The ITO, Ward-7(1), Ahmedabad V. Jay Deep Jewellers, Ahmedabad

ITA 860/AHD/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6960 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-11-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 22-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KULSHRESTHA
• Assessee Lawyers: M K PATEL
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ ITA NO . 860 / AHD/ 201 0 [ [ / ASSESSMENT YEAR : 20 0 5 - 06 INCOME TAX OFFICER, WARD 7 (1) AHMEDABAD VS JAY DEEP JEWELLERS, MAIN BAZAR, BAREJA TAL. DASCROI, DIST. AHMEDABAD PAN : AABFJ 3020 G / (APPELLANT) / (RESPONDENT) REVENUE BY : S HRI B. KULSHRESTHA, SR. DR. ASSESSEE(S) BY : SHR I M.K. PATEL, AR / DATE OF HEARING : 13 / 1 1 /2014 / DATE OF PRONOUNCEMENT: 12 /1 2 /2014 / O R D E R PER SHRI N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - X I, AHMEDABAD DATED 25.01.2010 FOR ASSESSMENT YEAR 2005 - 06 . 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE READS AS UNDER: - THE LD. COMMISSIONER OF INCOME - TAX (A) - XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING OF ADDITION MADE OF RS.1,03,463/ - ON ACCOUNT OF VALUE OF EXCESS STOCK OF SILVER AND RS.35,76,860/ - ON A/C OF VALUE OF EXCESS STOCK GOLD ORNAMENTS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE - FIRM IS ENGAGED IN THE BUSINESS OF TRADING IN GOLD AND SILVER ORNAMENTS. A SURVEY ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 2 PROCEEDINGS U/S 133A OF THE INCOME - TAX ACT, 1961 WAS CARRIED OUT BY THE DEPARTMENT ON 14.03.2005 AT THE BUSINESS PREMISES O F THE ASSESSEE. DURING THE COURSE OF SURVEY, THE SURVEY TEAM PREPARED AN INVENTORY OF THE PHYSICAL STOCK OF SILVER AND GOLD ORNAMENTS AVAILABLE ON THE DATE OF SURVEY I.E. 14.03.2005. ACCORDING TO THIS INVENTORY, IT WAS FOUND THAT THERE WAS STOCK OF GOLD ORNAMENTS OF 18.215 KGS AND STOCK OF SILVER ORNAMENTS OF 113.150 KGS. IT WAS ALSO OBSERVED BY THE SURVEY TEAM THAT THE STOCK OF GOLD AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE WAS 7.675 KGS AND THE STOCK OF SILVER AS PER THE BOOKS OF ACCOUNTS OF THE ASSE SSEE WAS 61.184 KGS. THUS, ACCORDING TO THE ASSESSING OFFICER, THERE WAS EXCESS STOCK OF SILVER OF 51.966 KGS AND EXCESS STOCK OF GOLD OF 10.54 KGS AS ON THE DATE OF SURVEY. IN THE RETURN OF INCOME FILED, THE ASSESSEE HAD DISCLOSED ADDITIONAL INCOME OF RS . 26,87,510/ - TOWARDS THE VALUE OF EXCESS STOCK OF GOLD AND SILVER ORNAMENTS BY SHOWING EXCESS STOCK OF SILVER OF 30.851 KGS VALUED AT RS.4900/ - PER KG, AMOUNTING TO RS.1,51,170/ - AND EXCESS STOCK OF GOLD OF 4.373 KGS VALUED AT RS.5800/ - PER 10 GM, AMOUNTIN G TO RS.25,36,340/ - . ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE HAS EXPLAINED BEFORE HIM THAT 21.115 KGS OF SILVER BELONG TO JAY DEEP FINANCE AND THAT 4.472 KGS OF GOLD BELONG TO CUSTOMERS AND 1.695 KGS OF GOLD ORNAMENTS BELONG TO JAY DEEP FINANCE A ND THEREFORE, HAS NOT INCLUDED THIS STOCK IN THE DISCLOSURE MADE IN THE RETURN OF INCOME. THE ASSESSING OFFICER, OBSERVED THAT DURING THE COURSE OF SURVEY, IN THE STATEMENT OF PARTNER SHRI NAVNITLAL VANMALIDAS SONI, HE CATEGORICALLY STATED THAT THERE IS NO STOCK OF GOLD AND SILVER ORNAMENTS BELONGING TO ANY OTHER THIRD PARTY IN HIS PREMISES AND ALSO TAKING IN VIEW THE FACT THAT IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAS SHOWN CLOSING STOCK OF GOLD AND SILVER AT RS.50,88,365/ - , WHEREAS IN THE BALANCE - SHEET THE ASSESSEE HAS DISCLOSED THE VALUE OF THE CLOSING STOCK AT RS.77,75,877/ - SHOWS THAT THE ASSESSEE - FIRM ITSELF ADMITS THAT THE ENTIRE STOCK FOUND DURING THE SURVEY IS BELONGING TO THE ASSESSEE ONLY. THEREFORE, HE ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 3 MADE ADDITION FOR THE EXCESS SILVER FOUND DURING THE COURSE OF SURVEY OF 21.115 KGS VALUED AT RS.4900/ - PER KG. WHICH WORKED OUT TO RS.1,03,464/ - AND EXCESS STOCK OF GOLD FOUND DURING THE COURSE OF SURVEY OF 6.167 VALUED AT RS.5800/ - PER 10 G MS WHICH AMOUNTED TO RS.35,76,860/ - AND IN THIS WAY MADE ADDITION OF RS. 36,88,323/ - (RS.1,03,463/ - + RS.35,76,860/ - ) TO THE INCOME OF THE ASSESSEE. 4. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE CONTENDED AS UNDER: - ' WHILE MAKING ADDITION OF THE ABOVE AM OUNTS THE A.O. HAS IN THE ORDER HELD AS UNDER : - (I) THE ASSESSEE HAS EXCLUDED 21.115 KQS. OF SILVER ON THE GROUND THAT IT IS BELONGING TO JAYDEEP FINANCE (II) THE ASSESSEE HAS EXCLUDED 1.695 KG S. O F GOLD ON THE GROUND THAT IS BELONGING TO JAYDEEP FINANCE (III) 4.472 KGS. O F GOLD ORNAMENTS ARE BELONGING TO CUSTOMERS. (A) ABOVE IS NOT CORROBORATED BY ANY EVIDENCE. (B) ABOVE IS A SELF SERVING CLAIM NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE. (C) IN THE STATEMENT OF PARTNER AT THE TIME OF SURVEY IT IS CATEGORICALLY STATED THAT 'THERE IS NO STOCK OF GOLD AND SILVER ORNAMENTS BELONGING TO ANY OTHER THIRD PARTY IN HIS PREMISES . (D) IN THE PROFIT & LOSS ACCOUNT CLOSING STOCK OF SILVER AT RS.50,88,365/ - WHILE IN THE BALANCE SHEET VALUE DISCLOSED IS AT R S. 77,75,877 / - . THIS INDICATES THAT THE ASSESSEE HAS NOT VALUED CLOSING STOCK OF SILVER AND GOLD ORNAMENTS IN P & L A/C WHILE IT HAS TAKEN THE VALUE OF ENTIRE STOCK IN THE BALANCE SHEET. THIS WOULD INDICATE THAT THE ASSESSEE FIRM ITSELF ADMITS THAT T HE ENT IRE STOCK FOUND DURING THE COURSE OF SURVEY IS BELONGING TO THE ASSESSEE ONLY. (E) THEREFORE, VALUE OF SILVER ITEMS WORTH 21.115 KGS AT RS. 1,03,463 / - AND VALUE OF GOLD ORNAMENTS WEIGHING 4.472 KGS. CL AIMED TO BE BELONGING TO CUSTOMERS AND 1.695 KGS. C LAIM ED TO BE BELONGING TO JAYDEEP FINANCE RS. 35,76,860 / - IS CONSIDERED TO BE OWN STOCK. ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 4 A.R'S SUBMISSIONS: (A) ADDITION IN RESPECT OF SILVER ARTICLES RS. 1,03,463/ - AND GOLD ORNAMENTS RS. 35,76,860 / - REQUIRES TO BE R EVIEW ED FROM OVERALL FACTS AND EVENTS IN THE CASE. (B) STATEMENT OF PARTNER DURING SURVEY: FOLLOWING FACTS EMERGES FROM THE STATEMENT RECORDED BY PARTNER SHRI ROHITBHAI ON 14 - 03 - 2005 DURING THE COURSE OF SURVEY, (I) Q . NO.7 : WHETHER AS ON TODAY IN YOUR PREMISES, STOCK OF ANY TRADER IS LYING? AND IS YOUR STOCK LYING WITH ANY OTHER TRADER ? A.NO.7. : IN MY SHOP THERE IS NO STOCK OF ANY BODY AND MY STOCK IS NOT WITH ANY BODY. Q.NO.7 : AS ON TODAY IS THERE ANY STOCK WHICH IS RECEIVED BUT NO BILL IS RECEIVED. SIMILARLY IF GOODS ARE SOLD BUT BILL IS PENDING TO BE MADE. GIVE DETAILS OF SUCH STOCK. A. A/O.7 : THERE IS NO STOCK IN MY SHOP FOR WHICH BILL IS TO BE RECEIVED AS ALSO THERE IS NO CASE OF SALE IS MADE BUT BILL NOT ISSUED. Q. NO.9 . IS THERE ANY STOCK AS ON TODAY OF ORNAMENTS TAKEN ON JOB WORK ? ARE S UCH ORNAMENTS SENT FOR JOB WORK ? IN ANY REGISTER OR RECORD IS KEPT FOR THIS ? A.NO.9 : THE ORNAMENTS RECEIVED FOR JOB WORK ARE IN THE SHOP AND THE SAME IS RECORDED IN REPAIRING BOOK AND ORDER BOOK. NO ORNAMENTS ARE SENT OUT FOR REPAIRING OR SUCH ORDER IS NOT COMPLETED. Q.NO.36. TODAY DURING THE SURVEY PROCEEDINGS PACKETS OF LOANS ARE FOUND. TOTAL LOAN AMOUNT COMES TO RS. 6,09,500/ - . STATE MODE OF PAYMENT AND RATE OF INTEREST . A 36. INTEREST RATE IS @ 18%. FOLLOWING MAIN FACTS EMERGE FROM THE STATEMENT OF PARTNER DURING SURVEY PROCEEDINGS : - (A) SURVEY ITO'S QUESTING IN RESPECT OF STOCK IN THE SHOP WAS KEEPING THE MAIN ACT TO BE ANSWERED IN RESPECT OF ANY TRADER. ANSWER OF THE ASSESSES IS ALSO IN RESPECT OF ANY GOODS OF ANY TRADER AND NOT OF ANY CUSTOMERS AS NO QUESTION IS ASKED IN RESPECT OF ORNAMENTS OF CUSTOMERS FOR REMAKING . HENCE THE LEARNED A.O'S DECISION ON THE PLEA THAT THE ASSESSEE HAS STATED THAT THERE IS NO ORNAMENTS OF ANYBODY ELSE IN THE SHOP IS NOT CORRECT ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 5 ABOVE IS ALSO SUPPORTED FROM THE A.AQ. NO. 9 WHERE THE ASSESSEE HAS CATEGORICALLY STATED THAT THERE ARE ORNAMENTS OF CUSTOMERS LYING IN SHOP AS RECORDED IN REPAIRING BOOK AND ORDER BOOK. ASSESSEE'S STATEMENT IS A L SO SUPPORTED BY THE FOLLOWING: FOR CUSTOMER'S GOLD - FOR REMAKING. (A) XEROX COPY OF 1ST PAGE AND LAST PAGE OF ORNAMENTS FOR REMAKING RECEIPT BILL BOOK WHICH BEARS ITO'S STAMP AND SIGNATURE (ALL COPIES ENCLOSED WITH LETTER DATED 13 - 09 - 2007) (B) XEROX COPY OF 1ST PAGE AND LAST PAGE OF ORNAME NTS FOR REMAKING DELIVERY BILL BOOK WHICH BEARS ITO'S STAMP AND SIGNATURE (ALL COPIES ENCLOSED WITH LETTER DATED 13 - 09 - 2007). (C) PROFIT AND LOSS ACCOUNT SHOWS AN AMOUNT OF RS. 4,49,910/ - AS SHOWN AS INCOME FOR JOB WORK/REPAIRING WORK OF GOLD ORNAMENTS. (D ) STATEMENT SHOWING RECEIPT OF OLD GOLD ORNAMENTS RECEIVED FROM CUSTOMERS AND ARE PENDING FOR DELIVERY AS ON 14 - 03 - 2005 I.E. DATE OF SURVEY, WITH AFFIDAVITS OF RESPECTIVE CUSTOMERS, ENCLOSED HEREWITH. FOR ORNAMENTS/SILVER OF M/S. JAVDEEP FINANCE. PLEASE FIND Q.A. NO. 36 OF THE STATEMENT OF PARTNER DURING THE COURSE OF SURVEY IN WHICH THE QUESTION IS ASKED IN RESPECT OF PACKETS OF LOANS. THE ABOVE CLEARLY IS THE EVIDENCE AS ACCEPTED BY THE SURVEY I TO ALSO, THAT THERE WERE PACKETS CONFERRING SILVER ARTICLES AND GOLD ORNAMENTS SEPARATELY KEPT IN RESPECT OF THE LOANS GIVEN BY M/S. JAYDEEP FINANCE. THE AMOUNT OF LOAN WAS ALSO ASCERTAINED BY THE SURVEY I TO AT RS. 6,09,500 / - ON THE POCKETS. WE ENCLOSE AFFIDAVITS OF SOME BORROWERS OF M/S. JAYDEEP FINANCE TO THE EFFECT THAT THEY HAVE BORROWED AMOUNTS ON PLEDGE OF ORNAMENTS (EIGHT AFFIDAVITS). THE ABOVE CATEGORICALLY SUBSTANTIATE THE SUBMISSION OF THE ASSESSEE THAT SILVER ARTICLES AND GOLD ORNAMENTS OF BORROWERS OF JAYDEEP FINANCE WERE LYING IN THE SHOP. FOLLOWING ARE SUBMITTED WITH SUBSTANTIATES THE ASSESSEE'S SUBMISSIONS: (A) LIST OF BORROWING OF M/S. JAYDEEP FINANCE WHOSE PACKETS OF ORNAMENTS WERE LYING IN SHOP ON THE DATE OF SURVEY I.E. 14 - 03 - 2005 WITH AMOUNT OF ADVANCE WITH AFFIDAVITS OF SOME BORROWERS (EIGHT). SUBMISSIONS AT THE TIME OF SCRUTINY OF ASSESSMENT. ALL THE DETAILS IN RESPECT OF THE CONTENTION THAT THE STOCK FOUND IN SHOP ON THE DATE OF SURVEY INCLUDED STOCK OF CUSTOMERS' ORNAMENTS FOR REMAKING ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 6 AND OF JAYDEEP FINANCE OF BORROWERS ARE SUBMITTED IN THE COURSE OF ASSESSMENT PROCEEDINGS. ASSESSING OFFICERS LETTER ASSESSEES REPLY 1. SUBMISSIONS LETTER DATED 23.08.2006 DETAILS OF MAJOR EXPENSES SUBMITTED ASSESSING OFFICERS LETTER (B) NOTICE DATED 23.06.2006 PARA 17 CLARIFICATION (1) SILVER BELONGING TO JAYDEEP FINANCE. 21.115 KGS. (2) GOLD BELONGING TO CUSTOMERS 4.472 KGS. (3) GOLD BELONGING TO JAYDEEP FINANCE . 1.695 KGS. ASSESSEES REPLY 2. LETTER DATED 06.09.2007 (1) DISCREPANCY IN STOCK AS PER P & L A/C. AND AS PER BALANCE SHEET EXPLAINED THAT IT IS DUE TO DISCLOSURE OF STOCK (PARA - 5) (2) DETAILED WORKING OF DISCLOSURE WITH QUANTITY (PARAS - 11) (3) REDUCTION IN STOCK QUANTITY AND VALUE [PARA 11 - 4(I) & (II) 3. FURTHER SUBMISSIONS VIDE LETTER DATED 13.09.2007 WITH ANNEXURES (1) PARA 17 REPLY TO POINT NO.17 (A) CUSTOMERS STOCK PARTICULARS OF STOCK BELONGING TO CUSTOMERS WITH PARTICULARS OF BILL NUMBER, DATE, PARTYS NAME, CUSTOMER GOLD RECEIVED AND GIVEN BACK AND STOCK REMAKING WITH THE FIRM AS DERIVED FROM BILL BOOKS INVENTORIES AS ANNEXURE A/2 AND A/3 ALONG WITH COPIES OF BILLS SUBMITTED (PARA 17 ANNEXURE 9) ASSESSING OFFICERS LETTER ASSESSEES REPLY (B) JAYDEEP FINANCE (I) COMPLETE PARTICULARS OF STOCK BELONGING TO M/S JAYDEEP FINANCE ALONG WITH BILL NUMBER, DATE, NAME OF THE PARTY, QUANTITY OF GOLD AND SILVER AND AMOUNT WITH BILLS IS SUBMITTED (ANNEXURE 10) (II) LIST GIVING PARTY WISE PARTICULARS OF FINANCE GIVEN BY M/S. JAYDEEP FINANCE AGAINST GOLD AND SILVER HAS ALSO BEEN FOUND AND INVENTORISED BY THE DEPAR T MEN T VIDE ANNEXURE A/10 PAGE NO.57 TO 60. COPY OF THE SAID LIST IS SUBMITTED (ANNEXURE 11) ORIGINAL ABOVE LIST WAS PRODUCED FOR VERIFICATION TO ASSESSING OFFICER. BASIS OF A.O'S DECISION AND HOW THE SAME IS NOT CORRECT ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 7 BASIS OF A. O. HOW THE SAME ISNOT CORRECT. (A) STATEMENT OF THE ASSESSEE THAT THE ORNAMENTS/SILVER BELONGS TO CUSTOMERS AND M/S. JAYDEEP FINANCE IS NOT CORROBORATED WITH ANY EVIDENCE. (B) PARTNER, IN THE STATEMENT HAS STATED THAT THERE ISNO STOCK OF ANY PERSON IN THE SHOP. (C) THERE IS DIFFERENCE OF CLOSING STOCK IN P & L A/C AND BALANCE SHEET (RS. 5088365 RS.7775877) COPY OF JOURNAL VOUCHER ENCLOSED. (A) A.Q.NO.9.36 IN THE STATEMENT RECORDED AT THE TIME OF SURVEY (JOB WORK AND PACKETS OF ORNAMENTS IN JAYDEEP FINANCE CASE). (B) Q.A.NO.7 THE QUESTION WAS OF 'ANY ___ OTHER TRADER ONLY. (C) DIFFERENCE DOES NOT EXIST IN P & L CL. STOCK 5088365 STOCK DISCLOSED 2687540 ------------ STOCK AS PER B/S. 7775875 ====== HENCE THERE IS NO DIFFERENCE. . AS PER ABOVE SUBMISSIONS I T IS EVIDENCE THAT THE BASIS WHICH HAS BEEN MADE BY ASSESSING OFFICER FOR MAKING ADDITIONS DOES NOT EXIST OR REMAIN. 5. IT WAS, THEREFORE, SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER FOR RS.1,03,463/ - ON ACCOUNT OF SILVER AND RS.35,76,860/ - ON ACCOUNT OF GOLD SHOULD BE DELETED. 6. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE AFO RESAID ADDITIONS MADE BY THE ASSESSING OFFICER. 7. AGGRIEVED BY THE AFORESAID ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 8. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED ON THE ORDER OF THE ASSESSING OFFICER WHEREAS THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND MATERIAL AVAILABLE ON RECORD. IN THE I NSTANT ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 8 CASE, A SURVEY WAS CONDUCTED ON 14.03.2005 IN WHICH INVENTORY OF PHYSICAL STOCK OF SILVER AND GOLD ORNAMENTS FOUND WAS MADE, ACCORDING TO WHICH STOCK OF SILVER ORNAMENTS WAS 113.150 KGS AND STOCK OF GOLD ORNAMENTS WAS 18.215 KGS. THE STOCK OF GOLD O R N A M E N T S AS PER BOOKS OF ACCOUNT OF THE ASSESSEE WAS 7.675 KGS AND STOCK OF SILVER ORNAMENTS AS PER BOOKS OF ACCOUNT OF THE ASSESSEE WAS 61.184 KGS AS ON 14.03.2005. THE ASSESSEE IN ITS RETURN OF INCOME ADMITTED THE UNDISCLOSED STOCK OF GOLD ORNAMENTS OF 4.373 KGS VALUED @ RS.5800/ - PER 10 GM - AMOUNTING TO RS.25,36,340/ - , AND UNDISCLOSED STOCK OF SILVER ORNAMENTS OF 30.851 KGS VALUED @ RS.4900/ - PER KG - AMOUNTING TO RS.1,51,170/ - AND ACCORDINGLY DISCLOSED INCOME OF RS.26,87,510/ - . THE BALANCE DIFFERENCE OF 21.115 KGS OF SILVER ORNAMENTS AND 6 . 1 6 7 KGS OF GOLD ORNAMENTS WAS EXPLAINED BY THE ASSESSEE AS , FIRSTLY BELONGING TO CUSTOMERS WHICH WERE KEPT AT THE PREMISES OF THE ASSESSEE FOR REPAIRS AND SECONDLY THE ORNAMENTS BELONG TO CUSTOMERS OF M/S. JAY DEEP FINA NCE TO WHOM FINANCE WAS GIVEN BY JAY DEEP FINANCE AS A SECURITY OF SUCH ORNAMENTS AND WERE KEPT IN SEPARATE PACKET S AT THE SAME PREMISES. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE WITH REGARD TO THE ORNAMENTS RECEIVED FOR REPAIR S AND ORNAMENTS RECEIVED AS SECURITY AGAINST LOAN FINANC ED BY M/S. JAY DEEP FINANCE AND THEREFORE, ADDED RS.36,8 0 ,323/ - TO THE INCOME OF THE ASSESSEE ON THE GROUND THAT IN THE STATEMENT SHRI NAVNITLAL VANMALIDAS SONI PARTNER OF THE ASSESSEE - FIRM - CATEGOR ICALLY STATED THAT THERE WAS NO STOCK OF GOLD AND SILVER ORNAMENTS BELONGING TO ANY OTHER THIRD PARTY IN HIS PREMISES AND THAT TAKING IN VIEW THE FACT THAT IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAS SHOWN CLOSING STOCK OF GOLD AND SILVER AT RS.50,88,365 / - , WHEREAS IN THE BALANCE - SHEET THE ASSESSEE HAS DISCLOSED THE VALUE OF THE CLOSING STOCK AT RS.77,75,877/ - SHOWS THAT THE ASSESSEE - FIRM ITSELF ADMITS THAT THE ENTIRE STOCK FOUND DURING THE SURVEY IS BELONGING TO THE ASSESSEE ONLY. ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 9 10. ON THE APPE AL, THE CIT(A) DELETED THE ABOVE ADDITIONS BY OBSERVING AS UNDER: - 6 .2. I HAVE CONSIDERED T HE SUBMISSIONS MADE BY THE A. R . OF THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. I HAVE PERUSED THE STATEMENT OF SHRI ROHIT KUMAR NAVNITIAL SONI (PARTNER OF APPELLANT FIRM) RECORDED DURING THE COURSE OF SURVEY U/S. 133A ON 14 - 03 - 2005. IN RESPONSE TO Q.NO.2, HE STATED THAT THE BUSINESS OF TWO FIRMS VIZ. JAYDEEP JEWELLERS (APPELLANT) AND JAYDEEP FINANCE WAS BEING CARRIED ON FROM THE PREMISES. IN RESPONSE TO Q. NO.7, HE STATED THAT NO OTHER TRADER'S STOCK WAS LYING IN THE PREMISES. IN RESPONSE TO Q. NO. 33 TO 35, HE FURNISHED PARTICULARS OF THE BUSINESS OF JAYDEEP FINANCE. QUESTION AND ANSWER NO.36 ARE REPRODUCED BELOW : - Q.NO.36. TODAY DURING THE SURVEY PROCEEDINGS PACKETS OF L OANS ARE FOUND. TOTAL LOAN AMOUNT COMES TO RS. 6,09,500 / - . STATE MODE OF PAYMENT AND RATE OF INTEREST. A. 36. INTEREST RATE IS @ 18%. 6.2.1. FROM THE ABOVE REPLIES IT IS CLEAR THAT JAYDEEP FINANCE WAS ALSO CARRYING ON THE BUSINESS FROM THE SAME PREMISES AND LOANS OF RS. 6,09,500/ - WERE FOUND TO HAVE BEEN ADVANCED BY THEM. FURTHER, AS CONTENDED BY THE A. R., PARTY - WISE FINANCE GIVEN BY JAYDEEP FINANCE AGAINST PLEDGE OF GOLD AND SILVER ARTICLES WAS INVENTORIS ED BY THE SURVEY PARTY. 6.2.2. AS REGARDS THE APPELLANT'S CONTENTION THAT THEIR CUSTOMERS' GOLD WAS LYING IN THE SHOP AT THE TIME OF SURVEY, QUESTION NO.9 AND ANSWER IN THE STATEMENT ARE VERY RELEVANT AND ARE REPRODUCED BELOW : - Q. A/O.9. IS THERE ANY ST OCK AS ON TODAY OF ORNAMENTS TAKEN ON JOB WORK? ARE SUCH ORNAMENTS SENT FOR JOB WORK? IN ANY REGISTER OR RECORD IS KEPT FOR THIS? A.NO.9 : THE ORNAMENTS RECEIVED FOR JOB WORK ARE IN THE SHOP AND THE SAME IS RECORDED IN REPAIRING BOOK AND ORDER BOOK. NO OR NAMENTS ARE SENT OUT FOR REPAIRING OR SUCH ORDER IS NOT COMPLETED. APPELLANT CREDITED RS. 4,49,910/ - TO P & L A/C. TOWARDS JOB - WORK / REPAIR OF GOLD ORNAMENTS. THE STOCK BELONGING TO APPELLANT'S CUSTOMERS WITH PARTICULARS OF BILL NUMBER, DATE, PARTY'S NAM E, STOCK REMAINING WERE ALSO INVENTORISED AT THE TIME OF SURVEY. ALL ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 10 THESE FACTS WERE BROUGHT TO THE NOTICE OF A. O. IN THE EXHAUSTIVE REPLY DATED 13 - 09 - 2007 FILED BY THE APPELLANT. 6.2.3. IN SPITE OF THE CONTEMPORANEOUS EVIDENCE BY WAY OF STATEMENT AT THE TIME OF SURVEY AND DOCUMENTS INVENTORISED DURING SURVEY PROCEEDINGS, A. O. PROCEEDED TO REJECT APPELLANT 'S CONTENTION THAT THE GOLD AND SILVER ITEMS BELONGING TO APPELLANT'S CUSTOMERS AND M/S. JAYDEEP FINANCE COULD NOT BE TAKEN TO BE ITS STOCK. THE VA LUE OF SAID ARTICLES WAS ASSESSED AS APPELLANT'S INCOME. I FIND NO REASON TO UPHOLD THE A.O'S ACTION. ACCORDINGLY ADDITION OF RS. 1,03,463 / - (ON ACCOUNT OF SILVER ARTICLES OF JAYDEEP FINANCE) AND RS. 35,76,860 / - (ON ACCOUNT OF GOLD ARTICLES OF APPELLANT'S C USTOMERS AND JAYDEEP FINANCE) ARE DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 11. BEFORE US, THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY SPECIFIC MISTAKE IN THE FINDING OF THE CIT(A). NO MATERIAL HAS BEEN BROUGHT BEFORE US TO SHOW THAT THE STOCK CUSTOMERS RECEIVED BY THE ASSESSEE FOR REPAIRS AND STOCK AS RECEIVED AS SECURITY AGAINST FINANCE MADE BY M/S. JAY DEEP FINANCE AND WERE LYING IN SEPARATE PACKET S IN THE PREMISES OF THE ASSESSEE WERE NOT INCLUDED IN THE INVENTORY PREPARED BY THE SURVEY OFFICIALS. WE, THEREFORE, DO NOT FIND ANY GOOD REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) WHICH IS CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE CO URT ON F R I D A Y , THE 1 2 T H OF DECEMBER , 2014 AT AHMEDABAD. SD/ - SD/ - ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD; DATED 1 2 /1 2 /2014 BIJU T., PS ITA NO. 860/AHD/2010 JAY DEEP JEWELLERS FOR AY 2005 - 06 11 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - X I , AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. [ / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD