J P Jewellery , Tirupathi V. Asst. Commissioner of Income Tax, Circle-1(1), Tirupathi

ITA 238/Hyd/2019

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6630 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 13-01-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 21-02-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: KP GANGI REDDY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO. AY. APPELLANT RESPONDENT 829/HYD/2018 2012-13 THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE-1(1), TIRUPATI M/S.J.P.JEWELLERY, TIRUPATI [PAN: AADFJ4897R] 238/HYD/2019 2012-13 M/S.J.P.JEWELLERY, TIRUPATI [PAN: AADFJ4897R] THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE-1(1), TIRUPATI FOR REVENUE : SHRI ROHIT MUJUMDAR, DR FOR ASSESSEE : SHRI K.P.GANGI REDDY, AR DATE OF HEARING : 13-01-2021 DATE OF PRONOUNCEMENT : 29-01-2021 O R D E R PER BENCH : THESE REVENUES AND ASSESSEES CROSS-APPEALS FOR AY.2012-13 ARISE FROM THE CIT(A)-TIRUPATIS ORDER(S) DATED 28- 02-2018 PASSED IN CASE NO.045/2015-16/CIT(A)/TPT, I N PROCEEDINGS U/S.143(3) R.W.S.147 OF THE INCOME TAX A CT, 1961 [IN SHORT, THE ACT]. ITA NOS. 829/HYD/2018 & 238/HYD/2019 :- 2 -: 2. AT THE OUTSET, WE NOTICE THAT ASSESSEES APPEAL ITA NO.238/HYD/2019 SUFFERS FROM DELAY OF 291 DAYS AS ATTRIBUTABLE TO MISPLACING OF APPEAL PAPERS BY ONE OF TH E OFFICE STAFF, IS CONDONED SINCE THE SAME IS NEITHER INTENTIONA L NOR DELINQUENT ON THE PART OF THE ASSESSEE BUT FOR THE CIRCUMSTANCES BEYOND ITS CONTROL. THE APPEAL ITA NO.238/HYD/2019 IS TAKEN UP FOR ADJUDICATION ON MERIT S. 3. COMING TO THE RIVAL PLEADINGS IN THESE CROSS-APPEAL S, WE NOTICE DURING THE COURSE OF HEARING THAT THE REVENUES SOLE ENDEAVOUR IS TO REVIVE THE CHALLENGE CORRECTNESS OF THE CIT(A)S ACTION REVERSING EXCESS GOLD ADDITION OF RS.2,33,15, 262/- WHEREAS THE ASSESSEES IDENTICAL GRIEVANCE UPON SILV ER ORNAMENTS/EXCESS STOCK INVOLVES A SUM OF RS.17,29,072 /- CONFIRMED IN THE LOWER APPELLATE ORDER. BOTH THE LEARN ED REPRESENTATIVES TAKE US TO THE CIT(A)S DETAILED DISCUSSI ON AS FOLLOWS: 6.1 I HAVE CONSIDERED THE FINDINGS OF THE AO AND W RITTEN SUBMISSIONS OF THE ASSESSEE CAREFULLY. THERE WAS A SURVEY ACTION AT THE BUSINESS PREMISES OF THE ASSESSEE ON 21.6.2011, AND PHYSICAL STOCK OF GOLD ORNAMENTS WEIGHING 61694 GMS WERE FOU ND. HOWEVER, THE AO COMPUTED THE GOLD ORNAMENTS STOCK AS PER BOO KS WEIGHING 49158.432 GMS AND PURCHASE OF GOLD BULLION WEIGHING 2000 GMS, TOTALLING TO 51158.432 GMS AS STOCK AS PER BOOKS, A ND DIFFERENCE OF 10535.591 GMS WAS COMPUTED AS EXCESS GOLD ORNAMENTS . WHILE DOING SO, THE AO HAD IGNORED THE CLAIM OF THE APPEL LANT THAT GOLD BULLION WEIGHING 3950.00 GMS AND OLD GOLD WEIGHING 6781.7571 GMS, AVAILABLE AS PER BOOKS OF ACCOUNT, BUT NOT PHYSICAL LY FOUND AT THE TIME OF SURVEY ACTION, LEADING TO NON-CONSIDERATION OF DEFICIT STOCK. THE REASON GIVEN BY THE AO AGAINST NON-CONSIDERATIO N OF DEFICIT STOCK OF GOLD BULLION AND OLD GOLD WAS THAT THERE WAS NO SUFFICIENT EVIDENCE FOUND AT THE TIME OF SURVEY ABOUT CONVERSION OF OLD GOLD AND GOLD BULLION INTO THE STOCK OF GOLD JEWELLERY. HOWEVER, THE AR OF THE APPELLANT VEHEMENTLY CONTESTED AGAINST NON-CONSIDER ATION OF CONVERSION OF GOLD BULLION WEIGHING 3950 GMS AND OL D GOLD JEWELLERY ITA NOS. 829/HYD/2018 & 238/HYD/2019 :- 3 -: WEIGHING 6781.757 GMS, ON THE GROUND THAT NAMES AND ADDRESSES OF THE WORKERS TO WHOM THE BULLION AND OLD GOLD WAS IS SUED FOR MAKING GOLD ORNAMENTS WERE GIVEN AT THE TIME OF SURVEY ACT ION TO THE DEPARTMENT. DURING THE COURSE OF APPELLATE PROCEEDI NGS, THE AR OF THE APPELLANT DRAWN TO MY ATTENTION THE RECONCILIATION OF STATEMENT OF GOLD GIVEN TO THE AO AT THE TIME OF SURVEY, WHEREIN THE BOOK STOCK WAS ARRIVED AT 61994.720 GMS. DURING THE COURSE OF APPELLATE PROCEEDINGS, AR OF THE APPELLANT ALSO DRAWN TO MY A TTENTION THE SWORN STATEMENT U/S.131 OF THE ACT ON 21.6.2011, GI VEN BY SRI P. NAVARATHAN S/O SRI PRAKASH CHAND, A PARTNER OF THE FIRM. I HAVE PERUSED THE RECONCILIATION OF BOOK STOCK WORKED OUT BY THE APPELLANT VIDE THEIR LETTER DATED 21.6.2011, WHICH IS PART OF THE SURVEY RECORD MENTIONING ABOUT 9434 PIECES, AND WEIGHING 61994.72 0 GMS. I HAVE ALSO PERUSED THE REPLIES GIVEN BY SRI P. NAVARATHAN IN THE COURSE OF STATEMENT RECORDED U/S.131 ON 21.6.2011 AND REPLIES TO QUESTION NO.3, 6, 7 & 8 ARE AS UNDER:- Q.3) AS ON DATE OF SURVEY I.E. ON 21-06-2011, THE B ULLION AS PER YOUR BOOKS OF ACCOUNTS IS AT 3950 GRAMS AND WHEREAS ON P HYSICAL INVENTORY, NO STOCK WAS FOUND AND NO BULLION 'WAS P RODUCED BY YOU FOR VERIFICATION. PLEASE EXPLAIN THE REASONS' FOR T HE SHORTAGE OF THE BUNION? ANS. 1 HAVE SENT ALL THE 3950 GRAMS OF GOLD BULLION TO THE GOLD SMITHS SITUATED AT CHENNAI, MUMBAI, NELLORE AND TIRUPATI. I HAVE RECEIVED GOLD ORNAMENTS FROM THE 'WORKERS IN RESPECT OF ALL THE GOLD BULLION OF 3950 GRAMS. FURTHER, I HAVE RECEIVED GOLD BULLION O F 2KGS FROM M/S.DP BULLIONS, NELLORE VIDE BILL NO.2655 DATED 07 -06-2011 AND 3048 DATED 15-06-2011 AND THE SAME WAS ISSUED TO TH E GOLD SMITHS FOR MAKING ORNAMENTS AND I HAVE RECEIVED THE GOLD O RNAMENTS IN RESPECT OF THESE 2KGS GOLD BULLION. Q.6) YOU HAVE STATED THAT YOU HAVE GIVEN BULLION TO VARIOUS WORKERS CHENNAI, MUMBAI, NELLORE AND TIRUPATI. WHAT IS THE MODUS OPERANDI FOR HANDING OVER THE BULLION TO THE WORKERS? ANS. I WILL PERSONALLY GO OUT TO THE VARIOUS PLACES AND HAND OVER THE BULLION TO THE WORKERS AND THE WORKERS WILL COME OU T TO MY SHOP PERSONALLY TO HAND OVER THE GOLD ORNAMENTS. WHEN I ISSUE BULLION FOR MAKING GOLD ORNAMENTS, I WILL TAKE A RECEIPT FROM T HE WORKER AND I WILL ALSO SIGN THE RECEIPT WHENEVER I RECEIVE GOLD ORNAMENTS FROM THE WORKERS. I WILL PRODUCE THE RECEIPTS WITHIN 2 DAYS. Q.7) AS PER THE STOCK REGISTER, STOCK OF OLD GOLD W AS TO THE TUNE OF 6781.757 GRAMS BUT ON THE VERIFICATION PHYSICALLY, NO OLD GOLD IS FOUND. FURTHER, THERE ARE NO OUTWARD ENTRIES IN THE OLD GOLD REGISTER AND INWARD ENTRIES IN GOLD ORNAMENTS REGISTER. PLEA SE EXPLAIN? ITA NOS. 829/HYD/2018 & 238/HYD/2019 :- 4 -: ANS.) AS REPLIED TO THE QUESTION NO.4, NO ENTRIES W ERE MADE SINCE OUR ACCOUNTANT MR. NAGARAJU FELL SICK. I HAVE MAINTAINE D KACHA WORKSHEETS AND RECEIPTS FOR INWARD AND OUTWARD TRAN SACTIONS AND I WILL PRODUCE THE SAME WITHIN 2 DAYS. Q.8) PLEASE FURNISH THE NAMES AND ADDRESSES OF THE WORKERS TO WHOM THE BULLION AND OLD GOLD WAS STATED TO HAVE BEEN IS SUED FOR MAKING GOLD ORNAMENTS AND ALSO STATED TO HAVE BEEN RECEIVE D GOLD ORNAMENTS. ANS. 1) SRI SIVA ACHARI, BESTA VEEDHI, TIRUPATI (C ELL NO.9949906346) 2) SRI ANAND ACHARI, IN OUR SHOP (CELL NO.810623338 1) 3) OM JEWELLERS, NSC BOSE ROAD, SHOWKARPET, CHENNAI 4)DHANALAKSHMI JEWELLERY, NSC BOSE ROAD, SHOWKARPET , CHENNAI 5) LAKSHMI JEWELLERY, NSC BOSE ROAD, CHENNAI 6.2 ON CONSIDERATION OF THE REPLIES GIVEN BY P. NAV ARATHAN DURING THE COURSE OF SURVEY ACTION AND ALSO RECONCILIATION OF THE STOCKS FURNISHED BY THE APPELLANT AT THE TIME OF SURVEY ACTION ITSEL F, IT IS ABUNDANTLY CLEAR THAT APPELLANT FIRM HAD GIVEN BULLION WEIGHIN G 3950 GMS AND OLD GOLD WEIGHING 6757.757 QMS TO KARIGARS, WORKERS , GOLD SMITHS, FOR MAKING GOLD ORNAMENTS. THE PARTNER OF THE FIRM HAD ALSO GIVEN THE NAMES AND ADDRESSES OF GOLDSMITHS / ACHAARIES, WHO COME TO THE SHOP OF THE ASSESSEE TO HAND OVER GOLD ORNAMENTS. T HE FACT THAT THERE WAS NO PHYSICAL STOCK FOUND IN RESPECT OF THE BULLI ON WEIGHING 3950 GMS AND OLD GOLD WEIGHING 6781.757 GMS AS AGAINST T HE BOOK STOCK CLEARLY POINT TO THE ISSUANCE OF THESE ITEMS TO GOL DSMITHS. THE AO DID NOT MAKE ANY EFFORT IN THE COURSE OF ASSESSMENT' PR OCEEDINGS ABOUT THE VERACITY OF THE CLAIMS OF ASSESSEE ABOUT THE IS SUANCE OF GOLD BULLION AND OLD GOLD TO WORKERS FOR GOLD MAKING. IN VIEW OF THE REPEATED CLAIMS OF THE ASSESSEE FIRM ON THE ISSUE O F OLD GOLD AND GOLD BULLION TO GOLD SMITHS FOR MAKING GOLD ORNAMEN TS, AO SHOULD HAVE CONSIDERED THESE ITEMS WHILE COMPUTING THE BOO K STOCK AFTER MAKING NECESSARY ENQUIRIES. IF THE RECONCILIATION I S DONE ACCORDING TO MATERIAL AVAILABLE ON THE DATE OF SURVEY ACTION AFT ER INCLUDING THESE ITEMS, THE DIFFERENCE IN THE STOCK OF GOLD COMES TO A DIFFERENCE OF 196.17 GMS ONLY. EVEN THIS DIFFERENCE COULD BE DUE TO MISTAKES IN THE NET WEIGHTS OF STONES. THE SURVEY RECORD SHOWS THAT THE VALUATION OF THE PHYSICAL STOCK I.E INVENTORY OF STOCK WAS ALSO NOT DONE WITH THE HELP OF REGISTERED VALUERS. HENCE, SMALL DIFFERENCE OF 196.17 GMS CAN BE ATTRIBUTABLE TO THE LACK OF INVOLVEMENT OF E XPERTS LIKE REGISTERED VALUERS IN THE PROCESS OF TAKING INVENTO RY. IT IS PERTINENT TO MENTION THAT THE APPELLANT HAD DECLARED RS.10 LAKHS AS ADDITIONAL INCOME AND PAID TAXES TO COVER UP DISCREPANCIES, WH ICH WILL TAKE CARE OF DIFFERENCE OF 196.17 GMS ALSO. IN VIEW OF THE AB OVE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE CONSIDERED O PINION THAT THE AO ITA NOS. 829/HYD/2018 & 238/HYD/2019 :- 5 -: IS INCORRECT IN ARRIVING STOCK DIFFERENCE IN RESPEC T OF GOLD ORNAMENTS AND THEREFORE, I DIRECT THE AO TO DELETE THE ADDITI ON OF RS.2,33,15,262/-. 6.3 REGARDING DIFFERENCE IN SILVER ORNAMENTS OF RS. 17,29,072/-, THE AR OF THE APPELLANT DID NOT MAKE ANY SUBMISSIONS. N O SUBSTANTIATION WAS ALSO DONE ON SILVER ACCOUNT DURING THE COURSE O F APPELLATE PROCEEDINGS ALSO. IT IS PERTINENT TO MENTION HERE T HAT SRI P. NAVARATHNA KUMAR IN THE COURSE OF STATEMENT RECORDE D U/S.131 ON 21.6.2011, HAD NOT RULED OUT THE POSSIBILITY OF EXI STENCE OF UNACCOUNTED PURCHASE OF SILVER IN RESPONSE TO QUEST ION NO.8. THEREFORE, I AM IN AGREEMENT WITH THE ADDITION MADE BY THE AO ON ACCOUNT OF SILVER ORNAMENTS AND SAME IS CONFIRMED. 4. LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY CONTENDED DURING THE COURSE OF HEARING THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE IMPUGNED EXC ESS GOLD ADDITION MADE BY THE ASSESSING OFFICER INVOLVING A SU M OF RS.2,33,15,262/- GOING BY THE SURVEY RECORDS IN QUES TION. HE FAILS TO DISPUTE THE CIT(A)S CLINCHING FINDING OF FA CT THAT THE ASSESSEE HAD VERY WELL FILED RECONCILIATION OF ITS GO LD STOCK DURING THE COURSE OF ASSESSMENT AS WELL. IT IS FURTHER NOT IN DISPUTE THAT IF THE RECONCILIATION STATEMENT IS ACCEPTED AS CORRECT, NO ADDITION MAY BE WARRANTED AT ALL. WE NEXT ADVERT TO THE ASSESSEES GRIEVANCE TOUCHING UP ON THE ISSUE OF EXCESS SILVER ORNAMENTS OF RS.17,29,072/ -. MR.MURALI MOHANA RAO SUBMITTED BEFORE US THAT BOTH THE LEARNED LOWER AUTHORITIES HAVE NOT TAKEN NOTE OF THE FACT THAT THE ASSESSEE HAD DECLARED A LUMPSUM PROFIT AMOUNT OF R S.10 LAKHS DURING THE COURSE OF SURVEY (SUPRA). HE THEREF ORE SEEKS TO DELETE THE IMPUGNED ADDITION IN ENTIRETY. HIS FURTHER CASE IS THAT THE ASSESSEE HAD NEVER MADE ANY CONCESSION BEFORE THE CIT(A) FOR NOT PRESSING ITS INSTANT GRIEVANCE. ITA NOS. 829/HYD/2018 & 238/HYD/2019 :- 6 -: 4.1. WE SEE NO MERIT IN THE ASSESSEES GRIEVANCE PER SE IN ENTIRETY. THE FACT REMAINS THAT IT HAS NOT BEEN ABLE TO EXPLAIN EACH AND EVERY ITEM IN BOTH GOLD AS WELL AS SILVER STO CK(S). WE NOTICE THAT IT HAS PLACED ON RECORD A DETAILED RECONCILI ATION STATEMENT OF BOTH STOCKS OF GOLD AS WELL AS SILVER ITEMS BEFORE US; THE VERY DISCREPANCY CONTINUES IN THE INSTANT SECOND APPELLATE PROCEEDINGS AS WELL. WE THEREFORE DEEM IT AP PROPRIATE THAT A LUMP SUM ADDITION OF RS.2 LAKHS QUA EXCESS GOLD AND RS.1 LAKH PERTAINING TO EXCESS SILVER STOCK; RESPECTIVE LY (OVER AND ABOVE THE SURVEY DISCLOSURE OF RS.10 LAKHS), WOU LD MEET THE ENDS OF JUSTICE. THE SAME SHALL BE DEEMED TO HAVE COVERED ALL THE ALLEGED SHORTFALLS AS WELL. BOTH PARTIES GET PA RT RELIEF IN FOREGOING TERMS. IT IS ALSO MADE CLEAR THAT OUR INSTANT ESTIMATION SHALL NOT BE TAKEN AS A PRECEDENT IN ANY OTHE R ASSESSMENT YEAR. NECESSARY COMPUTATION TO FOLLOW AS PE R LAW. 5. THESE REVENUES AND ASSESSEES CROSS APPEALS ARE PARTLY ALLOWED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER B E PLACED IN THE RESPECTIVE CASE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JANUARY, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 29-01-2021 TNMM ITA NOS. 829/HYD/2018 & 238/HYD/2019 :- 7 -: COPY TO : 1.THE ASST.COMMISSIONER OF INCOME TAX, CIRCLE-1(1), TIRUPATI. 2.M/S.J.P.JEWELLERY, NO.1-2-217, PRAKASAM ROAD, TIR UPATI. 3.CIT(APPEALS)-TIRUPATI. 4.PR.CIT-TIRUPATI. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.