The ITO, Ward-1, Mehsana V. Shri Rasiklal Ranchhodbhai Patel, Mehsana

ITA 2426/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6241 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 13-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Keywords: Assessment record
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2426/AHD/2015 (ASSESSMENT YEAR: 2012-13) INCOME TAX OFFICER, WARD- 2, MEHSANA V/S SHRI RASIKLAL RANCHHODBHAI PATEL PROP. OF UTSAV JEWELLERS, OPP. JAIN DERASAR STATION ROAD, MEHSANA-384001 (APPELLANT) (RESPONDENT) PAN: AIVPP1292J APPELLANT BY : SMT. SONIA KUMAR, SR. D.R. RESPONDENT BY : SHRI ANIL KSHATRIYA, A.R. ( )/ ORDER DATE OF HEARING : 17 -01-201 8 DATE OF PRONOUNCEMENT : 19-01-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 12.06.2015 PERTAINING TO A.Y. 2012-13 . ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 2 2. THE SUBSTANTIVE GRIEVANCE OF THE REVENUE READS AS U NDER: 1. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND O N FACTS IN DELETING THE ADDITION OF RS.46,15,631/-MADE BY THE AO ON ACCOUNT OF UNDER VALUATION OF STOCK OF GOLD JEWELLERY. 2. THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND ON FA CTS IN DELETING THE ADDITION OF RS. 10,56,004/- MADE BY THE A.O. ON ACCOUNT OF MRP OF JEWELLERY. 3. REPRESENTATIVES OF BOTH SIDES WERE HEARD AT LENGTH. HAVING HEARD THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS O F THE AUTHORITIES BELOW. WE HAVE CAREFULLY CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE ITAT RULES. 4. FACTS AS EMANATING FROM THE ASSESSMENT RECORD SHOW THAT A SURVEY HAD BEEN CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 02.0 9.2011. DURING THE COURSE OF THE SURVEY PROCEEDINGS, STOCK DIFFERENCE IN GOLD & SILVER AND IN CASH WAS FOUND AND THE SAME WAS CONFRONTED TO THE ASSESSEE. THE AS SESSEE DECLARED UNDISCLOSED INCOME OF RS. 55,95,970/-. 5. FOLLOWING NOTICE DATED 02.03.2015 WAS ISSUED AND SE RVED UPON THE ASSESSEE AND THE SAME IS EXHIBITED AT PAGE 54 OF THE PAPER BOOK: - OFFICE OF THE INCOME TAX OFFICER, WARD-1, MEHSANA ROOM NO. 204, 2 ND FLOOR, APOLLO ENCLAVE, OPP.- SIMANDHATTEMPLE HIGHW AY, MEHSANA-384002 DATE : 02/03/2015 PAN: AIVPP1292J TO SHRI RASIKLAL RANCHHODBHAI PATEL, PROP.- M/S ULSAV JEWELLERS, OPP.- JAIN DERASAR, STATION ROAD, MEHSANA SUB: ASSESSMENT PROCEEDINGS FOR A.Y. 2012-13. PLEASE REFER TO ABOVE. ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 3 2. A SURVEY U/S 133A OF I.T.ACT WAS CONDUCTED AT YO UR BUSINESS PREMISES ON 02.09.2011. DURING THE COURSE OF SURVEY PROCEEDINGS, THE VALUE OF STOC K DIFFERENCE AS PER BOOKS OF ACCOUNTS AND AS PER PHYSICAL VERIFICATION WAS REPORTED AT RS. 55200 43/- TAKING THE PREVAILING MARKET PRICE OF GOLD AT RS.2800 PER GRAM. IT WAS ALSO SEEN THAT THE ABOV E FINDINGS WAS CONFRONTED TO YOU IN YOUR STATEMENT ON OATH DURING SURVEY, WHICH WAS ADMITTED BY YOU AND HAD AGREED TO PAY TAX ON THE SAME. 2.1 SUBSEQUENTLY, YOU HAD DISCLOSED INCOME OF RS. 5 5,20,043/- IN RESPECT OF STOCK DIFFERENCES. ON VERIFICATION OF SUBMISSION, IT IS SEEN THAT THE VALUATION OF THE CLOSING STOCK OF GOLD ORNAMENTS WERE MADE AT AVERAGE RATE OF 2,135.79 PER GRAM. 2.2 SCRUTINY OF STOCK RECORDS REVEALED THAT YOU HAV E DEALING IN READYMADE JEWELLERY. YOU HAVE DEALT IN VARIOUS MRP JEWELLERIES AS WELL AS GOLD JE WELLERIES. NEITHER, YOU HAD MAINTAINED ITEM WISE STOCK OF GOLD JEWELLERY NOR HAD CONTENDED THE VALUATION OF JEWELLERY @ 2800 PER GRAM. IN ABSENCE OF ITEM WISE JEWELLERY DETAILS, THE VALUATI ON ADOPTED TO TAKE AVERAGE PURCHASE PRICE SEEMS TO BE INCORRECT AND CANNOT BE RELIED ON. THER EFORE, YOU ARE SHOW CAUSED WHY THE VALUATION OF CLOSING STOCK OF GOLD JEWELLERY SHOULD NOT BE MA DE @ 2800 PER GRAM. 3. ON PERUSAL OF SUBMISSION, IT IS NOTICED THAT THE RE IS DIFFERENCE BETWEEN CLOSING STOCK OF MRP JEWELLERY SHOWN BY YOU AND JEWELLERY FOUND DURING T HE SURVEY ON 02.09.2011 WHICH IS SHOWN AS UNDER:- BRAND NAME DETAILS OF CLOSING STOCK AS ON 02.09.2011 FURNISHED BY ASSESSEE DURING THE ASSESSMENT PROCEEDINGS (COST PRICE) PHYSICAL STOCK FOUND DURING THE COURSE OF SURVEY ON 02.09.2011 (MRP) COST PRICE OF PHYSICAL STOCK FOUND ON 02.09.2011 (MRP- 15%) DIFFERENCE (RS.) QTY. AMOUNTS (RS.) QTY. AMOUNTS (RS.) AMOUNTS (RS.) UTSAV GOLD 365 2588357 229 2113236 1796250 7,92,107/- ISHTA GOLD 72 451569 53 316629 269134, 1,82,435/- NISHTA A GOLD 68 316136 52 276088 234674 81,462/- TOTAL 10,56,004/- 21. THEREFORE, YOUR ARE SHOW CAUSED WHY THE DIFFERE NCE OF RS. 10,56,004/- IN THE VALUE OF MRP JEWELRY SHOULD NOT BE ADDED TO YOUR INCOME. 3. YOUR REPLY TO THE ABOVE ISSUES MUST REACH THE UNDERSIGNED BY 09703/2015 FAILING WHICH IT WILL BE ASSUMED THAT YOU HAVE NOTHING MORE TO SAY O N ANY OF THESE ISSUES AND ADDITIONS ON ALL THE ABOVE ISSUES WILL BE MADE AS PER THE INFORMATIO N ON RECORD. PRAVIN KUMAR AGRAWAL) INCOME TAX OFFICER WARD-1, MEHSANA ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 4 6. WHILE SCRUTINIZING THE RETURN OF INCOME, THE A.O. N OTICED THAT THE ASSESSEE HAS VALUED ITS CLOSING STOCK OF GOLD ORNAMENTS AT AVERA GE RATE OF RS. 2135.79 PER GMS. THE A.O. WAS OF THE FIRM BELIEF THAT THE SAME SHOULD HAVE BEEN VALUED AT RS. 2800 PER GMS. THE DIFFERENCE OF RS. 664.21 PER GMS WAS CONSIDERED AS UNDER VALUATION OF CLOSING STOCK OF GOLD, JEWELLERY AND ADDITION OF RS. 46,15,631/- WAS MADE. 7. PROCEEDING FURTHER, THE A.O. NOTICED THAT THE ASSES SEE HAS ALSO DEALT IN READY- MADE JEWELLERY BEARING BRAND NAME UTSAV GOLD, ISHTA GOLD AND NISHTAA GOLD, THE A.O. COMPARED THE STOCK AS ON THE DATE OF SURVE Y FURNISHED BY THE ASSESSEE WITH THE PHYSICAL STOCK STATEMENT PREPARED BY THE S URVEY PARTY ON THE DATE OF SURVEY AND CONCLUDED BY HOLDING THAT THERE IS A DIF FERENCE OF RS. 10,56,004/-. THE A.O. CONCLUDED BY HOLDING THAT THE SAME IS SUPP RESSION OF SALE AND ACCORDINGLY MADE THE ADDITION. 8. INSOFAR AS THE VALUATION OF STOCK IS CONCERNED, WE FIND THAT THE ASSESSING OFFICER HAS GROSSLY ERRED IN DISTURBING THE METHOD OF VALUATION OF THE CLOSING STOCK ADOPTED BY THE ASSESSEE SINCE PAST MANY YEARS . MOREOVER, THE ACTION OF THE ASSESSING OFFICER IS UNCALLED FOR AND UNWARRANT ED. FOR THE REASON THAT THE SURVEY PARTY DETERMINED THE VALUE OF STOCK DIFFEREN CE AT RS. 55,20,043/- AND NOT ONLY THE ASSESSEE ACCEPTED THE DIFFERENCE BUT S UBSEQUENTLY ALSO DISCLOSED THE SAME IN ITS RETURN OF INCOME. THIS FACT HAS NOW HERE BEEN DENIED BY THE A.O. THE ONLY REASON FOR MAKING THE ADDITION OF RS. 46,15,631/- IS THAT THE ASSESSEE VALUED ITS CLOSING STOCK AT AVERAGE RATE. THE A.O. TOTALLY IGNORED THE FACT THAT WHATEVER THE VALUATION DIFFERENCE WAS DET ERMINED BY THE SURVEY PARTY WAS OFFERED FOR TAXATION BY THE ASSESSEE IN ITS RET URN OF INCOME. WE DO NOT FIND ANY LAWFUL REASON FOR REJECTING A WELL RECOGNIZED M ETHOD OF VALUATION FOLLOWED ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 5 BY THE ASSESSEE. THE FIRST APPELLATE AUTHORITY HAS APPRECIATED THE FACTS IN THEIR TRUE PERSPECTIVE AND HAD ALLOWED THE RELIEF ON THE GIVEN FACTS. WE DO NOT FIND ANY REASON TO DISTURB THE FINDINGS OF THE LD. CIT(A ). GROUND NO. 1 IS ACCORDINGLY DISMISSED. 9. INSOFAR AS THE GRIEVANCE RAISED VIDE GROUND NO. 2 I S CONCERNED, WE FIND THAT THE A.O. HAS MISINTERPRETED THE CORRECT FACTS. THE TRUE FACTS CAN BE APPRECIATED FROM THE FOLLOWING TWO CHARTS:- M.R.P. ITEMS OF UTSSAV CZ JEWELLERY FOUND FROM GROU ND FLOOR SRNO DESCRIPTION AS PER VALUER AS PER BOOKS 1 18 KT GOLD & CZ STONES PENDENT BUTTI SET 34 34 2 18 KT GOLD & CZ PENDENT 14 14 3 18 KT GOLD & CZ RINGS 17 17 4 18 KT GOLD & CZ PEN DENT & BUTTI SET - 7 7 21 5 18 KT GOLD & CZ OVAL BRECELETE 3 3 6 18 KT GOLD & CZ RINGS 35 35 7 18 KT GOLD & CZ BUTTI PAIR-41 41 82 8 18 KT GOLD & CZ BUTTI PAIR - 48 48 96 9 18 KT GOLD & CZ RINGS 8 8 10 18 KT GOLD & CZ BALL PAIR & BUTTI 10 20 11 18 KT GOLD & CZ PENDENT BUTTI SET 5 5 15 12 18 KT GOLD & CZ MS PENDENT BUTTI SET 5 5 15 13. 18KTGOLD,&CZ PENDENT 2 2 14 G L S 3 A - 7 1 15 NOSE PIN 1 , 16 KADA 1 TOTAL 229 365 18 KT GOLD CZ MRP JEWELLERY OF ISHTAA SR NO DESCRIPTION AS PER VALUER AS PER BOOKS 1 18 KT GOLD CZ RINGS 12 12 ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 6 2 18 KT GOLD CZ PENDENT BUTTI SET 9 9 3 18 KT GOLD CZ PENDE NT, RINGS, BUTTI PAIR 11 11 4 18 KT GOLD CZ PENDENTS 18 18 5 ISHTA TOPS 17 6 ISHTATOPS 5 TOTAL 50 72 22KT.GOLD M.R.P. ITEMS OF BRAND NISHTAA SRNO DESCRIPTION AS PER VALUER AS PER BOOKS 1 22 KT GOLD PENDENT BUTTI SET 3 3 3 2 22 KT GOLD CZ RINGS 22 22 3 22 KT GOLD CZ BUTTI 10 10 4 22 KT GOLD CZ PENDENT 17 17 5. NISHTAA TOPS 16 TOTAL 52 68 NACHIKET SATISBHAI MAVALANKAR REGISTERED VA LUER FOR JEWELLERY, GOLD & SILVER ORNAMENTS 105,ISCON CENTRE CENTRE, REGISTERED NO. CAT V III 154 SHIVRANJANI CROSS ROAD, (APPROVED BY GOVT. OF INDIA) SATELLITE, AHMEDABAD-380015 SR DESCRIPTION NO. GROSS WT. (GRAM) NET WT. VALUT (GRAM) RS 67] GOLD RING - 1 4.100 4.100 11480.00 @ RS. 28000 PER 10 GMS. 68 ] GOLD & COPPER KADLI - 2 WITH WHITE RODIYAM. 52.700 25.500 71400.00 @ RS. 28000 PER 10 GMS. 69 ] GOLD SET - 17 WITH MARB AL MINA & MINA.(PIECES - 51) 960.750 960.750 2690100.00 @ RS. 28000 PER 10 GMS. 70] GOLD KARAP CHAIN - 1 53.950 53.950 151060.00 @ RS. 28000 PER 10 GMS. 71 ] GOLD MANGALSUTRA - 1 WITH PENDENT. 24.860 22.680 63504.00 ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 7 @ RS. 28000 PER 10 GMS. 72] 24KT.GOLD PIECES - 2. 20.600 20. 600 57680.00 @ RS. 28000 PER 10 GMS. 73] 24KT.GOLD COINS - 1 5.000 5.000 14000.00 @ RS. 28000 PER 1 0 GMS. 74] 18KT.GOLD COIN-1 3.000 3.000 6300.00 @ RS. 21 000 PER 1 0 GMS. M.R.P ITEMS OF UTSSAV CZ JEWELLERY FOUND FROM GROUN D FLOOR. 75 ] 1 8KT.GOLD & CZ STONES PENDENT BUTTIET-34. 0.000 - 531335.00 76 ] 18KT.GOLD C.Z PENDENTS PIECES - 14. 0.000 - 108418.00 77] 18KT.GOLD C.Z RINGS PIECES - 17 0.000 - 102595.00 78 ] 18KT.GOLD C.Z PENDENT & BUTTI SET-7. (PCS-21) 79] 18KT.GOLDC.ZOVALBRECELETE-3. ' 0.000 0.000 - 128265.00 - 71400.00 80 ] 1 8KT.GOLD C.Z RINGS PIECES-35. 0.000 - 174590.00 81 ] L8KT.GOLD C.Z BUTTI PAIR - 41. ( PIECES - 82 ) 0.000 - 315188.00 82] 18KT.GO!D C.Z BUTTI PAIR - 48.(PCS - 96 ) 0.000 - 348245.00 83] 18KT.GOLD C.Z RINGS PIECES-8. 0.000 - 65960.00 84 ] 18KT.GOLD C.Z BALI PAIR - 5 PIECES - 10 & BUTTI PAIR - 5.(PCS - 10) 0.000 - 93585.00 85] 1 8KT. GOLD C.Z. PENDENT BUTTI SET - 5.(PCS - 15 ) 0.000 - 81600.00 86 ] 18KT.GOLD C.Z. MS PENDENT BUTTI SET-5.(PCS-15 ) 87] 18KT.GOLD C.Z PENDENT-2. 0.000 0.000 - 77095.00 - 14960.00 18KT.GOLD C.Z M.R.P J EWELLERY OF ISHTAA. 88] 18KT.GOLD C.Z. RINGS PIECES-12. 0.000 - 72998.00 89 ] L8KT.GOLD C.Z. PENDENT BUTTI SET - 9. ( PIECES 27) 0.000 - 117946.00 90 ] 18KT.GOLD C.Z. PENDENTS - 2, RING - 1, BUTTI PAIR - 1 UPCS - 22). 91] 18KT. GOLD C.Z. PENDENTS-18. 0.000 0.000 - 66385.00 - 59300.00 22KT.GOLD W1.R.P ITEMS OF BRAND NISHTAA. 92 ] 22KT.GOLD P ENDENT BUTTI SET - 3.(PIECES - 9) 0.000 - 30812.00 @ RS. 20250 PER 10 GMS. 93 ] 22KT.GOLD C.Z. RINGS PIECES - 22. 0.000 - 12687100 @ RS. 20250 PER 10 GMS. 94] 22KT. GOLD C.Z. BUTTI PAIR-10. 0.000 - 66700.00 @ RS. 20250 PER 10 GMS. ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 8 95] 22KT. GOLD C.Z. PENDE NTS PIECES - 1 7. 0.000 - 51705.00 @ RS. 20250 PER 10 GMS. 96] SILVER BARS PIECES-4. - 157812.00 157812.00 SILVER BARS - 4., 2.525 KG. @ RS. 62500 PER 1 KG. 97]SILVER ORNAMENTS, UTENSILS & OTHER ITEMS. 143520.00 SILVER ORNAMENTS, UTENSILS & OTHERS., 3.588 KG. 143520.00 98] SILVER COINS-654 177750.00 SILVER COINS PIECES-654., 2.844KG. @RS.62500 PER 1 KG. 1777.50.00 - - 143520.00 - 177750.00 RUPEES: THREE CRORE SIXTY THREE LACKS EIGHT HUNDRED SEVENTY TWO ONLY 12963.350 11901.040 36300872.00 10. THE FIRST CHART CONTAINS DETAILS OF THE ITEMS FOUND ON THE DATE OF SURVEY CONSIDERED BY THE A.O. AND THE SECOND CHART IS THE LIST OF SAME ITEMS FOUND ON THE DATE OF SURVEY. 11. THE A.O. WAS OF THE OPINION THAT UTSAV GOLD WAS SHO WN BY THE ASSESSEE AT 365 PIECES WHEREAS THE SAME WAS FOUND BY THE SURVEY PAR TY AT 229 PIECES. SIMILARLY, ISHTA GOLD WAS SHOWN AT 72 PIECES WHEREAS THE SURVE Y PARTY FOUND 53 PIECES AND NISHTAA GOLD WAS SHOWN AT 68 PIECES AND FOUND A T 52 PIECES. THE A.O. WAS OF THE FIRM BELIEF THAT THE ASSESSEE HAS SOLD T HE DIFFERENCE AND IT IS CLEAR CUT CASE OF SUPPRESSION OF SALES. 12. A PERUSAL OF THE AFOREMENTIONED TWO CHARTS EXHIBITE D HEREINABOVE CLEARLY SHOWS THAT THE A.O. HAS GROSSLY ERRED IN COMPARING THE DETAILS FURNISHED BY THE ASSESSEE WHICH IS IN NUMBERS OF PIECES WITH THE DET AILS OF THE PHYSICAL STOCK FOUND DURING THE COURSE OF SURVEY WHICH IS IN NUMBE R OF SETS. IF THE NUMBERS OF SETS ARE CONVERTED INTO NUMBER OF PIECES, THERE WOULD REMAIN NO DIFFERENCE ITA NO. 2426 /AHD/2015 . A.Y. 2012-13 9 WHATSOEVER. JUST FOR THE CLARIFICATION OF THE AFOR E-STATED FACTS, 18 KT. GOLD C.Z PENDENT & BUTTI HAS BEEN SHOWN AS 21 PIECES BUT TAK EN BY THE A.O. AS 7 PIECES. SIMILARLY, 18 KT GOLD C.Z BUTTI PAIR HAS BEEN SHOWN AT 82 PIECES BUT TAKEN BY THE A.O. AS 41 PIECES. THE FIRST APPELLATE AUTHORIT Y HAS RECONCILED THIS FACTUAL DIFFERENCE AND DELETED THE ADDITION OF RS. 10,56,00 4/-. THE AFORE-STATED FACTUAL MATRIX CLEARLY SHOWS THAT THE ASSESSEE HAS SHOWN CL OSING STOCK AS ON THE DATE OF SURVEY IN NUMBER OF PIECES WHEREAS SURVEY TEAM HAS CONSIDERED CLOSING STOCK ON THE BASIS OF PAIRS OF ORNAMENTS OR SETS OF ORNAM ENTS. IF THESE PAIRS OF ORNAMENTS OR SETS OF ORNAMENTS ARE CONVERTED INTO N UMBER OF PIECES, THERE WOULD REMAIN NO DIFFERENCE AT ALL. CONSIDERING THE FACTS IN TOTALITY, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). G ROUND NO. 2 IS ALSO DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 01- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 19 /01/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD