M/S. JADAUJEWELLERS & MANUFACTURERS PVT. LTD., Jaipur V. DEPUTY COMMISSIONER OF INCOME TAX, Jaipur

ITA 111/JPR/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5958 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 31-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Search and seizure; Document seized; Tax effect; Documents seized
• Section: 153A; 251; 132; 144; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC H B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA- @ ITA NO. 111/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2010-11 M/S JADAU JEWELLERS & MANUFACTURERS PVT. LTD., B-1, TRIMURTI CIRCLE, GOVIND MARG, JAIPUR CUKE VS. DCIT, CENTRAL CIRCLE-02, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ6114C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. RUNI PAL (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 23/09/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 03/10/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-4, JAIPUR DATED 01.12.2017 WHEREIN THE ASSESSEE HAS TA KEN THE FOLLOWING SOLE GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DIRECTING THE AO TO RECOMPUTE THE PENA LTY IMPOSED BY LD. AO UNDER SECTION 271AAA OF INCOME TAX ACT, 1961 ON INC OME OF RS. 61,19,120/- @ 10% CONFIRMED AFTER THE ORDER OF ITAT MORE SO WHEN THE ADDITION IS BASED ON ESTIMATION OF TRADING PROF IT BY APPLYING GP RATE. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT ON THE MEMBERS O F KGK GROUP ON 06.05.2010 OF WHICH THE ASSESSEE IS ONE OF THE MEMB ERS. IN RESPONSE TO THE ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 2 NOTICE U/S 153A, THE ASSESSEE FILED ITS RETURN OF I NCOME WHICH INCLUDES ADDITIONAL INCOME OF RS. 2,46,00,000/- ON ACCOUNT O F INCOME EARNED FROM UNACCOUNTED SALES REPRESENTED BY UNDISCLOSED ASSETS . THE ASSESSMENT WAS COMPLETED U/S 144 READ WITH 153A VIDE ORDER DATED 1 4.11.2013 ASSESSING TOTAL INCOME OF RS. 15,28,93,350/-. THE MATTER WAS CARRIE D IN APPEAL BEFORE THE LD. CIT(A) AND THEREAFTER BEFORE THE TRIBUNAL WHERE THE ADDITION OF RS. 61,19,120/- WAS FINALLY SUSTAINED. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ALSO INITIATED THE PENALTY U/S 271AAA IN RESPECT OF UNDISCLOSED INCOME OF RS. 2,46,00,000/- SURRENDERED BY ASSESSEE AND DISCLOSED IN ITS RETURN OF INCOME AS WELL AS ON RS 5,30,97,994 TOWARDS ADDITION MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. DURING THE PENALTY PROCEEDINGS, A FRESH SHOW CAU SE WAS ISSUED TO THE ASSESSEE AND AFTER TAKING INTO CONSIDERATION THE SU BMISSION OF THE ASSESSEE AND ORDER OF THE TRIBUNAL IN THE QUANTUM PROCEEDING S, THE AO IMPOSED PENALTY OF RS. 30,71,912/- U/S 271AAA ON THE AMOUNT SURREND ERED BY THE ASSESSEE IN THE RETURN OF INCOME AMOUNTING TO RS 2,46,00,000 AS WELL AS THE ADDITION FINALLY SUSTAINED BY THE TRIBUNAL AMOUNTING TO RS 6 1,19,120. 5. ON APPEAL, THE LD. CIT(A) DELETED THE PENALTY L EVIED BY THE AO ON THE ADDITIONAL INCOME SURRENDERED BY THE ASSESSEE IN HI S RETURN OF INCOME AMOUNTING TO RS 2,46,00,000. HOWEVER, HE CONFIRMED THE PENALTY ON THE ADDITION OF RS. 61,19,120/- WHICH WAS SUSTAINED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS. THE REVENUE AND THE ASSESSEE FILED CROSS APPEAL AGAINST THE ORDER OF THE TRIBUNAL BEFORE THE TRIBUN AL. THE APPEAL FILED BY THE REVENUE WAS DISMISSED BY THE COORDINATE BENCH ON AC COUNT OF LOW TAX EFFECT VIDE ORDER DATED 22.08.2019 IN ITA NO. 288/JP/2018 AND THE ASSESSEE IS NOW ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 3 IN APPEAL BEFORE US AGAINST THE SUSTENANCE OF PENAL TY OF RS. 6,11,912/- @ 10% ON THE ADDITION OF RS. 61,19,120/- WHICH WAS SUSTAI NED BY THE TRIBUNAL IN THE QUANTUM PROCEEDINGS. 6. THE RELEVANT FINDINGS OF THE LD. CIT(A) WHICH A RE THEREFORE UNDER CHALLENGE READS AS UNDER:- FOR THE OTHER ADDITION OF RS. 61,19,120/- SUSTAINE D BY THE HONBLE ITAT BENCH, JAIPUR, I AM OF THE VIEW APPELLANT IS NOT CO VERED UNDER THE SECTION 271AAA[2] AS SUCH ADDITION IS NOT AS A RESU LT OF ADMISSIONS U/S 132[4]. I MAY ADD THAT SUCH ADDITION IS ALSO COVERE D UNDER THE DEFINITION OF UNDISCLOSED INCOME BEING DIRECTLY RELATABLE TO S EIZED DOCUMENTS FROM THE APPELLANT OF THE SPECIFIED PREVIOUS YEAR. UNDER THE STATED CIRCUMSTANCES I AM OF THE VIEW, APPELLANT GETS RELI EF FROM PENALTY ON A SUM OF RS. 2.46 CRORE, WHILE THE PENALTY U/S 271AAA IS CONFIRMED ON THE AMOUNT RS. 61,19,120/-. THE AO IS DIRECTED TO RECOM PUTE THE PENALTY. APPELLANT GETS A PART RELIEF IN GROUND NO. 1. 7. AT THE OUTSET, THE LD AR DRAWN OUR REFERENCE TO THE FINDINGS OF THE CO- ORDINATE BENCH IN THE QUANTUM PROCEEDINGS AND IT WA S SUBMITTED THAT THE ADDITION OF RS. 61,19,120/- WAS SUSTAINED BY THE TR IBUNAL ON ACCOUNT OF ESTIMATION OF GP RATE AND THE SAME DOES NOT REPRESE NT UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER, REFERENCE WAS DRAWN TO THE D EFINITION OF UNDISCLOSED INCOME AS DEFINED IN THE EXPLANATION 2 SECTION 271A AA OF THE ACT WHICH READS AS UNDER:- EXPLANATION FOR THE PURPOSES OF THIS SECTION,- (A) UNDISCLOSED INCOME MEANS- (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENT ED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOU NT OR OTHER ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 4 DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132, WHILE HAS- (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SEARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHER WHILE NOT BEEN DISCLOSED TO THE CHIEF COMMIS SIONER OR COMMISSIONER BEFORE THE DATE OF THE SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REPRESENT ED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF ANY EX PENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHICH IS FO UND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD THE SEARCH N OT BEEN CONDUCTED; 8. IT WAS SUBMITTED BY THE LD AR THAT THE ADDITIONA L INCOME FINALLY SUSTAINED BY THE REVENUE DOES NOT COME IN THE PURVIEW OF UNDI SCLOSED INCOME AS IT IS PURELY BASED ON THE ESTIMATION AND IT NEITHER REPRE SENTED BY UNDISCLOSED ASSETS OR ENTRY IN THE BOOKS OF ACCOUNT OR DOCUMENTS. FURT HER, IT WAS SUBMITTED THAT LEVY OF PENALTY U/S 271AAA IS DISCRETIONARY AND NOT MANDATORY IN NATURE. FURTHER, RELIANCE WAS PLACED ON THE HONBLE SUPREME COURT DECISION IN CASE OF HINDUSTAN STEELS LTD. VS. STATE OF ORISSA, 83 ITR 2 6 (SC) AS WELL AS THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF SHIV LAL TAK VS. CIT [2001] 251 ITR 373 (RAJ) AND CIT VS. HARSHVARDHAN CHEMICAL & MINER ALS LTD [2003] 133 TAXMAN 320 (RAJ). 9. PER CONTRA, THE LD. DR SUPPORTED THE FINDINGS O F THE ASSESSING OFFICER AS WELL AS OF THE LD. CIT(A). IT WAS SUBMITTED BY THE LD DR THAT THE LD. CIT(A) HAS CLEARLY HELD THAT THE CASE OF THE ASSESSEE DOES NOT FALL U/S 271AAA(2) OF THE ACT AND THEREFORE, THE SAID FINDINGS SHOULD BE CONF IRMED. ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 5 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL AVAILABLE ON RECORD. IN ORDER TO APPRECIATE THE RIVAL CONTEN TIONS, WE REFER TO THE FINDINGS OF THE ASSESSING OFFICER WHICH ARE CONTAINED AT PAG E 22-23 OF THE ASSESSMENT ORDER WHICH READS AS UNDER: IT IS AMPLY CLEAR FROM THE ABOVE DISCUSSION THAT E ACH OF THE DEFECTS FOUND AND POINTED OUT IN THE SHOW CAUSE NOTICE DATE D 03.10.2012 HAVE BEEN FOUND TO HAVE BEEN ALREADY ADDRESSED AND NECES SARY ADJUSTMENT MADE BY THE SPECIAL AUDITOR. ACCORDINGLY, THE NET P ROFIT OF THE ASSESSEE COMPANY FOR THE YEAR UNDER CONSIDERATION AS COMPUTE D IN THE SPECIAL AUDIT REPORT AT RS. 7,45,84,379/- ON CONSOLIDATED S ALES OF RS. 26,96,46,926/- SHALL BE ADOPTED FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME OF THE ASSESSEE. AS AGAINST THIS, THE NET PR OFIT SHOWN BY THE ASSESSEE IN THE RETURN FILED U/S 153A OF THE ACT AM OUNTED TO RS. 2,36,16,893/- ON TOTAL SALES OF RS. 6,98,91,003/-. ACCORDINGLY, THE SUM OF RS. 5,09,67,486/- (7,45,84,379/- MINUS RS. 2,36,16, 893/-) BEING THE UNDISCLOSED INCOME/PROFIT EARNED FROM ADDITIONAL SA LES OF RS. 19,97,55,923/- (RS. 26,96,46,926/- MINUS RS. 6,98,9 1,003/-) IS HEREBY ADDED TO THE TOTAL INCOME OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND IN THE LIGHT OF THE DISCUSSION MADE ABOVE; IT IS CLEAR THAT THE ASS ESSEE HAS CONCEALED ITS PARTICULARS OF INCOME TO THE TUNE OF RS. 5,09,67,48 6/-. SUCH CONCEALMENT OF PARTICULARS OF INCOME WAS EFFECTED BY NOT DISCLO SING THE CORRECT SALES AND THE CORRESPONDING PROFIT EARNED THEREUPON. THE ADDITIONAL SALES MADE BY THE ASSESSEE COMPANY AND THE CORRESPONDING ADDITIONAL PROFIT EARNED ON SUCH SALES WERE NOT DISCLOSED IN THE REGU LAR BOOKS OF ACCOUNTS NOR WERE THE SAME DISCLOSED IN THE RETURN FILED U/S 153A OF THE ACT. DESPITE THE ADDITIONAL SALES AND THE ADDITIONAL PRO FIT HAVING BEING RECORDED IN THE PARALLEL AND DUPLICATE SET OF BOOKS MAINTAINED UNDER THE ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 6 FICTITIOUS NAME OF M/S JADAU JI AND WHICH WERE SEIZ ED DURING THE COURSE OF SEARCH PROCEEDINGS U/S 132 OF THE ACT, THE ASSES SEE COMPANY FAILED TO DISCLOSE SUCH ADDITIONAL SALES AND ADDITIONAL PROFI T IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT. BEING THUS SATISFIED THA T THE ASSESSEE COMPANY HAS COMMITTED A DEFAULT U/S 271AAA OF THE ACT, PENA L PROCEEDINGS U/S 271AAA OF THE ACT ARE INITIATED SEPARATELY FOR CONC EALING PARTICULARS OF INCOME OF RS. 5,09,67,486/- 11. FURTHER, WE REFER TO THE FINDINGS OF THE LD. CI T(A) AND THE SAME READS AS UNDER:- 6.3 IN THESE GROUNDS, IT IS OBSERVED THAT THE LD. CIT(A) HAS UPHELD THE ADDITION TO THE EXTENT OF RS. 2,59,56,858/- BY ES TIMATING THE PROFIT RATE @ 24% ON ESTIMATED SALES OF RS. 26 CRORES BY OBSERVIN G AS UNDER:- AFTER CONSIDERING THE PAST HISTORY OF THE ASSESSEE AND GROSS PROFIT OF 15.30% IN COMPARABLE CASES CITED BY THE A.R. OF THE ASSESSEE, I FOUND THAT THE GROSS PROFIT RATE OF 26.21% SEEMS TO BE ON HIGHER SIDE IN THE BUSINESS OF THE ASSESSEE. THE CONSOLIDATED SALES WORKED OUT BY THE ASSESSEE AFTER THE CORRECTION COMES TO RS. 25, 06,61,673/- BUT THE FACT REMAINS THE ACCOUNTS OF JADAVJI ARE INCOMPLETE AND THERE MAY REMAIN SOME MORE UNACCOUNTED SALES. THEREFORE, I ES TIMATE THE CONSOLIDATES SALES OF THE ASSESSEE AT RS. 26.00 CRO RES. SO FAR AS THE ADDITION OF GROSS PROFIT IS CONCERNED, THE SPECIAL AUDITOR HAS COMPUTED THE GROSS PROFIT RATE OF 26.21% ON THE BASIS OF SAM PLE SIZE SELECTED BY HIM. THE A.R. OF THE ASSESSEE HAS CITED SOME MORE C ASES WHEREIN THE GROSS PROFIT RATE IS (-) 5.67%. IF THE EXAMPLES CIT ED BY THE A.R. OF THE ASSESSEE ARE ADDED TO THE SAMPLE SELECTED BY SPECIA L AUDITORS, THE WEIGHTED AVERAGE GROSS PROFIT COMES TO 24.08%. ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 7 CONSIDERING THIS FACT AND ASSESSED GROSS PROFIT IN PAST AND NEXT YEARS, I ESTIMATE THE GROSS PROFIT RATE OF 24% AS A GAINST 26.21% ADOPTED BY THE AO AND 16.95% SHOWN BY THE ASSESSEE. THUS THE GROSS PROFIT COMES TO RS. 6,24,00,000/-. THE ASSESSEE HAS SHOWN GROSS PROFIT OF RS. 1,18,43,142/- IN THE RETURN FILED U/S 153A O F THE ACT. THUS THE SHORT FALL IN GROSS PROFIT IS DETERMINED AT RS. 5,0 5,56,858/-. THE ASSESSEE HAS DECLARED RS.2,46,00,000/- IN THE RETUR N FILED U/S 153A OF THE ACT ON ACCOUNT OF UNDISCLOSED INCOME FROM UNAC COUNTED SALES/ PURCHASES. IN PROFIT AND LOSS ACCOUNT, THE ASSESSEE DISCLOSED THIS INCOME BY MENTIONING THAT INCOME TAKEN INTO ACCOU NT ON THE BASIS OF STATEMENT RECORDED IN SEARCH/ DOCUMENTS FOUND DURIN G THE SEARCH BEING INCOME EARNED FROM UNACCOUNTED SALES REPRESE NTED BY UNDISCLOSED ASSETS (PB PAGER 103). FURTHER IN SEAR CH STATEMENT, SHRI PRATEEK KOTHARI, DIRECTOR OF ASSESSEE COMPANY ADMIT TED THIS AS INCOME EARNED FROM UNACCOUNTED PURCHASES AND SALES IN THE COMPANY (PB PAGE 34 43). FURTHER THE COMPANY BEING AN ARTIFICIAL JUD ICIAL PERSON, CANNOT ACT LIKE A LIVING PERSON. THEREFORE, WHATEVER EARNI NG IS THERE IN THE COMPANY, IT COMES FORM ACTIVITIES IN THE COMPANY. T HE ASSESSEE COMPANY HAS NO ANOTHER ACTIVITY EXCEPT THE JEWELLER Y BUSINESS. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED, I HOLD THAT THE ASSESSEE HAS DECLARED TH IS INCOME OF RS. 2,46,00,000/- ON ACCOUNT OF PROFIT FROM UNACCOUNTE D PURCHASE AND SALES WHICH WAS UTILIZED IN UNACCOUNTED ASSET. AFTE R CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES , THE ADDITION OF RS. 5,05,56,858/- - RS. 2,46,00,000 = RS. 2,59,56,858/- IS SUSTAINED AS AGA INST TRADING ADDITION OF RS. 5,09,67,486+RS. 21,30,508/- TOTALING TO RS. 5,30,97,994/- MADE BY THE AO. THUS THE ASSESSEE GETS RELIEF OF RS. 2,7 1,41,136/-. ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 8 12. FURTHER, WE REFER TO THE FINDINGS OF THE CO-ORD INATE BENCH AT PARA 6.6 OF ITS ORDER WHICH REPRODUCED AS UNDER:- 6.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM THE RECORDS T HAT THE AO MADE THE ADDITION OF RS.5,30,97,994/- (I.E.RS.5,09,67,486+RS .21,30,508 )ESTIMATING THE GROSS PROFIT @ 26.21% ON SALES OF R S. 26,96,46,926/- (SALES AS WORKED OUT BY SPECIAL AUDITOR. IT IS NOTE D THAT IN THE GIVEN SAMPLES ALL THE TRANSACTIONS WERE OF TRADING GOODS OF DIAMOND JEWELLERY WHILE THE ASSESSEE HAS SALES OF KUNDAN MEENA JEWELL ERY FOR SUBSTANTIAL AMOUNT I.E. ALMOST 50% OF TOTAL SALES. WE WOULD LIK E TO STATE THAT THE SAMPLES WHICH REPRESENTED SALES OF DIAMOND JEWELLER Y CANNOT BE APPLIED FOR SALES OF KUNDAN MEENA JEWELLERY. MARGINS IN BO TH THESE ITEMS VARIES AND CANOT BE APPLIED TO EACH OTHER. TO REACH AT A C OMPARABLE AND REASONABLE ESTIMATED, THE AVERAGE OF PAST YEARS COU LD BE THE JUSTIFIED METHOD. IT IS ALSO NOTABLE TO COMPARE THE TRADING R ESULTS OF THE ASSESSEE FOR THE PREVIOUS YEARS WHICH ARE AS UNDER:- S. NO. A.Y TURNOVER G.P G.P. RATIO 1 2006-07 3531618.00 512723.00 14.52% 2 2007-08 18562148.00 2509297.00 13.52% 3 2008-09 20591252.00 3047886.00 14.80% 4 2009-10 12824830.00 3356643.00 26.17% WEIGHTED AVERAGE GP 55509848.00 9426549 16.98% IT IS FURTHER NOTED THAT THE LD. CIT(A) HAS ESTIMAT ED THE HIGHER GROSS PROFIT @ 24% ON ESTIMATED SALES OF RS. 26 CRORES. T HE ASSESSEE HAD COMPUTED THE GROSS TURNOVER OF RS. 25,06,61,673/- O N THE BASIS OF SEIZED DOCUMENTS AND BOOKS OF ACCOUNT AND HAS POINTED OUT SEVERAL MISTAKES ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 9 AND INSTANCES OF DOUBLE COUNTING OF SALES COMPUTED BY THE SPECIAL AUDITOR IN THE ESTIMATES OF GROSS TURNOVER. THE LD. CIT(A) AS WELL AS AO HAVE NOT POINTED OUT ANY DEFECT IN THE CALCULATION OF GROSS TURNOVER BY THE ASSESSEE ON THE BASIS OF SEIZED RECORDS. THEREF ORE, IT WILL BE IN THE INTEREST OF EQUITY AND JUSTICE THAT WEIGHTED AVERAG E GROSS PROFIT RATE OF LAST FOUR YEARS I.E. 16.98% SHOULD BE TAKEN INTO CO NSIDERATION ON TURNOVER OF RS. 25,06,61,673/- WHICH GIVES GROSS P ROFIT OF RS. 4,25,62,352/-. IT IS ALSO NOTED THAT THE ASSESSEE H AD DECLARED THE GROSS PROFIT OF RS. 1,18,43,142/- IN THE TRADING ACCOUNT FILED WITH THE RETURN AND FURTHER THE ASSESSEE HAD DECLARED RS. 2,46,00,0 00/- IN THE RETURN FILED U/S 153A OF THE ACT ON ACCOUNT OF UNDISCLOSE D INCOME FROM UNACCOUNTED SALES/PURCHASE. THEREFORE, THE TRADING ADDITION OF RS. 61,19,120/- (RS. 4,25,62,352/- MINUS (1,18,43,142+2 ,46,00,000) IS SUSTAINED ON THE BASIS OF WEIGHTED AVERAGE GROSS PR OFIT RATE ON THE BASIS OF PAST HISTORY OF THE ASSESSEE. THUS THE GROUND N O. 3 TO 7 OF ASSESSEE'S APPEAL OF THE ARE PARTLY ALLOWED AND GRO UND NO. 1 OF THE REVENUE IS DISMISSED. 13. THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE REPORTED TURNOVER IS RS 6,98,91,003 AS PER RETURN OF INCOME AND THE SPEC IAL AUDITOR HAS COMPUTED THE CONSOLIDATED TURNOVER OF RS 26,96,46,926 AND TH US, THERE IS UNDISCLOSED PROFIT FROM ADDITIONAL SALES OF RS 19,97,55,923 NOT RECORDED IN THE BOOKS OF ACCOUNTS. ON APPEAL, THE LD CIT(A) HAS CONSIDERED T HE CONSOLIDATED SALES OF RS 26 CRORES. AND THE COORDINATE BENCH HAS FINALLY UPH ELD THE FIGURE OF RS 25,06,61,673 BASED ON CALCULATION BY THE ASSESSE E ON THE BASIS OF SEIZED RECORDS AS AGAINST THE FIGURE OF REPORTED TURNOVER OF RS 6,98,91,003 AS PER RETURN OF INCOME AND THE RELEVANT FINDINGS OF THE C OORDINATE BENCH READS AS UNDER: ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 10 THE ASSESSEE HAD COMPUTED THE GROSS TURNOVER OF RS. 25,06,61,673/- ON THE BASIS OF SEIZED DOCUMENTS AND BOOKS OF ACCOUNT AND HAS POINTED OUT SEVERAL MISTAKES AND INSTANCES OF DOUBLE COUNTING O F SALES COMPUTED BY THE SPECIAL AUDITOR IN THE ESTIMATES OF GROSS TURNO VER. THE LD. CIT(A) AS WELL AS AO HAVE NOT POINTED OUT ANY DEFECT IN THE C ALCULATION OF GROSS TURNOVER BY THE ASSESSEE ON THE BASIS OF SEIZED REC ORDS. AND ON SUCH TURNOVER OF RS 25,06,61,673 SO COMPUTED BY THE ASSESSEE BASED ON SEIZED RECORDS, THE COORDINATE BENCH HAS UPHELD THE GROSS PROFIT RATE OF RS 16.98%. WE THEREFORE FIND THAT IT IS NOT A CASE OF MERE ESTIMATION OF GROSS PROFIT RATE ON DECLARED TURNOVER OF THE ASSESSEE BU T THE FACT OF THE MATTER WHICH IS CLEARLY EMERGING FROM THE ORDERS OF THE AU THORITIES BELOW AS WELL AS DECISION OF THE COORDINATE BENCH IS THAT SUCH ESTIM ATION OF GROSS PROFIT IS ON REPORTED SALES/TURNOVER AS WELL AS THE UNDISCLOSED SALES/TURN OVER WHICH HAS NOT BEEN DISCLOSED BY THE ASSESSEE IN ITS REGULAR B OOKS OF ACCOUNTS WHICH WAS SURRENDERED ON THE BASIS OF SEARCH CARRIED OUT AT T HE PREMISES OF THE ASSESSEE. THEREFORE, TO THE EXTENT OF PROFIT ESTIMATED ON UND ISCLOSED SALES/TURN OVER WHICH HAS BEEN FOUND IN THE COURSE OF SEARCH AND WH ICH HAS NOT BEEN DISCLOSED/RECORDED IN THE BOOKS OF ACCOUNTS MAINTAI NED IN THE NORMAL COURSE OF BUSINESS, IT IS CLEARLY A CASE OF UNDISCLOSED INCOM E AS DEFINED IN EXPLANATION TO SECTION 271AAA. WE THEREFORE DONOT SEE ANY INFIRMIT Y IN THE FINDINGS OF THE LD CIT(A) WHERE HE SAYS THAT SUCH ADDITION IS ALSO CO VERED UNDER THE DEFINITION OF UNDISCLOSED INCOME BEING DIRECTLY RELATABLE TO SEIZ ED DOCUMENTS FROM THE APPELLANT OF THE SPECIFIED PREVIOUS YEAR. THE PENALTY SO LEVIED ON UNDISCLOSED INCOME OF RS 61,19,120 IS HEREBY CONFIRMED. BEFORE PARTING, WE WOULD LIKE TO STATE THAT THE DECISIONS OF HONBLE HIGH COURT RELI ED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS AND DOESNT SUPPORT THE CA SE OF THE ASSESSEE. THE GROUND OF APPEAL IS THUS DISMISSED. ITA NO. 111/JP/2018 M/S JADAU JEWELLERS & MANUFACTURERS PVT. L TD. VS. DCIT, JAIPUR 11 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/10/2019. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/10/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S JADAU JEWELLERS & MANUFACTURERS PVT. LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- DCIT, CENTRAL CIRCLE-02, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 111/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR