2012 (4) TMI 763 - AT - Income Tax

Summary

Issues Involved:
1. Validity of the order passed by the AO.
2. Addition of unexplained cash.
3. Addition of unexplained investments in diamond jewellery.
4. Levy of interest u/s 234A, 234B, and 234C.

Summary:

1. Validity of the Order Passed by the AO:
- Ground No.1 and Ground No.2: The Ld. Counsel for the assessee did not press these grounds, and they were rejected as not pressed.

2. Addition of Unexplained Cash:
- Ground No.3: The AO observed that during the search, cash of Rs. 5,83,350/- was found, with Rs. 3,88,500/- found in the bedroom of the assessee. The assessee claimed it was combined family cash and provided details of cash balances belonging to various family members. The AO did not accept this explanation, treating Rs. 3,88,500/- as unexplained cash. The Ld.CIT(A) confirmed this addition. However, the Tribunal found that the explanation provided by the assessee, supported by books of account, was believable. The addition of Rs. 3,88,500/- was deleted.

3. Addition of Unexplained Investments in Diamond Jewellery:
- Ground No.4: The AO found diamond jewellery valued at Rs. 4,20,374/- and accepted only Rs. 40,000/- as explained, treating the balance Rs. 3,80,374/- as unexplained. The Ld.CIT(A) upheld this addition. The Tribunal, however, found that the jewellery was disclosed under VDIS and in wealth tax returns, and the AO had accepted the gold jewellery in toto. The addition of Rs. 3,80,374/- was deleted.
- Ground No.3 (By Mr. Bharat Hemraj Jethani): The AO found diamond jewellery valued at Rs. 4,86,865/- and accepted only Rs. 30,000/- as explained, treating the balance Rs. 4,56,865/- as unexplained. The Ld.CIT(A) upheld this addition. The Tribunal found that the jewellery was received by the assessee's wife during marriage and other occasions, and the addition was deleted.
- Ground No.3 (By Mrs. Darshna K. Jethani): The AO found diamond jewellery valued at Rs. 4,38,377/- and gold jewellery valued at Rs. 1,22,580/- as unexplained. The Ld.CIT(A) upheld this addition. The Tribunal found that the jewellery was received by way of a will and gifts, and the addition was deleted.

4. Levy of Interest u/s 234A, 234B, and 234C:
- Ground No.5: The Tribunal directed the AO to allow consequential relief in respect of the levy of interest charged u/s 234A, 234B, and 234C of the Act.

Conclusion:
- All the appeals were partly allowed, with significant deletions of additions made by the AO and sustained by the Ld.CIT(A). The Tribunal provided relief to the assessees by accepting their explanations and supporting documents.