Case Law Details
H.K. Dutta & Co. Vs ACIT (ITAT Kolkata)
The case of H.K. Dutta & Co. Vs. ACIT was brought before the Income Tax Appellate Tribunal (ITAT) Kolkata. The dispute primarily revolved around multiple additions and disallowances made by the Assessing Officer during the assessment year 2013-14. Among them, the significant issue was the addition under Section 69 of the Income Tax Act related to a gold loan obtained from a partner, which was recorded in the books of the firm.
The assessee, a partnership firm involved in the business of manufacturing and selling gold jewelry, faced several additions and disallowances during the assessment proceedings. One of the contentious issues was the addition under Section 69 concerning a gold loan received from one of the partners, Mr. Pradip Kumar Gupta, in the form of 4132.20 grams of gold during the financial year 1997-98. The loan was declared under the Voluntary Disclosure of Income Scheme (VDIS), and the value of the gold loan was recorded in the firm’s books at that time.
The Assessing Officer sought to invoke Section 69 of the Act, claiming that the value of the gold loan had increased, and Mr. Pradip Kumar Gupta had not reported the same in his income tax return or wealth tax return. However, the Tribunal found that both preliminary conditions to invoke Section 69 were not satisfied. Firstly, the loan was duly recorded in the firm’s books of accounts, and secondly, the nature and source of the gold loan were adequately explained during the assessment proceedings.
The Tribunal emphasized that the loan was still standing in the books and the genuineness of the transaction was not disputed. It also clarified that any future increase in the value of the gold loan when repaid would be accounted for as an expenditure in the hands of the firm and income in the hands of the partner. Therefore, no addition under Section 69 was justified, as it was merely anticipation of a future transaction and not unexplained investment.
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