SHRI C.SARAVANAN,CHENNAI vs. ADDL. CIT, MADURAI

This appeal is directed against the order of the Commissioner of Income Tax (Appeals) –II, Salem, dated 28.08.2012 and pertains to assessment year 2007-08.

Sh. A.S. Sriraman, the Ld.counsel for the assessee, submitted that there was search in the premises of the assessee and the Revenue authorities found `12.10. lakhs in cash in the cloth pouch of the assessee. A statement was recorded under Section 132(4) of the Income-tax Act, 1961 (in short 'the Act'). The Revenue official has also found a sale bill dated 17.08.2006 issued by M/s Surana Corporation Ltd. on sale of gold bar to the extent of `9,84,055/-. The issue arises for consideration, according to the Ld. counsel, is the investment made in the gold bar to the extent of `9,84,055/-. The assessee explained before the Assessing Officer that the gold was purchased for an amount of `9,84,055/- and the sale amount of gold purchased was used for purchase of gold on 06.06.2007. The Ld.counsel further submitted that if the purchase of gold value of `9,84,055/- is considered for assessment year under consideration, only the difference between the cash found and the gold sold alone shall be considered for the assessment year 2008-09. In fact, for the assessment year 2008-09, the CIT(Appeals) accepted the claim of the assessee. However, for the assessment year 2007-08, the Assessing Officer disbelieved the claim of the assessee. Referring to the order of the CIT(Appeals), the Ld.counsel submitted that the CIT(Appeals) without appreciating the material, agreed with the Assessing Officer that the assessee has invested unexplained income in purchase of gold bar to the extent of 1 Kg for a sum of `9,84,055/-. According to the Ld. counsel, the money found was sale proceeds of gold bar. The money belonged to one Shri Suresh, was used to purchase the gold bar. Therefore, there cannot be any addition in the case of the assessee.

On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that if the assessee’s claim that the money found belonged to Shri Suresh and Shri Suresh’s money was used for purchasing the gold bar, then the sale bill should also contain the name of Shri Suresh. In fact, the sale bill issued by M/s Surana Corporation Ltd. was in the name of the assessee.

We have considered the rival submissions on either side and perused the relevant material on record. From the order of the Assessing Officer it appears six persons, including the present assessee, were apprehended by the Enforcement Directorate at Fort Railway Station, Chennai, while moving around in a suspicious manner. The Revenue authorities on receiving information from the Enforcement Directorate, conducted a search under Section 132 of the Act and found a sum of `12.10 lakhs in the possession of the assessee. The assessee claimed before the Assessing Officer that he was engaged in brokerage business of gold Jewellery, he used to buy gold from Chennai on behalf of various persons at Madurai and earns commission. The assessee has also explained that the amount of `12.10. lakhs, which was found to be in the possession of the assessee, belonged to one Shri Suresh and the same was used for purchasing the gold bar which was subsequently sold as per the sale bill dated 17.08.2006. As rightly submitted by the Ld. D.R., if the money belonged to Shri Suresh was invested in purchasing the gold bar, the gold bar ought to have been sold on behalf of Shri Suresh, but the sale bill was apparently in the name of the assessee. Therefore, it is for the assessee to explain how he was able to purchase gold bar which was sold as per the sale bill dated 17.08.02006. In the absence of any material, the CIT(Appeals) has rightly confirmed the addition made by the Assessing Officer under Section 68 of the Act. This Tribunal has no reason to interfere with the order of the lower authority and accordingly the same is confirmed.

In the result, the appeal of the assessee is dismissed.