M/S KHANDELWAL JEWELLERS, Akola V. JCIT-AKOLA-RANGE, Akola

ITA 100/NAG/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3153 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 28-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

1 ITA NO. 100/NAG/2014 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I.T.A. NO.100/NAG/2014 ASSESSMENT YEAR : 2010 - 11. M/S KHANDELWAL JEWELLERS, JT. COMMISSIONER OF INCOME - TAX, AKOLA. VS. AKOLA RANGE, AKOLA. PAN AAJFM4772E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MAHAVIR ATAL. RESPONDENT : S MT. SUMAN MALIK. DATE OF HEARING : 18 - 11 - 2015 DATE OF PRONOUNCEMENT : 15 TH JANUARY, 2016. O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FROM THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 26 - 12 - 2013. THE ASSESSEE HAS ORIGINALLY RAISED THE FOLLOWING GROUNDS : 1. ACTION OF HON. CIT(A),NAGPUR IN CONFIRMI NG ORDER OF A.O., REJECTING THE BOOKS OF A/C OF THE ASSESSEE IS BAD IN LAW AND FACTS, WHEN NO MISTAKE HAS BEEN POINTED OUT IN BOOKS OF A/C EITHER BY A.O. OR BY HON. CIT(A). 2. THE ORDER PASSED BY HON. CIT(A), CONFIRMING ORDER OF LEARNED A.O. IN INCREASING QUANTITY AND VALUE OF CLOSING STOCK ON HIS OWN PRESUMPTION IS BAD IN LAW AND FACTS, WHEN LEARNED A.O. HAS NOT TAKEN INTO CONSIDERATION THE LOSS DUE TO HANDLING THEFT, CONVERSION ETC. THOUGH THE LEARNED A.O. HAS ADMITTED THE FACT. 3. THE ORDER OF HON. CIT(A) CONFIRMING ORDER PASSED BY A.O. DISTURBING QUANTITY OF CLOSING STOCK OF PURE GOLD IS BAD IN LAW AND FACTS, WHEN THE LEARNED A.O. HAD ACCEPTED QUANTITY OF OPENING STOCK, PURCHASE OF PURE GOLD, SALE OF PURE GOOD, S GIVEN IN REGULAR BOOKS OF A/C. THE ORDER PA SSED IS AGAINST NORM OF ACCOUNTANCY. 2 ITA NO. 100/NAG/2014 4. THE ORDER PASSED BY HON CIT(A) CONFIRMING THE ORDER OF A.O. WHEN COST OF IMPURITY IS CONSIDERED AT PAR TO COST OF PURE GOLD IS BAD IN LAW AND FACTS. 5. THE ORDER PASSED BY HON. CIT(A) CONFIRMING ORDER OF A.O. WHO DISTU RBED THE METHOD OF VALUATION OF CLOSING STOCK ADOPTED BY ASSESSEE FROM LAST 50 YEARS, IS BAD IN LAW AND FACTS. 6. THE ORDER OF HON. CIT(A) CONFIRMING THE ORDER OF A.O. WHICH IS BASED ON PRESUMPTION CONJECTURE WITHOUT BRINGING ANY POSITIVE MATERIAL ON RECORDS, AND NOT CONSIDERING SUBMISSION OF THE ASSESSEE IS BAD IN LAW ON FACTS. HOWEVER, THE ASSESSEE WAS ASKED TO CONCISE THE GROUNDS AS PER RULE 8 OF INCOME TAX TRIBUNAL RULES, 1963. THE SAME WERE CONCISED IN THE FOLLOWING MANNER : 1. ON THE FACTS AND CIRCUMSTAN CES OF THE CASE LEARNED CIT(A) ERRED IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER REJECTING BOOKS OF ACCOUNTS OF THE ASSESSEE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN ENDORSING THE ANALOGY OF THE GOLD CONVERSION ADOPTED B Y THE ASSESSING OFFICER WITHOUT ASSIGNING ANY LOGIC BEHIND THE SAID ANALOGY. 3. THE ASSESSMENT ORDER FRAMED ON A DISSOLVED FIRM AS WELL AS CIT(A) ORDER PASSED ON DISSOLVED FIRM WHICH IS NO MORE IN EXISTENCE IS BAD IN LAW AND HENCE SHOULD BE SQUASHED . 2. THIS APPEAL HAS BEEN ARGUED BY LEARNED A.R. IN THE BACKGROUND OF THE ABOVE GROUNDS OF APPEAL. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) DATED 28 TH DEC., 2012 WERE THAT THE ASSESSEE FIRM IS IN THE BUSINESS OF TRADIN G OF GOLD JEWELLERY AND SILVER ARTICLES. DURING THE COURSE OF HEARING THE ASSESSEE WAS ASKED TO JUSTIFY THE LABOUR CHARGES CLAIMED AT R.59,38,920/ - . THOSE CHARGES WERE STATED TO BE PAID TO KARIGARS FOR MAKING GOLD ORNAMENTS. DIRECT PAYMENT TO KARIGARS WE RE STATED TO BE RS. 30 ,20,562/ - . TURNOVER OF THE ASSESSEE WAS RS.139.01 CRORES AND THE GROSS PROFIT WAS AT THE RATE OF RS.2.22% AND THE INCOME DECLARED WAS AT RS.1,84,41,060/ - . THE OBSERVATION OF THE AO WAS THAT THERE WAS NO DETAILS AS PER THE TAX AUDIT REP ORT IN 3 ITA NO. 100/NAG/2014 RESPECT OF THE ORNAMENTS MANUFACTURED. THE ASSESSEE WAS, THEREFORE, ASKED TO FURNISH THE DETAILS OF WEIGHT OF GOLD GIVEN TO THE KARIGARS FOR MAKING ORNAMENTS. THE ASSESSEE WAS ALSO ASKED TO FURNISH THE DETAILS OF WEIGHT OF GOLD RECEIVED BACK FROM TH E KARIGARS WHO HAVE MANUFACTURED THE GOLD ORNAMENTS. THE ASSESSEE WAS FURTHER ASKED TO GIVE THE DETAILS ABOUT THE INCREASE IN WEIGHT IN THE GOLD ORNAMENTS DUE TO CONVERSION OF 24 CARAT STANDARD GOLD INTO LOWER CARAT OF GOLD USED FOR MAKING ORNAMENTS. AS PE R THE AO NO EXACT DETAILS WERE FURNISHED. DURING THE YEAR THE ASSESSEE HAD UTILIZED 376.558 KG. OF STANDARD GOLD FOR CONVERSION INTO GOLD ORNAMENTS. IT WAS ALSO FOUND THAT THE ASSESSEE HAD ALSO MADE PURCHASES OF 116.578 KG. OF GOLD ORNAMENTS FROM THE CUST OMERS. THE GOLD ORNAMENTS PURCHASED FROM CUSTOME R S HAVE ALSO BEEN CLAIMED TO HAVE BEEN USED TO CONVERT INTO NEW ORNAMENTS. THE ALLEGATION OF THE AO WAS THAT THE ASSESSEE HAD NOT MAINTAINED ANY DAY TO DAY STOCK REGISTER, SPECIFICALLY THE REGISTER ABOUT THE DETAILS OF GOLD OR GOLD ORNAMENTS GIVEN TO KARIGARS FOR MAKING NEW GOLD ORNAMENTS. AS PER THE AO THE ASSESSEE HAS NOT FURNISHED THE WEIGHT - WISE DETAILS OF THE GOLD GIVEN TO THE KARIGARS AND THE WEIGHT - WISE DETAILS OF THE GOLD ORNAMENTS RECEIVED FROM THE KARIGARS. THERE WAS NO PHYSICAL INVENTORY OF THE DAY TO DAY STOCK OF GOLD ARTICLES AS WELL AS SILVER JEWELLERY. AS PER THE AO THE CLOSING STOCK WAS CALCULATED AT THE END AS PER THE QUANTITATIVE STOCK MAINTAINED. THERE WAS NO RECORD OF INCREASE IN THE WEIGH T OF THE ORNAMENTS OCCURRED DUE TO CONVERSION OF 24 CARAT GOLD INTO LOWER CARAT OF GOLD. AS PER THE AO THE WEIGHT OF ORNAMENT ALSO GOT INCREASED DUE TO S HOU LDERING WHILE MAKING THE ORNAMENTS. 2.1 THE EXPLANATION OF THE ASSESSEE WAS THAT THE BUSINESS WAS CARRIED ON FROM LAST 50 YEARS AND THE DETAILS MAINTAINED WAS THE SAME RECORD REGULARLY AVAILABLE IN THIS LINE OF BUSINESS. THE STOCK IS MAINTAINED AS PER THE WEIGHT IN GRAMS I.E. ON QUANTITY BASIS BUT NOT ON CARAT BASIS. IT WAS A REGULAR METHOD ADOPTED YEA R AFTER YEAR. IT WAS A TIME CONSUMING EXERCISE TO MAINTAIN CARAT WISE DETAILS OF ORNAMENTS. THE ASSESSEE HAD 24 CARAT GOLD ORNAMENTS WHICH ARE HALLMARKED. 4 ITA NO. 100/NAG/2014 FURTHER THE ASSESSEES EXPLANATION WAS THAT OUT OF THE WEIGHT OF GOLD 376.558 KG. THE CONVERSION INT O ORNAMENTS IN 24 CARAT GOLD ORNAMENTS WAS 258 KG. THE ASSESSEE HAS INFORMED THAT THE BILLS AND SUPPORTING DOCUMENTS WERE AVAILABLE FOR VERIFICATION IN RESPECT OF 24 CARAT GOLD ORNAMENTS WEIGHING 258 KGS. ACCORDING TO THE ASSESSEE THE GOLD ORNAMENTS WEI GHT OF 23 CARAT WAS ABOUT 118 KG. ONLY. THERE WAS ALWAYS A PRODUCTION LOSS IN MANUFACTURING OF GOLD ARTICLES. THE ASSESSEE HAS ALSO INFORMED THAT AS PER THE RECORDS AVAILABLE IT WAS NOT POSSIBLE TO GIVE ALL THOSE DETAILS ASKED AT THAT TIME BY THE AO. HENC E THE ASSESSEE HAS OFFERED VOLUNTARILY 1 TO 1.5 KG. GOLD TO BE ADDED IN THE CLOSING STOCK. THE ASSESSEE HAS ALSO INFORMED THAT THE AVERAGE RATE OF GOLD DURING THE YEAR WAS RS.1572/ - . HOWEVER, THE AO WAS NOT CONVINCED AND HELD AS UNDER : 5.2 I HAVE CAREFULLY CONSIDERED WRITTEN SUBMISSIONS AS ABOVE. THE EVIDENCE OF CONVERSION MADE OF 376.577 KGS. OF GOLD INTO 24 CARATS OF GOLD ORNAMENTS PRODUCED WAS TEST CHECKED. IN RESPECT OF 24 CARATS OF GOLD ORNAMENTS/ARTICLES, VERY MINOR PRODUCTION LOSS IS RECOUP ED BY THE SHOULDERING MATERIAL, MEENA WORK, ARTIFICIAL ADDITION ETC. HENCE REASONABLY, THE ASSESSEES EXPLANATION ABOUT N O INCREASE IN MANUFACTURING OF THE 24 CARAT GOLD ORNAMENTS/ARTICLES MAY BE BELIEVED. IT IS FURTHER SUBMITTED BY THE ASSESSEE THAT BAL ANCE REMAINING FOR CONVERSION INTO 22 / 23 CARATS GOLD COMES TO ABOUT 118 KGS. ONLY. IN RESPONSE TO THE SHOW CAUSE OPPORTUNITY ALLOWED, THE ASSESSEE HAS VOLUNTARILY OFFERED 1 TO 1.5 KG. OF GOLD TO BE ADDED IN THE CLOSING STOCK FOR AVOIDING FURTHER LITIGATI ON. THUS, IT I ADMITTED BY THE ASSESSEE THAT THERE WAS INCREASE IN THE GOLD ORNAMENTS / ARTICLES UPON CONVERSION OF PURE GOLD OF 24 CARAT INTO ORNAMENTS OF 22 / 23 CARATS. IT IS ACCEPTED THAT SOME LOSS OF GOLD IS INVOLVED FOR CONVERTING THE 24 CARAT GOLD INTO LOWER CARAT GOLD ORNAMENTS/ARTICLES. NORMALLY, SUCH WASTAGE IS NOT MORE THAN 0.5 CARAT. IT IS ALSO ACCEPTABLE THAT ASSESSEE IS MAKING THE HALLMARK JEWELLERY WHERE THE PURITY OF THE MARKET CARAT IS MOST RELIABLE AND IT IS ALWAYS SUBJECT TO CHECK AND AN Y DISCREPANCY IN THE PURITY MAY TARNISH THE GOODWILL OF THE ASSESSEE. THE ASSESSEE IS A RENOWNED JEWELER OF THE AKOLA AND THEREFORE SUCH POSSIBILITY OF OFFERING THE GOLD OF LOWER QUALITY THAN THE GOLD AS 22/23 CARAT IS GENERALLY RULED OUT. THAT APART, THE ASSESSEE IS ALSO PURCHASING BACK THE GOLD ORNAMENTS /ARTICLES SOLD BY IT AT THE SAME CARAT VALUE. SUCH PURCHASES MADE BY THE ASSESSEE DURING THE YEAR ARE OF 116.578 KGS. FOR CONSIDERATION OF RS.15.86 CRORE. IT WAS ADMITTED BY THE 5 ITA NO. 100/NAG/2014 ASSESSEE THAT THERE MAY N OT BE ANY INCREASE AFTER MELTING AND CON VERSION OF THESE OLD GOLD ORNAMENTS/ARTICLES INTO NEW GOLD ORNAMENTS/ARTICLES. IN PRINCIPLE, I AGREE WITH THE CONTENTION OF THE ASSESSEE IN THIS REGARD. AFTER TAKING THE OVEALL VIEW, IT IS HELD THAT THERE IS AN ADD ITION OF 0.5 CARATS OF THE GOLD ORNAMENTS/ARTICLES CONVERTED FROM 24 CARATS TO 22/23 CARATS OF THE GOLD ORNAMENTS/ARTICLES. CONSIDERING THESE FACTS, THE PERCENTAGE OF INCREASE OF THE GOLD ORNAMENTS/ARTICLES WORKS OUT TO 2.08%. ON THIS ANALOGY, THE INCREASE IN GOLD ORNAMENTS DUE TO MANUFACTURING AND CONVERSION OF STANDARD GOLD INTO LOWER CARATS OF THE GOLD ORNAMENTS/ARTICLES OF 118 KGS. WORKS OUT TO 2.45 KGS. THE ASSESSEE ITSELF HAS ADMITTED THAT PHYSICAL INVENTORY OF THE CLOSING STOCK WAS NOT TAKEN AT THE E ND OF THE YEAR AND THERE WAS POSSIBILITY OF THE VARIATION IN THE STOCK. THE ASSESSEE HAS WORKED OUT THE INCREASE AT 1.5 KG. AND THE VALUE THEREOF AS PER THE ASSESSEES OWN SUBMISSION S WORKS OUT TO RS.23.58 LACS. BUT I AM NOT INCLINED TO ACCEPT THIS OFFER OF THE ASSESSEE AS THIS IS ON THE LOWER SIDE AND HAS NOT BEEN PROPERLY SUPPORTED BY THE FACTS AND THE RECORDS/DOCUMENTS. THE FACT IS ADMITTED BY THE ASSESSEE THATG INVENTORY OF CLOSING STOCK MENTIONED IN THE PROFIT & LOSS ACCOUNT IS AS PER THE STOCK REGIST ER MAINTAINED AND NO PHYSICAL INVENTORY WAS TAKEN AT THE END OF THE YEAR. THUS IT IS EVIDENT THAT INCREASE IN THE GOLD ORNAMENTS DUE TO ITS CONVERSION FROM STANDARD GOLD TO LOWER CARATS OF ORNAMENTS/ARTICLES HAS NOT BEEN TAKEN INTO ACCOUNT WHILE WORKING OU T THE CLOSING STOCK INVENTORY. THEREFORE, THE BOOK RESULTS ARE LIABLE TO BE REJECTED TO THIS EXTENT AND THE COST/VALUE OF THE EXCESS GOLD ORNAMENTS/ARTICLES IS LIABLE TO BE ADDED AS THE INCOME OF THE ASSESSEE. IT IS MENTIONED HERE THAT DURING THE COURSE OF THE SURVEY CARRIED OUT AT THE ASSESSEES PREMISES DURING THE YEAR 2007 - 08, EXCESS STOCK OF THE GOLD ORNAMENTS/ARTICLES WAS FOUND AT THE PREMISES OF THE ASSESSEE DUU TO THESE AND OTHER RE ASONS 5.3 CONSIDERING ALL THESE FACTS AND AS DISCUSSED IN THE PRECEDING PARAGRAPHS, I HEREBY ADD AN AMOUNT OF RS.37,35,858/ - AS INCREASE IN GOLD ORNAMENTS/ARTICLES OF 2.45 KGS. DUE TO MANUFACTURING AND CONVERSION OF 24 CARATS OF GOLD ORNAMENTS ARTICLES INTO THE LOWER CARATS OF GOLD ORNAMENTS/ARTICLES. FOR THIS PURPOS E , THE AVERAGE RATE OF 23 CARAT OF THE GOLD IS ADOPTED AT RS.15,24,840/ - BY ADOPTING THE AVERAGE RATE OF THE STANDARD GOLD AT RS.15,72,000/ - PER KG. ACCORDINGLY, AN ADDITION OF RS.37,35,858/ - IS MADE TO THE TOTAL INCOME. 3. BEING AGGRIEVED, THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE LEARNED CIT(APPEALS) ALMOST SAME ARGUMENTS WERE 6 ITA NO. 100/NAG/2014 REITERATED, HOWEVER, HE WAS NOT CONVINCED AND DECIDED THE ISSUE IN FAVOUR OF THE REVENUE AS UNDER : THE APPELLANT THUS FAILED TO DEMONSTRATE THAT THE BOOK RESULTS DECLARED BY THE APPELLANT IN THE RETURN OF INCOME FILED WERE CORRECT. THE APPELLANT HAS ALSO FAILED TO CORROBORATE THE FINDING OF THE AO THAT THE GOLD WEIGHING 2.08 KGS. ATTRIBUTABLE TO GOLD ORNAMENTS OF 118 KGS. IS NOT CORRECT. ON TH E CONTRARY, BASED ON THE DISCREPANCIES IN THE FORM OF ESTIMATED CLOSING STOCK, FOR WANT OF MAINTENANCE OF RELEVANT STOCK RECORDS, THE APPELLANT HIMSELF OFFERED 1.5 KGS. OF SUCH INCREASED GOLD FOR THE PURPOSE OF INCLUSION IN THE CLOSING STOCK, WHICH IN RESU LT HAS ENHANCED ITS PROFITS TO THAT EXTENT. THEREFORE, THE ACTION OF THE AO TO REJECT THE BOOK RESULTS BASED ON THE DISCREPANCIES, CONFESSED BY THE APPELLANT, AND WITH THE MOTIVE TO ARRIVE AT THE CORRECT PROFITS OF THE ASSESSEE FOR THE RELEVANT YEAR, IS JU STIFIED. 4. FROM THE SIDE OF THE APPELLANT LEARNED A.R. MR. MAHAVIR ATAL APPEARED AND PLEADED THAT IN A SITUATION WHEN THE CLOSING STOCK OF THE ASSESSEE WAS NOT FOUND DEFECTIVE IN ANY MANNER AND THERE WAS NO MISTAKE DETECTED IN THE BOOKS OF ACCOUNTS OF T HE ASSESSEE, HENCE THE AO HAD NO REASON TO REJECT THE BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS WERE REJECTED MERELY ON THE GROUND THAT THE ASSESSEE HAD NOT FURNISHED THE DETAILS CALLED FOR DURING THE ASSESSMENT PROCEEDINGS. LEARNED A.R. HAS ALSO PLEADED TH AT THE ASSESSEE HAD TRIED TO OFFER 1.5 KG. OF GOLD TO BE ADDED IN THE CLOSING STOCK BUT THAT OFFER WAS ALSO NOT ACCEPTED TO THE REVENUE DEPARTMENT. THE DETAILS WHICH WERE ASKED TO BE FURNISHED WERE NOT POSSIBLE IN THIS LINE OF BUSINESS. HE HAS FURTHER PLEA DED THAT THE STOCK WAS MAINTAINED ON THE BASIS OF THE WEIGHT OF THE GOLD AND NOT ON THE BASIS OF THE CARAT OF THE GOLD. WHEN THE ASSESSEE WANTS TO GET AN ORNAMENT MANUFACTURED FROM THE KARIGAR, THEN GIVES 24 CARATS GOLD ALONG WITH THE STONES AS PER THE DES IGNS. THE KARIGAR IN TURN CONVERTS THE GOLD INTO 23 OR 22 CARAT GOLD BY ADULTRING WITH COPPER ALLOY. THE ASSESSEE THUS RECEIVE THE SAME WEIGHT OF GOLD AS GIVEN TO KARIGAR. HENCE THERE WAS NO INCREASE IN THE WEIGHT AS FAR AS THE ASSESSEE IS CONCERNED. THE ASSESSEE HAD MAINTAINED THE STOCK ON THE BASIS OF THE 7 ITA NO. 100/NAG/2014 WEIGHT OF THE PURE GOLD. HENCE THERE WAS NO COGENT BASIS ON THE PART OF THE AO TO MAKE THE IMPUGNED ADDITION. 5. FROM THE SIDE OF THE REVENUE, LEARNED D.R. SMT. SUMAN MALIK APPEARED AND SUPPORTED THE O RDERS OF THE AUTHORITIES BELOW. SHE HAS PLEADED THAT THE ASSESSEE HAS NOT FURNISHED ANY GOLD ACCOUNT NOR FURNISHED ANY RECONCILIATION. THEREFORE, THE VIEW TAKEN BY THE AUTHORITIES BELOW SHOULD BE UPHELD. 6. WE HAVE HEARD BOTH THE SIDES AT SOME LENGTH AND ALSO PERUSED THE RECORDS AVAILABLE. THERE WAS NO PAPER BOOK OR COMPILATION BEFORE US. HENCE THE DECISION IS TO BE TAKEN ON THE BASIS OF THE OBSERVATIONS OF THE REVENUE AUTHORITIES. THE OBSERVATION OF THE AO WAS VERY SPECIFIC THAT THE ASSESSEE HAD NOT FURNI SHED THE DETAILS OF THE PURE GOLD GIVEN TO KARIGARS TO MANUFACTURE THE GOLD ORNAMENTS. THE AO HAS ALSO MADE AN ALLEGATION THAT THE ASSESSEE HAS ALSO FAILED TO FURNISH THE DETAILS OF THE GOLD ORNAMENTS MANUFACTURED BY KARIGARS. IN OUR HUMBLE OPINION IT APP EARS TO BE IMPOSSIBLE NOT TO MAINTAIN SUCH RECORD BY A GOLDSMITH. THE ASSESSEE BEING IN THE BUSINESS OF TRADING OF GOLD JEWELLERY, HENCE WITHOUT MAINTAINING THE ITEM - WISE DETAILS OF THE ORNAMENTS GIVEN FOR MANUFACTURING TO KARIGARS IT WAS NOT POSSIBLE TO R UN THE BUSINESS. ALTHOUGH IT IS WELL - KNOWN LEGAL PROPOSITION THAT REVENUE OFFICER SHOULD NOT STEP INTO THE SHOES OF A BUSINESSMAN OR SHOULD NOT ASSUME THE BUSINESS INTRICACIES BUT UNDER THE CIRCUMSTANCES AS MENTIONED BY THE AO IT IS OTHERWISE BEYOND UNDERS TANDING THAT HOW THIS ASSESSEE HAD MAINTAINED ANY CONTROL OVER THE KARIGARS. IT APPEARS TO BE BEYOND HUMAN PROBABILITIES THAT THE KARIGARS WERE GIVEN GOLD, VALUABLE ARTICLE, WITHOUT RECORDING IN ANY REGISTER OR TAKING PROPER RECEIPT FROM THOSE KARIGARS. M OREOVER THIS ASSESSEE HAS ADMITTED THAT THERE WAS NO SUCH RECORD AVAILABLE TO SATISFY THE QUERY OF THE AO. THE ASSESSEE, THEREFORE, DECIDED TO OFFER 1.5 KG. GOLD TO BE ADDED IN THE CLOSING STOCK. AS PER THE WEIGHTS OF GOLD MENTIONED IN THE ASSESSMENT ORDER , THE ASSESSEE HAD GIVEN 276.558 KGS. OF GOLD 8 ITA NO. 100/NAG/2014 TO KARIGARS. THE CLAIM OF THE ASSESSEE WAS THAT OUT OF THE SAID GOLD, THE KARIGARS HAVE MADE 24 CARATS GOLD ORNAMENTS OF ABOUT 258 KGS. OF GOLD. THIS FACT WAS ALSO CLAIMED TO HAVE BEEN SUPPORTED BY BILLS PRODU CED. THEREFORE, THE EXPLANATION OF THE ASSESSEE WAS THAT THERE WAS CONVERSION INTO 23 CARAT GOLD ONLY IN RESPECT OF REMAINING GOLD WEIGHING 118 KGS. ONLY. ON THIS FIGURE THE AO HAS PROPOSED THAT THERE WAS ABOUT 2.08% INCREASE IN THE GOLD WHICH ACCORDING TO HIM WAS ABOUT 2.4 KGS. OF GOLD WHICH WAS NOT PROPERLY RECORDED. THE AO HAS SPECIFICALLY MENTIONED THAT THE SAID DISCREPANCY WAS ADMITTED BY THE ASSESSEE IN THE ABSENCE OF NON - MAINTENANCE OF PHYSICAL INVENTORY OF THE CLOSING STOCK. WE ARE OF THE VIEW AFTE R CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE THAT THE AO ESTIMATED THAT THERE COULD BE INCREASE IN THE GOLD ORNAMENTS UPTO 2.08%. IN THE ABSENCE OF ANY COGENT MATERIAL IN SUPPORT OF THE SAID ESTIMATE, WE ARE OF THE CONSIDERED OPINI ON THAT THE OFFER OF 1.5 KG. AS MADE BY THE ASSESSEE CAN BE A REASONABLE VARIATION IN THE STOCK AS AGAINST THE STOCK DISCLOSED BY THE ASSESSEE. THE VALUE OF THE SAME AS MENTIONED IN THE ASSESSMENT ORDER FOR THE YEAR UNDER CONSIDERATION WAS RS.23.58 LAKHS. TO THIS EXTENT, IN OUR CONSIDERED OPINION, THE ADDITION SHOULD BE UPHELD. AS THE AO HAD MADE THE ADDITION OF RS.37,35,856/ - , HENCE THE ASSESSEE SHALL GET A RELIEF OF RS.13,77,858 (37,35,858 - 23,58,000). ACCORDINGLY A PART RELIEF IS HEREBY GRANTED. AS A RESULT, THE GROUNDS RAISED BY THE ASSESSEE ARE HEREBY DECIDED AS WELL AS DEALT WITH IN THE MANNER AS DISCUSSED IN THE FOREGOING PARAGRAPHS. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF JA NUARY, 2016. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 15 TH JANUARY, 2016. 9 ITA NO. 100/NAG/2014 COPY FORWARDED TO : 1. KHANDELWAL JEWELLERS, MAHATMA GANDHI ROAD, AKOLA. 2. J .C.I.T., AKOLA RANGE, AKOLA. 3. COMMISSIONER OF INCOME - TAX - , NAGPUR. 4. CIT(APPEALS) - I., NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, NAGPUR WAKODE.