SATISH SARAF,MUMBAI vs. DCIT- CC 4(3), MUMBAI

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ITA 2844/MUM/2018Status: DisposedITAT Mumbai26 July 2019AY 2014-154 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee claimed undisclosed commission income was invested in jewellery and cash, leading to a potential double addition. Since this contention was not examined by the AO, the issue was restored to the AO for de novo examination.

What were the facts?

The assessee appealed against the CIT(A)'s order concerning unexplained investment in jewellery and cash. The first ground regarding the seizure of jewellery was not pressed. The second ground concerned the denial of telescoping benefits for unexplained investments against assessed undisclosed income.

What were the issues?

Whether the benefit of telescoping of unexplained investment in jewellery and cash against assessed undisclosed income should be allowed to avoid double taxation.

Which sections of the Income-tax Act were involved?

Section 69A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI C.N. PRASAD, HONBLEShri Satish Saraf

For Appellant: Shri A.K. Ghosh
For Respondent: Shri Chaitanya Anjaria
Hearing: 03.06.2019Pronounced: 26.07.2019

O R D E R PER C.N. PRASAD (JM) 1. This appeal is filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals) – 51, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 20.02.2018 for the A.Y. 2014-15.

2.

The assessee has raised the following grounds in its appeal: - “1. On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred to hold that jewellery valued at Rs. 42,47,935/- was seized during the course of search (para 2 of the impugned order).

2. On the facts and the circumstances of the appellant's case and in law the Ld. CIT(A) erred in not allowing the benefit of telescoping of unexplained investment in jewellery & cash aggregating to Rs. 28,12,216/- against the (A.Y: 2014-15) Shri Satish Saraf undisclosed income determined by the AO amounting to Rs. 35,34,998/- for the AY 2010-11 to 2014-15.”

3.

At the time of hearing Ld. Counsel for the assessee submitted that Ground No.1 is not pressed. In view of the submissions of the Ld. Counsel for the assessee Ground No.1 is dismissed as not pressed.

4.

Coming to the second ground of appeal i.e. not allowing benefit of telescoping of unexplained investment in jewellery and cash against undisclosed income determined by the Assessing Officer for the A.Y.2010-11 to 2014-15, I find that in the course of the search cash of ₹.25,05,000/ was found and jewellery worth of ₹.3,12,216/- was found in the assessee’s group and this was brought to tax u/s. 69A of the Act as unexplained income. The assessee could not satisfactorily explain the sources for the said investments before the Assessing Officer. Before the Ld.CIT(A) the assessee contended that the Assessing Officer failed to allow the benefit of telescoping of undisclosed income of ₹.33,56,941/- assessed for the A.Ys. 2010-11 to 2014-15 as commission income while completing the assessments u/s. 153A of the Act. The assessee contended that both the undisclosed income and investment cannot be assessed as income of the assessee and this will amount to double addition. Ld.CIT(A) rejected the contentions of the assessee and rejected the benefit of telescoping in the absence of concrete evidences.

(A.Y: 2014-15) Shri Satish Saraf 5. Ld. Counsel for the assessee reiterated the submissions made before the lower authorities. On a specific query raised by me as to whether the assessee is maintaining Books of Accounts, it is submitted that no Books of Accounts were maintained. In the absence of date wise cash book and the unaccounted receipts as its deployment of investments, it may not be possible to verify the income and the investments. However, at the same time there cannot be any double taxation of income. It is the contention of the assessee that undisclosed income in the form of commission was already taxed and the said income was invested in jewellery and cash, so there cannot be any tax on this investment. This contention cannot be brushed aside. Therefore, since this contention was neither raised before the Assessing Officer nor he has examined, I feel it appropriate to give an opportunity to the assessee to produce evidences to support his contentions that the commissioned income is invested in jewellery and is in the form of cash. Thus, the issue in appeal is restored to the file of the Assessing Officer for denovo examination of the contentions of the assessee i.e. telescoping of unexplained investment in jewellery and cash against undisclosed income determined for A.Y. 2010-11 to 2014-15 after providing adequate opportunity to the assessee. Assessee may file all the necessary information before the Assessing Officer in support of his contentions.

(A.Y: 2014-15) Shri Satish Saraf 6. In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on the 26th July, 2019

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