KISHOREKUMAR M. JAIN, MUMBAI V. ITO 18(2)(4), MUMBAI

ITA 393/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6841 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 27-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: B P PUROHT
• Keywords: Gift
• Section: 133A; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H, MUMBAI BEFORE SHRI C N PRASAD, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.597/MUM/2016 ASSESSMENT YEAR : 2005-06 ITO 20(2)(3), MUMBAI. VS. KISHORE KUMAR M JAIN, GALA NO.222, BHARAT INDUSTRIAL ESTATE, THAKORSHI JIVRAJ ROAD, MUMBAI 400 015. PAN AACPJ6434F (APPELLANT) (RESPONDENT) ITA NO.393/MUM/2016 ASSESSMENT YEAR : 2005-06 KISHORE KUMAR M JAIN, MUMBAI 400 015. VS. ITO 18(2)(4), MUMBAI (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M C OMI NINGSHEN ASSESSEE BY : SHRI B P PUROHT & MS. LAVANYA RAJPURO HIT DATE OF HEARING : 09 .0 5 .201 8 DATE OF PRONOUNCEMENT : 29 .05.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER THESE APPEALS BY THE ASSESSEE AND THE DEPARTMENT AR E AGAINST THE ORDER, DATED 06.11.2015 OF LEARNED CIT(A)-33, MUMBA I PERTAINING TO ASSESSMENT YEAR 2005-06. ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 2 2 WE SHALL FIRST TAKE UP APPEAL BY THE ASSESSEE IN ITA 393/MUM/2016, WHEREIN THE FOLLOWING GROUND HAS BEEN RAISED: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS 7 213000/- MADE ON ACCOUNT OF GIFTS, NONE OF WHICH IS RECEIVED BY T HE APPELLANT AND WHICH THE AO HAS ADDED TO THE INCOME OF THE APPELLA NT IN THE INTEREST OF REVENUE, THE SAID ADDITION MAY THEREFO RE, KINDLY BE DELETED. THE SOLE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL I S AGAINST THE CONFIRMATION OF ADDITION OF 72,13,000/- BY THE CIT(A) AS MADE BY THE AO ON ACC OUNT OF GIFTS, NONE OF WHICH WAS RECEIVED BY THE ASSESSEE. 3. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED R ETURN OF INCOME ON 25.10.2005 DECLARING TOTAL INCOME AT 9,41,420/-, WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SE LECTED FOR SCRUTINY AND SURVEY WAS CONDUCTED U/S. 133A ON 23.11.2004. DURI NG THE COURSE OF SURVEY STATEMENT OF THE ASSESSEE WAS RECORDED AND GIFT DEC LARATIONS/DEED OF FOLLOWING PERSONS WERE FOUND: S.NO. NAME OF THE DONOR NAME OF THE DONEE AMOUNT 1. SHRI AJAY VEDIA DIPEN PRAVIN JAIN RS.6,00,000 2. SHRI JAPAN KUMAR MODI KISHORE KUMAR M. JAIN HUF RS.5,00,000 3. SHRI MUKESH MANEKLAL CHOKSI DEVIKA NAVIN JAIN RS.11,91,000 4. SHRI PRAKASH B. TUKLIA NAVIN KUMAR M. JAIN (HUF) RS.5,00,000 5. SHRI MAHESH PANDYA PRAVIN KUMAR M. JAIN RS.5,00,000 6. MS. MINAXI M. CHOKSHI ALKA KISHOR JAIN RS.12,11,000 7. SHRI FENIL SHAH DIKSHIT PRAVIN JAIN RS.5,00,000 8. SHRI MUKESH M. CHOKSHI MS. NIKITA PRAVIN JAIN RS.12,11, 000 9. SHRI GANESHLAL M. SISSODIA MS. SHANTIBAI M. JAIN RS.10,00,000 TOTAL RS.72,13,000 ACCORDINGLY, THE AO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE GIFT DEEDS/DECLARATIONS AS FOUND BY THE SURVEY TEAM IN THE PREMISES OF THE ASSESSEE AMOUNTING TO 72,13,000/- SHOULD NOT BE ADDED TO THE INCOME OF ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 3 THE ASSESSEE. AS THE ASSESSEE FAILED TO GIVE ANY E XPLANATION BEFORE THE SURVEY TEAM, THE AO ISSUED SUMMONS U/S. 131 TO THE DONORS OF GIFT ON 6.12.2007 AT THE ADDRESSES MENTIONED ON THE GIFT DE EDS. OUT OF THE NINE SUMMONS SENT, THREE WERE RETURNED UNSERVED AND REMA INING SIX DONORS DID NOT RESPOND. THE LEARNED AR OF THE ASSESSEE VIDE L ETTER DATED 12.12.2007 SUBMITTED THAT NONE OF THE GIFTS WERE RECEIVED BY T HE ASSESSEE AND, THEREFORE, THE SAME COULD NOT BE ADDED TO THE INCOM E OF THE ASSESSEE. THE AO NOT BEING SATISFIED WITH THE REPLY OF THE ASSESS EE ADDED THE SAME AS UNEXPLAINED INCOME OF THE ASSESSEE BY FRAMING ASSES SMENT U/S. 143(3), VIDE ORDER DATED 24.12.2007. IN THE APPELLATE PROCEEDING S, THE LEARNED CIT(A) AFTER CONSIDERING THE CONTENTIONS AND SUBMISSIONS O F THE ASSESSEE DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 9.6. THE ABOVE CONTENTIONS OF THE AR OF THE APPELLA NT HAVE BEEN CAREFULLY CONSIDERED IN THE LIGHT OF FACTS ON RECOR D AND FINDINGS MADE IN THE ASSESSMENT ORDER. IT IS OBSERVED THAT DURING TH E SURVEY PROCEEDINGS, COPIES OF NINE GIFT DEEDS ARE FOUND, W HERE THE DONEES WERE FOUND TO BE CLOSELY RELATED TO THE APPELLANT. IN ORDER TO ASCERTAIN FURTHER FACTS, THE AO HAS MADE THE NECESSARY ENQUIR Y BY ISSUING SUMMONS U/S 131 OF THE ACT. AS OBSERVED IN THE PREC EDING PARAGRAPHS, THREE OF THE SUMMONS HAD BEEN RETURNED BACK UNSERVED BY THE POSTAL AUTHORITIES' WITH A REMARK 'LEFT/NOT KNOWN' AND BALANCE DONEES EITHER DID NOT ATTEND OR NO ANY REPLY FILED. ONCE THE SUMMONS ARE RETURNED BACK OR THE CONCERNED PERSONS DID NOT ATTAIND, THE ONUS SHIFTS ON THE APPELLANT TO PROVE THE TRANSACTIONS A S NOT BELONGING TO HIM SINCE THE DOCUMENTS WERE FOUND FROM HIS PREMISE S AND NOT ESTABLISHED TO BE A DUMP PAPER. FROM THE ASSESSMENT ORDER AS WELL AS FROM THE REPLY OF THE APPELLANT, I FIND THAT THE ONUS OF COMING CLEAN ON THIS ASPECT, BY PRODUCING THE DONEES BEFOR E THE AO FOR VERIFICATION, IS NOT DISCHARGED DURING THE ASSESSME NT PROCEEDINGS. THE APPELLANT HAS ALSO ADMITTED THAT LOANS WERE IMM EDIATELY TAKEN IN THE BOOKS OF THE APPELLANT FROM SOME OF THE DONE ES. THE ACT OF THE AO IN NOT DISALLOWING INTEREST PAID ON SUCH LOA NS WILL NOT ACT AS A FACILITATOR IN AUTOMATICALLY ESTABLISHING THE GEN UINESS OF THE GIFTS, IF THE SURROUNDING CIRCUMSTANCE PROVE OTHERWISE. 9.7 APPELLANT HAS CONTENDED THAT IT IS THE RESPONSI BILITY OF THE AO TO PROVE THAT THE APPARENT IS NOT REAL. I FIND THAT TH E SURROUNDING CIRCUMSTANCES CAN ALSO BE LOOKED FROM THE ANGLE AS TO WHETHER THE APPARENT CAN BE CONSIDERED AS REAL. AS LAID DOWN BY THE HON'BLE ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 4 SUPREME COURT IN THE CASE OF CIT VS DURGA PRASAD MO RE 82 ITR 540, THE APPARENT MUST BE CONSIDERED AS REAL ONLY I F IT IS SHOWN THAT THERE ARE REASONS TO BELIEVE THAT THE APPARENT IS N OT REAL AND THAT TOO TAXING AUTHORITIES ARE ENTITLED TO LOOK INTO TH E SURROUNDING CIRCUMSTANCES TO FIND OUT THE REALITY AND THE MATTE R HAS TO BE CONSIDERED BY APPLYING THE TEST OF HUMAN PROBABILIT Y. FOR THIS PROPOSITION, I DRAW SUPPORT FROM THE DECISION OF TH E HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL VS CIT 21 4 ITR 801 WHEREIN THE SUPREME COURT HAS HELD 'DISMISSING THE APPEAL, THAT THE SETTLEMENT COMMISS ION AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLYING THE TEST OF HUMAN PROBABILITIES HAD RIGHTL Y CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT BEING HE R WINNING FROM RACES WAS NOT GENUINE.' IN THE INSTANT CASE, COPIES OF GIFT DEEDS ARE FOUND FROM THE PREMISES OF THE APPELLANT DURING SURVEY PROCEEDINGS, ALL THE DONEES ARE FOUND TO BE CLOSELY RELATED TO THE APPELLANT, GENUINESS O F THE DONEES WAS NOT ESTABLISHED BY THE APPELLANT AND THE INCIDENT O F IMMEDIATE LOAN RECEIVED BY THE APPELLANT FROM SOME OF THE DONEES C LEARLY POINTS OUT TO THE FACT THAT APPARENT IS NOT REAL AND IT IS ULTIMATELY THE APPELLANT WHOSE UNDISCLOSED INCOME IS REPRESENTED B Y THE GIFTS. 9.8 IN VIEW OF THE FACTS AND CIRCUMSTANCES CITED AB OVE IN MY CONSIDERED OPINION, THE ADDITION OF 72,13,000/- MADE BY THE ASSESSING OFFICER AS REPRESENTING APPELLANT UNEXPLA INED INCOME IS CORRECT AND HENCE IT IS UPHELD. HENCE, GROUND NO.7 IS DISMISSED. 4. THE LEARNED AR VEHEMENTLY SUBMITTED BEFORE US TH AT THE CIT(A) HAS IGNORED ALL THE MATERIAL AND RELEVANT FACTS ON RECO RD ESPECIALLY THE FACT THAT THE GIFT DEEDS/DECLARATIONS, WHICH WERE FOUND IN TH E PREMISES SUBJECTED TO SURVEY WERE NOT RELATING TO THE ASSESSEE AT ALL AND IN NONE OF THE CASES, THE ASSESSEE WAS INVOLVED IN ANY WAY. THE LEARNED AR R EFERRED TO PAGE 1 & 2 OF THE PAPER-BOOK, WHICH CONTAIN NAMES AND ADDRESSES O F THE DONEES, DATE OF GIFTS AND AMOUNT OF GIFTS ETC. THE LEARNED AR ALSO BROUGHT TO OUR ATTENTION REPLY, DATED 12.12.2007, FILED BEFORE THE AO, WHICH IS PLACED AT PAGES 3 TO 8 OF THE PAPER-BOOK, WHEREIN AT PARA 9 IT HAS BEEN ST ATED THAT IN NONE OF THE CASES THE GIFT IS RECEIVED BY THE ASSESSEE BUT HA VE BEEN RECEIVED BY OTHER PERSONS. IT WAS ALSO STATED THAT SUMMONS U/S. 131 W ERE ISSUED TO THEM AND ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 5 DONEES AND IN COMPLIANCE THERETO, THE DONEES HAVE S UBMITTED RESPECTIVE GIFT DEEDS, COPY OF ACKNOWLEDGMENTS OF RETURNS AND DETAI LS AS REQUIRED BY THE AO. THE LEARNED AR REITERATED THAT NONE OF THE GIF TS WERE RECEIVED BY THE ASSESSEE AND ALL THE DONEES WERE IDENTIFIED AND THE AO EVEN PASSED ON THE INFORMATION TO THE AO CONCERNED, WHO EXERCISED JURI SDICTION OVER DONEES AND IN SOME CASES NOTICE U/S. 143(2) WERE ALSO ISSUED. THE LEARNED AR CONTENDED THAT WHEN THE ASSESSEE IS NOT INVOLVED IN ANY WAY IN THESE GIFT DEEDS, THE ADDITION MADE BY THE AO WAS PURELY ON TH E BASIS OF PRESUMPTIONS, SURMISES AND CONJECTURES, WHICH IS NOT PERMISSIBLE UNDER THE ACT AND, THEREFORE, DESERVED TO BE DELETED. 5. THE LEARNED DR, ON THE OTHER HAND, OPPOSING THE ARGUMENTS OF THE LEARNED AR, CONTENDED THAT UNDOUBTEDLY THE GIFT DE EDS BELONGED TO THE ASSESSEE AS THE SAME WERE FOUND IN THE PREMISES IN WHICH THE ASSESSEE WAS CARRYING ON BUSINESS. HE FURTHER CONTENDED THAT IF THE ASSESSEE WAS NOT CONNECTED WITH ANY OF THE GIFT DEEDS/DECLARATIONS H OW THE PAPERS COULD BE FOUND IN THE PREMISES OF THE ASSESSEE. HE ALSO SUB MITTED THAT ALL REPLIES WERE FILED BY THE CA ON BEHALF OF THE DONEES AND NO T THE DONEES THEMSELVES, WHICH RAISED DOUBT ON THE NATURE AND CHARACTER OF T HE TRANSACTIONS. KEEPING IN VIEW THESE FACTS THE LEARNED DR SUBMITTED THAT T HE ORDER OF THE CIT(A) NEEDS TO BE CONFIRMED. 6. IN THE REJOINDER, THE LEARNED AR SUBMITTED THA T THE PREMISES WHICH WERE SUBJECT TO SURVEY U/S. 133A WERE NOT BELONGING TO THE ASSESSEE BUT TO THE BROTHER OF THE ASSESSEE AND THEREFORE, THE PLEA OF THE LEARNED DR THAT THESE DOCUMENTS WERE LYING AT THE PREMISES OF THE A SSESSEE CARRIES NO WEIGHT AND, HENCE, SHOULD BE DISCARDED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS ARE THAT THE NINE GIFT DEEDS INVOLVING AMOUNT OF 72,13,000/- WERE FOUND BY THE SURVEY TEAM ON 23 RD NOV. 2004 ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 6 DURING THE COURSE OF SURVEY. THE UNDISPUTED FACTS A RE THAT IN NONE OF THE GIFT DEEDS/DECLARATIONS THE ASSESSEE WAS INVOLVED EITHER AS A DONOR OR AS A DONEE. THE ASSESSEE HAS ALSO FURNISHED THE NAMES A ND ADDRESSES OF THE DONEE/DONORS, WHO WERE INCOME TAX ASSESSEES. THE L EARNED AO ALSO ISSUED SUMMONS U/S. 131, WHICH WERE SERVED IN SIX CASES AN D IN THREE CASES IT WAS RETURNED UNSERVED. ALL THE DONEES IN RESPONSE TO S UMMONS ISSUED U/S. 131 FILED THEIR REPLIES FURNISHING DOCUMENTS SUCH AS CO PY OF GIFT DEED, ACKNOWLEDGMENT OF RETURN FILED AND PANS ETC. THE L EARNED AO PASSED ON THESE INFORMATION TO THE AO CONCERNED , WHO EXERCIS ED THEIR JURISDICTION OVER THESE DONEES. UNDER THESE CIRCUMSTANCES WHEN THE D ONEES AS WELL AS THE DONORS WERE IDENTIFIED AND EVEN RESPONDED TO THE VE RIFICATION PROCESS BY THE AO, THE ADDITION OF THE GIFTS AMOUNTING TO 72,13,000/- IN THE HANDS OF THE ASSESSEE IS UNWARRANTED, WITHOUT ANY BASIS AND THER EFORE CANNOT BE SUSTAINED. IN THE PRESENT CASE, THE REVENUE HAS FA ILED TO BRING ON RECORD THE NECESSARY EVIDENCES TO PROVE THAT THE MONEY EITHER BELONGED TO THE ASSESSEE OR HAD COME TO THE ASSESSEE AFTER BEING GIFTED BY T HE DONEE. THE REVENUE HAS COMPLETELY FAILED TO TAKE THE INVESTIGATION TO A LOGICAL END. UNDER THESE CIRCUMSTANCES, WE ARE NOT IN AGREEMENT WITH THE FIN DINGS OF THE LEARNED CIT(A) AND HIS ORDER IS ACCORDINGLY SET ASIDE ON TH E ISSUE. THE AO IS DIRECTED TO DELETE THE ADDITION. 8. NOW COMING TO THE REVENUES APPEAL ITA NO.597/MU M/2016, WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) ERRED IN DELETING THE ADDITION OF RS. 54,76,827/- ON ACCOUNT OF UNEXPLAINED STOCK OF GOLD. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) FAILED TO APPRECIATE THE FACT THAT EXCESS STOCK OF GOLD OF 8862.18 GMS WAS DETERMINED FROM DOCUMENTS, BOOKS AN D INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S URVEY ON THE ASSESSEE. ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 7 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD CIT(A) FAILED TO APPRECIATE THE FACT THAT TH E ONUS IS ON THE ASSESSEE TO EXPLAIN AND SUBSTANTIATE THE CORRECTNES S OF STOCK OF GOLD ORNAMENTS. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALT ER ANY GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 9. THE ISSUE INVOLVED IN ALL THESE GROUNDS IS AGAIN ST THE DELETION OF ADDITION OF 54,76,827/- BY THE CIT(A) AS MADE BY THE AO ON ACC OUNT OF UNEXPLAINED STOCK OF GOLD AND THE FAILURE ON THE P ART OF THE CIT(A) TO APPRECIATE THE FACT THAT EXCESS STOCK OF GOLD OF 88 62.18 GMS WAS DETERMINED FROM THE DOCUMENTS, BOOKS AND INCRIMINATING MATERIA L FOUND DURING THE COURSE OF SURVEY. 10. THE FACTS IN BRIEF ARE THAT DURING THE COURSE O F SURVEY, THE SURVEY TEAM FOUND STOCK OF GOLD TO THE TUNE OF 12392.890 GMS AS BELONGING TO THE ASSESSEE AND 8862.18 GMS AS THAT OF CUSTOMERS RECEI VED FOR THE PURPOSE OF MANUFACTURING GOLD ORNAMENTS. ACCORDINGLY, THE AO REQUIRED THE ASSESSEE TO PRODUCE THE ADDRESS OF THE PERSONS FROM WHOM THE GO LD WAS RECEIVED FOR MANUFACTURING GOLD ORNAMENTS. THE ASSESSEE REPLIED TO THE AO VIDE SUBMISSIONS DATED 3.11.2007 AND 05.11.2007. THE AO ISSUED SUMMONS U/S. 131 TO THE PARTIES TO WHOM THE GOLD BELONGED TO AN D RECORDED THEIR STATEMENTS. ACCORDING TO THE AO THE STATEMENT RECO RDED U/S. 131 WERE NOT CO-RELATING WITH THE EXPLANATION OF THE GOLD TO TH E TUNE OF 8862.18 GMS FOUND DURING THE COURSE OF SURVEY AND SERVED TO SH OW CAUSE NOTICE ON THE ASSESSEE AS TO WHY THE VALUE OF GOLD SHOULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE, WHICH WAS AGAIN REPLIED BY THE ASSESS EE VIDE SUBMISSION DATED 12.12.2005, PLACED AT PAGE 36 OF THE PAPER-BOOK. F INALLY THE AO ADDED A SUM OF 54,76,827 AS UNEXPLAINED STOCK OF GOLD TO THE INCO ME OF THE ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 8 ASSESSEE BY OBSERVING THAT THE ASSESSEE HAS SUBMITT ED WRONG DETAILS OF STOCK AND FURTHER HELD THAT THE STOCK OF 8862.18 GMS OF G OLD BELONGED TO THE ASSESSEE. AS PER THE ASSESSEE THE STOCK AS APPEARIN G IN THE BOOKS OF ACCOUNT STOCK REGISTER AS BELONGING TO THE CUSTOMER WAS 8 862.18 GMS WHEREAS STOCK PHYSICALLY FOUND AS BELONGING TO THE CUSTOMER S WERE 5935.37 GMS, WHICH WERE DULY RECONCILED BEFORE THE AO. BUT THE AO DID NOT CONSIDER THE SAME. IN THE APPELLATE PROCEEDINGS THE CIT(A) DELE TED THE ADDITION BY OBSERVING AS UNDER: 4.7. I HAVE GONE THROUGH THE ASSESSMENT ORDER, REM AND REPORT OF THE AO AND VARIOUS SUBMISSIONS AND REJOINDER FILED BY T HE ASSESSEE DURING APPELLATE PROCEEDINGS AND MATERIAL AVAILABLE ON RECORD. MY OBSERVATIONS ARE IN THE FOLLOWING PARAGRAPHS. 4.8 THE ASSESSING OFFICER IN PARAGRAPH 3 OF THE ORD ER HAS STATED THAT THE STATEMENT OF THE APPELLANT WAS RECORDED U/S.131 OF THE IT.ACT ON 4.2.2005 BY THE ASSESSING OFFICER. IN THE SAID STAT EMENT THE ASSESSING OFFICER ASKED THE APPELLANT TO PROVIDE COMPLETE ADD RESS OF THE PERSON FROM WHOM THE STOCK OF GOLD AMOUNTING TO 8862.18 GR AMS FOUND DURING THE COURSE OF SURVEY WAS RECEIVED BY HIM FOR MANUFA CTURING OF GOLD ORNAMENTS. THE ASSESSING OFFICER AFTER EXAMINING TH E EXPLANATION OF THE APPELLANT WHICH IS MENTIONED IN PAGE 2 OF THE O RDER HELD THAT THE STOCK OF 8862.18 GRAMS OF GOLD HAS NOT BEEN EXPLAIN ED BY THE APPELLANT. HE STATED THAT APPELLANT HAS ADJUSTED TH E STOCK AND SUBMITTED WRONG DETAILS. THE VALUE OF GOLD OF 8862. 18 GRAMS FOUND DURING THE COURSE OF SURVEY AMOUNTING TO RS.54,76,8 27/- WAS ACCORDINGLY, ADDED BY THE ASSESSING OFFICER AS UNEX PLAINED STOCK. FROM, THE ABOVE, IT CAN BE SEEN THAT THE STOCK RELA TING TO THE APPELLANT HIMSELF RELATED TO 2392.890 GRAMS. THIS FIGURE OF 1 2392.890 GRAMS HAS BEEN STATED IN STATEMENT DATED 25/11/2004. 4.11. IT IS FURTHER OBSERVED THAT ACCORDING TO A CO MPUTER GENERATED PRINTOUT FOUND THE STOCK OF GOLD RELATING TO CUSTOM ER WAS STATED TO BE 8862.6 GRAMS WHEREAS THE ACTUAL STOCK DIFFERENCE FO UND DURING THE COURSE OF SURVEY FOUND WAS 5935.37 GRAMS. THE ASSES SING OFFICER HAS EXAMINED THE EXPLANATION OF THE APPELLANT IN PAGE N O.2 OF THE ASSESSMENT ORDER. THE APPELLANT HAS SUBMITTED DURIN G APPELLATE PROCEEDINGS THAT ALL THESE DETAILS RELATING TO RECO NCILIATION WERE SUBMITTED ON 15/02/2005 AND 12/12/2007 BEFORE THE A O, A COPY OF THE SAID LETTER WAS DULY ACKNOWLEDGED BY THE IT. OFFICE AND FILED DURING THE PRESENT PROCEEDINGS. THE RECONCILIATION OF CUSTOMER 'S STOCK, AS SUBMITTED VIDE REPLY DATED 12/12/2007, IS ALSO REPR ODUCED IN PAGE 2 OF THE ASSESSMENT ORDER. THE AO DID NOT ACCEPT THE REC ONCILIATION, AS ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 9 SHE OBSERVED THAT THE GOLD ORNAMENTS DELIVERED TO M /S.SHEFALI ARTS AND M/S.MANIBHADRA JEWELLERS BEFORE THE DATE OF SUR VEY I.E. 23/11/2004. THEREAFTER, THE AO HAS ADOPTED THE FIGU RE OF 8862.18 GRAMS AS UNEXPLAINED STOCK OF GOLD FOUND DURING SUR VEY. 4.12. CONSIDERING THE AFORESAID MATRIX OF THE FACT, I FIND THAT THE AO HAS TAKEN WRONG STOCK FIGURE & WITHOUT PROPERLY VER IFYING THE INVENTORIES OF STOCK TAKEN AND STATEMENTS RECORDED DURING SURVEY PROCEEDINGS AND IN RESPONSE TO SUMMON ISSUED U/S.13 2 OF THE IT. ACT. EVEN IN THE REMAND REPORT, PROPER FACTS WERE NOT BR OUGHT ON RECORD. FROM THE ABOVE DISCUSSION AND ON APPRECIATION OF FA CTS ON RECORD, IT IS CLEAR THAT STOCK DIFFERENCE OF 5935.37 GRAMS AND NO T 8862.16 GRAMS WAS FOUND DURING THE SURVEY PROCEEDINGS. ACTUALLY T HE FIGURE OF 8862.16 GRAMS REPRESENTS THE FIGURE OF STOCK OF GOL D RELATING TO CUSTOMERS AND FOUND FROM A COMPUTER PRINTOUT. IT WA S EXPLAINED TO THE AO DURING POST SURVEY PROCEEDINGS THAT EVEN THE STO CK OF 5935.37 GRAMS REPRESENTS THE STOCK OF GOLD OF CUSTOMERS. TH E RECONCILIATION OF FIGURES OF STOCK OF GOLD OF CUSTOMERS AS PHYSICALLY FOUND OF 5935.37 GRAMS AND AS PER COMPUTER PRINTOUT OF 8862.16 GRAMS WAS SUBMITTED AND EVEN CONSIDERED BY THE AO DURING ASSESSMENT PRO CEEDINGS. IN THE ASSESSMENT ORDER, THE AO HAS GIVEN A GENERAL FI NDING FOR NOT ACCEPTING THE RECONCILIATION STATEMENT THAT GOLD OR NAMENTS WERE SHOWN TO. BE DELIVERED TO M/S.SHEFALI ARTS AND M/S. MANIBHADRA JEWELLERS BEFORE THE DATE OF SURVEY. I FIND THAT TH E AO HAS RECORDED THE STATEMENT OF SH.JAYANT KUMAR SANCHETI, PROP, OF M/S .SHEFALI ARTS AND SH. SURESH KUMAR R.PUNAMIYA, DIRECTOR OF M/S. KUNDA N JEWELLERS IN THIS REGARD DURING POST SURVEY PROCEEDINGS. NOTHING WRONG WAS FOUND IN THESE STATEMENTS. THERE IS NOTHING ON RECORD TO SUBSTANTIATE THE FINDINGS OF THE AO. IN VIEW OF THE FACTS THAT EMERG E FROM THE ABOVE DISCUSSION, I FIND NO OCCASION FOR MAKING ADDITION OF RS.54,76,827/- RELATABLE TO 8862.18 GRAMS OF GOLD. HENCE THE AO IS DIRECTED TO DELETE THE ADDITION OF RS.54,76,827/-. GROUND NO.1 IS ACCO RDINGLY ALLOWED. 11. THE LEARNED DR ARGUED BEFORE US THAT THE FIRST APPELLATE AUTHORITY HAS WRONGLY DELETED THE ADDITION MADE ON ACCOUNT OF UNE XPLAINED STOCK. THE LD DR SUBMITTED THAT 8862.18 GMS OF GOLD BELONGED TO THE CUSTOMERS, WHICH WAS RECEIVED BY HIM FOR MANUFACTURING GOLD ORNAMENT S THOUGH THE ACTUAL STOCK BELONGING TO THE CUSTOMERS FOUND BY THE SURVE Y TEAM WAS 5935.37 GMS. THE LEARNED DR SUBMITTED THAT EVEN DURING THE STATEMENTS RECORDED POST SURVEY, THE ADDRESSES OF THE PERSONS FROM WHOM THE GOLD WAS RECEIVED BY THE ASSESSEE WERE NOT CO-RELATING WITH THE FACT S ON RECORD AND THUS, THE ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 10 AO HAS RIGHTLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED STOCK. THE ASSESSEE TRIED TO EXPLAIN THE DIFFEREN CE BY SUBMITTING THAT THE STOCKS WERE DELIVERED TO SHEFALI ART AND MANIBHADRA JEWELLERS WERE ENTERED TWICE, WHICH WAS RECTIFIED. THE AO FOUND THE RECON CILIATION FILED BY THE ASSESSEE AS UNBELIEVABLE AND HELD THAT THE ENTIRE E XERCISE WAS UNDERTAKEN TO TALLY THE STOCK DISCREPANCIES WHICH WERE FOUND DURI NG THE COURSE OF SURVEY. THE LEARNED DR SUBMITTED THAT EVEN IN THE REMAND PR OCEEDINGS, THE ASSESSEE HAS SUBMITTED REPORT TO THE CIT(A) EXPLAINING THE D IFFERENT IN CLEAR TERMS. THE LEARNED DR THEREFORE, SUBMITTED, THAT THE ADDIT ION AS DELETED BY THE CIT(A) WAS BASED ON WRONG FACTS AND PRESUMPTIONS AN D THEREFORE, DESERVED TO BE DELETED. 12. THE LEARNED AR ON THE OTHER HAND RELIED HEAVILY ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT A VERY DETAILED AND SUBS TANTIAL FINDING OF FACT HAVE BEEN RECORDED BY THE CIT(A) BEFORE DELETING THE ADD ITION. THE LEARNED AR TOOK US THROUGH THE SUBMISSIONS MADE BEFORE THE AO, COPIES OF WHICH HAVE BEEN FILED AT PAGE NOS. 16 TO 22 OF THE PAPER-BOOK. THE LEARNED AR TOOK US THROUGH THE STATEMENT RECORDED OF SHRI JAYANT KUMAR SANCHETI, PROPRIETOR OF SHEFALI ART & SHJRI SURESHKUAR R PUNAMIYA, DIRECTOR OF KUNDAN JEWELLERS P. LTD. AND SUBMITTED THAT NOWHERE BOTH THE PARTIES DI SOWNED GOLD GIVEN TO THE ASSESSEE FOR MANUFACTURING OF ORNAMENTS. THE LEARN ED AR SUBMITTED THAT THE ASSESSEE SUBMITTED THE TALLY OF TOTAL STOCK FOUND DURING THE COURSE OF SURVEY AND DULY RECONCILED IT WITH ITS BOOKS OF ACCOUNT. THE LEARNED AR SUBMITTED THAT THE AO HAS CONFUSED THE STOCK AS PER STOCK REG ISTER OF 8862.18 GMS AS BELONGING TO THE CUSTOMERS WITH THE STOCK OF 5935.6 7 GMS WHICH WAS PHYSICALLY FOUND BY THE SURVEY TERM AS BELONGING TO THE CUSTOMERS. THE RECONCILIATION IN THIS RESPECT WAS DULY FILED BEFOR E THE AO IN THE ORIGINAL PROCEEDINGS AS WELL AS IN THE REMAND PROCEEDINGS. THE AR ALSO SUBMITTED THAT VERY COMPREHENSIVE AND DETAILED STOCK REGISTER HAS BEEN MAINTAINED BY THE ASSESSEE AND TOOK US THROUGH THE INVENTORY OF S TOCK AS FOUND DURING THE ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 11 COURSE OF SURVEY, THE DETAILS OF WHICH IS PLACED AT PAGES 42 TO 46 OF THE PAPER-BOOK. THE AR FINALLY SUBMITTED THAT THE AO H AS MADE THE ADDITION ON ACCOUNT OF UNEXPLAINED STOCKS OF GOLD IN A CONFUSED STATE OF MIND BY MIXING UP VARIOUS DOCUMENTS AND, THUS, FAILED TO APPRECIAT E THEM IN A CORRECT PERSPECTIVE, WHEREAS THE CIT(A) AFTER HAVING GONE I NTO THE FACTS ON RECORD IN GREAT DEPTH CORRECTLY REACHED A CONCLUSION THAT THE AO HAS NOT PROPERLY GONE INTO THE ISSUE OF STOCK BELONGING TO THE CUSTOMERS AND THAT OF THE ASSESSEE, EVEN THOUGH RECONCILIATION WAS FILED BY THE ASSESSE E. FINALLY, HE PRAYED THAT THE ORDER OF THE CIT(A) SHOULD BE UPHELD AS IT IS W ELL-REASONED AND BASED ON CORRECT APPRECIATION OF FACTS ON RECORD. 13. WE HAVE HEARD THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE UNDISPUTED FACTS OF THE ASSESSEE CASE ARE THAT THE ASSESSEE WAS SUBJECTED TO SURVEY U/S. 133A DURING THE COURSE OF WHICH DISCREPANCY WAS FOUND IN THE STOCKS AS PER THE STOCK REGISTER AND S TOCK PHYSICALLY FOUND AT THE ASSESSEES PREMISES. AS PER STOCK REGISTER, THE STO CK BELONG TO THE CUSTOMERS WAS 8862.18 GMS WHEREAS THE ACTUAL STOCK FOUND WAS 5925.79 GMS. FROM THE FACTS BEFORE US WE OBSERVE THAT THE AO CONFUSED THE STOCK OF 8862.18 GMS AND 5925.37 GMS I.E. 5935.37 GMS WERE FOUND PHY SICALLY DURING THE COURSE OF SURVEY AND 8862.18 GMS WAS AS PER THE COM PUTER PRINT OUT AT THE TIME OF SURVEY AS BELONGING TO THE CUSTOMERS. WE A LSO FIND THAT THE ASSESSEE HAS FILED RECONCILIATION, WHICH WAS NOT ACCEPTED BY THE AO. THE FIRST APPELLATE AUTHORITY AFTER EXAMINATION OF RECORDS AN D SUBMISSIONS OF THE ASSESSEE HAS REACHED THE CONCLUSION THAT THE AO HAS NOT CORRECTLY UNDERSTOOD THE ISSUE AND MADE THE ADDITION ON WRONG APPRECIATION OF FACTS. A PERUSAL OF THE ORDER OF CIT(A) REVEALS THAT HE HA S TAKEN A CORRECT VIEW OF THE MATTER BY INTO THE STOCK RECORDS , RECONCILIATI ON ETC AND THUS DELETED THE ADDITION. THE OPERATIVE PART OF THE SAID ORDER HAS BEEN REPRODUCED BY US HEREINABOVE. UNDER THESE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY ITA NOS 393 & 597/MUM/2016 KISHORE KUMAR M JAIN. 12 REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) AN D THUS WE ARE INCLINED TO UPHOLD THE SAME. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND THAT OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 29 TH MAY 2018 SD/- SD/- (C N PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 29 TH MAY 2018 SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT 5. THE DR, H BENCH, ITAT, MUMBAI BY ORDER, //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI