KANCHANBAI M JAIN,HUBLI vs. ITO, HUBLI

Though various grounds are raised, but they all relate to introduction of cash in the books of accounts of the assessees on sale of gold & diamonds (ITA 133/Bang/2016) and on sale of sliver and diamonds (ITA No.134/Bang/2016), which were declared under Voluntary Disclosure of Income Scheme, 1997 (VDIS).

During the course of assessment proceedings, the Assessing Officer has noted that certain introduction of cash was explained by the assessees to have been introduced on account of sale of gold jewellery & diamonds and silver & diamonds respectively. It was also contended by the assessee that under VDIS, the assessees have declared the gold ornaments/jewellery & diamonds studded with gold as well as the silver and diamonds. The declaration was accepted under VDIS and later on gold jewellery was converted into gold bullion and separate diamonds as well as silver utensils were converted into silver bullion & separate diamonds which were sold and the sale proceeds were introduced in the books of account. The AO has raised a technical objection by stating that the items declared under VDIS were not the same, which were sold and the sale proceeds were introduced in the books of account.

When the matter reached the Hon’ble High Court of Karnataka, the Hon'ble jurisdictional High Court has remanded the matter back to the AO to give a specific finding as to, whether the items sold were the same which were disclosed under VDIS?

In the remand proceedings, the assessee has furnished the details of items sold and the evidence of conversion of the gold jewellery into gold bullion and diamonds. The weight of gold bullion and the diamonds were the same. The AO did not accept the contentions of the assessee and again made the additions. Though the assessee has tried to explain the facts with details, but it was not acceptable to the CIT(Appeals).

Before the Tribunal, the assessees have filed a copy of the Valuation Report, VDIS Certificate, copy of sale of diamond and gold bullion/copy of sale of silver bullion and diamonds and the evidence of conversion of gold jewellery into gold bullion/silver utensils into silver bullion and diamonds. From this evidence, the assessees have tried to explain that the same quantity of gold/silver which were declared under VDIS were sold. Similar is the position in respect of diamonds also.

Per contra, the ld. DR strongly opposed the contentions of the assessee and placed heavy reliance upon the order of the CIT(Appeals).

Having carefully examined the orders of lower authorities and documents placed on record in the light of rival submissions, we find that the same quantity of gold/silver and diamonds which were declared under VDIS were sold. Though the assessee has declared the gold jewellery studded with diamonds/silver and diamonds in different form under VDIS, but in sale bill the assessees have sold gold bullion/silver bullion and diamonds separately. The assessees have filed evidence with respect to conversion of gold jewellery into gold bullion/conversion of silver utensils into silver bullion and diamonds.

Since the same quantity which were disclosed under VDIS were sold, we find no justification in making the addition on introduction of sale proceeds in the books of account. Once the Revenue has accepted the declaration under VDIS and accepted the tax deposited by the assessee, it should not have made a further addition on account of introduction of sale proceeds of the said jewellery in the books of account. We therefore find no merit in the additions made by the revenue authorities. Accordingly, we set aside the order of the CIT(Appeals) and delete the addition.

In the result, the appeals by the assessees are allowed.