ITO, Puri Ward, Puri, Puri V. Raghunath Sahu, Puri

ITSSA 156/CTK/2013

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0638 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D K SHETH
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 143(3); 133A; 153A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK BEFORE SHRI P. K. BABNSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 485 / CTK /2013 (ASST. YEAR : 20 11 - 1 2 ) GANESH PRASAD SAHOO (DECEASED) , THROUGH L . R . RAGHUNATH SAHOO, GANESH JEWELLERY, BANIAPATTI, PURI. VS. IT O , PURI WARD, PURI PAN NO. ADGPS 0829 Q (APPELLANT) (RESPONDENT) IT (SS) A NO. 153 TO 157 /CTK/2013 (ASST. YEAR S : 20 05 - 06 TO 2008 - 09 & 2011 - 12 ) ITO, PURI WARD, PURI VS. SHRI GANESH PRASAD SAH U, THROUGH L.R. RAGHUNATH SAH U , BANIAPATTI, PURI. PAN NO. ADGPS 0829 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI D.K. SHETH A.R. DEPARTMENT BY : SHRI ANIL SHARMA - D.R. DATE OF HEARING : 28 / 0 1 /2015 . DATE OF PRONOUNCEMENT : 1 3 / 0 3 /201 5 . O R D E R 2 PER D.T. GARASIA , J .M TH E S E APPEAL S BY THE ASSESSEE AND THE DEPARTMENT ARE DIRECTED AGAINST THE COMMON ORDER OF LD. CIT (A) - II , BHUBANESWAR DATED 11 /0 9 /201 3 FOR THE A.Y. 2005 - 06 TO 2008 - 09 & 2011 - 12 . SINCE COMMON ISSUE S INVOLVED AND THE APPEALS WERE HEARD TOGETHER, SO THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. THE COMMON GROUNDS RAISED IN ALL THE APPEALS BY THE DEPARTMENT ARE AS FOLLOWS : 1. ON THE FACT S AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) IS NOT JUSTIFIED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 45,60,790/ - MADE BY THE A.O. ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. CIT(A) SHOULD HAVE UPHELD THE ABOVE ADDITION IN ABSENCE OF MATCHING LIABILITY AGAINST THE IMPUGNED ASSET. 3. ON THE FACT S AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE CONTENTION OF THE ASSESSEE AND NOT ACCEPTING THE FINDINGS O F THE A.O. IN VIOLATION OF RULE 46A WITHOUT A COMPLETE & THOROUGH VERIFICATION. 4. THE APPELLANT CRAVES TO ALTER, AMEND OR ADD ANY OTHER GR O UND THAT MAY BE CONSIDERED NECESSARY IN COURSE OF THE APPEAL PROCEEDINGS. 3. THE GROUNDS RAISED BY THE ASSESSEE IN I.T.A.NO. 485/CTK/2013 ARE AS UNDER : - 1. FOR THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION OF RS. 2,62,53,498/ - AS MADE UNDER HEAD UNEXPLAINED INVESTMENT IN STOCK IS WHOLLY ARBITRARY, UNCALLED FOR AND UNJUSTIFIED. 3 2. FOR THAT THE LEARNED COMMISSIONER FAILED TO APPRECIATE THE CONTENTION AND EXPLANATION FURNISHED BY THE APPELLANT AND IS NOT JUSTIFIED TO CONFIRM THE ADDITION. 4 . SHORT FACTS OF THE CASES ARE THAT ASSESSEE IS ASSESSED TO TAX IN THE INDIVIDUAL STATUS AND DERIVES INCOME FROM PURCHASE & SALE S OF GOLD JEWELLERY . RETURN OF INCOME WAS FILED AND SURVEY U/S. 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT', FOR SHORT) WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSES SEE M/S. GANESH JEWELLERS ON 29/03/2011 . DURING THE COURSE OF SEARCH , CERTAIN BOOKS OF ACCOUNTS WERE SEIZED FROM BUSINESS PREMISES , WHICH WERE IDENTIFIED AS GJ 01 TO GJ - 15 AND FROM RESIDENCE AS GPS 1 TO GPS 24 . BESIDES, GOLD JEWELLERY OF 759.500 GRAMS AND 13004.600 WERE SEIZED FROM RESIDENCE AND BUSINESS PREMISES OF M/S. GANESH JEWELLERY RESPECTIVELY. THE ASSESSEE SHRI GANESH PRASAD SAHU WAS EXPIRED ON 24/01/2012 . THEREAFTER, HIS LEGAL HEIR S WERE BROUGHT ON RECORD. THE A SSESSEE S MODUS OPERANDI WAS OF BUSINESS ACTIVITIES, WHICH SHALL REVEAL THE BUILD UP OF CAPITAL AND UNEXPLAINED INVESTMENTS IN STOCK . THE ASSESSEE FILED THE TRADING AND CAPITAL ACCOUNT FOR THE YEAR UNDER CONSIDERATION WITH THE RETURN U/S. 153A OF THE ACT . IN VIEW OF SEC. 153A OF THE ACT, THE ITO HAS SCRUTINIZED 7 YEARS ASSESSMENTS I.E. FROM 2005 - 06 TO 2010 - 11 AND U/S. 153A & 143(3) OF THE ACT FOR THE A.Y. 2011 - 12 . ONCE THE MATTER IS OPENED FOR 7 YEARS, INFORMATION OF THE 4 PREVIOUS YEAR BEC O ME S EVIDENCE IN THE SUCCEEDING YEAR AND VICE VERSA . T HE ASSESSING OFFICER HAS VERIFIED THE BALANCE SHEET FOR THE A.YS. 2005 - 06 TO 200 8 - 09 . IN SHORT, THE DIFFERENCE HAS BEEN TAX ED AS UNACCOUNTED INCOME FOR THE FOLLOWING 4 ASSESSMENT YEARS. 2005 - 06 RS. 45,60,790/ - 2 006 - 07 RS. 4,92,057/ - 2007 - 08 RS. 12,88,742/ - 2008 - 09 RS. 37,06,019/ - IN A.Y. 2011 - 12 , THE ASSESSING OFFICER HAS MADE THE ASSESSMENT . THIS ASSESSMENT YEAR PERTAIN S TO THE DATE OF SEARCH. DURING THE COURSE OF SEARCH, THE DECEASED LATE SHRI GANESH PRASAD SAHOO HAD ADMITTED IN HIS STATEMENT ABOUT THE FACTS OF UNEXPLAINED INVESTMENT IN 13 KGS OF GOLD JEWELLERIES. HOWEVER, WHILE FILING THE RETURN, THIS AMOUNT WAS NOT S HOWN AS INCOME . THE ASSESSING OFFICER HELD THAT THE AFORESAID VALUE OF GOLD HAS TO BE ASSESSED AS UNACCOUNTED ASSET FOR THIS ASSESSMENT YEAR ALSO . ACCORDINGLY, THE ASSESSING OFFICER HAS MADE THE ASSESSMENT S FOR THE 4 YEARS. 5 . THE MATTER WAS CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS DELETED THE ADDITION FOR THE A.YS. 2005 - 06 TO 200 8 - 0 9 BY OBSERVING AS UNDER: - DURING THE COURSE OF HEARING BEFORE ME, I HAVE SEEN THE ITOS RECORDS WHICH THE APPELLANT COULD NOT DISPUTE. HE HAD PERSONAL GOLD OF ONLY 1.3 KG ON 31/03/1994 . ONLY IN 31/03/20 0 1 , THIS BECAME 4.5 KGS AND ON 31/03/2002 THIS BECAME 6 KGS. ON THE FACE OF TH E SE FACTS IT IS NOT 5 POSSIBLE TO SAY THAT THE ENTIRE 6 KGS . O F GOLD WAS WITH THE APPELLANT PRIOR TO 1981. HENCE, I WOULD GO WITH THE ASSESSING OFFICER ON THIS ISSUE AND A SUM OF RS. 14,65,375/ - SHOULD BE ADDED TO THE LTCG SHOWN AT RS. 13,85,940/ - AND THE TOTAL SHOULD BE TAXED @ 20%. THE AO'S COST COMPUTATION AND INDEXATION APPEAL TO BE PROPER. ACCORDINGLY THE APPEAL FOR THIS YEAR STAND DISMISSED. FOR A.Y. 2011 - 12 , THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING AS UNDER: - CONSIDERING THESE TWO DISCUSSIONS AND HEARING THE AO AND AR TODAY, I AM OF THE VIEW THAT A NOTION A L BACK CALCULATION AS DONE BY THE AO IS NOT ALWAYS POSSIBLE BECAUSE THE RATE OF THE GOLD GOES THROUGH HEAVY FLUCTUATIONS DAY - BY - DAY . THE ACCOUNT OF THE APPELLANT IS AUD ITED FOR F/Y 2010 - 11. A COPY OF THE AUDITED TRADING AND P & L A/C WAS MADE AVAILABLE TO THE AO WHICH WAS BE F O R E HIM PRIOR TO THE HEARING. THE PURCHASE FIGURES OF THE GOLD ARE SUPPOSED TO BE BASED ON ACTUAL GOLD PURCHASE RECEIPTS AND BOTH QUANTITY AND PRI CES ARE AVAILABLE IN T H OSE RECEIPTS. WITHOUT CHANGING THE QUANTITY OF GOLD IF THE AO NOTIONALLY INFLATES THE TOTAL PURCHASE PRICE, IN THE TRADING ACCOUNT IT WILL BE A SIMPLE CONJECTURE AND WILL CORRESPONDINGLY HAVE A NEGATIVE IMPACT ON THE GROSS PROFIT FOR THE YEAR. THE EXERCISE WILL BE TOT ALLY FUTILE AND NOT BE AS PER LAW OR ON PRINCIPLE OF ACCOUNTING. THEREFORE , THE NOTIONAL ADDITION OF RS. 1,63,77,860/ - IS DIRECTED TO BE DELETED. 6 . FOR A.YS. 2005 - 06 TO 2008 - 09 L EARNED DR FOR THE A.YS. 2005 - 06 TO 2008 - 09 SUBMITTED THAT ASSESSEE DERIVE D INCOME FROM SALE OF GOLD JEWELLERY. T HE BALANCE SHEET OF THE ASSESSEE WAS RECASTED TO FIND OUT THE UNACCOUNTED INCOME OF THE ASSESSEE AND ADDED TO THE TOTAL INCOME FOR THE A.YS. 2005 - 06 TO 2008 - 09. THIS DECISION OF THE AO FINDS SUPPORT FROM THE FACTS A VAILABLE ON RECORDS AS DISCLOSED BY THE ASSESSEE IN THE YEARS UNDER CONSIDERATION. HOWEVER, ASSESSEE'S MODUS OPERAND I WAS TO EVADE TAX. RECORDS 6 SHOW THE TREND AND MODUS OPERANDI OF BUSINESS TRANSACTION TO BUILD UP CAPITAL AND INVESTMENT IN STOCK IN TRADE. NO BALANCE SHEET IS FILED FOR THE YEAR S 2005 - 06 TO 2007 - 08. FROM THE YEA R THE ASSESSEE HAS FILED AUDITED BALANCE FROM 2008 - 09 ONWARDS. I T IS THE DUTY CAST ON THE TAX PAYER TO DISCLOSE HIS/HER INCOME FULLY AND TRULY. THE I . T. ACT PRESCRIBES THAT TAX IS TO BE COLLECTED ON TRUE INCOME EARNED DURING A PARTICULAR YEAR. IT DOES NOT ALLOW SHIFTING OF INCOME FROM ONE TO THE OTHER NOR DOES IT ALLOW ANY SCOPE TO BUILD UP FALSE CAPITAL THROUGH DISCLOSURE OF INCOME SLIGHTLY BELOW OR ABOVE EXEMPTION LIMITS. IT IS A WELL SETTLED THAT EVEN IF FOR A YEAR A PERSON FILES HIS TAX RETURNS PAYING MARGINAL TAX, HIS CLAIM OF CAPITAL BUILD UP CAN BE SUBJECTED TO SCRUTINY WHEN THE SAID CAPITAL IS CLAIMED TO BE UTILIZED FOR CERTAIN INVESTMENT INCLUDING ADVANCING LOANS OR STOCK IN TRADE. THE ASSESSEE WAS PAYING TAX REGULARLY . THE RETURN FILED IN RESPONSE TO NOTICE U/S 153A INDICATES THAT THE ASSESSEE HAS AVAILED THE BENEFIT OF OPENING STOCK FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS GIVEN AN OPPORTUNITY AS TO WHY THE OPENING STOCK AND APPRECIATION IN STOCK SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENTS. ON VERIFICATION OF THE RETURNS , IT IS NOTICED THAT THE INCOME - DECLARED DURING THE YEAR I S RS.2,43,840/ - . EVEN IF A TREND OF DISCLOSURE ON AVERAGE BASIS IS TAKEN @ 1,00,000/ - FOR THE LAST TWENTY YEARS, THE 7 CAPITAL CANNOT BE MORE THAN RS.20,00,000 / - . THE RECORDS OF THE ASSESSEE NEITHER SHOW ANY SUNDRY CREDITOR, SECURED OR UNSECURED LOANS NOR TH E AS S ESSEE FURNISHED SUCH DETAILS IN RESPONSE TO THE LETTERS UNDER REFERENCE. THEREFORE IT IS ABUNDANTLY CLEAR THAT THE ASSESSEE IS RUNNING THE BUSINESS WITH AVAILABLE CAPITAL AND STOCK OF PAST YEARS AND PURCHASES OF EACH YEAR. IN VIEW THE FACTS, THERE IS NO OTHER ALTERNATIVE THAN TO GIVE BENEFIT OF OPENING CAPITAL AND CLOSING CAPITAL AND THE TRADING RESULTS SHOWN BY THE ASSESSEE DURING THE YEAR WHICH SHALL HAVE CASCADING EFFECT IN THE SUCCEEDING YEARS. THEREFORE, IT IS NECESSARY TO RECAST THE BALANCE SHEET FOR THIS YEAR ON THE BASIS OF TRADING AND CAPITAL ACCOUNTS FURNISHED BY THE ASSESSEE IN THE RETURN OF INCOME. THE RECASTED BALANCE SHEET OF THE ASSESSEE FOR THE YEARS UNDER CONSIDERATION IS NOTHING BUT ON THE BASIS OF THE DISCLOSURE MADE BY ASSESSEE IN CAPITAL ACCOUNT AND TRADING ACCOUNT. WHILE CONSIDERING THE CAPITAL IN THE BALANCE SHEET, OPENING CAPITAL OF PAST YEARS WERE ALSO CONSIDERED. THEREFORE, IN ABSENCE OF ANY OTHER ASSET IN THE BALANCE SHEET, THE CLOSING STOCK IS ONLY THE ASSET AND CAPITAL IN THE LIABILITY SIDE AS SUCH. IN ORDER TO BALANCE THE ASSETS AND LIABILITIES, THE DIFFERENCE CANNOT BE ANYTHING EXCEPT UNACCOUNTED INCOME OF THE ASSESSEE IN FORM OF CAPITAL (IN A BSENCE OF ANY OTHER LIABILITY) 8 AND ADDED TO THE TOTAL INCOME. THEREFORE, LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER . 7 . LEARNED AR SUBMITTED BEFORE U S THAT THE ASSESSING OFFICER SUGGESTED THAT FOR A PERIOD OF 20 YEARS PRIOR TO A.Y. 2005 - 06, THE ASSESSEE COULD NOT HAVE SAVED AND BUILT UP A CAPITAL OF RS. 20 LAC. HOWEVER , AS ON 01/04/2004, HE HA D COMPUTED THE INCOME OF RS. 33,54,073/ - . THE ASSESSING OFFICER HAS CONSIDERED SALES, PURCHASES AND OPENING STOCK ETC. AND COMPUTED CLOSING CAPITAL AS ON 31/03/2005 AS RS. 35,48,093/ - . THERE IS NO ACCRETION OF CAPITAL DURING THE YEAR AMOUNTING TO LESS THAN RS. 2 LAC. THE OPENING STOCK AS ON 01/04/2004 IS RS. 71,11,194/ - AND THE CLO SING STOCK ON 31/03/2005 IS RS. 81,08,883/ - . THE ASSESSING OFFICER HAS TAKEN THE CLOSING STOCK FIGURE AND CLOSING CAPITAL FIGURE AS ABOVE AS ON 31/03/2005 AND HAS HELD THAT THE DIFFERENCE OF RS. 45,60,790/ - WOULD REPRESENT INVESTMENT IN PURCHASE OF GOLD. LEARNED AR FURTHER SUBMITTED THAT IF THE ASSESSING OFFICERS STAND IS ACCEPTED AS ON 31/03/2005 , FOLLOWING THE SAME PRINCIPLE AS ON 31/03/2004 SINCE THE OPENING STOCK IS TAKEN AT RS. 71,11 ,194/ - THE OPENING CAPITAL SHOULD BE COMPUTED AT THE SAME VALUE . THE ASSESSING OFFICER HAS NOT MADE OUT THE PROPER FIGURES OF ACCOUNTS WHICH ARE NECESSARY FOR PREPARING THE BALANCE SHEET OF ASSESSEE S INDIVIDUAL ACCOUNT . THE RATIONAL METHOD IS TO CON S I D ER THE 9 NET ACCRETION IN CAPITAL BEFORE CONSIDERING PERSONAL DRAWINGS. THIS SHOULD GIVE A FARE IDEA OF THE INCOME EARNED DURING THE CONCERNED YEAR. THE ITO HAS NOT CONSIDERED THIS, HENCE, LD. CIT(A) HAS DELETED THE ADDITION , THEREFORE , IT MUST BE UPHELD FOR THE A.YS. 2005 - 06 TO 20 08 - 09. 8 . WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT LD. CIT(A) HAS VERIFIED THE CAPITAL ACCOUNT AND HE WAS OF THE VIEW THAT IN ACCOUNTING PARLANCE, CAPITAL ACCOUNT IS ONLY A NOMINAL ACCOUNT AND DOES NOT HAVE A REAL EXISTENCE. THE LD. CIT(A) HELD THAT I T IS THE DIFFERENCE BETWEEN THE ASSETS AND LIABILITIES OF AN ASSESSEE ON A PARTICULAR DAY . IN A BALANCE SHEET , THERE MAY BE SO MA NY ITEMS OF ASSETS INCLUDING STOCK AND ON THE LIABILITY SIDE THERE MAY BE VARIOUS LIABILITIES LIKE CREDITORS, LOANS ETC. THE CAPITAL BALANCE CAN REMAIN THE SAME FROM THE OPENING DAY TO THE CLOSING DAY OF AN ACCOUNTING YEAR WITH FULL LIBERTY OF VARIATION I N INDIVIDUAL ASSET FIGURES AND VARIATION IN INDIVIDUAL LIABILITY FIGURES , SO LONG AS THE DIFFERENCE BETWEEN TOTAL ASSETS AND LIABILITY DOES NOT CHANGE. IN A JEWELLERY CASE, THE OPENING STOCK OF GOLD MAY SUBSTANTIALLY GO UP (EVEN 10 FOLD) DURING A YEAR STOCK IF SUBSTANTIAL GOLD IS ACQUIRED AND SOME CASH/BACK BALANCE IS USED UP FOR THIS. THE INCREASE IN STOCK WILL BE BALANCED BY DECREASED IN CASH /BANK ACCOUNT. 10 BUT THIS WOULD NOT MEAN THAT THE OPENING CAPITAL WILL HAVE TO GO UP BY 10 TIMES DURING THE YEA R. IN SPITE OF SUBSTANTIAL INCREASE IN STOCK, IF THE NET VARIATION BETWEEN TOTAL ASSET AND TOTAL LIABILITY IS NIL, THERE WILL BE NO CHANGE IN THE CAPITAL. THEREFORE, LD. CIT(A) HAS HELD THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN HIS ACTION AND THE CA LCULATION OF THE ASSESSING OFFICER CANNOT BE CONSIDERED AS UNEXPLAINED INVESTMENT IN GOLD. THEREFORE , WE ARE OF THE VIEW THAT LD. CIT(A) IS JUSTIFIED IN D ELETING THE ADDITION ON ACCOUNT OF INCOME FOR A.YS. 2005 - 06 TO 2008 - 09 . OUR INTERFERENCE IS NOT REQUIRED . 9 . IN THE RESULT, APPEAL S OF THE DEPARTMENT ARE DISMISSED. 10 . FOR A.Y. 2011 - 12 , L EARNED AR SUBMITTED THAT LATE SHRI GANESH PRASAD SAHOO ADMITTED THE VALUE OF 13 KGS OF GOLD AS UNACCOUNTED INCOME IN HIS STATEMENT RECORDED U/S. 132(4) OF THE ACT. BUT , ACTUALLY , THE ASSESSEE HAS BOUGHT PERSONAL GOLD DURING THE PAST SEVERAL YEARS WHICH HAD ACCUMULATED TO 13 KGS WHICH WAS DIFFERENT F R OM THE OTHER GOLD AVAILABLE IN BUSINESS. SEARCH WAS CONDUCTED ON 29/03/2011 . LATE SHRI GANESH PRASAD SAHOO EXPIRED ON 24/01/2012 , WHICH WAS SHORTLY AFTER THE SEARCH . T HEREFORE, ASSESSEE COULD NOT EXP LAIN THE SOURCE OF 13 KG GOLD . LEARNED AR FURTHER SUBMITTED THAT ASSESSEE HAD STOCK OF 5 KG GOLD ONLY , BUT HE WAS HAVING 13 KG GOLD IN HIS PERSONAL 11 ACCOUNT . I N THE WEALTH TAX R ETURN FOR A.Y. 2011 - 12 , HE WAS MENTIONED THE SAME. COPY OF WEALTH TAX RETURN, BALANCE SHEET AND P & L A/C WAS FILED IN PAPER BOOK AT PAGE NOS . 15 & 16 . ASSESSEE IN HIS WEALTH TAX RETURN HAD ALREADY ACCOUNTED FOR THIS GOLD AND HAS PAID WEALTH TAX ON THE SAME , WHICH CAN BE VERIFIED FROM THE WEALTH TAX RETURN AT PAGE NOS. 4 TO 14 OF THE PAPER BOOK. THE DEPARTM ENT HAS ACCEPTED THAT THE ASSESSEE WAS HAVING GOLD OF 13 KG WHICH WAS SHOWN IN WEALTH TAX RETURN. THEREFORE, NO ADDITION CAN BE MADE. THE LEARNED AR HAS FURTHER SUBMITTED THAT T HE ADDITION OF RS. 1,63,77,860/ - HAS BEEN MADE UNDER THE HEAD U NEXPLAINED I NVESTMENT OF S TOCK. IN FACT THE LEARNED A.O. MERELY ESTIMATED THE PURCHASE VALUE OF GOLD ORNAMENTS AS UNDER: - PURCHASE VALUE DECLARED BY THE ASSESSEE RS. 3,82,33,697 - 80 ADD VAT INPUT RS. 90,099 - 00 ENTRY TAX RS. 29,703 - 00 PROCESSING CHARGES RS. 2,80,302 - 00 RS. 3,86,33,800 - 00 THE TOTAL PURCHASE HAS BEEN MADE ON DAY TO DAY BASIS AND MOREOVER , WHICH WERE REGULARLY RECORDED IN THE PURCHASE REGISTER AND ARE VERIFIABLE. THE LEARNED A.O. SHOULD NOT HAVE DOUBTED THE PURCHASE AND SHOULD NOT HAVE ESTIMATED THE PURCHASE PRICE. MOREOVER, IF THE PURCHASE IS INCREASED IN THE MANNER ADOPTED BY THE LEARNED A.O. THE SAME WILL BE HAVE A DIRECT EFFECT ON THE GROSS PROFIT AND ULTIMATELY THE 12 GROSS PROFIT WILL BE LESS BY THE SAME AMOUNT. TO BE MORE SPECIFIC IF THE PURCHASE VALUE IS INCREASED BY RS. 1,63,77,860/ - AS SUGGESTED BY THE LEARNED A.O. THE RESULTANT G.P. WILL BE REDUCED BY THE SAME AMOUNT I.E. THE G.P. WOULD BE ( - ) RS. 1,20,04,548/ - IN PLACE OF RS. 43,73,312/ - AS DECLARED. AS SUCH THE ATTEMPT MADE BY THE LEARNED A.O. TO ENHANCE TO PURCHASE BY WAY OF ESTIMATING THE COST AND MAKING ADDITION IN THIS MANNER WILL RESULT INTO NOTHING. THEREFORE, APPEAL MAY BE ALLOWED. 11 . LEARNED DR RELIED UPON THE ORDERS OF THE REVENUE. 12 . WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS FILED THE WEALTH TAX RETURN FOR A.Y. 2011 - 12 WHICH IS PLACED AT PAGE NOS. 4 TO 14 OF THE PAPER BOOK . I N THE WEALTH TAX RETURN, THE ASSESSEE HAS SHOWN THAT HE WAS HAVING GOLD AS HIS SAVINGS AND THE ASSESSEE HAS PAID THE TAX ON IT. WE FIND THAT WHEN ASSESSEE HAS SHOWN THIS GOLD IN HIS P & L ACCOUNT, NO ADDITION CAN BE MADE. WE FIND THAT THE ASSESSEE WAS IN THE BUSINESS OF SELLING OF GOLD JEWELLER Y AND WAS ACQUIRED SOME OF THE GOLD DURING THE RELEVANT ASSESSMENT YEARS . LATE SHRI GANESH PRASAD SAHOO HAS DISCLOSED 13 KG. GOLD, BUT HE HAS NOT STATED ANYTHING REGAR D ING THE RATES IN HIS STATEMENT U/S. 132(4) OF T HE ACT. THE RATES WERE ADOPTED BY THE DEPARTMENT AS ON THE DATE OF SEARCH I.E. ON 13 29/03/2011 . IT IS NOT A MANDATORY THAT THE ENTIRE 13 KGS WOULD HAVE BEEN ACQUIRED BY THE ASSESSEE ON THAT DATE. A SSESSEE HAS ACQUIRED THE SAME BETWEEN 01/04/2010 TO 29/03/2011 AND SURRENDERED AS INCOME OF THE YEAR. THE VALUE OF THE GOLD HAS TO BE ADOPTED AS PER THE AVERAGE PRICE OF GOLD DURING TH IS PERIOD AND IF THE PROPER VA L UATION FOR 13 KG IS DONE, THE VALUE OF THE GOLD ADOPTED AT RS. 2.62 CRORES WILL GO DOWN. TH E AVERAGE PURCHASE OF 14.2 KGS AS STATED IN THE ACCOUNTS IS BASED ON ACTUAL PURCHASE INVOICES. THERE IS NO BASIS FOR TAKING ARTIFICIAL VALUE OF 1 3 KGS. WE ARE OF THE VIEW THAT WHEN THE ASSESSEE HAS EXPLAINED 13 KG GOLD AND WHEN HE DECLARED THE SAME IN THE WEALTH TAX RETURN, THE ASSESSING OFFICER AS WELL AS LD. CIT(A) IS NOT JUSTIFIED IN ADDING THE SAME. THEREFORE , WE DELETE THE SAME. 1 3 IN THE RESULT, APPEAL OF THE ASSES SEE IS ALLOWED. 1 4 . IN THE RESULT, APPEALS OF THE DEPARTMENT ARE DISMISSED AND T H AT OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN PURSUANCE OF RULE 34(4) OF ITAT RULES, 1963 BY PUTTING ON NOTICE BOARD OF THE BENCH AT CUTTACK ON 1 3 T H MARCH, 2015. S D / - S D / - (P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 1 3 T H MARCH , 201 5 . 14 VR/ - COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE LD. CIT 4 . THE CIT(A) 5 . THE D.R 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., CUTTACK.