Appeal details
Counselvise Citation
[2011] 122 COUNSELVISE.COM (IT) 6761 (ITAT-INDORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Cross Objection
Pronouncement Date
20-12-2011
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
Not Allotted
Assessment Year
2008-2009
Appeal Filed On
03-08-2011
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.30/IND/2011 A.Y. 2008-09 ASSTT. COMMISSIONER OF INCOME TAX 2(1), BHOPAL ... APPELLANT VS SHASHI MOHAN AGRAWAL BHOPAL PAN AADPA-5686L ... RESPONDENT CO NO. 39/IND/2011 ARISING OUT OF ITA NO. 30/IND/2011 SHASHI MOHAN AGRAWAL BHOPAL :: OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX 2(1), BHOPAL :: RESPONDENT DEPTT. BY : SHRI ANADI VERMA ASSESSEE BY : SHRI S.S. DESHPANDE 2 DATE OF HEARING 12.12.2011 DATE OF PRONOUNCEMENT 20 .12.2011 O R D E R PER R.C. SHRMA, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 28.2.201 1 FOR THE ASSESSMENT YEAR 2008-09 IN THE MATTER OF O RDER PASSED U/S 153A/143(3) OF THE INCOME TAX ACT, 1961. 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS, IN BRIEF, ARE THAT A SEARCH AND SEIZURE ACTION WAS CONDUCTED U/S 132 OF THEINCOME TAX ACT, 1961 AT THE AGRAWAL, TAPARIAS AND THE SINGHDEOS GROUP OF BHOPAL ON 13.11.2007. THE AGRAWALS ARE PRIMARILY JEWELLERS ENGAGED IN THE SALE AND PURCHASE OF GOLD, SILVER, DIAMOND AND OTHER PRECIOUS STONES AND ARE ALSO CARRYING OUT PAWNING ACTIVITY. 3 3. WHILE FRAMING THE ASSESSMENT U/S 153A OF THE ACT VARIOUS ADDITIONS WERE MADE INCLUDING ADDITION ON ACCOUNT OF CASH SEIZED DURING THE COURSE OF SEARCH AMOUNTING TO RS. 2 LACS AND JEWELLERY RS. 27,79,552/- AND UNEXPLAINED STOCK OF RS.1,99,934/-. THE FIRST AND SECOND ADDITIONS WERE DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER RECORDING DETAILED FINDINGS AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED STOCK AMOUNTING TO RS. 1,99,934/- WAS SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AGAINST WHICH THE ASSESSEE HAS FILED THE CROSS OBJECTION. 4. FROM RECORD WE FIND THAT THE ADDITION ON ACCOUNT OF CASH WAS DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER RECORDING THE FOLLOWING FINDINGS :- 4 I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE. I HAVE ALSO SEEN THE REASONING OF THE ASSESSING OFFICER DURING THE SEARCH ACTION FROM THE BED ROOM OF THE ASSESSEES DAUGHTER-IN-LAW, GITYA AGRAWAL, CASH WAS FOUND AMOUNTING TO RS. 104000/- AND FROM THE BEDROOM OF THE ASSESSEE CASH WAS FOUND TO THE EXTENT OF RS. 1,50,500. IN THE STATEMENT RECORDED DURING THE SEARCH THE ASSESSEE HAS STATED THAT 1.5 LACS IS A COLLECTIVE CASH OF HIMSELF AND HIS WIFE WHICH WAS AVAILABLE FROM THE SAVINGS AND ALSO CASH PRESENTATION RECEIVED BY THEM IN THE MARRIAGE OF THEIR SON. THEY HAD ALSO SAID THAT SOME CASH WAS ALSO SHOWN IN THE WEALTH TAX RETURN. THE ASSESSEES DAUGHTER-IN-LAW HAD ALSO STATED THAT THE CASH FOUND COMPRISED MONEY WHICH WAS RECEIVED IN THE MARRIAGE FROM THE RELATIVES. THE ASSESSEE HAS GIVEN IN DETAILS OF THE WITHDRAWALS MADE FROM THE VARIOUS CONCERNS IN WHICH HE IS A PARTNER/PROPRIETOR AND IN SUPPORT OF THE WITHDRAWALS, THE ASSESSEE HAS FURNISHED THE COPY OF THE LEDGER ACCOUNT WITH AGRAWAL JEWELLERS, TT NAGAR, BHOPAL IN WHICH HE IS A PARTNER AND ALSO THE COPY OF LEDGER ACCOUNTS IN THE BOOKS OF HIS PROPRIETARY CONCERN M/S SHELL TECH. IN SUPPORT OF THE CASH SHOWN IN THE WEALTH TAX RETURN, THE ASSESSEE HAS FURNISHED THE COPY OF THE COMPUTATION OF WEALTH AS ON 31.3.2007 (DATE OF SEARCH 13.11.2007) IN RESPECT OF HIS HUF RETURN AND THE RETURN OF HIS WIFE NEELAM AGRAWAL. I FIND FROM THE TABULATION FURNISHED BY THE ASSESSEE WITH REGARD TO THE AVAILABILITY OF CASH AS REPRODUCED ABOVE, IS SUPPORTED BY THE PROPER DOCUMENTS AND EVIDENCES. IT IS SEEN THAT DURING THE PERIOD PRIOR TO THE DATE OF SEARCH ITSELF, THE ASESSEES WITHDRAWAL WERE TO THE TUNE OF RS. 1220000/-. THUS, AFTER HAVING CONSIDERED THE EXPLANATION GIVEN, IN MY VIEW, THE ADDITION OF RS. 200000/- IS NOT JUSTIFIED 5 AND THE SAME IS DELETED. THIS GROUND OF APPEAL IS ALLOWED. 5. WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF JEWELLERY, THE SUBMISSION OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) WAS AS UNDER :- 1. IT IS SUBMITTED THAT THE FAMILY OF THE ASSESSEE CONSISTS OF HE, HIMSELF, HIS WIFE NEELAM AGARWAL, MARRIED SON ANKIT AGARWAL, DAUGHTER-IN-LAW GITYA AGARWAL & SON SHOBHIT. ALL THESE PERSONS ARE RESIDING AS A TRADITIONAL JOINT HINDU FAMILY IN HOUSE AT SHALMA ROAD, BHOPAL. SEARCH TOOK PLACE AT THE SAID RESIDENTIAL PREMISES ON 13.11.2007. IN THE COURSE OF SEARCH WITH THE MEMBERS OF FAMILY, GOLD AND DIAMOND JEWELLERY ETC WERE FOUND AT A VALUE OF RS. 53,54,430. THE PARTICULARS OF THE SEIZURE ARE AS UNDER :- PANCHNAMA ANNEXURE PLACE WHERE FOUND VALUE OF JEWELLERY AS PER PANCHNAMA FOUND SEIZED JFS-1/PAGE- 1 (PANCHNAMA DTD. 19.11.2007) LOCKER NO.264 WITH STATE BANK OF INDORE, T.T.NAGAR BHOPAL 1218815 1218815 JS-2/PAGE- 1 TO 3 BED ROOM OF SHASHI MOHAN/ NEELAM 1781320 1781320 JS-1/PAGE 1 TO 3 BED ROOM OF ANKIT/GITYA 2324295 2324295 5324430 5324430 5324430 5324430 2. THE ASSESSEE EXPLAINED THE SOURCES AS UNDER :- S. NO . PARTICULARS OF SOURCES AMOUNT 1. VALUE OF JEWELLERY SHOWN IN 2000000 6 THE WEALTH TAX RETURN OF SHASHI MOHAN (HUF) FOR A.Y. 2007-08 FURNISHED ON 29.10.2007. (WORKING OF VALUATION IS GIVEN IN ANNEXURE-1 ATTACHED) 2. PURCHASES OF JEWELLERY IN THE MONTH OF APRIL-2007 AS PER THE DETAILS GIVEN IN ANNEXURE-2 ATTACHED. 2889158 3. VALUE OF GOLD JEWELLERY SHOWN IN THE WEALTH RETURN OF NEELAM AGRAWAL FOR A.Y. 2007-08 FURNISHED ON 29.10.2007. COPY OF THE WEALTH TAX RETURN AND THE ACKNOWLEDGE ARE ATTACHED. IT IS ALSO MENTIONED THAT THE SAID JEWELLERY WAS ALSO DISCLOSED IN THE WEALTH RETURN FURNISHED FOR A.Y.1992-93 AS PER COPY OF THE WEALTH TAX RETURN AND THE ACKNOWLEDGE ATTACHED HEREWITH. 496000 VALUE OF DIAMOND JEWELLERY SHOWN IN THE WEALTH RETURN OF NEELAM AGARWAL FOR A.Y. 2007-08 FURNISHED ON 29.10.2007. COPY OF THE WEALTH TAX RETURN AND THE ACKNOWLEDGE ARE ATTACHED. IT IS ALSO MENTIONED THAT THE SAID JEWELLERY WAS ALSO DISCLOSED IN THE WEALTH RETURN FURNISHED FOR A.Y.1992-93 AT A VALUE OF RS.108000 AS PER COPY OF THE WEALTH TAX RETURN AND THE ACKNOWLEDGE ATTACHED HEREWITH. 1100000 ESTIMATED VALUE OF JEWELLERY OF DAUGHTER-IN- LAW, GITYA AGARWAL PRESENTED TO HER BY HER PARENTS IN THE MARRIAGE HELD ON 19.04.2007 AS PER COPY OF AFFIDAVIT OF KULDIP GOEL OF HER FATHER ATTACHED HEREWITH. 1700000 TOTAL 8185158 7 3. THE ASSESSEE THUS SUBMITS THAT AS MAY BE SEEN FROM THE ABOVE TABULATION, NO EXCESS JEWELLERY WAS FOUND IN THE SEARCH. THE ACQUISITION/POSSESSION OF THE JEWELLERY IS FULLY EXPLAINED AND SUPPORTED BY ALL DOCUMENTARY EVIDENCES. FURHTER ALL EVIDENCES WERE FURNISHED BEFORE THE A.O. IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE SOURCES OF ACQUISITION/POSSESSION OF ORNAMENTS WERE ALSO EXPLAINED IN THE COURSE OF STATEMENTS RECORDED IN THE SEARCH. THE DIFFERENCE IN THE VALUATION IS ARISING DUE TO THE REASONS THAT THE ORNAMENTS ON PERSON WERE NOT TAKEN INTO INVENTORY AND FURTHER DUE TO DIFFERENCES IN THE OPINION IN THE VALUATION. ALL THE ITEMS AS MENTIONED IN THE PURCHASES BILL AND ALSO IN THE AFFIDAVIT ETC. WERE EXISTED AT THE TIME OF THE SEARCH. SOME ITEMS WHICH WEE DECLARED IN THE VDIS-97 WEE SOLD AND SOME OF THEM WEREREMADE. THE ALLEGATION OF THE A.O. THAT THE ITEMS IN THE PANCHNAMA WERE NOT MATCHING IS WHOLLY WRONG AND ERRONEOUS. THE REASON BEING THAT WHILE PREPARING THE INVENTORY, THERE WAS A MIXING OF ITEMS AND ALSO NOT PROPERLY MENTIONING THE DESCRIPTION ON THE PART OF THE VALUER AND ALSO AT THE TIME OF PREPARING THE INVENTORY. THE ASSESSEE SUBMITS THAT HE IS PREPARED TO MATCH ALL ITEMS WITH RESPECT TO BILLS ETC PROVIDED THE JEWELLERY IS DE-SEALED AND PUT TO A PHYSICAL VERIFICATION. AS A MATTER OF FACT, NO PART OF THE JEWELLERY IS UNEXPLAINED. THE ADDITION HAS BEEN MADE SOLELY ON THE BASIS OF EXTRANEOUS CONSIDERATION AND, THEREFORE, BE DELETED. 4. IT IS SUBMITTED THAT THE THREE SEPARATE PANCHNAMAS WERE PREPARED IN THE COURSE OF SEARCH AND NOT THE TWO PANCHNAMAS AS REFERRED BY THE A. 0. IN HER ASSESSMENT ORDER. THE PANCHNAMAS REFERRED TO AS JS-1 & JS-2 WERE IN RELATION TO THE JEWELLERY FOUND IN THE BEDROOMS OF THE MEMBERS OF THE FAMILY AND THE AGGREGATE VALUE OF THE JEWELLERY MENTIONED IN THE TWO PANCHNAMAS IS RS.4105615. THE THIRD PANCHNAMA WAS IN RELATION TO LOCKER AND IT IS MARKED AS JFS-1 AND IN THE SAID PANCHNAMA THE VALUE HAS BEEN MENTIONED AT RS.1218815. THUS IT IS SUBMITTED THAT THE TOTAL VALUE OF THE 8 JEWELLERY AS MENTIONED IN THE PANCHNAMAS FOUND IN THE SEARCH WAS OF RS. 5324430. THE ENTIRE JEWELLERY WERE SEIZED IN THE SEARCH. AS REGARDS THE SOURCES OF INVESTMENT/ACQUISITION OF THE JEWELLERY, THE ASSESSEE SUBMITS THAT THE HUF OF THE ASSESSEE IS ASSESSED TO WEALTH TAX. THE WEALTH TAX RETURN WAS FILED BY SHASHI MOHAN (HUF) FOR A. Y 2007-08 ON 29.10.2007 AND IN THE SAID WEALTH TAX RETURN, THE VALUE OF JEWELLERY AS ON 31.3.2007 HAS BEEN SHOWN AT RS. 20 LACS. THE ASSESSEE SUBMITS THAT AT PAGE NO 26 OF THE PAPER BOOK, HE HAS GIVEN THE WORKING AS TO HOW THE FIGURE OF RS. 20 LACS WAS WORKED OUT FOR THE PURPOSE OF FILING THE RETURN OF WEALTH TAX. IN THE SAID WORKING CHART, ASSESSEE MENTIONS THAT THE JEWELLERY WAS DECLARED IN THE VDIS-97, SOME DIAMOND JEWELLERY WERE PURCHASED IN A. Y 2003-04 AND 2006-07. IN SUPPORT OF THE WORKING, THE COPY OF VDIS-97 CERTIFICATE, BILLS OF DIAMOND JEWELLERY PURCHASES AND BILLS OF REMAKING JEWELLERY AND THE COPY OF HIS CAPITAL ACCOUNT IN THE BOOKS OF FIRM M/S. AGARWAL JEWELLERS, T T NAGAR, BHOPAL WERE FURNISHED BEFORE THE A.O. AND THE COPIES THEREOF ARE ALSO ATTACHED FOR YOUR PERUSAL. THE ASSESSEE FURTHER SUBMITS THAT IN A.Y 2003-04, THE JEWELLERY WORTH OF RS.351445 WAS SOLD AND SOME JEWELLERY WERE REMADE/PURCHASED AND A DETAILED NOTE IN RESPECT OF THE SAME WAS ALSO GIVEN IN THE INCOME TAX RETURN FILED FOR A.Y. 2003-04 ON 25.07.2003. THE COPY OF THE INCOME TAX RETURN AND THE COMPUTATION HAVE BEEN PLACED AT PAGE 31 TO 34 OF THE PAPER BOOK. THE ASSESSEE FURTHER REFERS THE PAGE 26 OF THE PAPER BOOK WHICH IS THE WORKING OF VALUATION OF THE JEWELLERY OF RS. 20 LACS SHOWN IN WEALTH TAX RETURN FOR A. Y 2007-08 AND SUBMITS THAT AS PER THE WORKING, THE TOTAL VALUE COMES TO RS.1464984 WHICH HAS BEEN SHOWN AT RS. 20 LACS IN THE ROUND FIGURE IN THE WEALTH TAX RETURN. 5. THE ASSESSEE FURTHER SUBMITS THAT IN THE ANNEXURE- 2 AT PAGE NO. 39 OF THE PAPER BOOK, THE DETAILS OF THE JEWELLERY PURCHASED IN APRIL, 2007 HAS BEEN GIVEN. AS PER THIS ANNEXURE, IT 9 MAY BE SEEN THAT IN THE MONTH OF APRIL, 2007, JEWELLERY WORTH OF RS.2889158 WAS PURCHASED. THE COPY OF PURCHASE BILLS ARE ALSO ATTACHED AT PAGE NO. 40 TO 43 OF THE PAPER BOOK. THE ASSESSEE FURTHER CONTENDS THAT ALL PURCHASES HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES AND IN SUPPORT OF THE CONTENTION, THE COPY OF HIS CAPITAL ACCOUNT IN THE BOOKS OF THE FIRM, M/S. AGARWAL JEWELLERS, T T NAGAR, BHOPAL IS ALSO ATTACHED AT PAPER BOOK PAGE NO. 44 TO 46. 6. THE ASSESSEE FURTHER SUBMITS THAT HIS WIFE NEELAM AGARWU] WAS ALSO ASSESSED TO WEALTH TAX EARLIER UPTO A.Y. 1992-93. SHE HAD FURNISHED EARLIER HER WEALTH TAX RETURN FOR A.Y. 1992-93 ON 10,09.1992. IN THE SAID WEALTH TAX RETURN, SHE HAD DISCLOSED THE VALUE OF GOLD JEWELLERY AT RS. 212279 AND DIAMOND JEWELLERY AT VALUE RS. 108000 RESPECTIVELY AS ON 31.3.92. THE COPY OF THE STATEMENT OF NET WEALTH AND THE ACKNOWLEDGMENT OF FILING OF RETURN HAS BEEN PLACED IN THE PAPER BOOK AT PAGE NO. 51, 52 & 53. IT IS FURTHER SUBMITTED THAT SHE HAD ALSO FILED THE WEALTH TAX RETURN FOR A.Y. 2007-08 ON 29.10.2007 AND SHOWN THE VALUE OF GOLD JEWELLERY AT RS.496000 AND DIAMOND JEWELLERY A! AN ESTIMATED VALUE OF RS. 11 LACS AS ON 31.3.2007. THE COPY OF THE WEALTH TAX RETURN AN D THE COMPUTATION HAS BEEN PLACED AT PAPER BOOK PAGE NO. 47 & 48. THE ASSESSEE ALSO SUBMITS FURTHER THAT HIS SON ANKIT AGARWAL GOT MARRIED WITH GITYA AGARWAL ON 19.04.2007 AND IN THE MARRIAGE, HER FATHER HAD ALSO PRESENTED SUBSTANTIAL JEWELLERY AND THE AFFIDAVIT OF HER FATHER WAS ALSO FOUND IN THE SEARCH AND THE COPY OF THE SAID AFFIDAVIT WAS ALSO HANDED OVER TO THE SEARCH OFFICIAL IN THE COURSE OF SEARCH. IN THE PAPER BOOK AT PAGE NO. 54, THE COPY OF AFFIDAVIT HAS BEEN PLACED. IT IS ALSO SUBMITTED THAT IN THE AFFIDAVIT, HER FATHER HAS GIVEN FULL DESCRIPTION OF THE JEWELLERY. ACCORDING TO THE ASSESSEE THE ESTIMATED VALUE OF THE JEWELLERY PRESENTED TO HIS DAUGHTER-IN- LAW IN THE MARRIAGE BY HER FATHER WOULD HAVE BEEN AROUND THE VALUE OF RS. 17 LACS. 10 7. THE ASSESSEE FURTHER SUBMITS THAT, AS MAY BE SEEN FROM THE TABLE, THAT THE VALUE OF THE JEWELLERY POSSESSED BY THE FAMILY IS AROUND THE VALUE OF RS. 8185158 AND SUCH JEWELLERY IS FULLY EXPLAINED AND THE EXPLANATION OF THE ASSESSEE WITH REGARD THE ACQUISITION/POSSESSION IS FULLY SUPPORTED BY ALL EVIDENCES I.E. THE VDIS-97 CERTIFICATES, BILLS OF PURCHASES OF JEWELLERY, WEALTH TAX RETURNS AND THE PRESENTATIONS IN THE MARRIAGE. THUS THE ASSESSEE SUBMITS THAT THE JEWELRY FOUND IN THE SEARCH WAS NOT IN EXCESS OF JEWELLERY HELD BY THE MEMBERS OF THE FAMILY. IT IS SUBMITTED FURTHER THAT THE VARIATION IN THE VALUE OF JEWELLERY FOUND IN SEARCH AND THE VALUE OF JEWELLERY POSSESSED BY THE FAMILY MEMBERS WERE DUE TO THE REASON THAT THE JEWELLERY WHICH WERE ON PERSON WITH THE MEMBERS OF THE FAMILY WERE NOT INCLUDED IN THE INVENTORY, THE IN THE DIAMOND JEWELLERY, THE DIAMONDS ETC WERE STUDDED WITH THE GOLD AND THE VALUER HAS ESTIMATED THE WEIGHT OF THE DIAMOND AND THE GOLD ON ESTIMATE BASIS BECAUSE THE CORRECT WAS NOT POSSIBLE UNLESS THE JEWELLERY IS BROKEN. THE OTHER REASON IS A DIFFERENCE OF OPINION IN MAKING THE VALUATION BECAUSE IN THE VALUATION, THE VALUER ESTIMATES THE MILLE OF DIAMONDS ON AN EYE ESTIMATION WITHOUT ANY SCIENTIFIC METHOD. IT IS THE CONTENTION OF THE ASSESSEE THAT THE DIAMONDS ARE A NATURAL PRODUCT IN LIKE HUMAN FACE, NO DIAMOND CAN EVER BE ALIKE. THOUGH BOTH THE DIAMONDS LOOK EXTREMELY SIMILAR, THEY COULD SUBSTANTIALLY IN TERMS OF VALUATION. FOR EXAMPLE, ONE CT. DIAMOND COULD COST RS. 25000 PER CT. TO RS. 10 LACS PER CT. NO TWO DIAMONDS COULD BE THE SAME VALUE AND THERE IS BOUND TO BE PRICING DIFFERENCE IN RESPECT OF EACH DIAMOND, HOW SO, INCONSEQUENTIAL, IT COULD BE. PRICING OF A DIAMOND IS PRINCIPALLY CHARACTERIZED BY WHAT ARE POPULARLY KNOWN AS 4CS VIZ. CUT, CARAT, COLOUR AND CLARITY. THESE ARE THE BASIC FACTORS THAT CONTRIBUTE TOWARDS PRICING OF A DIAMOND. FURTHER, THERE ARE ATLEAST 12 GRADING ATTRIBUTVS VIZ. LUSTER, COLOUR, HUE (APPEARANCE), FLUORESCENCE, FLUORESCENCE COLOUR, POLISH, SYMMETRY, TABLE INCLUSION, BLACK 11 INCLUSION, OPEN INCLUSION, INCLUSION PATTERN, INTERNAL GRAINING AND CULET (THE BACK OF BRILLIANT - CUT DIAMOND). IT IS ALSO SUBMITTED THAT GENERALLY, BROAD ASSORTMENTS ARE MADE BASED ON ALL THESE PARAMETERS BASED ON SUBJECTIVE EVALUATION OF DIAMOND ON CASE TO CASE BASIS AND AFTER CONSIDERING THE MARKET FORCES FOR EXAMPLE D TO F COLOUR MAY FETCH A DIAMOND GOOD PRICE BUT IF IT IS COUPLED WITH WEAK PURITY (CLARITY) LIKE 12 OR 13 THEN THE PRICE WOULD SUBSTANTIALLY VARY. SIMILARLY, ONE DIMOUND MAY WEIGH 3 CT. AND OTHER MAY WEIGH 1 CT, HOWEVER, IF THE PURITY OF 3 CTS. DIAMOND IS SAY 12 AD PURITY OF 1 CT. IS SAY IF (INTERNALLY FLAWLESS) THEN 1 CT. DIAMOND WOULD FATCH HIGHER PRICE THAN 3 CTS. DIAMOND. SAME WOULD APPLY IN RESPECT OF ALL ABOVE CHARACTERISTICS. THE DIAMOND'S COLOUR IS ONE OF THE MOST IMPORTANT FACTOR IN DETERMINING ITS VALUE. THE GRADUATION IN COLOUR ARE SO SUBTLE THAT INTRICATE INTERNAL GRADING SCALE HAVE BEEN DEVISED. DIAMONDS ARE GRADED INTO CATEGORIES DEFINES BY LETTERS. THE COLOUR RANGES FROM EXCEPTIONAL WHITES (CATEGORIES DEF) TO TINTED COLOURS (CATEGORIES M TO Z). WHEN NITROGEN COMBINES WITH THE DIAMOND CRYSTALS DURING THE FORMATION STAGE, IT CAUSES A SURPLUS ELECTRONS IN THE BONDING. THIS SURPLUS ELECTRON SABSORBS BLUE LIGHT, THUS GIVING OFF YELLOW COLOUR. YELLOW DIAMONDS ALSO OCCUR WHEN AGGREGATES OF THREE NITROGEN COMBINES AND CAUSE SURPLUS BONDS. A VACANCY IN THE REGULAR LATTICE OF ATOMS WITHIN A DIAMOND RESULTS IN A GREEN COLOURING. CARBON ATOMS BEING KNOCKED OUT OF THEIR REGULAR POSITION BY OTHER PARTICLES CAUSE VACANCIES. THE DEPTH OF A COLOUR USUALLY EXTENDS ABOUT TWO MM BELOW DIAMOND SURFACE. AT EXTREMELY HIGH TEMPERATURES THE VACANCIES CAN BECOME MOBILE AND CAN COMBINE WITH NITROGEN TO FORM OTHER COLOURS SUCH AS MAUVE, ORANGE, BLUE OR GOLD. DURING THE FORMATION OF DIAMOND, IT IS POSSIBLE FOR MINUTE PARTICLE OF NON-CRYSTALLIZED CARBON OR NON DIAMOND CRYSTALS TO BE CAUGHT WITH IN THE DIAMOND. THESE IMPERFECTIONS ARE CALLED INCLUSIONS AND PROVIDE EACH INDIVIDUAL DIAMOND WITH UNIQUE CHARACTERISTICS. INCLUSION 12 MAY NOT BE VISIBLE TO THE NAKED EYE, HOWEVER, THEY DO INTERFERE WITH THE PASSAGE OF LIGHT THROUGH DIAMOND. THEREFORE, THE FEWER INCLUSIONS A DIAMOND HAS, THE MORE VALUABLE IT IS, LIKE COLOUR, CLARITY IS ALSO CATEGORIZED USING INTERNAL GRADING SCALES. THE CATEGORIES OF CLARITY ARE BASED UPON THE NUMBER, SIZE AND POSITION OF THE INCLUSION WITHIN THE DIAMONDS, GRADING RANGE FROM FLAWLESS, THROUGH VERY SMALL AND SMALL INCLUSIONS TO IMPERFECT. DIAMONDS ARE PRICED PER CARAT ACCORDING TO THEIR SIZE AND QUALITY. ALTHOUGH THE CARAT WEIGHT OF A DIAMOND IS INDICATIVE OF ITS SIZE, IT IS NOT NECESSARILY INDICATIVE OF A DIAMONDS QUALITY. THEREFORE, WHERE TWO DIAMONDS HAVE THE SAME CARAT WEIGHT, THE VALUE OF EACH DIAMOND MAY DEFER. THE ASSESSEE, THEREFORE, CONTENDED THAT IN THE DIAMOND JEWELLERY VALUATION, THERE IS ALWAYS A SUBSTANTIAL VARIATION BETWEEN THE VALUERS. SO FAR AS THE ASSESSEE IS CONCERN, THERE IS NO UNEXPLAINED INVESTMENT IN THE JEWELLERY AS ALLEGED. 8. ON THE OBSERVATION OF A.O . THAT THE ASSESSEE COULD NOT FURNISHED ONE TO ONE CORRELATION. THE CONTENTION OF THE ASSESSEE IS THAT IN THE SEARCH, JEWELLERY ARE FOUND IN THE MIXED UP STATE, PARTICULARLY IN THE JOINT FAMILY WHERE THE SAS-BAHU ARE RESIDING TOGETHER AND THE MEMBERS OF THE FAMILY MAY TAKE THE JEWELLERY FROM EACH OTHER AND WEAR THE SAME. FURTHER IN THE COURSE OF SEARCH, DURING VALUATION,ITEM-WISE/DESCRIPTION-WISE SEGREGATION IS MADE AND THE VALUATION IS DONE. THE SEARCH OFFICIALS THEN SEIZED THE JEWELLERY AFTER THE INVENTORISATION. LATER ON SAY AFTER A YEAR OR TWO, THEY EXPECT FROM THE ASSESSEE ONE TO ONE MATCHING WHICH BECOMES IMPOSSIBLE UNLESS THE JEWELLERY IS TAKEN OUT AND IT IS DEMONSTRATED BEFORE THE MEMBERS IN THE COURSE OF ASSESSMENT: THE ASSESSEE IS STILL PREPARED TO DO ITEM-WISE MATCHING OF THE JEWELLERY IF THE JEWELLERY IS TAKEN OUT AND PUT BEFORE THE ASSESSEE FOR THAT PURPOSE. THE ASSESSEE SUBMITS THAT IN THE COURSE OF SEARCH EVERY THING WAS DONE IN A HURRIED MANNER. THE 13 ASSESSEE ALSO AT THAT POINT OF TIME, REMAINED THROUGH OUT IN A DISTURB STATE OF MIND. THE ASSESSEE REFERS A DECISION OF ITAT IN THE CASE OF SMT. BOMMANA SWARNA REKHA VS. ACIT - 94 TTJ 885/888 (VISAKHA), IN THAT CASE, THE APPELLATE TRIBUNAL HELD THAT WHEN THE JOINT FAMILIES ARE PUTTING TOGETHER, THIS IS QUITE NATURAL THAT ALL THE MEMBERS OF THE FAMILY MAY TAKE THE JEWELLERY FROM EACH OTHER AND WEAR THE SAME. IN SUCH CIRCUMSTANCES THE APPELLATE TRIBUNAL HELD THAT FOR ASCERTAINING THE UNDISCLOSED JEWELLERY OF THE FAMILY, THE TOTAL JEWELLERY DISCLOSED BY THE MEMBERS HAS TO BE AGGREGATED AND THEN THE SAME BE COMPARED TO THE TOTAL JEWELLERY FOUND IN THE FAMILY AS A WHOLE. THE ASSESSEE ALSO REFERS ANOTHER DECISION OF ASHOK KUMAR KATARIYA VS. DCIT - (2002) 75 TTJ (JP) 392 AND IN THAT CASE ALSO, THE APPELLATE TRIBUNAL HELD THAT EVEN IF THERE WERE CERTAIN INFIRMITIES IN HER STATEMENT TAKEN AT THE TIME OF SEARCH THE CORRECT FACTS THAT MORE JEWELLERY AS INFORMED BY THE ASSESSEE BELONGING TO HER AND ACCEPTED BY THE DEPARTMENT CANNOT BE LOST SIGHT OF EVEN IF THE TALLY WAS NOT AVAILABLE AS SUCH INFIRMITY MAY BE BECAUSE OF SEVERAL REASONS, INCLUDING MIXING OF JEWELLERY AT THE TIME OF INVENTORISATION, CONVERSION ETC. THE APPELLATE TRIBUNAL SAID THAT HOWEVER, THE FACT REMAINS THAT THE JEWELLERY FOUND WAS MUCH LESS THAN THE JEWELLERY DISCLOSED HENCE NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. THE APPELLATE TRIBUNAL ALSO HELD THAT THE ADDITION ON SUSPICION ALONE IS NOT SUSTAINABLE. IT FURTHER HELD THAT SUSPICION, HOWEVER, STRONG MAY BE CANNOT TAKE PLACE OF THE EVIDENCE. REFERENCE IS ALSO MADE IN THE CASE OF DCIT VS. ARJUNDAS KALWANI - (2006) 102 TTJ 977 (JD), IN THAT, THE APPELLATE TRIBUNAL HELD THAT SIMPLY BECAUSE THE ITEMS OF ORNAMENTS DO NOT TALLY WITH THE ITEMS SHOWN IN THE INVENTORY PREPARED AT THE TIME OF EARLIER SEARCH AND THE ASSESSEE COULD NOT LEAD EVIDENCE OF CONVERSION OR RE-MAKING OF JEWELLERY, IT CANNOT BE SAID THAT THE JEWELLERY TO THIS EXTENT IS UNEXPLAINED. REFERENCE HAS ALSO BEEN MADE IN THE CASE OF SMT. 14 KRISHNAWANTI BATRA VS. ACIT - (2004) 85 TTJ (DEL) 550, IN THAT CASE, THE APPELLATE TRIBUNAL HELD THAT THE EXPLANATION OF THE ASSESSEE SHOULD BE CONSIDERED OBJECTIVELY. FURTHER THE APPELLATE TRIBUNAL IN PARA 6 OF ITS ORDER HELD THAT THE ASSESSEES WERE ENTITLED TO BENEFIT OF THE JEWELLERY DISCLOSED IN THE WEALTHTAX RETURN. THE APPELLATE TRIBUNAL FURTHER HELD THAT IT IS WELL KNOWN FACT THAT THE INDIAN LADIES KEEP CHANGING DEIGN O F JEWELLERY FROM TIME TO TIME. THE ASSESSEE SUBMITS THAT THESE OBSERVATIONS ARE WITH REFERENCE TO THE OBSERVATIONS MADE BY THE ASSESSING OFFICERS INVARIABLY IN REJECTING THE CLAIM OF THE ASSESSEE THAT THERE IS A MISMATCH OF THE JEWELRY FOUND IN THE SEARCH. 9. THE ASSESSEE SUBMITS THAT HE HAS FURNISHED EVERY POSSIBLE EVIDENCE BEFORE THE A.O. AND EXPLAINED IN A DETAILED MANNER THAT THE JEWELLERY FOUND IS NOT IN EXCESS OF THE JEWELRY ALREADY EXPLAINED. THE ASSESSEE ALSO SUBMITS THAT HE HAS ALSO EXPLAINED THE ACQUISITION THE JEWELLERY IN THE COURSE OF SEARCH ALSO. THE A.O. HAS NOT DOUBTED THE GENUINENESS OF THE EVIDENCES AND THE DETAILED EXPLANATION GIVEN BY THE ASSESSEE WITH REGARD THE POSSESSION AND THE ACQUISITION OF THE JEWELLERY. THUS THE ADDITION OF RS. 2779552 IS WHOLLY UNJUSTIFIED AND UNLAWFUL AND, THEREFORE, THE SAME BE DELETED. 10. THE COPY OF THE REPLY DATED 20.11.2009 AS FURNISHED BEFORE THE A. 0. IS ATTACHED.' IN THE COURSE OF HEARING, THE LEARNED A.R DREW MY ATTENTION TO THE FACT THAT THE THREE SEPARATE PANCHNAMAS WERE PREPARED IN THE COURSE OF SEARCH AND NOT THE TWO PANCHNAMAS AS REFERRED BY THE A.O. IN THE ASSESSMENT ORDER. THE PANCHNAMAS REFERRED TO AS JS-L & JS-2 WERE IN RELATION TO THE JEWELLERY FOUND IN THE BEDROOMS OF THE MEMBERS OF THE FAMILY AND THE AGGREGATE VALUE OF THE JEWELLERY MENTIONED IN THE TWO PANCHNAMAS IS RS.4105615. THE THIRD PANCHNAMA WAS IN RELATION TO LOCKER AND IT IS MARKED AS JFS-L AND IN THE SAID PANCHNAMA THE VALUE HAS BEEN MENTIONED AT 15 RS.1218815. THUS THE COUNSEL SUBMITTED THAT THE TOTAL VALUE OF THE JEWELLERY AS MENTIONED IN THE PANCHNAMAS FOUND IN THE SEARCH WAS OF RS. 5324430. THE ENTIRE JEWELLERY, HOWEVER WERE SEIZED IN THE SEARCH. THE LEARNED COUNSEL, THEREAFTER HAS DRAWN MY ATTENTION TO THE TABLE PREPARED BY HIM EXPLAINING THE SOURCES OF INVESTMENT/ACQUISITION OF THE JEWELLERY. HE SUBMITTED THAT THE HUF OF THE ASSESSEE IS ASSESSED TO WEALTH TAX. THE WEALTH TAX RETURN WAS FILED BY SHRI MOHAN AGARWAL (HUF) FOR A.Y. 2007-08 ON 29.10.2007 AND IN THE SAID WEALTH TAX RETURN THE VALUE OF JEWELLEY DISCLOSED AND THE WORKMG OF THE FIGURE OF 20 LACS HAS BEEN GIVEN FOR THE PURPOSE OF FILING OF WEALTH TAX RETURN. IN THE SAID WORKING CHART, IT HAS BEEN EXPLAINED THAT THE JEWELLERY WAS DECLARED IN THE VDIS-97, SOME DIAMOND JEWELLERY WERE PURCHASES IN A.Y. 2003-04 AND 2006-07. IN SUPPORT OF THE WORKING, THE COPY OF VDIS-97 CERTIFICATE, BILLS OF DIAMOND JEWELLERY PURCHASES AND BILLS OF REMAKING JEWELLERY AND BILLS OF THE COPY HIS CAPITAL ACCOUNT IN THE BOOKS OF FIRM M/S. AGARWAL JEWELLERS, T.T. NAGAR, BHOPAL WERE ALSO FURNISHED IN THE PAPER BOOK . THE COUNSEL ALSO EXPLAINED THAT IN A Y. 2003-04, THE JEWELLERY WORTH OF RS.351445 WAS SOLD AND SOME JEWELLERY WERE REMADE/PURCHASED AND A DETAILED NOTE IN RESPECT OF THE SAME WAS ALSO GIVEN IN THE INCOME TAX RETURN FILED FOR AY. 2003-04 ON 25.07.2003. THE COPY OF THE INCOME TAX RETURN AND THE COMPUTATION HAVE BEEN PLACED AT PAGE 31 TO 34 OF THE PAPER BOOK. THE COUNSEL THEN REFERRED THE PAGE 26 OF THE PAPER BOOK WHICH IS THE WORKING OF VALUATION OF THE JEWELLERY OF RS, 20 LACS SHOWN IN WEALTH TAX RETURN FOR A.Y. 2007-08. IT HAS BEEN SUBMITTED BY HIM THAT AS PER THE WORKING, THE TOTAL VALUE COMES TO RS. 1464984 WHICH HAS BEEN SHOWN AT RS. 20 LACS IN THE ROUND FIGURE IN THE WEALTH TAX RETURN. THE WORKING OF RS. 1464984 AS GIVEN IN THE PAPER BOOK IS REPRODUCED AS UNDER : PARTICULARS ASSESSMEN COST OF SOURCES OF 16 T YEAR OF INVESTMENT PURCHASES INVESTMENT DIAMOND JEWELLERY DISCLOSED IN VDIS-1997 1990-91 602500 COPY OF THE AFFIDAVIT & THE VDIS-97 CERTIFICATE ARE ATTACHED. DIAMOND JEWELLERY 2003-04 357200 DIAMOND PURCHASED FROM DHANLAXMI EXPORTS VIDE BILL DATED 22.01.2003. PAYMENT MADE BY CHQ. NO.07325 ON 13.2.2003 FROM THE CAPITAL ACCOUNT WITH AGRAWAL JEWELERS, T.T.NAGAR, BHOPAL. FUTHER A DETAILED NOTE AS TO THIS TRANSACTION WAS GIVEN IN THE COMPUTATION OF TOTAL INCOME FURNISHED ALONGWITH RETURN FOR A.Y. 2003-04. COPY ATTACHED. DIAMOND JEWELLERY 2003-04 156729 TWO BILL (I) RS.147026 DATED 21.02.2003 & (II) RS.9503 DATED 27.01.2003 DIAMOND JEWELLERY (PURCHASE FROM CONCEPT JEWELLERY INDIA PVT. LTD., MUMBAI VIDE BILL NO.HO/01/06 /03 DATED 05/01/2003) 2006-07 700000 PAID BY CHQ. NO. 254070 DATED 27.01.2006. THE PAYMENT WAS MADE FROM THE CAPITAL ACCOUNT OF SHASHI MOHAN (HUF) IN THE BOOKS OF FIRM M/S. AGARWAL JWELLERS, T.T.NAGAR, BHOPAL IN WHICH HE IS A PARTNER. AGGREGATE 1816429 LESS: COST OF JEWELLERY SOLD 2003-04 351445 CAPITAL GAIN SHOWN IN INCOME TAX RETURN OF A.Y.2003-04 OF SHASHI MOHAN (HUF) 17 BALANCE 1464984 IN THE WEALTH TAX RETURN OF SHASHI MOHAN (HUF) FURNISHED ON 29.10.2007 FOR A.Y. 2007-08, THE VALUE OF THE JEWELLERY WAS SHOWN AT VALUE OF RS. 20 LACS. PARTICULARS ASSESSMENT YEAR OF INVESTMENT COST OF PURCHASES SOURCE S OF INVESTM ENT DIAMOND JEWELLERY DISCLOSED IN VDIS-1997 1990-91 602500 COPY OF THE AFFIDAVIT & THE VDIS- 97 CERTIFICA TE ARE ATTACHE D. DIAMOND JEWELLERY 2003-04 357200 DIAMON D PURCHAS ED FROM DHANLA XMI EXPORTS VIDE BILL DATED 22.01.2 003. PAYME NT MADE BY CHQ. NO.073 25 ON 13.2.20 03 FROM THE CAPITAL ACCOUNT WITH AGRAWA L JEWELER 18 S, T.T.NA GAR, BHOPAL. FUTHER A DETAILED NOTE AS TO THIS TRANSACT ION WAS GIVEN IN THE COMPUT ATION OF TOTAL INCOME FURNISHE D ALONGWI TH RETURN FOR A.Y. 2003- 04. COPY ATTACHE D. DIAMOND JEWELLERY 2003-04 156729 TWO BILL (I) RS.147 026 DATED 21.02.2 003 & (II) RS.950 3 DATED 27.01.2 003 DIAMOND JEWELLERY (PURCHASE FROM CONCEPT JEWELLERY INDIA PVT. LTD., MUMBAI VIDE BILL NO.HO/01/06/03 DATED 05/01/2003) 2006-07 700000 PAID BY CHQ. NO. 254070 DATED 27.01.2 006. THE PAYMEN T WAS 19 MADE FROM THE CAPITAL ACCOUNT OF SHASHI MOHAN (HUF) IN THE BOOKS OF FIRM M/S. AGARWA L JWELLER S, T.T.NA GAR, BHOPAL IN WHICH HE IS A PARTNER. AGGREGATE 1816429 LESS: COST OF JEWELLERY SOLD 2003-04 351445 CAPITAL GAIN SHOWN IN INCOME TAX RETURN OF A.Y.200 3-04 OF SHASHI MOHAN (HUF) BALANCE 1464984 IN THE WEALTH TAX RETURN OF SHASHI MOHAN (HUF) FURNISHE D ON 29.10.2 20 007 FOR A.Y. 2007- 08, THE VALUE OF THE JEWELLER Y WAS SHOWN AT VALUE OF RS. 20 LACS. IT WAS EXPLAINED BY THE COUNSEL THAT CONSIDERING TH E COST OF THE JEWELLERY ACQUIRED IN THE EARLIER YEARS, THE VALUE FOR THE WEALTH TAX PURPOSE WAS TAKEN AT RS. 20,00,000/- AS AGAINST THE COST SHOWN ABOVE. MY ATTENTION HAS BEEN INVITED FURTHER ON THE ANNEXU RE-2 AT PAGE NO. 39 OF THE PAPER BOOK. IN THIS ANNEXURE, TH E DETAILS OF THE JEWELLERY PURCHASED IN APRIL, 2007 H AS BEEN GIVEN. AS PER THIS ANNEXURE, IT SEEN THAT IN THE MO NTH OF APRIL, 2007, JEWELLERY WORTH OF RS.2889158 WAS PURC HASED BY THE ASSESSEE. THE COPY OF PURCHASE BILLS HAVE AL SO BEEN FURNISHED FROM PAGE NO. 40 TO 43 OF THE PAPER BOOK. THE ASSESSEE CONTENDED THAT ALL PURCHASES HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES AND IN SUPPORT OF THE CONTENTION, THE COPY OF ASSESSEES CAPITAL ACCOUNT IN THE BOOKS OF THE FIRM, M/S. AGARWAL JEWELLERS, T.T.NAGA R, BHOPAL HAVE BEEN FURNISHED AT PAPER BOOK PAGE NO. 4 4 TO 46. THE COPY OF THE ANNEXURE AS FURNISHED BY THE ASSESSEE IS REPRODUCED AS UNDER:- PARTICULARS ASSESSMENT YEAR OF INVESTMENT COST OF PURCHASES SOURCES OF INVESTMENT GOLD & DIAMOND JEWELLERY 2008-09 414610 PURCHASES FROM TOTARAM MAGANLAL & SONS VIDE BILL NO.003 DATED 10.04.2007 BILL IS IN THE NAME OF ANKIT AGARWAL, SON OF ASSESSEE. PAYMENT MADE VIDE CHQ. NO. 288509 DATED 21 16.03.2008. THE PAYMENT WAS MADE FROM THE CAPITAL ACCOUNT OF SHASHI MOHAN (HUF) IN THE BOOKS OF FIRM M/S. AGARWAL JWELLERS, T.T.NAGAR, BHOPAL IN WHICH HE IS A PARTNER. GOLD & DIAMOND JEWELLERY 2008-09 470460 PURCHASE FROM TOTARAM MAGANLAL & SONS VIDE BILL NO. 004 DATED 14.04.2007 BILL IS IN THE NAME OF ANKIT AGARWAL, SON OF ASSESSEE. PAYMENT MADE VIDE CHQ. NO. 085628 DATED 30.06.2007. THE PAYMENT WAS MADE FROM THE CAPITAL ACCOUNT OF SHASHI MOHAN (HUF) IN THE BOOKS OF FIRM M/S . AGARWAL JWELLERS, T.T.NAGAR, BHOPAL IN WHICH HE IS A PARTNER. GOLD & DIAMOND JEWELLERY 2008-09 972106 PURCHASE FROM B. SETHIYA & SONS VIDE BILL NO BS- 63 DATED 27.04.2007. PAYMENT MADE VIDE CHQ. NO. 299608 DATED 06.06.2007 OF RS. 5 LACS & CHQ. NO. 085623 DATED 6.6.2007 FOR RS. 472106. THE PAYMENT 22 WAS MADE FROM THE CAPITAL ACCOUNT OF SHASHI MOHAN (HUF) IN THE BOOKS OF FIRM M/S. AGARWAL JWELLERS, T.T.NAGAR, BHOPAL IN WHICH HE IS A PARTNER. PARTICULARS ASSESSMENT YEAR OF INVESTMENT COST OF PURCHASES SOURCES OF INVESTMENT GOLD & DIAMOND JEWELLERY 2008-09 1031982 PURCHASE FROM B.SETHIYA & SONS VIDE BILL NO. BS- 64 DATED 27.04.2007. PAYMENT MADE VIDE CHQ. NO. 299610 DATED 18.07.2007 OF RS. 531980 & CHE NO. 035646 DATED 6.11.2007 OF RS. 5 LACS. THE PAYMENT WAS MADE FROM THE CAPITAL ACCOUNT OF SHASHI MOHAN (HUF) IN THE BOOKS OF FIRM M/S. AGARWAL JWELLRS, T.T.NAGAR, BHOPAL IN WHICH HE IS A PARTNER. AGGREGATE PURCHASES IN THE MONTH OF APRIL, 2007. 2889158 THE ASSESSEE FURTHER CONTENDED THAT HIS WIFE NEELAM AGARWAL WAS ALSO ASSESSED TO WEALTH TAX EARLIER UPT O A. Y. 1992-93. SHE HAD FURNISHED EARLIER HER WEALTH TA X RETURN FOR A. Y. 1992-93 ON 10.09.1992. IN THE SAID 23 WEALTH TAX RETURN, SHE HAD DISCLOSED THE VALUE OF GOLD JEWELLERY AT RS. 212279 AND DIAMOND JEWELLERY AT VA LUE RS. 108000 RESPECTIVELY AS ON 31.3.92. THE COPY OF THE STATEMENT OF NET WEALTH AND THE ACKNOWLEDGMENT OF F ILING OF RETURN HAS IS FURNISHED IN THE PAPER BOOK AT PAG E NO. 51, 52 & 53. IT IS FURTHER CONTENDED THAT SHE HAD ALSO FILED THE WEALTH TAX RETURN FOR A.Y; 2007-08 ON 29.10.2007 AND SHOWN THE VALUE OF GOLD JEWELLERY AT RS. 496000 AND DIAMOND JEWELLERY AT AN ESTIMATED VALUE OF RS. 11 LACS AS ON 31.3 .2007. THE COPY OF THE WEALT H TAX RETURN AND THE COMPUTATION IS FURNISHED AT PAPER BO OK PAGE NO. 47 & 48. THE ASSESSEE HAS FURTHER CONTENDED THAT HIS SON ANKIT AGARWAL GOT MARRIED WITH GITYA AGARWAL ON 19.04.2007 AND IN THE MARRIAGE, HER FATH ER HAD ALSO PRESENTED SUBSTANTIAL JEWELLERY AND THE AF FIDAVIT OF HER FATHER WAS ALSO FOUND IN THE SEARCH AND THE COPY OF THE SAID AFFIDAVIT WAS ALSO HANDED OVER TO THE S EARCH OFFICIAL IN THE COURSE OF SEARCH. IN THE PAPER BOOK AT PAGE NO. 54, THE COPY OF AFFIDAVIT IS FURNISHED. THE COU NSEL SUBMITTED THAT IN THE AFFIDAVIT, HER FATHER HAS GIV EN FULL DESCRIPTION OF THE JEWELLERY. ACCORDING TO THE ASSE SSEE THE ESTIMATED VALUE OF THE JEWELLERY PRESENTED TO H IS DAUGHTER-IN-LAW IN THE MARRIAGE BY HER FATHER WOULD HAVE BEEN AROUND THE VALUE OF RS.17 IACS. IT IS FURTHER CONTENDED BY THE ASSESSEE THAT, THE V ALUE OF THE JEWELLERY POSSESSED BY THE FAMILY IS AROUND THE VALUE OF RS. 8185158 AND SUCH JEWELLERY IS FULLY EXPLAINE D AND THE EXPLANATION OF THE ASSESSEE WITH REGARD THE ACQUISITION/POSSESSION IS FULLY SUPPORTED BY ALL EV IDENCES I.E. THE VDIS-97 CERTIFICATES, BILLS OF PURCHASES O F JEWELLERY, WEALTH TAX RETURNS AND THE PRESENTATIONS IN THE MARRIAGE. ACCORDING TO THE A.R., THE JEWELRY FOUND IN THE SEARCH WAS NOT IN EXCESS OF DISCLOSED JEWELLERY OF THE MEMBERS OF THE FAMILY. IN THE COURSE OF APPEAL HEAR ING, THE LEARNED A.R. SUBMITTED THAT THE VARIATION IN TH E VALUE OF JEWELLERY FOUND IN SEARCH AND THE VALUE OF JEWEL LERY POSSESSED BY THE FAMILY MEMBERS WERE DUE TO THE REASON THAT THE JEWELLERY WHICH WERE ON PERSON BY T HE MEMBERS OF THE FAMILY WERE NOT INCLUDED IN THE INVE NTORY. IN THE DIAMOND JEWELLERY, THE DIAMONDS ETC WERE STU DDED WITH THE GOLD AND THE VALUER HAS ESTIMATED THE WEIG HT OF THE DIAMOND AND THE GOLD ON ESTIMATE BASIS BECAUSE THE CORRECT VALUATION OF WEIGHT WAS NOT POSSIBLE UNLESS THE JEWELLERY IS BROKEN AND THE ITEMS ARE SEGREGATED. T HE OTHER REASON IS A DIFFERENCE OF OPINION IN MAKING T HE 24 VALUATION BECAUSE IN THE VALUATION, THE VALUER ESTI MATES THE VALUE OF DIAMONDS ON ESTIMATES AND WITHOUT ANY SCIENTIFIC BASIS AND EXPLAINED HIS THIS POINT IN A DETAILED MANNER. ON THE OBSERVATION OF A.O. THAT THE ASSESSEE COULD NOT FURNISHED ONE TO ONE CORRELATION. THE CONTENTION OF THE ASSESSEE IS THAT IN THE SEARCH, JEWELLERY WERE FOUN D IN THE MIXED UP STATE, PARTICULARLY IN THE JOINT FAMIL Y WHERE THE MOTHER-IN-LAW AND DAUGHTER-IN-LAW ARE RESIDING TOGETHER AND THE MEMBERS OF THE FAMILY MAY TAKE THE JEWELLERY FROM EACH OTHER AND WEAR THE SAME. FURTHE R IN THE COURSE OF SEARCH, DURING VALUATION, ITEM- WISE/DESCRIPTION-WISE SEGREGATION IS MADE AND THE VALUATION IS DONE. THE SEARCH OFFICIALS THEN SEIZED THE JEWELLERY AFTER THE INVENTORISATION. LATER ON SAY A FTER A YEAR OR TWO, THEY EXPECT FROM THE ASSESSEE ONE TO O NE MATCHING WHICH BECOMES IMPOSSIBLE UNLESS THE JEWELLERY IS TAKEN OUT AND IT IS DEMONSTRATED BEFOR E THE MEMBERS IN THE COURSE OF ASSESSMENT . EVEN IN THE COURSE OF SEARCH EVERY THING WAS DONE IN A HURRIED MANNER. THE ASSESSEE ALSO AT THAT POINT OF TIME, REMAINED THROUGH OUT IN A DISTURB STATE OF MIND. TH E ASSESSEE REFERRED A DECISION OF ITAT IN THE CASE OF SMT. BOMMANA SWARNA REKHA VS. ACIT- 94 TTJ 885/888 (VISAKHA), IN THAT CASE, THE APPELLATE TRIB UNAL HELD THAT WHEN THE JOINT FAMILIES ARE PUTTING TOGET HER, THIS IS QUITE NATURAL THAT ALL THE MEMBERS OF THE F AMILY MAY TAKE THE JEWELLERY FROM EACH OTHER AND WEAR THE SAME. IN SUCH CIRCUMSTANCES THE APPELLATE TRIBUNAL HELD THAT FOR ASCERTAINING THE UNDISCLOSED JEWELLER Y OF THE FAMILY, THE TOTAL JEWELLERY DISCLOSED BY THE ME MBERS HAS TO BE AGGREGATED AND THEN THE SAME BE COMPARED TO THE TOTAL JEWELLERY FOUND IN THE FAMILY AS A WHO LE. THE ASSESSEE ALSO REFERRED ANOTHER DECISION OF ASHOK KUMAR KATARIYA VS. DCIT - (2002) 75 TTJ (JP) 392 AN D IN THAT CASE ALSO, THE APPELLATE TRIBUNAL HELD THAT EVEN IF THERE WERE CERTAIN INFIRMITIES IN HER STATEMENT TAKEN AT THE TIME OF SEARCH, THE CORRECT FACTS THAT MORE JEW ELLERY AS INFORMED BY THE ASSESSEE BELONGING TO HER AND ACCEPTED BY THE DEPARTMENT CANNOT BE LOST SIGHT OF EVEN IF THE TALLY WAS NOT AVAILABLE AS SUCH, INFIRM ITY MAY BE BECAUSE OF SEVERAL REASONS, INCLUDING MIXING OF JEWELLERY AT THE TIME OF INVENTORISATION, CONVERSIO N ETC. THE APPELLATE TRIBUNAL SAID THAT HOWEVER, THE FACT REMAINS THAT THE JEWELLERY FOUND WAS MUCH LESS THAN 25 THE JEWELLERY DISCLOSED HENCE NO ADDITION CAN BE MA DE IN THE HANDS OF THE ASSESSEE. THE APPELLATE TRIBUNA L ALSO HELD THAT THE ADDITION ON SUSPICION ALONE IS N OT SUSTAINABLE. IT FURTHER HELD THAT SUSPICION, HOWEVE R, STRONG MAY BE CANNOT TAKE PLACE OF THE EVIDENCE. REFERENCE HAVE ALSO BEEN MADE IN THE CASE OF DCIT V S. ARJUNDAS KALWANI - (2006) 102 TTJ 977 (JD), IN T HAT CASE, THE APPELLATE TRIBUNAL HELD THAT SIMPLY BECAU SE THE ITEMS OF ORNAMENTS DO NOT TALLY WITH THE ITEMS SHOWN IN THE INVENTORY PREPARED AT THE TIME OF EARL IER SEARCH AND THE ASSESSEE COULD NOT LEAD EVIDENCE OF CONVERSION OR RE-MAKING OF JEWELLERY, IT CANNOT BE SAID THAT THE JEWELLERY TO THIS EXTENT IS UNEXPLAINED. REFERENCE HAS ALSO BEEN MADE IN THE CASE OF SMT. KRISHNAWANTI BATRA VS. ACIT - (2004) 85 TTJ (DEL) 5 50, IN THAT CASE, THE APPELLATE TRIBUNAL HELD THAT THE EXPLANATION OF THE ASSESSEE SHOULD BE CONSIDERED OBJECTIVELY. FURTHER THE APPELLATE TRIBUNAL HAS HEL D THAT THE ASSESSEE WAS ENTITLED TO BENEFIT OF THE JEWELLE RY DISCLOSED IN THE WEALTH TAX RETURN. THE APPELLATE TRIBUNAL FURTHER HELD THAT IT IS WELL KNOWN FACT TH AT THE INDIAN LADIES KEEP CHANGING DESIGN OF JEWELLERY FRO M TIME TO TIME. THE ASSESSEE SUBMITS THAT THESE OBSERVATIONS ARE WITH REFERENCE TO THE OBSERVATIONS MADE BY THE ASSESSING OFFICERS INVARIABLY IN REJECT ING THE CLAIM OF THE ASSESSEE THAT THERE IS A MISMATCH OF THE JEWELRY FOUND IN THE SEARCH. 6. AFTER CONSIDERING THE ABOVE SUBMISSIONS AND ALSO THE STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH, COMMISSIONER OF INCOME TAX (APPEA LS) DELETED THE ADDITION OF RS. 27,79,552/- ON ACCOUNT OF JEWELLERY AFTER RECORDING THE FOLLOWING FINDINGS :- I HAVE CONSIDERED THE DETAILED SUBMISSION OF THE ASSESSEE. IN SUPPORT OF THE CONTENTIONS, THE ASSESS EE HAS FURNISHED ADEQUATE EVIDENCE BEFORE THE A.O. AND EXPLAINED IN A DETAILED MANNER THAT THE JEWELLERY F OUND IS NOT IN EXCESS OF THE JEWELRY DISCLOSED BY THE APPELLANT. THE ASSESSEE ALSO EXPLAINED THE ACQUISIT ION THE SAME IN THE COURSE OF SEARCH ALSO. THE A.O. HAS NOT 26 DOUBTED THE GENUINENESS OF THE EVIDENCES AND THE DETAILED EXPLANATION OF THE ASSESSEE WITH REGARD TH E POSSESSION AND THE ACQUISITION OF THE JEWELLERY. IN MY VIEW SIMPLY BECAUSE ONE TO ONE MATCH IS NOT POSSIBL E FOR THE DETAILED REASONS GIVEN ABOVE, IT IS NOT JUS TIFIED TO HOLD THAT THE JEWELLERY FOUND IS UNEXPLAINED. THE SUBMISSIONS OF THE ASSESSEE ARE ALSO FOUND DULY SUPPORTED BY THE JUDICIAL DECISION AS CITED BY THE LEARNED COUNSEL IN THE COURSE OF HEARING OF THE APP EAL. IN VIEW OF THE ABOVE FACTS, THE ADDITION OF RS.2779 552 ON ACCOUNT OF JEWELLERY IS UNJUSTIFIED AND, THEREFO RE, THE SAME IS DELETED. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND FIND T HAT THE CASH FOUND DURING THE COURSE OF SEARCH WAS DULY EXPLAINED BY THE ASSESSEE AFTER PRODUCING NECESSARY DOCUMENTARY EVIDENCE. THE CASH FOUND IN POSSESSION OF THE ASSESSEES DAUGHTER-IN-LAW WAS ALSO EXPLAINED A ND SHE ALSO STATED WHILE RECORDING THE STATEMENT DURIN G THE COURSE OF SEARCH THAT THE CASH FOUND COMPRISED OF M ONEY WHICH WAS RECEIVED IN THE MARRIAGE FROM THE RELATIV ES. THE DETAILED FINDINGS RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AT PAGE 4 AS REPRODUCED HEREINABOVE HAVE NOT BEEN CONTROVERTED BY THE LEARN ED SR. DR. WE, THEREFORE, DO NOT FIND ANY JUSTIFICATIO N TO INTERFERE WITH THE FINDINGS SO RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AND CONFIRM TH E 27 SAME. 8. WITH REGARD TO THE JEWELLERY FOUND DURING THE CO URSE OF SEARCH, THE ASSESSING OFFICER HAS MADE THE ADDIT ION ONLY ON THE PLEA THAT THE ASSESSEE COULD NOT MATCH EACH AND EVERY ITEM OF JEWELLERY AS DISCLOSED BY HIM. TH E COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT THE TOTAL JEWELLERY AS DISCLOSED BY THE ASSESSEE WAS MO RE THAN THE AMOUNT OF JEWELLERY FOUND DURING THE COURS E OF SEARCH. THESE JEWELLERIES WERE DISCLOSED BEFORE THE SEARCH IN VDIS AND THE ASSESSEE HAS ALSO PRODUCED B ILLS AND MODE OF PAYMENT OF JEWELLERY SO ACQUIRED. AFTE R RECORDING A FINDING TO THE EFFECT THAT THE ASSESSEE HAS FURNISHED ADEQUATE EVIDENCE BEFORE THE ASSESSING OFFICER AND EXPLANATION IN DETAILED MANNER THAT THE JEWELLERY FOUND IS NOT IN EXCESS OF THE JEWELLERY, COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED TH E ADDITION. WE FIND THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF ACQUISITION OF SUCH JEWELLERY AND THE ASS ESSING OFFICER HAS NOT DOUBTED THE GENUINENESS OF THE EVID ENCE AND THE DETAILED EXPLANATION OF THE ASSESSEE WITH R EGARD TO ITS POSSESSION AND ACQUISITION. MERELY BECAUSE THE 28 ASSESSEE COULD NOT CO-RELATE ITEM TO TIME, THE ADDI TION IS NOT WARRANTED WHEN THE TOTAL JEWELLERY ALREADY DISC LOSED WAS MORE THAN THE JEWELLERY FOUND DURING THE COURSE OF SEARCH. THE DETAILED FINDINGS RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDER ING THE ASSESSEES SUBMISSIONS COULD NOT BE CONTROVERTE D BY THE LEARNED SR. DR BY BRINGING ANY POSITIVE MATERIA L ON RECORD. WE, THEREFORE, DO NOT FIND ANY REASON TO I NTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) RESULTING IN DELETION OF ADDITION MADE ON ACCOUNT OF JEWELLERY. 9. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED, 10. IN THE CROSS OBJECTION, THE ASSESSEE IS AGGRIEV ED WITH THE RETENTION OF ADDITION OF RS.2,33,738/- ON ACCOUNT OF EXCESS STOCK. THE FACTS, IN BRIEF, ARE THAT DIFF ERENCE OF RS. 4,33,672/- WAS FOUND DURING THE COURSE OF SEARC H IN PHYSICAL STOCK TAKEN BY THE DEPARTMENT VIS--VIS TH E STOCK DISCLOSED BY THE ASSESSEE AS PER ITS BOOKS OF ACCOU NTS. AFTER APPLYING THE GROSS PROFIT RATE OF 27.74% THE ASSESSING OFFICER HAS CALCULATED THE VALUE OF STOCK AT 29 RS. 5,65,998/-. THE CONTENTION OF THE LEARNED COUN SEL FOR THE ASSESSEE WAS THAT ACTUAL GROSS PROFIT DECLARED BY THE ASSESSEE WAS 33.97% WHEREAS THE ASSESSING OFFICER HAS TAKEN ONLY GROSS PROFIT OF 27.74% WHICH WAS DEC LARED IN THE IMMEDIATELY PRECEDING YEAR. SINCE THE ASSES SEE HAS ALREADY OFFERED PROFIT ON THE BASIS OF GROSS PR OFIT AT 33.97% WHILE COMPUTING THE VALUE OF STOCK ON THE DA TE OF SEARCH, THE ASSESSING OFFICER SHOULD HAVE TAKEN THE GROSS PROFIT RATE AT 33.97% INSTEAD OF 27.74%. HE FURTHER CONTENDED THAT WHILE ADJUDICATING THIS GROUND, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT CONSIDERED THIS ASPECT AND CONFIRMED THE ADDITION O F RS. 2,33,738/- ON ACCOUNT OF EXCESS STOCK. 11. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, GONE THROUGH THE MATERIAL AVAILABLE ON RECORD AND FIND T HAT THE ADDITION WAS MADE ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SEARCH. THE ADDITION OF RS.4,33,672/- WAS REDUCED BY THE COMMISSIONER OF INCOME TAX (APPEALS) BY RS. 1,99,934/- ON ACCOUNT O F DEFECTIVE STOCK. HOWEVER, NO CREDIT WAS GIVEN FOR THE HIGHER GROSS PROFIT RATE SHOWN BY THE ASSESSEE. TH E 30 PRECISE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX (APPEALS) ARE AS UNDER :- I HAVE CONSIDERED THE SUBMISSION OF THE ASSESSEE AND I HAVE ALSO GONE THROUGH THE ORDER OF THE A.O. I FIND THAT AT THE TIME OF SURVEY, THE VALUATION OF STOCK WAS DONE AT THE SELLING RATE WHICH WORKED OUT TO RS.999670. THE ASSESSEE AT THE SAME TIME WAS DIRECTED TO PREPARE A TENTATIVE TRADING ACCOUNT FROM THE COMMENCEMENT OF THE PREVIOUS YEAR TILL THE DATE OF SURVEY I.E. FROM 1.4.2007 AND SINCE THE ACCOUNT YEAR WAS NOT ENDED, THEREFORE, FOR THE PURPOSE OF COMPUTATION OF THE CLOSING STOCK, THE ASSESSEE APPLIED A GROSS PROFIT RATE @ 27.74%, WHICH WAS THE GP RATE IN THE IMMEDIATELY PREVIOUS YEAR AND ON THAT BASIS, HE WORKED OUT THE VALUE OF CLOSING STOCK AT RS. 565998. THE A.O., THEREFORE, MADE ADDITION OF RS. 433672 (999670- 565998). IN THE COURSE OF ASSESSMENT, THE ASSESSEE MADE A DETAILED SUBMISSION AND THE SUBMISSIONS WERE THAT WHEN THE YEAR ENDED, A TRADING ACCOUNT OF THE EAR WAS PREPARED WHICH SHOWED THE GROSS PROFIT RATE @ 33.97% AND, THEREFORE, HE CONTENDED THAT FOR THE PURPOSE OF ASCERTAINING THE ESTIMATED VALUE OF THE CLOSING STOCK, A GROSS PROFIT RATE @ 33.97% SHOULD BE TAKEN INTO CONSIDERATION AND IF THIS IS DONE, THEN THE VALUE OF STOCK ON THE DATE OF SURVEY WOULD BE AROUND AT RS.635994. FURTHER CONTENTION OF THE ASSESSEE IS THAT THE VALUATION OF STOCK DONE ON THE BASIS OF THE SELLING RATE ON THE DATE OF SURVEY WAS AT RS. 999670 AND IF FROM THIS FIGURE, THE G.P. RATE @ 33.97% WHICH WORKED OUT TO RS.339587 IS REDUCED THEN THE VALUE OF THE STOCK ON SURVEY DATE WOULD HAVE BEEN WORKED OUT AT 31 RS. 660083. THEREFORE, THE ASSESSEE'S CONTENTION AT THE MOST THE EXCESS VALUE OF STOCK EVEN IF IT IS ASSUMED WOULD IN NO CASE BE MORE THAN RS. 24089/-. HE HAS SUPPORTED HIS CONTENTION IN THE WORKING GIVEN IN THE PARA 4 OF HIS SUBMISSION BEFORE ME. THE ASSESSEE SUBMITTED THAT THERE CANNOT BE TWO DIFFERENT YARD STICKS FOR THE PURPOSE OF VALUATION OF STOCK IN THE SURVEY I.E. APPLYING TWO DIFFERENT G.P. RATES. THE JUDICIOUS CONSIDERATION REQUIRED THAT THE G.P. RATE AS REFLECTED IN THE FINAL ACCOUNT IN THE YEAR OF SURVEY SHOULD HAVE BEEN ADOPTED IN SURVEY FOR THE PURPOSE OF ADJUDICATION OF THE VALUE OF STOCK IN SURVEY. THE ASSESSEE HAS REFERRED A DECISION OF ITAT JODHPUR BENCH IN THE CASE OF ITO VS. SATYANARAYAN AGARWAL REPORTED IN 112 TTJ (JD) 717. IN THIS CASE, THE APPELLATE TRIBUNAL HELD THAT THE DEPARTMENTAL AUTHORITIES HAVE WORKED OUT THE DIFFERENCE IN THE STOCK AT THE TIME OF SURVEY ON THE BASIS OF G.P. RATE SHOWN IN THE IMMEDIATELY PRECEDING YEAR INSTEAD OF HIGHER G.P. RATE OF THE CURRENT YEAR. THE ALLEGED DIFFERENCE WAS ONLY ON ACCOUNT OF VARIATION IN G.P. RATE AND, THEREFORE, ADDITION U/S.69 TOWARDS UNEXPLAINED INVESTMENT IN STOCK COULD NOT BE SUSTAINED. THE ASSESSEE ALSO SUBMITTED BEFORE ME THAT EVEN RS.24809 DO NOT SUGGEST THE VALUE OF ANY EXCESS STOCK. THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE'S CONCERN JYOTI CEMENT PIPES INDUSTRIES IS IN THE BUSINESS OF R.C.C. HUME PIPES AND COLLARS. THE VARIATION ARISEN MAINLY ON ACCOUNT OF THE REASON THAT THERE WERE SEVERAL DEFECTIVE AND BROKEN ITEMS OF PIPES AND COLLERS LYING IN THE STOCK AND ACCUMULATED OVER A PERIOD 32 OF TIME WHICH ARE NOT SALEABLE AT ALL BUT IN THE SURVEY, THEY WERE INCLUDED IN THE COUNTING AND VALUED AT SELLING RATE ALONG WITH OTHERS. THE ASSESSEE CONTENDED THAT ALL SUCH FACTS WERE ALSO EXPLAINED IN THE COURSE OF SURVEY PROCEEDINGS ITSELF, THE A.D. HAS NOT CONTROVERTED SUCH FACT. THE REALITIES OF THE BUSINESS HAVE ALSO NOT BEEN SEEN IN A OBJECTIVE MANNER AND, THEREFORE, THE CONTENTION OF THE ASSESSEE IS THAT THERE WAS NO EXCESS STOCK HENCE THE ADDITION IS NOT SUSTAINABLE. IN MY CONSIDERED VIEW, THE WORKING OF THE VALUATION OF CLOSING STOCK AS ON THE DATE OF SURVEY WAS PROVIDED BY THE ASSESSEE HIMSELF WHEREIN THE G.P. WAS TAKEN ON THE BASIS OF IMMEDIATELY PRECEDING PREVIOUS YEAR @ 27.74% AND THE STOCK WAS VALUED ACCORDINGLY AT RS.565998 AND AS PER THE PHYSICAL INVENTORY, THE VALUE OF STOCK WAS ADOPTED AT RS. 999670. THE LEARNED A.R. BEFORE ME HAS CONTENDED THAT THE VALUE OF CLOSING STOCK AS PER PHYSICAL INVENTORY HAS TAKEN ON THE BASIS OF SALE PRICE AND NOT AT COST OR MARKET VALUE, WHICHEVER IS LOWER. THIS FACT WAS STATED BY THE SUPERVISOR OF THE APPELLANT ON 13 .11.2007 WHO IN REPLY TO QUESTION NO.14 TAKEN DURING THE SURVEY U/S 133A(1) CONTENDED THAT THE REAL VALUE OF STOCK WOULD COME TO RS. 799736 AFTER DEDUCTING 20% ON THE SALE VALUE OF VARIOUS ITEMS AND VIEW OF THE ISSUE, HE ADMITTED THAT THERE IS EXCESS VALUE OF RS.233738 BUT THIS INCLUDES OLD AND DEFECTIVE STOCK. IN VIEW OF THE STATEMENT GIVEN AND CONSIDERING THE TOTALITY OF FACTS, THE EXCESS STOCK IS TAKEN AT RS. 233738 AS AGAINST RS. 433672 TAKEN BY THE A.O. ON THE BASIS OF THE SALE PRICE AND THE ADDITION TO THAT EXTENT IS SUSTAINED. THE APPELLANT, THEREFORE, GETS A RELIEF OF 33 RS.1,99,934 (RS.433672-233738). THIS GROUND IS DECIDED ACCORDINGLY. 12. IT IS CLEAR FROM THE ABOVE THAT THE COMMISSIONE R OF INCOME TAX (APPEALS) HAS HIMSELF RECORDED A FINDING TO THE EFFECT THAT THE ASSESSEE HAS ACTUALLY SHOWN GRO SS PROFIT OF 33.97%. HOWEVER, WHILE RECOMPUTING THE QUANTUM OF EXCESS STOCK, NO CREDIT FOR SUCH HIGHER GROSS PROFIT DECLARED BY THE ASSESSEE WAS GIVEN. AS PER OUR CONSIDERED VIEW, SINCE THE ASSESSEE HIMSELF HAS SHO WN HIGHER GROSS PROFIT OF 33.97%, THEREBY SHOWING HIGH ER PROFIT, THERE IS NO REASON TO VALUE THE STOCK BY TA KING GROSS PROFIT RATE OF 27.74% OF IMMEDIATELY PRECEDIN G ASSESSMENT YEAR. WE, THEREFORE, DIRECT THE ASSESSI NG OFFICER TO RECOMPUTED THE STOCK AFTER TAKING GROSS PROFIT RATE AT 33.97% AS SHOWN BY THE ASSESSEE DURING THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION. 13. IN THE RESULT, THE CROSS OBJECTION OF THE ASSES SEE IS ALLOWED. 34 FINALLY, THE APPEAL OF THE REVENUE STANDS DISMISSED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLO WED IN PART, IN TERMS INDICATED HEREINABOVE . SD SD (JOGINDER SINGH) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBE R DECEMBER 20 , 2011 COPY TO APPELLANT,RESPONDENT,CIT, CIT(A), DR DN/-
