M/s Tholasi Jewellery Mart, Mysore V. DCIT, Mysore

ITA 238/BANG/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1501 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 03-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 01-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: D VINAY
• Section: 133A; 234B; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA 238/BANG/2010 ASSESSMENT YEAR : 2006-07 M/S. THOLASI JEWELLERY MART, NO.578, ASHOKA ROAD, MYSORE. : APPELLANT VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, MYSORE 575 001. : RESPONDENT APPELLANT BY : SHRI D. VINAY, ADVOCATE RESPONDENT BY : SHRI MANOJ KUMAR, ADDL.CIT(DR) O R D E R PER SMT. P. MADHAVI DEVI, JUDICIAL MEMBER THIS IS ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2006-07. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEAL S) OUGHT NOT TO HAVE PASSED THE ORDER IN THE MANNER IN WHICH HE HAS DONE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED COMMISSIONER (A) ERRED IN CONFIRMING AN ADD ITION OF RS.20,17,684/- TOWARDS VALUE OF GOLD JEWELLERY FOUN D DURING THE COURSE OF SURVEY. ITA NO. 238/BANG/10 PAGE 2 OF 6 3. THE LEARNED COMMISSIONER (A) ERRED IN CONFIRMING THE VALUATION OF GOLD AT RS.780/- PER GRAM WHICH WAS FO R 24 CARAT GOLD. FURTHER, THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE ENTIRE GROSS WEIGHT OF 9 KGS. WAS NOT PURCHASED DURING THE TIME OF SURVEY. 4. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT GOLD JEWELLERY COULD NOT BE MADE FROM 24 CARAT GOLD, BUT COULD BE ONLY OUT OF 22 CARAT GOLD. 5. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRE CIATED THAT THE ADDITION CONFIRMED (9 KGS GOLD) WAS GROSS WEIGHT WHICH INCLUDED STONES, BEEDS ETC., AND WAS NOT THE NET WE IGHT. FURTHER, THE LEARNED CIT(A) ERRED IN ADOPTING THE RATE OF RS .780/GRAM EVEN FOR THE WEIGHT OF STONES, BEEDS, ETC., WHICH I N FACT OUGHT TO HAVE BEEN REDUCED FROM THE GROSS WEIGHT. ACCORDING LY THE ADDITION CONFIRMED WAS HIGHLY ARBITRARY AND IS LIAB LE TO BE DELETED. 6. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE DELET ED THE ENTIRE ADDITION WITH REGARD TO SILVER ARTICLES. ON THE CONTRARY THE LEARNED COMMISSIONER (A) ADOPTED 11.15% (DECLARED G .P. RATE) ON THE SILVER ARTICLES FOUND DURING THE COURSE OF S URVEY TO THE TUNE OF RS.1,37,700/-. ACCORDINGLY, THE ADDITION NEEDS TO BE DELETED. 7. WITHOUT PREJUDICE TO THE ABOVE MENTIONED GROUNDS , THE LEARNED COMMISSIONER (A) OUGHT TO HAVE APPRECIATED THAT THE GOLD JEWELLERY & SILVER ARTICLES WERE NOT EITHER SO LD OR PURCHASED ON THE DATE OF SURVEY AND THEREFORE IT WAS NOT JUST IFIED FOR HIM TO ADOPT THE VALUE OF GOLD AS ON 31.1.2006 OR THE VALU E THE SILVER ARTICLES AT THE DECLARED G.P. RATE BEING 11.15%. 8. WITHOUT PREJUDICE TO THE ABOVE MENTIONED GROUNDS THE ADDITIONS CONFIRMED WAS HIGHLY ARBITRARY, UNREALIST IC AND LIABLE TO BE DELETED IN FULL. 9. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE CONFI RMED THE INTEREST LEVIED U/S. 234B AND 234C OF THE ACT. 10. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED A T THE TIME OF HEARING OF THE APPEAL THE APPELLANT PRAYS THAT T HE APPEAL MAY BE ALLOWED. ITA NO. 238/BANG/10 PAGE 3 OF 6 3. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS GROUNDS OF APPEAL 6 & 7. ACCORDINGLY GROUND NOS.6 & 7 ARE REJECTED AS NO T PRESSED. 4. GROUND NOS. 1, 9 & 10 ARE ALSO GENERAL IN NATURE AND THEREFORE NEEDS NO ADJUDICATION. GROUND NO.8 BEING CONSEQUEN TIAL IN NATURE ALSO NEEDS NO SPECIFIC ADJUDICATION. 5. COMING TO GROUND NOS.2 TO 5, THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF PURCHASE, MANUFACTURE AND SALE OF GOLD BULLION, JEW ELLERY AND SILVER ARTICLES. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.10.06 DECLARING TOTAL INCOME OF RS.65,67,990. THERE WAS A SURVEY ACTION U/S. 133A IN THE PREMISES OF THE ASSESSEE ON 31.1.06 WHEN THE STOCK OF GOLD JEWELLERY WAS FOUND TO BE EXCESS BY 9 KGS. AND SILVER ARTICLES SH ORT BY 12 KGS. AND ALSO THERE WAS EXCESS CASH OF RS. 1,41,413. THE ASSESSEE AGREED FOR INCLUSION OF STOCK OF GOLD AT RS.50,02,316 AND AS REGARDS THE SHORTAGE OF SILVER ARTICLES, IT WAS CONSIDERED AS SALE NOT RECORDED AN D EXCESS CASH AS PART OF THE SALE PROCEEDS. WHILE VALUING THE GOLD STOCK, T HE ASSESSEE ADOPTED THE AVERAGE OF 10 MONTHS BULLION PRICE ON THE PLEA THAT THE PURCHASE COULD NOT BE MADE OVERNIGHT. 6. THE ASSESSING OFFICER HOWEVER REJECTED THIS CONT ENTION AND VALUED THE GOLD @ RS.780 PER GM. AS ON 31.1.2006, WHICH CO MES TO RS.70,20,000. HE ALSO ADOPTED THE SHORTAGE OF SILVER ARTICLES AT RS.1,53,000 AND AFTER REDUCING THE VALUE OF GOLD AND SILVER INCLUDED IN T HE RETURN AT RS.51,39,531, HE MADE AN ADDITION OF RS.20,33,459. ITA NO. 238/BANG/10 PAGE 4 OF 6 7. AGGRIEVED BY THE SAME, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(APPEALS) STATING THAT THE GOLD JEWELLERY FO UND DURING THE COURSE OF SURVEY COULD NOT HAVE BEEN PURCHASED OVERNIGHT AND THE QUALITY OF GOLD ALSO HAS BEEN VALUED AT 24 CARATS WHEREAS 22 CARATS GOLD IS USED FOR MAKING JEWELLERY AND THE AO HAS ADOPTED THE GROSS W EIGHT INCLUDING THE BEADS AND STONES USED IN THE JEWELLERY WHEREAS THE NET WEIGHT OF GOLD IN THE JEWELLERY WOULD BE MUCH LESS. 8. HOWEVER, THE CIT(APPEALS) WAS NOT CONVINCED WITH THESE ARGUMENTS AND HE CONFIRMED THE ORDER OF THE ASSESSING OFFICER AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND SU BMITTED THAT THOUGH THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE BILLS AND VOUCHERS FOR THE PURCHASE OF GOLD AT THE TIME OF SURVEY OR ASSESSMEN T PROCEEDINGS OR THEREAFTER, BUT HE HAS ALL THE RELEVANT DETAILS AT PRESENT. HE THUS SOUGHT FOR REMITTANCE OF THE ISSUE TO THE FILE OF THE ASSESSIN G OFFICER FOR VERIFICATION OF THESE DETAILS. 10. THE LD. DR, ON THE OTHER HAND, SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE H AS NOT PRODUCED ANY EVIDENCE EVEN BEFORE THE CIT(APPEALS) OR BEFORE THE ITAT AND THEREFORE THE ADDITIONS CONFIRMED BY THE CIT(APPEALS) HAVE TO BE UPHELD. 11. HAVING HEARD BOTH THE PARTIES AND HAVING CONSID ERED THE RIVAL CONTENTIONS, WE FIND SOME FORCE IN THE CONTENTION O F THE ASSESSEE THAT 9 KG. OF GOLD STOCK COULD NOT HAVE BEEN PURCHASED OVERNIG HT I.E., ON 31.1.06, THE ITA NO. 238/BANG/10 PAGE 5 OF 6 DATE OF SURVEY. IT COULD HAVE BEEN PART OF STOCK A CCUMULATED OVER A PERIOD OF TIME AND THEREFORE ADOPTION OF THE VALUE OF GOLD AS ON 31.1.2006 FOR WHOLE OF THE GOLD IS NOT CORRECT. 12. FURTHER, WE ALSO FIND STRENGTH IN THE CONTENTIO N OF THE ASSESSEE THAT GOLD HAS BEEN VALUED AT 24 CTS., WHILE 22 CTS. GOLD IS USED FOR MAKING THE GOLD JEWELLERY AND THEREFORE VALUATION OF 22 CTS. G OLD MAY BE ADOPTED. 13. AS REGARDS THE ASSESSEES CONTENTION THAT THE W EIGHT OF BEADS AND STONES SHOULD ALSO BE REDUCED FROM THE GROSS WEIGHT OF GOLD JEWELLERY, WE ARE NOT READY TO ACCEPT THIS CONTENTION FOR THE REA SON THAT THE VALUE OF STONES AND BEADS HAS NOT BEEN ADDED BY THE AUTHORIT IES BELOW AND THE SOME OF THE STONES MAY BE VERY PRECIOUS VALUING MUC H MORE THAN THE GOLD FOUND DURING THE COURSE OF SURVEY. IN VIEW OF OUR OBSERVATIONS ABOVE, WE FEEL NO PURPOSE WOULD BE SERVED BY REMITTING THE MA TTER BACK TO THE FILE OF THE AO, BUT WE DEEM IT FIT AND PROPER TO VALUE THE STOCK OF GOLD FOUND AT THE TIME OF SURVEY IN EXCESS OF WHAT IS INCLUDED IN THE RETURN AT RS.12 LAKHS. THUS, RELIEF OF RS.8,33,459 IS GIVEN TO THE ASSESS EE AND THE BALANCE OF RS.12,00,000 IS CONFIRMED. 14. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF MARCH, 2011. SD/- SD/- ( DR. O.K. NARAYANAN ) ( P. MADHAVI DEVI ) VICE PRESIDENT JUDICIAL MEMBER BANGALORE, DATED, THE 9 TH MARCH, 2011. DS/- ITA NO. 238/BANG/10 PAGE 6 OF 6 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. C IT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.