Case Law Details
Ballabh Prasad Aggarwal Vs ACIT (ITAT Delhi)
The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) recently ruled in favor of the taxpayer in the case of Ballabh Prasad Aggarwal Vs Assistant Commissioner of Income Tax (ACIT). The case revolved around the income tax addition due to long-term capital gains on a supposed, notional, and fictitious sale of jewellery. ITAT asserted that there is no provision in the Income Tax Act to presume a difference between the value of the jewellery declared in the Wealth Tax Return (WTR) and the value found in the search, in case the jewellery falls short of the amount or quantity declared in the WTR.
The key issue in the case was whether the Assessing Officer (AO) could resort to the determination of notional Long-Term Capital Gain (LTCG) or not. The AO calculated the LTCG on the presumption that the jewellery not found during the search was sold. The ITAT, however, held that no additions could be made to the entire disclosed jewellery as per the WTR and as discovered on the premises. The shortage of jewellery could have been questioned at the time of the search, and any evidence regarding the sale of jewellery should have been collected during or post the search.
Furthermore, the assessee argued that the loose diamonds, which were part of the WTR, were later studded in the jewellery, and that was the reason for the difference in the description of the jewellery. ITAT concurred with this assertion and refrained from adding the value of this jewellery to the total discovered in the premises.
FULL TEXT OF THE ORDER OF ITAT DELHI
Please become a Premium member. If you are already a Premium member, login here to access the full content.
