PURUSHOTTAM NARAYAN GADGIL, SANGLI V. ADDL/JOINT/DC/AC OF THE INCOME TAX, NATIONAL E-ASSESSMENT CENTRE , DELHI

ITA 646/PUN/2022

AI Insights

The case involves an appeal by Purushottam Narayan Gadgil against the order of the CIT (Appeals), which affirmed the Assessing Officer's action of adding Rs.2,81,27,517 representing the closing stock of 'Jawahir' (jewelry) for the assessment year 2018-2019. The primary issue was the method of valuing the closing stock, where the lower authorities applied aggregation based on averaging, which the Tribunal found inappropriate without revising the corresponding book results. The Tribunal acknowledged the possibility of damage to precious stones but limited the addition to the value of 300 grams of damaged goods, directing a re-computation by the Assessing Officer.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137366 (ITAT-PUNE)
• Duration Of Justice: 5 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowedPartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 11-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 24-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NIKHIL PATAK
• Keywords: Search and seizure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B” : PUNE BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER ITA.No.646/PUN./2022 Assessment Year 2018-19 Purushottam Narayan Gadgil, Saraf Bazar, Sangli. PIN – 416 416. Maharashtra. PAN AAFFP3237R vs. The Commissioner of Income Tax, Range-1, Sangli. (Appellant) (Respondent) For Assessee : Shri Nikhil Patak For Revenue : Shri M.G. Jasnani Date of Hearing : 12.01.2023 Date of Pronouncement : 27.01.2023 ORDER PER SATBEER SINGH GODARA, J.M. This assessee’s appeal for assessment year 2018- 2019, arises against the CIT (Appeals), NFAC, Delhi’s DIN & Order No.ITBA/NFAC/S/250/2022-23/1043689996(1), dated 30.06.2022, involving proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short “the Act”). Heard both the parties. Case file perused. 2. Coming to the assessee’s sole substantive grievance raised herein that both the learned lower authorities have erred in law and on facts in adding an amount of Rs.2,81,27,517/- representing closing stock on “Jawahir”, it is 2 ITA.No.646/PUN./2022 Purushottam Narayan Gadgil, Sangli. Maharashtra. noted that the CIT(A)'s detailed discussion affirming Assessing Officer’s action to this effect reads as under : 3. It transpires during the course of hearing that the assessee’s impugned stock of Jawahir in the impugned assessment year reads as follows : 3 ITA.No.646/PUN./2022 Purushottam Narayan Gadgil, Sangli. Maharashtra. 4 ITA.No.646/PUN./2022 Purushottam Narayan Gadgil, Sangli. Maharashtra. 3.1. It is an admitted fact that both the learned lower authorities have agreed with the declared quantity of all the foregoing 12 items in the “Jawahir” stock since they have applied “aggregation” based on averaging which forms the sole issue before us. 4. Learned DR could hardly dispute the clinching fact that all these precious stone items altogether taken as “one” having different values and quantities whose closing value could hardly be disturbed on averaging basis without revising the corresponding book results. Mr. Jasnani at this stage sought to vehemently support both the lower authorities impugned action on the ground that the assessee could not file details of damaged goods quantity of 393.97grams as it has raised the corresponding claim for the first time in F.Y. 2017- 18 only. We are afraid that the assessee’s foregoing failure could hardly result in raising the entire value of its closing stock of “Jawahir” representing all these twelve items in totality for the mere fact that this quantity of 393.77grams could not be explained. We further reiterate here that there is no material at all available with the department herein which could buttress the impugned aggregation in assessee’s value of closing stock in issue. The fact also remains that the above claim of the damaged goods quantity of 393.97grams involving 5 ITA.No.646/PUN./2022 Purushottam Narayan Gadgil, Sangli. Maharashtra. seven precious stones categorised has been made for the first time only without any cogent evidence. We are also mindful of the fact that such a damage of the precious stones in jewellery business could also not be altogether ruled out. Faced with the situation, we partly affirm the impugned addition of Rs.2,81,27,517/- only to the extent of the assessee’s damaged goods quantity weighing 300 grams [out of 393.97 grams] and direct the learned Assessing Officer to frame his consequential computation as per law in very terms. Ordered accordingly. 5. This assessee’s appeal is partly allowed in above terms. Order pronounced in the open Court on 27.01.2023. Sd/- Sd/- [DR. DIPAK P. RIPOTE] [SATBEER SINGH GODARA] ACCOUNTANT MEMBER JUDICIAL MEMBER Pune, Dated 27 th January, 2023 VBP/- Copy to 1. The appellant 2. The respondent 3. The Ld. CIT(A) concerned. 4. The CIT concerned 5. D.R. ITAT, Pune “B” Bench, Pune 6. Guard File. //By Order// Assistant Registrar, ITAT, Pune Benches Pune.