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2016 (12) TMI 1486 - AT - Income TaxAddition u/s 28(iv) - huge increase in the capital - revaluation of the jewellery - Held that:- Opening balance of gold is 27.927 gms and on 31.03.1999 the closing stock of gold pawned was 31,183 gms and ₹ 5,14 ,897/- was lended by the assessee, which matches with the figures shown in the balance sheet as on 31.03.1999. Thus we note that the pawned jewellery stock of 31,183gms as on 31.3.1999 was reduced to approx 28 kgms as noted by AO as on 31.3.2007 pursuant to various redemptions that had happended during the period from 1999 to 2007. The assessee during the financial year 2006-07 thought it fit merely to revalue the said already accounted jewellery and give the effect of revalued portion of the jewellery to the tune of ₹ 1.52 crores and included the same in the jewellery account on assets side and corresponding credit to his capital account. This is merely a book entry passed by the assessee to give effect to the revaluation of the jewellery which was already disclosed in the balance sheet. Hence in any case there is no case made by the AO for framing an addition u/s 28 (iv) of the Act. The assessee was able to explain with the evidence of the auditor who has admitted to have made mistakes in describing the gold pledged as capital of the assessee , whereas, in the eyes of law it is a contingent liability and since the error has been corrected by audited reconciliation statement before the AO at the very first instance itself, we do notfind any infirmity in the order passed by the ld. CIT(A) in directing the deletion of the addition made by the AO u/s 28(iv) of the Act. Therefore we confirm the order of the ld. CIT(A) and dismiss the ground of appeal raised by the revenue on this issue. - Decided in favour of assessee Addition made u/s 68 - Held that:- the undisputed fact that the assessee was maintaining accounts under Bengali conversion single entry system upto Asst Year 2006-07 (i.e immediately preceding previous year) and given the fact that the same were duly converted into English double entry system during the financial year 2006-07 relevant to Asst Year 2007-08 wherein these entries together with other entries were reflected in the books , we are persuaded to believe the version of the assessee in this regard. Respectfully following the Hon’ble Supreme Court’s decision in H.H.Sri Rama Verma vs CIT (1990 (9) TMI 4 - SUPREME Court) we hold that the provisions of section 68 of the Act cannot be invoked in the facts and circumstances of the case and the ld CITA had rightly deleted the addition in this regard. Hence we do not find any infirmity in the order of the ld CIT-A.- Decided in favour of assessee
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