Sun & Sun Jewellwes, Rayagada V. ITO, Rayagada

ITA 453/CTK/2013

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2402 (ITAT-CUTTACK)
• Duration Of Justice: 6 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 27-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 201

Judgement Text

P A G E 1 | 7 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO . 453 /CTK/201 3 ASSESSMENT YEAR : 20 09 - 2010 SUN & SUN JEWLLERS , MAIN ROAD, RAYAGADA, VS. ITO, RAYAGADA WARD, RAYAGADA PAN/GIR NO. ABIFS 1091 A (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : NONE REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 06 / 11 / 201 9 DATE OF PRONOUNCEMENT : 28 / 1 1 / 201 9 O R D E R PER C.M.GARG,JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) , BERHAMPUR DATED 9.6.2013 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE EFFECTIVE TWO GROUNDS/ISSUES RAISED IN THIS APPEAL ARE THAT THE AO WAS NOT CORRECT IN MAKING ADDITION ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK AS PER BOOKS OF ACCOUNT AND CONSIDERING THE CLOSING STOCK BELONGS TO THE CUSTOMERS FOR WHICH THE ASSESSEE IS RECEIVING MA KING CHARGES. 3 . NONE APPEARED ON BEHALF OF THE ASSESSEE WHEN THE MATTER WAS CALLED FOR HEARING. NO ADJOURNMENT PETITION WAS PLACED ON RECORD. ON PERUSAL OF APPEAL RECORD, WE FIND THAT THE APPEAL WAS INITIALLY FIXED FOR ITA NO.453/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 2 | 7 HEARING ON 28.4.2014 AND LATER ON, IT IS OBSERVED THAT THE APPEAL WAS ADJOURNED ON THE REQUEST OF LD A.R. OF THE ASSESSEE. THIS IS AN OLD APPEAL FILED IN THE YEAR 2013 AND AS PER THE DIRECTION OF HONBLE DELHI HIGH COURT, IT IS INCUMBENT UPON THE TRIBUNAL TO DISPOSE OF ALL THE APPEALS WHI CH ARE PENDING FOR MORE THAN 5 YEARS. KEEPING IN VIEW THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, WE PROCEED TO DECIDE THE APPEAL ON MERITS ON THE BASIS OF MATERIALS ALREADY AVAILABLE ON RECORD AND AFTER HEARING LD D.R. 4. PERUSED THE ORDERS OF LOWE R AUTHORITIES. WE OBSERVE THAT THE ASSESSING OFFICER HAS MADE ADDITION ON THE BASIS OF DIFFERENCE FOUND IN THE STOCK AT THE TIME OF SURVEY AND THE STOCK DISCLOSED BY THE ASSESSEE IN TRADING ACCOUNT TREATING THE SAME AS UNDISCLOSED STOCK AND THE SAME WAS AD DED TO THE INCOME. 5. THE ADDITION WAS CONFIRMED BY THE CIT(A) BY HOLDING THAT IF THE EXPLANATION WAS INDEED CORRECT, THE APPELLANT COULD HAVE EASILY FURNISHED DETAILS LIKE THE AFFIDAVITS ETC IMMEDIATELY AFTER THE SURVEY. NON - PRODUCTION OF THESE DETAILS IMMEDIATELY AFTER THE SURVEY DESPITE SPECIFIC QUERY BY THE AO BOTH DURING THE SURVEY AND IMMEDIATELY THEREAFTER AS DETAILED IN THE ASSESSMENT ORDER CLEARLY SHOW THAT THERE WAS NO CONTEMPORANEOUS EVIDENCE WITH THE ASSESSEE TO EXPLAIN THE DIFFERENCE IN STOCK. THE CIT(A) ALSO HELD THAT THE EXPLANATION SUBMITTED BY THE ASSESSEE IS AN AFTERTHOUGHT. FROM PARA 5.2 OF THE CIT(A) ORDER, WE OBSERVE THAT THE CONTENTIONS OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW WERE T HAT THE ASSESSEE IS MAINTAINING ITA NO.453/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 3 | 7 REGULAR BOOKS OF ACCOUNT; THAT THE VALUATION OF CLOSING STOCK BY THE AO IS UNJUST AND UNWARRANTED AND NOT AS PER STANDARD PRINCIPLES ; THE ASSESSEE IS UNDERTAKING MAKING OF GOLD ORNAMENTS FROM OLD GOLD GIVEN BY THE CUSTOMERS ; A SEPARATE STOCK REGISTER IS ALSO MAINTAINED FOR MAKING OF GOLD ORNAMENTS WHICH DOES NOT BELONG TO THE ASSESSEE AND THIS FACT WAS NOT CONSIDERED BY THE AO; THE STOCK BELONGS TO DIFFERENT CUSTOMERS, THE DETAILS SUBMITTED TO THE AO NOT CONSIDERED, THE AO HAS CONSIDERED THE MAKING CHARGES AS INCOME BUT THE STOCK BELONGS TO THE DIFFERENT CUSTOMERS HAD NOT AT ALL BEEN CONSIDERED AND THAT THE AFFIDAVITS OF EACH CUSTOMERS WERE FILED ALONGWITH RECEIPTS BOOK, CONFIRMATION LETTER AND STOCK REGISTER, ETC BUT THE SA ME WERE NOT CONSIDERED BY THE AO IN THE RIGHT PERSPECTIVE. 6. BEFORE US, LD D.R. SUPPORTING THE ORDERS OF THE AUTHORITIES BELOW SUBMITTED THAT THE AFFIDAVITS FILED BY THE ASSESSEE ARE AFTERTHOUGHT AS THE SAME WERE NOT FILED IMMEDIATELY AFTER THE SURVEY DE SPITE SPECIFIC QUERY BY THE AO ON BOTH THE POINTS I.E. DURING THE SURVEY AND IMMEDIATELY AFTER THE SURVEY. THEREFORE, THE AO WAS RIGHT IN MAKING ADDITION BY CONSIDERING THE DIFFERENCE IN THE STOCK FOUND DURING THE SURVEY AND SHOWN BY THE ASSESSEE IN THE T RADING ACCOUNT. 7. ON CONSIDERATION OF THE SUBMISSIONS OF LD D.R. AND MATERIALS ON RECORD, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS A GOLDSMITH AND DOING BUSINESS OF TRADING IN GOLD ORNAMENTS AND AS THE AO IS TAXING THE AMOUNT OF GOLD ORNAMENTS O F MAKING CHARGES IN THE HANDS OF THE ASSESSEE, ITA NO.453/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 4 | 7 THEN WE SAFELY PRESUME THAT THE ASSESSEE IS MAKING ORNAMENTS FROM OLD GOLD ORNAMENTS RECEIVED FROM RESPECTIVE CUSTOMERS. 8. FROM THE PAGES 44 TO 50 PAGES, WE CLEARLY OBSERVE THAT THE ASSESSEE HAS FILED LIST O F 80 CUSTOMERS AND STATEMENT OF CONVERSION STOCK DETAILS WITH AFFIDAVITS FOR THE FINANCIAL YEAR 2008 - 09 RELEVANT TO ASSESSMENT YEAR 2009 - 2010, WHEREIN, NAMES AND ADDRESS OF THE CUSTOMERS, THEIR AGE, DATE OF RECEIPT OF METAL, QUANTITY RECEIVED, DATE OF DELIVERY , QUANTITY DELIVERED AND MAKING CHARGES HAVE BEEN MENTIONED IN DETAIL (SILVER ORNAMENTS) . IN THIS LIST, THERE ARE 80 CUSTOMERS , WHICH IS EVIDENT F ROM PAGES 51 TO 132 . W E OBSERVE THAT THE ASSESSEE HAS FILED AFFIDAVITS OF 40 CUSTOMERS, WHEREIN, THEY HAVE CLEARLY STATED THAT THEY HAVE GIVEN OLD GOLD/SILVER ORNAMENTS FOR MAKING NEW ORNAMENTS DESCRIBING THEREIN THE WEIGHT AND AMOUNT OF PAYING MAKING CHARGES. ALL THE CUSTOMERS HAVE CONFIRMED THAT THEY HAVE RECEIVED THE NEW GOLD /SILVER ORNAMENTS FROM THE ASSE SSEE AND THEY HAVE ALSO PAID MAKING CHARGES AT THE TIME OF RECEIVING NEW GOLD/SILVER ORNAMENTS MADE OUT OF OLD ORNAMENTS. FROM THE ORDERS OF LOWER AUTHORITIES, WE ARE UNABLE TO SEE ANY FINDINGS EITHER BY THE AO OR BY THE CIT(A) THAT THESE EVIDENCES ARE NO T CORRECT. WE ARE ALSO UNABLE TO SEE ANY EXERCISE BY THEM CALLING THE CUSTOMERS EVEN FOR SAMPLE TEST CHECK BASIS TO VERIFY THE CONTENTS AND STATEMENTS GIVEN BY THEM BY WAY OF AFFIDAVITS. WITHOUT CONDUCTING ANY SUCH EXERCISE ABOUT THE EVIDENCES AND WITHOU T CALLING THE RESPECTIVE CUSTOMERS FOR EXAMINATION, THE CIT(A) PROCEEDED TO ITA NO.453/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 5 | 7 HOLD THAT THESE ARE AFTERTHOUGHT AS THEY WERE NOT SUBMITTED DURING THE COURSE OF SURVEY AND IMMEDIATELY AFTER THE SURVEY. IT CAN BE EASILY GATHERED EVEN BY A MAN OF ORDINARY PRUD ENT THAT IT IS NOT PRACTICALLY POSSIBLE TO SUBMIT EVIDENCE IN THE FORM OF AFFIDAVITS OF 80 SCATTERED CUSTOMERS DURING THE SURVEY PROCEEDINGS BEFORE THE SURVEY TEAM. THEREFORE, THESE ALLEGATIONS OF THE CIT(A) HAVE NO LEGS TO STAND. 9. SO FAR AS OBSER VATIONS OF LD CIT(A) THAT AFFIDAVITS ARE AFTERTHOUGHT , THUS, THE SAME HAS BEEN FILED SUBSEQUENTLY IS CONCERNED, WE ARE OF THE CONSIDERED VIEW THAT THIS KIND OF ALLEGATION CAN BE MADE AGAINST THE ASSESSEE ONLY BY WAY OF PROPER VERIFICATION AND EXAMINATION OF THE DEPONENTS, WHO ARE GIVING AFFIDAVIT IN FAVOUR OF THE ASSESSEE OTHERWISE WITHOUT SUCH EXERCISE ANY ALLEGATION OR DOUBT AGAINST VOLUMINOUS EVIDENCE AND DETAILS FILED BY THE ASSESSEE ALONGWITH NAMES AND ADDRESS OF THE CUSTOMERS CANNOT BE DISCARDED AND THROWN OUT THRESHOLD. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE SUBMITTED ALL POSSIBLE EVIDENCE UNDER HIS COMMAND, IN THE FORM OF NAMES AND ADDRESS ES OF THE CUSTOMERS, DETAILS OF OLD ORNAMENTS, NEW ORNAMENTS, MAKING CHARGES, ETC ALONGWIT H AFFIDAVIT OF HALF NUMBER OF CUSTOMERS, WHICH HAVE NOT BEEN EXAMINED AND VERIFIED BY THE AUTHORITIES BELOW BY WAY OF SUMMONING THEM O R ANY OTHER PERMISSIBLE MODE . HENCE, WE HAVE NO HESITATION TO HOLD THAT THE ASSESSEE HAS DISCHARGED ITS ONUS TO SHOW THAT THE IMPUGNED QUANTITY OF MATERIAL CREATING DIFFERENCE BETWEEN STOCK SHOWN IN THE TRADING ACCOUNT AND ITA NO.453/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 6 | 7 PHYSICAL STOCK FOUND EXCESS DURING SURVEY BY FILING ALL THE RELEVANT DETAILS AND DOCUMENTARY EVIDENCE WHICH WAS POSSIBLE AND UNDER HIS C ONTROL BUT THE SAME WAS DISMISSED AT THE THRESHOLD WITHOUT VERIFICATION OR EXAMINATION OF CUSTOMERS EVEN ON TEST CHECK BASIS. THIS ACTION OF THE AUTHORITIES BELOW CANNOT BE SAID TO BE A REASONABLE AND JUSTIFIED APPROACH OF A QUSAI - JUDICIAL OFFICER/REVENU E OFFICER AND BY HOLDING SO WE DISMISS THE ALLEGATION OF THE AO WHILE MAKING ADDITION AS WELL AS OF THE CIT(A) WHILE CONFIRMING THE SAME. ONE SHOULD NOT IGNORE THE FACT THAT THE SURVEY U/S.133A OF THE ACT WAS CONDUCTED ON 24.9.2009 AND THE ASSESSEE IS REG ULARLY MAINTAINING CONVERSION REGISTER OF NEW JEWELERS BY USING OLD JEWELRY OR METAL SUPPLIED BY THE CUSTOMERS, WHICH HAVE ALSO BEEN PLACED AT PAGES 6 - 11, 12 - 17 AND 18 - 43 OF THE ASSESSEES PAPER BOOK AND THUS EVIDENCE CANNOT BE DISMISSED WITHOUT EXAMINATI ON OF THE CUSTOMERS WHO ARE DEPOSING IN SUPPORT OF ASSESSEE BY WAY OF AFFIDAVITS. 10. IN OUR HUMBLE OPINION, THE REVENUE AUTHORITIES ARE NOT ALLOWED TO DISMISS THE EVIDENCE ON THE THRESHOLD WITHOUT ANY VERIFICATION AND EXAMINATION AND, THEREFORE, THE ADDITION MADE IS UNREASONABLE AND UNJUSTIFIED, WHICH CANNOT BE HELD AS SUSTAINABLE. WE MAY POINT OUT THAT THE AO HAS TAXED THE AMOUNT OF MAKING CHARGES EARNED BY THE ASSESSEE FROM THE SAME CUSTOMERS RECEIVED BY IT AGAINST MAKING OF NEW GOLD ORNAMENTS BY USING THE OLD USE GIVEN BY THE CUSTOMERS . THEREFORE, IN VIEW OF THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING ALL ITA NO.453/CTK/2013 ASSESSMENT YEAR : 2009 - 2010 P A G E 7 | 7 RELEVANT EVIDENCES PRODUCED BEFORE THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED VIEW THAT IN ADDITION TO TRADING OF GOLD AND SILVER ORNAMENTS AND ARTICLES , THE ASSE SSEE IS ALSO GIVING SERVICES TO ITS CUSTOMERS BY WAY OF MAKING NEW ORNAMENTS OUT OF OLD ORNAMENTS AND METALS RECEIVING FROM THE RESPECTIVE CUSTOMERS, FOR WHICH, THE ASSESSEE IS MAINTAINING SEPARATE STOCK REGISTERS AND THIS FACT HAS BEEN IGNORED BY THE AUTH ORITIES BELOW BEFORE MAKING THE ADDITION WITHOUT CONSIDERING THE CLOSING STOCK BELONGS TO THE CUSTOMERS AND STOCK IN TRADING ACCOUNT OF THE ASSESSEE. ACCORDINGLY, WE ARE INCLINE D TO DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE C IT(A) BY ALLOWING THE GROUNDS OF APPEAL OF THE ASSESSEE. 1 1 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED ORDER PRONOUNCED ON 28 / 1 1 /201 9 . S D/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 28 / 1 1 /20 1 9 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : SUN & SUN JEWELLERS, MAIN ROAD, RAYAGADA, 2. THE RESPONDENT. ITO, RAYAGADA WARD, RAYAGADA 3. THE CIT(A) - , BERHAMPUR 4. PR.CIT - , B ERHAMPUR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//