COMMISSIONER OF INCOME TAX (CENTRAL) Vs. JEVER JEWELLERS

JUDGEMENT

(1.) THIS Tax Appeal has been preferred against the order, passed by the Income Tax Appellate Tribunal, Circuit Bench, Ranchi in Income Tax Appeal No. 15/Pat/2005 for the Block Assessment Period 1996 -97 to 2001 -02 and from 01.04.2001 to 26.09.2001 with Cross Objection No. 18/Pat/2005 for the very same block assessment period and for the broken period of 2001. The order was passed by the Income Tax Appellate Tribunal (hereinafter referred to as 'the ITAT' for the sake of brevity) dated 23rd June, 2006 against which this appeal has been preferred wherein the following substantial questions have been raised:

(2.) WE have heard counsel for the appellant, who has submitted that deleting the addition of Rs. 22,84,923/ - by the ITAT was without appreciating the fact that the respondent -assessee has not disclosed the said addition before the Settlement Commission as provided under Section 245D(4) of the Income Tax Act, 1961 and this amount was added because of undisclosed stock of gold and diamond jewellery on the strength of difference in physical verification of the stock found and its book value. It is also submitted by the counsel for the appellant that similarly, the ITAT has committed an error in deleting the addition of Rs. 41,51,301/ -. This addition was made by Assessing Officer. This was undisclosed income for the year 2002 -03 on the basis of seized documents marked as A/JJ/6 which IIAT has overlooked or ignored. Counsel for the appellant submitted that search and seizure operation under Section 132 of the Income Tax Act, 1961 was conducted on 26th September, 2001 at various premises of the respondent. Thereafter, application was preferred by Sri Prem Prakash Arya, who is main partner of M/s. Jever Jewellers, Bangalore, under Section 245C of the Income Tax Act before the Settlement Commission. Settlement Commission took sometimes meanwhile Assessing Officer passed an order dated 23rd October, 2003 and two major additions were made which is at Rs. 22,84,923/ - on the basis of physical verification of the stock firm and the book value and the 2nd major addition was Rs. 41,51,301/ - on the basis of the seized documents which ITAT has ignored. Appeal was preferred by the respondent before Commissioner of Income Tax (Appeals), who passed an order dated 15th July, 2004 in favour of the respondent and therefore, appellant preferred Appeal before the ITAT which was dismissed vide order dated 23rd June, 2006 and therefore, this Tax Appeal has been preferred with the aforesaid substantial questions of law and as this Settlement Commission passed an order on 8th January, 2014, Commissioner of Income Tax (Appeals) as well as ITAT has placed heavy reliance upon the order, passed by the Settlement Commission and more particularly, upon the disclosure of income by Mr. P.P. Arya. Thus, it is mainly submitted by the counsel for the appellant that ITAT has not properly appreciated that additions of income at Rs. 22,84,923/ - which is based upon a difference in physical verification of stock and its book value and this was never disclosed before the Settlement Commission by Mr. P.P. Arya and 2nd addition of Rs. 41,51,301/ - was on the basis of the seized documents marked as A/JJ/6 which the ITAT has overlooked or ignored and therefore, deletion of both these additions may be quashed and set aside by an order of this Hon'ble Court.

(3.) COUNSEL for the respondent has also relied upon the decision rendered by Hon'ble Supreme Court as well as Hon'ble Delhi High Court as: