ITO 23(2)(1), MUMBAI V. A.B. ENTERPRISES, MUMBAI

ITA 3415/MUM/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6664 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVRAM; RAHUL HAKKANI
• Keywords: Capital asset; Opportunity of being heard; Deemed to accrue or arise in india; Additional evidence; Corroborative evidences
• Section: 143(3); 43(5); 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI SANJAY GARG, J M ITA NO. 3415 / MUM/20 1 0 ( ASSESSMENT YEAR : 200 6 - 0 7 ) ITO 23(2)(1), MUMBAI VS. M/S A.B.ENTERPRISES 10, JALARAM ESTATE, M.G.ROAD, MULUND (W), MUMBAI - 400 080 PAN/GIR NO. : A ALFA 3059 L ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI JAVED AKHTAR /ASSESSEE BY : DR.K.SHIVRAM & MR.RAHUL HAKKANI DATE OF HEARING : 10 TH FEBRUARY , 201 4 DATE OF PRONOUNCEMENT : 4 TH APRIL , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : THE REVENUE HAS PREFERRED THIS APPEAL AGAINST THE ORDER OF CIT(A) - 8 , DATED 9 - 12 - 2009 , FOR THE ASSESSMENT YEAR 200 6 - 0 7 , IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE I.T . ACT. 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 3 . BRIEFLY STATED FACTS EMANATE FROM THE ASSESSMENT ORDER FRAMED UNDER SECTION 143(1), WHEREIN THE AO OBSERVED AS UNDER : - THE ASSESSEES NATURE OF BUSINESS AS CLAIMED BY HIM IS RESELLER O F GOLD, SILVER AND DIAMONDS. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY FOR THE REASONS THAT THE ASSESSEE DID NOT SHOW ANY PURCHASES DURING THE YEAR. THE STOCK SHOWN WAS THE NET FIGURE OF ITA NO. 3415 /20 1 0 2 RS. 85.15 LAKHS. THE DETAILS OF THE SAME WERE NOT FILED. THERE WE RE NO SUNDRY DEBTORS, OR CREDITORS OR ANY LOANS. THE ASSESSEE WAS ASKED TO FILE RELEVANT DETAILS ON ACCOUNT OF SALE, COPY OF PARTNERSHIP DEED AND DETAILS OF STOCK AND EXPENSES. THE ASSESSEE SUBMITTED THE DETAILS AS UNDER : - 1) ACKNOWLEDGEMENT COPY OF WT RETURNS OF TWO PARTNERS FOR A. Y.2001 - 02. 2) COPY OF PARTNERSHIP DEED. 3) BANK STATEMENT OF THE FIRM FROM 14.6.2005 TO 30.6.2006 OF DENA BANK, MULUND (W), MUMBAI. 4) COPIES OF SALES - TAX CHALLANS FOR F. Y. 2005 - 06. ON VERIFICATION OF RETURN OF PREVIOUS YEARS FILED WITH THE DEPARTMENT, IT WAS SEEN THAT ASSESSEES CONTENTION THAT, HE HAD BEEN HOLDING CLOSING STOCK OF JEWELIERY OF RS.85, 16,248/ - FOR ALL THESE PREVIOUS YEARS IS FALSE, INCORRECT AND WITHOUT ANY BASIS. ALSO IT IS SEEN FROM THE DETAILS FILED T HAT THE ASSESSEE HAS NOT BEEN ABLE TO SUPPORT HIS CLAIM SINCE NO DETAILS OF CONVERSION OF STOCK - IN - TRADE HAS BEEN FILED WITH SUPPORTING EVIDENCE. HENCE, ASSESSEES CONTENTION OF CLOSING STOCK BEING AVAILABLE IS NOT ACCEPTABLE AND ADDED BACK AS UNEXPLAINED MONEY AND TAXED U/S. 69A OF THE I. T. ACT. 4 . BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION AFTER HAVING FOLLOWING OBSERVATIONS : - 2 . 6 I HAVE CAREFULLY EXAMINED THE ORDER OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT ALONG WITH ITS ANNEXURES IN SUPPORT OF THE CONTENTION RAISED, I FIND THAT THE CONTENTION OF THE APPELLANT CAN BE ACCEPTED. THE APPELLANT HAS FILED COPIES OF DOCUMENTS FILED BEFORE THE ASSESSING OFFICER. THE APPELLANT HAS FILED COPIES OF RETURNS OF INCOME WHICH S HOWS THAT IN ASSESSMENT YEAR 2002 - 03 CAPITAL WAS INTRODUCED IN - THE FORM OF JEWELLERY IN THE RESPECTIVE CAPITAL ACCOUNTS OF THE PARTNERS OF THE FIRM AFTER COMPLYING WITH THE PROVISIONS OF SECTION 45(3) OF THE I. T ACT, 1961 AND THE DEPARTMENT HAS ACCEPTED THE SAME. THE APPELLANT HAS SUBMITTED THAT THE PARTNERS WERE ASSESSED TO WEALTH TAX PRIOR TO ASSESSMENT YEAR 2002 - 0 3 AND THE SAID JEWELLERY WAS DISCLOSED IN THE RETURN OF WEALTH FILED. COPIES OF WEALTH TAX RETURNS FILED HAVE BEEN SUBMITTED, FROM A STUDY O F THESE, IT IS SEEN THAT THE JEWELLE R Y RECEIVED BY ONE OF THE PARTNERS I.E. SHRI RAMLAL JAM ON THE DEATH OF HIS MOTHER THE LATE GISHIBAI WHO WAS ALSO ASSESSED TO WEALTH TAX HAD ALSO BEEN DECLARED EARLIER, AT BEST, THE ASSESSING OFFICER COULD HAVE TAKEN INV ESTIGATIVE ACTION IN THE YEAR IN WHICH THE CAPITAL WAS FIRST INTRODUCED IN THE FORM OF JEWELLE,Y AS WARRANTED U/S 69 OF THE I. T ACT, 1961, / FIND THAT THE DEPARTMENT HAS ACCEPTED THE DECLARATION OF THE APPELLANT IN THE CONCERNED YEAR. U/S 69, THE PREVIOUS YEAR WHEN SUCH DEEMED INCOME SHALL BE TAKEN TO HAVE ACCRUED SHALL BE YEAR IN WHICH THE INVESTMENT WAS FIRST RECORDED. ONCE IT IS ITA NO. 3415 /20 1 0 3 ACCEPTED IN THAT YEAR, IT IS NOT OPEN TO THE ASSESSING OFFICER TO DOUBT IT IN THE SUBSEQUENT YEAR ON SUSPICION, SURMISES AND C ONJECTURES AS DONE IN THE INSTANT CASE. THE APPELLANT HAS FILED COPIES OF THE WEALTH TAX RETURNS OF THE PARTNERS IN SUPPORT OF HIS CONTENTION AND RECORDS SHOW THAT THEY HAVE BEEN ACCEPTED BY THE DEPARTMENT. THE ONUS WAS ON THE APPELLANT TO PROVE THE GENUIN ENESS OF THE TRANSACTION AND THE APPELLANT IN THIS CASE HA S PROVED THE SAME. THE JEWELLERY HAS BEEN DECLARED IN THE WEALTH TAX RETURNS AND THE RETURNS HAVE NOT BEEN QUESTIONED, THEREFORE THE INVESTMENT OF THIS JEWELLER Y AS CAPITAL CANNOT BE TREATED AS UNEX PLAINED INVESTMENT. ONCE THE APPELLANT HAS GIVEN THE WEALTH TAX RETURNS OF THE PARTNERS AND THE COPIES OF INCOME TAX RETURNS OF THE APPELLANT FOR EARLIER YEARS I.E. TILL ASSESSMENT YEAR 2005 - 06, UNLESS THE ASSESSING OFFICER HAS ENQUIRED INTO IT AND ESTABLI SHED THAT THEY WERE NON - GENUINE IN THE YEAR THE IN I N VESTMENT WAS FIRST MADE, IT IS NOT OPEN TO THE ASSESSING OFFICER TO DISBELIEVE AND TO MAKE ADDITION U/S. 69 AT A LETTER DATE. I FIND THAT THE ASSESSING OFFICER HAS NEVER QUESTIONED THE NATURE OF SOURCE O F INVESTMENT IN THE EARLIER YEARS OR DOUBTED THE BOOKS OF ACCOUNTS OF THE APPELLANT. I FIND THAT THE ASSESSING OFFICER HAS TAKEN NO ACTION TO INVESTIGATE INTO THE DOCUMENTS SUBMITTED BY THE APPELLANT TO PROVE ITS CASE BUT HAS SUMMARILY REJECTED THE APPELLA NTS CONTENTION REGARDING THE FACT THAT THE STOCK REPRESENTED THE CAPITAL INTRODUCED BY THE PARTNERS IN FORM OF JEWELLER Y ,. IN FACT, DOCUMENTS SUBMITTED AT THE TIME OF APPELLATE PROCEEDINGS SHOW THAT VIDE LETTER DATED 17.12.08 AND 26.12.08, THE APPELLANT H AD SUBMITTED ALL DETAILS REQUIRED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER, I FIND, HAS RESORTED TO THE POLICY OF PICK AND CHOOSE AND HAS MENTIONED ONLY SOME DOCUMENTS IN THE ASSESSMENT ORDER AND HAD COMPLETELY IGNORED THE OTHERS THE ASSESSING O FFICER WAS NOT AT LIBERTY TO DO SO. THE EXPLANATION OF THE APPELLANT WAS REQUIRED TO BE EXAMINED TAKING INTO CONSIDERATION THE TOTALITY OF CIRCUMSTANCES AND RECORDS AND IF ANY LACUNAE HAD BEEN FOUND, THE SAME NEEDED DETAILING. THE BOOKS OF ACCOUNTS OF THE APPELLANT HAVE NOT BEEN REJECTED. NEITHER HAS THE TRADING AND PROFIT & LOSS ACCOUNT BEEN LOOKED INTO, WHEREIN THE SAID ACCOUNT CLEARLY SHOWS SALE OF STOCK AT RS. 86,15,810/ - IN THE YEAR. IN ANY CASE, REGARDING THE QUESTION IS THE INTRODUCTION OF CAPITAL W FORM OF STOCK IN TRADE BY PARTNERS, THE SAME, I FIND, STANDS PROVED AND ACCEPTED IN EARLIER YEARS THEREFORE, THERE SEEMS TO BE NO REASON FOR DOUBTING IT IN THE HANDS OF THE APPELLANT IN THIS YEAR. THE PARTNERS, 1 FIND, HAVE FILED PERSONAL RETURNS OF INCOME TAX AND WEALTH TAX IN EARLIER YEARS, WHEREIN THE INTRODUCTION OF JEWELLER Y , HAS BEEN DECLARED AND IN ASSESSMENT YEAR 2002 - 03 THE PARTNERS HAVE INDIVIDUALLY COMPLIED WITH THE PROVISIONS OF SECTION 43(5) OF THE INCOME TAX ACT, 1961, WHEN THEY CONVERTED THE ASSETS INTO STOCK IN TRADE AND INTRODUCED IT AS CAPITAL IN THE FIRM. THIS STAND WAS ACCEPTED BY THE DEPARTMENT. AS THE PARTNERS HAVE DECLARED LONG TERM CAPITAL GAINS ON THE SAID JEWELLER Y , I FIND, THERE WAS NO REASON FOR THE FIRM TO DO SO AS WHAT THE FIRM GOT WAS STOCK IN TRADE IN THE FORM OF CAPITAL. THE ASSESSING OFFICER, I FIND HAS NOT LOOKED INTO OR ITA NO. 3415 /20 1 0 4 EXAMINED THIS ASPECT AND HAS DISMISSED THE APPELLANTS STATEMENT IN A GENERAL WAY. IN THIS CASE, IT IS SEEN THAT THE APPELLANT HAS TAKEN APPROPRIATE STEPS T O DISCHARGE THE ONUS PLACED ON IT TO PROVE THAT IT WAS IN THE POSSESSION OF THE STOCK THAT HAS BEEN DOUBTED AND IT WAS TRADING IN IT. IN VIEW OF THE ABOVE, THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITION U/S 69A AT RS. 85,16,248/ - CANNOT BE SUSTAINE D AND NEEDS TO BE DELETED. THE GROUND OF APPEAL ON THIS ISSUE IS ALLOWED. 5 . ASSAILING THE IMPUGNED ORDER OF CIT(A), THE REVENUE IS IN APPEAL HERE BEFORE THE TRIBUNAL, WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN : - I ) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE THE ADDITION U/S. 69 OR 69A OF RS. 85,16,248/ - . II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ADMITTING FRESH EVIDENCE WITHOUT GIVING OPPORTUNITY TO THE AO U/R.46A OF THE I. T RULES, 1962 WHILE DECIDING THE APPEAL. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE ASSESEES APPEAL BY STATING THAT THE PARTNERS HAD DECLARED LONG TERM CAPITAL GAIN ON CONVERSION OF CAPITAL ASSET (GOLD JEWELLE R Y) INTO STOCK - IN - TRADE U/S.45(3) OF THE I. T. ACT ALONG WITH SUPPORTING EVIDENCE WHEREAS IT HAS BEEN FOUND AFTER VERIFICATION OF THE RETUR5N FOR A. Y.2006 - 07 BY THE ASSESSING OFFICER OF THE PARTNERS, VIZ., NAME OF THE PARTNERS PAN AO I) RAMLAL K. JAM, HUF MJHR 2975Q 23(3)(2) II) PRAKASH R. JAM, HUF AAHHP8834J 23(3)(1) THAT NO LONG TERM CAPITAL GAIN WAS OFFERED ON SALE OF JEWELLER Y. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE US. 6 . IT WAS ARGUED BY THE LEARNED D R THAT ADDITION MADE ON ACCOUNT OF UNEXPLAINED MONEY AMOUNTING TO RS. 85,16,248/ - WAS DELETED BY CIT(A) IN CONTRAVENTION OF RULE 46A. THE CIT(A) HAS ACCEPTED THE ADDITIONAL EVIDENCE WITH REGARD TO THE DEC LARATION OF CAPITAL GAIN ON THE JEWELLERY CONVERTED BY THE PARTNERS INTO STOCK - IN - TRADE, AND INTRODUCING ITA NO. 3415 /20 1 0 5 THE SAME AS CAPITAL IN THE FIRM. LEARNED DR FURTHER CONTENDED THAT AS PER CLEAR FINDING RECORDED BY THE AO, THE ASSESSEE HAS ONLY FILED WT RETURNS OF T WO PARTNERS FOR THE ASSE SSMENT YEAR 2001 - 02, HOWEVER, NO RETURN OF INCOME WAS FILED BEFORE THE AO WHEREIN ASSESSEE HAS OFFERED THE CAPITAL GAINS EARNED ON CONVERSION OF PERSONAL JEWELLERY INTO STOCK - IN - TRADE OF THE FIRM. OUR ATTENTION WAS ALSO INVITED TO T HE OBSERVATION OF THE AO TO THE EFFECT THAT ASSESSEE HAS NOT BEEN ABLE TO SUPPORT HIS CLAIM SINCE NO DETAILS OF CONVERSION OF STOCK - IN - TRADE HAS BEEN FILED WITH THE SUPPORTING EVIDENCE. LEARNED DR PRAYED THAT MATTER SHOULD BE RESTORED TO THE FILE OF THE AO SO THAT HE CAN EXAMINE THE DETAILS AND DOCUMENTS FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE CIT(A) AND DECIDE THE ISSUE AFRESH. 7 . ON THE OTHER HAND, LEARNED AR SUBMITTED THAT THERE IS NO VIOLATION OF RULE 46A AND THE DETAILS WHICH WERE FILED BE FORE THE AO WERE ONLY FILED BEFORE THE CIT(A) . AS PER LEARNED AR, IN THE STATEMENT OF FACTS FILED BEFORE THE CIT(A), THE ASSESSEE HAS CLEARLY STATED THAT IT HAD FILED VARIOUS DETAILS WHICH WERE IGNORED BY THE AO AND THE COPY OF THE STATEMENT OF FACTS WERE SENT TO THE AO, WHO DID NOT GIVEN ANY COMMENTS. LEARNED AR FURTHER SUBMITTED THAT GROUND NO.3 AS RAISED BY THE REVENUE IS FACTUALLY INCORRECT AS IN THE RETURN OF INCOME OF PARTNERS, THE AMOUNT WAS SHOWN AFTER INDEXATION AND IT WAS LOSS IN THE ASSESSMENT YE AR 2002 - 03 AND, HENCE, ONCE AGAIN SHOWING THE SAME IN ASSESSMENT YEAR 2006 - 07, DOES NOT ARISE. FURTHER THE CONTENTION OF LEARNED AR WAS THAT THE ASSESSEE HAS EXPLAINED THE SOURCE OF GOLD ITA NO. 3415 /20 1 0 6 THROUGH COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2002 - 03 AND WEA LTH TAX RETURNS OF THE PARTNERS. OUR ATTENTION WAS ALSO INVITED TO THE DECISION OF THE COORDINATE BENCH IN THE CASE OF BM ENTERPRISES IN ITA NO. 2379/MUM/2010, ORDER DATED 17 - 10 - 2012, WHEREIN SIMILAR ADDITION OF OPENING STOCK WAS DELETED BY THE TRIBUNAL . LE ARNED AR VEHEMENTLY ARGUED THAT ASSESSEE FIRM WAS MAINTAINING BOOKS OF ACCOUNT, THE STOCK WAS ENTERED IN THE BOOKS AND ACCOUNTS IN THE ASSESSMENT YEAR 2002 - 03, HENCE, NO ADDITION CAN BE MADE IN THIS YEAR AS THE STOCK IS COMING FROM EARLIER YEAR. AS PER LEARNED AR NO ADDITION CAN BE MADE UNDER SECTION 69A AS THE STOCK OF JEWELLERY IS RECORDED IN THE BOOKS OF ACCOUNTS OF EARLIER YEARS AND ASSESSEE HAS DISCHARGED ITS BURDEN BY FILING RETURN OF INCOME OF EARLIER YEARS, RETURNS OF INCOME OF PARTNERS FOR THE ASSESSMENT YEAR 2002 - 03 AND WEALTH TAX RETURNS OF PARTNERS. ALTERNATIVELY, IT WAS ARGUED THAT CAPITAL WAS INTRODUCED IN THE ASSESSMENT YEAR 2002 - 03, NO ADDITION CAN BE MADE FOR THE RELEVANT ASSESSMENT YEAR 2006 - 07 UNDER CONSIDERATION. 8 . WE HAVE CONSIDERE D RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAD ALSO CAREFULLY PERUSED THE ORDER OF THE COORDINATE BENCH IN THE CASE OF B.M. ENTERPRISES FOR ASSESSMENT YEAR 2006 - 07, PASSED IN ITA NO. 2379/MUM/2010 VIDE ORDER DATED 7 - 10 - 2012. FROM THE RECORD, WE FOUND THAT ASSESSEE IS A PARTNERSHIP FIRM, IN THE RETURN OF INCOME SO FILED ASSESSEE HAS CLAIMED NATURE OF BUSINESS AS RESELLER OF GOLD, SILVER AND DIAMONDS. DURING THE COURSE OF SCRUTINY ASSESSMENT THE AO FOUND THAT ASSESSEE H AD NOT ITA NO. 3415 /20 1 0 7 SHOWN ANY PURCHASE DURING THE YEAR. THE STOCK SHOWN WAS THE NET FIGURE OF RS. 85.15 LAKHS. THE DETAILS OF THE SAME WAS NOT FILED. THE AO FURTHER OBSERVED THAT THERE WAS NO SUNDRY DEBTORS OR CREDITORS OR ANY LOANS. AS PER OBSERVATION OF THE AO, THE ASSESSEE ONLY SUBMITTED COPY OF WEALTH TAX RETURN OF TWO PARTNERS FOR THE ASSESSMENT YEAR 2001 - 02. THE AO FURTHER OBSERVED THAT ON VERIFICATION OF RETURN OF PREVIOUS YEARS FILED WITH THE DEPARTMENT, IT WAS FOUND THAT ASSESSEES CONTENTION THAT, HE HAS BEEN HOLDING CLOSING STOCK OF JEWELLERY OF RS. 85,16,248/ - FOR ALL THESE PREVIOUS YEARS IS FALSE, INCORRECT AND WITHOUT ANY BASIS. THE AO FURTHER OBSERVED THAT ASSESSEE HAS NOT BEEN ABLE TO SUPPORT HIS CLAIM SINCE NO DETAILS OF CONVERSION OF PERSONAL JEWELLERY INTO STOCK - IN - TRADE HAS BEEN FILED WITH SUPPORTING EVIDENCE. HENCE, ASSESSEES CONTENTION OF CLOSING STOCK BEING AVAILABLE WAS NOT ACCEPTABLE AND ADDED BACK AS UNEXPLAINED MONEY AND TAXED UNDER SECTION 69A OF THE IT ACT. THE CIT(A) HAS DELETED THE ADDITION BY OBSERVING THAT ASSESSEE HAS FILED COPIES OF RETURNS OF INCOME WHICH SHOWS THAT IN THE ASSESSMENT YEAR 2002 - 03, CAPITAL WAS INTRODUCED IN THE FORM OF JEWELLERY IN THE RES PECTIVE CAPITAL ACCOUNT OF THE PARTNERS OF THE ASSESSEE FIRM AFTER COMPLYING WITH T HE PROVISIONS OF SECTION 45(3) OF THE ACT AND THE DEPARTMENT HAS ACCEPTED THE SAME. THE CIT(A) FURTHER OBSERVED THAT ONCE THE ASSESSEE HAS GIVEN THE WEALTH TAX RETURNS OF PARTNERS AND THE COPIES OF THE IT RETURNS OF THE PARTNERS FOR EARLIER YEARS, UNLESS T HE AO HAS ENQUIRED INTO AND ESTABLISHED THAT THEY WERE NON - GENUINE IN THE YEAR THE INVESTMENT WAS FIRST MADE, IT IS NOT OPEN TO THE AO TO ITA NO. 3415 /20 1 0 8 DISBELIEVE AND TO MAKE ADDITION UNDER SECTION 69 AT A LATER DATE. THE CIT(A) FURTHER OBSERVED THAT THE AO HAS TAKEN NO ACTION TO INVESTIGATE INTO THE DOCUMENTS SUBMITTED BY THE ASSESSEE TO PROVE ITS CASE BUT HAS SUMMARILY REJECTED ASSESSEES CONTENTION REGARDING THE FACT THAT THE STOCK REPRESENTED THE CAPITAL INTRODUCED IN THE PARTNERS CAPITAL ACCOUNT IN THE FORM OF JEWEL LERY. HERE IT IS PERTINENT TO MENTION THAT MERE FINDING A FAULT IN AOS ACTION IS NOT SUFFICIENT, THE CIT(A) HAS ALSO GOT CO - TERMINUS POWER, WHAT THE AO HAS FAILED TO DO, THE CIT(A) IS COMPETENT TO DO THE SAME. MERE POINTING OUT FAULT IN AOS ACTION AND WI THOUT RECORDING ANY POSITIVE FINDING WITH RESPECT TO THE ADDITIONS MADE BY THE AO, THE CIT(A) CANNOT DELETE THE ADDITION. HOWEVER, TO VERIFY THE CORRECTNESS OF ASSESSEES CONTENTION REGARDING OFFERING OF CAPITAL GAINS IN THE RETURN OF INCOME FILED FOR ASSE SSMENT YEAR 2002 - 03, ON MINUTE EXAMINATION OF THE COPY OF THE RETURN FILED IN F ORM NO. 2D, PLACED AT PAGE 42 OF THE PAPER BOOK, WE OBSERVE THAT IN COLUMN 18 OF FORM NO.2D OF CAPITAL GAIN S , THE PARTNER MR. RAMLAL KESHRIMAL JAIN (HUF) HAS RETURNED NIL CAPITA L GAINS /LOSS . SIMILARLY AS PER THE RETURN OF INCOME FILED IN THE FORM NO.2D BY ANOTHER PARTNER MR. PRAKASH RAMLAL JAIN(HUF) FOR THE ASSESSMENT YEAR 2002 - 03, COPY OF WHICH HAS BEEN PLACED AT PAGE 39 OF THE PAPER BOOK, COLUMN NO. 18 OF THE CAPITAL GAINS WAS L EFT BLANK. IT MEANS NEITHER ANY POSITIVE CAPITAL GAINS NOR ANY NEGATIVE CAPITAL GAINS WERE OFFERED BY THE ASSESSEE IN THESE RETURNS OF INCOME. HOWEVER, IN THE PAPER BOOK ASSESSEE HAS PLACED COMPUTATION OF INCOME IN CASE OF PRAKASH RAMLAL JAIN (HUF) AT ITA NO. 3415 /20 1 0 9 PAGE 41 AND SHRI RAMLAL KESHRIMAL JAIN (HUF), WHICH INDICATE THE WORKING OF CAPITAL GAIN COMPUTED UNDER SECTION 45(3). THUS, THERE IS A CLEAR CONTRADICTION IN THE RETURN OF INCOME FILED FOR THE RELEVANT ASSESSMENT YEAR 2001 - 02 BY THE TWO PARTNERS VIS - - VIS COM PUTATION OF TOTAL INCOME PLACED IN THE PAPER BOOK, WHICH REQUIRES EXAMINATION ON THE PART OF THE AO TO REACH TO THE CORRECT CONCLUSION. THE BASIC CLAIM OF ASSESSEE WAS THAT PARTNERS OF THE ASSESSEE FIRM H AS CONVERTED THEIR PERSONAL JEWELLERY INTO STOCK - IN - TRADE IN THE ASSESSMENT YEAR 2002 - 03 AND RESPECTIVE CAPITAL GAINS/LOSS WAS OFFERED IN THE RETURN OF INCOME AND THE SAME WAS ACCEPTED BY THE DEPARTMENT. AS PER ASSESSEE THESE JWELLERIES AFTER CONVERTING INTO STOCK - IN - TRADE, WAS INTRODUCED IN FIRM AS PARTNER S CAPITAL. THESE JEWELLERIES WERE HELD BY THE ASSESSEE FIRM AS ITS STOCK - IN - TRADE FROM A.Y. 2001 - 02 TILL A.Y.2006 - 07 UNDER CONSIDERATION. THERE WAS NO ANY OTHER PURCHASE OR SALE DURING ALL THESE FOUR YEARS. HOWEVER, WE FIND THAT B OTH RETURNS OF INCOME OF P ARTNERS DO NOT INDICATE ANY GIR NUMBER OR PAN NUMBER. THE BASIC CLAIM OF ASSESSEE FIRM IS THAT THEIR PARTNERS WERE OWNING GOLD ORNAMENTS, WHICH THEY HAD INTRODUCED AS THEIR RESPECTIVE CAPITALS OF THE FIRM AFTER OFFERING CAPITAL GAINS/LOSS ON CONVERSION OF SUCH ORNAMENTS BELONGING TO THEIR RESPECTIVE HINDU UNDIVIDED FAMILY INTO STOCK - IN - TRADE IN THE A.Y.2002 - 03 . HOWEVER, THE RETURN OF INCOME AS PLACED AT PAGE NO. 39 & 42 OF PAPER BOOK DOES NOT SUPPORT THE CLAIM OF ASSESSEE. EVEN IN RESPECT OF WEALTH TAX RETU RNS FILED BY BOTH THE PERSONS IN THE STATUS OF HUF, THERE DOES NOT APPEARS TO BE ANY DETAIL ITA NO. 3415 /20 1 0 10 OF JEWELLERY OR OTHER IMMOVABLE PROPERTY HELD BY THE RESPECTIVE HUF . KEEPING IN VIEW THE GROUND RAISED BY THE REVENUE REGARDING VIOLATION OF RULE 46A BY CIT(A) AND ALSO TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED ABOVE, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR EXAMINING MINUTELY THE DOCUMENTS ALLEGED TO BE FILED BEFORE THE CIT(A) SO AS TO SUBSTANTIATE THAT HUF PARTNERS WERE HAVING JEWELLE RY WHICH THEY HAVE CONVERTED INTO STOCK - IN - TRADE BY OFFERING CAPITAL GAINS IN THEIR RESPECT IVE INCOME TAX RETURN AND S A ME WAS INTRODUCED AS CAPITAL IN THE ASSESSEES FIRM. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY OF BEING HEARD. 9 . W E HAVE ALSO GONE THROUGH THE ORDER OF THE COORDINATE BENCH AS RELIED UPON BY THE LEARNED AR IN THE CASE OF BM ENTERPRISES (SUPRA), WHEREIN CONCURRENT FINDING OF FACT WAS RECORDED BOTH BY THE CIT(A) AND TRIBUNAL TO THE EFFECT THAT PARTNERS OF THE ASSESSEE F IRM HAVE OFFERED CAPITAL GAINS ON THE JEWELLERY CONVERTED INTO STOCK - IN - TRADE, WHICH WAS INTRODUCED AS CAPITAL OF THE FIRM. AS THE RETURN OF INCOME FILED BY BOTH THE HUF , WHO ARE PARTNERS IN ASSESSEE FIRM DO NOT SUPPORT THIS FIN D ING, THE CASE LAW RELIED UP ON BY THE LEARNED AR WILL NOT HELP THE INSTANT CASE BEFORE US . 10 . IN THE RESULT, APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES . ITA NO. 3415 /20 1 0 11 ORDER PRONOUNCED IN THE OPEN COUR T ON THIS 4 TH APRIL . 201 4 . 4 TH APRIL, 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 04 / 0 4 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) - X, MU MBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//