M/s Agarwal Diamonds, Bhopal V. The ACIT- 2(1), Bhopal

CO 64/IND/2013

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1738 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 22-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-12-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bogus purchase
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.(SS).A.NO. 112/IND/2013 A.Y. : 2008-09. ACIT, 2(1), M/S.AGARWAL DIAMONDS, PLATINUM PLAZA, BHOPAL VS. BHOPAL. APPELLANT RESPONDENT PAN NO. AAMFA1006C C.O.NO.64/IND/2013 (ARISING OUT OF I.T.(SS).A.NO. 112/IND/2013 A.Y. : 2008-09. M/S.AGARWAL DIAMONDS, PLATINUM PLAZA, ACIT, 2(1), BHOPAL BHOPAL. VS. CROSS OBJECTOR RESPONDENT DEPARTMENT B Y : S MT.ASHIMA GUPTA, CIT DR ASSESSEE BY : SHRI GIRISH AGARWAL, C. A. ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 2 2 O R D E R PER D.T.GARASIA, J.M. APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF CIT(A)-I , BHOPAL, DATED 27.02.2013 FOR THE ASSESSMENT YEAR 2008-09. 2. THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 39,06,778/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED SALES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 3,87,532/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASES OF OLD JEWELLERY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF RETAIL SALE OF DIAMOND JEWELLERY ETC. THE ASSESSEE HAD FILED ITS O RIGINAL RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 16. 01.2009 DECLARING LOSS OF RS. 10,41,915/-. IN THIS CASE, SU RVEY U/S DATE OF HEARING : 22 . 12 .201 5 DATE OF PRONOUNCEMENT : 22 . 12 .201 5 ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 3 3 133A WAS CARRIED OUT ON 13.11.2007 AT THE PREMISES OF THE ASSESSEE AT M/S. AGRAWAL DIAMONDS, 14-17, PLATINUM PLAZA, T.T.NAGAR, BHOPAL. THE CASE WAS TAKEN INTO SCRUTINY BY ISSUING NOTICE U/S 143(2) OF THE ACT. THE ASSESSMEN T U/S 143(3) WAS COMPLETED ON 31.12.2009 DETERMINING TAXA BLE INCOME AT RS. 42,41,558/-. 4. THE AO NOTICED THAT DURING THE COURSE OF SURVEY AT THE BUSINESS PREMISES OF THE ASSESSEE, PHYSICAL INVENTO RY OF THE STOCK FOUND WAS PREPARED AND VALUATION THEREOF WAS MADE. AS PER THE VALUATION BY THE DEPARTMENTAL VALUER, THE T OTAL VALUE OF STOCK OF DIAMOND FOUND WAS OF RS. 1,75,26,461/-, WHEREAS AS PER THE ASSESSEES VALUATION OF STOCK AS ON THE DATE OF SURVEY AS PER BOOKS WAS OF RS. 2,24,09,935/- I.E. T HERE WAS SHORTAGE OF RS. 48,83,473/- IN THE STOCK FOUND. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE SHORTAGE OF STOC K SHOULD NOT BE TREATED AS UNDISCLOSED SALES MADE OUTSIDE TH E BOOKS AND THE SAME SHOULD NOT BE ADDED TO THE TOTAL INCOM E. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE DID NOT MAINTAIN STOCK REGISTER. HOWEVER, EACH AND EVERY PU RCHASE ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 4 4 WAS FULLY VERIFIABLE WITH THE PURCHASE BILLS AND S ALES WITH THE SALE BILLS. BUT THE AO DID NOT FIND THE SUBMISSION OF THE ASSESSEE AS TENABLE BECAUSE THE PURCHASE BILLS WERE NOT ATTACHED WITH THE SUBMISSION AND THE EXACT QUANTITA TIVE DETAIL OF ITEMS WITH RESPECT TO THE PURCHASES AND SALES WE RE NOT FURNISHED. ACCORDINGLY, THE AO MADE ADDITION OF RS. 48,83,473/- OF THE UNACCOUNTED SALES TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DIRECTED THE AO TO MAKE ADDITION OF RS. 9,76,695/- I.E. GROSS PROFIT ON THE UNACCOUNTED SALES, AS AGAINST ADDITIO N OF RS. 48,83,473/- MADE IN ASSESSMENT ORDER, BY GIVING REL IEF OF RS. 39,06,778/- BY OBSERVING AS UNDER :- 5.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT IS AN ADMITTED FACT THAT VALUATION OF DIAMOND JEWELLERY FOUND AT THE BUSINES S PREMISES OF THE APPELLANT AT THE TIME OF SURVEY WAS PREPARED WITH THE ASSISTANT OF THE REGISTERED VALUE R AND VALUE OF THE STOCK FOUND WAS AT RS. 1,75,26,461/- , ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 5 5 WHEREAS THE VALUE OF STOCK AS PER BOOKS OF ACCOUNTS AS ON THE DATE OF SURVEY WAS AT RS. 2,24,09,935/-. THUS, THERE WAS SHORTAGE OF STOCK FOUND OF RS.48,83,473/- (RS.2,24,09,935 - RS. 1,75,26,461/-). THE APPELLANT FURNISHED GENERAL SUBMISSION EXPLAINING THE DIFFERE NCE MAINLY ON THE GROUND THAT THE DEPARTMENTAL VALUER H AS NOT PROPERLY VALUED THE STOCK. BUT THE APPELLANT HAD NOT POINTED OUT ANY SPECIFIC DEFECT IN ANY ITEM VALUED BY THE APPROVED VALUER. IT MAY BE NOTED THAT THE APPROVED VALUER IS AN EXPERT PERSON IN VALUATION OF THE DIAMOND STO CK AND, THEREFORE, THERE IS NO REASON NOT TO ACCEPT THE VAL UATION PREPARED BY THE APPROVED VALUER OF THE STOCK FOUND AT RS. 1,75,26,461/- . THUS, THE APPELLANT FAILED TO SATISFACTORILY EXPLAIN THE SHORTAGE OF STOCK FOUND AT THE TIME OF SURVEY WITH ANY COGENT AND UNIMPEACHABLE EVIDENCE. SINCE, THE STOCK FOUND WAS SHORT BY RS.48,83.473/-, IT HAS TO BE PRESUMED THAT THE APPELLANT HAD MADE SALES OF THIS STOCK WHICH WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT S. HOWEVER, THE SUBMISSION OF THE APPELLANT THAT AO WA S ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 6 6 NOT JUSTIFIED IN MAKING ADDITION OF TOTAL AMOUNT OF RS.48,83,473/- OF ALLEGED UNACCOUNTED SALES HAS FORCE. THE ENTIRE VALUE OF SHORTAGE OF STOCK FOUND WHICH REPRE SENT THE UNACCOUNTED SALES MADE BY THE APPELLANT CANNOT BE ASSESSABLE AS ADDITIONAL INCOME AND IT IS ONLY THE PROFIT ELEMENT WHICH IS EMBEDDED IN THE SALE AMOUNT, WHICH IS CHARGEABLE TO TAX AS INCOME, BECAUSE THE INVESTMENT IN THE STOCK HAD ALREADY BEEN ACCOUNTED FOR IN THE BOO KS OF ACCOUNTS. IT MAY BE NOTED THAT THE EXPENSES RELATAB LE TO PROFIT & LOSS ACCOUNT HAD ALREADY BEEN DEBITED BY THE APPELLANT AND APPELLANT HAD NOT TO INCUR ANY EXTRA EXPENDITURE FOR MAKING SUCH UNACCOUNTED SALES. THEREFORE, THE AMOUNT OF GROSS PROFIT EMBEDDED IN T HE SALES HAS TO BE CONSIDERED AS INCOME ON THIS ACCOUN T. IN THIS CASE, THE APPELLANT HAD SHOWN GROSS PROFIT OF 20 % IN A. YS. 2006-07, 2007-08 & 2008-09. THEREFORE, GROSS PROFIT RATE 20 % IS APPLIED ON THE TOTAL UNACCOUNTED SALES OF RS. 48,83,473/-. THE ADDITIONAL INCOME WORKS OU T AT RS. 9,76,695/- (20 % OF RS.48,83,473). ACCORDINGLY, THE AO ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 7 7 IS DIRECTED TO MAKE ADDITION OF RS.9,76,695/- ON THIS ACCOUNT. IN THIS REGARD, IT WOULD BE RELEVANT TO REFER SOME OF THE DECISIONS OF HON'BLE COURTS ON THIS ISSUE. 5.5 IN THE CASE OF COMMISSIONER OF INCOME-TAX V. PRESIDENT I NDUSTRIES [ 2002] 258 ITR 0654 (GUJ), THE HON'BLE GUJRAT HIGH COURT HAD AN OCCASION TO CONSID ER SIMILAR ISSUE. IN THIS CASE, IN THE COURSE OF SURVE Y CONDUCTED IN THE PREMISES OF THE ASSESSEE, EXCISE R ECORDS WERE FOUND WHICH DISCLOSED GODOWN SALES NOT DISCLOS ED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESS ING OFFICER MADE ADDITION OF UNDISCLOSED INCOME OF THE ENTIRE SALE PROCEEDS THEREOF. THE COMMISSIONER (APPEALS) AFFIRMED THE ADDITION BUT THE APPELLATE TRIBUNAL FO UND THAT THERE WAS NO MATERIAL TO INDICATE THAT THE ASS ESSEE MADE INVESTMENTS OUTSIDE THE BOOKS OF ACCOUNT TO MA KE THE ALLEGED SALES AND HELD THAT THE ENTIRE SALE PRO CEEDS COULD NOT HAVE BEEN ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE BUT THE ADDITION COULD BE ONLY OF THE PROF ITS EMBEDDED IN THE SALES. THE TRIBUNAL HAVING DECLINED TO ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 8 8 STATE A CASE, THE DEPARTMENT APPLIED TO THE HIGH CO URT FOR AN ORDER CALLING FOR A REFERENCE. THE HON'BLE H IGH COURT HELD AS UNDER :- 'HELD, DISMISSING THE APPLICATION FOR REFERENCE. TH AT THE AMOUNT OF SALES COULD NOT REPRESENT THE INCOME OF THE ASSESSEE WHO HAD NOT DISCLOSED THE SALES. THE SALES ONLY REPRESENTED THE PRICE RECEIVED BY THE SE LLER OF THE GOODS; ONLY THE REALISATION OF THE EXCESS OV ER THE COST INCURRED COULD FORM PART OF THE PROFIT INC LUDED IN THE CONSIDERATION FOR THE SALES. SINCE THERE WAS NO FINDING TO THE EFFECT THAT INVESTMENT BY WAY OF INCURRING THE COST IN ACQUIRING THE GOODS WHICH WER E SOLD HAD BEEN MADE BY THE ASSESSEE AND THAT THAT INVESTMENT WAS ALSO DISCLOSED, ONLY THE EXCESS OVER THE COST INCURRED COULD BE TREATED AS PROFIT, ' 5.6 SIMILARLY, IN THE CASE OF COMMISSIONER OF INCOME- TAX V. BALCHAND AJIT KUMAR (2003) 263 ITR 0610- ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 9 9 (MP) THE HON'BLE JURISDICTIONAL MP HIGH COURT EXPRESSED THE SAME OPINION. IN THIS CASE, IN A SEAR CH CONDUCTED AT THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE, IT WAS FOUND THAT THERE WERE CREDI T SALES WHICH WERE NOT REFLECTED IN THE BOOKS OF ACCOUNT. ON SCRUTINY OF THE BOOKS OF ACCOUNT OF THE ASSESSEE, THE ASSESSING OFFICER ADDED A SUM OF RS. 8,19,255/- TOWARDS THE SALES PROFIT OF THE ASSESSEE . THE COMMISSIONER (APPEALS) CAME TO THE CONCLUSION THAT THE ENTIRE CREDIT SALES COULD NOT HAVE BEEN INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE AND ACCORDINGLY FOLLOWED THE METHOD OF ADDING NET PROFI T RATE OF FIVE PER CENT. ON THESE SALES AND ACCORDING LY RS. 40,960/- WAS INCLUDED ON RS.40,960 WAS INCLUDED ON THAT SCORE. THE TRIBUNAL HELD THAT THE COMMISSIONER (APPEALS) HAD RECOURSE TO A REASONABLE METHOD BY ADOPTING THE NET PROFIT RATE O F FIVE PER CENT IN AS MUCH AS THE ENTIRE SALE COULD N OT HAVE BEEN REGARDED AS THE PROFIT OF THE ASSESSEE. ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 10 10 HOWEVER, THE TRIBUNAL DID NOT REDUCE THE RATE WHICH WAS ADDED BY THE COMMISSIONER (APPEALS). ON APPEAL BY THE DEPARTMENT, THE HON'BLE HIGH COURT HELD AS UNDER: HELD, THAT THE TOTAL SALE COULD NOT BE REGARDED AS THE PROFIT OF THE ASSESSEE. THE NET PROFIT RARE HAD TO BE ADOPTED AND ONCE IT WAS ADOPTED IT COULD NOT BE SAID THAT THERE WAS PERVERSITY OF APPROACH. WHETHER THE RATE WAS LOW OR HIGH WOULD DEPEND UPON THE FACTS OF EACH CASE. ' 5.7 THE HON'BLE M.P. HIGH COURT IN ANOTHER CASE OF MALL MOHON SADONI V. COMMISSIONER OF INCOME-TAX (2008) 304 ITR 0052-(MP), ALSO HELD AS UNDER: 'THE ENTIRE SALE PROCEEDS CANNOT BE REGARDED AS PRO FIR OR TREATED AS UNDISCLOSED INCOME OF THE ASSESSE E. ON THE CONTRARY, IT IS THE NET PROFIT RATE WHICH HAS TO BE ADOPTED IN SUCH CASES. ' 5.8 THE HON'BLE ITAT AHMEDABAD BENCH IN THE CASE OF V. ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 11 11 R. TEXTILES V. JOINT COMMISSIONER OF INCOME-TAX, (2011) 011 ITR (TRIB) 0476-(ITAT-AHD.), ALSO HELD THAT IT IS A SETTLED LAW THAT ENTIRE SALES COULD NOT BE TREATED AS PROFIT OF THE ASSESSEE AND GROSS PROFIT RATE CAN ON LY BE APPLIED AGAINST UNACCOUNTED SALES FOR THE PURPOSE O F MAKING ADDITION. THE HON'BLE IT A.T INTER-ALIA HELD AS UNDER :- 'HELD, IT WAS SELL LED LOLL' THAT THE ENTIRE UNDISC LOSED SALES COULD NOT BE TREATED AS PROFIT OF THE ASSESSE E. THE COMMISSIONER (APPEALS) WAS, THEREFORE, JUSTIFIE D IN APPLYING GROSS PROFIT RATE AGAINST UNACCOUNTED SALES FOR THE PURPOSE OF MAKING THE ADDITION ON ACCOUNT OF UNDISCLOSED INCOME OF THE ASSESSEE . 5.9 THEREFORE, IN VIEW OF THE ABOVE, THE AO IS DIRECTED TO MAKE ADDITION OF RS.9.76,695/- I.E. GROSS PROFIT ON THE UNACCOUNTED SALES, AS AGAINST ADDITION OF RS. 48,83,473/- MADE IN ASSESSMENT ORDER. THUS, THE APPELLANT GETS A RELIEF OF RS. 39,06,778/- (RS.48,8 3,473 RS. 9,76,695/-) IN THESE GROUNDS OF APPEAL. ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 12 12 6. THE LD. DR RELIED UPON THE ORDER OF THE AO. 7. THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT TH E ASSESSEE IS IN THE BUSINESS OF RETAIL SALE OF DIAMO ND JEWELLERY. DURING THE COURSE OF SURVEY U/S 133A AT THE BUSINES S PREMISES OF THE ASSESSEE, THE INVENTORY OF STOCK FO UND WAS FIRST PREPARED ON THE BASIS OF TAG PRICE AT RS. 2,9 9,81,970/-. THE DEPARTMENTAL VALUER VALUED THE STOCK AT RS. 1,75,26,461/-. THE TOTAL STOCK AS PER THE BOOKS AS ON THE DATE OF SURVEY WAS RS. 2,24,09,935/-. IT WAS CONTENDED T HAT THERE WAS NO SHORTAGE OF STOCK AS ALLEGED BECAUSE THE VAL UATION MADE BY THE VALUER WAS UNRELIABLE. THE VALUER VALUE D THE VALUATION DEHORS THE COST OF PURCHASE MENTIONED IN THE PURCHASE BILLS. HE DID NOT MENTION IN THE REPORT AS TO WHAT BASIS HE TOOK THE VALUE PER CARET ETC. OF VARIOUS I TEMS. THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT THE VALUAT ION WAS MADE IN AN ARBITRARY MANNER. THERE WAS NO PURCHASE OR SALE OUTSIDE THE BOOKS OF ACCOUNT AND THERE WAS NO SHORT AGE OF STOCK AS ALLEGED BY THE ASSESSING OFFICER. IT WAS C ONTENDED THAT THE AO WAS GROSSLY UNJUSTIFIED IN MAKING THE A DDITION OF ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 13 13 RS. 48,83,473/-. THE ADDITION OF RS. 48,83,473/- MA Y BE DELETED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT IN THIS CASE THE ASSESSEE HAD SHOWN GROSS PROFIT RATE OF 20% IN ASSESSMENT YEARS 2006-0 7, 2007-08 AND 2008-09. GROSS PROFIT RATE @ 20% WAS APPLIED O N TOTAL UNACCOUNTED SALES OF RS. 48,83,473/-. THE ADDITIONA L INCOME WORKED OUT WAS AT RS. 9,76,695/- WHICH WAS 20% OF R S. 48,83,473/- . ACCORDINGLY, THE AO WAS DIRECTED TO M AKE THE ADDITION OF RS. 9,76,695/- ON THIS ACCOUNT. THE LD. DR DID NOT POINT OUT ANYTHING CONTRARY TO THE DECISION OF THE LD. CIT(A). WE UPHOLD THE ACTION OF THE LD. CIT(A) AND OUR INTE RFERENCE IS NOT CALLED. GROUND NO.1 IS REJECTED. 9. GROUND NO.2 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS . 3,87,532/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BOGUS PURCHASE OF OLD JEWELLERY. ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 14 14 10. THE AO FOUND FROM THE RECORDS THAT THERE WERE PURCHASES OF OLD JEWELLERY WORTH RS. 4,00,000/- IN ASSESSMENT YEAR 2007-08. ON PHYSICAL VERIFICATION NO STOCK WAS FOUND AT THE PREMISES DURING SURVEY U/S 133A ON 13.11.2007. THE AO MADE THE ADDITION OF RS.4,00,000/- TO THE TOTAL INC OME, AS THE ASSESSEE COULD NOT EXPLAIN AS TO WHERE SUCH STOCK W AS MAINTAINED AND WHY THE SALES WERE NOT RECORDED. 11. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) UPHELD THE ADDITION OF RS. 12,468/- OUT OF RS. 4,00 ,000/- BY OBSERVING AS UNDER :- 6.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT AND FACTS OF THE CASE. IT IS NOTICED THAT THE AO MADE ADDITION OF RS. 4,00,000/- ON ACCOUNT O F BOGUS PURCHASES OF OLD JEWELLERY BUT NO SPECIFIC DOCUMENT WAS REFERRED. THE AO HAD ALSO NOT NOT DISCUSSED AND CONSIDERED THE SUBMISSION OF THE APPELLANT IN THE ASSESSMENT ORDER WHILE MAKING ADDITION OF RS. 4,00,000/-. THE APPELLANT SUBMITTED THAT PURCHASE AND SALE BILLS OF OLD ORNAMENTS WHICH ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 15 15 WERE RECORDED IN THE BOOKS OF ACCOUNT WERE FOUND AND IMPOUNDED DURING SURVEY AND WERE IN POSITION OF THE LD. AO WHICH WERE NO CONSIDERED. HE HAS ALSO FURNISHED COPIES OF SUCH PURCHASE AND SALE BILLS. HOWEVER, ON VERIFICATION, IT IS NOTICED THAT AS PER THESE DOCUMENTS THE APPELLANT HAD SHOWN TOTAL PURCHASES OF OLD JEWELLERY WEIGHING 193.660 GMS. FO R RS.1,87,400/- WHEREAS SALE OF THE OLD JEWELLERY WAS ACCOUNTED FOR WEIGHING 137.750 GMS. FOR RS. 1,35,888/-. THUS, THE APPELLANT HAD SHOWN PURCHASE OF OLD JEWELLERY WEIGHING 193.660 GMS. AND SALES OF ONLY 137.750 GMS. THERE SHOULD HAVE BEEN STOCK OF OLD JEWELLERY WEIGHING 55.91 GMS, BUT NO SUCH STOCK OF OLD JEWELLERY WAS FOUND ON THE DATE OF SURVEY WHICH SHOWS THAT APPELLANT HAD MADE UNACCOUNTED SALES OF THESE ITEMS. THE PREVAILING RATE OF GOLD O N THE DATE OF SURVEY WAS OF RS. 1,115/- PER GRAM AND, THUS, THE TOTAL VALUE WORKS OUT AT RS 62,340/-. THE APPELLANT HAD SHOWN GROSS PROFIT RATE OF 20%. ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 16 16 ACCORDINGLY, THE ADDITIONAL INCOME ON UNACCOUNTED SALE OF OLD JEWELLERY WOULD BE WORKED OUT AT RS. 12,468/-. THEREFORE, THE AO IS DIRECTED TO MAKE ADDITION OF RS. 12,468/- ON ACCOUNT OF UNACCOUNTED SALES OF OLD JEWELLERY AS AGAINST ADDITION OF RS. 4,00,000/- MADE IN THE ASSESSMENT ORDER. THUS, THE APPELLANT GETS A RELIEF OF RS. 3,87,532/- ( RS. 4,00,000/- (-) RS. 12,468/- IN THIS GROUND/. 12. THE LD. DR RELIED UPON THE ORDER OF AO. 13. THE LD. AUTHORIZED REPRESENTATIVE CONTENDED THAT TH E AO WAS WHOLLY WRONG IN MAKING ADDITION OF RS. 4,00, 000/-. IT WAS SUBMITTED THAT THE PURCHASES AND SALES OF OLD J EWELLERY WERE FULLY RECORDED AND SUPPORTED BY PROPER BILLS S IGNED BY THE CUSTOMERS CARRYING THE FULL PARTICULARS OF PURC HASES AND SALES.THE SALES AND PURCHASE BILLS WERE IN THE POSI TION OF THE AO BEING IMPOUNDED DURING SURVEY, IN WHICH THE PURC HASES AND SALES WERE FULLY REFLECTED. HE CONTENDED THAT T HE FINDING OF AO THAT SALES AND PURCHASES OF OLD JEWELLERY WAS BO GUS IS WHOLLY INCORRECT. IT WAS CONTENDED THAT NO SUCH MAT ERIAL WAS ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 17 17 CONFRONTED IN THE COURSE OF ASSESSMENT PROCEEDINGS TO THE ASSESSEE. HE CONTENDED THAT THE AMOUNT OF RS. 4,00 ,000/- WAS JUST AN AD HOC ADDITION AND THE LD. AO DID NOT REFER ANY SPECIFIC MATERIAL IN WHICH THE AMOUNT OF RS. 4,00,0 00/-WAS APPEARING. IT WAS ARGUED THAT THE AO WAS NOT JUSTIF IED IN MAKING ADDITION ON ESTIMATES AND PRAYED THAT THE AD DITION OF RS. 4 LACS MAY BE DELETED. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE FIND THAT THE ASSESSEE HAD SHOWN TOTAL PURCHASES OF OLD JEWELLERY WEIGHING WEIGHING 193.660 GMS. FOR RS. 1,87,400/- WHEREAS SALE OF OLD JEWELRY WAS ACCOUNTE D FOR WEIGHING 137.750 GMS. FOR RS. 1,35,888/-. THE ASSES SEE HAD SHOWN PURCHASE OF OLD JEWELLERY WEIGHING 193.660 GM S AND SALES OF ONLY 137.750 GMS. HENCE, THE DIFFERENCE OF STOCK OF OLD JEWELLERY COMES TO 55.91 GMS., BUT NO SUCH STOCK OF OLD JEWELLERY WAS FOUND ON THE DATE OF SURVEY. THE LD. CIT(A) TOOK THE PREVAILING RATE AS RS. 1115/- PER GRAM AND THE TOTAL VALUE WAS WORKED OUT AT RS. 62,340/-. THE ASSESSEE HAD SH OWN GROSS PROFIT AT 20% AND ADDITIONAL ON ACCOUNT OF UN ACCOUNTED ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 18 18 SALE OF OLD JEWELLERY WAS WORKED OUT AT RS. 12,468/ -.THE LD. CIT(A) DIRECTED THE AO TO MAKE THE ADDITION OF RS. 12,468/- ON ACCOUNT OF UNACCOUNTED SALES OF OLD JEWELLERY AS AG AINST ADDITION OF RS. 4,00,000/- . THE LD. DR DID NOT POI NT OUT ANYTHING CONTRARY TO THE DECISION OF THE LD. CIT(A) . WE UPHOLD THE ACTION OF LD. CIT(A). GROUND NO.2 ALSO FAILS. C.O.NO.64/IND/2013 : 15. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE HAS BECOM E INFRUCTUOUS. HENCE, THE CROSS OBJECTION IS DISMISSE D. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED AND CROSS OBJECTION IS ALSO DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 22 ND DECEMBER, 2015. SD/- (B.C.MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 22 ND DECEMBER, 2015. ACIT ,2(1), BHOPAL VS. M/S. AGRAWAL DIAMONDS, BHOPA L - I.T.(SS).A.NOS. 112/IND/2013 & C.O. 64/IND/2013A.Y. 2008-09 19 19 CPU*