Naresh Kumar Kapoor, Faridabad V. ACIT, Circle-II, Faridabad

ITA 4962/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1154 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S NEGI
• Keywords: Valuation report; TDS
• Section: 69B; 143(2); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.4962/DEL/2017 ASSESSMENT YEAR: 2012-2013 NARESH KUMAR C/O ANKIT GUPTA B-64, IIND FLOOR, NEHRU GROUND, NIT FARIDABAD. VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-II, FARIDABAD. TAN/PAN: ACTPK8967F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SHANTANU JAIN, ADV. RESPONDENT BY: SHRI S.S. NEGI, SR.DR DATE OF HEARING: 07 04 2021 DATE OF PRONOUNCEMENT: 05 07 2021 O R D E R PER AMIT SHUKLA, JM THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 31.05.2017, PASSED BY LD. CIT (APPEALS), FARIDABAD FOR THE QUANTUM OF ASSESSM ENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2012-13. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED FOLLOWIN G GROUNDS: 1. BECAUSE THE ACTION IS BEING CHALLENGED ON THE F ACTS & LAW, FOR MAKING ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK O F RS. 45,97,325/- U/S 69B OF THE INCOME TAX ACT, 1961OVER LOOKING & IGNORING THE PLEADINGS, FACTS, EVIDENCES, PROVISION S OF ACT, PRINCIPLES OF LAW ADVANCED HENCE UNSUSTAINABLE ORDE R. I.T.A. NO.4962/DEL/2017 2 2. BECAUSE THE ACTION IS BEING CHALLENGED ON THE FA CTS & LAW, FOR MAKING AN ADDITION IN DIFFERENCE IN STOCK AMOUN TING RS. 45,97,325/- ON THE BASIS OF VALUATION REPORT BY GOV T. APPROVED VALUER WITHOUT TAKING INTO CONSIDERATION 'MATERIAL FACTS' CONTAINING 'MATERIAL PARTICULARS' ALREADY ON RECORD . 3. BECAUSE THE ACTION IS BEING CHALLENGE ON THE FAC TS & LAW, FOR DISALLOWANCE OF INTEREST AMOUNTING TO RS. 1,08,000/ - ON LOAN BORROWED U/S 36(L)(III) ON AN ACCOUNT OF NON-BUSINE SS PURPOSE. 4. BECAUSE THE ACTION IS BEING CHALLENGE ON THE FAC TS & LAW, FOR MAKING DISALLOWANCE OF INTEREST PAID ON DELAY IN DE POSIT OF TDS AMOUNTING RS 704/- ON ACCOUNT OF PENAL NATURE. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS ENG AGED IN THE BUSINESS OF RETAIL TRADING OF JEWELLERY IN HIS PROP RIETORSHIP CONCERN, M/S. AKASH JEWELLERS. A SURVEY OPERATION U /S.133A WAS CARRIED OUT ON 13.09.2011 AT THE BUSINESS PREMI SES OF THE ASSESSEE, AND ACCORDINGLY, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S. 143(2) WAS IS SUED ON 13.09.2013. THE LD. ASSESSING OFFICER OBSERVED THAT DURING THE COURSE OF SURVEY OPERATION, BOOKS OF ACCOUNT MA INTAINED BY THE ASSESSEE, SALE PURCHASE DETAILS AND VOUCHERS WERE EXAMINED AND INVENTORIES OF PHYSICAL CASH AND STOCK S FOUND AT THE BUSINESS PREMISES WERE PREPARED AND THE SAME WERE VERIFIED FROM THE REGULAR BOOKS OF ACCOUNTS AS ON 1 3.09.2011. THE VALUATION AND JEWELLERY/STOCK WAS ALSO MADE BY THE APPROVED VALUER WHEREIN FOLLOWING DISCREPANCY WAS N OTICED:- I.T.A. NO.4962/DEL/2017 3 VARIATION IN STOCK HEADS AMOUNT IN RS. ACTUAL STOCK FOND ON PHYSICAL VERIFICATION 1,68,97, 325 STOCK ENTRY RECORDED IN THE BOOKS/DOCUMENTS 1,23,00 ,000 EXCESS/UNACCOUNTED STOCK 45,97,325 3. IN REPLY TO THE QUERY RAISED BY THE ASSESSING OF FICER TO EXPLAIN THE DISCREPANCY, IT WAS SUBMITTED THAT THE VARIATION IN THE STOCK IS PURELY DUE TO GOLD RATE FLUCTUATION IN THE MARKET. THE LD. ASSESSING OFFICER AFTER GIVING HIS REASONIN G HAS MADE THE ADDITION ON ACCOUNT OF DIFFERENCE AT RS.45,97,3 25/-. 4. FURTHER, ON PERUSAL OF THE BALANCE-SHEET, THE AS SESSING OFFICER NOTED THAT ASSESSEE HAS GIVEN ADVANCE OF RS .9 LACS TO M/S. AKASH HI TECH ON WHICH NO INTEREST HAS BEEN RE CEIVED, WHEREAS THE ASSESSEE HAS AVAILED LOAN OF RS.1,51,70 ,715/- FROM THE STANDARD CHARTERED BANK ON WHICH THE INTER EST INCURRED HAS BEEN DEBITED TO THE P&L ACCOUNT. THE L D. ASSESSING OFFICER IMPUTED 12% OF INTEREST ON SUCH L OAN AND CALCULATED THE DISALLOWANCE OF RS.1,08,000/-. 5. LD. CIT (A) AFTER INCORPORATING THE ASSESSEES D ETAILED SUBMISSIONS HAS CONFIRMED THE ADDITION. HIS RELEVAN T OBSERVATION READS AS UNDER: FROM THE DATA PROVIDED BY THE APPELLANT, SOME BASIC CALCULATIONS HAVE BEEN MADE TO ARRIVE UPON SOME FIGURES WHICH AR E IMPORTANT TO ANALYZE THE CONTENTIONS OF THE APPELLANT. THESE CAL CULATIONS HAVE BEEN TABULATED AS BELOW: I.T.A. NO.4962/DEL/2017 4 AVERAGE COST PRICE AVERAGE SALE PRICE PRICE IN RS. QTY. IN GM PRICE/ GM PRICE IN RS. QTY. IN GM PRICE/GM OPENING STOCK AS ON 01.04.2011 8473065 3753.5 2257.377115 APRIL, 2011 2014421.8 1099.96 1831.35914 APRIL, 2011 3786019 1981.77 1910.423006 MAY, 2011 3133323.55 1570.27 1995.404325 MAY, 2011 6714221 3855.71 1741.37085 JUNE, 2011 6626297.04 3174.42 2087.404011 JUNE, 2011 4826180 2705.325 1783.988717 JULY, 2011 3154677.68 1482.84 2127.456556 JULY, 2011 8624947 4559.46 1891.659758 AUG, 2011 2582940.8 1124.59 2296.784428 AUG, 2011 1374160 555.115 2475.451033 SEP, 2011 469420.16 197.72 2374.166296 SEP, 2011 490210 200.85 2440.677122 OCT, 2011 4891483.52 1959.71 2496.024167 OCT, 2011 2654556 1135.59 2346.405714 NOV, 2011 3866755.02 1489.58 2595.869319 NOV, 2011 5618429 2002.83 2805.245078 DEC, 2011 3005072.4 1148.814 2615.804125 DEC, 2011 1317440 489.97 2688.817683 JAN, 2012 7616220.18 2979.857 2555.901233 JAN, 2012 11006948 4289.85 2565.811858 FEB, 2012 6176331.04 2367 2609.349827 FEB, 2012 14168315 5107.575 2773.980803 MARCH, 2012 8731903.28 3445.933 2533.973609 MARCH, 2012 6468180 2763 2340.998914 PERUSAL OF THE ABOVE TABLE (AVERAGE COST PRICE} REV EALS THAT THE PRICE/GM OF THE GOLD SHOWN BY THE APPELLANT FOR OPENING STOC K AS ON 01.04.2011 IS RS. 2257.37/-. HOWEVER, IT SIGNIFICANTLY DIPPED DUR ING THE NEXT FOUR MONTHS AND HOVERED AROUND IS. 1828/-, IT AGAIN INCR EASED JUST BEFORE THE MONTH OF SURVEY AND WENT UP TO RS, 2475/- IN THE MO NTH OF AUGUST 2011, AFTER THE DATE OF SURVEY I.E. FROM 13.09.2011 TILL THE END OF FINANCIAL YEAR, THE PRICE/GM OF THE GOLD PURCHASED BY THE APPELLANT STEADILY REMAINED AROUND RS. 2610/-, WHEREAS ON THE OTHER HAND, THE P RICE/GM OF THE GOLD SOLD BY THE APPELLANT WITNESSED A STEADY GROWTH FRO M RS. 1831/- IN THE MONTH OF APRIL, 2011 TO RS, 2533/- IN THE MONTH OF MARCH, 2012. THE PRICE OF GOLD PURCHASED AND SOLD BY THE APPELLANT DURING THE PERIOD IS DEPENDENT ON THE MARKET PRICE OF THE GOLD, A PRICE WHICH IS IN THE PUBLIC DOMAIN AND KNOWN TO EVERY CUSTOMER. HOWEVER, IT CAN 'T BE SEEN IN THE INSTANT CASE WHERE FLUCTUATION IN COST PRICE OF GOL D DOESN'T HAVE ANY BEARING ON THE SALE PRICE OF THE GOLD. IN THIS CASE AS EVIDENT FROM THE DATA I.T.A. NO.4962/DEL/2017 5 REPRODUCED ABOVE, IT IS CLEAR THAT THERE IS NO CORR ELATION BETWEEN THE SALE PRICE AND THE COST PRICE, ON A MONTHLY AVERAGE BASI S. FURTHER, THE APPELLANT HAS VALUED ITS OPENING STOCK AT RS. 2257.377 PER/GM AND AS PER THE PREVALENT ACCOUNTING METHOD I N BUSINESS PARLANCE OPENING STOCK IS VALUED EITHER AT CP OR M.P WHICHEV ER IS LOWER. HENCE, IF IT IS ASSUMED THAT THE APPELLANT HAS VALUED ITS OPENIN G STOCK AT COST PRICE BEING LOWER OF THE TWO, THAT MEANS THE PREVALENT MA RKET PRICE WAS HIGHER THAN RS. 2257377/- DURING THE MONTH OF APRIL, 2011. HOWEVER, THE APPELLANT HAS SHOWN PURCHASED PRICE OF THE GOLD PER GM AT RS. 1910/- IN THE MONTH OF APRIL, 2011. WHEREAS ON THE OTHER HAND , IF IT IS ASSUMED THAT THE APPELLANT HAS VALUED ITS OPENING STOCK AT MARKE T PRICE EVEN THEN THE PRICE PER GM SHOWN BY THE APPELLANT ARE LESS THAN T HE PREVALENT MARKET PRICE BY RS, 347/- PER GM. IT IS VERY HARD TO BELIE VE THAT THE RATE OF GOLD PER GM WOULD HAVE DIPPED BY RS. 347/- IN A SPAN OF JUST 30 DAYS I.E. FROM VALUATION OF THE OPENING STOCK AS ON 01.04.201 1 TILL THE END OF THE MONTH OF APRIL, 2011. ONE MORE ANALYSIS, WHICH HAS BEEN DONE ON THE BASIS OF THE DATA PROVIDED BY THE APPELLANT, IS IMPORTANT AND THE SAM E IS TABULATED AS UNDER: DESCRIPTION PRICE QUANTITY WEIGHTED PRICE/GM COST PRICE INCLUDING OPENING STOCK AS ON 01.04.2011 TILL THE DATE OF SURVEY I,E 13.09.2011 3,37,98,592/ - 17471.88 GM RS. 1941,23/ - COST PRICE EXCLUDING OPENING STOCK AS ON 01.04.2011 TILL THE DATE OF SURVEY I.E. 13.09.2011 2,53,25,527/ - 13657,38 GM R S. 1854.34/ - COST PRICE OF THE GOLD PURCHASED AFTER THE DATE OF SURVEY I.E. 13.09.2011 4,17,34,078/ - 15989.665 GM RS. 2610.06/ - FROM THE PERUSAL OF THE ABOVE TABLE, THE RATES OF G OLD PER GM SHOWN BY THE APPELLANT CAN BE BIFURCATED INTO TWO PERIODS, O NE PRE-SURVEY AND ANOTHER POST- SURVEY. FROM THE TABLE IT CAN BE SEER* THAT THERE I S HUGE I.T.A. NO.4962/DEL/2017 6 DIFFERS RITE M THE PRICE PER GM OF THE POLO PURCHAS ED BY THE APPELLANT BEFORE THE DATE OF SURVEY END AFTER THE DATE OF SUR VEY. BEFORE THE DATE OF SURVEY, THE WEIGHTED PRICE PER GM OF THE GOLD SHOWN BY THE APPELLANT COMES TO RS. 1941/- WHICH FURTHER DIPPED TO RS. 185 4/- IF THE OPENING STOCK IS EXCLUDED FROM THE TOTAL STOCK AS ON 13.09. 2011 WHICH HAS BEEN VALUED AT RS, 2257/- PER GM BY THE APPELLANT. WHERE AS THE RATES OF GOLD PER GM PURCHASED BY THE APPELLANT AFTER THE DATE OF SURVEY I.E. 13.09.2011 COMES TO RS. 2610/- AND THE DIFFERENCE B ETWEEN THESE TWO RATES COMES TO RS. 756/- PER GM. FURTHER, THE APPELLANT IN ITS WRITTEN SUBMISSIONS H AS STRESSED UPON TWO MORE POINTS THAT (T) THE VALUE OF STOCK AS ON THE D ATE OF SURVEY MADE BY IT AT RS.1,23,00,000/- WAS JUST AN ESTIMATION AND CAN' T BE TAKEN AS SACROSANCT, AND (LLJ THE RATES OF THE GOLD FLUCTUAT ED TREMENDOUSLY DURING THE A.Y. HOWEVER, PERUSAL OF PAGE 3 OF THE AO'S ORD ER REVEALS THAT THE FIGURE OF RS. 1,23,00,000/- HAS BEEN TAKEN FROM THE REGULAR BOOKS OF ACCOUNTS MAINTAINED/TRADING ACCOUNT PREPARED BY THE APPELLANT AS ON DATE OF SURVEY. PERUSAL OF THE ASSESSMENT ORDER FUR THER REVEALS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APP ELLANT HAD SUBMITTED TWO MORE REASONS FOR THE VARIATION IN THE STOCK BES IDE THE FLUCTUATION OF GOLD RATE. IT HAD SUBMITTED THAT 400 TO SCO GMS OF GOLD OF VARIOUS CUSTOMERS WAS LYING WITH HIM AS ON THE DATE OF SURV EY AND IT HAD RECEIVED GOLD JEWELLERY WORTH RS. 5.50 LACS FROM VA IBHAV JEWELLERS. HOWEVER, THE APPELLANT FAILED TO FURNISH ANY CORROB ORATIVE EVIDENCE IN SUPPORT OF ITS CONTENTIONS BEFORE THE AO. INTERESTI NGLY, THE APPELLANT DIDN'T MENTION THESE TWO REASONS FOR THE DIFFERENCE IN STO CK DURING THE COURSE OF APPELLATE PROCEEDINGS. THE DIFFERENT VERSIONS PUT F ORTH BY THE APPELLANT, ONE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ANOTHER DURING THE COURSE OF APPELLATE PROCEEDINGS, AS REASONS FOR THE DIFFERENCE IN STOCK IN ITSELF IS A GOOD INDICATOR THAT THE APPELLANT DIDN' T KNOW THE EXACT REASONS FOR THE VARIATION IN THE STOCK AND WAS NOT SURE WHA T TO SAY ABOUT THE DIFFERENCE IN STOCK AND MERELY MAKING ORGANIC/GENER AL OBSERVATIONS TO COVER UP THE ISSUE. AS REGARDS TO THE FLUCTUATION IN THE PRICE OF GOLD DURING THE RELEVANT PERIOD IS CONCERNED, I FIND THAT THE RATES WHICH HAS BEEN SHOWN BY THE APPELLANT I.T.A. NO.4962/DEL/2017 7 IN ITS PURCHASE REGISTER ARE NOT IN SYNC WITH THE P REVALENT MARKET RATES IN THE COUNTRY. TO GET THE PREVALENT MARKET RATES OF T HAT PERIOD, I HAVE MADE A BASIC SEARCH OVER THE INTERNET AND FOUND THAT THE RE IS A VARIATION OF 6,7 TO 8% IN THE RATES SHOWN BY THE APPELLANT AS COMPAR ED TO THE PREVALENT MARKET RATES. THE BELOW MENTIONED TABLE DEPICTS THE VARIATION IN RATES SHOWN BY THE APPELLANT TO THAT OF THE MARKET RATES: - SR. NO. MONTH AVERAGE RATE/ GRAM (INCLUDING DIRECT EXPENSES) SHOWN BY THE APPELLANT IN ITS PURCHASE REGISTER FROM 01.04.2011 TO 31.03.2012 AVERAGE RATE/ GRAM OF THE GOLD IN THE INDIAN MARKET (SOURCE: WWW.BULLION- RATES.COM/GOLD/INR/2011- 12-HISTORY.HTM ) AVERAGE RATE/ GRAM OF THE GOLD IN THE INDIAN MARKET (SOURCE: WWW. GOLDPRICEINDIA.COM/GOLD- PRICE-JANUARY-2011.PHP) 24 KARAT 22 KARAT 24 KARAT 22 KARAT 24 KARAT 22 K ARAT 1 APRIL, 2011 2115/- 1904/- 2146/- 1932/- 2 MAY, 2011 1939/- 2180/- 1962/- 2223/- 2000/- 3 JUNE, 2011 1841/- 2201/- 1981/- 2239/- 2015/- 4 JULY, 2011 2031/- 2244/ - 3020/- 2251/- 2026/- 5 AUG.,2011 2610/- 2569/- 2312/- 2563/- 2307/- 6 SEP, 2011 2590/- 2711/- 2440/- 2691/- 2422/- 7 OCT, 2011 2488/- 2644/- 2380/- 2681/- 2413/- 8 NOV., 2011 2941/- 2832/- 2549/- 2815/- 2S33/- 9 DEC., 2011 2846/- 2756/- 2481/- 2800/- 2520/- 10 JAN., 2011 2872/- 2719/- 2447/- 2768/- 2491/* 11 FEB., 2011 2935/- 2750/- 2475/- 2823/- 2541/- 12 MARCH, 2011 2484/- 2714/- 2442/- 2788/- 2509/- THERE IS VARIATION OF 1.1% BETWEEN THE PRICES OF TWO DIFFERENT SOURCES WHICH IS ACCEPTABLE EN THE SIZE OF THE GOLD MARKET IN INDIA. THIS ANALYSIS MAKES ONE THING DEAR THAT FIGURES SHO WN BY THE APPELLANT CAN'T BE RELIED UPON. HENCE THE APPELLANT'S CALCULA TION OF STOCK AT RS. 1,28,20,859/- AS ON THE DATE OF SURVEY I.E. 13/09/2 011 BY TAKING THE AVERAGE OUST OF SALE PER GRAM AT RS. 1992/- IS NOT ACCEPTABLE. MOREOVER, AS PER THE QUANTITATIVE DETAIL OF THE GOLD PROVIDED BY THE APPELLANT, IT HAD I.T.A. NO.4962/DEL/2017 8 8814.180 GM OF GOLD AVAILABLE WITH IT AS ON THE DAT E OF SURVEY I.E. 13.09.2011. WHEREAS PERUSAL OF THE VALUATION REPORT OF THE VALUER REVEALS THAT THE VALUATION OF 4892 GM OF GOLD HAD BEEN DONE ONLY. IT MEANS 3922.18 GM OF GOLD WAS NOT PHYSICALLY IN THE POSSES SION OF THE APPELLANT FOR VALUATION AS ON THE DATE OF SURVEY. THIS PLEA H AS NEVER BEEN TAKEN BY THE APPELLANT EITHER ON THE DATE OF SURVEY, OR DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS AND IN FACT NOT EVEN BEFORE ME DURING APPELLATE PROCEEDINGS. THE WRITTEN SUBMISSIONS OF THE APPELLA NT AS REPRODUCED ABOVE CLEARLY SHOW THAT THE APPELLANT HAS NOT SAID THAT THERE WAS MORE GOLD AVAILABLE WITH HIM THEN WHAT HAS BEEN VALUED B Y THE VALUER/SURVEY TEAM. IN FACT DURING THE COURSE OF SURVEY, THE APPE LLANT PLEADED THAT SOMEBODY ELSE'S GOLD IS LYING WITH HIM. THUS, ALL T HESE FACTS MAKE IT ABUNDANTLY CLEAR THAT THE QUANTITATIVE STOCK DETAIL S FURNISHED BY THE APPELLANT ARE NOT RELIABLE FOR ARRIVING AT ANY CONC LUSION AND HENCE DESERVE TO BE IGNORED. FOR THE SAKE OF ARGUMENT, IF THE QUANTITATIVE DETAIL OF THE APPELLANT ARE RELIED UPON THEN IT WOULD SHOW THAT THE APPELLANT HAD SOLD APPROXIMATELY 4 KG GOLD OUTSIDE THE BOOKS OF A CCOUNTS, THUS, IN VIEW OF THE ABOVE EXPLANATION, I SEE NO REASON TO INTERF ERE WITH THE ORDER OF THE ASSESSING OFFICER AND THE ADDITION OF RS.45,97,325/ - IS SUSTAINED. THIS GROUND OF THE APPELLANT IS, THUS, DISMISSED. 6. REGARDING DISALLOWANCE OF INTEREST OF RS.1,08,00 0/-, LD. CIT(A) UPHELD THE ADDITION ON THE GROUND THAT APPEL LANT HAS FAILED TO JUSTIFY THE UTILIZATION OF LOAN OF RS.9 LA C IN TERMS OF BUSINESS NEXUS. HE FURTHER HELD THAT POSSIBILITY OF ADVANCING AMOUNT OF RS.9 LAC OUT OF INTEREST FREE UNSECURED L OAN AMOUNTING TO RS.42,15,000/- CANNOT BE RULED OUT AS ASSESSEE HAS AVAILED LOAN OF RS.1,51,70,715/- FROM STANDARD CHARTERED BANK ON WHICH INTEREST HAS BEEN PAID, THE REFORE, THE UTILIZATION OF SUCH FUNDS FOR ESTABLISHING THE BUSINESS NEXUS IN ADVANCING ANY PART OUT OF THESE FUNDS IS I MPERATIVE. I.T.A. NO.4962/DEL/2017 9 7. WE HAVE HEARD BOTH THE PARTIES AND ALSO PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS. ONLY REASON FOR THE ADDITION MADE BY THE ASSESSING OFFICER IS THAT, THERE WAS DIFFERENCE BETWEEN THE STATEMENT GIVEN BY THE ASSES SEE WHEREIN HE HAS GIVEN ESTIMATION OF THE STOCK AND TH E STOCK AS VALUED BY THE VALUER AT THE TIME OF SURVEY. BUT FOR THE DIFFERENCE IN VALUE, THERE IS NO DIFFERENCE IN THE QUANTITATIVE DETAILS, I.E., WHETHER ANY EXCESS QUANTITY WAS FOUN D AT THE TIME OF SURVEY WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. THE BASE FOR VALUATION OF STOCK HAS BEEN T AKEN AT RS.1,23,00,000/- WHICH WAS STATED TO BE ESTIMATE VA LUE OF THE STOCK WITH THE ASSESSEE IN HIS STATEMENT DURING THE COURSE OF SURVEY. THIS WAS AN APPROXIMATE ESTIMATE GIVEN BY T HE ASSESSEE AT THAT TIME. NOW THE ADDITION IS ON ACCOU NT OF DIFFERENCE BETWEEN ESTIMATED VALUES DECLARED IN STA TEMENT AT THE TIME OF SURVEY AT RS. 1,23,00,000/- AND THE VAL UATION DONE BY THE VALUER. 8. ADMITTEDLY, THERE IS NO DIFFERENCE IN THE QUA NTITATIVE TALLY OR ANY DISCREPANCY IN PURCHASE AND SALES OR ANY EXC ESS QUANTITY OF JEWELLERY WAS FOUND SO AS TO DRAW ANY A DVERSE INFERENCE. ALBEIT THE ADDITION IS BASED ON THE STAT EMENT GIVEN BY THE ASSESSEE IN RESPECT OF STOCK VALUE AT THE TI ME OF SURVEY AND EVEN IN THE STATEMENT THERE IS NO REFERENCE OF EXCESS QUANTITIY. BEFORE THE LD. CIT (A), THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. DHINGRA METAL WORKS IN ITA NO. 1111/2010, THAT ASSESSING OFFICER COULD NOT MAKE THE ADDITION SOLEL Y ON THE I.T.A. NO.4962/DEL/2017 10 BASIS OF STATEMENT DURING THE COURSE OF SURVEY. HER E, WE FIND FROM THE STATEMENT AS RECORDED BY THE LD. CIT (A) I N HIS ORDER THAT; FIRSTLY , THERE IS NEITHER ANY DISPUTE REGARDING SALE AND PURCHASE BY THE ASSESSING OFFICER NOR HE HAS RAISED ANY OBJECTION OF GIVEN ANY ADVERSE FINDING ON THE OPENI NG VALUE OF STOCK AND THE DIRECT EXPENSES INCURRED DUR ING THE RELEVANT ASSESSMENT YEAR. SECONDLY , THERE IS NO DIFFERENCE IN THE QUANTITATIVE TALLY OF THE CLOSING STOCK ALSO. ONCE THE SALE PURCHASE OPENING STOCK IS NOT IN DISPUTE EITHER QUANTITATIVE -WISE OR OF CLOSING STOCK, THEN SOLELY ON THE DIFFERENCE OF THE VALUE OF THE STOCK OF GOLD JEWELLERY AS DONE BY THE VALUATION OFFICER CANNOT BE THE BASIS FOR MAKING TH E ADDITION. LASTLY, LD. CIT (A) HAS GONE BY THE AVERAGE COST PRICE OF EVERY MONTH OF SALE AND PURCHASE AND ON WHICH PRICE ASSESSEE HAS SOLD. HE HAS OBSERVED THAT THERE IS NO CORRELATION BETWEEN THE SALE AND COST PRICE ON A MO NTHLY AVERAGE BASIS AND THUS THE DIFFERENCE AS WORKED OUT BY THE VALUER AND ADDITION MADE BY THE ASSESSING OFFIC ER IS JUSTIFIED. 9. HOWEVER, LD. CIT (A) ANALYSIS IS DE HORS THE BASIC FACT THAT THERE WAS NO DIFFERENCE IN THE QUANTITATIVE TA LLY NOR THE BOOKS OF ACCOUNT HAVE BEEN REJECTED OR THE SALE AND PURCHASE HAS BEEN DISPUTED. ONCE THE OPENING STOCK, PURCHASE AND I.T.A. NO.4962/DEL/2017 11 DIRECT COST ON THE DEBIT SIDE IS NOT IN DISPUTE; AN D ON CREDIT SIDE SALES HAVE BEEN ACCEPTED AND THERE IS NO DIFFE RENCE IN THE QUANTITATIVE TALLY IN THE CLOSING STOCK, THEN NO AD DITION CAN BE MADE IN THE TRADING ACCOUNT. HERE THE ADDITION IS N OT BASED ON UNDERVALUATION OF CLOSING STOCK BUT UNDISCLOSED INVESTMENT IN CLOSING STOCK. SIMPLY BECAUSE THERE I S A DIFFERENCE IN THE VALUATION MADE BY THE VALUER AND THE VALUE STATED BY THE ASSESSEE DURING THE SURVEY IN HIS STA TEMENT AS AN APPROXIMATE ESTIMATE OF THE STOCK AVAILABLE WITH HIM, ADDITION CANNOT BE MADE AS UNDISCLOSED INVESTMENT. HAD IT BEEN CASE WHERE THERE IS EXCESS QUANTITY OF STOCK F OUND NOT RECORDED IN THE BOOKS OR NOT EXPLAINED, THEN PERHAP S ADDITION ON ACCOUNT OF UNDISCLOSED INVESTMENT COULD HAVE BEE N MADE. UNDER THESE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO SUSTAIN THE ADDITION; THEREFORE, THE SAME IS DIRECTED TO BE DELETED. 10. ON THE ISSUE OF DISALLOWANCE OF INTEREST ON THE ADVANCE OF RS.9 LACS TO M/S. AKASH HI TECH, ONE IMPORTANT F ACT IS THAT, ASSESSEE HAD INTEREST FREE UNSECURED LOAN AMOUNTING TO RS.42,15,000/- FROM FRIENDS AND RELATIVES AND THIS FACT HAS ALSO BEEN NOTED BY THE LD. CIT(A). SIMPLY BECAUSE T HE ASSESSEE HAS SECURED LOAN FROM STANDARD CHARTERED B ANK OF RS.1,51,70,715/-, THAT DOES NOT MEAN THAT SAME INTE REST BEARING FUND HAVE BEEN GIVEN FOR INTEREST FREE LOAN TO OTHER PARTY. IF ASSESSEE HAS INTEREST FREE FUNDS WHICH FA R EXCEED THE ADVANCE GIVEN, THEN THERE CANNOT BE ANY PRESUMPTION THAT SUCH ADVANCE HAS BEEN GIVEN ONLY OUT OF SUCH INTERE ST I.T.A. NO.4962/DEL/2017 12 BEARING FUNDS. ONCE THE ASSESSEE HAS SUBSTANTIAL IN TEREST FREE FUND, THEN NO ADDITION/DISALLOWANCE CAN BE MADE ON THIS SCORE. ACCORDINGLY, THIS GROUND IS ALLOWED. 11. SINCE, NO ARGUMENT HAS BEEN PLACED REGARDING GR OUND NO. 4, THE SAME IS DISMISSED AS NOT PRESSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY, 2021 SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 05/07/2021 PKK: