UTSAV PAREKH,KOLKATA vs. ACIT, CIR-31, KOLKATA, KOLKATA

This is an appeal by assessee challenging the order dated 30-3-2016, in Appeal No.373/CIT(A)-9/Cir-31/2014-15/Kol, passed by the ld. Commissioner of Income Tax (Appeals)-9, Kolkata [hereinafter called as ‘CIT(A)’], while dismissing the appeal confirmed the additions made by the Assessing Officer (hereinafter called as ‘AO’).

Aggrieved by the addition the assessee carried the matter in appeal to ld. CIT(A). Ld. CIT(A) observed that the assessee was non-cooperative and there was no appearance on behalf of the assessee. Though there was appearance on 04.11.2015, subsequent to the receipt of remand report, none appeared, hence holding that there was no new fact or details available for consideration, he confirmed the order of the AO. ./2016 Assessment year: 2006-2007 Page 3 of 7

Aggrieved by the impugned order, the assessee came in appeal before us on the following grounds :-

For that under the facts and circumstances of the case, the order passed by Ld. CIT(Appeals) is wrong bad in law and unjustified and should be deleted, reversed or modified.

For that under the facts and circumstances of the case, the Ld. CIT(Appeals) was grossly wrong and unjustified in confirming the addition to the tune of Rs. 13,44,708/- on account of valuation of jewellery even when no defect was highlighted in the method of valuation adopted by the appellant. 3. For that under the facts and circumstances of the case, the Ld. CIT(Appeals) was bad in law and unjustified in not appreciating the remand report provided by the Assessing Officer and erred in confirming the addition made to the tune of Rs. 13,44,708/ -. Relief claimed Rs. 13,44,708/-. 4. For that under the facts and circumstances of the case, the Ld. CIT(Appeals) was vehemently wrong and unjustified in confirming the findings made by the Ld. A.0., which is contradictory ipso facto.

It is the argument of the ld. AR that having observed the difference in the valuation of the jewellery as mentioned in the wealth tax returns and income tax returns, the AO called for the details and it was explained to the AO that for the purpose of wealth tax fair market value is taken whereas for income tax purpose, the historical cost was taken and since both are not comparable, no addition can be made on that account. However, the AO proceeded to add the amount stating that no record was produced before him to substantiate the contention of the assessee. In appeal, written submissions were made before the ld. CIT(A) on 30-11-2015 and it is only after going through such written submissions the ld. CIT(A) called for a remand report on 2-12-2015 and such remand report was received on 15-12-2015. However, ./2016 Assessment year: 2006-2007 Page 4 of 7 since the assessee could not appear on 22-3-2016, the ld. CIT(A) proceeded ex-parte but ignored the evidence available on record in support of the contention of the assessee. It is, therefore, prayed that the orders of authorities below may be quashed and the additions made be deleted.

Ld. DR, on the other hand, vehemently relied upon the assessment order and submitted that in spite of several opportunities granted the assessee failed to avail the same and since there was no new facts that brought to the light during the appellate proceedings, ld. CIT(A) justified in confirming the additions made by the AO. For this reason, he prayed to dismiss the appeal.

In view of the above contentions and factual position, the point that arises for our consideration is as to whether the ld. CIT(A) is justified in confirming the assessment order in which addition made on account of the difference observed in respect of valuation of the jewellery and ornaments under wealth tax returns and income tax returns?

As could be seen from the proceedings the bone of contentions of this matter is that there is a difference in respect of valuation of the jewellery and ornaments possessed by the assessee as mentioned by him in the wealth tax returns and income tax returns. When the assessee was called upon to explain this, the assessee explained that for wealth tax returns, the fair market value of the jewllery and ornaments were considered whereas for income tax ./2016 Assessment year: 2006-2007 Page 5 of 7 purpose, a historical cost was taken and since both are non-comparable, no addition could be made on this score. However, the AO observed that no material was placed before him in support of this contention of the assessee and on that score disbelieving the version of the assessee the AO made additions to a tune of Rs.13,44,708/-.

In spite of the fact of availability of this remand report on record, ld. CIT(A) failed to take into account while disposing of the appeal before him. He simply recorded that the assessee failed to enter any appearance and make any representation. We find that there is no basis for the ld. CIT(A) to observe that there is no new fact or details available for consideration during the ./2016 Assessment year: 2006-2007 Page 6 of 7 appellate proceedings, inasmuch as in the remand report it is well brought out that in the remand proceedings the assessee produced so many documents and the AO convinced himself that valuation of the jewellery and ornaments for wealth tax purpose and income tax purpose are proper and genuine and there was no malafide intention to avoid any tax nor there has been any case of income escaping assessment. Thus, a vital new fact that was brought by way of remand report missed the contention of the ld. CIT(A).

In view of this factual position, we are unable to agree with the ld. DR that the AO is justified in making any addition because in the remand proceedings all the required documents were produced to the satisfaction of the AO and AO recorded a finding that there was no income escaping assessment at all. We, therefore, find that it is fit case to allow the appeal and delete the additions made by the ld. AO and confirmed by the ld. CIT(A). We answer the point accordingly.

In the result, the appeal of assessee is allowed. Order pronounced in the open court on 07/10/2016.