the amount recorded in the books of account of the firm M/s.GG Jewellery, by applying the provisions of section 45(3). The value of asset that is declared in the VDIS, coupled with indexation has to be allowed as cost while working out the capital gains on transfer. In these circumstances, the grounds raised by the appellant to delete the additions are dismissed.”
Aggrieved, now assessee is in appeal before the Tribunal.
Now before us, apart from raising various grounds, assessee’s only submission was that the gold loan account and advance received from his wife Smt. Geetha should not be taken into consideration. The ld.counsel for the assessee showed us the capital account reproduced in order of CIT(A), which reads as under:-
Capital Account Opening Balance 96,17,766 Add: Conversion of gold of 4163.740 grams Declared under VDIS 1,19,75,915 Conversion of Diamonds 25 carat declared Under VDIS 21,32,105 Smt. Geetha Gold of 1000 grams 31,24,300 Smt. Geetha Advance 37,50,000 3,06,00,086
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The ld.counsel only requested that the gold loan of 1000 grams valued at Rs.31,24,300/- should be excluded while applying the provisions of section 45(3) of the Act. For this, the ld.counsel stated that there is agreement between the assessee and the firm but no written agreement is entered into. Even oral agreement is enforceable in law, according to ld.counsel.
When these facts were confronted to ld.Senior DR, he stated that these facts need verification at the level of AO and hence, the gold loan received from his wife Smt. Geetha of 1000 grams valued at Rs.31,24,300/- can be excluded in case, assessee is able to prove the same.
After hearing both the sides and going through the facts, we noted that there is a claim by assessee from the beginning before AO and before CIT(A) that there is one item of loan of gold from his wife Smt. Geetha of 1000 grams, which is approximately valued at Rs.31,24,300/-. In case, the assessee is able to prove that this is a loan, the same cannot be taken into consideration by applying the provisions of section 45(3) of the Act. This needs verification at the level of AO. Hence, we set aside the order of CIT(A) as well as AO on this issue and remand the matter back to the file of the AO.
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In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 14th December, 2022 at Chennai.
Sd/- Sd/- (मनोज कुमार अ�वाल) (महावीर �सह ) (MANOJ KUMAR AGGARWAL) (MAHAVIR SINGH) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�ई/Chennai, �दनांक/Dated, the 14th December, 2022 RSR आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� ) अपील(/CIT(A) 4. आयकर आयु� /CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF.