Back
2008 Supreme(Kar) 953
IN THE HIGH COURT OF KARNATAKA AT DHARWAD BENCH
V.G. Sabhahit and S.N. Satyanarayana, JJ.
Kailashi Devi G. Agarwal —Appellant
Vs.
Income Tax Officer —Respondent
Income Tax Appeal No. 186 of 2004
Decided on : 22-09-2008
Advocate appeared:
Mr. A. Shankar, for the Appellant
Mr. M.V. Sheshachala, for the Respondent
The central legal point established in the judgment is the need to prove that the goods sold matched those declared under the Scheme, 1997, and accepted by the Revenue, in determining the taxability of sale transactions under Section 68 of the Income Tax Act, 1961.
Headnote:
Income Tax - Sale of Goods - Section 68 - Scheme, 1997 - [Sale of Goods] - [Income Tax Act, 1961, Section 68] - The court discussed the application filed by the Assessee under the Scheme, 1997, and the sale transactions in respect of gold jewellery and diamond. The court emphasized the need to determine whether the goods sold under the regular returns were the same as those declared under the Scheme, 1997, and accepted by the Revenue. The court held that if the Assessee could prove that the goods sold matched those declared under the Scheme, 1997, then the transaction would not be taxable under Section 68, but if not, tax would be imposed under Section 68 of the Income Tax Act, 1961.
Fact of the Case:
The Assessee filed a return of income declaring total income of Rs. 92,950, including capital loss on sale of diamond. The assessing authority held that the Assessee failed to prove the sale transactions and charged the entire credit as income from other sources under Section 68. The Commissioner of Income Tax (Appeals) confirmed the order, treating the entire amount as the Assessee's income. The Income Tax Appellate Tribunal also confirmed the order.
Finding of the Court:
The court found that the assessing authority, first appellate authority, and the Tribunal did not consider whether the goods sold matched those declared under the Scheme, 1997. As a result, the court set aside the Tribunal's order and remitted the matter to the Income Tax Officer for fresh orders.
Issues: The issues revolved around the taxability of the sale transactions under Section 68 of the Income Tax Act, 1961, and the need to determine whether the goods sold matched those declared under the Scheme, 1997.
Ratio Decidendi: The court emphasized the importance of proving that the goods sold matched those declared under the Scheme, 1997, and accepted by the Revenue, in determining the taxability of the sale transactions under Section 68.
Final Decision: The appeal was allowed, the Tribunal's order was set aside, and the matter was remitted to the Income Tax Officer for fresh orders.
V.G. Sabhahit, J.— This appeal by the Assessee is filed being aggrieved by the order passed by the Income Tax Appellate Tribunal, Bangalore Bench-C, dated December 19, 2003, in I.T.A. No. 605/3ang/2003 confirming the order passed by the Commissioner of Income Tax (Appeals), Hubli, dated March 27, 2003.
2. The essential facts of the case leading to this appeal are as follows:
3. The Assessee had filed return of income on October 10, 1998, declaring total income of Rs. 92,950. The same was selected for scrutiny with prior approval of the Additional Commissioner of Income Tax, Range I, Hubli. The Assessee had shown capital loss on sale of diamond amounting to Rs. 1,038 and a perusal of personal capital accounts revealed that there is accretion of Rs. 8,29,330 on account of sale of gold jewellery and diamond. Notices under Section 143(2)(i) were issued on September 30, 1999, informing the Assessee to appear on October 14, 1999 with the books of account, bills, vouchers and details of assets acquired. The Assessee appeared through Sri R.H. Agarwal, a chartered accountant and produced the books of account maintained by her as proprietor of M/s. Kailash Traders. To show that gold was sold to Sri Mahalakshmi Jewellers on January 27, 1998 for Rs. 4,08,080 and diamond was sold to M/s. Sheetal Exports, Surat for Rs. 4,21,250, a copy of the bank pass book was filed on November 29, 2000. It was also contended that the Assessee had filed a declaration under the Voluntary Disclosure of Income Scheme, 1997, on December 23, 1997 under Section 68(2) of the said Scheme (hereinafter called "the Scheme, 1997"), wherein she had declared the income in the form of gold jewellery and diamond for the value of Rs. 3,51,213 in respect of the assessment year 1987-88 and the report of the valuation of the jewellery and ornaments was also filed. The said application was accepted and a certificate had been issued on December 27, 1997, by valuing the said gold and diamond by the indexed method and the same has been declared in the return of income filed on October 16, 1998. The assessing authority by order dated March 30, 2001 held that the Assessee had failed to prove the transaction of sale to M/s. Mahalaxmi Jewellers for an amount of Rs. 4,08,030 and the sale of diamond for Rs. 4,21,250 to M/s. Sheetal Exports, Surat. Having regard to the statements recorded by him and after considering the contentions of the Assessee, the assessing authority also held the sale proceeds as income and charged the entire credit of Rs. 4,08,080 and Rs. 4,21,250 as income from other sources under Section 68 and deduction was given to the amount that was declared under the declaration filed under the Scheme, 1997, towards gold jewellery and diamond. Being aggrieved by the said order passed by the assessing authority, an appeal was filed before the Commissioner of Income Tax (Appeals), Hubli, by the Assessee.
4. In the said appeal the order passed by the assessing authority was confirmed, however, it was ordered that the Assessing Officer will treat the entire amount of Rs. 8,29,330 as the income of the Appellant therein. Being aggrieved by the said order dated March 27, 2003, an appeal was preferred before the Income Tax Appellate Tribunal. The Tribunal by order dated December 19, 2003, confirmed the order passed by the Commissioner of Income Tax (Appeals) and dismissed the appeal. Being aggrieved by the said order passed by the Income Tax Appellate Tribunal, the Assessee has preferred this appeal under Section 260A of the Income Tax Act, 1961.
5. The appeal was admitted on July 13, 2004. We have heard the learned Counsel for the Appellant and the learned Counsel for the Respondent/ Revenue.
6. The learned Counsel for the Appellant has taken us through the orders passed by the assessing authority as also the first appellate authority and the Tribunal and the declaration made by the Assessee under the Scheme, 1997, on December 23, 1997, as per annexure F to the appeal. He sub
