TMI Blog2014 (4) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... tock-in-trade in the A.Y.2002-03 – there was violation of Rule 46A by CIT(A) – thus, the matter is required to be remitted back to the AO for examination of the documents so as to substantiate that HUF partners were having jewellery which they have converted into stock-in-trade by offering capital gains in their respective income tax return and same was introduced as capital in the assessee’s firm – Decided in favuor of Revenue. - ITA No. 3415/Mum/2010 - - - Dated:- 4-4-2014 - Shri R. C. Sharma, AM And Shri Sanjay Garg, JM,JJ. For the Petitioner : Shri Javed Akhtar For the Respondent : Dr. K. Shivram Mr. Rahul Hakkani ORDER Per R. C. Sharma (A.M.) : The Revenue has preferred this appeal against the order of CIT(A)-8, dated 9-12-2009, for the assessment year 2006-07, in the matter of order passed under Section 143(3) of the I.T. Act. 2. Rival contentions have been heard and record perused. 3. Briefly stated facts emanate from the assessment order framed under Section 143(1), wherein the AO observed as under :- The assessee s nature of business as claimed by him is reseller of gold, silver and diamonds. The case of assessee was selected for scru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed to Wealth Tax had also been declared earlier, At best, the Assessing Officer could have taken investigative action in the year in which the capital was first introduced in the form of jewellery as warranted u/s 69 of the I. T Act, 1961, / find that the department has accepted the declaration of the appellant in the concerned year. U/s 69, the previous year when such deemed income shall be taken to have accrued shall be year in which the investment was first recorded. Once it is accepted in that year, it is not open to the Assessing Officer to doubt it in the subsequent year on suspicion, surmises and conjectures as done in the instant case. The appellant has filed copies of the Wealth tax returns of the partners in support of his contention and records show that they have been accepted by the department. The onus was on the appellant to prove the genuineness of the transaction and the appellant in this case has proved the same. The jewellery has been declared In the Wealth Tax returns and the returns have not been questioned, therefore the investment of this jewellery as capital cannot be treated as unexplained investment. Once the appellant has given the Wealth Tax returns of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said jewellery, I find, there was no reason for the firm to do so as what the firm got was stock in trade in the form of capital. The Assessing Officer, I find has not looked into or examined this aspect and has dismissed the appellant s statement in a general way. In this case, it is seen that the appellant has taken appropriate steps to discharge the onus placed on it to prove that it was in the possession of the stock that has been doubted and it was trading in it. In view of the above, the action of the Assessing Officer in making addition u/s 69A at Rs. 85,16,248/- cannot be sustained and needs to be deleted. The ground of appeal on this issue is allowed. 5. Assailing the impugned order of CIT(A), the Revenue is in appeal here before the Tribunal, wherein following grounds have been taken :- i) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to delete the addition u/s. 69 or 69A of Rs. 85,16,248/-. ii) On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in admitting fresh evidence without giving opportunity to the AO u/r.46A of the I. T Rules, 1962 while deciding the appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tners, the amount was shown after indexation and it was loss in the assessment year 2002-03 and, hence, once again showing the same in assessment year 2006-07, does not arise. Further the contention of learned AR was that the assessee has explained the source of gold through computation of income for the assessment year 2002-03 and wealth tax returns of the partners. Our attention was also invited to the decision of the coordinate bench in the case of BM Enterprises in ITA No.2379/Mum/2010, order dated 17-10-2012, wherein similar addition of opening stock was deleted by the Tribunal. Learned AR vehemently argued that assessee firm was maintaining books of account, the stock was entered in the books and accounts in the assessment year 2002-03, hence, no addition can be made in this year as the stock is coming from earlier year. As per learned AR no addition can be made under Section 69A as the stock of jewellery is recorded in the books of accounts of earlier years and assessee has discharged its burden by filing return of income of earlier years, returns of income of partners for the assessment year 2002-03 and wealth tax returns of partners. Alternatively, it was argued that capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er date. The CIT(A) further observed that the AO has taken no action to investigate into the documents submitted by the assessee to prove its case but has summarily rejected assessee s contention regarding the fact that the stock represented the capital introduced in the partners capital account in the form of jewellery. Here it is pertinent to mention that mere finding a fault in AO s action is not sufficient, the CIT(A) has also got co-terminus power, what the AO has failed to do, the CIT(A) is competent to do the same. Mere pointing out fault in AO s action and without recording any positive finding with respect to the additions made by the AO, the CIT(A) cannot delete the addition. However, to verify the correctness of assessee s contention regarding offering of capital gains in the return of income filed for assessment year 2002-03, on minute examination of the copy of the return filed in Form No.2D, placed at page 42 of the paper book, we observe that in column 18 of Form No.2D of capital gains, the partner Mr. Ramlal Keshrimal Jain(HUF) has returned Nil capital gains/loss. Similarly as per the return of income filed in the Form No.2D by another partner Mr. Prakash Ramlal J ..... X X X X Extracts X X X X X X X X Extracts X X X X
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