SHRI ASHOK DAULATRAMANI,KOLKATA vs. ITO, WARD - 29(2), KOLKATA, KOLKATA

The assessee is an individual and has income from investments. Admittedly, he does not maintain any books of accounts. An amount of Rs.3 Lakhs/-, was invested by the assessee in various mutual funds. The source of investment was claimed as proceeds from sale of jewellery. The Assessing Officer disbelieved the claim of the assessee that he has sold seven numbers of rings having 1 carat of diamond each to seven different persons listed at page 1 of the assessment order on the ground that, out of the seven persons only three responded to summons u/s 131 of the Act, and four others had not responded. In their statements, the three persons who had appeared before the Assessing Officer i.e., Shri Sushil Kumar Bihani, Smt. Malati Paul and Shri Asit Paul, confirmed that they have purchased one carat diamond rings and paid the amount to the assessee. They had filed affidavits to this effect. Identification was also provided by furnishing copy of PAN card and copy of voter-id card. The Assessing Officer made the addition on the Assessment Year: 2004-05 Sri Ashok Daulatramani ground that, these persons could not prove their creditworthiness by producing the cash flow statements as on the date of purchase of the rings. As far as the other four persons are concerned, the Assessing Officer admits that they had filed confirmation letters, copy of voter-id card, PAN card and copy of passports as identification proof. On the ground that they have not prepared cash flow statements, their confirmations were not believed. The addition of Rs.3 Lakhs/- was made u/s 68 of the Act. The ld. CIT(A) confirmed the same.

Aggrieved the assessee is in appeal before me.

After hearing rival contentions, I find that the assessee has discharged the burden of proof that lay on its by furnishing confirmation letter from all the seven persons who have purchased one carat rings from the assessee. The amount involved is below Rs. 50,000/- and I do not find it necessary that for such small amounts the cash flow statements needs to be furnished. The third parties who purchased the rings have proved their identities and genuineness of the transactions. Merely because some of them have not appeared before the Assessing Officer, no addition can be made has held by the Hon’ble Supreme Court in the case of Commissioner of Income-tax v. Orissa Corpn, (P.) Ltd. [1986] 159 ITR 78 (SC). 4.1. By furnishing their income tax details, the parties have also proved their creditworthiness. This is a case of sale of assets. Hence the tests laid down u/s 68 of the Act are fulfilled on confirmations furnished by the purchasers along with their identity. Thus, I find no merit in the said addition of Rs.3 Lakhs/- and the same is hereby deleted.

In the result appeal of the assessee is allowed. Kolkata, the 5th day of December, 2018. Sd/- [J. Sudhakar Reddy] Accountant Member Dated : 05.12.2018 {SC SPS}