SURESH PRASAD CHOKHANI,MUMBAI vs. ITO, CIRCLE - 4(3)(1), MUMBAI

The issue raised is that learned CIT(appeals) erred in sustaining the addition under section 69 of the income tax act amounting to Rs. 5, 67,000/- as unexplained investment.

The brief facts of the case are that during the course of assessment the assessing officer noted that he has received information from the investigation wing that assessee has been beneficiary of bogus purchase bill for Diamond for the aforesaid amount. Based upon the investigation wing finding in the case of Jain Group the assessing officer issued notice to the assessee. The assessee responded that it has submitted the purchasable bill and that the party from whom he has purchased the Diamond has also responded to the notice issued by the assessing officer. The assessee further informed that he has purchased the Diamond for his own use and has not used it for any trading purpose. The 2 Suresh Prasad Chokhani assessee also informed that his source of income is only salary and interest income. However the assessing officer was not satisfied he proceeded to add the aforesaid amount as unexplained investment. This was duly confirmed by the learned commissioner of income tax.

Against this order assessee is in appeal before the ITAT. I have heard both the counsel and perused the records. I find that assessee’s source of income is salary and interest income. There is no whisper whatsoever in the assessment order that assessee is anyway engaged in the sale and purchase of diamonds. Assessee has duly submitted the purchase vouchers. The party from whom the Diamond has been purchased has also duly responded. Assessee has also informed that he has purchased the diamonds for his own consumption. In this view of the matter, there is no reason whatsoever for the Assessing Officer to make the addition under section 69 solely on the basis of investigation wing report in the case of Jain group. In my considered opinion on the facts and circumstances of the case there is no case made out against the assessee for the addition of the aforesaid amount. Accordingly, I set aside the orders of the authorities below and direct that the addition should be deleted.

In the result, the appeal by the assessee stands allowed.