ITO WD 11(1)(4), MUMBAI V. UZURI JEWELS P.LTD, MUMBAI

ITA 3605/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3939 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 17-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MRS KAVITA KAUSHAL
• Keywords: Rectification of order; Search and seizure; Accommodation entries; Bogus loan; TDS; Set aside
• Section: 143(3); 142(1); 201; 2(A); 13; 22; 131; 154

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI PAWAN SING H , JM & SHRI S. RIFAUR RAHMAN, AM ./ I.T.A. NO . 3605 / MUM/ 2017 ( / ASSESSMENT YEAR: 2012 - 13 ) ITO WARD 11(1)(4) 2 ND FLOOR, ROOM NO. 202 , AAYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400 020 / VS. M/S UZURI JEWELS PVT. LTD. 17 - 18, APOLLO INDUSTRIAL ESTATE, OFF - MAHAKALI CAVES ROAD, MUMBAI - 400 093 ./ ./ PAN NO. AA BCU 0883 D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : MRS. KAVITA KAUSHAL , DR / RESPONDENTBY : SHRI HARESH P. SHAH , AR / DATE OF HEARING : 04.12.2019 / DATE OF PRONOUNCEMENT : 28.02.2020 / O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LD. COMMIS S IONER OF INCOME TAX (APPEALS) 18 IN SHORT REFERRED AS LD. CIT(A) , MUMBAI, DATED 23.02.17 FOR A SSESSMENT YEAR (IN SHORT A Y ) 2012 - 13 . 2 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD 2 . T HE BRIEF FACTS OF THE C ASE ARE THAT ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING & DEALERS OF GOLD JEWELLERY AND ALSO DOING LABOUR JOB WORK. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 201 2 - 13 ON 30.09.2012 , DECLARING TOTAL LOSS OF RS. 3,70,596 / - AND SUBSEQUENTLY THE CASE WAS SELECTED F OR SCRUTINY AND NOTICES U/S 143(2 ) AND 142(1) OF THE I.T. ACT WERE ISSUED AND SERVED ON THE ASSESSEE. IN RESPONSE, AR OF THE ASSESSEE ATTENDED AND FILED THE RELEVANT INFORMATION AS CALLED FOR. 3. A PASSENGER NAMED SHRI NARINDER KUMAR WHO WAS INTERCEPTED IN MUMBAI AIRPORT CARRYING THE GOLD ORNAMENTS WEIGHTING 3500 GM (APPROX.) FROM MUMBAI TO CHANDIGARH BY FLIGHT NO. IT 3185 AS DECLARED BY HIM, THE GOLD ORNAMENTS WERE PURCHASED FROM THE ASSESSEE COMPANY. IN ORDER TO VERIFY THE CLAIM OF THE SAID PASSENGER, T HE V ERIFICATION U/S 131 OF THE ACT AND SWORN STATEMENT OF SHRI PANKAJ KUMAR H. JAGAWAT, DIRECTOR OF ASSESSEE COMPANY WERE RECORD. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE WAS ASKED WHY , THE JEWELLERY OF 3500 GM SOLD TO SBM JEWELERS SHOULD NOT BE ADDED AS INCOME OF THE ASSESSEE AS THE SAME IS NOT 3 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD RECORDED IN SALES REGISTER ON THE DAY OF VERIFICATION U/S 131 OF THE ACT. FURTHER STOCK OF JEWELLERY OF 3863.697 GMS WAS PHYSICALLY FOUND ON THE DAY OF VERIFICATION AND TAKING INTO CONSIDERATION THE LIST OF CANCELLED BILLS IN THE POSSESSION OF THE ASSESSEE, WHY THE STOCK OF JEWEL E RY OF 3863.697 GMS SHOULD NOT BE CONSIDERED AS INCOME OF THE ASSESSEE. 5. IN RESPONSE, ASSESSEE SUBMITTED THAT THE SALES TO M/S SBM JEWELLERS COVERING GOLD JEWELLERY OF 3500 GMS WAS DULY RECORDED IN THE BOOKS OF ACCOUNTS ON THE DAY OF VERIFICATION U/S 131 OF THE ACT AND THE PHYSICAL STOCK OF 3863.697 GMS FOUND DURING VERIFICATIO N U/S 131 OF THE ACT ONLY AFTER RECORDING OF SALES OF 3500 GMS TO M/S SBM JEWELLERS. HOWEVER, T HE EXPLANATION OFFERED BY THE ASSESSEE WAS REJECTED BY THE AO BY RELYING ON THE STATEMENT OF ACCOUNTANT AND AO PROCEEDED TO MAKE THE ADDITION BASED ON THE LIST O F CANCELLED BILLS FOUND WITH THE ACCOUNTANT. THE SAME IS RECORDED IN PARA NO. 7.1 OF THE ORDER OF AO AND AO PROCEEDED TO MAKE THE FOLLOWING ADDITIONS: - A) AO MADE ADDITION OF PEAK INVESTMENT OF RS. 91,91,683/ - WHICH IS THE VALUE OF JEWELLERY INTERCEPTED I N THE MUMBAI AIRPORT WHICH WAS SOLD TO M/S SBM JEWELLERS. 4 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD B) AO MADE ADDITION OF PROFIT ON UNACCOUNTED SALES TO THE EXTENT OF RS. 48,96,798/ - C) AO MADE ADDITION OF THE VALUE OF STOCK FOUND DURING VERIFICATION U/S 131 TO THE EXTENT OF RS. 1,00,45,612/ - . D ) AO FOUND UNDISCLOSED PAYMENT OF WAGES IN THE MONTH OF JAN 2012 AND MADE ADDITION OF RS. 5,00,620/ - . 6. FURTHER AO MADE ADDITION OF BOGUS UNSECURED LOANS TO THE EXTENT OF RS. 70,85,000/ - . THE AO OBSERVED THAT A SEARCH AND SEIZURE ACTION UNDERTAKEN IN THE CASE OF B HANWAR LAL JAIN GROUP BY THE INVESTIGATION WING ON 03.10.13 AND THE SEARCH REVEALED THAT B HANWAR LAL JAIN GROUP IS A LEADING ENTRY PROVIDER. AO OBSERVED THAT ASSESSEE HAS TAKEN UNSECURED LOANS FROM M/S A2 JEWELS & M/S MAXIMUM GEMS, WHICH ARE COMPANY CONTROLLED BY BHANWARLAL JAIN. A CCORDINGLY , HE MADE ADDITION. 7 . AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND SUBMITTED BEFORE HIM AS BELOW: - 7.1. WITH REGARD TO UNDISCLOSED INCOME ON ACCOUNT OF BOOK INVESTMENT AND SALE TO M/S SBM JEWELLERS, IT IS SUBMITTED THAT ASSESSEE HAS ALREADY ACCOUNTED FOR THE ABOVE SALES IN ITS BOOKS OF 5 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD ACCOUNTS ON THE DAY OF VERIFICATION U/S 131 OF THE ACT, THEREFORE IT IS A PROPER SALE. 7.2. WITH REGARD TO UNDISCLOSED STOCK, ASSESSEE SUBMI TTED THAT O N THE DAY OF VERIFICATION, THEY FOUND PHYSICAL STOCK OF 3863.697 GM, EVEN THOUGH AS PER THE STOCK REGISTER MAINTAINED BY THE ASSESSEE, IT WAS CARRYING 3,942.152 GM WITH MINOR DIFFERENCE OF 78.455 GMS, THEREFORE THE VALUE OF STOCK WAS ALREADY REC ORDED IN THE BOOKS OF ACCOUNTS. 7.3 WITH REGARD TO ESTIMATION OF GROSS PROFIT OF ALLEGED UNACCOUNTED SALES, IT WAS BROUGHT TO THE NOTICE THAT ASSESSEE HAS RAISED THE FOLLOWING BILLS TO THE FOLLOWING PARTIES NAME OF PARTY ALLEGED AMOUNT OF SALES M/S, SBM JEWELLERS RS.91,91,683/ - M/S. SHREE MANGAL JEWELS PVT LTD RS.3,72,80,121/ - M/S. HEMRATNA JEWELLERS RS.1,72,45,231/ - M/S. SHIV JEWELLERS RS.45,83,292/ - M/S. BHATIA & CO RS.45,01,411/ - M/S. SAJAWAT JEWELLERS RS.23,41,657/ - M/S. L K JEWELLERS RS.2,11, 22,7807 - M/S. V K BANGLES RS.30,19,608/ - 6 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD TOTAL RS.9,92,85,783/ - 7.4 THE TOTAL VALUE OF SALES OF THE ALLEGED TAX INVOICE ARE RS. 9,92,85,783/ - , WHEREAS AO HAS WRONGLY ESTIMATED RS. 9,79,35,783/ - . ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT AO ESTIMATED GROSS PROFIT OF RS. 48,96,789/ - WHICH IS 5% OF THE ALLEGED UNACCOUNTED SALES. IN SUPPORT OF ITS CONTENTION, AS SESSEE SUBMITTED A DETAIL SUBMISSION ON SALES OF VARIOUS PARTIES WHICH ARE GIVEN BELOW: - M/S. SBM JEWELLERS: THE ID AO HAS ESTIMATED GP @ 5% ON ALLEGED SALES OF RS.91,91,683/ - AFFECTED TO M/S . SBM JEWELLERS. THE APPELLANT HAS SOLD JEWELLERY WEIGHING 3500.260 GMS VIDE ITS TAX INVOICE NO. UM/02/196 DATED 14TH FEBRUARY, 2012 TO M/S. SBM JEWELLERS FOR RS.91,91,683/ - (PAGE 9 OF PAPER BOOK) FROM THE COPY OF THE IMPOUNDED SALE REGISTER AS PROVIDED BY THE AO IT CAN BE SEEN THAT THE SAID TAX INVOICE [NO. MUM/02/196 DATED 14 TH FEBRUARY, 2012] 7 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD HAD BEEN DULY ENTERED IN THE REGULAR BOOKS OF ACCOUNTS BEFORE THE ACTION U/S. 131(3)(B) OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT (PAGE 13 OF PAPER BOOK). SINCE THE TAX INVOICE IN QUESTION IS ALREADY BEEN ACCOUNTED IN THE REGULAR BOOKS OF ACCOUNTS AND T HE SAME WAS OFFERED TO TAX WHILE CALCULATING THE INCOME FROM BUSINESS, FURTHER ESTIMATION OF GP ON THE ALLEGED SALE IS NOT WARRANTED AS IT WILL AMOUNT TO TAX THE SAME GP DOUBLE WHICH IS NOT PERMITTED BY LAW. IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. M/S. SHREE MANQAL JEWELS PVT LTD: THE ID AO HAS ESTIMATED GP @ 5% ON ALLEGED SALES OF RS.3,72,80,121/ - AFFECTED TO M/S. SHREE MANGAL JEWELLERS PVT LTD. THE APPELLANT HAS UNDERTAKEN ONLY LABOUR JOB TO MAKE JEWELLERY FOR M/S. SHREE MANGAL JEWELLERS PVT LTD. THIS CAN BE SEEN FROM THE COPY OF ACCOUNT OF THE APPELLANT AS APPEARING IN THE BOOKS OF M/S. SHREE MANGAL JEWELLERS PVT LTD FOR THE YEAR UNDER CONSIDERATION (PAGE NO 25 OF PAPER BOOK) . 8 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD T HUS THE APPELLANT HAS NOT A FFECTED ANY SALES TO M/S. SHREE MANGAL JEWELLERS PVT IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. M/S. HEMRATNA JEWELLERS: THE ID AO IN HIS ORDER HAS ESTIMATED GP @ 5% ON ALLEGED SALES OF RS.1,72,45,231/ - AFFECTED TO M/S. HEMRATNA JEWELLERS. THE APPELLANT HAS UNDERTAKEN ONLY LABOUR JOB TO MAKE JEWELLERY FOR M/S. HEMRATNA JEWELLERS. THIS CAN BE SEEN FROM THE COPY OF ACCOUNT OF THE APPEL LANT AS APPEARING IN THE BOOKS OF M/S HEMRATNA JEWELLERS.FOR THE YEAR UNDER CONSIDERATION (PAGE NO 26 OF PAPER BOOK) THUS THE APPELLANT HAS NOT AFFECTED ANY SALES TO M/S. HEMRATNA JEWELLERS. IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. M/S. SHIV JEWELLERS: 9 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD THE L D AO IN HIS ORDER HAS ESTIMATED GP @ 5% ON ALLEGED SALES OF RS.45,83,292/ - AFFECTED TO M/S. SHIV JEWELLERS. THE APPELLANT HAS UNDERTAKEN ONLY LABOUR JOB TO MAKE JEWELLERY FOR M/S. SHIV JEWELLERS THIS CAN BE SEEN FROM THE COPY OF ACCOUNT OF THE APPELLANT AS APPEARING IN THE BOOK S OF M/S. SHIV JEWELLERS FOR THE YEAR UNDER CONSIDERATION (PAGE NO 27 OF PAPER BOOK) THUS THE APPELLANT HAS NOT AFFECTED ANY SALES TO M/S. SHIV JEWELLERS. IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. M/S. BHATIA & CO: THE L D AO IN HIS ORDER HAS ESTIMATED GP @ 5% ON ALLEGED SALES OF RS.45,01,411/ - AFFECTED TO M/S. BHATIA & CO. THE APPELLANT HAS SOLD JEWELERS WORTH RS.4,99,339/ - ONLY ON 12 TH OCTOBER, 2011 TO M/S. BHATIA & CO. EXCEPT THIS SALE NO OTHER SALE WAS AFFECTED TO M/S. BHATIA & CO. 10 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD IT HAS ALSO UNDERTAKEN LABOUR JOB TO MAKE JEWELLERY FOR M/S. BHATIA & CO. THIS CAN BE SEEN FROM THE COPY OF ACCOUNT OF THE APPELLANT AS APPEARING IN THE BOOKS OF M/S B HATIA & CO FOR THE YEAR UNDER CONSIDERATION (PAGE NO 28 OF PAPER BOOK) T HUS THE APPELLANT HAS NOT AFFECTED ALLEGED SALES TO M/S. BHATIA & CO. IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. M/S SAJAWT JEWELLERS: THE ID AO IN HIS ORDER HAS ESTIMATED GP @ 5% ON ALLEGED SALES OF RS.23,41,657/ - AFFECTED TO M/S. SAIAWAT JEWELLERS. THE APPELLANT HAS UNDERTAKEN ONLY LABOUR JOB TO MAKE JEWELLERY FOR M/S. SAJAWAT JEWELLERS. THIS CAN BE SEEN FROM THE COPY OF ACCOUNT OF THE APPELLANT AS APPEARING IN THE BOOKS OF M/S. SAJAWAT JEWELLERS FOR THE YEAR UNDE R CONSIDERATION (PAGE NO 29 - 30 OF PAPER BOOK) 11 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD THUS THE APPELLANT HAS NOT AFFECTED ANY SALES TO M/S. SAJAWAT JEWELLERS. IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. M/S. L K JEWELLERS: THE ID AO IN HIS ORDER HAS ESTIMATED GP @ 5% ON ALLEGED SALES OF RS.2,11,22,7807 - AFFECTED TO M/S. L K JEWELLERS. M/S. L K JEWELLERS HAS NOT ENTERED IN TO ANY TRANSACTION WITH THE APPELLANT COMPANY. THIS FACT IS CONFIRMED M/S. L K JEWELLERS BY THEIR CONFIRMATION LETTER ( PAGE NO 31 OF PAPER BOOK). IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. M/S. V K BANGLES: THE ID AO IN HIS ORDER HAS ESTIMATED GP @ 5% ON ALLEGED SALES OI RS.30,19,608/ - AFFECTED TO M/S. V K BANGLES. M/S V K BANGLES HAS NOT ENTERED IN TO ANY TRANSACTION WITH THE APPELLANT COMPANY. 12 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD THIS FACT IS CONFIRMED M/S. V K BANGLES BY THEIR CONFIRMATION LETTER (PAGE NO 32 OF PAPER BOOK ). IT IS THEREFORE HUMBLY PRAYED THAT THE ADDITION OF GP ON THIS COUNT MAY BE DELETED. IN VIEW OF THE ABOVE FACTS AND DOCUMENTS IT IS APPARENT THAT THE APPELLANT HAS NOT AFFECTED THE ALLEGED SALES IN QUESTION. IT IS IMPORTANT HERE TO MENTION THAT NO EXCESS STOCK OR CASH WAS FOUND DURING THE COURSE VISIT BY THE DEPUTY DIRECTOR OF INCOME TAX ( INV). UNIT - III ( 4). MUMBAI. IN VIEW OF THE ABOVE FACTS THE TRANSACTIONS OF ALLEGED SALE COVERED BY THE TAX INVOICES REFERRED IN THE ORDER OF ASSESSMENT DID NOT TAKE PLACE AND THE SAID TAX INVOICES WERE CANCELLED, THE ESTIMATION OF GROSS PROFIT @ 5% ON SALE VALUE OF SAID C ANCELLED TAX INVOICES IS UNWARRANTED. THE APPELLANT HUMBLY PRAYS THAT IN THE LIGHT OF THE ABOVE FACTS THE ADDITION MAY BE DELETED. 7.5 WITH REGARD TO BOGUS UNSECURED LOANS, ASSESSEE MADE THE FOLLOWING SUBMISSIONS: 4. BOGUS UNSECURED LOANS: 13 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD WHILE FRAMING TH E ORDER U/S. 143(3) OF THE I T ACT, THE AO HAS MADE ADDITION OF RS.70,85,000/ - AS BOGUS LOANS. THE ASSESSEE COMPANY HAS ACCEPTED DEPOSITS OF RS.25, 00,000 / - FROM M/S. A2 JEWELS & RS.40,00,000/ - FROM M/S. MAXIMUM GEMS RESPECTIVELY. THE SAID DEPOSITS WERE ACCEPTED IN THE FINANCIAL YEAR 2009 - 10 CORRESPO NDING TO ASSESSMENT YEAR 2010 - 11 . THE ASSESSEE HAS CREDITED / PAID INTEREST ON THE SAID DEPOSITS FROM TIME TO TIME AFTER DEDUCTION TAX AT SOURCE AS PER APPLICABLE PROVISIONS AND RATE. DURING THE YEAR UNDER CO NSIDERATION IT HAS PAID INTEREST OF RS.2,25,000/ - & RS.3,60,000/ - TO M/S. A2 JEWELS & M/S. MAXIMUM GEMS. AFTER DEDUCTING TAX AT SOURCE A SUM OF RS.2,02,500/ - & RS.3,24,0007 - WAS CREDITED TO THE ACCOUNTS OF M/S. A2 JEWELS & M/S. MAXIMUM GEMS RESPECTIVELY. T HE ASSESSEE HAS FURNISHED NECESSARY CONFIRMATIONS FROM THE RESPECTIVE PARTIES ALONGWITH COPIES OF ACKNOWLEDGEMENTS OF FILING OF RETURN OF INCOME BY THEM & THEIR BANK STATEMENTS / PASS BOOKS IN SUPPORT OF THE DEPOSITS DURING THE COURSE OF ASSESSMENT PROCEEDI NGS. 14 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD WHILE FRAMING THE ORDER U/S. 143(3) OF THE I T ACT, THE AO HAS ADDED A SUM OF RS.70,85,000/ - (PRINCIPAL RS.65,00,000/ - & INTEREST THEREON OF RS.5,85,000/ - FOR THE YEAR) BEING BOGUS LOANS. THE AO THEN RECTIFIED HIS ORDER U/S. 143(3) DATED 25 TH MARCH, 2015 BY ORDER U/S. 154 OF THE I T ACT DATED 17 TH MARCH, 2016 DELETING THE ADDITION OF RS.65,00,000/ - BEING THE PRINCIPAL AMOUNT OF LOANS AND RETAINING THE ADDITION OF RS.5,85,000/ - BEING INTEREST ON SUCH LOANS FOR THE YEAR (PAGE NO. 33 OF PAPER BOOK). THE PRINCIPAL AMOUNT OF RS.65,00,000/ - HAS BEEN ADDED TO INCOME OF THE ASSESSEE IN THE ASSESSMENT YEAR 2010 - 11 AGAINST WHICH THE APPELLANT HAS PREFERRED APPEAL ON 22 ND MARCH, 2016 BEFORE YOUR GOODSELVES. WITHOUT PREJUDICE TO THE MERITS OF THE CASE, THE ASS ESSEE CRAVES THE LEAVE TO WITHDRAW THIS GROUND OF APPEAL TO THE EXTENT OF PRINCIPAL AMOUNT OF RS.65,00,000/ - . THE ADDITION OF RS.5,85,000/ - MAY BE DECIDED IN THE LIGHT OF DECISION AS MAY BE TAKEN IN ASSESSMENT YEAR 2010 - 11 ON THIS ISSUE. THE APPEAL OF ASSE SSMENT YEAR 2010 - 11 HAS COME UP FOR HEARING SIMULTANEOUSLY. 15 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD 8. AFTER CONSIDERING THE SUBMISSION OF ASSESSEE, LD. CIT(A) DELETED THE ADDITIONS WITH RESPECT TO PEAK INVESTMENT, PROFIT ON UNACCOUNTED SALES AND UNDISCLOSED STOCK. WITH RESPECT TO PAYMENT OF WAG ES NOT DISCLOSED IN THE BOOKS OF ACCOUNT, HE CONFIRMED THE ADDITION. WITH REGARD TO BOGUS LOANS AND ADVANCES, HE OBSERVED THAT IT IS BROUGHT TO KNOWLEDGE THAT AO HAS ALREADY MADE ADDITION IN THE AY 2010 - 11 WHEN THE SAME ADDITION IS MADE IN AY 2012 - 13 ALSO, IT MEANS DOUBLE ADDITION. ACCORDINGLY, HE DELETED THE ADDITION. WITH RESPECT TO INTEREST PAYMENT OF RS. 5,85,000/ - , LD. CIT(A) DELETED THE ADDITIONS ON TECHNICAL GROUND THAT AO HAS ALREADY REJECTED THE BOOKS OF ACCOUNT AND THE SAME CANNOT BE RELIED TO MAK E THIS ADDITION. 9 . AGGRIEV ED WITH THE ABOVE ORDER, REVENUE HAS PREFERRED THE APPEAL BEFORE US ON THE GROUND MENTIONED HEREIN BELOW: - 1. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS.91,91,683/ - ON ACCOUNT OF PEAK INVESTMENT MADE BY THE AO WITHOUT APPRECIATING THE FACT THAT IN THE STATEMENT RECORDED U/S.131 DURING THE 16 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD COURSE OF ACTION U /S.1 31(3)(B) MR. PANKAJ JAGAWAT DIRECTOR OF THE COMPANY HIMSELF ADMITTED THAT THE SAID INVOICE NO. MUM/02/196 DTD. 14/02/2012 WAS NOT RECORDED IN REGULAR BOOKS OF ACCOUNT. 2. (A) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITIONS OF RS 48,96,789/ - AND RS. 1,00,45,612/ - MADE BY THE AO ON ACCOUNT OF PROFIT ON UNACCOUNTED SALES AND UNDISCLOSED INCOME ON ACCOUNT OF UNDISCLOSED STOCK WITHOUT APPRECIATING THE FACT THAT D URING T HE COURSE OF ACTION U/S.1 31(3)(B) IT WAS FOUND THAT THERE WAS DIFFERENCE BETWEEN THE SALES REGISTER MAINTAINED IN TALLY SOFTWARE FORMAT AND OTHER MAINTAINED IN EXCEL FORMAT. (B) 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN DELETING THE ADDITION WITHOUT APPRECIATING THE FACT THAT AS PER PAGE NO.3, 4 & 5 OF ANNEXURE - A - 1 OF IMPOUNDED MATERIAL WHEREIN DETAILS OF CASH RECEIPTS AND EXPENDITURE OF THE COMPANY ARE MENTIONED PROVES THAT CASH SALES HAVE BEEN MADE BY THE A SSESSEE OUT OF THE BOOKS.' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION OF RS. 5,85, 000/ - CONSTITUTING INTEREST ON 17 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD BOGUS LOANS AND ADVANCES MADE BY THE AO WITHOUT APPRECIATING THE FACT THAT THE ENTRY OF THESE UNSECURED LOANS AND ADVANCES IN THE BOOKS OF ACCOUNTS ARE BOGUS ACCOM MODATION ENTRIES WHICH HAS BEEN P ROVIDED BY MR. BHANWARLAL JAIN GROUP IN F.Y. 2009 - 10 PERTAINING TO A.Y.2010 - 11.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION WITHOUT APPRECIATING THE FACT THAT THE APPEAL OF THE ASSESSEE FOR THE A.Y.2010 - 11 IN RESPECT OF BOGUS UNSECURED LOANS AND ADVANCES IS PENDING BEFORE THE LEARNED CIT(A) FOR ADJUDICATI ON.' 5. ' THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE A.O. BE RESTORED.' 6. THE APPELLANT CRAVES TO LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 10 . BEFORE US, LD. DR BROUGHT TO OUR NOTICE FINDINGS OF AO IN PARA NO. 8 OF THE ASSESSMENT ORDER AND SUPPORTED THE FINDINGS OF AO. WITH REGARD TO ADDITIONS OF PEAK INVESTMENT, GP ON UNACCOUNTED SALES AND UNDISCLOSED INVESTMENT ON GOLD JEWELLERY FOUND DURING VE RIFICATION U/S 131 OF THE ACT, HE SUBMITTED THAT 18 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD THE ADDITIONS MADE BY AO IS BASED ON THE IMPOUNDED MATERIAL FOUND DURING VERIFICATION AND SUPPORTED THE ORDERS PASSED BY AO. WITH REGARD TO DELETION OF INTEREST ON BOGUS LOANS OF RS. 5,85,000/ - , HE SUBMITTED THAT THE LOANS AND ADVANCES TAKEN FROM BHANWARLAL JAIN GROUP AND THE LOAN IS ONLY AN ACCOMMODATION ENTRY AND ANY INTEREST ON SUCH TRANSACTION IS ALSO ACCOMMODATION ENTRIES. THEREFORE, HE SUPPORTED THE FINDINGS OF AO. 11 . ON THE OTHER HAND, LD. A R BROUGHT TO OUR NOTICE THE SUBMISSIONS MADE BEFORE LD. CIT(A) WHICH IS PART OF ORDER OF FIRST APPELLATE AUTHORITY AND SUB MITTED THAT THE ADDITION OF UNDISCLOSED INVESTMENT WITH REGARD TO JEWELLERY INTERCEPTED IN MUMBAI AIRPORT. HE SUBMITTED THAT ASSESSEE HAS ALREADY RECORDED THE SALES IN THE BOOKS OF ACCOUNTS ON THE DAY OF VERIFICATION, THEREFORE THE ABOVE SALES ARE PART OF THE TURNOVER ALREADY RECORDED BY ASSESS EE , THEREFORE THERE IS NO SUPPRESSION OF SALES. HE FURTHER SUBMITTED THAT AO HAS NOT CONSIDERED THE FINAL FINANCIAL STATEMENTS PREPARED AFTER THE SURVEY. HE BROUGHT TO OUR NOTICE PAGE 20 OF THE PAPER BOOK IN WHICH IT IS HIGHLIGHTED THAT ASSESSEE HAS ALREAD Y RECORDED THE SALES TO M/S SBM JEWELLERS. 19 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD 11.1 WITH REGARD TO GROUND NO. 2 ON ACCOUNT OF GP ON CANCELLED BILLS, HE SUBMITTED THAT ASSESSEE HAS ALREADY SUBMITTED THE CONFIRMATION LETTERS FROM VARIOUS PARTIES ON WHICH AO HAS ALLEGED THAT ASSESSEE HAS CANCE LLED THE BILLS. HE BROUGHT TO OUR NOTICE PAGE 8, 24, AND 30 OF THE PAPER BOOK. HE BROUGHT TO OUR NOTICE THE FINDINGS OF LD. CIT(A) THAT ALL THE BILLS WERE RECORDED IN THE BOOKS OF ACCOUNTS AND CERTAIN BILLS ALLEGED TO BE CANCELLED ARE JOB WORK DONE BY THE ASSESSEE. ALL THESE INFORMATION WERE BROUGHT ON RECORD BY WA Y CONFIRMATIONS FROM THE RESPECTIVE PARTIES. 11.2 WITH REGARD TO ADDITION OF UNDISCLOSED STOCK, HE SUBMITTED THAT STOCK OF GOLD JEWELRY WERE FOUND DURING SURVEY PROCEEDINGS MATCHING WITH THE BOOK STOCK MAINTAINED BY THE ASSESSEE WITH MINOR VARIATION AND THE SAME WERE ALREADY DISCLOSED AS STOCK IN TRADE IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 11.3 WITH REGARD TO GROUND NO. 3 & 4, HE BROUGHT TO OUR NOTICE THE ALLEGED BOGUS LOANS AND ADV ANCES TAKEN BY THE ASSESSEE FROM M/S A2 JEWELLERS AND M/S MAXIMUS GEMS WERE ADDED TWICE BY 20 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD THE AO FOR WHICH AO HAS ALREADY PASSED RECTIFICATION ORDER U/S 154 OF THE ACT RECTIFYING THE ABOVE ADDITION. 11.4 WITH REGARD TO ADDITION ON INTEREST PAYMENT OF ABO VE SAID LOAN, HE AGREED THAT ABOVE SAID LOANS WERE TAKEN IN THE AY 2010 - 11 AND ASSESSEE IS IN APPEAL AGAINST THE ABOVE SAID ORDER AND HE SUBMITTED THAT TRANSACTION IS GENUINE AND INTEREST PAYMENT IS AGAINST THE ABOVE SAID LOAN. 12 . CONSIDERED THE RIVAL SU BMISSIONS AND MATERIAL PLACED ON RECORD, WE NOTICE FROM THE RECORD THAT REVENUE IS IN APPEAL AGAINST THE RELIEF GIVEN BY LD. CIT(A) TO THE ASSESSEE AND REVENUE HAS RAISED BEFORE US MAINLY 4 GROUNDS. 12.1 WITH REGARD TO GROUND NO. 1, ADDITION OF RS. 9 1 ,91,6 83/ - ON ACCOUNT OF PEAK INVESTMENT WITH REGARD TO INTERCEPTION OF GOLD JEWELLERY IN MUMBAI AIRPORT WHICH WAS SOLD TO M/S SBM JEWELLERS, WE NOTICE THAT INTERCEPTION OF AB OVE SAID JEWELLERY WAS MADE ON 14.02.12 AND SUBSEQUENTLY ASSESSEE HAS ALREADY RECORDED THE ABOVE SAID SALES IN ITS BOOKS OF ACCOUNTS AND THE SAME WAS PART OF THE TURNOVER DISCLOSED IN RETURN OF INCOME 21 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD SUBMITTED BEFORE TAX AUTHORITIES. SINCE, THESE SALES WERE ALREADY RECORDED IN THE BOOKS OF ACCOUNTS, WE DO NOT SEE ANY REASON TO INTERFERE WIT H THE ORDER PASSED BY LD. CIT(A), ACCORDINGLY GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED . 12.2 WITH REGARD TO GROUN NO. 2(A) & (B), WE NOTICE THAT AO HAS MADE ADDITION BASED ON UNDISCLOSED SALES AND UNDISCLOSED STOCK WHICH WAS FOUND DURING SURVEY PROC EEDINGS. WE NOTICE THAT THE STOCK FOUND DURING SURVEY PROCEEDING TO THE EXTEN T OF 3,863.697 GMS AND ASSESSEE HAS ALREADY SHOWN IN STOCK IN TRADE TO T HE EXTENT OF 3942.152 GMS IN ITS BOOKS OF ACCOUNTS AND THE SAME WAS DISCLOSED IN FINANCIAL STATEMENTS AND P ART OF RETURN OF INCOME FILED BEFORE THE TAX AUTHORITIES. THERE IS NO DISCREPANCY FOUND WITH THE STOCK MAINTAINED BY THE ASSESSEE, THEREFORE WE ARE INCLINED TO ACCEPT THE FINDINGS OF LD. CIT(A). 12.3 WITH REGARD TO ESTIMATION OF GROSS PROFIT ON ALLEGED UN ACCOUNTED SALES, WE NOTICE THAT LD. CIT(A) CONSIDERED THE DETAIL SUBMISSIONS AND BY WAY OF RECONCILIATION WHICH WAS SUBMITTED BEFORE HIM WITH SALES AND JOB WORK, WHICH ARE AS FOLLOWS: - 22 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD SR. NAME OF THE AMOUNT AS AMOUNT AS REMARKS AS OBSERVATIONS IN NO PARTY PER AO PER APPELLANT PER APPELLANT APPEAL 1 M/S. SBM JEWELLERS 91,91,683 91,91,683 BILL NO. MUM/ 02 /1 96 DT. 14.02.2012 FOUND TO BE CORRECT AS RECORDED IN REGULAR BOOKS. 2 M/S. SHREE 3,72,80,121 3,72,80,121 ONLY LABOUR PAGE NO.25 OF MANGAL JOB FOR SHREE THE PAPER BOOK JEWELLERS MANGAL SHOWS LABOUR PVT. LTD. JEWELLERS CHARGES & TDS, PVT.LTD. THEREFORE FOUND TO BE CORRECT. 3 M/S. 1,72,45,231 1,72,45,231 ONLY LABOUR PAGE NO. 26 OF HEMRATNA JOB FOR THE PAPER BOOK JEWELLERS HEMRATNA SHOWS LABOUR JEWELLERS CHARGES & TDS, THEREFORE FOUND TO BE CORRECT. 4 M/S. SHIV 45,83,292 45,83,292 ONLY LABOUR PAGE NO. 27 OF JEWELLERS JOB FOR SHIV THE PAPER BOOK JEWELLERS SHOWS LABOUR CHARGES & TDS, THEREFORE FOUND 23 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD * TO BE CORRECT. 5 M/S. BHATIA 45,01,411 45,01,411 GOODS WORTH PAGE NO. 28 OF & COMPANY RS.4,99,339/ - THE PAPER BOOK SOLD ON SHOWS SALES, 12.10.2011 LABOUR CHARGES AND REMAINING 85 TDS, ONLY LABOUR THEREFORE FOUND JOB FOR BHATIA TO BE CORRECT. & COMPANY 6 M/S. SAJAWAT JEWELLERS 2341657/ - 2341657 ONLY LABOUR JOB FOR SAJAWAT JEWELLERS PAGE NO.29 & 30 OF THE PAPER BOOK SHOWS LABOUR CHARGES & TDS, THEREFORE FOUND TO BE CORRECT. 7 M/S. L. K. JEWELLERS 2,11,22,780 0 NO TRANSACTION WITH L. K. JEWELELRS PAGE NO.31 OF THE PAPER BOOK SHOWS THAT NO TRANSACTION HAS BEEN ENTERED INTO, THEREFORE 24 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD FOUND TO BE CORRECT. 8 M/S V. K. BANGLES 30,19,608 0 NO TRANSACTION WITH V. K. BANGLES PAGE NO. 32 OF THE PAPER BOOK SHOWS THAT NO TRANSACTION HAS BEEN ENTERED INTO, THEREFORE FOUND TO BE CORRECT 12.4 AFTER CONSIDERING THE ABOVE FINDINGS OF LD. CIT(A), WE ARE INCLINED TO ACCEPT THE FINDINGS OF LD. CIT(A), THEREFORE GROUNDS RAISED IN THIS R EGARD IS DISMISSED. 12.5 WITH REGARD TO GROUND NO . 3 & 4, WE NOTICE THAT REVENUE IS IN APPEAL WITH REGARD TO INTEREST ON LOANS AND ADVANCES TAKEN FROM BHANWARLAL JAIN GROUP IN THE AY 2010 - 11 AND IN THIS ASSESSMENT YEAR, THE ADDITION OF INTEREST EXPENDITUR E, WE NOTICE THAT LD. CIT(A) DELETED THIS ADDITION WITH OBSERVATION THAT AO HAS REJECTED THE BOOKS OF ACCOUNT AND THE SAME BOOK RESULTS CANNOT BE CONSIDERED FOR MAKING THIS ADDITION. WE ARE NOT IN AGREEMENT WITH THE OBSERVATION OF LD. CIT(A) AND LD. CIT(A) 25 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD HAS DELETED MOST OF THE ADDITIONS BASED ON THE BOOK RESULTS, THEREFORE WE ARE NOT INCLINED TO ACCEPT THE DELETION ON ACCOUNT OF INTEREST PAYMENT ON ALLEGED BOGUS LOANS. WE DO NOT KNOW THE OUTCOME OF THE APPEAL FILED BY THE ASSESSEE IN AY 2010 - 11, IT ALL D EPENDS UPON THE FINDINGS IN ABOVE SAID APPEAL. BEFORE US, LD. AR HAS NOT MADE ANY SUBMISSION. MOREOVER, WE NOTICE THAT ASSESSEE HAS ONLY CREDITED THE INTEREST AND NOT ACTUALLY PAID. THEREFORE, WE ARE INCLINED TO SUSTAIN THE ADDITION MADE BY AO. ACCORDINGLY , GROUND RAISED IN THIS REGARD IS SUSTAINED. THE OTHER GROUNDS NO. 5 & 6 ARE GENERAL IN NATURE, THEREFORE NEEDS NO SPECIFIC ADJUDICATION. 13 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STA NDS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEB. 2020 . SD/ - SD/ - ( PAWAN SINGH ) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 28 . 02 .2020 SR.PS . DHANANJAY 26 I.T.A. NO. 3605 /MUM/201 7 M/S UZURI JEWELS PVT. LTD / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI