Gowadia Jewellers, JAIPUR V. DCIT, UDAIPUR

ITA 264/JODH/2012

• Counselvise Citation: 26423314 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 11-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: SHRAVAN KUMAR GUPTA
• Section: 143(3); 145

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 262/JODH/2012 (A.Y. 2008-09) INCOME TAX OFFICER VS. M/S GOWADIA JEWELLERS, DUNGARPUR SADAR BAJAR, SAGWARA, DISTT. DUNGARPUR. PAN NO. AAAFG6333J ITA NO. 264/JODH/2012 (A.Y. 2008-09) M/S GOWADIA JEWELLERS, VS. THE DCIT, CENTRAL CIR CLE-1 SADAR BAJAR, SAGWARA, UDAIPUR. DISTT. DUNGARPUR. PAN NO. AAAFG6333J ITA NO. 436/JODH/2012 (A.Y. 2009-10) M/S GOWADIA JEWELLERS, VS. THE DCIT, CENTRAL CIR CLE-1 SADAR BAJAR, SAGWARA, UDAIPUR. DISTT. DUNGARPUR. PAN NO. AAAFG6333J ITA NO. 449/JODH/2012 (A.Y. 2009-10) INCOME TAX OFFICER, VS. M/S GOWADIA JEWELLERS, WARD, DUNGARPUR SADAR BAJAR, SAGWARA, DISTT. DUNGARPUR. PAN NO. AAAFG6333J ASSESSEE BY : SHRAVAN KUMAR GUPTA DEPARTMENT BY : SHRI G.R. KOKANI- D.R. 2 DATE OF HEARING : 10/07/2013. DATE OF PRONOUNCEMENT : 22/08/2013. O R D E R PER BENCH : ITA NO. 262 & 264/JU/2012 THESE CROSS APPEALS FOR A.Y. 2008-09 ARE DIRECTED A GAINST THE ORDER OF LD. CIT (A), JAIPUR DATED 13/03/2012. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT M/ S. GOWADIA JEWELLERS IS A PARTNERSHIP FIRM, WHICH IS DOING JEWELLERY BUSINESS . FOR A.Y. 2008-09 ASSESSEE-FIRM FILED ITS RETURN OF INCOME (ROI) ON 30/08/2008 DECL ARING TOTAL INCOME OF RS. 8,95,170/-. BUT THE ASSESSMENT UNDER SECTION 143 ( 3) OF THE ACT WAS COMPLETED AT A TOTAL INCOME OF RS. 50,90,750/- (RS. 50,90,745/- ROUNDED OFF AS ABOVE). IN ARRIVING AT THE ABOVE INCOME, THE AO HAS MADE THE F OLLOWING ADDITIONS:- RETURNED INCOME 895170 ADD: - GROSS PROFIT 1163548 ADD: - GROSS PROFIT 2672927 ADD: - LABOUR INCOME 47790 ADD: - INTEREST TO PARTNERS 138520 ADD: - INTEREST TO DEBTORS 172790 TOTAL INCOME 5090745 ROUNDED 5090750 2.1 AGAINST THE ABOVE ORDER, APPELLANT FILED FIRST APPEAL AND LD. CIT (A) HAS REDUCED/DELETED SOME OF THE ADDITIONS. BOTH THE PA RTIES ARE NOW AGGRIEVED. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS AP PEAL:- 3 1. THAT THE IMPUGNED ASSESSMENT ORDER U/S 143(3) DATED 24/12/2010 IS BAD IN LAW AND ON FACTS OF THE CASE FOR WANT OF JUR ISDICTION AND FOR VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 2.1 RS. 7,72,582/- + 98,996/- : THE LD. CIT (A) HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF THE AO IN INVOKING OF THE PROVISION OF SECTION 145(3). THE P ROVISION SO INVOKED AND CONFIRMED BY THE CIT (A) BEING CONTRARY TO THE P ROVISIONS OF LAW AND FACTS, HENCE, THE SAME MAY KINDLY BE QUASHED. CONSEQUENTLY THE TRADING ADDITION OF RS. RS. 7,72,582/- + 98,996/- M AY KINDLY BE DELETED IN FULL. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE. 2.2 RS. 7,72,582/- : THE LD. CIT (A) FURTHER HAS GRO SSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN DETERMINING GRO SS PROFIT OF GOLD AT RS. 33,76,849/- AS AGAINST RS. 26,04,267/- DECLARED BY THE ASSESSEE AND RS. 37,67,815/- BY THE AO, AND THEREBY PARTLY SU STAINING TRADING ADDITION OF RS. 7,72,582/- OUT OF RS. 11,63,548/-. THE DETERMINING OF GROSS PROFIT AND ADDITION SO MADE BY THE AO AND P ARTLY SUSTAINED BY THE CIT (A) IS BEING TOTALLY CONTRARY TO THE PROV ISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITION MAY KIND LY BE DELETED IN FULL. 2.3 RS. 98,996/- : THE LD. CIT (A) FURTHER HAS GROSS LY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN DETERMINING GROSS PR OFIT OF SILVER AT RS. 7,15,608/- AS AGAINST RS. 6,16,612/- DECLARED BY TH E ASSESSEE AND RS. 32,89,539/- BY THE AO, AND THEREBY PARTLY SUSTAINING TRADING ADDITION OF RS. 98,996/- OUT OF RS. 26,72,927/-. THE DETERM INING OF GROSS PROFIT AND ADDITION SO MADE BY THE AO AND PARTLY SUS TAINED BY THE CIT (A) IS BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITION MAY KINDLY BE DEL ETED IN FULL. 4 FURTHER ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOV E 2.4 THE LD. CIT (A) FURTHER HAS GROSSLY ERRED IN LA W AS WELL AS ON THE FACTS OF THE CASE IN APPLYING THE FIFO METHOD ONLY ON THE CLOSING STOCK INSTEAD OF OPENING AND CLOSING STOCK OF BOTH. THE FIFO METHOD SO APPLIED ONLY ON CLOSING STOCK BY THE CIT (A) IS BEIN G TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AN D HENCE AT THE WORST IF THE ACTION OF THE CIT (A) IS HELD THEN THE AO MAY KINDLY BE DIRECTED TO APPLY THE FIFO METHOD ON OPENING AND CL OSING STOCK BOTH. 3. RS. 47,790/- : THE LD. CIT (A) HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF IN CONFIRMING THE LABOUR INCOME AT RS. 1,50,000/- ESTIMATED BY THE AO AS AGAINST RS. 1,02,210/- DECLAR ED BY THE ASSESSEE AND THEREBY CONFIRMING ADDITION OF RS. 47, 790/-. HENCE, THE ESTIMATION AND ADDITION SO MADE BY THE AO AND CONFIR MED BY THE CIT (A) IS BEING TOTALLY CONTRARY TO THE PROVISIONS OF L AW AND FACTS ON THE RECORD AND HENCE THE ADDITION MAY KINDLY BE DELETED IN FULL. 4. RS. 15,067/- : THE LD. CIT (A) HAS ERRED IN LAW A S WELL AS ON THE FACTS OF THE CASE IN PARTLY SUSTAIN THE ADDITION OF RS. 1 5,067/- OUT OF RS. 1,38,520/- MADE BY THE AO ON ACCOUNT OF INTEREST PA ID ON PARTNERS CAPITAL AS PER PROVISIONS OF S. 40B OF THE IT ACT AS UNDISCLOSED INCOME OF THE ASSESSEE. HENCE, THE ADDITION SO MADE BY THE AO AND PARTLY SUSTAINED BY THE CIT (A) IS TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITION MAY KINDLY BE DELETED IN FULL. 5. THE LD. AO HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B, 234C & 234D. T HE APPELLANT TOTALLY DENIES IT LIABILITY OF CHARGING OF ANY SUCH INTEREST. THE INTEREST, SO CHARGED, BEING CONTRARY TO THE PROVISI ONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 5 6. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO A DD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN IT S APPEALS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF : 1. REDUCING ADDITION FROM RS. 11,63,548/- TO 7,72,5 82/- IN TRADING OF GOLD. 2. REDUCING ADDITION FROM RS. 26,72,927/- TO 98,996 /- IN TRADING OF SILVER. 3. REDUCING ADDITION FROM RS. 1,38,520/- TO RS. 15, 607/- MADE ON ACCOUNT OF INTEREST TO PARTNERS. 4. DELETING ADDITION OF RS. 1,72,970/- ON ACCOUNT O F INTEREST ON DEBTORS. 2.2 WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFU LLY PERUSED THE ENTIRE RECORD. GROUND NO.1 OF THE ASSESSEES APPEAL IS GEN ERAL IN NATURE. GROUND NO.2 (2.1, 2.2, 2.3 & 2.4) IS IN RELATION TO TRADING ADD ITION MADE UNDER SECTION 145 (3) OF THE ACT. THE GROUNDS NO. 1 & 2 IN REVENUES APPEAL ARE ALSO IN RESPECT OF TRADING ADDITIONS. WE ARE PROCEEDING TO DISCUSS AND DECIDE THEM SIMULTANEOUSLY. THE FACTS OF THIS ISSUE ARE THAT DURING RELEVANT YEAR, THE ASSESSEE-FIRM HAS DECLARED GROSS PROFIT AND GROSS PROFIT RATES IN THE GOLD AND SILVER JEWELLERY, WHICH HAS BEEN 6 COMPARED WITH THE TRADING RESULTS OF A.Y. 2008-09 BY THE ASSESSING OFFICER AS UNDER:- GOLD PARTICULARS A.Y. 2007 - 08 A.Y. 2008 - 09 SALES 8397412 2440503 GROSS PROFIT 9549806 2604267 G.P. RATE % 29.06 27.27 SILVER PARTICULARS A.Y. 2007 - 08 A.Y. 2008 - 09 SALES 1559715 1585034 GROSS PROFIT 63966 2 616612 G.P. RATE % 41.01 38.90 THE AO HAS NOTICED THAT GROSS PROFIT RATES IN BOTH THE GOLD & THE SILVER ACCOUNTS ARE LOWER IN THIS YEAR AS COMPARED TO THE IMMEDIATE LY PRECEDING YEAR. WHEN ASKED TO DO, ASSESSEE EXPLAINED THAT THIS FALL IN G .P. RATES IS DUE TO FLUCTUATION IN MARKET RATES OF THESE METALS. FURTHER, THE AO HAS FOUND THAT THE ASSESSEE-FIRM HAS VALUED ITS CLOSING STOCK OF GOLD AT RS. 92,15,6 31/- @ 709/- PER GRAM WHILE IT WAS PURCHASED @ RS. 799/- PER GRAM. IN THE SILVER ACCOUNT THE VALUE OF CLOSING STOCK HAS BEEN TAKEN AT RS. 47,18,450/- @ RS.9593/- PER K.G. WHEREAS PURCHASE PRICE IS TAKEN @ RS. 15,028/- PER K.G. THE AO HAS, THUS, DOUBTED THE VALUATION OF CLOSING STOCK IN BOTH THE ACCOUNTS. HE HAS ALSO CO NSIDERED AND COMPARED THE RESULTS WITH G.P. RATES DECLARED BY A SIMILAR BUSIN ESS VIZ. ALANKAR JEWELLERS, WHO HAS DECLARED G.P. RATE OF 32.46 % IN GOLD ACCOUNT A ND 45.47% IN THE SILVER ACCOUNT AND HAS FOUND THE G.P. RATES IN THE CASE OF ASSESSE E-FIRM AS VERY LOW RATHER ABNORMALLY ON LOWER SIDE. ACCORDINGLY, THE AO HAS NOT FOUND THE BOOKS OF ACCOUNTS OF THE ASSESSEE-FIRM AS RELIABLE AND, THUS , AFTER REJECTING THEM BY RESORTING TO THE PROVISIONS OF SECTION 145 OF THE A CT HAS, AFTER DISCUSSING AS TO WHY 7 THE BOOKS ARE NOT RELIABLE AND AS TO HOW THE ASSESS ING OFFICER IS REQUIRED TO CONDUCT HIMSELF IN SUCH CIRCUMSTANCES, FINALIZED TH E TRADING RESULTS AS UNDER:- GOLD QUANTITY COST VALUE QUANTITY COST VALUE TO OPEN ING STOCK 12095.98 630 7626512 BY SALES 9788.75 976 9549806 TO PURCHASES 10675.03 799 8534658 BY CLOSING STOCK 12982.25 710 9215631 G.P. 2604267 G.P. RATE 27.3 VALUE OF CLOSING STOCK @ 799 I.E. COST OF GOODS 10379179 GROSS PROFIT DETERMINED 3767815 LESS: G.P. DECLARED BY THE ASSESSEE 2604267 DIFFERENCE TO BE ADDED 116354 SILVER QUANTITY COST VALUE QUANTITY COST VALUE TO OPENING STOCK 502.144 8613 4324996 BY SALES 100.94 15703 1585034 TO PURCHASES 90.619 15029 1361876 BY CLOSING STOCK 491.821 9594 4718450 G.P. 616612 G.P. RATE 38.90 VALUE OF CLOSING STOCK @ 15029 I.E. COST OF GOODS 7391377 GROSS PROFIT DETERMINED 3289539 LESS: G.P. DECLARED BY THE ASSESSEE 616612 DIFFERENCE TO BE ADDED 2672927 HE HAS, THUS, MADE AN ADDITION OF RS. 11,63,548/- I N THE GOLD ACCOUNT AND OF RS. 26,72,927/- IN THE SILVER ACCOUNT. CONTRARY TO THE ABOVE, THE LD. CIT (A) HAS 8 ACCEPTED THE FIRST COME FIRST OUT METHOD OF ACCEPTI NG OF THE (CLOSING) STOCK AND HAS RECORDED OUT THE TRADING RESULTS AS UNDER:- IN THE GOLD ACCOUNT PARTICULAR QUANTITY RATE (COST) VALUE PARTICULAR QUANTITY RATE SALE TO OPENING STOCK 12095.98 630 7626512 BY SALE 9788.75 976 9549806 TO PURCHASE 10675.03 799 8534658 BY TOTAL CLOSING STOCK I) BY OLD STOCK II) BY CURRENT PURCHASE STOCK 12982.25 (2307.23 + 10675.03) 630 799 9988213 (1453555 + 8534658) G.P. 3376849 G.P. ALREADY DECLARED 2604267 DIFFERENCE 772582 IN THE SILVER ACCOUNT PARTICULAR QUANTITY RATE (COST) VALUE PARTICULAR QUANTITY RATE SALE TO OPENING STOCK 502.144 8613 4324996 BY SALE 100.94 15703 1585034 TO PURCHASE 90.619 15029 1361876 BY TOTAL CLOSING STOCK I) BY OLD STOCK II) BY CURRENT PURCHASE STOCK 491.821 (401.204 + 90.619) 9594 8613 15029 4718450 (3455570+ 1361876) G.P. 715608 9 G.P. ALREADY DECLARED 616612 DIFFERENCE 98996 THE LD. CIT (A) HAS, THUS, SUSTAINED ADDITION OF RS . 7,72,582/- ONLY IN THE GOLD ACCOUNT AND HAS SUSTAINED AN ADDITION OF RS. 98,996 /- IN THE SILVER ACCOUNT. 2.4 BEFORE US BOTH PARTIES HAVE MAINTAINED THEIR OR IGINAL STAND. THE LD. AR HAS RELIED ON HIS WRITTEN SUBMISSION AND PARTLY ON THE FINDING OF LD. CIT (A). LIKEWISE, THE LD. D.R. HAS HEAVILY RELIED ON THE AO'S ORDER A ND ON THE ORDER OF LD. CIT (A) TO THE EXTENT HE HAS SUSTAINED THE ADDITIONS. 2.5 AFTER CONSIDERING RIVAL STANDS, WE HAVE FOUND T HAT THE ASSESSING OFFICER HAS NOT PINPOINTED ANY MISTAKE IN THE BOOKS OF ACCOUNTS DULY MAINTAINED BY THE ASSESSEE. THE BOOKS OF ACCOUNTS ARE ALSO AUDITED U NDER SECTION 44 AB OF THE ACT. ALL THE PURCHASES, SALES AND EVEN THE EXPENDITURE A RE SUPPORTED AND DULY VOUCHED. THERE IS NO CHANGE APPLIED IN THIS YEAR IN RELATING TO THE STOCK AND THE ASSESSEE HAS BEEN REGULARLY FOLLOWING THE SAME METHOD. THE ASSESSEE HAS MAINTAINED THE QUANTITATIVE DETAILS OF THE CLOSING STOCK FOR THE Y EAR UNDER CONSIDERATION. ALL THE REQUIRED DOCUMENTS INCLUDING BOOKS OF ACCOUNTS, CAS H-BOOK, LEDGER, STOCK REGISTER AND VOUCHERS ETC. WERE PRODUCED BEFORE THE ASSESSIN G OFFICER. ALL PURCHASES AND SALES ARE FOUND FULLY VOUCHED. MONTH WISE DETAILS OF PURCHASE AND SALES OF GOLD AND SILVER ORNAMENTS IN AMOUNT AND QUANTITY BOTH HA VE BEEN MAINTAINED. THE VALUE OF THE CLOSING STOCK HAS BEEN DETERMINED AND DECLARED CONSISTENTLY ON THE BASIS OF AVERAGE PURCHASE PRICE METHOD WHICH THE DE PARTMENT HAS BEEN ACCEPTING. THEREFORE, SIMPLY BECAUSE THERE IS A FALL IN THE G. P. RATE, BOOKS CANNOT BE 10 REJECTED. THE METHOD ADOPTED BY THE ASSESSEE HAS T O BE ACCEPTED IN THE INTEREST OF CONSISTENCY. THIS ISSUE IS COVERED BY THE DECIS ION OF THIS BENCH TAKEN IN THE CASE OF M/S. SURESH KUMAR RAM CHANDRA VS. THE DCIT IN ITA NO. 339 & 340/JODH/ 2012 FOR A.Y. 2008-09 & 2009 10 DATED 22/03/2013. IN THE ORDER, THE VALUATION OF THE CLOSING STOCK ON AVERAGE WEIGHTED PRICE, WHICH IS ALSO THE CASE IN THE GIVEN APPEAL HAS BEEN APPROVED BY APPELLATE TRIBUNAL (JOD HPUR BENCH). ACCORDINGLY, WE ALLOW THE GROUNDS NO. 2.1 TO 2.4 OF ASSESSEES APPE AL AND DISMISS THE GROUNDS NO. 1 & 2 OF THE REVENUES APPEAL. 3. GROUND NO. 3 OF THE REVENUES APPEAL IS REGARDI NG INTEREST PAID TO THE PARTNERS OF THE ASSESSEES FIRM. THE FACTS ON THIS ISSUE ARE THAT THE AO NOTICED THAT THE ASSESSEE HAS CALCULATED INTEREST ON PARTNE RS CAPITAL ON THEIR OPENING CAPITAL BALANCES. AS PER ASSESSING OFFICER, THE AS SESSEE HAS NOT CONSIDERED THE WITHDRAWAL MADE BY THEM DURING THE YEAR. THEREFORE , HE HAS DEDUCTED THE TOTAL WITHDRAWALS ON THE VERY FIRST DAY AND HAS WORKED OU T INTEREST ON THE REDUCED BALANCE. HE HAS NOT EVEN CONSIDERED THEIR SALARY A ND PROFIT SHARE OF THE YEAR AND THE FACT THAT THE WITHDRAWALS WERE MADE NOT ON THE FIRST DAY BUT THROUGHOUT THE YEAR. HE HAS CALCULATED THIS INTEREST AT RS. 1,38, 520/- AND HAS ADDED THE SAME. 3.1 THE LD. CIT(A) HAS REWORKED THIS INTEREST AT RS . 15,607/-. ACCORDING TO HIM, TOTAL INTEREST PAYABLE TO PARTNERS COMES TO RS. 12, 06,800/- AS AGAINST THE INTEREST PAID BY THE ASSESSEE-FIRM AT RS. 12,22,407/-. THUS , HE HAS SUSTAINED ADDITION OF RS. 15,607/-. 11 3.2 BEFORE US BOTH PARTIES HAVE MAINTAINED THEIR EA RLIER STAND. IN OUR CONSIDERED OPINION, THE FINDING OF LD. CIT (A) IN T HIS REGARD NEEDS TO BE CONFIRMED. THE ASSESSING OFFICER CANNOT WORK OUT THE ENTIRE IN TEREST BY TAKING THE TOTAL WITHDRAWALS ON THE VERY FIRST DAY OF THE YEAR WHERE AS THE WITHDRAWALS WERE MADE THROUGHOUT THE YEAR. UNDER IDENTICAL FACTS, THIS BE NCH HAS TAKEN A SIMILAR VIEW WHILE DECIDING THE CASE OF DCIT VS. M/S. DHANRAJ GO WADIA & SONS IN ITA NO. 202/JODH/2011 ORDER DATED 30/11/2012. SO, THIS ISS UE IS ALSO COVERED IN FAVOUR OF ASSESSEE BY THE ABOVE DECISION. THUS, WE CANNOT AL LOW GROUND NO.3 OF THE REVENUES APPEAL AND WE DISMISS THE SAME. THE RELA TED GROUND NO.4 OF ASSESSEES APPEAL THOUGH WHICH SUSTAINED AMOUNT OF RS. 15,067/ - HAS BEEN CHALLENGED WILL ALSO BE DISMISSED. 4. THE FACTS APROPOS GROUND NO.4 OF REVENUES APPE AL ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN DEBTORS OF RS. 42,24,082/-, WHO ARE TRADE-DEBTORS QUA WHOM INTEREST HAS BEEN SHOWN AT RS. 3,30,920/- ON RECEIP T BASIS. SINCE, THE ASSESSEE HAS BEEN FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE ASSESSING OFFICER HAS REJECTED ACT OF SHOWING INTEREST-INCOME ON RECEIPT BASIS. A CCORDINGLY, HE MADE AN ADDITION OF RS. 1,72,970/- BEING BALANCE ON RS. 42,24,082/- @ 12% I.E. RS. 5,06,890/- LESS RS. 3,33,920/- ALREADY DISCLOSED. 4.1 HOWEVER, LD. CIT (A) HAS DELETED THIS ADDITION VIDE PARA 5.1 AT PAGE 26 OF HIS ORDER. BEFORE US BOTH PARTIES HAVE TAKEN THEIR EAR LIER STAND. IT WAS FOUND THAT THIS ISSUE IS SQUARELY COVERED BY THE DECISION OF THIS B ENCH IN THE CASE OF DCIT VS. DHAN RAJ JEWELLERS IN I.T. A. NO. 241/JODH/2011 A.Y. 2006 -07 AND CIT VS. DHANRAJ 12 GOWADIA & SONS IN I.T.A NO. 202/JODH/2011 FOR A.Y. 2 007-08 DATED 30/11/2012. THEREFORE, BY RESPECTFULLY FOLLOWING THE ABOVE TRIB UNAL ORDER, WE CONFIRM THE IMPUGNED FINDING OF LD. CIT (A) AND DISMISS GROUND NO.4 OF REVENUES APPEAL. 5. THE GROUND NO. 3 OF THE ASSESSEES APPEAL IS REG ARDING SUSTAINED ADDITION OF RS. 47,790/- MADE BY ESTIMATING LABOUR INCOME. THE ASSESSEE HAS SHOWN THIS INCOME AT RS. 1,02,210/-. THE A.O. ESTIMATED IT AT RS. 1,50,000/-. THUS, REMAINING SUM OF RS. 47,790/-HAS BEEN ADDED IN THIS ACCOUNT. THE LD. CIT(A) CONFIRMED THIS ADDITION. 5.1 IT WAS ARGUED THAT LABOUR INCOME CANNOT BE ESTI MATED AS HAS BEEN DONE BY THE ASSESSING OFFICER. BUT LD. D.R. HAS SUPPORTED THIS ADDITION. AFTER HEARING BOTH SIDES, WE ARE UNABLE TO SUSTAIN THE IMPUGNED ESTIMA TED ADDITION. THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNT WHICH CONT AINED LABOUR ACCOUNT AND HAD PRODUCED THE SAME BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS MADE THIS ADDITION PURELY ON THE BASIS OF HIS GUESS AND DOUBT. SUCH ADDITION CANNOT BE SUSTAINED IN THE EYES OF THE LAW. ACCORD INGLY, WE DELETE THE IMPUGNED ADDITION OF RS. 47,790/- AND ALLOW GROUND NO.3 OF A SSESSEES APPEAL. 6. LASTLY, THE ASSESSEE HAS TAKEN GROUND NO. 5 TO C HALLENGE CHARGE OF INTEREST UNDER SECTION 234 A, 234 & 234 C & 234 D. THE CHAR GE OF INTEREST UNDER THESE SECTIONS BEING MANDATORY, THIS GROUND CANNOT BE ALL OWED. HOWEVER, THE ASSESSEE IS ENTITLED TO CONSEQUENTIAL RELIEF. 13 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ITA NO. 436 & 449/JU/2013 8. THESE ARE CROSS APPEALS FOR A.Y. 2009-10 AND ARE DIRECTED AGAINST THE ORDER OF LD. CIT (A) DATED 31/10/2012. 9. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE IMPUGNED ASSESSMENT ORDER U/S. 143(3) DATED 14/12/2011 IS BAD IN LAW AND ON FACTS OF THE CASE FOR WANT OF JUR ISDICTION AND FOR VARIOUS OTHER REASONS AND HENCE THE SAME MAY KINDLY BE QUASHED. 2.1 RS. 9,43,266/- + 4,01,124/- : THE LD. CIT (A) HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFI RMING THE ACTION OF THE AO IN INVOKING OF THE PROVISION OF SECTION 145(3 ). THE PROVISION SO INVOKED AND CONFIRMED BY THE CIT (A) BEING CONTR ARY TO THE PROVISIONS OF LAW AND FACTS, HENCE, THE SAME MAY KI NDLY BE QUASHED. CONSEQUENTLY THE TRADING ADDITION OF RS. 9,43,266/- + 4,01,124/- MAY KINDLY BE DELETED IN FULL. ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOVE. 2.2 RS. 9,43,266/- : THE LD. CIT (A) FURTHER HAS GRO SSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN DETERMINING GRO SS PROFIT OF GOLD AT RS. 39,43,413/- AS AGAINST RS. 29,98,147/- DECLARED BY THE ASSESSEE AND RS. 67,10,231/- BY THE AO, AND THEREBY PARTLY SU STAINING TRADING ADDITION OF RS. RS. 9,43,266/- OUT OF RS. 37,12,084 /-. THE DETERMINING OF GROSS PROFIT AND ADDITION SO MADE BY THE AO AND 14 PARTLY SUSTAINED BY THE CIT (A) IS BEING TOTALLY CON TRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITION MAY KINDLY BE DELETED IN FULL. 2.3 RS. 4,01,124/- : THE LD. CIT (A) FURTHER HAS GRO SSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN DETERMINING GRO SS PROFIT OF SILVER AT RS. 10,68,099/- AS AGAINST RS. 6,66,975/- DECLAR ED BY THE ASSESSEE AND RS. 42,86,707/- BY THE AO, AND THEREBY PARTLY SU STAINING TRADING ADDITION OF RS. 4,01,124/- OUT OF RS. 36,19,732/-. THE DETERMINING OF GROSS PROFIT AND ADDITION SO MADE BY THE AO AND P ARTLY SUSTAINED BY THE CIT (A) IS BEING TOTALLY CONTRARY TO THE PROV ISIONS OF LAW AND FACTS ON THE RECORD AND HENCE THE ADDITION MAY KIND LY BE DELETED IN FULL. FURTHER ALTERNATIVELY AND WITHOUT PREJUDICE TO ABOV E 2.4 THE LD. CIT (A) FURTHER HAS GROSSLY ERRED IN LA W AS WELL AS ON THE FACTS OF THE CASE IN APPLYING THE FIFO METHOD ONLY ON THE CLOSING STOCK INSTEAD OF OPENING AND CLOSING STOCK OF BOTH. THE FIFO METHOD SO APPLIED ONLY ON CLOSING STOCK BY THE CIT (A) IS BEIN G TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AN D HENCE AT THE WORST IF THE ACTION OF THE CIT (A) IS HELD THEN THE AO MAY KINDLY BE DIRECTED TO APPLY THE FIFO METHOD ON OPENING AND CL OSING STOCK BOTH. 3. THE LD. AO HAS GROSSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B, 234C & 234D. T HE APPELLANT TOTALLY DENIES IT LIABILITY OF CHARGING OF ANY SUCH INTEREST. THE INTEREST, SO CHARGED, BEING CONTRARY TO THE PROVISI ONS OF LAW AND FACTS, MAY KINDLY BE DELETED IN FULL. 4. THE APPELLANT PRAYS YOUR HONOUR INDULGENCES TO A DD, AMEND OR ALTER OF OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEARING. 15 10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: 1. REDUCING THE TRADING ADDITION IN GOLD FROM RS. 37,1 2,084/- TO RS. 9,43,246/- 2. REDUCING THE TRADING ADDITION IN SILVER FROM RS. 36,19,732/- TO 4,01,124/-. 3. DELETING THE ADDITION MADE ON ACCOUNT OF INTERES T TO PARTNER RS. 3,85,891/-. 12. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFU LLY PERUSED THE ENTIRE RECORD. 13. THE GROUND NOS. 2.1 TO 2.4 OF THE ASSESSEES AP PEAL HAS TO BE ALLOWED IN VIEW OF OUR FINDING GIVEN IN A.Y. 2008-09 AS ABOVE. THE FACTS OF THIS ISSUE OF VALUATION OF THE CLOSING STOCKS OF GOLD AND SILVER ARE EXACTLY IDENTICAL EXCEPT FOR THE FIGURES OF ADDITION. THEREFORE, THE SIMILAR RE ADING WE ALLOW THE GROUNDS IN THE FAVOUR OF THE ASSESSEE. THE RELATED GROUNDS NOS. 1 & 2 OF THE REVENUES APPEAL ARE DISMISSED. 14. THE GROUND NO.3 IS REGARDING CHARGE OF INTEREST UNDER SECTION 234A, 234B, 234C & 234D. AGAIN THIS GROUND CANNOT BE ALLOWED. 16 15. GROUND NO.3 OF REVENUES APPEAL IN RELATION TO INTEREST PAID TO PARTNERS OF RS. 3,85,891/- IS DECIDED IN THE FAVOUR OF THE ASSE SSEE IN THE SAME MANNER AS WE HAVE DECIDED IN A.Y. 2008-09. THE FACTS, THE REASON INGS AND ARGUMENTS OF THE PARTIES BEING SAME AND IDENTICAL, WE CANNOT ALLOW G ROUND NO.3 OF THE REVENUES APPEAL. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 22 ND AUGUST, 2013. SD/- SD/- (N.K.SAINI) (HARI OM MARAT HA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 22 ND AUGUST, 2013. V L /- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT BY ORDER 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR