Sh. Jawahar Lal Jain HUF, Chandigarh V. DCIT, Chandigarh

ITA 1046/CHANDI/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6588 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-09-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUSHAN RAI
• Keywords: Valuation report
• Section: 143(3); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, A CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1046/CHD/2013 ASSESSMENT YEAR: 2008-09 SH. JAWAHAR LAL JAIN (HUF), VS. THE DCIT, CENTRAL CIRCLE-1, C/O NIKKA MAL BABU RAM CHANDIGARH JEWELLERS, CHANDIGARH PAN NO. AABHJ6142D & ITA NO. 1079/CHD/2013 ASSESSMENT YEAR: 2008-09 THE DCIT, CENTRAL CIRCLE-1, VS. SH. JAWAHAR LAL JAI N, (HUF) CHANDIGARH C/O NIKKA MAL BABU RAM JEWELLERS, CHANDIGARH PAN NO. AABHJ6142D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. PRIKSHIT AGGARWAL RESPONDENT BY : SH. GUSHAN RAI DATE OF HEARING : 05.10.2017 DATE OF PRONOUNCEMENT : 11.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE ABOVE CAPTIONED CROSS APPEALS, ONE BY THE ASSES SEE AND OTHER BY REVENUE, HAVE BEEN PREFERRED AGAINST THE ORDER OF C OMMISSIONER OF INCOME 2 TAX (APPEALS) (CENTRAL) [HEREINAFTER REFERRED TO AS CIT(A)], GURGAON DATED 19.09.2013. 2. FIRST, WE SHALL TAKE UP ASSESSEES APPEAL. THE ASSESSEE IN ITS APPEAL HAS TAKEN THE FOLLOWING GROUNDS:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE WORTHY CIT(A) THROUGH HERE ORDER DATED 19.9.2013 HAS ERRED IN PASSING THAT ORDER IN CONTRA VENTION OF PROVISIONS OF SECTION 250(6) OF THE INCOME-TAX A CT, 1961. 2. THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITION OF THE CASE, THE WORTH CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE LD. ASSESSING OFFICER OF MAKING IMPUG NED ADDITIONS OF RS. 2,47,34,493/- ON ACCOUNT OF INTROD UCTION OF PERSONAL JEWELLERY AS STOCK IN TRADE OF THE FIRM EVEN WHEN THE INTRODUCTION OF JEWELLERY WAS NOT GENUINE LY DECLARED PERSONAL WEALTH OF THE APPELLANT. FURTHER, WORTHY CIT(A) HAS ERRED IN CONFIRMING THE SAID ADDI TION EVEN WHEN THE SAID ADDITION COULD NOT HAVE BEEN MAD E U/S 68 OF THE INCOME-TAX ACT, 1961. 3. THAT ON FACTS, CIRCUMSTANCES AND LEGAL POSITON O F THE CASE, WORTHY CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION OF RS. 82,50,250/- OUT OF TOTAL ADDITION OF RS. 99, 95,327/- MADE BY LD. ASSESSING OFFICER ON ACCOUNT OF ADVANCE S RECEIVED FROM CUSTOMERS EVEN WHEN THE ADVANCES WERE GENUINE AND COULD NOT HAVE BEEN ADDED U/S 68 OF THE INCOME TAX ACT, 1961. FURTHER, SINCE THESE ADVANCES HAVE BEEN OFFERED AS SALES BY THE APPELLANT IN ITS BOOK IN SUCCEEDING YEARS(S), THE SAME AMOUNTED TO DOUBLE TAXATION OF THE SAME AMOUNT WHICH IS AGAINST THE BA SIC PRINCIPLES OF LAW AS WELL AS INCOME TAX ACT AND HEN CE THE WORTHY CIT(A) AS WELL AS LD. ASSESSING OFFICER HAVE GROSSLY ERRED IN MAKING THE SAID ADDITION BY ERRON EOUSLY 3 INVOKING THE PROVISIONS OF SECTION 68 OF THE INCOME -TAX ACT, 1961. IN THIS GROUND, WE AGITATE THE CONFIRMAT ION OF ADDITION ON THE ABOVE ISSUE IN RESPECT OF FOLLOWING PARTIES. NAME OF THE PARTY ADDITION (IN RS.). I. UNITED CAPITAL PARTNERS (I) P. LTD.70,00,000/- II. MAR RAVISH GOYAL 4,00,000/- III. M/S JAI BUILDWELL 2,50,000/- IV. MR HARDEV SINGH 1,00,000/- V. MS. INDU GILL 1,00,000/- VI. MR SATWANT BASSI 1,00,000/- VII. RAKESH GOYAL 50,000/- VIII. SIDHU 50,000/- TOTAL 80,50,000/- THE OTHER CONFIRMED ADVANCES OF RS. 2,00,250/- ARE NOT BEING AGITATED AS PER THE PERSON-WISE FIGURES OF SAID ADV ANCES ARE VERY SMALL ALTHOUGH THE SAID ADVANCES ARE GENUINE A ND SHOULD NOT HAVE BEEN ADDED U/S 68 OF THE ACT . 3. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO SP ECIFIC ADJUDICATION. 4. VIDE GROUND NO.2, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 2,47,34,493/- ON ACCOUNT OF INTRODUCTION OF JEWELLERY AS STOCK IN TRADE IN THE PROPRIETORSHI P CONCERN OF THE ASSESSEE. 5. THE BRIEF FACT RELATING TO THE ISSUE UNDER CONSI DERATION ARE THAT DURING THE ASSESSMENT PROCEEDINGS THE ASSESSING OFF ICER NOTED THAT THE ASSESSEE HUF HAS INTRODUCED RAW GOLD AND SILVER AMO UNTING TO RS. 2,47,34,493/- IN ITS CAPITAL ACCOUNT. IN THIS RESPE CT, THE ASSESSEE SUBMITTED 4 THAT THE ASSESSEE HUF NAMELY JAWAHAR LAL JAIN, HUF HAD RECEIVED JEWELLERY FROM ITS PARENTAL HUF NAMELY BABU RAM & S ONS, HUF WHICH WAS DISSOLVED AT THE TIME OF THE DEATH OF MOTHER OF SHRI JAWAHAR LAL JAIN, KARTA OF JAWAHAR LAL JAIN HUF. THE ASSESSEE FURTHE R SUBMITTED THAT THIS JEWELLERY WAS ORIGINALLY ACQUIRED BY BABU RAM & SON S, HUF DURING ASSESSMENT YEARS 1971-72 & 1972-73 VALUED AT RS. 4 LAKH AT THAT TIME. KARTA OF THE ASSESSEE HUF, SHRI JAWAHAR LAL JAIN W AS ALSO THE MEMBER OF THE SAID BABU RAM & SONS, HUF AND EVEN LATER ON BEC AME KARTA OF BABU RAM & SONS, HUF. THE SAID BABU RAM & SONS, HUF SUR RENDERED THE SAID JEWELLERY IN VOLUNTARY DISCLOSURE OF INCOME SCHEME, 1997 (VDIS) AND PAID THE REQUIRED TAXES THERE UPON. THE SAID SURREN DER WAS ACCEPTED BY THE DEPARTMENT AND A CERTIFICATE TO THIS EFFECT WAS ISS UED BY CIT(A) UNDER SECTION 68(2) OF VDIS 1997. THE SAID HUF STOOD DI SSOLVED AT THE TIME OF DEATH OF SMT. DAYAWANATI JAIN ON 18.12.2006, LEAVIN G BEHIND THE SOLE MEMBER SHRI JAWAHAR LAL JAIN. THEREAFTER, THE JEWE LLERY WAS TRANSFERRED TO THE HUF OF SHRI JAWAHAR LAL JAIN NAMELY SHRI JAWAH AR LAL JAIN & SONS, HUF (ASSESSEE) WHICH WAS FURTHER INTRODUCED INTO TH E CAPITAL ACCOUNT OF THE PROPRIETORSHIP CONCERN NAMELY NIKKA MAL BABU RA M. THE ASSESSING OFFICER, HOWEVER, DID NOT AGREE WITH THE ABOVE CONT ENTION OF THE ASSESSEE. HE OBSERVED THAT IN THE VDIS RETURN, THE SAID BABU RAM & SONS HUF HAD DECLARED SILVER HOUSEHOLD GOODS, GOLD COINS AND OTH ER HOUSEHOLD GOODS WHEREAS IN THE CAPITAL ACCOUNT OF THE PROPRIETORSH IP CONCERN, THE ASSESSEE HAD SHOWN INTRODUCTION OF RAW GOLD AND SILVER. EVEN NO VALUATION OF JEWELLERY AT THE TIME OF DISCLOSURE UNDER VDIS HAD BEEN FILED. THAT EVEN NO EVIDENCE OF DISSOLUTION OF BABU RM & SONS HUF WA S FURNISHED. HE, THEREFORE, HELD THAT THE ASSESSEE HAD NOT SATISFACT ORILY EXPLAINED THE 5 INTRODUCTION OF THE GOLD AND SILVER ORNAMENTS AMOUN TING TO RS. 2,47,34,493/- AND ACCORDINGLY MADE THE ADDITION OF THE AFORESAID AMOUNT INTO THE INCOME OF THE ASSESSEE AS UNEXPLAINED INV ESTMENT U/S 68 OF THE ACT. THE ASSESSEE UNSUCCESSFULLY CONTESTED THE ISS UE BEFORE THE CIT(A). 6. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT THE SOURCE OF THE GOLD AND SILVER WAS DULY EXPLAINED. HE SUBMI TTED THAT EARLIER THE BABU RAM & SONS (HUF) WAS CONSTITUTED OF THE ASSESS EE, HIS FATHER, MOTHER, BROTHERS AND SISTERS. THE SAID BABU RAM & S ONS IN THE VDIS HAD DECLARED THE GOLD AND SILVER JEWELLERY ACQUIRED IN THE ASSESSMENT YEARS 1971-72 AND 1972-73 (WORTH RS. 4 LAKH AT THAT TIME) AND PAID TAXES THEREUPON. THE SAID DISCLOSURE WAS DULY ACCEPTED B Y THE REVENUE AUTHORITIES AND A CERTIFICATE U/S 68(2) OF THE VDIS 1997 SCHEME WAS ISSUED. THE SAID JEWELLERY WAS PASSED ON THE ASSESSEE HUF A FTER THE DISSOLUTION OF THE PARENT HUF AS DISCUSSED ABOVE. HE HAS FURTHER S UBMITTED THAT AFTER ACQUISITION OF THE SAID GOLD AND SILVER THE ORNAMEN TS ON 18.12.2006, THE ASSESSEE HUF FILED WEALTH TAX RETURNS FOR ASSESSMEN T YEAR 2007-08 AND PAID TAXES THEREON AS PER THE PROVISIONS OF THE WEA LTH TAX ACT, 1958. HE IN THIS RESPECT HAS RELIED UPON THE COPY OF THE WEALTH TAX RETURN FOR ASSESSMENT YEAR 2007-08. HE HAS FURTHER SUBMITTED T HAT EVEN THE SAID SHRI BABU RAM & SONS HUF HAS FILED ITS WEALTH TAX RETURN S IN RESPECT OF ABOVE JEWELLERY AND HAD PAID TAX THEREUPON. HE, IN THIS RESPECT HAS RELIED UPON THE COPIES OF THE WEALTH TAX RETURNS OF SHRI B ABU RAM & SONS, HUF FOR ASSESSMENT YEAR 2001-02 TO ASSESSMENT YEAR 2006 -07. THE LD. COUNSEL FOR THE ASSESSEE HAS FURTHER SUBMITTED THAT ONCE TH E VDIS WAS ACCEPTED BY THE DEPARTMENT, THE DEPARTMENT WAS PRECLUDED FROM R AISING ANY OBJECTION 6 OR DOUBTING THE ACQUISITION AND POSSESSION OF THE J EWELLERY BY THE DECLARANT. THE LD. COUNSEL WHILE RELYING UPON THE P APER BOOK PAGES 248 TO 251 HAS SUBMITTED THAT THE OTHER BROTHERS, SISTERS OF SHRI JAWAHAR LAL JAIN, KARTA, HAVE FILED THEIR DULY SWORN AFFIDAVITS CONFI RMING THAT THEY HAVE NOT TAKEN ANY SHARE OUT OF THE JEWELLERY DECLARED BY BA BU RAM & SONS HUF AND FURTHER THAT THEY HAD RELINQUISHED THEIR RIGHTS AND CLAIMS IN THE ASSETS OF BABU RAM JAIN & SONS HUF SINCE MORE THAN 25 YEAR S. FURTHER, THAT ON THE DEATH OF MRS. DAYAWANTI JAIN ON 8.12.2006, MR. JALWAHAR LAL REMAINED THE SOLE SURVIVOR MEMBER OF BABU RAM & SONS, HUF AN D THAT THEY HAVE NO OBJECTION ON APPROPRIATION OF ASSETS INCLUDING THE ABOVE REFERRED JEWELLERY OF SHRI BABU RAM & SONS HUF TO SHRI JAWAHAR LAL JAI N AND ITS FURTHER DISPOSAL AS PER HIS WISHES. 7. WE HAVE GONE THROUGH THE AFORESAID COPIES OF THE AFFIDAVITS OF SHRI KAMAL KANT JAIN, S/O LATE SHRI BABU RAM JAIN, SHRI JASWANT RAI JAIN S/O SHRI BABU RAM JAIN, SUHAG JAIN W/O LATE SHRI PAWAN KUMAR JAIN WHEREIN IN THEIR SEPARATE AFFIDAVITS THE AFORESAID PERSONS HAVE AFFIRMED THE AFORESAID RELINQUISHMENT OF THEIR RIGHTS IN ASSETS OF BABU RAM & SONS HUF. THE LD. AR HAS FURTHER INVITED OUR ATTENTION TO THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAD MADE OBSERVATIONS THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE REGARDING THE DISSOLUTION OF HUF OF M/S BABU RAM & SONS. HE IN THIS RESPECT HAS EXPLAINED THAT AN HU F IS NOT CREATION OF LAW RATHER HUF COME INTO EXISTENCE AS A NATURAL ENTITY AS PER HINDU LAW. THE DISSOLUTION / PARTITION OF AN HUF NEED NOT NECESSAR ILY BE DOCUMENTED. BABU RAM & SONS HUF GOT NATURALLY DISSOLVED ON THE DEATH OF ONE OF ITS MEMBERS NAMELY SMT. DAYAWANTI JAIN HUF LEAVING BEHI ND THE SOLE 7 MEMBER SHRI JAWAHAR LAL JAIN WHO FURTHER FORMED JAW AHAR LAL JAIN & SONS, HUF AND THE ASSETS OF THE PARENT BABU RAM & S ONS HUF AUTOMATICALLY DEVOLVED UPON THE ASSESSEE HUF. THE LD. COUNSEL HAS FURTHER EXPLAINED REGARDING THE DISCREPANCY IN THE DESCRIPTION OF JEWELLERY BY SUBMITTING THAT THE PROPRIETORSHIP CONCERN OF TH E ASSESSEE HUF NAMELY M/S NIKKA MAL BABU RAM IS INTO THE BUSINESS OF SALE AND PURCHASE OF GOLD ORNAMENTS (JEWELLER). AS PER ESTABLISHED PRACTICE, WHEN A SELLER COMES TO THE JEWELLER FOR SALE OF HIS / HER ORNAMENTS, THE P RICE IS DETERMINED AS PER THE GOLD AND SILVER QUANTITY IN THE SAID JEWELLERY. THE SAID JEWELLERY IS THEN CONVERTED INTO RAW GOLD OR RAW SILVER FOR MAKI NG FRESH ORNAMENTS AS PER DEMAND. THEREFORE, IN HANDS OF A JEWELLER THE O LD JEWELLERY ITEMS SUCH AS GOLD CHAIN OR SILVER UTENSILS ARE VALUED AS PER THE RAW GOLD OR RAW SILVER PRESENT IN THESE ITEMS AND ARE CONSIDERED AS SUCH BECAUSE THE PRICE IS NOT PAID FOR THE JEWELLERY ITEMS BUT OF THE GOLD OR SIL VER CONTENT ONLY. HE THEREFORE, HAS EXPLAINED THAT IN THE PURCHASE VOUCH ERS, VIDE WHICH THE JEWELLERY WAS INTRODUCED INTO THE CAPITAL ACCOUNT O F THE ASSESSEE, THE VALUE OF RAW GOLD AND RAW SILVER IS MENTIONED. HE HAS FUR THER INVITED OUR ATTENTION TO PAGES 3 TO 6 OF THE PAPER BOOK WHICH A RE THE COPIES OF THE PURCHASE VOUCHERS ISSUED BY NIKKA MAL BABU RAM CONC ERN IN FAVOUR OF JAWAHAR LAL JAIN HUF FOR OLD ORNAMENTS WHEREIN THE VALUE IS DETERMINED OF THE 22 CARROT RAW GOLD. THE LD. COUNSEL, THEREFO RE, HAS SUBMITTED THAT THE AFORESAID ADDITION MADE BY THE LOWER AUTHORITIE S WAS NOT JUSTIFIED. 8. THE LD. DR, ON THE OTHER HAND, HAS RELIED UPON T HE FINDINGS OF THE LOWER AUTHORITIES AND HAS FURTHER SUBMITTED THAT IT IS NOT PROVED ON THE FILE THAT THE AFORESAID ORNAMENTS INTRODUCED BY THE ASSE SSEE INTO THE CAPITAL ACCOUNT OF ITS PROPRIETORSHIP CONCERN WERE THE SAME JEWELLERY AS WAS 8 DECLARED BY BABU RAM & SONS HUF UNDER VDIS 1997 SCH EME. HE HAS FURTHER SUBMITTED THAT EVEN NO VALUATION REPORT WAS SUBMITTED ALONG WITH THE VDIS DECLARATION, THEREFORE, THE EXACT VALUE OF THE JEWELLERY WAS NOT KNOWN. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS HAD HAV E GONE THROUGH THE RECORD. THERE IS NO DISPUTE TO THE FACT THAT EARLIE R THE PARENT HUF OF THE ASSESSEE HUF NAMELY BABU RAM & SONS HUF HAD DECLARE D THE JEWELLERY WORTH RS. 4 LACS ACQUIRED IN YEARS 1971-72 AND 1972 -73 IN THE VDIS SCHEME 1997. THE SAID DECELERATION WAS DULY STOOD A CCEPTED BY THE INCOME TAX AUTHORITIES AND A CERTIFICATE OF ACCEPTANCE WAS DULY ISSUED IN FAVOUR OF THE ASSESSEE U/S 68(2) OF THE VDIS SCHEME 1997. ONCE THE DECLARATION WAS DULY ACCEPTED, THE INCOME TAX AUTHORITIES ARE P RECLUDED FROM OBJECTING TO OR SUSPECTING THE POSSESSION OF THE DECLARED INC OME / ASSETS IN THE HANDS OF THE DECLARER. THE ASSESSEE HAS ALSO DULY EXPLAI NED THAT THE SAID ASSETS HAVE DEVOLVED UPON THE ASSESSEE HUF ON THE DEATH OF SMT. DAYAWANTI JAIN, MOTHER OF SHRI JAWAHAR LAL JAIN. THE LD. COUNSEL HA S ALSO DULY EXPLAINED FROM THE PURCHASE VOUCHERS ON ACCOUNT OF WHICH SAID ORNAMENTS WERE INTRODUCED INTO THE CAPITAL ACCOUNT OF THE PROPRIET ORSHIP CONCERN NIKKA MAL BABU RAM THAT THE SAME PERTAIN TO THE OLD ORNAM ENTS BUT VALUE OF THE RAW GOLD AND RAW SILVER HAS BEEN TAKEN FOR DETERMIN ATION OF THE WORTH OF THE ASSETS INTRODUCED. 10. NOW COMING TO THE OBSERVATIONS MADE BY LD. CIT( A) IN THE IMPUGNED ORDER; THE LD. CIT(A) APART FROM THE AFORE SAID OBSERVATIONS MADE BY THE ASSESSING OFFICER WHICH HAVE BEEN DULY DISCUSSED IN THE PARAS ABOVE, HAS FURTHER MENTIONED THAT THE RELIANCE OF T HE ASSESSEE ON THE WEALTH TAX RETURNS FILED BY BABU RAM & SONS FOR THE ASSESS MENT YEARS 2001-02 TO 9 2006-07 WAS MISPLACED AS ALL THESE RETURNS WERE FIL ED SUBSEQUENTLY IN THE MONTH OF NOVEMBER 2006 ONLY. HE HAS OBSERVED THAT THE SAID BABU RAM & SONS HUF DID NOT FILE ANY WEALTH TAX RETURN AFTER T HE DECLARATION OF THE INCOME IN THE VDIS DECLARATION. MAY IT BE SO, THE F ACT IS THAT GOLD AND SILVER ASSETS WERE DECLARED BY BABU RAM & SONS IN T HE VDIS 1997 AND DUE TAX WAS PAID THEREUPON. THERE WAS NO QUESTION OF DO UBTING THE OCCUPATION / POSSESSION OF THE ASSETS IN THE HANDS OF THE DECLAR ANTS. FURTHER, THE ASSESSMENT YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2010-11, WHEREAS, ADMITTEDLY THE WEALTH TAX RETURNS WERE FILED PERTAI NING TO THE ASSESSMENT YEARS 2001-02 TO 2006-07 WHICH HAVE BEEN DULY ACCEP TED, HENCE, THE HOLDING THE ASSETS BY THE PARENT HUF, BABU RAM & SO NS HUF CANNOT BE DOUBTED FOR THE YEAR UNDER CONSIDERATION. FURTHER, AFTER DEVOLUTION OF THE ASSETS UPON THE ASSESSEE HUF, THE ASSESSEE HUF FILE D ITS WEALTH TAX RETURNS FOR THE ASSESSMENT YEAR 2007-08 WHICH HAS ALSO BEEN ACCEPTED. UNDER THESE CIRCUMSTANCES, THE DEPARTMENT WAS PRECLUDED DOUBTIN G THE OWNERSHIP AND POSSESSION OF THE ASSETS IN THE HANDS OF THE ASSESS EE HUF. THE FURTHER OBSERVATION MADE BY THE CIT(A) IS THAT A SEARCH AC TION WAS CARRIED OUT ON THE ASSESSEE AND ITS CONCERN ON 27.10.2006 BUT NO S UCH ASSETS WERE FOUND DURING THE SEARCH ACTION. IN OUR VIEW, MERELY BECA USE THE DEPARTMENT DID NOT TAKE NOTE OF THE SAID ASSETS DURING THE SEARCH ACTION OR DID NOT SEIZE THE SAME, THAT CANNOT BE SAID TO BE AN EVIDENCE TO PROV E THAT THE ASSESSEE WAS NOT IN POSSESSION OF THE ASSETS. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. KANCHAN BHALLA ITA NO. 57 OF 2010 VIDE ORDER DATED 15.7.2010 HAS HELD THAT JUST BECAUSE THE JEWELLERY WAS NOT FOUND IN THE EARLIER SEARCHES, IT CANNOT BE SAID THAT NON-EXISTE NT JEWELLERY HAD BEEN DECLARED IN THE VDIS SCHEME, 1997. THAT IT WAS NOT OPEN TO THE ASSESSING 10 OFFICER TO QUESTION EXISTENCE OF THE SAID JEWELLERY . THAT IT HAD BEEN DECLARED UNDER THE VDIS SCHEME. IN VIEW OF THIS, WE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING THE ADDITION ON THIS ISSUE AND THE SAME IS ACCORDINGLY ORDERED TO B E DELETED. 11. GROUND NO.3: VIDE GROUND NO.3, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS. 82, 50,250/- OUT OF TOTAL ADDITION OF RS. 92,95,327/- MADE BY THE ASSESSING O FFICER ON ACCOUNT OF ADVANCES RECEIVED FROM CUSTOMERS. 12. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER NOTED AND ASKED THE ASSESSEE TO FURNISH THE COMPLETE ADDRESS AND PAN NUMBERS OF THE CUSTOMERS FROM WHOM THE ADVANCES HAD BEEN RECEIVED. SINCE THE ASSESSEE FAILED TO FURNISH THE CONFIRMATIONS AND COMPLETE AD DRESSES OF THE CUSTOMERS, THE ASSESSING OFFICER MADE THE ADDITION OF RS. 92,95,327/- TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED RECEIPTS . DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A), THE ASSESSEE EXPLAIN ED THAT DURING THE COURSE OF TRADING OF JEWELLERY, ADVANCE FROM CUSTOM ERS WERE RECEIVED AGAINST SUPPLY TO BE MADE IN FUTURE, WHICH IS A NOR MAL BUSINESS PRACTICE. THE ASSESSEE FURTHER FURNISHED FOLLOWING DOCUMENTS BEFORE THE CIT(A) :- A) PERSON-WISE LIST (ALONG WITH THEIR ADDRESSES) TOTAL LING TO RS. 92,95,327/-, BEING ADVANCES FROM CUSTOMERS, AS AT 31.3.2008 (PAGE NO.152) B) COPIES OF LEDGER ACCOUNT OF RELEVANT CUSTOMER FOR T HE YEAR IN QUESTION AT PAGE 153 TO 200. C) FURTHER, COPIES OF LEDGER ACCOUNTS OF CUSTOMER FOR SUCCEEDING YEARS SHOWING PAYMENT AND / OR SALES MA DE TO SAID CUSTOMERS AT PAGE NO.153 TO 208 11 13. THE LD. CIT(A), HOWEVER, HELD THAT THE ASSESSEE HAD FAILED TO PROVE THE GENUINENESS OF THE TRANSACTIONS AND CREDI TWORTHINESS OF THE CUSTOMERS. HE, HOWEVER, AGREED TO THE CONTENTION OF THE ASSESSEE THAT THE TOTAL OUTSTANDING ADVANCES FROM CUSTOMERS AS ON 31.3.2008 WAS RS. 92,95,327/-, WHICH INCLUDED THE PREVIOUS YEAR ADVAN CES. HE HELD THAT THE ADDITION COULD HAVE BEEN MADE BY THE ASSESSING OFFICER ON THE ADVANCES RECEIVED DURING THE YEAR AND NOT THE ADVAN CES SHOWN TO HAVE BEEN RECEIVED IN THE PRECEDING ASSESSMENT YEAR. HE , THEREFORE, DELETED THE ADDITIONS OF RS. 10,45.077/- OUT OF THE AFORESA ID TOTAL ADDITIONS OF RS. 92,95,327/- AND CONFIRMED THE ADDITION OF RS. 8 2,80,250/- ON ACCOUNT OF UNEXPLAINED ADVANCES FROM CUSTOMERS. 13. BEFORE US, THE LD. AR OF THE ASSESSEE HAS EXPLA INED THAT THE ADVANCES IN QUESTION WERE RECEIVED BY THE ASSESSEE THROUGH CHEQUES. ALL THE ADVANCES WERE DULY RECORDED IN THE ACCOUNT OF T HE CONCERNED PARTIES AND IN THE LEDGER ACCOUNTS OF THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT NOT ONLY THE CONFIRMATIONS HAVE BEEN FILED BY THE R ESPECTIVE PARTIES BUT ALSO THE FACTUM OF RECEIPT OF THE AMOUNT IS PROVED FROM THE BANK CERTIFICATE AND COPIES OF THE BANK ACCOUNTS OF THE CONCERNED PARTIES. HE HAS FURTHER SUBMITTED THAT CORRESPONDING SALES HAVE BEEN BOOK IN THE NEXT YEAR IN RESPECT OF THE ADVANCES RECEIVED FROM THE CUSTOMERS AND THE PROFIT HAS BEEN OFFERED FOR TAXATION. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAD SHOWN ADVANCES FROM CUSTOMERS. ALL THE ADVANCES HAVE BEEN MADE THROUGH BANKING CHANNELS. IN THE SUBSEQUENT YEARS, THE SALES HAVE BEEN BOOKED AND THE PROFIT HAS BEEN OFFERED FOR TAXATION. IN THESE CIRCUMSTANCES, WE FIND NO JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN MAKING THE IMPUGNED 12 ADDITIONS AS UNEXPLAINED RECEIPTS. THE ADDITION MAD E BY THE LOWER AUTHORITIES ON THIS ISSUE ARE ALSO DIRECTED TO BE D ELETED. THIS ISSUE IS ACCORDINGLY DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO. 1079/CHD/2013 REVENUES APPEAL 14. THE REVENUE IN ITS APPEAL HAD TAKEN THE FOLLOWI NG GROUND OF APPEAL:- WHETHER ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,12,87,092/- ON ACCOUNT OF CLOSING STOCK WITHOUT APPRECIATING THE FACT THAT THE ASSESSING OFFICER FOUND DISCREPANCY IN THE VALUATION OF STOCK. 14. THE FACTS IN BRIEF ARE THAT DURING THE ASSESSME NT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN OPENING STOCK OF GOLD WEIGHING 78754.190 GMS VALUED AT RS. 602437 50.22. OUT OF THIS, THE ASSESSEE HAD SHOWN SALE OF GOLD DURING TH E YEAR WEIGHING 75225.331 GMS VALUED AT RS. 82341055/-. THE ASSESSE ES OPENING STOCK AS ON 31.3.2008 WOULD BE AT 3528.331 GMS VALUING AT RS. 2696048.27 GMS PLUS THE ENTIRE PURCHASES MADE DURING THE YEAR I.E 95719.119 GMS VALUED AT RS. 9,94,07,744/- ( VALUE AS PER THE RATE OF ASSESSEES OPENING STOCK). AS PER SALE BILL PRODUCED BY THE ASSESSEE, AVERAGE SALE VALUE WAS @ 1302 PER GM WHEREAS THE VALUE WAS TAKEN @ 764 PER GM ON AVERAGE VALUE OF OPENING STOCK OF GOLD. HE, THEREFORE, MADE AN ADDITION TAKING THE TOTAL VALUE OF CLOSING STOCK AT RS. 10,21,03,79 2/- AGAINST RS. 9,08,16,700/- SHOWN BY THE ASSESSEE, THE DIFFERENCE OF WHICH COMES TO RS. 1,12,87,092. THUS, AN ADDITION OF RS. 1,12,87, 092/- WAS MADE TO THE NET PROFIT OF THE ASSESSEE. 13 15. BEFORE LD. CIT(A), THE ASSESSEE EXPLAINED THAT ASSESSING OFFICER HAD NOT RAISED ANY DISPUTE AS QUANTITY OF O PENING STOCK, PURCHASE, SALE AND THE CLOSING STOCK OF JEWELLERY. THE ONLY DISPUTE WAS REGARDING THE METHOD OF VALUATION OF THE CLOSING ST OCK. IT WAS FURTHER EXPLAINED THAT ASSESSEE HAD CONSISTENTLY BEEN FOLLO WING THE METHOD OF VALUATION OF JEWELLERY AT COST OR MARKET PRICE, WHI CHEVER IS LESS. HOWEVER, THE ASSESSING OFFICER HAD MADE THE ADDITIO N ON THE BASIS OF DIFFERENCE BETWEEN AVERAGE VALUE TAKEN FROM THE SAL E BILL AND THE AVERAGE VALUE OF OPENING STOCK OF GOLD. IT WAS FUR THER EXPLAINED THAT EVEN AN ASSESSMENT U/S 143(3) READ WITH SECTION 153 A OF THE ACT WAS FRAMED BY THE SAME ASSESSING OFFICER FOR ASSESSMENT YEARS TO 2001-02 TO 2007-08 AND THE METHOD OF VALUATION OF THE ASSES SMENT WAS ACCEPTED BY THE ASSESSING OFFICER AND NO ADDITION WAS MADE I N THOSE ASSESSMENT YEARS. HOWEVER, DURING THE YEAR UNDER CONSIDERATION , THE ASSESSING OFFICER DEVIATED FROM HIS OWN STAND TAKEN IN EARLIE R YEARS. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASS ESSEE OBSERVED THAT THERE WAS FORCE IN THE ARGUMENTS OF THE ASSESSEE. H E FURTHER OBSERVED THAT IT WAS A SETTLED POSITION OF LAW THAT THE METH OD OF VALUATION REGULARLY FOLLOWED BY THE ASSESSEE COULD NOT BE TIN KERED WITH IN THE ABSENCE OF ANY FINDINGS THAT THERE WERE INHERENT DI SCREPANCIES BECAUSE OF WHICH IT WAS NOT POSSIBLE TO DETERMINE THE CORRE CT INCOME OF THE ASSESSEE. WE ALSO FIND THAT THE ASSESSING OFFICER H AS NOT POINTED OUT AS TO WHAT WAS THE DISCREPANCY IN THE METHOD OF VALUAT ION ADOPTED BY THE ASSESSEE. THE ASSESSING OFFICER SIMPLY APPLIED ANOT HER METHOD OF VALUATION REJECTING THE METHOD OF VALUATION ADOPTED BY THE ASSESSEE CONSISTENTLY FOR THE PAST SO MANY YEARS WHICH HAS A LSO BEEN ACCEPTED IN 14 THE EARLIER ASSESSMENT YEARS. WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) ON THIS ISSUE AND THE SAME IS UPHELD. 16. IN THE RESULT, THE APPEAL PREFERRED BY THE REVE NUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.11.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 TH NOV., 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR