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2014 (10) TMI 1 - HC - Income TaxBenefit under Voluntary Disclosure of Income Scheme – Sale transaction of diamonds - Genuine transaction or not - Held that:- All the three assesses made separate voluntary disclosures of their income, in response to a scheme and they were also issued the certificates - For one reason or the other, the family thought of selling away the jewellery - the diamonds were separated from gold and while the gold was sold at Hyderabad, diamonds were sold at Surat - The resultant sale proceeds were shown as capital gains in the respective returns for the AY 1998-99 - there is ample evidence to show that all the three assesses have sold the diamonds, that are separated from the jewellery, at Surat. It is a place known for voluminous business in diamonds - Not only the particulars of the persons, who purchased the diamonds was furnished, but also the manner of payment was disclosed - The entire payments were through demand drafts - The purchaser was undoubtedly a dealer in diamond - Even assuming that on certain occasions, the corresponding assessee did not proceed to Surat, it cannot be a factor to disbelieve the transaction - When not only the respondents have disclosed the wealth in VDIS, but also have shown sale proceeds as capital gains, it was farfetched, if not unreasonable, on the part of the AO, to doubt their honesty in this behalf - Though it is prerogative of the State to levy tax, referable to its sovereign power, it cannot be extended to the level of regulating the conduct of a citizen to such minute extents - Except that the AO intended to treat the sale proceeds of jewellery u/s 68 of the Act, no other provision of law is invoked, nor any principle is projected – Decided against revenue.
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