UDAYLAL H JAIN, MUMBAI V. ACIT CIR 4, THANE

ITA 530/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0753 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 24-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI G S PANNU, VICE-PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 530/MUM/2017 ASSESSMENT YEAR : 2010-11 UDAYLAL H JAIN, SHOP NO.7, SAINATH APARTMENT, SIDDHARTH HOSPITAL, AGASHI ROAD, VIRAR (W) - 401303 PAN ABJPJ5197M VS. ACIT CIRCLE 4, THANE (APPELLANT) RESPONDENT) APPELLANT BY : SHRI BHUPENDRA SHAH RESPONDENT BY : SHRI RAJIV GUBGOTRA DATE OF HEARING : 25.03.2019 DATE OF PRONOUNCEMENT : 25.03.2019 O R D E R PER G S PANNU, VICE-PRESIDENT : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A)-3, THANE, DATED 01.11.2016, WHICH IN TURN HAS ARISEN O UT OF THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME TAX ACT , 1961 RELATING TO ASSESSMENT YEAR 2010-11. 2. IN THIS APPEAL, ALTHOUGH ASSESSEE HAS RAISED MUL TIPLE GROUNDS OF APPEAL, THE MAIN GRIEVANCE IS ON ACCOUNT OF TWO ADDITIONS MADE AMOUNTING TO ` 11,93,000/- AND ` 3,60,000/-. BOTH THE ADDITIONS ARISE OUT OF THE A DMISSION MADE BY THE ASSESSEE IN 2 SHRI UDAYLAL H JAIN THE COURSE OF SURVEY CONDUCTED BY THE DEPARTMENT ON 9 TH MARCH 2010 AT THE BUSINESS PREMISES OF THE ASSESSEE. 3. IN ORDER TO APPRECIATE THE RELEVANT FACTS, FOLLO WING DISCUSSION IS APPROPRIATE. THE APPELLANT BEFORE US IS AN INDIVIDUAL, ENGAGED I N THE BUSINESS OF MANUFACTURE AND SALE OF GOLD AND SILVER ORNAMENTS. A SURVEY AC TION U/S. 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E ON 9 TH MARCH 2010 AND AT THAT TIME, A STATEMENT OF THE ASSESSEE WAS ALSO RECORDED . A PERUSAL OF REPLY TO QUESTION NO.4 OF THE SAID STATEMENT, A COPY OF WHICH HAS BEE N PLACED ON RECORD, REVEALS THAT THE ASSESSEE HAD ADMITTED OF DISCREPANCY IN THE CLO SING STOCK OF GOLD WEIGHING 4000 GMS. THE ASSESSEE EXPLAINED THAT THE VALUATION OF SUCH STOCK WORKED OUT TO ` 50 LACS CONSIDERING THE RATE OF ` 12,880/- PER 10 GMS OF GOLD WITH PURITY OF 18 CARA T. IN THE COURSE OF STATEMENT, ASSESSEE EXPLAINED THAT TH E MARKET RATE OF THE GOLD OF ` 16,600/- PER 10 GMS WAS IN RELATION TO 23 CARAT GOL D WHEREAS NORMALLY GOLD USED FOR MAKING JEWELLERY RANGES FROM 18 TO 22 CARAT PURITY. THUS, IN THIS BACKGROUND, ASSESSEE OFFERED FOR TAXATION ADDITIONAL INCOME OVE R AND ABOVE THE AMOUNTS DECLARED IN THE BOOKS OF ACCOUNT OF RS 50 LACS. BE FORE US, LEARNED REPRESENTATIVE EXPLAINED THAT INCOME SO OFFERED WAS DULY DISCLOSED BY THE ASSESSEE AND REQUISITE TAXES WERE PAID. IN THE COURSE OF ASSESSMENT PROCE EDINGS, THE ASSESSING OFFICER DISAGREED WITH THE VERSION OF THE ASSESSEE REGARDIN G THE PURITY OF STOCK OF GOLD FOUND AT THE TIME OF SURVEY, AS ACCORDING TO HIM, T HE QUALITY WISE PURCHASE AND SALE OF GOLD ORNAMENTS DURING THE YEAR WAS ONLY OF 22 CA RAT PURITY, AND THUS THE STOCK FOUND COULD NOT BE OF 18 CARAT PURITY. THEREFORE, ACCORDING TO HIM, THE VALUATION OF CLOSING STOCK OF GOLD MADE AT THE RATE OF ` 12,880/- PER 10 GMS WAS ERRONEOUS AND 3 SHRI UDAYLAL H JAIN THAT THE VALUATION OF THE UNDISCLOSED STOCK OUGHT T O HAVE BEEN MADE AT ` 15,482.50/- PER 10 GMS BEING THE RATE OF 22 CARAT GOLD PURITY. IN THIS MANNER THE ASSESSING OFFICER COMPUTED THE VALUE OF UNACCOUNTED GOLD FOUND AT THE TIME OF SURVEY AT ` 61,93,000/- AS AGAINST 50 LACS DECLARED BY THE ASS ESSEE, THEREBY RESULTING IN AN ADDITION OF ` 11,93,000/- TO THE RETURNED INCOME. SIMULTANEOUSL Y, THE ASSESSING OFFICER ALSO PRESUMED THAT THE ASSESS EE WOULD HAVE INCURRED EXPENDITURE IN THE FORM OF LABOUR CHARGES ON SUCH U NACCOUNTED STOCK OF GOLD, WHICH HE ESTIMATED AT ` 3,60,000/- THE SAID AMOUNT WAS ALSO ADDED TO THE RETURNED INCOME AS UNDISCLOSED INCOME. BOTH THE ADDITIONS H AS SINCE BEEN SUSTAINED BY THE CIT(A) ALSO AGAINST WHICH THE ASSESSEE IS IN FURTHE R APPEAL BEFORE US. 4. BEFORE US, ALTHOUGH ASSESSEE HAS RAISED VARIOUS GROUNDS ASSAILING THE MAINTAINABILITY OF THE IMPUGNED ADDITION, BUT THE L EARNED REPRESENTATIVE POINTED OUT THAT THE ASSESSEE WOULD BE SATISFIED IF A DIRECTION IS ISSUED THAT SINCE THE ADDITIONS OF ` 11,93,000/- AND ` 36,000/- WOULD GO TO INCREASE THE VALUE OF CLOSING STOCK OF GOLD IN THIS YEAR, SAME ENHANCED VALUE BE TAKEN AS VALUE OF OPENING STOCK IN THE SUBSEQUENT ASSESSMENT YEAR. 5. ON THIS ASPECT THE LEARNED DR APPEARING FOR THE REVENUE DID NOT SERIOUSLY OPPOSE BECAUSE IN ANY CASE THE ADDITION IN THE INST ANT YEAR IS LIABLE TO BE CONFIRMED. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS, IN OUR VIEW, THE LIMITED PLEA RAISED BY THE ASSESSEE IS QUITE JUSTIFIED IN AS MUCH AS TH E VALUE OF THE CLOSING STOCK IN THIS YEAR IS DEFINITELY TO BE UNDERSTOOD AS THE OPENING STOCK VALUATION IN THE SUBSEQUENT PERIOD. THE PLEA OF THE ASSESSEE ON THE POINT OF L AW IS ALSO SUPPORTED BY THE RECENT 4 SHRI UDAYLAL H JAIN JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF V K J BUILDERS & CONTRACTS PVT. LTD. VS. CIT 318 ITR 204. IN THIS VIEW OF THE MATT ER, IN CONCLUSION, WE HOLD THAT IN VIEW OF THE SUSTAINABILITY OF THE IMPUGNED ADDITION S, WHICH RESULTS IN CORRESPONDING ENHANCEMENT IN THE VALUE OF THE CLOSING STOCK, THE VALUE OF THE OPENING STOCK IN THE NEXT YEAR BE ENHANCED BY THE CORRESPONDING AMOUNT. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED, SUBJECT TO THE ABOVE REMARKS ORDER DICTATED AND PRONOUNCED IN THE OPEN COURT BEF ORE BOTH THE PARTIES ON THIS DAY OF 25 TH MARCH, 2019. SD/- SD/- (PAWAN SINGH) (G S PANNU) JUDICIAL MEMBER VICE PRESIDENT MUMBAI, DATED : 25 TH MARCH, 2019. SA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE C I T(A), MUMBAI. 4. THE C I T , MUMBAI. 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR/ SR. PS) INCOME TAX APPELLATE TRIBUNAL, MUMBAI