Manoj Sharma, Gummidipoondi V. ITO, Kancheepuram

ITA 31/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4628 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-07-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: T VASUDEVAN
• Section: 133A; 250; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI U.B. BEDI, J.M. AND SHRI N.S. SAINI, AM .. I.T.A. NO. 31/MDS/2011 ASSESSMENT YEARS 2007-08 MANOJ SHARMA PROP. M/S KRISHNA GOLD PARK NO. 288, GNT ROAD GUMMIDIPOONDI 601 201. (PAN NO. AGSPM 6040Q) VS. THE INCOME-TAX OFFICER WARD 1(2), KANCHIPURAM (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI T. VASUDEVAN DEPARTMENT BY : SHRI SHAJI P. JACOB O R D E R PER N.S. SAINI, A.M :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE LD. CIT-IX, CHENNAI DATED 2.11.2010 FO R ASSESSMENT YEAR 2007-08. PAGE 2 OF 8 I.T.A. NO. 31MDS/2011 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE COMMISSIONER OF INCOME-TAX ERRED IN CONFIRMING THE ADDITION IN R ESPECT OF EXCESS STOCK OF GOLD JEWELLERY TO THE EXTENT OF 1200 GMS. 3. BRIEF FACTS OF THE CASE ARE THAT A SURVEY U/S 13 3A OF THE INCOME-TAX ACT, 1961 [IN SHORT, THE ACT] WAS CONDUC TED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 22.2.2007 DURI NG WHICH CERTAIN DISCREPANCIES IN THE ACCOUNTS AND STOCK WERE NOTICE D WHEN INVENTORY OF STOCK WAS TAKEN. EXCESS GOLD JEWELLER Y WAS QUANTIFIED AT 2644.27 GMS. ON 22.2.2007, THE ASSESSEE FURNISH ED RECONCILIATION OF PHYSICAL STOCK FOUND AT THE TIME OF SURVEY VIS A VIS AS PER THE BOOKS AND FOUND THAT THERE WAS AN EXCESS STOCK OF GOLD JEWELLERY TO THE EXTENT OF 1010.380 GMS. ASSESSEE DID NOT DISPUTE THE EXCESS JEWELLERY OF 2644.27 GMS FOUND AT THE TI ME OF SURVEY. THE ASSESSEE SUBMITTED THAT OUT OF THE SAID JEWELLE RY, 1200 GMS BELONGED TO THE FOLLOWING FAMILY MEMBERS AS UNDER: OM PRAKASH SARMA [FATHER] 300 GMS M MAMTA SARMA [WIFE] 300 GMS REKHA SARMA [SISTER] 200 GMS LALITHA SARMA [SISTER] 300 GMS VANDANA SARMA [SISTER] 200 GMS PAGE 3 OF 8 I.T.A. NO. 31MDS/2011 THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATIO N OF THE ASSESSEE ON THE GROUND THAT IT WAS NOT NECESSARY TO KEEP THE OLD JEWELRY OF THE FAMILY MEMBERS IN THE SHOP; THAT THE FAMILY MEM BERS JEWELRY CANNOT BE ROUND OFF TO HUNDREDS, THAT JEWELLERY SHO PS SHOW ONLY LATEST DESIGNS/VARIETIES THROUGH CATALOGUES CONTAIN ING COLOURFUL COMPUTERIZED JEWELRY MODEL PHOTOGRAPHS AND NOT THE OLD DESIGN JEWELLERY IN THE SHOP FOR EXHIBITION, AND, THEREFOR E, THERE IS NO NEED TO KEEP THE FAMILY MEMBERS JEWELLERY IN THE S HOP FOR EXHIBITION. HE, THEREFORE, MADE ADDITION FOR THE SAME. 4. ON APPEAL, BEFORE THE LD. CIT(A), THE ASSESSEE R ELIED ON THE INSTRUCTION OF THE CBDT IN F. NO. 288/63/93-IT[INV. II] DATED 11.5.1994 CONTAINING GUIDELINES FOR SEIZURE OF GOLD JEWELLERY WHICH PROVIDED THAT JEWELLERY TO THE EXTENT OF 500 GMS FO R EACH FEMALE MARRIED MEMBERS AND 250 GMS FOR EACH FEMALE UNMARRI ED MEMBERS AND 100 GMS FOR EACH MALE MEMBER WAS NOT BE SEIZED AT THE TIME OF SEARCH. IT WAS THE SUBMISSION OF THE LD. A.R. T HAT ACCORDINGLY THE ASSESSING OFFICER SHOULD HAVE ALLOWED DEDUCTION FOR 1200 GMS OF JEWELLERY BELONGING TO THE FAMILY MEMBERS. PAGE 4 OF 8 I.T.A. NO. 31MDS/2011 5. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSION S OF THE LD. A.R., HELD AS UNDER: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, TH E STATEMENTS GIVEN BY THE APPELLANT AND ALSO THE WRIT TEN SUBMISSIONS GIVEN BY THE LD. A.R. OF THE ASSESSEE. THE APPELLANT IS NOT DISPUTING THE EXCESS GOLD JEWELLERY OF 2644.380 GMS. THE ONLY DISPUTE IS THAT PERSONAL JEW ELRY OF FAMILY MEMBERS WERE KEPT IN THE BUSINESS PREMISES AS DISPLAY. BUT FROM THE ASSESSMENT ORDER, I AM UNDERST ANDING THAT THIS IS NOT A SEARCH CASE. THE ACTIONS WERE C ARRIED OUT U/S 133A OF THE I.T. ACT ON 20.2.2007 IN THE BUSINESS PREMISES OF THE APPELLANT AND ACCORDINGLY THE RESIDENCE PORT ION WAS NOT SEARCHED AS CLAIMED BY THE LD. A.R. OF THE APPE LLANT AND HENCE THE BOARDS INSTRUCTION IN F. NO. 288/63/93-IT [INV. II] DATED 11.5.1994 RELIED BY THE LD. A.R. IS NOT APPLI CABLE TO THE APPELLANT AND THEREFORE, I AM AGREEING WITH THE VIE W OF THE ASSESSING OFFICER THAT THERE IS NO NEED TO KEEP THE PERSONAL JEWELRY OF THE FAMILY MEMBERS INCLUDING THE APPELLAN T IN THE BUSINESS PREMISES AND ACCORDINGLY THE VALUE OF 1200 G MS PAGE 5 OF 8 I.T.A. NO. 31MDS/2011 ADDED AS EXCESS GOLD JEWELLERY BELONGING TO THE FAM ILY MEMBERS KEPT ON DISPLAY IS CONFIRMED. 6. BEFORE US, THE LD. A.R. OF ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE LD. CIT(A). ON THE OTHER HAND, THE LD. D.R. DULY SUPPORTED THE ORDERS OF THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL AVAILABLE ON RECORD. ASSESSEE IS ENGAGED IN THE BUSINESS OF GOLD, SILVER AND OTHER ARTICLES. SURVEY U/S 133A OF ACT, 1961 WAS CONDUCT ED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 22.2.2007. ON PHYSICAL VERIFICATION OF THE GOLD JEWELLERY, IT WAS FOUND TH AT ASSESSEE WAS IN POSSESSION OF EXCESS STOCK OF GOLD JEWELLERY AT 264 4.27 GMS. DURING THE COURSE OF SURVEY PROCEEDINGS, AS PER QUESTION N O. 4 RECORDED IN THE ORDER OF THE LD. CIT(A), ASSESSEE SUBMITTED THA T STOCK OF NO OTHER PARTY IS KEPT IN ITS BUSINESS PREMISES. THE ABOVE FACTS ARE NOT IN DISPUTE BEFORE US. THE ASSESSEE ADMITTED 1010.3 80 GMS OF EXCESS STOCK AS UNDISCLOSED INCOME OF AN INVESTMENT OF THE ASSESSEE AND EXPLAINED THAT 434 GMS BELONGED TO THE CUSTOMERS AN D REMAINING PAGE 6 OF 8 I.T.A. NO. 31MDS/2011 1200 GMS WAS EXPLAINED AS BELONGING TO FAMILY MEMBE RS. THE ASSESSING OFFICER DID NOT ACCEPT THE SAID EXPLANATI ON OF THE ASSESSEE REGARDING 1200 GMS AS BELONG TO FAMILY MEMBERS AND, THEREFORE,, ADDED RS. 6,87,933/- TO THE INCOME OF THE ASSESSEE . ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSIN G OFFICER FOR THE REASONS QUOTED HEREINABOVE IN THIS ORDER. WE FIND THAT IT IS NOT IN DISPUTE THAT THE ASSESSEE SUBMITTED IN THE STATEMEN T RECORDED AT THE TIME OF SURVEY THAT NO JEWELLERY BELONGING TO O THERS WAS KEPT IN ITS BUSINESS PREMISES. WE FIND THAT IT IS NOT THE CASE OF THE ASSESSEE THAT DURING THE COURSE OF SURVEY, IT WAS NOT POINTE D OUT TO HIM THAT EXCESS JEWELRY OF 2644.27 WAS FOUND ON PHYSICAL VER IFICATION AND ASSESSEE WAS NOT ALLOWED REASONABLE OPPORTUNITY TO EXPLAIN THE SOURCE OF SUCH EXCESS JEWELLERY FOUND AT THE TIME O F SURVEY. CLAIM OF THE ASSESSEE THAT IN VIEW OF THE CBDT INSTRUCTIO N F. NO. 288/63/93-IT[INV.II] DATED 11.5.1994, ADDITION IN R ESPECT OF JEWELLERY WEIGHING 1200 GMS SHOULD BE NOT BE ADDED IS NOT ACCEPTABLE BECAUSE IN THE SAID INSTRUCTION IT HAS N OT BEEN OPINED THAT JEWELLERY FOUND IN THE BUSINESS PREMISES OF TH E ASSESSEE SHOULD BE ASSESSED AS BELONGING TO DIFFERENT FAMILY MEMBER S OF THE ASSESSEE. IN THE INSTANT CASE, ASSESSEE HAS NOT EX PLAINED AT THE PAGE 7 OF 8 I.T.A. NO. 31MDS/2011 TIME OF SURVEY THAT JEWELLERY WEIGHING 1200 GMS BEL ONGING TO DIFFERENT FAMILY MEMBERS OF THE ASSESSEE. FURTHER, THE ASSESSEE HAS NOT FILED BEFORE US COPY OF INVENTORY WHICH WAS PREPARED AT THE TIME OF SURVEY OR COPY OF ALLEGED CONFIRMATIONS WHI CH WERE FILED BEFORE THE LOWER AUTHORITIES OR THE COPY OF STATEME NT WHICH WAS RECORDED AT THE TIME OF SURVEY. IN THE ABSENCE OF ANY POSITIVE MATERIAL BEFORE US, WE DO NOT FIND ANY ERROR IN THE ORDER OF THE LOWER AUTHORITIES. FURTHER, ASSESSEE EXPLAINED THA T IT IS CUSTOMARY THAT JEWELLERY OF FAMILY MEMBERS ARE KEPT IN THE BU SINESS PREMISES TO GIVE A BETTER LOOK OF THE STOCK POSITION OF JEWE LLERY ITEMS OF DIFFERENT STYLES FOR ATTRACTING CUSTOMERS. HOWEVER , WE FIND THAT NO MATERIAL WAS BROUGHT BEFORE US TO SHOW THAT THERE W AS ANY SUCH PREVALENT CUSTOMARY PRACTICE. IN OUR CONSIDERED OP INION, HAD IT BEEN THE FACT, ASSESSEE WOULD HAVE EASILY IDENTIFIE D THE ITEMS AT THE TIME SURVEY WHICH BELONGED TO DIFFERENT FAMILY MEMBERS BY IDENTIFYING THE ITEMS VIS A VIS NAME OF FAMILY MEMB ERS. ASSESSEE COULD NOT POINT OUT ANY DOCUMENT WHICH WAS FOUND DU RING THE COURSE OF SURVEY WHICH SUPPORTS THE CLAIM OF THE AS SESSEE THAT JEWELLERY BELONGED TO DIFFERENT FAMILY MEMBERS OF T HE ASSESSEE WERE GIVEN BY THEM TO BE KEPT AS DISPLAY ITEMS OR F OR SECURITY PAGE 8 OF 8 I.T.A. NO. 31MDS/2011 PURPOSE IN THE BUSINESS PREMISES OF THE ASSESSEE. IN THE ABOVE CIRCUMSTANCES, WE DO NOT FIND ANY GOOD REASON TO IN TERFERE WITH THE ORDER OF THE LOWER AUTHORITIES. THEREFORE, ORDER O F THE LD. CIT(A) IS CONFIRMED AND GROUND OF APPEAL OF THE ASSESSEE IS D ISMISSED. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE COURT ON 28-07-2011. SD/- SD/- (U.B.S BEDI ) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 28 TH JULY, 2011. VL COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE