The Asst. Commissioner of Income Tax, Circle-7(1), Hyderabad V. M/s. MDR Jewellers, Hyderabad

ITA 1449/HYD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5995 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 31-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K MYTHILI RANI
• Keywords: Unexplained investment; Search and seizure; Document seized; Cost of acquisition; Documents seized
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1449/HYD/2013 ASSESSMENT YEAR: 2006-07 ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 7(1), HYDERABAD. VS. M/S M.D.R. JEWELLERS, HYDERABAD. PAN AALFM7978A APPELLANT RESPONDENT REVENUE BY: SMT. K. MYTHILI RANI ASSESSEE BY: NONE DATE OF HEARING: 17/02/2016 DATE OF PRONOUNCEMENT: 16/03/2016 O R D E R PER S. RIFAUR RAHMAN, AM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED A GAINST THE ORDER OF THE CIT(A) - VI, HYDERABAD DATED 19/07 /2013 FOR ASSESSMENT YEAR 2006-07. 2. BRIEFLY THE FACTS OF THE CASE ARE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 28/06/2007 ADMITTING AN INCOME OF RS. 26,77,116 AND THE ASSESSING OFFICER PASSED ORDER DA TED 31/12/2007 U/S 143(3) ASSESSING THE INCOME AT RS. 6,40,44,744 AS AGAINST THE RETURNED TOTAL INCOME OF RS. 26,77,116/- BY MAKING THE FOLLOWING ADDITIONS: 1. UNACCOUNTED INVESTMENTS RS. 5,18,16,250 2. UNACCOUNTED PURCHASES RS. 1,20,20,000 3. GROSS PROFIT ON SALE OF UNACCOUNTED GOLD RS. 2,08,494 2.1 THE MAIN BASIS FOR MAKING THE ADDITIONS WERE SHOWN TO BE THE IMPOUNDED DOCUMENTS, PAGED AS 162, 163 AND 1 64 OF I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 2 BOOK NO. 42, AND THE FINDINGS OF SEARCH AND SEIZURE OPERATIONS CONDUCTED AT AIRPORT ON 30.03,2007. THE OBSERVATIONS OF THE ASSESSING OFFICER, IN THIS REGA RD ARE AS UNDER (AS INDICATED IN THE SHOW CAUSE NOTICE): 'AS PER DOCUMENT BEARING NO. 162 TO 164 OF BOOK NO . 42, WHICH IS A SUMMARY OF YOUR BUSINESS TRANSACTION S DURING THE YEAR UPTO 17.2,2006, TOTAL PURCHASES ARE RS. 15,48,31,718/- TOWARDS PURCHASE OF 190 KG OF GOLD B ULLION WHEREAS PURCHASES RECORDED IN THE BOOKS OF ACCOUNT PRODUCED BY YOU (WHICH FORMED THE BASIS FOR THE RET URN OF INCOME FILED BY YOU) DURING THE SAME PERIOD I.E. UP TO 17.2.2006, ARE RS. 11,21,08,000/- TOWARDS 139 KG OF BULLION. SIMILAR DISCREPANCIES ARE FOUND IN THE FIG URES OF SALES, EXPENDITURE ETC. IT IS NOTICED FROM AN ANALY SIS OF THE IMPOUNDED MATERIAL VIS-A-VIS YOUR BOOKS OF ACCO UNT THAT THE BOOKS OF ACCOUNT PRODUCED BY YOU ARE PREPA RED ONLY TO MAKE THEM COMPATIBLE WITH THE DEBITS AND CR EDITS IN THE BANK ACCOUNTS AND ARE NOT THE TRUE RECORDING S OF DAY-TO-DAY TRANSACTIONS OF BUSINESS. THIS CONCLUSIO N IS DRAWN BASED, INTER ALIA, ON THE DISCOVERY, ON THE D AY OF SEARCH AND SEIZURE OPERATIONS AT THE HYDERABAD AIR PORT, OF TWO SALE INVOICES BEARING NOS. 35 AND 36 ISSUED BY ARIHANT GEMS AND JEWELLERS, JAIPUR. INVOICE NO. 35 DT. 20.2.2006 IS FOR THE PURCHASE BY YOU OF 10 KG GOLD WHEREAS YOU HAD RECORDED A PURCHASE OF MERE 2 KG IN YOUR BOOKS AGAINST THE SAME INVOICE NO. 35. THIS IS TO MAKE THE AMOUNT OF PURCHASES TALLY WITH THE DISPATC H OF RS. 20 LACS BY CHEQUE DRAWN ON FEDERAL BANK TO M/S. ARIHANT ON THE SAME DAY. FURTHER, YOU HAD COMPLETEL Y OMITTED TO RECORD THE SECOND PURCHASE OF 7 KG OF GO LD WORTH RS. 56,00,000/- THROUGH INVOICE NO. 36 OF THE SAME DATE OBVIOUSLY FOR THE SAME REASON. MOREOVER, THE METICULOUS WAY IN WHICH THE MINUTEST DETAILS OF THE TRANSACTIONS WERE FOUND RECORDED IN THE IMPOUNDED DOCUMENTS, THE CIRCUMSTANCES WHICH THE DOCUMENTS WE RE DETECTED AT YOUR PREMISES COUPLED WITH THE FACT THA T EACH AND EVERY ENTRY OF REMITTANCE MADE BY YOU TO YOUR SUPPLIERS TALLIES WITH THE DEPOSITS IN YOUR BANK AC COUNTS, LEAVES ONE WITH THE INESCAPABLE CONCLUSION THAT THE SAID DOCUMENTS BEARING PAGE NOS. 162, 163 AND 164 REFLE CT THE TRUE TRANSACTIONS OF YOUR BUSINESS. UNDER THE CIRCUMSTANCES, IT IS PROPOSED TO TAKE THE PURCHASE TRANSACTIONS AS FOUND IN THESE DOCUMENTS A S REAL, UPTO 17.2.2006, I.E. THE DATE OF THE DOCUMENT S SINCE THE DEPARTMENT COULD NOT LAY ITS HANDS ON ANY I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 3 EVIDENCE FOR THE ACTUAL TRANSACTIONS MADE BY YOU AF TER THIS DATE, EXCEPT FOR THE TWO PURCHASE INVOICES REF ERRED TO ABOVE.' 2.2 IN RESPONSE TO THE ABOVE SHOW CAUSE LETTER, THE ASSESSEE PRODUCED SRI SANDEEP JAIN AS ITS WITNESS A S HE IS ONE OF THE SUPPLIERS OF BULLION TO THE ASSESSEE FIR M. HIS STATEMENT WAS RECORDED. THE ASSESSING OFFICER, HOWE VER, WAS NOT SATISFIED WITH HIS STATEMENT. THEREFORE, HE COM PLETED THE ASSESSMENT BY MAKING THE ADDITIONS ON ACCOUNT OF UNACCOUNTED INVESTMENTS, UNACCOUNTED PURCHASERS AND GROSS PROFIT ON SALES OUT OF UNACCOUNTED PURCHASES. 3. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). 4. AS REGARDS THE ADDITION ON ACCOUNT OF UNACCOUNTE D INVESTMENTS OF RS. 5,18,16,250, THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER MADE THIS ADDITION BASING ON THE TOTAL PURCHASES RECORDED IN THE IMPOUNDED MATERIAL AS AGA INST THE AMOUNTS RECORDED IN THE BOOKS, AS ON 17/02/2006. AS PER THE ASSESSING OFFICER THE TOTAL PURCHASES MADE AS ON 1 7.2.2006 STOOD AT RS. 15,48,31,718/-, AND BY INCLUDING THE U NACCOUNTED EXPENSES OF RS. 1,91,178/- ASSOCIATED WITH SUCH PUR CHASES, THE TOTAL COST OF PURCHASES WAS TAKEN AT RS. 15,50 ,23,436/-, FOR WHICH THE SOURCES AVAILABLE AS ON THE SAID DATE WERE QUANTIFIED AT RS. 10,32,07,186/-, WHICH WERE IN THE FORM OF SALES (RS. 10,04,76,186) AND THE CAPITAL (RS. 27,31 ,000). THUS, THE AMOUNT OF RS. 5,18,16,250/- BEING THE DIF FERENCE BETWEEN THE TOTAL PURCHASES AND THE SOURCES AVAILAB LE TO ASSESSEE, (RS. 15,50,23,436 - 10,31,07,186), WAS TR EATED AS UNACCOUNTED INVESTMENT, MADE BY ASSESSEE, PRESUMING THAT THERE ARE NO INFORMATION AS REGARD TO STOCK IN TRAD E ETC. IT WAS ALSO MENTIONED BY THE ASSESSING OFFICER THAT AS AGA INST THE TOTAL PURCHASES OF RS. 15,48,31,718 (190 KG. OF GOL D) RECORDED I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 4 IN IMPOUNDED MATERIAL, ONLY AN AMOUNT OF RS. 11,21, 08,000/- (139 KG. OF GOLD) WAS RECORDED IN BOOKS. THUS, AS C OULD BE SEEN FROM THE INFORMATION FILED BY THE ASSESSEE BEF ORE THE ASSESSING OFFICER, DURING THE ASSESSMENT PROCEEDING S, THERE WERE NO EXPLANATIONS FOR THE PROPOSALS BY THE ASSES SING OFFICER, TO TREAT THE SAID AMOUNTS AS UNEXPLAINED I NVESTMENT, EXCEPT TO STATE THAT THE ACTUAL PURCHASES SHOULD BE TAKEN AT RS. 11,21,08,000/- AS RECORDED IN BOOKS. HOWEVER, T HERE IS NO DISPUTE AS REGARD TO THE SALES EFFECTED THROUGH THE BOOKS WHICH WAS PUT AT RS. 10,04,76,186/-. CIT(A) FURTHER OBSERVED THAT THE SEPARATE ADDITIONS WERE MADE BY THE ASSESS ING OFFICER, ON THE BASIS OF PRESUMED UNACCOUNTED PURCH ASES, WITH REGARD TO THE SOURCES FOR THE SAME AND THE PROFITS EARNED ON SALE OF SUCH UNACCOUNTED GOLD, AS ON 17 .02.2006. I N THIS REGARD, IT MAY ALSO BE RELEVANT TO SAY THAT WHERE T HE INVESTMENTS ARE EXAMINED WITH REFERENCE TO THE SOUR CES, THE AMOUNTS AS RECORDED IN BOOKS ON THE GIVEN DATE I.E. 17 .02.2006, IS THE CORRECT PROPOSITION, INSTEAD OF PI TTING THE RECORDED SALES AGAINST THE UNRECORDED PURCHASES, FO R SAKE OF EQUITY AND CLARITY. AS COULD BE SEEN FURTHER, INFO RMATION WAS AVAILABLE AS REGARD TO THE QUANTITY OF GOLD PURCHAS ED, WHICH NEED TO BE TAKEN INTO CONSIDERATION, WHILE QUANTIFY ING THE UNACCOUNTED INVESTMENTS. THE TOTAL QUANTITY OF THE GOLD PURCHASED WAS SHOWN AT 190 KGS., WHICH WAS VALUED AT RS. 15,48,31,718/- AS AGAINST THE PURCHASES OF 139 KGS. RECORDED IN BOOKS, WHICH WAS VALUED AT RS. 11,21,08,000/- AS ON 17.02.2006. THE QUANTITY OF GOLD SOLD AS ON 17.2.20 06, WAS NOT INDICATED IN THE ASSESSMENT ORDER, BUT THE VALU E OF THE SALES WAS PUT AT RS. 10,04,76,186/-. IN THIS REGARD , IT MAY BE RELEVANT TO OBSERVE THAT UNLESS THERE ARE PURCHASES , THERE WOULD NOT BE ANY SALES. THUS, IT WOULD BE APPROPRIA TE TO PRESUME THAT THE GOLD PURCHASED THROUGH BOOKS IS QU ANTIFIED AT 139 KGS. WITH EQUAL AMOUNTS SOLD, FOR WHICH NO D ETAILS ARE I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 5 AVAILABLE ON RECORD. HENCE, THE DIFFERENCE IN THE V ALUE OF THE PURCHASES AND SALES, WITH NO INDICATION OF STOCK IN TRADE IN BOOKS, WOULD AMOUNT TO THE UNACCOUNTED INVESTMENTS BROUGHT INTO THE BOOKS. IN THIS REGARD, THE DIFFERENCE BETW EEN THE PURCHASES RECORDED (RS.11,21,08,000) AND THE SOURCE S AVAILABLE IN THE FORM OF SALE OF THE SAME (RS. 10,0 4,76,186/-) AND THE SOURCES AVAILABLE IN THE FORM OF CAPITAL (R S. 27,31,000), WOULD ALONE AMOUNT TO THE UNACCOUNTED INVESTMENTS IN PURCHASE OF GOLD OF 139 KGS. OF GOLD (RS.11,21,08,000). THUS, THE AMOUNT OF RS. 89,00,81 4/- BEING THE DIFFERENCE BETWEEN THE AMOUNTS OF INVESTMENTS F OR PURCHASES (RS.11,21,08,000) AND SOURCES AVAILABLE F OR SUCH PURCHASES IN THE FORM OF SALE PROCEEDS (RS.10,04,76 ,186) AND CAPITAL (RS. 27,31,000), WHICH WERE TAKEN INTO CONS IDERATION BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, I N QUANTIFYING THE UNACCOUNTED INVESTMENT, WOULD CONST ITUTE THE UNACCOUNTED INVESTMENTS, IN THE FORM OF PURCHASES O F GOLD THAT ARE RECORDED IN BOOKS BUT NOT EXPLAINED WITH T HE HELP OF SOURCES. AS COULD BE SEEN FROM THE PROCEEDINGS OF ASSESSMENT, THE UNACCOUNTED PURCHASES WITH SPECIAL REFERENCE TO THE INVOICES FOUND / NOTICED, WHICH WE RE TAKEN AS PURCHASES, BUT WITHOUT GIVING ANY CREDIT TO THE UNA CCOUNTED SALES MADE OUT OF IT, AS EVIDENCED BY THE ABSENCE O F ANY STOCKS IN TRADE, IN BOOKS OF ACCOUNT. HENCE, THE P URCHASES AND SALES, THAT HAVE NOT BEEN REFLECTED IN THE BOOK S, NEED TO BE DEALT SEPARATELY, WITHOUT PUTTING THEM INTO THE COMPANY OF TRANSACTIONS RECORDED IN THE BOOKS OF ACCOUNT, AS R EFERRED BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE OBSERVA TIONS, THE CIT(A) HELD THAT THE ADDITION RELATED TO UNACCOUNT ED INVESTMENTS OF THE GOLD PURCHASED AND RECORDED IN T HE BOOKS STAND CONFIRMED AT AS. 89,00,814/- AS AGAINST THE A DDITION OF RS. 5,18,16,250/- MADE BY THE ASSESSING OFFICER. I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 6 4.1 AS REGARDS THE ADDITION ON ACCOUNT OF UNACCOUNT ED PURCHASES OF RS. 1,20,20,000, THE CIT(A)S OBSERVAT IONS ARE AS FOLLOWS: 4.2 THE ASSESSING OFFICER MADE A FURTHER ADDITION OF RS.1,20,20,000/- REFERRING TO THE PARA 4 AND 8 OF T HE ASSESSMENT ORDER. AS COULD BE SEEN FROM THE RECORD, BILL NO. 35 AND 36 DATED 20.02.2006 ISSUED BY M/S. ARIHANT G EMS AND JEWELLERS, JAIPUR, IN THE NAME OF THE APPELLANT FIR M WITH THE PURCHASE VALUE OF RS. 80,00,000/- AND RS. 36,00,000 /- SHOWN FOR PURCHASE OF 10 KG. AND 7KG. OF GOLD RESPECTIVEL Y, AGAINST WHICH THE APPELLANT SHOWN TO HAVE ACCOUNTED ONLY 2K GS IN THE BOOKS, WITH 8 KGS. OUT OF 10 KGS. OF BILL NO. 35 AN D 7 KGS. OF BILL NO. 36, NOT ACCOUNTED AT ALL. AS PER THE ASSES SING OFFICER, THE PURCHASES OF RS. 1,36,00,000 (80,00,000 AND 56, 00,000), VIDE BILL NO. 35 AND 36 DATED 20.02.2006, CONSTITUT E UNACCOUNTED PURCHASES AND THE UNACCOUNTED INVESTMEN TS MADE BY THE ASSESSEE. THE BASIS FOR REDUCING THE AM OUNTS, FROM RS. 1,36,00,000/- TO RS.L,20,20,000/- IS NOT C LEARLY INDICATED IN THE ASSESSMENT ORDER, FOR THE PERIOD S UBSEQUENT TO THE DATE OF 17.02.2006. 4.3 IN THIS REGARD IT MAY BE RELEVANT TO HOLD THAT THE UNACCOUNTED INVESTMENTS, FOR THE PERIOD UPTO 17.02. 2006, WAS ASCERTAINED BY A SEPARATE ADDITION AS INDICATED IN THE EARLIER PARAGRAPH, WHEREIN THE UNACCOUNTED INVESTMENT WAS QUANTIFIED AT RS. 89,00,814/-, AFTER CONSIDERING T HE SOURCES IN THE FORM OF SALE PROCEEDS OF GOLD ROUTED THROUGH B OOKS AND THE CAPITAL AVAILABLE TO ASSESSEE. SINCE, THE SAID INVESTMENTS ARE AVAILABLE TO THE ASSESSEE, FURTHER INVESTMENTS NEED NOT BE ANALYSED WITH REFERENCE TO THE SOURCES FOR THE P URCHASES OF RS. 1,20,20,000/-. SINCE, DEFINITE SOURCES FOR INVE STMENTS ARE QUANTIFIED, THE SAME MAY MEET THE REQUIREMENTS OF F URTHER I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 7 INVESTMENTS MADE OUTSIDE THE BOOKS. UNDER THE CIRCUMSTANCES, IT MAY BE RELEVANT TO OBSERVE THAT, THE MARGINS ON PURCHASE COST, ALONE MAY CONSTITUTE THE UNACCOUN TED PROFIT/INCOME FOR THE APPELLANT. IN THIS REGARD, IT MAY ALSO BE RELEVANT TO MENTION THAT, A TOTAL OF 190 KGS. OF GO LD WAS PURCHASED, OUT OF WHICH 139 KGS. WERE ONLY ACCOUNTE D IN THE BOOKS, AS INDICATED IN ASSESSMENT ORDER, WHICH MEAN S 51 KGS. OF GOLD WAS SOLD OUTSIDE THE BOOKS. IT WAS ALS O NOTICED AND QUANTIFIED BY THE ASSESSING OFFICER THAT THE GR OSS PROFIT AS AVAILABLE TO THE ASSESSEE ON SALE OF EACH KG OF GOL D WAS AT RS. 3159/-, BASED ON WHICH A SEPARATE ADDITION OF R S. 2,08,494/- WAS ALSO MADE BY THE ASSESSING OFFICER. IN THIS REGARD, IT MAY BE RELEVANT TO HOLD, THAT BASED ON THE FACTS THE PROFITS EARNED BY THE ASSESSEE ON SALES MADE OUTSID E THE BOOKS STAND QUANTIFIED AT RS. 1,61,109/-, @RS. 3159 /- PER KG ON 51 KGS. OF GOLD. THE CAPITAL OF RS. 27,31,000/- AVAILABLE TO THE ASSESSEE FIRM AS CONSIDERED BY THE ASSESSING O FFICER IN THE ASSESSMENT ORDER ALONG WITH THE UNEXPLAINED IN VESTMENT OF RS. 89,00,814/- AS QUANTIFIED SHALL BE DEEMED T O HAVE BEEN AVAILABLE TO THE ASSESSEE, TO EARN THE PROFITS OF RS. 1,61,109/-, IN ABSENCE OF ANY INFORMATION TO THE CO NTRARY, TO INDICATE THAT FUNDS WERE DIVERTED ELSEWHERE AND THE TOTAL OF THE UNEXPLAINED INVESTMENT WAS DEEMED TO HAVE BEEN DISPOSED/SOLD, IN ABSENCE OF ANY STOCKS IN TRADE. H ENCE, THE ADDITION ON THIS COUNT STAND CONFIRMED TO RS. 1,61, 109/- AS AGAINST RS. 1,20,20,000 MADE BY THE ASSESSING OFFIC ER. ACCORDINGLY, THE SEPARATE ADDITION OF RS. 2,08,494/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF GROSS PROFIT EA RNED BY THE ASSESSEE ON ACCOUNT OF SALE OF UNACCOUNTED GOLD PUR CHASED, ALSO STAND MERGED WITH THE AMOUNT OF UNACCOUNTED IN COME OF RS. 1,61,109/-, CONSIDERED IN THIS REGARD. ON THIS GROUND, THE GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 8 4.4 AS REGARDS THE ADDITION OF RS. 1,91,718/-, BEI NG THE EXPENDITURE INCURRED OUTSIDE THE BOOKS OF ACCOUNT, IN CONNECTION WITH THE PURCHASES, WHICH WAS ADDED TO T HE VALUE OF THE PURCHASES/INVESTMENTS, WHILE DETERMINING THE QUANTUM OF UNACCOUNTED INVESTMENTS MADE IN PURCHASES, WHIC H WAS QUANTIFIED AT RS. 5,18,16,250/-. CIT(A) OBSERVED TH AT THOUGH THE DETAILS OF EXPENSES WERE NOT BROUGHT ON RECORD, THERE IS NO INDICATION AS TO THE SOURCES, FOR INCURRING SUCH EXPENSES, EXCEPT TO PRESUME THAT THE SAME IS INCURRED OUT OF THE INCOMES EARNED IN THE TRADE. HOWEVER, THERE IS NO C LEAR INDICATION AS TO THE SOURCES OF THE EXPENSES OF RS. 1,91,718/-. UNDER THE CIRCUMSTANCES, THE ADDITION OF RS. 1,91,7 18/- WHICH WAS CONSIDERED AS UNACCOUNTED INVESTMENTS BY THE AS SESSING OFFICER, NEEDS TO BE TREATED AS UNEXPLAINED EXPENSE S, RELATED TO UNACCOUNTED PURCHASE OF GOLD, SINCE THE PURCHASE S RECORDED THROUGH BOOKS ALONE WERE CONSIDERED, IN TH IS ORDER, WHILE QUANTIFYING THE UNACCOUNTED INVESTMENT AT RS. 89,00,814/-. ACCORDINGLY, THE ADDITION OF RS. 1,91, 718/- STAND CONFIRMED, IN THE FORM OF UNEXPLAINED EXPENSES, AS AGAINST THE TREATMENT OF THE SAME AS UNACCOUNTED INVESTMENT S, IN ASSESSMENT ORDER, MADE BY THE ASSESSING OFFICER. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE REVENUE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF A PPEAL: 1. THE CIT(A) ERRED IN BOTH LAW AND FACT 2. THE CIT(A) OUGHT TO HAVE CONFIRMED THE ADDITION S MADE ON ACCOUNT OF UNDISCLOSED INVESTMENTS AND PURCHASES AND THE PROFIT THEREON. 6. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED TH AT LD. CIT(A) HAD NOT APPRECIATED THE UNDISCLOSED INVESTME NT RECORDED IN THE DOCUMENT SEIZED DURING THE SEARCH O PERATION RELATING TO UNACCOUNTED PURCHASES. SHE RELIES ON TH E ASSESSMENT ORDER. I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 9 7. NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESS EE. HOWEVER, WE PROCEED TO DISPOSE OF THIS APPEAL AFTER HEARING LEARNED DEPARTMENTAL REPRESENTATIVE AND ON MERITS O F THE CASE. 8. CONSIDERING THE SUBMISSIONS OF THE LD. DR AND M ATERIAL FACTS ON RECORD AND ON CAREFUL ANALYSIS OF THE ORDE RS OF THE REVENUE AUTHORITIES, IT IS OBSERVED THAT THERE IS N O DISPUTE THAT THE DOCUMENTS SEIZED DURING SEARCH PERTAINS TO THE ASSESSEE AND THE DEPARTMENT HAD UNEARTHED THE UNACCOUNTED PU RCHASES TO THE EXTENT OF 51 KGS. (190 KGS -139 KGS). BUT TH E LD. CIT(A) ADJUDICATED ON THE BASIS OF RECORDED PURCHASES AND SALES IN THE BOOKS OF ASSESSEE ALONG WITH THE AVAILABLE CAPI TAL IN THE BUSINESS. COMPLETELY OVERLOOKING THE PRESENCE OF UNACCOUNTED PURCHASES UNEARTHED BY THE DEPARTMENT B Y STATING THAT IT SHOULD BE DEALT SEPARATELY AND HE H AS NOT PROPOSED HOW IT WILL BE DEALT SEPARATELY. THERE IS CONSIDERABLE EVIDENCE TO SHOW THAT THE ASSESSEE HAD DEALT WITH THE PURCHASE AND SALE OF THE UNACCOUNTED GOLD BAR OF 51 KGS. THE WORTH OF THE 51 KGS OF GOLD SHOULD BE TREA TED AS UNEXPLAINED INVESTMENT AND THE RELATED GROSS MARGIN SHOULD BE ADDED AS INCOME FROM THE UNACCOUNTED TRANSACTION . 8.1 WITH REGARD TO ADDITION OF RS. 1.20 CRORES FOR THE CASH DEPOSITS IN BANK ACCOUNT OF THE ASSESSEE, THESE TRA NSACTIONS BELONG TO THE SAME SET OF TRANSACTIONS, WHICH ARE UNACCOUNTED. WE DO NOT FIND ANY REASON TO MAKE ADDI TION TWICE FOR THE SAME BUSINESS. HENCE, WE ARE INCLINED TO DELETE THIS ADDITION AND CONFIRM THE OTHER ADDITIONS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER I.E. I) UNACCOUNTED INVESTMENT OF RS. 5,18,16,250/- II) GROSS PROFIT ON SALE OF UNACCOUNTED PURCHASES OF 51 KGS. RS. 2,08,494/-. I.T.A. NO. 1449/HYD/2013 M/S MDR JEWELLERS 10 9. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER SD/- (S. RIFAUR RAHMAN) ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH MARCH, 2016 KV COPY FORWARDED TO: 1. ACIT, CIRCLE 7(1), 2ND FLOOR, B BLOCK, IT T OWERS, AC GUARDS, HYDERABAD 500 004. 2. M/S MDR JEWELLERS, C/O KUMAR & GIRI, C.A.S, 1-11 - 126/D, OPP. AERO VIEW TOWERS, BEGUMPET, HYDERABAD 16. 3. CIT(A) - VI, HYDERABAD 4 CIT - VI, HYDERABAD 5 THE DR, ITAT, HYDERABAD S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER