DCIT (Central)-2, Indore V. Punjab Retail (P) Ltd., INDORE

ITA 677/Ind/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3658 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-02-2021
• Assessment Year: 2017-2018
• Appeal Filed On: 04-06-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N AGRAWAL; PANKAJ MOGRA CAS
• Assessee Lawyers: RAJIB JAIN
• Keywords: Unexplained investment; Value adopted by valuation officer; Capital asset; Business income; Valuation report
• Section: 69C; 143(3); 133A; 69B; 64; 13; 22; 68; 132; 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NOS.677/IND/2019 (ASSESSMENT YEARS: 2017-18) THE DCIT, CENTRAL-2, INDORE VS. M/S. PUNJAB RETAIL PVT. LTD. 577, GOLD PLAZA, M. G. ROAD, INDORE PAN NO.AACCP5782B ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI S. N. AGRAWAL, CA & SHRI PANKAJ MOGRA, CAS RESPONDENT BY : SHRI RAJIB JAIN, CIT DR DATE OF HEARING 17.08.2021 DATE OF PRONOUNCEMENT 08 .10.2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 26.03.2019 PASSED BY THE LD. CIT(A)-3, BHOPAL (M.P.) ARISING OUT OF THE ORDER DATED 31.12.2018 PASSED BY THE DCIT, CENTRAL- 2, INDORE UNDER SECTION UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER REFERRED TO AS THE ACT) FOR A.Y. 2017-18 WITH THE FOLLOWING GROU NDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (APPEALS) ERRED IN DELETING THE ADDITION OF RS. 14,07,74,148/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SEARCH AND IGNORING THE FACTUAL FINDINGS RECORDED BY THE AO WITH REGARD TO THE ADDI TION MADE ON THIS ACCOUNT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (APPEALS) WAS NOT JUSTIFIED IN ALLOWING THE ASSESSEES APPEAL ON THE CHARGEABILITY OF TAX AS PER NORMAL RATES INSTEAD OF AMENDED PROVISIONS OF SECTI ON 115BBE OF THE ACT APPLICABLE ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 2 W.E.F. 01/04/2017 RELEVANT TO AY 2017-18 WHICH ARE CLEARLY ATTRACTED IN THE CASE OF THE ASSESSEE. 2. THE FIRST GROUND RELATES TO ADDITION OF RS. 14,0 7,74,148/- ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SEARCH. 3. THE BRIEF FACTS LEADING TO THE CASE IS THIS THAT THE ASSESSEE IS ENGAGED IN TRADING AND MANUFACTURING BUSINESS OF GOLD AND DIAM OND JEWELLERY. A SEARCH OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT ON 28.09.2016 AT THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF ANAND & PUNJAB GROUP OF INDORE INCLUDING THE ASSESSEE ALONG WITH OTHER CONCERNS/BU SINESS ASSOCIATES WHEREIN CERTAIN DISCREPANCIES IN THE QUANTITY OF CLOSING ST OCK WERE FOUND. THE ASSESSEE OFFERED ADDITIONAL INCOME OF RS. 10,10,00,000/- ON ACCOUNT OF THE AFORESAID DIFFERENCE IN THE QUANTITY OF STOCK FOUND IN THE SA ID SEARCH PROCEEDING. SUBSEQUENTLY, ANOTHER SURVEY PROCEEDING UNDER SECTI ON 133A WAS CARRIED OUT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 15.11.2 016 WHICH WAS CONCLUDED ON 19.11.2016. DURING THE COURSE OF SURVEY ADDITIO NAL INCOME TO THE TUNE OF RS. 1,20,02,793/- WAS DECLARED BY THE ASSESSEE ON A CCOUNT OF EXCESS STOCK. WHILE FILING THE INCOME TAX RETURN ON 07.11.2017 TH E VALUATION OF DIFFERENCE IN QUANTITY OF STOCK WAS CALCULATED AT 10,14,95,122/- WHICH WAS DULY INCORPORATED IN THE BOOKS OF ACCOUNTS AND SHOWN SEPARATELY IN TH E PROFIT AND LOSS FOR THE YEAR ENDED ON 31.03.2017. IN THE SAID RETURN INCOM E OF RS. 1,20,02,793/- WAS ALSO OFFERED BY THE ASSESSEE COMPANY. IN FACT, THE ASSESSEE COMPANY ON 07.11.2017 DECLARED THE TOTAL INCOME AT RS. 28,56,2 0,940/- INCLUDING ADDITIONAL INCOME SURRENDERED OF RS. 10,14,95,122/- AND RS. 1, 20,02,793/- DURING THE COURSE OF SEARCH AND SURVEY PROCEEDING RESPECTIVELY . THE AO CALCULATED THE DIFFERENCE IN THE VALUATION OF STOCK TO THE TUNE OF RS. 24,17,74,248/- AT THE TIME OF SEARCH AND UPON ALLOWING THE CREDIT OF ADDITIONA L INCOME SO OFFERED AT THE TIME OF SEARCH OF RS. 10,10,00,000/-, DIFFERENCE OF THE SAME WAS CALCULATED OF ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 3 RS. 14,07,74,248/- AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. BEFORE THE FIRST APPELLATE AUTHORITY THE SAID ADDIT ION STOOD DELETED. HENCE, THE INSTANT APPEAL BEFORE US. 4. WE HAVE HEARD THE RESPECTIVE PARTIES AND PERUSED THE RELEVANT MATERIALS AVAILABLE ON RECORD. 5. THE CASE OF THE ASSESSEE IS THIS THAT AS ON THE DATE OF SEARCH ON 28.09.2016 THE DEPARTMENTAL VALUATION OFFICER (DVO) CALCULATED THE MARKET PRICE OF STOCK AS LYING IN ALL THE SHOWROOMS OF THE RESPONDENT ASSESSEE COMPANY TO THE TUNE OF RS. 106,03,64,733/-, WHEREAS THE VALUATION OF STOCK AS FOUND AT THE TIME OF SEARCH ON THE BASIS OF BOOKS O F ACCOUNTS OF THE ASSESSEE WAS ONLY OF RS. 81,85,90,485/-. THE AO WRONGLY COM PARED THE VALUATION OF STOCK AS PER BOOKS OF ACCOUNTS AND AS CALCULATED BY THE DVO AND THE DIFFERENCE IN THE AMOUNT OF STOCK WAS CALCULATED AT RS. 24,17,74,248/-. THE LD. AO WHILE MAKING THE ADDITION OBSERVED AS F OLLOWS:- 6.5 THE ASSESSEE HAS RECONCILED THE FIGURES FROM D ETAILS FILED IN EARLIER SUBMISSIONS. THE EXAMINATION OF SUBMISSION FILED B Y THE ASSESSEE REVEALED THE FOLLOWING FACTS:- THE GOVT. APPROVED VALUER HAS GIVEN THE TECHNICAL R EPORT BASED ON PURITY AND RATE OF GOLD/GOLD JEWELLERY WORKING OUT THE QUA NTITATIVE DIFFERENCE OF AROUND 35389.524 GMS. WHICH IS NOT DISPUTED BY THE ASSESSEE. THE ASSESSEE HAS ADMITTED THE DIFFERENCE IN QUANTIT Y VALUED BY THE AUTHORISED GOVT. APPROVED VALUER DURING THE SEARCH AND THERE IS NO DISPUTE AGAIN ON THIS ISSUE ON PART OF ASSESSEE. AFTER CONSIDERING THE QUANTITATIVE DIFFERENCE IN TO TALITY, THE ASSESSEE ITSELF HAS OFFERED RS. 10,10,00,000/- ON ACCOUNT OF EXCESS STOCK FOUND IN JEWELLERY BUSINESS DURING THE, COURSE OF SEARCH AND VALUED BY THE GOVT. APPROVED VALUER ON THE BASIS OF STOCK AVAILABLE AT THE PREMISES ON THE DATE OF SEARCH, WHICH IS NOT DISPUTED, ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 4 THE FACT REMAINED UNDISPUTED TILL THE DATE OF ISSUA NCE OF SHOW CAUSE NOTICE DATED 31.10.2018 & 05.12.2018 WHEREAS NO REP LY WAS FILED TILL 11.12.2018 THE ASSESSEE HAS NOW COME FORWARD WITH A PLEA THAT THE VALUATION MADE BY GOVT. APPROVED VALUER; IS NOT CORRECT ON ADOPTI NG THE VALUE OF GOLD/ORNAMENTS IN THE VALUATION REPORT, ALTHOUGH TH ERE IS NO DISPUTE OVER THE QUANTITY OF THE SAID REPORT AND IS PARTLY ACCEP TABLE TO ASSESSEE. NOW, THE ASSESSEE PLEADED THAT IF THE WORKING IS MA DE ON HYPOTHETICAL FIGURE TAKEN IN THE VALUATION REPORT ON THE QUANTIT Y APPEARING IN THE BOOKS OF ACCOUNT AND THERE REMAINS NO DIFFERENCE AND THE SURRENDER MADE BY THE ASSESSEE IS EXCESSIVE ON THE FACTS AND IS THEREFORE NOT ACCEPTABLE. SURPRISINGLY, THE ASSESSEE HAS CLAIMED TO HAVE DECL ARED RS. 10.14 CRORE ON ACCOUNT OF EXCESS INVESTMENT IN STOCK WITHOUT AU THENTIC BASIS AND DISPUTING THE QUANTITATIVE DIFFERENCE WHEREAS, THE NATURE OF BUSINESS IS DEALING IN THE RATES OF GOLD, WHICH FLUCTUATE EVERY DAY AND PUTTING QUESTION MARK ON THE VALUATION REPORT OF THE VALUER, WHO DEA LS IN TECHNICAL MATTERS WITH RESPECT TO VALUATION OF GOLD AND IS ACCEPTED I N ALL THE CASES REFERRED BY THE DEPARTMENT. ANOTHER INTERESTING FACTS NOTICED IS THAT THE ASSES SEE HAS ACCEPTED THE VALUATION REPORT ON THE DATE OF SURVEY AND ACCORDIN GLY MADE SURRENDER OF RS. 1.20 CRORE ON THE BASIS OF DIFFERENCE IN VALUE AS WELL AS IN QUANTITY WORKED OUT IN THE VALUATION REPORT. 6.6. IN VIEW OF THE ABOVE, THE CONTENTION RAISED BY THE ASSESSEE IS NOT ACCEPTABLE AND THE DIFFERENCE OF RS. 25,37,77,041/- (DIFFERENCE OF RS. 24,17,74,248/- DURING THE SEARCH AND RS. 1,20,02,79 3/- DURING THE SURVEY) IS TREATED AS INVESTMENT IN EXCESS STOCK ON THE DATE O F SEARCH & SURVEY AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE, THE ASSESS EE HAS ALREADY DECLARED EXCESSIVE INVESTMENT IN STOCK AMOUNTING TO RS. 10.1 0 CRORE DURING THE SEARCH AND RS. 1.20 CRORE DURING THE SURVEY, IN THE RETURN INC OME FILED FOR THE A.Y. 2017-18, THEREFORE, AMOUNT OF DIFFERENCE IN STOCK FOUND DURI NG THE COURSE OF SEARCH OF RS. 14,07,74,248/- (RS. 24,17,74,248 RS. 10,10,00,000 ) IS FURTHER ADDED TO THE TOTAL INCOME OF THE ASSESSEE FOR A.Y. 2017-18 ON ACCOUNT OF EXCESS STOCK FOUND AND TREATED AS UNEXPLAINED INVESTMENT U/S 69B OF I.T. A CT, 1961. THE TOTAL EXCESS STOCK FOUND OF RS. 25,37,77,041/- IS TAXED AS PER T HE AMENDED PROVISIONS CONTAINED U/S 115BBE APPLICABLE W.E.F. 01.04.2017 O F I.T. ACT. (ADDITION : RS. 14,07,74,248/-) ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 5 6. THE ADDITION OF RS. 14,07,74,248/- WAS MADE BY T HE LD. AO ON ACCOUNT OF DIFFERENCE IN THE VALUATION OF STOCK AS PHYSICAL LY FOUND AND AS SHOWN IN THE BOOKS OF ACCOUNTS. THE DIFFERENCE IN THE QUANTITY WAS DULY ACCEPTED AND OFFERED BY THE ASSESSEE DURING SEARCH. THE LD. AO NOTIONALLY MADE ADDITION ON THE BASIS OF MARKET PRICE, TOTALLY IGNORING THE CASE OF THE ASSESSEE. THE ADDITION REPRESENTS THE NOTIONAL PROFIT OF STOCK IN HAND OF THE APPELLANT AND NOT THE ACTUAL PROFIT. WE HAVE FURTHER CONSIDERED INTE R ALIA THE FOLLOWING SUBMISSION MADE BY THE ASSESSEE MADE IN THE WRITTEN NOTES OF SUBMISSION SUBMITTED BEFORE US: 1.9] THAT IF THE VALUATION OF BOOK STOCK CONVERTED AT THE MARKET PRICE BY TAKING THE RATE AS APPLIED BY THE DVO IN THAT CASE THE OVERALL DIFFERENCE WAS OF RS 2,78,25,512/- ONLY WHEREAS THE RESPONDENT ASSESSEE HAD DECLARED ADDITIONAL INCOME OF RS 10,14,95,122/-. THE SAME IS CALCULATED AS UND ER:- PARTICULARS STOCK AS PER DVO VALUATION BOOK STOCK AS PER DVO RATES CL. STOCK AS ON 31.03.2016 (AS PER ANNEX. 1) 855514351 1048141462 ADD: PURCHASES BETWEEN 01.04.2016 & 28.09.2016 516053030 516053030 ADD: MAKING CHARGES BETWEEN 01.04.20 1 6 & 28.09.2016 0 21321624 LESS: SALES BETWEEN 01. 04.2016 & 61 1767 28.09.2016 779 LESS: GP AS PER AUDIT REPORT 5 87 90 FOR AY 2016 -17 9.61% 8 84 1 371567381 55 29 76895 1 5855 16 116 55 29 76 895 CL. STOCK AS ON 28.09.2016 AS PER BOOKS OF A/C 818590486 1032539221 PHYSICAL STOCK AS PER DVO REPORTS 1060364733 1060364733 EXCESS STOCK -24 1774247 -27825512 LESS: STOCK SURRENDERED SHORT/ EXCESS SURRENDERED 101495122 -140279125 101495122 73669610 1.10] THAT IF THE BOOKS STOCK IN TERM OF QUANTITY A S ON THE DATE OF SEARCH WAS CALCULATED AS PER THE RATES AS ADOPTED BY THE DVO, IN THAT CASE ALSO THE VALUATION OF BOOK STOCK WOULD INCREASE FROM RS 81,85,90,485/- TO RS 99,75,79,091/- . THE VALUATION AS CALCULATED BY THE DEPARTMENTAL VALUATI ON OFFICER IN HIS REPORT WAS OF RS. 1,06,03,64,733/- AND ACCORDINGLY THE DIFFERENCE IN THE VALUATION OF STOCK CALCULATED COMES TO RS.6,27,85,642/- ONLY AS AGAINST ADDITIONA L INCOME OF RS 10,14,95,122/- WAS OFFERED FOR TAX BY THE APPELLANT. THE SAME IS C ALCULATED AS UNDER:- ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 6 DESCRIPTION TOTAL STOCK AS PER BOOKS @ MAKING CHARGES VALUATION OF BOOK STOCK GOLD IN DIAMOND 2549.937 1826 1200 7715684 GOLD IN DIAMOND 20853.130 2348 1200 73976479 GOLD ORNAMENT 18KT 12095.672 2348 313 32180535 GOLD ORNAMENT 22KT 185411.676 2869 313 590010855 OLD GOLD ORNAMENTS 2653.248 2869 313 8443077 GOLD ORNAMENT 24KT 1499.660 3130 313 5163329 24 CT. GOLD 160.519 3130 0 502424 TOTAL GOLD 225223.842 PLATINUM ORNAMENTS 1599.934 3800 1500 8479650 SILVER BAR 16310.500 46 742780 SILVER ARTICALS 1212.900 46 55235 SILVER ORNAMENTS 9082.397 46 413612 BRANDED JEWELLERY 176.130 2348 313 468594 STUDDED DIAMOND 3526.657 44122 DVOS 155602049 LOOSE DIAMOND 321.659 44122 DVOS 14192137 LOOSE STONE 187.832 STUDDED STONE 18978.668 STONE MALA 6870.580 ALLOY 3830.945 WATCHES+ PEN ETC. DVOS 99632649 BOOK STOCK AS PER DVO RATES 287322.044 997579091 PHYSICAL STOCK AS PER DVO 1060364733 EXCESS STOCK FOUND IN SEARCH -62785642 LESS: STOCK SURRENDERED 101495122 EXCESS SURRENDERED 38709481 1.11] THAT IT IS UN-DISPUTED FACT OF THE CASE THAT THE DIFFERENCE AS PROPOSED IS ON ACCOUNT OF VALUATION ONLY AND THERE WAS NO DIFFEREN CE IN THE QUANTITY. THE DIFFERENCE IN THE QUANTITY WAS DULY ADDRESSED BY DECLARING ADD ITIONAL INCOME AT THE TIME OF SEARCH. HENCE THERE WAS NO JUSTIFICATION FOR ADDING THE DIFFERENCE IN THE VALUATION OF THE JEWELLERY TO THE TOTAL INCOME OF THE APPELLANT. THE LD CIT(A) WAS RIGHTLY DELETED THE SAID ADDITION. 7. THE LD. CIT(A) WHILE ALLOWING THE APPEAL PREFERR ED BY THE ASSESSEE OBSERVED AS FOLLOWS:- 4.1.3 I HAVE CONSIDERED THE FACTUAL MATRIX OF THE CASE, PLEA RAISED BY THE APPELLANT AND FINDINGS OF THE AO. SEARCH U/S 132 OF THE IT AC T WAS CONDUCTED AT THE BUSINESS PREMISES OF THE APPELLANT ON 25-09-2016. THE APPELL ANT MAINTAINED DAY TO DAY QUANTITY RECORDS IN GS-11 AND GS-12. DURING THE COU RSE OF SEARCH, DIFFERENCE IN THE ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 7 QUANTITY AS PER GS-11 AND GS-12 WITH THE QUANTITY A S ACTUALLY FOUND DURING THE COURSE OF SEARCH AS PER DVO REPORT WAS DULY ACCEPTE D BY THE APPELLANT AND ADDITIONAL INCOME TO THE TUNE OF RS, 10,10,00,0007- AS PER THE RATE ADOPTED BY THE DVO ON THE DATE OF SEARCH WAS SURRENDERED. IT IS AN UNDISPUTED FACT THAT THE DIFFERENCE IN THE QUANTITY WAS DULY RECONCILED AND ADDITIONAL INCOME ON ACCOUNT OF DIFFERENCE IN QUANTITY WAS DULY SURRENDERED BY THE APPELLANT. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER CONSIDERED THE V ALUATION OF JEWELLERY OF ALL THE SHOWROOMS OF THE APPELLANT AS PER REPORT OF THE DVO WHICH CAME TO RS. 106,03,64,733/- AS PROVIDED ON PAGE NO. 3 OF THE AS SESSMENT ORDER. THE ASSESSING OFFICER THEN COMPARED THE SAID VALUATION WITH THE C OST OF JEWELLERY AS PER BOOKS OF ACCOUNTS AS ON THE DATE OF SEARCH WHICH CAME TO RS. 81,85,90,485/- AS PROVIDED ON PAGE NO. 5 OF THE ASSESSMENT ORDER. DIFFERENCE OF T HESE TWO FIGURES I.E. MARKET VALUE OF JEWELLERY FOUND AS PER THE REPORT OF DVO OF RS. 106,03,64,733/-AND COST OF JEWELLERY AS PER BOOKS OF ACCOUNTS OF RS. 81,85,90, 485/- WAS CALCULATED BY THE ASSESSING OFFICER WHICH CAME TO RS. 24,17,74,248/- [AS PER PAGE NO. 6 OF THE ASSESSMENT ORDER]. THE ASSESSING OFFICER THEN ALLOW ED CREDIT OF ADDITIONAL INCOME AS ALREADY ACCEPTED BY THE APPELLANT TO THE TUNE OF RS . 10,10,00,000/- [CORRECT AMOUNT ACTUALLY OFFERED WAS OF RS.10,14,95,122/-] AND BAL ANCE AMOUNT OF RS. 14,07,74,248/- [RS. 24,17,74,248/- MINUS RS. 10,10,00,000] WAS ADD ED TO THE TOTAL INCOME OF THE APPELLANT. THE APPELLANT DURING THE COURSE OF ASSES SMENT PROCEEDINGS AS WELL AS DURING THE COURSE OF APPELLATE PROCEEDINGS HAS CLAI MED THAT THERE WAS NO DIFFERENCE IN THE QUANTITY WHICH SUPPORTED THE ABOVE I ADDITIO N MADE BY THE ASSESSING OFFICER. THE ADDITION WAS MADE BY THE ASSESSING OFFICER MERE LY ON ACCOUNT OF DIFFERENCE IN VALUATION OF JEWELLERY AS ACTUALLY FOUND AND AS SHO WN IN THE BOOKS OF ACCOUNTS. THE DVO ADOPTED THE MARKET PRICE OF GOLD AS ON THE DATE OF .SEARCH I.E. 28.09.2016, WHEREAS AVERAGE COST OF JEWELLERY WAS CONSIDERED BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS. THE ADDITION MADE BY THE ASSESSING OFFICE R REPRESENTED THE DIFFERENCE IN THE VALUATION OF JEWELLERY I.E. DIFFERENCE OF COST AND MARKET PRICE AS ON THE DATE OF SEARCH. IF THE VERSION OF THE ASSESSING OFFICER IS ACCEPTED, IN THAT CASE, ENTIRE JEWELLERY OF THE APPELLANT SHALL BE CONVERTED AT MA RKET PRICE AS ON THE DATE OF SEARCH AND THE APPELLANT WOULD HAVE BEEN LIABLE TO PAY TAX ON THE VALUATION OF CONVERSION OF JEWELLERY FROM COST TO MARKET PRICE WHICH IN ANY CA SE IS NOT THE CORRECT APPROACH OF THE ASSESSING OFFICER. IN CASE OF JEWELLERY BUSINES S WHERE DAY TO DAY QUANTITY RECORDS WERE PROPERLY MAINTAINED AND PURCHASE AND SALE BILL S WERE DULY ACCOUNTED FOR; THERE WAS NO REASON TO IGNORE THE QUANTITY AS PER BOOKS O F ACCOUNTS. THE APPELLANT DURING THE COURSE OF SEARCH VOLUNTARILY ACCEPTED DIFFERENC E IN THE QUANTITY OF JEWELLERY AND OFFERED ADDITIONAL INCOME OF RS. 10,10,00,000/- [CO RRECT AMOUNT OF RS. 10,14,95,122/-] FOR TAX. AFTER INCORPORATING THE QU ANTITY WHICH WAS SURRENDERED BY THE APPELLANT, THERE WAS NO DIFFERENCE IN THE QUANT ITY AS PER BOOKS OF ACCOUNTS AND AS ACTUALLY FOUND DURING THE COURSE OF SEARCH. THUS, T HE APPELLANT CLAIMED THAT ADDITION MADE BY THE ASSESSING OFFICER TO THE TUNE OF RS. 14 ,07,74,248/- WAS NOT JUSTIFIED. ON PERUSAL OF THE ASSESSMENT ORDER AND AFTER GOING THR OUGH THE SUBMISSION OF THE APPELLANT, I FIND STRONG FORCE IN THE CONTENTION OF THE APPELLANT THAT THE AMOUNT ADDED TO THE TOTAL INCOME OF THE APPELLANT WAS ON ACCOUNT OF DIFFERENCE IN VALUATION OF JEWELLERY AS PER REPORT OF THE DVO AND COST OF JEWE LLERY AS SHOWN IN THE BOOKS OF THE APPELLANT. THE SAID APPROACH OF THE ASSESSING OFFIC ER WAS NOT CORRECT MORE SO WHEN THE APPELLANT DULY ACCEPTED ADDITIONAL INCOME ON AC COUNT OF DIFFERENCE IN THE QUANTITY AS PER BOOKS OF ACCOUNTS AND AS ACTUALLY F OUND DURING THE COURSE OF SEARCH ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 8 AS PER REPORT OF THE DVO. THE APPELLANT FURTHER DEM ONSTRATED BEFORE THE ASSESSING OFFICER AND ALSO IN THE APPELLATE PROCEEDINGS THAT IF THE COST OF STOCK IS CONVERTED AS PER RATE ADOPTED BY THE DVO, IN THAT CASE, THERE SH ALL NO SCOPE FOR ANY ADDITION. I AM IN FULL AGREEMENT WITH THE ARGUMENTS OF APPELLANT T HAT WHAT COULD HAVE BEEN ADDED TO THE TOTAL INCOME OF THE APPELLANT WAS ONLY THE DIFF ERENCE IN THE QUANTITY WHICH WAS DULY ADMITTED BY THE APPELLANT AND ADDITIONAL INCOM E OF RS. 10,14,95,122/- WAS ALSO OFFERED FOR TAX. THE DIFFERENCE IN VALUATION OF JEW ELLERY AS PER REPORT OF DVO AND COST OF JEWELLERY AS PER BOOKS OF ACCOUNT CANNOT BE CONSIDERED FOR THE PURPOSE OF MAKING ADDITION TO THE TOTAL INCOME SINCE THE DVO I N HIS REPORT ADOPTED THE MARKET RATE AS ON THE DATE OF SEARCH I.E. 28.09.2016, WHER EAS JEWELLERY WAS SHOWN AT COST IN THE BOOKS OF ACCOUNTS WHICH WAS CARRIED FORWARD FRO M YEAR TO YEAR. HON'BLE DELHI BENCH OF ITAT IN THE CASE OF NEHA JEWELLERS P LIMIT ED [APPEAL NO ITA NO 371/ DEL/ 2010 DT 26-06-2015 HAD APPROVED THE ORDER OF THE LD CIT[A] AND HELD THAT [REFER LAST FOUR LINE OF PARA 24 ON PAGE NO. 18 OF THE ORD ER]: 'FOR THE PURPOSE OF MAKING ADDITION ON ACCOUNT OF U NDISCLOSED STOCK, FIRST THE QUANTITY I WEIGHT OF SUCH UNDISCLOSED STOCK HAS TO BE DETERMINED AND THEN MARKET VALUE OF THIS UNDISCLOSED STOCK IS TO BE ADDED AS I NCOME. ACCORDINGLY, GROUND NO 2 OF THE APPEAL OF THE REVENUE IS REJECTED' IN THE CASE OF APPELLANT, DIFFERENCE IN THE QUANTIT Y WAS DULY OFFERED BY THE APPELLANT AS ITS INCOME AND THE ADDITION MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF DIFFERENCE IN VALUATION OF JEWELLERY COMPARING THE MARKET PRIC E AS PER THE REPORT OF DVO WITH THE COST AS SHOWN IN THE BOOKS OF ACCOUNTS WAS NOT JUSTIFIED. THE AO HAS SIMPLY CONVERTED STOCK FROM COST TO MARKET PRICE CALCULATE D AT THE RATE ADOPTED BY THE DVO WHICH IN ANY CASE IS NOT JUSTIFIABLE. IF THE RATES ADOPTED BY THE DVO ARE APPLIED-TO OPENING BALANCE THE PICTURE WHICH EMERGES OUT IS AS UNDER:- PARTICULARS STOCK AS PER DVO VALUATION BOOK STOCK AS PER DVO RATES CL. STOCK AS ON 31.03.2016 (AS PER ANNEX. L) 8555 14351 1 048141 462 ADD: PURCHASES BETWEEN 01.04.2016 & 28.09.2016 51 6053030 51 6053030 ADD: MAKING CHARGES BETWEEN 01.04.2016 & 28.09.2016 0 21321624 LESS: SALES BETWEEN 01.04.2016 & 28.09.2016 61 17 67779 LESS: GP AS PER AUDIT REPORT FOR AY 2016-17 9.61% 5 87 90 884 1 37 1567381 552976895 1 5855 16 116 55 29 76 895 CL. STOCK AS ON 28.09.2016 AS PER BOOKS OF A/C 81 8590486 1 032539221 PHYSICAL STOCK AS PER DVO REPORTS 1 06 03 64 733 1 060364733 EXCESS STOCK -241774247 -27825512 ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 9 LESS: STOCK SURRENDERED SHORT/ EXCESS SURRENDERED 10 1495 122 - 140279125 101495122 73669610 THUS, IN VIEW OF THE ABOVE DISCUSSION, IF THE RATES ADOPTED BY THE DVO ARE APPLIED TO OPENING STOCK THE ONLY DIFFERENCE WHICH COMES OUT I S AT RS. 2,78,25,512/-, HOWEVER, APPELLANT HAS ALREADY MADE VOLUNTARY DISCLOSURE OF RS. 10,14,95,122/- DURING THE COURSE OF SEARCH AND SURVEY. THEREFORE, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF RS, 14,07,74,248/- ON ACCOUNT OF EXCESS STOCK FO UND DURING THE COURSE OF SEARCH. THUS, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 14,07,74,248/- IS DELETED . THEREFORE, APPEAL ON THESE GROUND IS ALLOWED. 8. WE HAVE CONSIDERED THE JUDGMENT RELIED UPON BY T HE LD. AR PASSED BY THE HONBLE DELHI BENCH IN THE CASE OF NEHA JEWELLE RS PVT. LTD. VS. ACIT IN ITA NO. 3711/DEL/2010. ON THE IDENTICAL SITUATION THE HONBLE BENCH WAS PLEASED TO OBSERVE AS FOLLOWS: 19. THE LEARNED CIT(APPEALS) AFTER EXAMINING THE F ACTS OF THE CASE, HELD THAT THE METHODOLOGY ADOPTED BY THE ASSESSING OFFICER IN COM PUTING THE UNEXPLAINED STOCK IS NOT CORRECT. HE AGREED WITH THE CONTENTION OF THE A SSESSEE THAT FIRST WEIGHT OF UNDISCLOSED STOCK HAS TO BE DETERMINED ON THE DATE OF SEARCH. WE ALSO CONCURRED WITH THE CONTENTION OF THE ASSESSEE THAT THE BASIS FOR M AKING THE ADDITION WILL BE DIFFERENCE IN THE WEIGHT OF STOCK AS PER BOOKS OF ACCOUNT AS O N THE DATE OF SEARCH AND THE WEIGHT OF THE STOCK FOUND AT THE TIME OF THE SEARCH. 20. THUS, THE ISSUE RAISED IN THE APPEAL PREFERRED BY THE REVENUE IS AS TO WHETHER THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN COMPUTING THE UNDISCLOSED STOCK IN THE MANNER STATED IN ITS ORDER. 21. IT IS AN ADMITTED FACT THE COMPUTATION OF UNDIS CLOSED STOCK HAS BEEN DONE BY THE ASSESSING OFFICER ON THE BASIS OF VALUE ONLY WITHOU T DETERMINING THE UNDISCLOSED WEIGHT OF THE GOLD AND JEWELLERY. FURTHER THE ASSES SING OFFICER HAS TAKEN THE OPENING STOCK AS ON 01.04.2005 AS AGAINST THE STOCK AS ON 0 9.12.2005. THIS APPROACH OF THE ASSESSING OFFICER, IN OUR VIEW, IN COMPUTING THE EX CESS STOCK AS ON THE DATE OF THE SEARCH IS NOT CORRECT. THE METHODOLOGY ADOPTED BY T HE ASSESSEE, IN OUR OPINION, IS THE CORRECT PROCEDURE TO DETERMINE THE UNEXPLAINED STOC K ON THE DATE OF SEARCH. IN THIS REGARD, WE NOTE FROM THE PAGE NO. 104 OF THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE THAT THE WEIGHT OF THE STOCK AS PER BOOKS OF ACCOUNT HAS BEEN COMPUTED BY TAKING INTO ACCOUNT THE QUANTITY OF THE STOCK AS ON 01.04.2005 AND THEN ADDING THE WEIGHT OF THE PURCHASES MADE FROM 01.04.2005 TO 08. 12.2005 AND DEDUCTING THE QUANTITY OF THE SALES FROM 01.04.2005 TO 08.04.2005 . THE DIFFERENCE IN THE WEIGHT OF THE STOCK PHYSICALLY FOUND AND THE WEIGHT OF STOCK AS PER BOOKS OF ACCOUNT WORKED OUT IN THE MANNER STATED HEREINABOVE HAS BEEN TAKEN AS WEIGHT OF UNDISCLOSED STOCK. THIS UNEXPLAINED WEIGHT OF STOCK HAS THEN BEEN VALUED BY APPLYING MARKET RATE. THE ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 10 ASSESSING OFFICER INSTEAD OF FOLLOWING THIS METHODO LOGY HAS STRAIGHT AWAY GONE TO THE VALUE OF THE STOCK PHYSICALLY FOUND ON THE DATE OF SEARCH AND THERE FROM HE HAS DEDUCTED THE VALUE OF THE STOCK THAT TOO AS ON 01.0 4.2005, NOT AS ON THE DATE OF SEARCH. THUS, THE ASSESSING OFFICER HAS COMMITTED T WO MISTAKES. ONE IN NOT ASCERTAINING THE UNEXPLAINED QUANTITY OF STOCK AND TWO IN TAKING THE STOCK AS PER BOOKS OF ACCOUNT AS ON 01.04.2005 AS AGAINST AS ON 09.12.2005. 22. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E LEARNED CIT(APPEALS) HAS ALSO CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFF ICER. IN HIS REMAND REPORT, THE ASSESSING OFFICER HAS ALSO NOT POINTED OUT ANY SPEC IFIC ERROR OR DEFECT IN THE COMPUTATION OF THE EXCESS STOCK. AS REGARDS THE STO CK TO BE TAKEN AS ON THE DATE OF THE SEARCH AS AGAINST TAKEN BY THE ASSESSING OFFICER AS ON 01.04.2005, THE EXPLANATION OF THE ASSESSING OFFICER IN THE REMAND REPORT WAS THAT IN VIEW OF THE UNACCOUNTED SALES AND PURCHASES, HE WAS JUSTIFIED IN TAKING THE STOCK AS ON 01.04.2005. WE ARE OF THE VIEW THAT THIS CONTENTION OF THE ASSESSING OFFICER IS NOT SUSTAINABLE AND THIS CANNOT BE THE REASONING FOR TAKING INTO CONSIDERATION THE STOCK AS ON 01.04.2005 AS PER BOOKS OF ACCOUNT AS AGAINST THE STOCK AS ON THE DAT E OF THE SEARCH AS PER BOOKS OF ACCOUNT. WHAT IS TO BE FOUND OUT ON THE DATE OF SEA RCH IS THE STOCK AS PER BOOKS OF ACCOUNT. WHILE FINDING OUT THE STOCK ON THE DATE OF SEARCH I.E. ON 09.12.2005, THE PURCHASES AND SALES MADE AND RECORDED IN THE BOOKS OF ACCOUNT DURING THE PERIOD 01.04.2005 TO 09.12.2005 HAVE TO BE TAKEN INTO CONS IDERATION. 23. ON HAVING GONE THROUGH THE PAPER BOOK, WE NOTE THAT THE ASSESSEE HAD SUBMITTED COMPLETE DETAILS OF PURCHASES AND SALES IN QUANTITY AND VALUE AND NO DISCREPANCY OR ERROR HAS BEEN POINTED OUT BY THE ASSESSING OFFICER , EITHER IN THE ASSESSMENT ORDER OR IN THE REMAND REPORT. THE PURCHASES RECORDED IN THE BOOKS OF ACCOUNT ARE THE DISCLOSED/ACCOUNTED PURCHASES. SIMILARLY, SALES REC ORDED IN THE BOOKS OF ACCOUNT ARE THE DISCLOSED/RECORDED SALES IN THE BOOKS OF ACCOUN T. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT ASSESSEE HAD MANIPULATED THE BOOKS OF ACCOUNT AFTER THE SEARCH. ON THE CONTRARY, WE NOTE THAT IN THE REMAND REPORT, THE FACT THAT THE RECONCILIATION WAS SUPPORTED BY THE REGULAR BOOKS O F ACCOUNT WHICH WERE FOUND AT THE TIME OF SEARCH, HAS NOT BEEN CONTROVERTED. FURT HER, THE DEPARTMENT WAS HAVING THE SEIZED COMPUTER WHEREBY DATA FOR THE PURCHASES AND SALES FOR THE PERIOD OF FIVE YEARS ENDING ON 08.12.2005 WAS ALSO THERE. IN VIEW OF THE ABOVE FACTS, THE METHODOLOGY ADOPTED BY THE ASSESSING OFFICER IN COM PUTING THE UNDISCLOSED STOCK WAS NOT CORRECT. AS AGAINST THIS, THE METHODOLOGY A DOPTED BY THE LEARNED CIT(APPEALS) FOR COMPUTING THE WEIGHT OF UNDISCLOSE D STOCK IS THE CORRECT METHODOLOGY. 24. THE LEARNED CIT(DR) DURING THE COURSE OF HEARIN G CONTENDED THAT THE ASSESSING OFFICER'S COMPUTATION BE UPHELD BUT COULD NOT POINT OUT ANY REASON TO DIFFER WITH THE METHODOLOGY ADOPTED BY THE LEARNED CIT(APPEALS). AC CORDINGLY, SO FAR AS THE REVENUE'S APPEAL IS CONCERNED, WE ARE OF THE VIEW T HAT THE METHODOLOGY ADOPTED BY THE LEARNED CIT(APPEALS) IS CORRECT FOR DETERMINING THE VALUE OF THE UNDISCLOSED STOCK AND THE COMPUTATION DONE BY THE ASSESSING OFF ICER TO DETERMINE THE VALUE OF UNDISCLOSED STOCK IS NOT CORRECT ONE. FOR THE PURPO SE OF MAKING ADDITION ON ACCOUNT OF UNDISCLOSED STOCK, FIRST THE QUANTITY/WEIGHT OF SUCH UNDISCLOSED STOCK HAS TO BE ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 11 DETERMINED AND THEN MARKET VALUE OF THIS UNDISCLOSE D STOCK IS TO BE ADDED AS INCOME. ACCORDINGLY, GROUND NO.2 OF THE APPEAL OF THE REVEN UE IS REJECTED. 9. IT APPEARS FROM THE REASONS THAT THE VALUATION O F CLOSING STOCK AS TAKEN BY THE DVO WAS AT THE PREVAILING MARKET RATE AS ON THE DATE OF SEARCH WHEREAS THE VALUATION OF STOCK SHOULD HAVE BEEN CALCULATED AT COST AS PER BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. IN FACT, THE DIFFERENCE IN THE QUANTITY WAS DULY OFFERED BY THE ASSESSEE AND INCORPORATED WITH THE BOOKS OF ACCOUNTS. THE CASE MADE OUT BY THE ASSESSEE THAT THE DIFFERENCE A S ADDED TO THE TOTAL INCOME OF THE APPELLANT WAS ON ACCOUNT OF VALUATION OF STO CK AND NOT ON THE BASIS OF DIFFERENCE IN QUANTITY OF STOCK WHICH IS NOT THE PR OPER METHOD AND WHICH RIGHTLY CONSIDERED BY THE LD. CIT(A) IS ALSO HAVING SUBSTANCE. WE FURTHER FIND THAT THIS IS AN UNDISPUTED FACT OF THE CASE THAT THE DIFFERENCE AS PROPOSED IS ON ACCOUNT OF VALUATION O NLY AND THERE IS NO DIFFERENCE IN QUANTITY. THE DIFFERENCE IN QUANTITY HAS DULY BEEN ADDRESSED BY DECLARING ADDITIONAL INCOME AT THE TIME OF SEARCH. 10. THUS, CONSIDERING THE ENTIRE ASPECT OF THE MATT ER WE FIND NO JUSTIFICATION FOR ADDITION IN THE DIFFERENCE THE VALUATION OF THE JEWELLERY TO THE TOTAL INCOME OF THE APPELLANT. THE ADDITION MADE BY THE LD. AO ON ACCOUNT OF EXCESS STOCK FOUND DURING THE COURSE OF SEARCH THOSE CANNOT BE S ET TO BE JUSTIFIED IN VIEW OF THE OBSERVATION MADE HEREINABOVE AND, THUS, THE DEL ETION OF ADDITION MADE BY THE LD. CIT(A) IS ACCORDING TO US IS JUST AND PROPE R SO AS TO WARRANT INTERFERENCE. HENCE, THE GROUNDS OF APPEAL PREFERR ED BY REVENUE IS FOUND TO BE DEVOID OF ANY MERIT AND, THUS, DISMISSED. ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 12 GROUND NO.2:- 11. ALLOWING THE APPEAL ON THE CHARGEABILITY OF TAX AS PER NORMAL RATES INSTEAD OF AMENDED PROVISION OF SECTION 115BBE OF T HE ACT IS THE SUBJECT MATTER BEFORE US. THE APPELLANT HAS CHALLENGED THE CHARGEABILITY OF TAX @ 77.25% BY INVOKING THE AMENDED PROVISION OF SECTION 115BBE OF THE ACT ON ACCOUNT OF ADDITIONAL INCOME DECLARED AT THE TIME O F SEARCH, SURVEY AND ALSO THE ADDITION MADE BY THE AO. 12. THE CASE OF THE ASSESSEE IS THIS THAT THE AMEND MENT IN SECTION 115BBE CAME INTO FORCE ONLY ON 15.12.2016 WHEREAS THE SEAR CH WAS CONDUCTED ON 21.09.2016 AND THE ASSESSEE HAS PAID TAX @ 30%. TH E PROVISION OF SECTION 115BBE OF THE ACT TAX PRIOR TO THE AMENDMENT READS AS FOLLOWS: 115BBE. (1) WHERE THE TOTAL INCOME OF AN RESPONDEN T ASSESSEE INCLUDES ANY INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C OR SECTION 69D, THE INCOME-TAX PAYABLE SHALL BE THE AGGREGATE OF (A) THE AMOUNT OF INCOME-TAX CALCULATED ON INCOME REFER RED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C OR SECTIO N 69D , AT THE RATE OF THIRTY PER CENT; AND (B) THE AMOUNT OF INCOME-TAX WITH WHICH THE RESPOND ENT ASSESSEE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME REFERRED TO IN CLAUSE (A). 13. THE SECOND AMENDMENT CAME INTO FORCE W.E.F. 15. 12.2016 WHEREAS THE INCOME TAX ACT SEARCH AND SURVEY WAS CONDUCTED PRIO R TO THAT DATE AND, THUS, AT THE TIME OF DECLARING THE ADDITIONAL INCOME THE SECOND AMENDMENT WAS NOT AVAILABLE UNDER THE INCOME TAX ACT. THE SAID AMEND MENT TOOK PLACE WITH THE FOLLOWING MANNER: (1) WHERE THE TOTAL INCOME OF AN RESPONDENT ASSESS EE, (A) INCLUDES ANY INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C OR SECTION 69D AND REFLECT ED IN THE RETURN OF INCOME FURNISHED UNDER SECTION 139; OR ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 13 (B)DETERMINED BY THE ASSESSING OFFICER INCLUDES ANY INCOME REFERRED TO IN SECTION 68, SECTION 69, SECTION 69A, SECTION 69B, SECTION 69C O R SECTION 69D, IF SUCH INCOME IS NOT COVERED UNDER CLAUSE (A), THE INCOME-TAX PAYABLE SHALL BE THE AGGREGATE OF (I) THE AMOUNT OF INCOME-TAX, CALCULATED ON THE INC OME REFERRED TO IN CLAUSE (A) AND CLAUSE (B), AT THE RATE OF SIXTY PER CENT; AND (II) THE AMOUNT OF INCOME-TAX WITH WHICH THE RESPON DENT ASSESSEE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME REFERRED TO IN CLAUSE (I). (2) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, NO DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ALLOWANCE [OR SET OFF OF ANY LOSS] S HALL BE ALLOWED TO THE RESPONDENT ASSESSEE UNDER ANY PROVISION OF THIS ACT IN COMPUTI NG HIS INCOME REFERRED TO IN CLAUSE (A) OF SUB-SECTION (1).] AFTER THE AMENDMENT TOTAL INCOME INCLUDES ADDITIONA L INCOME AS VOLUNTARILY DECLARED BY THE APPELLANT IN THE RETURN OF TOTAL INCOME WHEREAS THE AMOUNT OF ADDITION MADE BY THE AO INCLUDED BOTH THE AMOUNT, AND THE PROVISION OF SECTION 115BBE OF THE INCOME TAX ACT W AS APPLIED. THEREFORE, THE ASSESSEE MADE OUT THE FOLLOWING CASE AGAINST TH E ORDER PASSED BY THE LD. AO: 2.2.5] THAT PROVISION OF SECTION 68, 69, 69A, 69B, 69C AND 69D OF THE INCOME TAX ACT IS ATTRACTED WHEN THE ADDITIONAL INCOME AS OFFE RED OR AMOUNT AS ADDED ATTRACT THE PROVISION OF SECTIONS 68, 69, 69A, 69B, 69C AND 69D OF THE INCOME TAX ACT. THE PRESENT CASE IN HAND, THE ASSESSING OFFICER MADE AD DITION TO THE TOTAL INCOME OF THE RESPONDENT ASSESSEE BY INVOKING THE PROVISION OF SE CTION 69B OF THE INCOME TAX ACT '69B. WHERE IN ANY FINANCIAL YEAR THE RESPONDENT ASSESSEE HAS MADE INVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULL ION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND THE ASSESSING OFFICER FINDS T HAT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLIO N, JEWELLERY OR OTHER VALUABLE ARTICLE EXCEEDS THE AMOUNT RECORDED IN THI S BEHALF IN THE BOOKS OF ACCOUNT MAINTAINED BY THE RESPONDENT ASSESSEE FOR A NY SOURCE OF INCOME, AND THE RESPONDENT ASSESSEE OFFERS NO EXPLANATION A BOUT SUCH EXCESS AMOUNT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OP INION OF THE ASSESSING OFFICER, SATISFACTORY, THE EXCESS AMOUNT MAY BE DEE MED TO BE THE INCOME OF THE RESPONDENT ASSESSEE FOR SUCH FINANCIAL YEAR.' 2.3] THAT PROVISION OF SECTION 69B OF THE ACT THOUG H INVOKED IN THE CASE OF THE ABOVE RESPONDENT ASSESSEE. HOWEVER, THE EXCESS JEWELLERY AS FOUND WAS PART OF STOCK IN ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 14 TRADE OF THE RESPONDENT ASSESSEE COMPANY AND NOT FO UND AS INVESTMENT AS ENVISAGE IN THE PROVISION OF SECTION 69B OF THE INCOME TAX ACT. THAT PROVISION OF SECTION 68 TO 69D ARE RESIDUARY SECTIONS AND THE SAME IS APPLIED ONLY WHERE THE AMOUNT WAS NOT TAXED UNDER ANY SPECIFIC CHAPTER. IN THE PRESENT CA SE IN HAND, THE RESPONDENT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF JEWE LLERY. THE DIFFERENCE IN THE QUANTITY OF STOCK WAS DURING THE NORMAL BUSINESS AC TIVITIES OF THE RESPONDENT ASSESSEE COMPANY. THE EXCESS JEWELLERY AS FOUND WAS PART OF ITS STOCK IN TRADE AND FOUND IN THE BUSINESS, PREMISES OF THE RESPONDENT ASSESSEE C OMPANY. IT WAS ALSO EXPLAINED BY THE RESPONDENT ASSESSEE THAT THE SAME WAS OUT OF IT S NORMAL BUSINESS INCOME AND THEREFORE THE SAME IS TAXABLE UNDER THE HEAD OF BUS INESS INCOME. THAT WHEN INCOME IS TAXABLE AS BUSINESS INCOME OF THE RESPONDENT ASS ESSEE. IN THAT CASE, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING THE SAME BY INV OKING THE PROVISION OF SECTION 69B OF THE INCOME TAX ACT. THUS, THE ADDITION AS MADE B Y INVOKING THE PROVISION OF SECTION 69B OF THE ACT WAS NOT JUSTIFIED. THAT WHEN THE EXCESS AMOUNT OF STOCK WAS TAXED AS BUSINESS INCOME OF THE RESPONDENT ASSESSEE ON ACCOUNT OF CLOSING STOCK VALUATION, IN THAT CASE THERE WAS NO JUSTIFICATION FOR INVOKING OF THE PROVISION OF SECTION 115BBE OF THE ACT. 2.4] THE RESPONDENT ASSESSEE COMPANY CARRYING MANUF ACTURING AND TRADING BUSINESS OF JEWELLERY FROM LAST SEVERAL YEARS. DURING THE CO URSE OF SEARCH AND SURVEY PROCEEDINGS RESPONDENT ASSESSEE COMPANY HAD OFFERED AN AMOUNT OF RS. 10,14,95,122/-AND RS. 1,20,02,793/- ON ACCOUNT OF D ISCREPANCIES IN STOCK. IN ADDITION TO THAT THE LD. A.O. ALSO ADDED RS. 14,07,74,248/- ON ACCOUNT OF EXCESS VALUATION OF CLOSING STOCK IN VALUE TERMS ONLY. 2.5.1] THAT WHILE FILING THE RETURN THE RESPONDENT ASSESSEE COMPANY INCLUDED THE SURRENDER AMOUNT OF RS. 11,34,97,915/- UNDER THE HE AD 'BUSINESS INCOME' AND PAID TAX AT APPLICABLE NORMAL RATE OF 34.60%. 2.5.2] THE ASSESSING OFFICER TREATING THE DIFFERENC E IN STOCK AS 'UNEXPLAINED INVESTMENT' AND COVERED THE SAME UNDER DEEMING PROV ISIONS OF SECTION 69B OF THE INCOME TAX AND AFTER APPLYING THE PROVISIONS OF SEC TION 115BBE TAX @ 77.25% . 2.5.3] THAT THE ISSUE IN THIS GROUND IS THAT UNDER WHICH HEAD EXCESS STOCK FOUND IN THE SEARCH & SURVEY IS TO BE TAXED ,WHETHER UNDER T HE HEAD INCOME FROM BUSINESS OR TREATED AS UNEXPLAINED INVESTMENT BY APPLYING DEEMI NG PROVISIONS OF SECTION 69B OF THE ACT. 2.5.4] THAT DURING THE COURSE OF SEARCH PROCEEDINGS VIS-A-VIS ASSESSMENT PROCEEDINGS THE RESPONDENT ASSESSEE HAS EXPLAINED B EFORE THE LD. A.O. THAT SURRENDER OF EXCESS STOCK WAS IN RELATION TO BUSINE SS ACTIVITIES AND IT HAD DIRECT NEXUS WITH BUSINESS ACTIVITIES, ACCORDINGLY THE RES PONDENT ASSESSEE COMPANY INCLUDED THE SAME UNDER THE HEAD 'BUSINESS INCOME'. 14. IT IS ALSO A FACT THAT THE LD. AO HAS NOT BROUG HT ON RECORD ANY EVIDENCE OR MATERIAL TO ESTABLISH THAT THE ASSESSEE WAS INVO LVED IN ANY OTHER ACTIVITIES OR ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 15 HAVING ANY OTHER SOURCE OF INCOME. WHILE DELETING THE ADDITION MADE BY THE LD. AO THE LD. CIT(A) OBSERVED AS FOLLOWS : FIRST OF ALL LET ME DISCUSS WHETHER THE PROVISIONS OF SECTION 115BBE ARE APPLICABLE TO THIS CASE OR NOT. THE PROVISION OF DISALLOWANCE OF ANY LOSS WITH THE INCOME AS COMPUTED UNDER CLAUSE (A) OF SUB SECTION (1) OF SEC TION 115BBE CAME INTO FORCE W.E.F 01.04.2017. HON'BLE SUPREME COURT IN THE CASE OF CI T VS VATIKA TOWNSHIP PVT LTD (2014) 24 ITJ 532 (SC); (2014) 271 CTR 1: (2014) 22 7 TAXMANN 121 HAS HELD THAT 'AN AMENDMENT MADE TO THE TAXING STATUTE CAN BE SAI D TO BE INTENDED TO REMOVE 'HARDSHIPS' ONLY OF THE ASSESSEE, NOT OF THE DEPART MENT-ON THE CONTRARY, IMPOSING A RETROSPECTIVE LEVY ON THE ASSESSEE WOULD HAVE CAUSE D UNDUE HARDSHIP. HON'BLE ITAT INDORE IN THE CASE OF PRIYADHARSHANI CONSTRUCTION V S ITO (2012) 19 ITJ 276 (TRIB- INDORE) HAS HELD THAT 'SUBSTANTIVE LAW SHALL BE UND ERSTOOD TO BE APPLICABLE PROSPECTIVELY UNLESS MADE SPECIFICALLY RETROSPECTIV E. THUS, IT IS SETTLED POSITION OF LAW THAT PROVISION OF SECTION 115BBE OF THE ACT IS CLEA RLY NOT APPLICABLE IN CASE OF BUSINESS INCOME WHICH IS TAXED UNDER SECTION 28 TO 44 OF THE INCOME TAX ACT. THE ASSESSING OFFICER ALSO FAILED TO BRING ON RECORDS A NY OTHER SOURCE OF INCOME OF THE APPELLANT APART FROM THE ONE THAT IS SHOWI IN RETU RN OF INCOME. THE APPELLANT IN SUPPORT HAS ALSO RELIED ON THE FOLLOWING DECISION:- HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT V S BAJARGAN TRADERS [APPEAL NO 258/2017 DT 12-09-2017]; HON'BLE AHMEDABAD BENCH OF ITAT IN THE CASE OF CH OKSHI HIRALAL MAGANLAL VS DCIT AS REPORTED IN 141 TTJ 001; HON'BLE JODHPUR BENCH OF ITAT IN THE CASE OF LOVI SH SINGHAL & OTHERS VS ITO [APPEAL NO 143/ JODH/ 2018]; HON'BLE JAIPUR BENCH OF ITAT IN THE CASE OF DCIT VS RAMNARAYAN BORLA [APPEAL NO 482/ JP/ 2015 DT 30-09-2016]; HON'BLE SUPREME COURT IN THE CASE OF LAKHMICHAND BAIJNATH VS CIT AS REPORTED IN 35 ITR 416; HON'BLE APEX COURT IN THE CASE OF NALINI KANT AMB ALAL MODY VS SAL NARAYAN ROW AS REPORTED IN 61 ITR 428. CONSIDERING THE SUBMISSION MADE AND DECISIONS REFER RED, IT IS UNDISPUTED THAT THE APPELLANT IS HAVING ONLY SOURCE OF INCOME FROM TRAD ING AND MANUFACTURING OF JEWELLERY. THE ADDITIONAL INCOME WAS OFFERED ON AC COUNT OF DIFFERENCE IN THE STOCK AS PER BOOKS OF ACCOUNTS AND AS ACTUALLY FOUND DURING THE COURSE OF SEARCH. THE DIFFERENCE IN STOCK AS FUND WAS ALSO RELATED TO THE BUSINESS OF THE APPELLANT. I THEREFORE HOLD THAT ADDITIONAL INCOME OFFERED AND ADDITION MADE WAS ON ACCOUNT OF BUSINESS INCOME OF THE APPELLANT AND IS THEREFORE L IABLE TO BE TAXED UNDER THE HEAD OF INCOME FROM BUSINESS AND PROFESSION ONLY. THE PROVI SIONS OF SECTION 115BBE OF THE INCOME TAX ACT ARE APPLICABLE WHERE ADDITION IS MAD E UNDER SECTION 68, 69, 69A, ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 16 69B, 69C AND 69D I.E. FROM RESIDUARY CATEGORY W.E.F 01.04.2017. HOWEVER, IN THE PRESENT CASE IN HAND, ADDITIONAL INCOME WAS OFFERED AND EVEN ADDITION WAS MADE ON ACCOUNT OF DIFFERENCE IN THE STOCK WHICH WAS LIABLE TO BE TAXED UNDER THE HEAD OF INCOME FROM BUSINESS AND PROFESSION ONLY AND VALUAT ION OF STOCK WAS DONE ON THE BASIS OF VARIOUS OBSERVATIONS DRAWN DURING THE COUR SE OF SEARCH & SURVEY WHICH TOOK PLACE ON 28.09.2016 & 15.11.2016 RESPECTIVELY. SINC E, THE SEARCH IN THE CASE OF APPELLANT WAS CARRIED OUT ON 28.09.2016 AND ADDITIO NS WERE MADE CONSEQUENTIAL TO SEARCH, THEREFORE, THE ASSESSING OFFICER, WAS NOT J USTIFIED IN STATING THAT PROVISIONS U/S 115BBE WERE INVOKED BY THE APPELLANT WHICH IN FACT WAS APPLICABLE FROM 01.04.2017 AND NOT FROM 28.09.2016 (DATE OF SEARCH). THUS, THE ASSESSING OFFICER IS HEREBY DIRECTED TO CALCULATE TAX AS PER NORMAL RATE APPLIC ABLE IN THE CASE OF THE APPELLANT THEREFORE, APPEAL ON THIS GROUND IS ALLOWED. SINCE THE SEARCH IN THE CASE OF THE APPELLANT WAS C ARRIED OUT BEFORE THE AMENDMENT THE ADDITION OUGHT TO HAVE BEEN MADE IN T ERMS OF THE PREVAILING PROVISION AND THEREFORE, THE ADDITION MADE BY THE A O INVOKING SECTION 115BBE PROVISION OF WHICH CAME INTO FORCE ONLY ON 0 1.04.2017 IS NOT SUSTAINABLE. THEREFORE, THE ORDER PASSED BY THE LD . CIT(A) DELETING THE ADDITION MADE ON THAT PREMISE IS ACCORDING TO US JU ST AND PROPER SO AS TO WARRANT INTERFERENCE. HENCE, THE APPEAL PREFERRED BY THE REVENUE FOUND TO BE DEVOID OF ANY MERIT AND IS DISMISSED. 15. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 08 /10/2021 SD/- SD/- SD/- SD/- (MANISH BORAD) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 08 /10/2021 TANMAY, SR. PS TRUE COPY ITA NO.677/IND/2019 DCIT VS.M/S. PUNAJB RETAIL PVT. LTD. ASST.YEAR 2017-18 - 17 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)- 5. , ! ', #$%% / DR, ITAT, INDORE 6. &' () / GUARD FILE. / BY ORDER, (DY./ASSTT.REGISTRAR) ITAT, INDORE 1. DATE OF DICTATION 16.09.2021 & 04.10.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 16.09.2021 & 05.10.2021 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 06 .10.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .10.2021 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S .10.2021 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .10.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER