M/s. R. Chowdhury Grand Sons., Kolkata V. Addl. CIT, Range - 29, Kolkata, Kolkata

ITA 2109/KOL/2009

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4524 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 12-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-12-2009
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Assessee Lawyers: MIHIR BANDYOADHYAY
• Keywords: Additional evidence
• Section: 133A; 131; 132

Judgement Text

I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 1 OF 12 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 2109/KOL/ 2009 ASSESSMENT YEAR: 2006-2007 M/S. R. CHOWDHURY GRANDSONS,....................... ........................APPELLANT 152, S.P. MUKHERJEE ROAD, KOLKATA-700 026 [PAN : AAHFR 3873 P] -VS.- ADDITIONAL COMMISSIONER OF INCOME TAX,............. .................RESPONDENT RANGE-29, KOLKATA, 2, GARIAHAT ROAD (SOUTH), AAYAKAR BHAWAN (DAKSHIN), KOLKATA-700 068 APPEARANCES BY: SHRI MIHIR BANDYOADHYAY, A.R., FOR THE ASSESSEE SHRI KALYAN NATH, JCIT, SR. D.R., FOR THE DEPARTMENT DATE OF CONCLUDING THE HEARING : MAY 12, 2016 DATE OF PRONOUNCING THE ORDER : JULY 8, 2016 O R D E R PER SHRI P.M. JAGTAP :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-XVI, KOLKATA D ATED 14.09.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE COMMON ISSUE RAISED IN GROUNDS NO. 1 & 2 OF THIS APPEAL RELATES TO THE ADDITION OF RS.52,23,896/- MADE BY THE ASSES SING OFFICER AND CONFIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF EXC ESS STOCK OF JEWELLERY FOUND DURING THE COURSE OF SURVEY. I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 2 OF 12 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM, WHICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADIN G OF GOLD ORNAMENTS AND PRECIOUS STONES. A SURVEY UNDER SECTION 133A WA S CARRIED OUT IN ITS BUSINESS PREMISES ON 03.03.2006. THEREAFTER THE RET URN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 31.10.2006 DECLARING TOTAL INCOME OF RS.15,32,155/-. DURING TH E COURSE OF SURVEY, THE STOCK OF JEWELLERY LYING IN THE BUSINESS PREMISES O F THE ASSESSEE WAS INVENTORISED AFTER PHYSICAL VERIFICATION AND ACTUAL WEIGHMENT. AS PER THE INVENTORY PREPARED, GOLD ORNAMENTS ACTUALLY FOUND D URING THE COURSE OF SURVEY WERE 11,864.37 GRAMS AS AGAINST THE GOLD ORN AMENTS OF 5,175.642 GRAMS AS APPEARING IN THE BOOKS OF ACCOUNT OF THE A SSESSEE. IN HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY, A P ARTNER OF THE ASSESSEE-FIRM WAS ASKED TO RECONCILE THIS DIFFERENC E BUT HE SOUGHT SOME TIME TO RECONCILE THE SAME. ANOTHER STATEMENT OF TH E SAID PARTNER WAS RECORDED BY THE ASSESSING OFFICER ON 09.03.2006, BU T HE AGAIN EXPRESSED HIS INABILITY TO RECONCILE THE DIFFERENCE ON THE GR OUND THAT HIS ACCOUNTANT, WHO LOOKS AFTER HIS STOCK RECORD, WAS O UT OF STATION. HE, HOWEVER, ACCEPTED THAT ALL THE ENTRIES RELATED TO S TOCK WERE DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE FIRM AND THERE WAS N O ENTRY PENDING ON THIS ACCOUNT AS ON THE DATE OF SURVEY. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE- HOWEVER, MADE AN ATTEMPT TO EXPLAIN THE EXCESS STOC K OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY. IN THIS REGARD, HE INITIALLY SUBMITTED THAT GOLD ORNAMENTS BELONGING TO EIGHT FAMILY MEMBE RS OF PARTNERS WEIGHING 3,818.418 GRAMS WERE KEPT IN THE SHOP FOR DISPLAY PURPOSE AND THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY WAS COMPRISING OF THESE GOLD ORNAMENTS. SUBSEQUENTLY, HE FILED A LIST OF GOLD ORNAMENTS CLAIMED TO BE KEPT BY THE SAID FAMILY MEMBERS SHOWI NG THE QUANTITY OF GOLD ORNAMENTS BELONGING TO THE FAMILY MEMBERS AT 3 ,263.980 GRAMS. IT WAS SUBMITTED BY THE ASSESSEE THAT THE GOLD ORNAMEN TS OF PARTNERS AND THEIR FAMILY MEMBERS WERE DISPLAYED IN THE SHOWROOM IN ORDER TO ATTRACT CUSTOMERS AND TO MAKE AVAILABLE DESIGN SAMPLES FOR PROCURING THEIR I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 3 OF 12 ORDERS. IT WAS ALSO SUBMITTED THAT SINCE THE PERSON AL BELONGINGS WERE VIRTUALLY USED BY THE PARTNERS ONLY FOR DISPLAY AND NOTHING ELSE MUTUALLY, THE SAME WERE NOT RECORDED IN THE BOOKS OF ACCOUNT. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASSESS ING OFFICER. ACCORDING TO HIM, DIFFERENT STAND WAS TAKEN BY THE ASSESSEE A T DIFFERENT STAGES WHILE EXPLAINING THE EXCESS STOCK OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY AND THE SAME WAS SOMETIMES SELF-CONTRADICTOR Y. HE ALSO NOTED THAT THERE WAS NO EVIDENCE WHATSOEVER TO SUPPORT AND SUB STANTIATE THE CLAIM OF THE ASSESSEE THAT THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY OF GOLD ORNAMENTS WAS PARTLY BELONGING TO THE CONCERNE D FAMILY MEMBERS INDIVIDUALLY AND THE SAME WAS KEPT IN THE SHOP ONLY FOR DISPLAY PURPOSE. 5. AS REGARDS THE BALANCE EXCESS STOCK OF GOLD ORNA MENTS FOUND DURING THE COURSE OF SURVEY, THE ASSESSEE EXPLAINED THAT G OLD ORNAMENTS WEIGHING 2,870.310 GRAMS WERE PURCHASED ON 03.03.20 06 FROM M/S. TUNGER GEMS & JEWELLERY PVT. LIMITED ON APPROVAL BA SIS. THE PHOTOCOPY OF THE ISSUE VOUCHER BEARING NO. 069 DATED 03.03.20 06 OF THE SAID PARTY WAS ALSO FILED BY THE ASSEESSEE. THE ASSESSING OFFI CER, HOWEVER, NOTED THAT THE SAID VOUCHER WAS NOT FOUND BY THE SURVEY T EAM AT THE TIME OF SURVEY. HE ALSO NOTED THAT THE RELEVANT TRANSACTION OF PURCHASE OF GOLD ORNAMENTS ON APPROVAL BASIS HAD NOT BEEN RECORDED B Y THE ASSESSEE IN ITS BOOKS OF ACCOUNT. IN ORDER TO VERIFY THE CLAIM OF T HE ASSESSEE, A NOTICE UNDER SECTION 131 WAS ISSUED BY THE ASSESSING OFFIC ER TO M/S. TUNGER GEMS & JEWELLERY PVT. LIMITED AT THE ADDRESS GIVEN IN THE ISSUE VOUCHER. THE SAME, HOWEVER, WAS RETURNED UN-SERVED WITH A RE MARK LEFT BY THE POSTAL AUTHORITIES. THE INSPECTOR DEPUTED BY THE AS SESSING OFFICER TO SERVE THE NOTICE UNDER SECTION 131 REPORTED THAT TH E SAID PARTY HAD ALREADY SHIFTED ITS OFFICE 15 TO 18 MONTHS AGO TO A NEW PLACE NOT KNOWN TO ANY BUSINESSMAN IN AND AROUND THE BUILDING. WHEN TH ESE ADVERSE FINDINGS WERE CONFRONTED BY THE ASSESSING OFFICER TO THE ASS ESSEE GIVING AN OPPORTUNITY TO PRODUCE THE PARTY, ONE MR. DEEPAK TU NGER CLAIMED TO BE A SALESMAN OF M/S. TUNGER GEMS & JEWELLERY PVT. LIMIT ED WAS PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER FOR EXAMI NATION. ALTHOUGH THE I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 4 OF 12 SAID PERSON TRIED TO SUPPORT THE CASE OF THE ASSESS EE, HE EXPRESSED HIS INABILITY TO PRODUCE THE BOOKS OF ACCOUNT OF THE CO MPANY. KEEPING IN VIEW THE CONTRADICTION IN HIS STATEMENT AS WELL AS THE OTHER ADVERSE FINDINGS ALREADY RECORDED, THE ASSESSING OFFICER DI D NOT ACCEPT THE EXPLANATION OF THE ASSESSEE OF HAVING PURCHASED GOL D ORNAMENTS OF 2,870.310 GRAMS FROM M/S. TUNGER GEMS & JEWELLERY P VT. LIMITED ON APPROVAL BASIS ON THE DATE OF SURVEY, I.E. 03.03.20 06 AND REJECTING THE SAME, HE TREATED THE ENTIRE EXCESS STOCK OF GOLD OR NAMENTS OF 6,888.728 GRAMS FOUND DURING THE COURSE OF SURVEY AS UNEXPLAI NED. ACCORDINGLY, THE VALUE OF SUCH EXCESS STOCK AS WORKED OUT AT RS.52,2 3,896/- [@ RS.1,810/- PER 10 GRAMS] WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 69A OF THE ACT. 6. THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 69A WAS DISPUTED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS) AND THE FOLLOWING SUBMISSIONS WERE MADE BY THE ASSE SSEE BEFORE THE LD. CIT(APPEALS) IN SUPPORT OF ITS CASE ON THIS ISSUE:- THE NEXT ADDITION IS RS.52,23,986/- IN RESPECT OF STOCK. IT HAS TWO LIMBS. ONE IS ORNAMENTS BELONGS TO FAMILY M EMBERS (3818.414 GRAMS) AND ANOTHER IS PURCHASE MADE FROM TUNGER BROS. (2870.310 GRAMS). YOUR APPELLANTS SUBMITTED BEFORE THE ASSESSING OFFI CER THAT GOLD ORNAMENTS OF 3818.414 GRAMS BELONGED TO SEVERA L FAMILY MEMBERS, LIST SUBMITTED BEFORE ASSESSING OFF ICER AND WERE KEPT IN SHOP FOR DEMONSTRATIONS OF DESIGNS FROM INCEPTION. BUT THE SUBMISSION WAS NOT ACCEPTED BY T HE ASSESSING OFFICER. HE DEMANDED THE DATES OF PURCHAS ES, COPY OF THE PURCHASE BILLS OF EACH FAMILY MEMBERS, DOCUMENTS TO SHOW THAT THEY WERE GIVEN TO THE FIRM FOR TRADE PURPOSE, HOW LONG IT WAS KEPT WITH THE FIRM A ND WHAT WAS THE CONSIDERATION AND WHETHER THE FAMILY MEMBER S WERE ASSESSED TO WEALTH TAX. IN REPLY TO THE SAME T HE APPELLANT SUBMITTED THAT GOLD ORNAMENTS WERE KEPT F ROM INCEPTION OF BUSINESS FOR DISPLAY FOR DESIGN ONLY. AS THE MEMBERS HAD NO TAXABLE WEALTH NO WEALTH TAX RETURN WAS FILED. THE AO DID NOT ACCEPT THE SUBMISSION. HE ADD ED THE VALUE OF THE ORNAMENTS AS UNEXPLAINED STOCK. I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 5 OF 12 YOUR APPELLANT SUBMITS THE ASSESSING OFFICER DID NO T CONSIDER THE INSTRUCTION NO.1916 DATED 11.05.94 OF THE CBDT IN RESPECT OF ACQUISITION OF JEWELLERY, WHICH RUNS AS FOLLOWS: SUBJECT: GUIDELINES FOR SEIZURE OF JEWELLERY AND OR NAMENTS IN COURSE OF SEARCH. INSTANCES OF SEIZURE OF JEWELLERY OF SMALL QUANTITY IN COURSE OF OPERATIONS UNDER S. 132 HAVE COME TO THE NOTICE OF THE BOARD. THE QUESTION OF A COMMON APPROACH TO SITUATI ONS WHERE SEARCH PARTIES COME ACROSS ITEMS OF JEWELLERY HAS BEEN EXAMINED BY THE BOARD AND FOLLOWING GUIDELINES ARE ISSUED FOR STRICT COMPLIANCE: (I) IN THE CASE OF A WEALTH-TAX ASSESSEE, GOLD JEWE LLERY AND ORNAMENTS FOUND IN EXCESS OF THE GROSS WEIGHT DECLA RED IN THE WT RETURN ONLY NEED BE SEIZED. (II) IN THE CASE OF A PERSON NOT ASSESSED TO WEALTH -TAX GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GMS PE R MARRIED LADY, 250 GMS PER UNMARRIED LADY AND 100 GM S PER MALE MEMBERS OF THE FAMILY NEED NOT BE SEIZED. (III) THE AUTHORIZED OFFICER MAY, HAVING REGARD TO THE STATUS OF THE FAMILY, AND THE CUSTOM AND PRACTICES OF THE COMMUNITY TO WHICH THE FAMILY BELONGS AND OTHER CIRCUMSTANCES OF THE CASE, DECIDE TO EXCLUDE A LARG ER QUANTITY OF JEWELLERY AND ORNAMENTS FROM SEIZURE. ON THE BASIS OF THIS GUIDELINE THE ITAT IN MUMBAI T RIBUNAL HAD IN THE CASE REPORTED IN 61 TTJ 223 HAD ACCEPTED THE JEWELLERY FOUND AS EXPLAINED. YOUR PETITIONER HAD A LREADY EXPLAINED THE BACK GROUND OF THE FAMILY IN ITS LETT ER TO THE ASSESSING OFFICER DATED 01.12.2008 QUOTED BY THE AS SESSING OFFICER IN THE ASSESSMENT ORDER PAGE 8. IT APPEARS THE ASSESSING OFFICER DID NOT CONTRADICT THE SUBMISSION S MADE AND MADE THE ADDITION IGNORING THE CIRCULAR AND SUBMISSION. HENCE THIS ADDITION SHOULD BE DELETED. COMING TO CONTRACT AND CONSIDERATION IT IS SUBMITTE D THAT MUTUAL CONSENT AND ORAL CONTRACT IS ESTABLISHED BEC AUSE NONE OF THE MEMBERS HAD DENIED THE FACT. CONSIDERAT ION IS OBVIOUS. BY THE DISPLAY THE FIRM MAY EARN MORE INCO ME WHERE ALL FAMILY MEMBERS WOULD BENEFITED. REGARDING PURCHASE OF JEWELLERY OF 2870.31 GRAMS IT IS SUBMITTED THAT THE REPREHENSIVE OF SELLER HAD ACCEP TED THE TRANSACTION. HE HAD ALSO INFORMED THAT THE JEWELLER Y WAS I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 6 OF 12 SENT FOR APPROVAL. THIS WAS MENTIONED BY THE AO AT PAGE 11 OF HIS ORDER. IF ANY CONTRADICTION IN THE STATEMENT OF THE REPREHENSIVE OF THE SELLER, THE APPELLANT CANNOT BE MADE RESPONSIBLE. ALTERNATIVELY WHEN OPENING STOCK PURCHASE, SALE AND CLOSING STOCK ARE ACCEPTED ONLY THE PROFIT OF UNEXP LAINED STOCK CAN BE ADDED. THIS IS UNDISPUTED CONCLUSION, AS THE AO HAD NOT ADDED THE UNDISCLOSED STOCK IN THE CLOSI NG STOCK SUGGESTING THE SAME HAD BEEN SOLD. 7. THE LD. CIT(APPEALS) DID NOT FIND MERIT IN THE S UBMISSIONS MADE BY THE ASSESSEE AND AFTER DISCUSSING ALL THE RELEVANT ASPECTS IN DETAIL, HE CONFIRMED THE ADDITION OF RS.52,23,896/- MADE BY TH E ASSESSING OFFICER UNDER SECTION 69A FOR THE FOLLOWING REASONS GIVEN I N PARAGRAPH NO. 10 & 11 OF HIS IMPUGNED ORDER:- 10. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AS WELL AS THE REASONS GIVEN BY THE A.O. FOR MAKING ADDITION O F RS.52,23,896/- U/S. 69A ON ACCOUNT OF EXCESS STOCK OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY. BEFORE PROCEEDING FURTHER, IT IS TO BE MENTIONED THAT DURING THE COUR SE OF APPELLATE PROCEEDINGS THE APPELLANT'S A.R. HAS FILED COPIES O F AFFIDAVIT OF FAMILY MEMBERS CLAIMING THAT THEIR GOLD ORNAMENTS W ERE LYING IN THE SHOP AT THE TIME OF SURVEY. THESE AFFIDAVITS WE RE NOT FILED BEFORE THE A.O. HENCE BEING THE ADDITIONAL EVIDENCE S, I DECLINE TO ADMIT THE SAME. DURING THE COURSE OF SURVEY PROCEED INGS, IT WAS OBSERVED BY THE A.O. THAT STOCK OF GOLD ORNAMENTS W EIGHING 6688.728 GRAMS WAS IN EXCESS THAN THE STOCK RECORDE D IN THE BOOKS OF ACCOUNTS. ON BEING CONFRONTED IT WAS SUBMI TTED BY THE APPELLANT AT THE TIME OF SURVEY THAT THE PERSON WHO LOOKS AFTER THE STOCK MATTER WAS OUT OF STATION AND HENCE IT WA S NOT POSSIBLE TO RECONCILE THE STOCK IMMEDIATELY. HOWEVER, AT THE TIME OF ASSESSMENT PROCEEDINGS, THE APPELLANT CAME WITH AN EXPLANATION THAT IT HAS MADE PURCHASES OF GOLD ORNAMENTS WEIGHI NG 2870.310 GRAMS ON 03.03.2006 I.E. THE DATE OF SURVEY FROM M/ S. TUNGER GEM & JEWELLERY PVT. LTD. AND GOLD ORNAMENTS WEIGHI NG 3818.418 BELONGS TO VARIOUS FAMILY MEMBERS WHICH WERE KEPT I N THE SHOP FOR THE PURPOSE OF DISPLAY. IN THIS MANNER THE APPE LLANT HAS TRIED TO EXPLAIN THE EXCESS STOCK OF 6688.728 GRAMS OF GO LD ORNAMENTS FOUND DURING THE COURSE OF SURVEY. DURING THE COURS E OF ASSESSMENT PROCEEDINGS IN ITS SUBMISSION DATED 24.1 0.2008, THE APPELLANT HAS GIVEN LIST OF 8 (EIGHT) FAMILY MEMBER S CLAIMING GOLD ORNAMENTS WEIGHING 3818.418 GRAMS. HOWEVER, IN ITS SUBMISSION DATED 10.11.2008 THE APPELLANT HAS REDUC ED CLAIM OF GOLD BELONGING TO THE FAMILY MEMBERS FROM 3818.418 GRAMS TO I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 7 OF 12 3263.980 GRAMS. THE APPELLANT HAS NOT SUBMITTED ANY EXPLANATION ABOUT THE DIFFERENCE OF 553.436 GRAMS G OLD ORNAMENTS BEING THE DIFFERENCE BETWEEN THE TWO CLAI MS MADE BY THE APPELLANT VIDE LETTER DATED 24.10.2008 AND 10.1 1.2008. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APP ELLANT HAS AGAIN CLAIMED THAT GOLD ORNAMENTS BELONGING TO THE FAMILY MEMBERS WAS 3818.418 GRAMS. THE CONTENTION OF THE A PPELLANT WAS NOT ACCEPTED BY THE A.O. FOR THE REASON THAT NO SORT OF EVIDENCES WERE PRODUCED BEFORE HIM TO SUBSTANTIATE THAT CERTAIN AMOUNT OF GOLD ORNAMENTS WERE BELONGING TO THE FAMI LY MEMBERS OF PARTNERS OF APPELLANT FIRM. THERE WAS NO ENTRY I N ANY OF THE RECORD MAINTAINED BY THE APPELLANT WHICH COULD SHOW THAT IT HAS RECEIVED FAMILY MEMBERS GOLD ORNAMENTS TO DISPLAY T HEM IN THE SHOWROOM. IT IS ALSO INTERESTING THAT DURING THE CO URSE OF SURVEY WHEN THE PARTNER OF THE APPELLANT FIRM WAS CONFRONT ED ABOUT THE EXCESS STOCK, HE HAS NOT STATED THAT SOME OF THE GO LD ORNAMENTS LYING IN THE SHOWROOM WERE BELONGING TO THE FAMILY MEMBERS. IT IS NOT POSSIBLE THAT IF ANY AMOUNT OF GOLD ORNAMENT S BELONGING TO THE FAMILY MEMBERS WAS LYING IN THE SHOP AT THE TIME OF SURVEY, THE PARTNER WAS NOT AWARE ABOUT THAT FACT A ND HE COULD NOT STATED THE FACT WHILE GIVING THE STATEMENT. DUR ING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS RELIED ON INSTRUCTION NO.1916 DATED 11.05.1994 OF CBDT IN RESPECT OF ACQU ISITION OF JEWELLERY WHEREIN IT IS MENTIONED THAT IN THE CASE OF A PERSON NOT ASSESSED TO WEALTH TAX GOLD JEWELLERY AND ORNAMENTS TO THE EXTENT OF 500 GRAMS PER MARRIED LADY, 250 GRAMS PER UNMARRIED LADY AND 100 GRAMS PER MALE MEMBER OF THE FAMILY NE ED NOT TO BE SEIZED. THE APPELLANT HAS ALSO RELIED ON A CASE REPORTED IN 61 TTJ 223 (MUM) WHEREIN JEWELLERY FOUND TO BE EXPLAIN ED ON THE BASIS OF AFORESAID INSTRUCTION OF THE BOARD. I DO N OT FIND ANY SUBSTANCE IN THE SUBMISSION OF THE APPELLANT AND IT S RELIANCE ON THE INSTRUCTION NO.1916 AND THE DECISION REPORTED I N 16 TTJ 223 BECAUSE NEITHER THE CONTENTS OF BOARD'S INSTRUCTION NOR THE DECISION OF MUMBAI I.T.A.T. HAVE ANY RELEVANCE TO T HE FACTS OF THE APPELLANT'S CASE. THOUGH, THE A.O. HAS DISPUTED ABO UT THE OWNERSHIP OF GOLD ORNAMENTS WITH THE FAMILY MEMBERS BUT THE MAIN DISPUTE IS ON THE FACT THAT THERE WAS NO EVIDE NCE AT ALL THAT THE GOLD ORNAMENTS BELONGING TO THE FAMILY MEMBERS WERE LYING IN THE SHOWROOM AT THE TIME OF SURVEY. NO SUCH FACT WAS DISCLOSED BY THE APPELLANT DURING THE COURSE OF SUR VEY. NO ENTRY ETC. TO THIS EFFECT WAS FOUND IN THE BOOKS OF ACCOU NTS OF THE APPELLANT. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS AND APPELLATE PROCEEDINGS, THE APPELLANT ITSELF HAS CHA NGED ITS VERSION THAT INITIALLY IT CLAIMED JEWELLERY BEING 3 818.418 GRAMS AS BELONGING TO THE FAMILY MEMBERS AND LATER ON THE QUANTITY CHANGED TO 3263.980 GRAMS AND AGAIN STICK ON THE FI GURE OF 3818.418 GRAMS. THUS, THE APPELLANT ITSELF WAS NOT SURE ABOUT ITS CLAIM AND ITS CORRECTNESS. IT IS FURTHER SEEN THAT APPELLANT HAS GIVEN A LIST OF 8 MEMBERS AND THE QUANTITY OF GOLD ORNAMENTS CLAIMED TO BE BELONGING TO EACH OF SUCH MEMBERS. IT IS NOT KNOWN THAT WHEN THERE WAS NO ENTRY IN ANY OF THE BOOKS OF ACCOUNTS, AND THE FAMILY MEMBERS WERE NOT ASSESSED TO WEALTH TAX, FROM WHERE THE APPELLANT HAS TAKEN THE QUANTITY AND DESC RIPTION OF I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 8 OF 12 GOLD ORNAMENTS CLAIMED TO BE BELONGING TO EACH OF T HE FAMILY MEMBERS. THE APPELLANT'S CLAIM CANNOT BE ACCEPTED W ITHOUT ANY EVIDENCE. IN VIEW OF ABOVE, IT IS HELD THAT THE A.O . WAS JUSTIFIED IN HIS CONCLUSION THAT NO AMOUNT OF GOLD ORNAMENTS BEL ONGING TO ANY OF THE FAMILY MEMBERS WERE LYING IN THE SHOWROO M AT THE TIME OF SURVEY PROCEEDINGS. THE APPELLANT HAS MADE THE CLAIM DURING THE ASSESSMENT PROCEEDINGS JUST TO EXPLAIN T HE EXCESS STOCK FOUND AND WHICH IS NOTHING THAN AN AFTERTHOUG HT TO EXPLAIN THE DISCREPANCY TO THE STOCK. I AM INCLINED TO AGREE WITH THE VIEW TAKEN BY THE A.O. 11. SIMILARLY, THE APPELLANT HAS TRIED TO EXPLAIN B ALANCE QUANTITY OF EXCESS STOCK BY CLAIMING THAT IT HAS MADE PURCHA SE OF GOLD ORNAMENTS WEIGHING 2870.310 GRAMS ON 03.03.2006 FRO M M/S. TUNGER GEMS & JEWELLERY PVT. LTD. WHICH REMAINED TO BE ENTERED IN THE BOOKS OF ACCOUNTS. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE A.D. HAS EXAMINED A PERSON BY THE NAME SHRI DIPAK TUNGER WHO CLAIMED HIMSELF AS THE SALESMAN OF THE SAID COMPANY. THE RELEVANT PORTION OF THE STATEMENTS OF SHRI DIPAK TUNGER HAS BEEN REPRODUCED BY THE A.O. IN THE ASSES SMENT ORDER. THE A.O. HAS RECORDED HIS STATEMENT ON 03.11.2008 A ND 30.11.2008. THE SAID PERSON WAS NOT ABLE TO PRODUCE THE BOOKS OF ACCOUNTS OF THE COMPANY FOR THE RELEVANT PREVIOUS Y EAR TO PROVE THAT IN ACTUAL ANY SALE OF GOLD ORNAMENTS WAS MADE TO THE APPELLANT ON 03.03.2006. IT IS FURTHER OBSERVED BY THE A.O. THAT THERE WERE MANY CONTRADICTIONS AND ANOMALIES IN THE STATEMENT OF SHRI DIPAK TUNGER. THE PROCEDURE AND THE DOCUMEN TS ISSUED BY THE SAID COMPANY FOR THE ALLEGED SALE WERE DIFFE RENT THAN THE NORMAL PROCEDURE AND THE REGULAR DOCUMENTS ISSUED B Y THE COMPANY IN THE CASES OF OTHER SALES. THIS HAS HAPPE NED ONLY BECAUSE OF THE REASON THAT ON 03.03.2006 THE APPELL ANT HAS NOT MADE ANY PURCHASES FROM THE SAID PARTY AND ALL THE DOCUMENTS WERE CREATED AFTER THE DATE OF SURVEY TO EXPLAIN TH E DISCREPANCY IN THE STOCK. IF THE APPELLANT HAS ACTUALLY RECEIVE D THE GOLD ORNAMENTS WEIGHING 2870.310 GRAMS ON 03.03.2006 FRO M THE SAID COMPANY, IT SHOULD HAVE STATED BEFORE THE SURV EY PARTY AS THE SURVEY ACTION WAS CONDUCTED ON THE VERY SAME DA Y I.E. 03.03.2006. HOWEVER, NO SUCH CLAIM WAS MADE BY THE APPELLANT DURING THE SURVEY PROCEEDINGS EVEN WHEN THE PARTNER WAS SPECIFICALLY ASKED TO EXPLAIN THE DISCREPANCY IN TH E STOCK. FURTHER, DURING THE COURSE OF SURVEY PROCEEDINGS, N O DOCUMENT ISSUED BY THE AFORESAID COMPANY FOR ALLEGED SALE WA S FOUND BY THE SURVEY PARTY. IN VIEW OF ABOVE, IT IS HELD THAT THE APPELLANT HAS NOT MADE ANY PURCHASE OF GOLD ORNAMENTS FROM TU NGER GEMS & JEWELLERY PVT. LTD. ON 03.03.2006 AND THE A.O. WA S JUSTIFIED IN HOLDING THE SAME. IT IS HELD THAT THE APPELLANT HAS FAILED TO EXPLAIN THE EXCESS STOCK OF GOLD ORNAMENTS WEIGHING 6688.728 GRAMS FOUND DURING THE COURSE OF SURVEY. THE A.O. W AS JUSTIFIED IN MAKING THE ADDITION OF RS.52,23,896/- U/S. 69A O F THE 1. T. ACT. THE ADDITION MADE BY THE A.O. IS CONFIRMED. TH E GROUND NO.2 IS DISMISSED. I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 9 OF 12 8. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESESE HAS MAINLY REITERATED BEFORE US THE SUBMISSIONS MADE BE FORE THE AUTHORITIES BELOW IN ORDER TO EXPLAIN THE EXCESS STOCK OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY. THE LD. D.R., ON THE O THER HAND, HAS STRONGLY RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND S UBMITTED THAT THE EXPLANATION SOUGHT TO BE OFFERED BY THE ASSESSEE IN RESPECT OF EXCESS GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY HAS BEE N REJECTED BY THE ASSESSING OFFICER AS WELL AS BY THE LD. CIT(APPALS) BY GIVING COGENT AND CONVINCING REASONS AFTER DISCUSSING ALL THE RELEVAN T ASPECTS IN GREAT DETAIL. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL AVAILABLE ON RECORD, WE FIND OURSELVES IN AGREEMENT WITH THE AUTHORITIES BELOW THAT THE ASSESSEE HAS FAILED TO E XPLAIN SATISFACTORILY THE EXCESS STOCK OF GOLD ORNAMENTS FOUND DURING THE COU RSE OF SURVEY. AS REGARDS THE CLAIM OF THE ASSESSEE THAT THE EXCESS S TOCK OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY WAS PARTLY COMPRI SING OF GOLD ORNAMENTS BELONGING TO THE FAMILY MEMBERS, WHICH WE RE KEPT IN THE SHOP ONLY FOR DISPLAY PURPOSE, WE FIND THAT THERE IS NO EVIDENCE WHATSOEVER TO SUPPORT AND SUBSTANTIATE THE SAME. NO DOCUMENTARY E VIDENCE WHATSOEVER WAS FOUND DURING THE COURSE OF SURVEY TO SHOW THAT SUCH GOLD ORNAMENTS BELONGING TO THE FAMILY MEMBERS WERE LYING IN THE S HOP FOR DISPLAY PURPOSE. EVEN THE QUANTITY OF SUCH GOLD ORNAMENTS C LAIMED TO BE BELONGING TO THE FAMILY MEMBERS AS GIVEN BY THE ASS ESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING AT TWO DIFFERENT ST AGES WAS FOUND TO BE DIFFERENT. IF AT ALL SUCH GOLD ORNAMENTS BELONGING TO THE FAMILY MEMBERS WERE KEPT IN THE SHOP FOR DISPLAY PURPOSE, IT IS BE YOND COMPREHENSION AS TO HOW THE PARTNER OF THE ASSESSEE-FIRM, WHOSE STAT EMENT WAS RECORDED DURING THE COURSE OF SURVEY, WAS UNAWARE OF THE SAM E. EVEN IN HIS STATEMENT RECORDED AFTER THE SURVEY, HE DID NOT MEN TION ANYTHING ABOUT SUCH GOLD ORNAMENTS BELONGING TO THE FAMILY MEMBERS KEPT IN THE SHOP FOR DISPLAY PURPOSE WHEN HE WAS SPECIFICALLY ASKED TO EXPLAIN THE EXCESS I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 10 OF 12 STOCK FOUND DURING THE COURSE OF SURVEY. SIMILARLY THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED 2,870.310 GRAMS OF GOLD ORNAMENTS FROM M/S. TUNGER GEMS & JEWELLERY PVT. LIMITED ON THE DATE OF SURVEY IS FOUND TO BE NOT SUPPORTED BY ANY COGENT AND CONVINCING EVIDENCE . THE CLAIM MADE BY THE ASSESSEE ON THIS ACCOUNT IS FOUND TO BE FULL OF CONTRADICTION AND THE ENQUIRY CONDUCTED BY THE ASSESSING OFFICER TO CROSS VERIFY THE SAME HAS CULMINATED IN VARIOUS ADVERSE FINDINGS. HERE AGAIN IT IS SURPRISING TO NOTE THAT WHEN THE SUBSTANTIAL GOLD ORNAMENTS OF 2,870.3 10 GRAMS WERE RECEIVED ON APPROVAL BASIS ON THE DATE OF SURVEY IT SELF AS CLAIMED BY THE ASSESSEE, THE PARTNER OF THE ASSESSEE-FIRM WAS NOT EVEN AWARE OF THE SAME, INASMUCH AS, NEITHER IN HIS STATEMENT RECORDE D DURING THE COURSE OF SURVEY ON 03.03.2006 NOR EVEN IN HIS STATEMENT RECO RDED ON 09.03.2006, HE MADE ANY MENTION OF SUCH GOLD ORNAMENTS RECEIVED ON APPROVAL BASIS, WHEN HE WAS SPECIFICALLY CALLED UPON TO EXPLAIN THE DIFFERENCE IN STOCK FOUND DURING THE COURSE OF SURVEY REPRESENTING EXCE SS STOCK. EVEN THE ISSUE VOUCHER PRODUCED BY THE ASSESSEE DURING THE C OURSE OF ASSESSMENT PROCEEDINGS IN SUPPORT OF ITS CLAIM WERE NOT FOUND DURING THE COURSE OF SURVEY AND THERE WAS NO ENTRY WHATSOEVER MADE FOR T HESE ORNAMENTS EITHER IN THE BOOKS OF ACCOUNT OR EVEN IN THE STOCK RECORD. HAVING REGARD TO ALL THESE FACTS OF THIS CASE, WE FIND THAT THERE WAS A CLEAR FAILURE OF THE ASSESSEE TO EXPLAIN SATISFACTORILY THE EXCESS STOCK OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY AND THE ADDITION MADE BY THE ASSESSING OFFICER UNDER SECTION 69A BY TREATING THE SAID STOC K AS UNEXPLAINED IS RIGHTLY CONFIRMED BY THE LD. CIT(APPEALS). WE, THER EFORE FIND NO INFIRMITY IN THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON TH IS ISSUE AND UPHOLDING THE SAME, WE DISMISS GROUNDS NO. 1 & 2 OF THE ASSES SEES APPEAL. 10. THE ISSUE INVOLVED IN GROUNDS NO. 3 & 4 RELATES TO THE ADDITION OF RS.1,00,000/- MADE BY THE ASSESSING OFFICER AND CON FIRMED BY THE LD. CIT(APPEALS) ON ACCOUNT OF DISALLOWANCE OF COMMISSI ON CLAIMED TO BE PAID BY THE ASSESSEE-FIRM TO ITS EMPLOYEES. I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 11 OF 12 11. UNDER THE HEAD SALES COMMISSION, A SUM OF RS. 1,00,000/- PAID TO SEVEN EMPLOYEES WAS CLAIMED BY THE ASSESESE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE, HOWEVER, COUL D NOT SUPPORT AND SUBSTANTIATE ITS CLAIM ON THIS COUNT TO THE SATISFA CTION OF THE ASSESSING OFFICER. THE ASSESSING OFFICER, THEREFORE, MADE A D ISALLOWANCE OF RS.1,00,000/- ON ACCOUNT OF SUCH COMMISSION. ON APP EAL, THE LD. CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE B Y THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN IN PARAGRAP H NO. 17 OF HIS IMPUGNED ORDER:- 17. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND PERUSED THE ASSESSMENT ORDER. THE A.O. HAS MADE THE DISALLOWANCE OF RS.1,00,000/- BEING THE PAYMENT OF COMMISSION TO THE EMPLOYEES FOR THE REASON THAT THE APPELLANT HAS FAILED TO PROVE THE BASIS AND REASON OF PAYMENT OF COMMISSION . DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS SIMPLY MENTIONED THAT THERE IS NO RESTRICTION IN THE INCOM E TAX ACT FOR MAKING PAYMENT OF COMMISSION TO THE EMPLOYEES AND I T HAS PAID THE COMMISSION TO THE EMPLOYEES TO ENCOURAGE THEM. HOWEVER, I AM OF THE OPINION THAT THE APPELLANT HAS FAILED TO JUSTIFY THE PAYMENT OF COMMISSION TO THE EMPLOYEES. IT HAS NOT MENTIONED THAT ON WHAT BASIS THE PAYMENT OF COMMISSION WAS MA DE AND WHAT SERVICES WERE RENDERED BY THOSE EMPLOYEES TO J USTIFY THE PAYMENT OF COMMISSION. THE APPELLANT HAS ALSO FAILE D TO CLARIFY AS TO WHETHER IT HAS PAID COMMISSION TO ALL THE EMP LOYEES WORKING IN THE SHOWROOM OR THE COMMISSION WAS PAID TO LIMITED NUMBER OF EMPLOYEES. IN THE ABSENCE OF ANY PLAUSIBL E EXPLANATION AND EVIDENCES, I AM NOT INCLINED TO INT ERFERE WITH THE VIEW TAKEN BY THE A.O. THE DISALLOWANCE OF PAYM ENT OF COMMISSION OF RS.1,00,000/- IS CONFIRMED. THE GROUN D NO.4 IS DISMISSED. 12. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS RAISED A NEW C ONTENTION THAT THE AMOUNT IN QUESTION WAS PAID BY THE ASSESSEE-FIRM TO ITS EMPLOYEES AS INCENTIVE AND NOT COMMISSION. HE, HOWEVER, HAS NOT PRODUCED ANY EVIDENCE TO SUPPORT AND SUBSTANTIATE THIS NEW STAND TAKEN BEFORE THE TRIBUNAL FOR THE FIRST TIME. HE HAS ALSO NOT BEEN A BLE TO EXPLAIN ANY BASIS OF SUCH INCENTIVE CLAIMED TO BE PAID TO THE EMPLOYE ES. WE, THEREFORE, FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER O F THE LD. CIT(APPEALS) I.T.A. NO. 2109/KOL./2009 ASSESSMENT YEAR: 2006-2007 PAGE 12 OF 12 CONFIRMING THE DISALLOWANCE OF RS.1,00,000/- MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION AND UPHOLDING THE SAME, WE DISMISS GROUNDS NO. 3 & 4 OF THE ASSESSEES APPEAL. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 8, 2016. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, THE 8 TH DAY OF JULY, 2016 COPIES TO : (1) M/S. R. CHOWDHURY GRANDSONS, 152, S.P. MUKHERJEE ROAD, KOLKATA-700 026 (2) ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-29, KOLKATA, 2, GARIAHAT ROAD (SOUTH), AAYAKAR BHAWAN (DAKSHIN), KOLKATA-700 068 (3) COMMISSIONER OF INCOME-TAX (APPEALS)-XVI, KOLK ATA (4) COMMISSIONER OF INCOME TAX, KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.