Chawla Jewellers, New Delhi V. ACIT, New Delhi

ITA 1028/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3905 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 20-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ANISH GUPTA
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 1028/DEL /2013 ASSESSMENT YEAR: 2010-11 CHAWLA JEWELLERS , 2654, BANK STREET, KAROL BAGH, NEW DELHI. (PAN: AAAFC4490J) VS ACIT, CENTRAL CIRCLE-10, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANISH GUPTA, CA RESPONDENT BY: MS RACHNA SINGH, CIT DR DATE OF HEARING : 24.10.2017 DATE OF PRONOUNCEMENT: 19.01.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE LD. CIT(A)-XXXII, N EW DELHI WHEREIN VIDE ORDER DATED 01.11.2012, THE LD. COMMISSIONER OF INCOME TAX(A) HAS DISMISSED THE ASSESSEES APPEAL PERTAINING TO ASSESSMENT YEAR 201 0- 11. ITA NO. 1028/DEL/2013 ASSESSMENT YEAR 2010-11 2 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AN D SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 19 61 (HEREINAFTER CALLED 'THE ACT') WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTMENT ON 10.10.2007 IN THE CASE OF THE ASSESSEE AND THE SAME INCLUDED PREM ISES OF THE ASSESSEE AT CHAWLA TOWER, KAROL BAGH, AT GRE ATER KAILASH-I AND AT RAJOURI GARDEN, NEW DELHI. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSIN ESS OF TRADING AND MANUFACTURING OF JEWELLERY AND THE RETU RN OF INCOME WAS FILED ON 17.02.2011 DECLARING A TOTAL IN COME OF RS. 7,49,58,714/- WHICH INCLUDED SURRENDERED AMO UNT OF RS. 7,14,65,572/- ON ACCOUNT OF DIFFERENCE IN ST OCK FOUND DURING THE SEARCH PROCEEDINGS. THE ASSESSMEN T WAS COMPLETED U/S 143(3) OF THE ACT AT AN INCOME OF RS. 8,27,41,914/- AFTER MAKING AN ADDITION OF RS. 77,83,200/- ON ACCOUNT OF UNDISCLOSED INVESTMENT IN JEWELLERY WHICH IS THE SOLE ISSUE UNDER DISPUTE IN THIS APPEAL. THE ASSESSING OFFICER OBSERVED IN HIS ASSESSMENT ORDER WHILE MAKING THE SAID ADDITION THA T DURING THE SEARCH PROCEEDINGS AT THE RESIDENTIAL PR EMISES OF SHRI OM PRAKASH CHAWLA, A PARTNER OF THE ASSESSE E ITA NO. 1028/DEL/2013 ASSESSMENT YEAR 2010-11 3 FIRM, JEWELLERY WORTH RS. 1,00,58,600/- WAS FOUND, OUT OF WHICH JEWELLERY WORTH RS. 77,83,200/- WAS SEIZED WH ICH INCLUDED TWO DIAMOND RINGS WHICH WERE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS OF THE FIRM M/S CHAWLA JEWELLERS. THE ASSESSING OFFICER ALSO REPRO DUCED THE RELEVANT QUESTION NOS. 26 & 27 OF THE STATEMENT OF SHRI O.P. CHAWLA RECORDED DURING THE COURSE OF SEAR CH PROCEEDINGS IN HIS ASSESSMENT ORDER IN WHICH SHRI O .P. CHAWLA HAD CONTENDED THAT THIS JEWELLERY WAS ACTUAL LY PERSONAL JEWELLERY AS WELL AS JEWELLERY OF THE FIRM BUT SEGREGATION WAS NOT POSSIBLE AND FURTHER THAT THERE WERE NO BILLS FOR THE SAID JEWELLERY. THE ASSESSING OFF ICER FURTHER NOTED THAT DURING THE COURSE OF POST SEARCH INQUIRIES, THE ASSESSEE SUBMITTED THAT THE JEWELLER Y WORTH RS. 77,83,200/- SEIZED WAS PART OF THE STOCK IN TRADE. AS THE ASSESSEE COULD NOT FILE ANY EVIDENCE WITH REGARD TO THIS CLAIM, THE ASSESSING OFFICER ADDED T HIS AMOUNT WHILE FINALISING THE ASSESSMENT. THE ASSESS EES APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A) WAS ALSO DISMISSED AND NOW THE ASSESSEE HAS APPROACHED THE ITAT AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - ITA NO. 1028/DEL/2013 ASSESSMENT YEAR 2010-11 4 1. THE ORDER PASSED BY THE CIT(A)-XXII IS BAD IN LAW AND VOID AB INITIO. 2. THE CIT(A)-XXXII HAS ERRED IN CONFIRMING THE ADDITION OF RS. 77,83,200/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INVESTMENT IN JEWELLERY. 3. THE APPELLANT CRAVES LEAVE TO ADD AND ALTER GRO UNDS OF APPEAL AT THE TIME OF HEARING. 3. LD. AR SUBMITTED THAT DURING THE COURSE OF SEARC H PROCEEDINGS AT THE RESIDENTIAL PREMISES OF SHRI OM PRAKASH CHAWLA, THE PARTNER, THE TWO DIAMOND RINGS WHICH WERE SEIZED WERE FOUND IN THE FINGERS OF SHRI O.P. CHAWLA AT THE TIME OF SEARCH. IT WAS SUBMITTED THA T SINCE BOTH RINGS WERE IN THE NATURE OF PERSONAL BELONGINGS, THE SAME COULD NOT BE TAXED IN THE HAND S OF THE FIRM. IT WAS ALSO SUBMITTED THAT OUT OF THE TW O DIAMOND RINGS, ONE RING WEIGHING 7.800 GMS OF GOLD, WHICH INCLUDED 9.80 CT. DIAMOND, WAS RECEIVED FROM THEIR SUPPLIER NAMELY M/S HARSHIL EXIM PVT. LTD. ON APPROVAL/JANGAD ON 16.09.2009. OUR ATTENTION WAS DRAWN TO A COPY OF JANGAD AND CERTIFICATE TO THIS E FFECT FROM M/S HARSHIL EXIM PVT. LTD. PLACED ON PAGES 22 AND 23 OF THE PAPER BOOK FILED IN THIS REGARD AND IT WA S ITA NO. 1028/DEL/2013 ASSESSMENT YEAR 2010-11 5 SUBMITTED THAT SINCE THIS RING WAS IN POSSESSION OF SHRI O.P. CHAWLA ON APPROVAL, THE SAME COULD NOT HAVE BE EN INCLUDED IN THE STOCK-IN-TRADE OF THE ASSESSEE AND, FURTHER IT COULD NOT HAVE BEEN INCLUDED IN THE ADDI TIONS MADE BY THE ASSESSING OFFICER. 4. IN RESPONSE, THE LD. CIT DR DREW OUR ATTENTION T O THE FACT THAT SHRI O.P. CHAWLA HAD ADMITTED IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH PROCEEDINGS THAT IMPUGNED JEWELLERY WAS NOT ACCOUNT ED FOR IN THE REGULAR BOOKS OF ACCOUNTS AND FURTHER TH AT THEY DID NOT HAVE BILLS FOR THE SAME EXCEPTING 12 L ADIES RINGS WORTH RS. 1,31,700/- WHICH WERE RECEIVED FOR APPROVAL FROM THE CUSTOMERS. LD. CIT DR SUBMITTED THAT THE ASSESSING OFFICER HAD RIGHTLY REJECTED THE ASSE SSEES CONTENTION THAT ONE OF THE RINGS WAS PART OF THE UNDISCLOSED STOCK WHICH HAD ALSO BEEN CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX(A). WITH RESPECT TO THE SECOND RING, WHICH AS PER THE ASSESSEES CONTENTION WAS ON APPROVAL, THE LD. CIT DR SUBMITTED THAT JANGAD F ILED BY THE ASSESSEE WAS NOT FOUND DURING THE COURSE OF SEARCH AND FURTHER THE IMPUGNED DIAMOND RING WHICH ITA NO. 1028/DEL/2013 ASSESSMENT YEAR 2010-11 6 WAS ALLEGEDLY RECEIVED ON APPROVAL WAS FOUND IN THE FINGER OF SHRI O.P. CHAWLA AND IT WAS BEYOND COMPREHENSION THAT A JEWELLER WHO RECEIVES GOODS ON APPROVAL WOULD WEAR THE SAME TILL THEY ARE APPROVED/SENT BACK. THE LD. CIT DR ALSO HIGHLIGHTE D THE FACT THAT SHRI O.P. CHAWLA HAD CATEGORICALLY STATED THAT ONLY 12 LADIES RINGS WORTH RS. 1,31,700/- WERE REC EIVED ON APPROVAL. THE LD. CIT DR PRAYED THAT THE ADDITI ON BE UPHELD. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THE T WO DIAMOND RINGS UNDER CONSIDERATION WERE FOUND IN THE FINGERS OF SHRI O.P. CHAWLA. FURTHERMORE, SHRI O.P . CHAWLA HAS ADMITTED IN HIS STATEMENT RECORDED DURIN G THE COURSE OF SEARCH PROCEEDINGS THAT THESE TWO RIN GS WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS. SHRI O.P. CHAWLA HAS ALSO ADMITTED IN HIS STATEMENT THAT ONLY 12 DIAMOND RINGS WORTH RS. 1,31,700/- WERE RECEIVED FOR APPROVAL FROM THE CUSTOMERS AND THERE WAS NO MENTIO N OF THESE TWO RINGS IN THE SAID STATEMENT. IT IS AL SO ON RECORD THAT THE ASSESSEE COULD NOT PRODUCE ANY EVID ENCE ITA NO. 1028/DEL/2013 ASSESSMENT YEAR 2010-11 7 ABOUT ONE OF THE RINGS HAVING BEEN RECEIVED ON APPR OVAL EXCEPT 12 LADIES RINGS. FURTHER, BOTH THE RINGS WE RE OVER AND ABOVE THE DIFFERENCE IN STOCK FOUND DURING THE COURSE OF SEARCH AND SHRI O.P. CHAWLA, THE PARTNER, WAS ALSO NOT IN A POSITION TO SEGREGATE THE STOCK-IN-TR ADE FROM THE PERSONAL JEWELLERY. REGARDING THE COPY OF CERTIFICATE SAID TO HAVE BEEN RECEIVED FROM M/S HAR SHIL EXIM PVT. LTD., THE LD. COMMISSIONER OF INCOME TAX( A) HAS RIGHTLY OBSERVED THAT THIS CERTIFICATE DOES NOT EVEN BEAR THE SIGNATURE OF THE ISSUER AND HENCE, THE VER ACITY OF THE SAME IS DOUBTFUL. EVEN DURING THE COURSE OF PROCEEDINGS BEFORE US, THE LD. AR COULD NOT FURNISH FRESH EVIDENCE TO SUPPORT THE CLAIM OF THE ASSESSEE. THE REFORE, GIVEN THE FACTUAL MATRIX OF THE CASE, WE FIND NO RE ASON TO INTERFERE WITH THE FINDINGS OF THE LD. COMMISSIONER OF INCOME TAX(A) ON THIS ISSUE AND ACCORDINGLY, WE DIS MISS THE GROUNDS RAISED BY THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. ITA NO. 1028/DEL/2013 ASSESSMENT YEAR 2010-11 8 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH JANUARY, 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 19TH JANUARY 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR