The ACIT,(OSD) Circle-8, Ahmedabad V. Seema Jewellers Pvt.Ltd., Ahmedabad

ITA 212/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6496 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 22-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S A BOHRA
• Keywords: Unexplained investment
• Section: 133A

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI M.K. SHRAWAT, JM AND D.C.AGRAWAL, AM ASSTT. CIT (OSD), CIRCLE-8, AHMEDABAD. VS. SEEMA JEWELLERS (P) LTD., 207/208, SAMIR COMPLEX, C.G. ROAD, AHMEDABAD. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S. A. BOHRA, SR.DR RESPONDENT BY:- SHRI VINIT MOONDRA, AR O R D E R PER D.C. AGRAWAL, ACCOUNTANT MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE RAISING FOL LOWING GROUNDS :- (1) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.14,11,993/- ON ACCOUNT OF DISCREPANC Y IN CLOSING STOCK. (2) THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING THE ADDITION OF RS.9,10,000/- ON ACCOUNT OF STOCK OF IM ITATION JEWELLERY. 2. THE ASSESSEE HAS FILED THE CROSS OBJECTION IN WH ICH ARGUMENTATIVE GROUNDS ARE TAKEN. THE GIST OF C.O. IS THAT LD. CIT (A) HAS RIGHTLY DELETED THE ADDITION. ITA NO.212/AHD/2009 ALONG WITH CO NO.19/AHD/2009 ASST. YEAR 2005-06 ITA NO.212/AHD/2009 ALONG WITH CO NO.19/AHD/2009 ASST. YEAR 2005-06 2 3. REGARDING REVENUES GROUNDS THE FACTS ARE THAT A SURVEY U/S 133A WAS CARRIED OUT ON 14.0.2004 AT THE BUSINESS PREMIS ES OF THE ASSESSEE. DURING THE COURSE OF SURVEY STOCK OF GOLD JEWELLERY AS PER BOOKS WAS VALUED AT RS.3.07,22,881/- WHILE NO CLOSING STOCK W AS FOUND AT THE SURVEY PREMISES. THE ASSESSEE IS ENGAGED IN THE BUSINESS O F TRADING IN BULLION AND MAKING ORNAMENTS ON JOB WORK BASIS ETC. WHEN AS KED TO EXPLAIN ASSESSEE HAD SUBMITTED THAT GOLD WAS SOLD TO TWO PA RTIES NAMELY CHANDRAKANT NANDLAL SONI AND SUNIL JEWELLERS. THE E NTRIES RELATING TO WHICH ARE NOT MADE IN THE BOOKS. IT WAS FURTHER EXP LAINED THAT SALES TO CHANDRAKANT NANDLAL SONI AMOUNTED TO RS.1,19,02,583 /- WHEREAS SALES TO SUNIL JEWELLERS AMOUNTED TO RS.1,78,10,070/-. IT WA S ALSO EXPLAINED THAT THERE WAS SOME CASH CREDIT OF RS.6,25,000/- TO SHRI CHOKSHI RAMNIKLAL PITAMBERDAS. THE AO IN TERMS OF QUANTITIES AND VALU E WORKED OUT THE STOCK AS PER BOOKS AS UNDER:- PARTICULARS QUANTITY (IN GRAM) RATE VALUE BULLION (24 CARAT) 30499.940 564.12 RS.17205511.47 FINE GOLD ISSUED FOR JEWELLERY MAKING 8606.400 - - FINE GOLD RECEIVED FOR JEWELLERY MAKING (-) 6436.400 - - ORNAMENT (22 CARRATE) 40947.862 330.111 13517369.97 TOTAL 73617.802 30722881.44 THE AO DID NOT ACCEPT THE EXPLANATION AND HELD THAT THE STOCK DIFFERENCE REMAINS UN-RECONCILED. OUT OF TOTAL BOOK STOCK OF 7 3617.802 GMS. THE AO ITA NO.212/AHD/2009 ALONG WITH CO NO.19/AHD/2009 ASST. YEAR 2005-06 3 TREATED 2153.906 GRAMS AS UNEXPLAINED INVESTMENT UN DER SECTION 69A BEING THE GOLD INCORPORATED IN THE BOOKS. ITS VALUE WAS WORKED AT RS.14,11,993/-. IN RESPECT OF OTHERS IT SEEMS THAT THE AO WAS SATISFIED WITH THE EXPLANATION. 4. WHEN THE MATTER CAME UP BEFORE THE LD. CIT(A) HE HELD THAT THE VALUE OF STOCK OF GOLD WAS INCORPORATED IN THE BOOK S AND, THEREFORE, NO ADDITION ON THAT ACCOUNT CAN BE MADE. HE OBSERVED I N THIS REGARD AS UNDER:- 2.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS AS ADVANCED BY THE APPELLANT. AT THE TI ME OF SURVEY, STOCK OF 995 GOLD WAS FOUND TO BE NIL AND STOCK OF 22 CT. OR NAMENTS WAS OF 163.632 GMS. THIS IMPLIES THAT THE STOCK OF FINE GO LD ISSUED TO KARIGARS FOR JEWELLERY MAKING AND STOCK OF FINE GOLD RECEIVE D FOR JEWELLERY MAKING HAS BEEN ACCOUNTED FOR IN THE STOCK STATEMENT FOR T HE PERIOD FROM 1.4.2004 TO 31.3.2005. THE STOCK FOUND ON THE DATE OF SURVEY OF 0 GM. FOR 995 GOLD AND 163.632 GMS. FOR ORNAMENTS OF 22 CTS. HAVE BEEN FOUND TO BE CORRECT IN THE STOCK STATEMENT OF THE ENTIRE YEA R AND IN ARRIVING AT THE WORKING OF CLOSING STOCK AS ON 31.3.2005. THEREFORE , THERE IS NO JUSTIFICATION FOR ADDITION OF DIFFERENCE OF 2153.90 6 GMS., HENCE THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.14,11,993/-. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATERI AL ON RECORD. THE LD. DR BASICALLY RELIED ON THE ORDER OF AO WHEREAS THE LD. AR RELIED ON THE ORDER OF LD. CIT(A). UNDISPUTED FACTS ARE THAT NO PHYSICAL STOCK WAS FOUND AT THE TIME OF SURVEY. ASSESSEE EXPLAINED THA T THIS STOCK SOLD BUT HAS NOT BEEN ENTERED IN THE BOOKS, AS BOOKS HAS TO BE STILL WRITTEN THAT DAY. SUBSEQUENTLY ENTIRE SALE OF GOLD HAS BEEN TAKEN IN THE BOOKS. THEY WERE ITA NO.212/AHD/2009 ALONG WITH CO NO.19/AHD/2009 ASST. YEAR 2005-06 4 AUDITED AND RETURN HAS BEEN FILED ON THAT BASIS. TH E EXPLANATION OF THE ASSESSEE THAT STOCK AS PER BOOKS WAS EITHER SOLD OR GIVEN TO KARIGARS FOR MAKING JEWELLERY WAS NOT FOUND FALSE AND ENTIRE STO CK HAS BEEN ACCOUNTED FOR IN THE BOOKS. THE AO WAS INCORRECT TO PRESUME T HE EXISTENCE OF GOLD AND TREATING INVESTMENT THEREIN AS UNEXPLAINED. ONC E AT BEST WHEN STOCKS AS PER BOOKS ARE NOT FOUND PHYSICALLY THEN ONLY INF ERENCE WHICH CAN BE DRAWN WOULD BE THAT SUCH STOCK HAS BEEN SOLD AND HA S NOT BEEN ACCOUNTED FOR. THERE IS NO CASE FOR INVOKING THE PROVISIONS O F SECTION 69A WHICH CAN BE ONLY INVOKED WHEN CERTAIN STOCK IS FOUND OUT SIDE THE BOOK AND INVESTMENT THEREIN IS NOT EXPLAINED. THIS IS NOT TH E CASE IN THE PRESENT CASE, RATHER IT IS REVERSE. THE ONLY INFERENCE FOR NOT FINDING THE PHYSICAL STOCK WOULD BE THE SALE WHICH HAS BEEN ULTIMATELY R ECORDED IN THE BOOKS. ACCORDINGLY, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. THIS GROUND OF REVENUE IS REJECTED. 6. THE SECOND GROUND RELATES TO ADDITION OF RS.9,10 ,000/- AS UNEXPLAINED INVESTMENT IN STOCK OF IMITATION JEWELL ERY. CERTAIN STOCK OF IMITATION JEWELLERY WAS FOUND AT THE BUSINESS PREMI SES OF THE ASSESSEE WHOSE VALUE WAS DETERMINED AT RS.9,10,000/-. IT WAS EXPLAINED TO THE AO THAT IMITATION JEWELLERY DID NOT BELONG TO IT BUT B ELONGED TO ONE SHRI ASHISH SONI WHO HAS PLACED THE STOCK WITH THE ASSES SEE FOR SALE. SINCE IMITATION JEWELLERY WAS NOT SOLD IT WAS RETURNED TO HIM ON 20.9.2004. THE ITA NO.212/AHD/2009 ALONG WITH CO NO.19/AHD/2009 ASST. YEAR 2005-06 5 ASSESSEE PRODUCED SHRI ASHISH SONI BEFORE THE AO, W HOSE STATEMENT WAS RECORDED. ON VERIFICATION OF THE FACTS IT WAS NOTIC ED BY THE AO THAT SHRI ASHISH SONI WAS DOING THIS BUSINESS FOR LAST 8-10 Y EARS. HE WAS NOT ISSUING ANY VOUCHER AT THE TIME OF RECEIVING IMITAT ION JEWELLERY FROM VARIOUS KARIGARS AND WAS NOT OBTAINING VOUCHERS FRO M THE SHOP OWNERS TO WHOM JEWELLERY WAS GIVEN FOR SALE. THE AO, HOWEVER, WAS OF THE VIEW THAT SHRI ASHISH SONI IS NOT A MAN OF MEANS, THEREF ORE, HE COULD NOT HAVE INVESTED IN IMITATION JEWELLERY GIVEN TO KARIGARS. HE ACCORDINGLY TREATED THE SUM OF RS.9,10,000/- AS UNEXPLAINED INVESTMENT IN IMITATION JEWELLERY AND ADDED THE SAME U/S 69A. 7. THE LD. CIT(A) DELETED THE ADDITION BY HOLDING T HAT ASSESSEE IS NOT DEALING IN IMITATION JEWELLERY AND, THEREFORE, THER E IS NO NEED TO PURCHASE UNACCOUNTED IMITATION JEWELLERY FROM ANY ONE. IN TH IS REGARD HE OBSERVED AS UNDER :- 3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE SUBMISSIONS AS ADVANCED BY THE AR OF THE APPELLANT. FROM THE DETAILS FURNISHED BY THE AR OF THE APPELLANT DURING THE COU RSE OF APPELLATE PROCEEDINGS, IT IS SEEN THAT THE STOCK OF IMITATION JEWELLERY WAS NOT OF THE APPELLANT, BUT THE SAME WAS RECEIVED ON JANGAD/APPR OVAL BASIS ON 10.9.04 FROM SHRI ASHISH SONI, SUPPLIER FOR SALE. S INCE THE APPELLANT HAS NOT BEEN ABLE TO MATERIALIZE THE SALE, THE SAME WER E RETURNED TO SHRI SONI ON 20.9.2004, WHICH FACT HAD BEEN CONFIRMED BY SHRI SONI AS PER THE STATEMENT RECORDED BEFORE THE AO. IN THE STATEMENT, IT WAS CLEARLY STATED BY SHRI SONI THAT HE HAD TAKEN BACK THE GOODS FROM THE APPELLANT. SINCE THE APPELLANT WAS NOT DEALING IN THE IMITATION JEWE LLERY, THERE WAS NO NEED TO MAKE AN ADDITION ON THIS ACCOUNT IN THE HAN DS OF THE APPELLANT. CONSIDERING THESE FACTS AND CIRCUMSTANCES, I HOLD T HAT THE AO IS NOT JUSTIFIED IN MAKING AN ADDITION OF RS.9,10,000/- BE ING THE VALUE OF ITA NO.212/AHD/2009 ALONG WITH CO NO.19/AHD/2009 ASST. YEAR 2005-06 6 IMITATION JEWELLERY, AS THERE WAS NO IMITATION JEWE LLERY IN THE NAME OF THE APPELLANT. THE AO IS DIRECTED TO DELETE THE ADDITIO N SO MADE. 8. WE HAVE HEARD THE PARTIES. THE LD. DR WAS OF THE VIEW THAT STOCK OF IMITATION JEWELLERY WAS NOT EXPLAINED AND HENCE ADD ITION IS REQUIRED. THE LD. AR ON THE OTHER HAND, SUPPORTED THE ORDER OF LD . CIT(A). AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE DECLINE TO IN TERFERE. THE REASONS ARE THAT ONCE ASHISH SONI HAS ADMITTED TO HAVE GIVEN TH E JEWELLERY TO THE ASSESSEE AND HIS STATEMENT IS NOT FOUND FALSE AND F URTHER THAT ASSESSEE IS NOT DEALER IN IMITATION JEWELLERY THE ADDITION ON T HIS ACCOUNT NEED NOT BE MADE IN THE HANDS OF THE ASSESSEE. THE AO WAS REQUI RED TO MAKE VERIFICATION AND COULD HAVE COME TO A FINDING THAT WHAT IS STATED BY ASHISH SONI WAS NOT CORRECT AND HENCE THE EXPLANATI ON FURNISHED BY THE ASSESSEE WAS ALSO NOT CORRECT. CIRCUMSTANTIAL EVIDE NCE SHOWED THAT ONCE THE ASSESSEE IS NOT DEALING IN IMITATION JEWELLERY HE COULD NOT HAVE PURCHASED THEM OUTSIDE THE BOOKS PARTICULARLY WHEN COSTLY ITEMS OF REAL GOLD ARE FULLY RECORDED IN THE BOOKS OF ACCOUNT. TH ERE IS REALLY NO REASON TO KEEP UNACCOUNTED IMITATION JEWELLERY WITH HIM. A CCORDINGLY, THE EXPLANATION SUBMITTED BY THE ASSESSEE IS PLAUSIBLE. AS A RESULT, THIS GROUND OF REVENUE IS ALSO REJECTED. 9. THE CROSS OBJECTION FILED BY THE ASSESSEE UNDER THE CIRCUMSTANCES IS ALLOWED. ITA NO.212/AHD/2009 ALONG WITH CO NO.19/AHD/2009 ASST. YEAR 2005-06 7 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALLOWED. ORDER WAS PRONOUNCED IN OPEN COURT ON 27/5/11. SD/- SD/- (M. K. SHRAWAT) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMB ER AHMEDABAD, DATED : 27/5/11. MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 12/5/2011 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 23/05/2011 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..