KIRAN FINE JEWELLERS PRIVATE LIMITED,JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, JAIPUR

ITA 1232/JPR/2024

AI Insights

The case involves M/s. Kiran Fine Jewellers Pvt. Ltd., which appealed against the order of the CIT(A), Jaipur, confirming the additions made by the Assessing Officer during the assessment year 2018-19. The additions were based on the findings from a search operation that revealed unexplained cash and excess stock of gold and silver jewellery at the business premises. The Tribunal examined the evidence, including the statements of the company's director and the valuation reports of the seized items, and found discrepancies in the application of the law and the facts presented by the Assessing Officer and CIT(A). The Tribunal's decision highlighted the importance of substantiating claims with concrete evidence and the procedural lapses in the assessment process.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 469924 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: CIT v. Durga Prasad More [1971] 82 ITR 540 (Supreme Court), Commissioner of Income-tax v. Hotel Meriya [2010] 195 Taxman 459 (Kerala)/[2011] 332 ITR 537 (Kerala), Pr. CIT v. Shri Roshan Lal Sancheti [IT Appeal No 47 of 2018, dated 30-10-2018), Hon'ble Rajasthan High Court, CIT, Bikaner v. Ravi Mathur, supra, Escorts Heart Institute and Research Centre Limited Vs. DCIT (TDS) JP. (2017) 87 Taxmann.com 184 Rajasthan, Commissioner of Income Tax Vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC), Shree Ganesh Trading Co. Vs. Commissioner of Income Tax, Dhanbad, (2013) 257 CTR 159 (Jharkhand), Commissioner of Income Tax, Karnataka Vs. Shri Ramdas Motor Transport Ltd. (2015) 230 Taxman 187 (Andhra Pradesh), Chetnaben J. Shah Vs. Income Tax Officer, Ward10(3), (2016) 288 CTR 579 (Gujarat)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P.P. MEENA; THRU V.H
• Assessee Lawyers: S.R. SHARMA; OBSERVING AT PARA .; VIRTUE OF STATEMENT; OBSERVING AT PARA .; OBSERVING AT; AN INDEPENDENT
• Keywords: Corroborative evidences; Unexplained investment; Documents seized; Retraction; TDS; Search and seizure; Valuation report; Block assessment; Assessment record; Reason to believe; Charitable institution
• Section: 195; 192; 64; 132; 131; 22; 13; 69A

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oaJh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 1232/JP/2024 fu/kZkj.k o\"kZ@Assessment Year : 2018-19 M/s. Kiran Fine Jewellers Pvt. Ltd. F-19, Gautam Marg, Vaishali Nagar Jaipur cuke Vs. The DCIT Central Circle-2 Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AADCK 7512 P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri S.R. Sharma, CA and Shri R.K. Bhatra, CA jktLo dh vksj ls@Revenue by: Shri P.P. Meena, CIT-DR (Thru” V.H.) lquokbZ dh rkjh[k@Date of Hearing : 03/02/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 25 /02/2025 vkns'k@ORDER PER: DR. S. SEETHALAKSHMI, JM The assessee has filed an appeal against order of the ld. CIT(A), Jaipur-4, dated 20-08-2024 for the assessment year 2018-19 wherein the assessee has raised the grounds of appeal as under:- ‘’1. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the learned AO that out of cash of Rs. 16,03,210/- found at business premises of the appellant at the time of search, sources of cash to the extent of Rs. 11,76,838/- allegedly remained unexplained and in further upholding addition said amount of Rs. 2 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR 11,76,838/- to the income of the appellant as unexplained money u/s 69A of the IT Act, 1961 on this count. 2. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the learned AO that out of silver jewellery weighing 47831 gms. found at business premises of the appellant at the time of search, jewellery weighing 18704.46 gms was allegedly found in excess, sources of which also allegedly remained unexplained and in further making an addition of Rs. 6,57,672/-to the income of the appellant u/s 69A of the IT Act, 1961 as unexplained investment on this count. 3. That on the facts and in the circumstances of the case, the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the ld. AO that out of stock of gold jewellery, jewellery weighing 18 KT. valued at Rs. 41,48,637/- was allegedly found in excess at the time of search at the business premises of the appellant and in further confirming addition of said amount of Rs. 41,48,637/- to the income of the appellant as unexplained investment u/s 69A of the IT Act, 1961 on this count. 4. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in confirming finding recorded by the ld. AO that out of 22 KT gold jewellery and gold bar found at the time of search at the business premises of the appellant, gold jewellery weighing 2683.36 gm. and gold bars weighing 480.60 gms. valuing Rs. 85,70,827/- (7157863 + 1412964) were allegedly found short which represented unaccounted sale of the appellant not offered to tax by it and in further confirming addition of Rs. 3,67,688/- to the income of the appellant being alleged profit earned on such sale by applying GP rate of 4.29% on above said alleged unaccounted sale of Rs. 85,70,827/-. 5. That on the facts and in the circumstances of the case the learned CIT(A) is wrong, unjust and has erred in law in upholding application of provisions of sec. 115BBE of the IT Act, 1961 on addition sustained by him vide ground No. (1) to (3) above. ‘’ 2.1 Apropos ground No. 1 of the assessee, it is noticed that the ld CIT(A) dismissed this ground of appeal of the assessee by observing at para 4.2 of his order as under:- ‘’4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- 3 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR The brief facts as noted in the assessment order are that a survey was conducted was carried out at the business premises of the appellant M/s Kiran Fine Jewellers on 02-08-2017 and subsequently vide warrant dated 03-08-2017 search u/s 132(4) of the I.T. Act was carried. Effectively the survey was converted into search operation. During this operation total cash amounting to Rs. 16,03,210 was found whereas as per the cash book so furnished during the course of search the cash in hand was at Rs. 4,26,372. Hence, excess cash amounting to Rs. 11,76,838 was found. Out of which cash amounting to Rs. 11,00,000 was seized. The appellant has claimed in the appeal that the cash in hand as per the regular cash book maintained was Rs. 9,34,327 and not Rs. 4,26,372 as adopted by the learned AO. Appellant has also claimed that amount of Rs. 6,68,893 was advance received from customers to purchase the ornaments as per their desire/requirement. The total worked out by the appellant comes to Rs. 16,03,220. Regarding the first contention of the appellant which is on the issue of the amount of cash in hand as on the date of search, the appellant has stated that the books of accounts were incomplete on the date of search action and book entries has been made after the conclusion of the search proceedings. However the appellant has not placed on record the all versions of relevant cash book. The appellant has:- (i) not proved and not shown that the entries in the cash book which the appellant is claiming that were not entered in the books of accounts till 02.08.2017/03.08.2017 represent the actual pending transactions and (ii) has not proven and not shown that supporting documents regarding such pending book entries were found during the course of search action, and (ii) has not proven and not shown that statement was made by any responsible person of the company during the course of search and seizure action highlighting such pending book entries. Conversely, during the course of search statement of director of the company Shri Nagendrasingh Laxamsingh Rathor was recorded on oath u/s 132(4) of the Act wherein at question no. 27 the director of the company was asked to explain the excess cash amounting to Rs. 1176838/-. However, in reply to the same the director did not raised any question or objection that the cash in hand is not at Rs. 426372/-but at Rs. 934237/-. Hence it is evident that the claim of the assessee is not acceptable and cash book so furnished to substantiate his claim has been prepared after thought. Regarding the claim of the appellant that the appellant was having cash amount of Rs. 6,68,893 on the date of search action as advance received from customers to purchase the ornaments as per their desire/requirement, the appellant has not 4 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR placed on record any material to substantiate and prove the statement. No acknowledgement slips, order memo, design details and advance amount linkage, party details, dates of receipt of such advance, etc. seen to be found during the course of search and seizure action in this regard. Details such as name, full address of these persons and items which were subsequently sold to them etc. have not been furnished. The appellant has claimed that this is a trade practice whereby the advances received from the customers however the appellant has not placed on record cash book of the earlier periods in the year under appeal and for the earlier years to show that this is a regular business practice in the case of the appellant. On these grounds the appeal of the appellant is liable to be dismissed at this stage itself. Further as referred in para 3.1, the appellant was non-compliant during the assessment proceedings and the similar approach continues in the present appeal proceedings is well and the relevant documents have not been filed in the appeal. A party who relies on a recital has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax (CIT v. Durga Prasad More [1971] 82 ITR 540 (Supreme Court)]. Further, the claim of the appellant is contrary to the statement of director of the company who at question no. 27 has explained the excess cash due to cash sale against which Invoices has not been issued. 4.3 The statement recorded during the course of search and seizure action is an evidence itself and in the present case there is no retraction (the question of valid or invalid retraction does not arise) is on record and the statement is still in force as per the appellant itself also. The statement itself is evidence against the appellant as the statement was given by the director of the company. Such evidence cannot be brushed aside and can only be countered with sterling evidences which has not been done in the present case and there is no retraction. Appellant is bound by such statement. In this regard reference is made to the following judgements:- Commissioner of Income-tax v. Hotel Meriya [2010] 195 Taxman 459 (Kerala)/[2011] 332 ITR 537 (Kerala) [26-05-2010] \"What is evidence? We shall examine it first. Evidence is defined in section 3 of the Evidence Act as follows: \"Evidence\"- \"Evidence\" means and includes (1) all statements which the Court permits or requires to be made before it by witnesses, in relation to matters of fact under inquiry, such statements are called oral evidence; (2) all documents including electronic records produced for the inspection of the Court, such documents are called documentary evidence.\" 5 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR The 'Court' mentioned above in the definition of evidence would include all persons, except arbitrators, legally authorised to take evidence as defined under section 3. In section 3, Court is defined as follows:- \"Court\"-\"Court\" includes all Judges and Magistrates, and all persons, except arbitrators, legally authorised to take evidence.\" A reading of section 131 of the Income-tax Act would show that the Assessing Officer is vested with the same powers as are vested in a court under the Code of Civil Procedure, 1908 in respect of (a) discovery and inspection, (b) enforcing the attendance of any person, including any officer of a banking company and examining him on oath and (c) compelling the production of books of account and other documents. It is not disputed that the Assessing Officer recorded the statement of the partner of the respondent as well as the employees in exercise of the powers vested by him under section 131 of the Income-tax Act. The documents were also seized in exercise of such powers. In the above circumstance, the statement of the partner and the employees recorded by the Assessing Officer as well as the documents seized would come within the purview of the evidence under section 158BB of the Income-tax Act read with section 3 of the Evidence Act and section 131 of Income-tax Act. Therefore, such evidence would be admissible for the purpose of block assessment.’’ …….. …….. \"9. It appears that the Tribunal had arrived at a conclusion that the statements recorded by the Assessing Officer under section 132(4) of the Income-tax Act has only very limited application without applying the mind. Explanation to section 132(4) of Income-tax Act would make it very clear that the evidence so collected would be relevant for all purposes of any investigation connected with any proceeding under the Income-tax Act. We find that a reading of section 132(4) with Explanation would be relevant. Hence we quote the same for easy reference \"Section 132(4) The authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any books of account, documents, money, bullion, jewellery or other valuable article or thing and any statement made by such person during such examination may thereafter be used in evidence in any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act Explanation For the removal of doubts, it is hereby declared that the examination of any person under this sub-section may be not merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding under the Indian Income-tax Act. 1922 (11 of 1922), or under this Act\" Going by the above provision along with its Explanation we find that the statement of the partner and employees recorded and documents collected are relevant and 6 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR admissible in respect of all matters for the purpose of any investigation connected with any proceedings under the Income-tax Act Hence, we are of the opinion that the statements so recorded and documents collected by the Assessing Officer cannot be brushed aside as done by the appellate Tribunal stating that it is having only very limited application. We answer the question in favour of the appellant.\" Pr. CIT v. Shri Roshan Lal Sancheti [IT Appeal No 47 of 2018, dated 30-10-2018), Hon'ble Rajasthan High Court ‘’This court in CIT, Bikaner v. Ravi Mathur, supra, which judgment has been relied by the ITAT in the present case, after considering catena of previous decisions, held that the statements recorded under section 132(4) of the IT Act have great evidentiary value and they cannot be discarded summarily and cryptic manner, by simply observing that the assessee retracted from his statement. One has to come to a definite finding as to the manner in which the retraction takes place. Such retraction should be made as soon as possible and immediately after such statement has been recorded by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials by way of duly sworn affidavit or statement supported by convincing evidence, stating that the earlier statement was recorded under pressure, coercion or compulsion. We deem it appropriate to reproduce para 15 of the said judgment, which reads thus, \"15. In our view, the statements recorded under section 132(4) have great evidentiary value and it cannot be discarded as in the instant case ITA No. 720/JP/2017 M/s Bannalal Jat Construction Pvt. Ltd., Bhilwara v. ACIT, Central Circle-Ajmer by the Tribunal in a summary or in a cryptic manner. Statements recorded under section 132(4) cannot be discarded by simply observing that the assessee retracted the statements. One has to come to a definite finding as to the manner in which retraction takes place. On perusal of the facts noticed hereinbefore, we have noticed that while the statements were recorded at the time of search on 9-11-1995 and onwards but retraction, is almost after an year and that too when the assessment proceedings were being taken up in November 1996. We may observe that retraction should be made as soon as possible and immediately after such a statement has been recorded, either by filing a complaint to the higher officials or otherwise brought to the notice of the higher officials, either by way of a duly sworn affidavit or statements supported by convincing evidence through which an assessee could demonstrate that the statements initially recorded were under pressure/coercion and factually incorrect. In our view, retraction after a sufficient long gap or point of time, as in the instant case, loses its significance and is an afterthought. Once statements have been recorded on oath, duly signed, it has a great evidentiary value and it is normally presumed that whatever stated at the time of recording of statements under section 132(4), are true and correct and brings out the correct picture, as by that time the assessee is uninfluenced by external agencies. Thus, whenever an assessee pleads that the statements have been obtained forcefully/by coercion/undue influence without material/contrary to the material, then it should be supported by strong evidence 7 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR which we have observed hereinbefore. Once a statement is recorded under section 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time and in the instant case we notice that the AO in the Assessment Order observes:- \"Regarding the amount of Rs. 44.285 lakhs, it is now contended that the statement u/s 132(4) was not correct and these amounts are in ITA No 720/JP/2017 M/s Bannalal Jat Construction Pvt. Ltd., Bhilwara v. ACIT, Central Circle-Ajmer thousands, not lakhs ie it is now attempted to retract from the statements made at the time of S & S operations Therefore, what we gather from the Assessment Order and on perusal of the above finding that the retraction was at the stage when the assessment proceedings were being finalized i.e. almost after a gap of more than an year. Such a so-called retraction in our view is no retraction in law and is simply a self- serving statement without any material. In the above judgement, inter-alia, the following arguments were taken on behalf of the assesse which stand rejected- \"Per contra, Mr. Prakul Khurana, learned counsel for the respondent- assessee submitted that the surrender was extracted from the assessee by Income tax authorities during the search proceedings by use of coercion, duress and threat, which facts have been explained by the assessee in greater detail in the affidavit of retraction. It is argued that affidavits of Shri Suresh, Shri Ashok Jat and Shri Padam Kumar Jain were also filed, in which they have stated on oath that they did not own any land and therefore there did not arise any question of their accepting any advance from the assessee. Learned counsel referred to Instruction No. 286/2003-IT(Inv.) dated 10.03.2003 issued by the Central Board of Direct Taxes which acknowledges the fact that in certain cases, assessees are forced to disclosed the income during the course of search, seizure and survey operations. It was advised therein that there should be focus and concentration on collection of evidence of income which lead to information of what has not been disclosed or is not likely to be disclosed before the Income Tax Department, and no attempt should be made to obtain confession as to any disclosed income. Circumstances in which the assessee had to give the statements under Section 132(4) and/or under Section 131 of the Act have been explained in the affidavit filed on 20.05.2013. The very fact that the search continued for as long as 36 hours indicates that coercion and undue influence were exercised by the authorities of the appellantdepartment for making surrender. The affidavit filed by the assessee on 20.05.2013 explained in minute details the circumstances which led to surrender and how the surrender was extracted from the assessee from the aforesaid seven papers. The assessee has not brought any evidence on record to 8 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR prove the facts mentioned by the assessee in the affidavit. The persons whose names were mentioned on the papers seized by the department have also denled any amount having been received by them from the assessee as advance against the sale of the properties/land Learned counsel argued that the Assessing Officer has not given any reason in the assessment order as to why the explanation given by the assessee in the affidavit was not acceptable Learned CIT(A) has given detailed reasons in respect of each deletion of the addition made by the Assessing Officer. Learned counsel in support of his arguments relied upon the judgment of the Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. State of Kerala & Another, (1973) 91 ITR 0018 (SC) and submitted that the Supreme Court therein held that the admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made admission to show that it is incorrect and the assessee should be given proper opportunity to show the correct state of affairs. Reliance is also placed on the judgment of Madras High Court in M. Narayan and Bros. Vs. Assistant Commissioner of Income Tax, Special Investigation Circle, Salem, (2011) 13 Taxmann.com 49 (Madras) wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. It is argued that additions cannot be made merely on the basis of statements which are subsequently retracted even belatedly as held by Delhi High Court in CIT Vs. Sunil Aggarwal, (2015) 64 Taxmann.com 107 (Delhi). Learned counsel relied on the judgment of this Court in Escorts Heart Institute and Research Centre Limited Vs. DCIT (TDS) JP. (2017) 87 Taxmann.com 184 Rajasthan, Commissioner of Income Tax Vs. Vegetable Products Ltd. (1973) 88 ITR 192 (SC) and argued that if two views are possible, the view in favour of the assessee should be preferred. Reliance is also placed on the judgments in Commissioner of Income Tax Vs. K.Y. Pilliah & Sons, (1967) 63 ITR 411 (SC); Deputy Commissioner of Income Tax Vs. Ratan Corpn., (2005) 197 CTR 536 (Gujarat), The Assistant Commissioner of Income Tax, Central Circle, Ajmer Vs. Shri Devendra Kumar Choudhary, 2-5-10 to 2-S-18. Basant Vihar, Bhilwara, ITA No 828/JP/16, Commissioner of Income Tax Vs. Ashok Kumar Soni, (2007) 291, ITR, 172 (Raj.), Kailashben Manharlal Chokshi Vs. Commissioner of Income Tax (2008) 174 Taxman 466 (Gujarat), Commissioner of Income Tax, Central-II, Mumbal Vs. Omprakash K. Jain, (2009) 178 Taxman 179 (Bombay), Mehta Parikh & Co. Vs. Commissioner of Income Tax, (1956) 30 ITR 181 (SC): Shree Ganesh Trading Co. Vs. Commissioner of Income Tax, Dhanbad, (2013) 257 CTR 159 (Jharkhand); Commissioner of Income Tax, Karnataka Vs. Shri Ramdas Motor Transport Ltd. (2015) 230 Taxman 187 (Andhra Pradesh). Chetnaben J. Shah Vs. Income Tax Officer, Ward10(3), (2016) 288 CTR 579 (Gujarat)\" (Emphasis Supplied) The Hon'ble Rajasthan High Court in this case further held as under- 9 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR 'In view of the law discussed above, it must be held that statement recorded under Section 132(4) of the Act and later confirmed in statement recorded under Section 131 of the Act, cannot be discarded simply by observing that the assessee has retracted the same because such retraction ought to have been generally made within reasonable time or by filing complaint to superior authorities or otherwise brought to notice of the higher officials by filing duly sworn affidavit or statement supported by convincing evidence. Such a statement when recorded at two stages cannot be discarded summarily in cryptic manner by observing that the assessee in a belatedly filed affidavit has retracted from his statement. Such retraction is required to be made as soon as possible or immediately after the statement of the assessee was recorded. Duration of time when such retraction is made assumes significance and in the present case retraction has been made by the assessee after almost eight months to be precise, 237 days (Emphasis supplied) CIT, Bikaner vs. Shri Ravi Mathur (D.B. Income-tax Appeal No. 67/2002), Hon'ble Rajasthan High Court \"Once a statement is recorded u/s 132(4), such a statement can be used as a strong evidence against the assessee in assessing the income, the burden lies on the assessee to establish that the admission made in the statements are incorrect/wrong and that burden has to be discharged by an assessee at the earliest point of time, such a so-called retraction in our view is no retraction in law and is simply a self-serving statement without any material Commissioner of Income-tax V. MAC Public Charitable Trust [2022] 144 taxmann.com 54 (Madras)/[2023] 450 ITR 368 (Madras) [31-10-2022] \"63. The statements given to the Assessing officer under section 132 (4) have legal force. Unless the retractions are made within a short span of time, supported by affidavit swearing that the contents are incorrect and it was obtained under force, coercion and by lodging a complaint with higher officials, the same cannot be treated as retracted. This position laid down in catena of decisions by the various High Courts in Lekh Raj Dhunna ( supra), Bachittar Singh (supra), Rameshchandra & Co. v. C/T[1987] 35 Taxman 153/168 ITR 375 (Bom.), Dr. S.C. Gupta (supra), C/Tv, Hotel Meriya [2010] 195 Taxman 459/[2011] 332 ITR 537 (Ker.), O. Abdul Razak (supra)\" (Emphasis Supplied) In. Manmohansingh Vig v Deputy Commissioner of Income Tax, Circle 1(1), [2006] 6 SOT 18 (Mum), the ITAT while coming to a conclusion as to the admissibility of a retraction made on an affidavit by the assessee, laid out certain reasoning for not admitting the same. The conclusions drawn by the Tribunal would be useful for us and gives us an insight to ascertain as to what the Courts 10 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR have regard to, while dealing with retractions and how a retraction should be framed. The relevant extract is given hereunder- a) What was retracted subsequently was only a denial. No material evidence was furnished so as to discharge onus cast on the assessee by virtue of statement recorded under sections 132(4) and 131(1A), b) Presumption raised under section 132(4A) is not rebutted by the assessee by submitting cogent evidence. Hence, the statement given under sections 132(4) and 131 (1A) hold their evidentiary value. c) No material has been submitted to show that any pressure or coercion was exercised while recording the statements under sections 132(4) and 131(1A). No complaint was filed immediately after search or recording of statement under section 131 (1A) to show that there was any pressure or coercion. Statement under section 132(4) was recorded before witnesses. Hence, there is a presumption that there was no pressure/coercion unless proved. d) Disclosure was enhanced during statement under section 131(1A) as compared to the statement given under section 132(4). Hence, the theory of pressure or coercion applied during recording not of statement under section of statement e) The assessee is silent for about 11 months. No letter/correspondence was sent immediately after recording of statement under section 132(4). Hence, theory of pressure or coercion is only an afterthought. f) Disclosure of several items were based on documents found in the search. These documents were explained under sections 132(4) and 131(1A). Hence, there is a strong reason to believe that statement under sections 132(4)/131(1A) reveal correct state of affairs and retraction has to be ignored. 4.4 In view of the above discussion this ground of appeal of the appellant is hereby dismissed 2.2 During the course of hearing, the ld.AR of the assessee submitted that the ld. CIT(A) is not justified in confirming the addition of Rs.11,76,833/-made by the AO u/s 69A of the Act. It may be noted that the ld. AR of the assessee repeated the same arguments as made before the ld. CIT(A). 11 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR 2.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 2.4 We have heard both the parties and perused the materials available on record including the case laws cited by the respective parties. In this case it is noted that the assessee is aggrieved as to the addition of Rs.11,76,838/- which has been confirmed by the ld. CIT(A) for the reason that :- (a) That during the course of search, total cash amounting to Rs. 16,03,210/- was found and as per the cash book, the alleged cash in hand was Rs. 4,26,372/-. Hence, alleged excess cash Rs. 11,76,838/- was found. (b) Relied upon the statement recorded during the course of search of the Director Shri Narendra Singh Laxman Singh Rathore in which he “did not raise (para 7.4 of the assessment order) any question or objection” in reply to the cash in hand Rs. 4,26,372/-. The relevant para of the statement of Director has also been reproduced in the impugned assessment order as follows :- ^^ iz’u % vkidh dEiuh ds O;olkf;d ifjlj ij vk;dj dk;ZokbZ ds nkSjku HkkSfrd lR;kiu djus ij 16]03]210@& :i;s dkcash ik;k x;k gSA ,oa cgh[kkrksa ds vuqlkj Cash in hand Rs.4,26,372/- :i;s gSA bl izdkj vkids ;gka ij cash 11,76,838/- :i;s vf/kd ik;k x;k] d`i;k bl vf/kd ik;s x;s cash ds ckjs esa viuk Li\"Vhdj.k nsosA mÙkj % tks LVkWd de ik;k x;k gS oks fcuk fcy dVs lsy gks x;h gSA vkSj blh otg ls LVkWd de ik;k x;k gS] vkSj cash vf/kd ik;k x;k gSA^^ (c) The learned AO and the learned CIT(A) both are also of the view that the assessee failed to furnish details i.e. name, full address of the persons from whom a sum of Rs. 6,68,893/- were received and as such, the claim made during the course of assessment proceedings by the assessee is in contradiction to the supra statement of the Director of the appellant company. 12 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR It is also noted from the records that the learned CIT(A) discussed the issue in para No. 4.2 to 4.4 of the appellate order. In this regard, the appellant submitted that during the course of assessment proceedings, the appellant submitted complete and correct books of accounts including cash book had been maintained. It is submitted that as per the said cash book, the cash in hand as on date of search was Rs. 9,34,327/- and not Rs. 4,26,372/- as alleged and considered by the learned AO / learned CIT(A).The ld. AR further submitted that the appellant also made a request to the AO to provide a copy of the working details or any evidence based on the same, the cash in hand amount was worked out by the AO at Rs. 4,26,772/- as referred in the supra statement of the Director but the AO did not supply the required details and the ld CIT(A) also did not consider request of the appellant.It is further submitted that after considering the advance payments from customers Rs. 6,68,893/-, the total cash in hand as on the date of search was Rs. 16,03,220/-. The appellant also submitted before the learned CIT(A) that the learned AO did not point out any error or mistake in maintenance of cash book which is till date lying seized with the IT Department. However, the , AO and the ld CIT(A) solely relied upon the 13 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR no objection raised by the Director of the appellant company in his statement and turned down the claim of the appellant backed by documentary evidence in making the supra addition of Rs. 11,76,838/-. Further, the AO has also not taken into consideration the submission of the Director made in his supra statement. “The excess cash if any represents the cash sales made for which bills are to be made” and there is a no requirement of mentioning IT PAN Number and address, etc. in the cash sales up to Rs. 2,00,000/-. It is noted thatas per above facts, it is crystal clear that the learned CIT(A) has solely relied upon the statement of the Director of the appellant company without appreciating the complete facts of the statement and also ignoring the facts that no working details of alleged cash in hand Rs. 4,26,372/- as per IT department’s findings / working as on date of search have been supplied. The ld. AR of the assessed also submitted that no defect or deficiency had been pointed out either by the AO or by the learned CIT(A) in maintenance of the daily regular cash book and other books of accounts. Thus, the action of the AO as well as CIT(A) appears one sided and not supported by legal legs. We noted that ld. CIT(A) relied upon the following judgments :- 14 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR A. Commissioner of Income-tax v. Hotel Meriya [2010] 195 Taxman 459 (Kerala) / [2011] 332 ITR 537 (Kerala) [26.05.2010] – In this case, the issue decided was regarding evidence of the statement as per definition given in Section 3 of the Evidence Act and additions made have been confirmed on the basis of the statement. In appellant’s case, the appellant has not denied and / or objected the statement of the Director but the objections have been made on the calculation of alleged excess cash in hand. Thus, the facts of the said case are in applicable in appellant’s case. B. Principal Commissioner of Income-Tax Vs Roshan Lal Sancheti [2023] 150 taxmann.com 227 (Rajasthan) – In this case the statement recorded during the course of search u/s 132(4) of the IT Act, 1961, the Hon’ble High Court held that when a statement is recorded at two stages and the assessee had categorically admitted in clear terms additional income, could not be discarded simply in satiric manner. In appellant’s case, no second statement was recorded and in the statement recorded u/s 132(4), the appellant has submitted that presently he is unable to got verify from the books of accounts. Thus, the ratio decided in the said judgment are inapplicable in the appellant’s case. C. Bannalal Jat Constructions (P) Ltd. Vs ACIT [2019] 106 taxmann.com 128 (SC) – The facts of this case were that during the course of search cash was found at the residential premises of Shri Banna Lal Jat one of the Directors of above referred Pvt. Ltd. company. In the statement recorded u/s 132(4) of the IT Act, 1961, Shri Banna Lal Jat disclosed the said cash found as undisclosed income of the Private Limited company and he further reconfirmed in the statement recorded in the second statement recorded u/s 131 of the IT Act, 1961. Thereafter, Shri Banna Lal Jat informed that the said cash belongs to his proprietorship concern. In applicant’s case as evident from the assessment order that its facts are all together different and as such the ratio decided in the said case relied upon by the learned CIT(A) are inapplicable. D. CIT, Bikaner Vs Ravi Mathur in D.B. Income Tax Appeal No. 67/2002, Hon’ble Rajasthan High Court – In this case, the Hon’ble Court held that burden lies on the assessee to establish that admission made in the statements 15 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR are incorrect to which, Shri Ravi Mathur failed to do so. In appellant’s case, the Director submitted explanation of the cash found during the course of search. It is also noted that appellant company with reference to the case laws relied upon by the ld CIT(A) submits that as of now, it is a settled position of law that the statement of the assessee is an extremely important piece of evident but it cannot be conclusive and later on the same may be amended. In support of this argument, the appellant relies upon the judgment of the Hon’ble Supreme Court in Pullangode Rubber Produce Company Ltd. Vs. State of Kerala & Another, (1973) 91 ITR 0018 (SC), Hon’ble Court there in held that the admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the assessee who made admission to show that it is incorrect and the assessee should be given proper opportunity to show the correct state of affairs. Reliance is also placed on the judgment of Madras High Court in M. Narayan and Bros. Vs. Assistant Commissioner of Income Tax, Special Investigation Circle, Salem, (2011) 13 Taxmann.com 49 (Madras) wherein retraction made during the course of assessment proceedings was entertained and relief was granted on merits of the explanation. Further, Hon’ble Delhi High Court in CIT vs. Sunil Aggarwal, 64 Taxmann.com 107 held that addition cannot be made 16 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR merely on the basis of the statement which is subsequently retracted even belatedly. It is also noted that The appellant also placed reliance on the following judgments to support his submission :- (a) Escorts Heart Institute and Research Centre Limited Vs DCIT (TDS) JP (2017) 87 taxmann.com 184 (Rajasthan) and CIT Vs Vegetable Products Ltd. (1973) 88 ITR 192(SC) – The Hon’ble Court held that if, two views are possible, the view in favour of the assessee should be preferred. (b)Shree Ganesh Trading Co. Vs CIT, Dhanbad (2013) 257 CTR 159 (Jharkhand) (c) CIT, Karnataka Vs Shri Ramdas Motor Transport Ltd. (2015) 230 Taxman 187 (Andhra Pradesh) (d) Chetnaben J. Shah Vs Income Tax Officer, Ward 10(3) (2016) 288 CTR 579 (Gujarat). (e) Mantri Share Broker P Ltd. (96) Taxmann.com 279 (Rajasthan) Hence taking into consideration entire facts of the case and the case law as mentioned, the Bench does not concur with the findings of the ld. CIT(A) and the impugned addition of Rs. 11,76,838/- made on account of alleged excess cash in hand is wrong and against the fact of the case. Thus the Ground No. 1 of the assessee is allowed 3.1 Apropos ground No. 2 of the assessee, it is noticed that the ld CIT(A) dismissed this ground of appeal of the assessee by observing at para 5.2 of his order as under:- 17 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR ‘’5.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- During the course of the search dated 02-08-2017 on the business premises of M/s Kiran Fine Jewellers Pvt. Ltd, physical stock was taken by a registered valuer in the presence of trusted person of the assessee company wherein excess stock of silver item weighing 18570.46 gm was found and valued at Rs. 657672. During the assessment proceedings the appellant tried to explain the difference by claiming that the excess silver items represented the items obtained on approval basis from Messers Sangam Handicrafts. It is noted in the assessment order that the director of the assessee company Shri Nagendrasingh Laxmansingh Rathor in the statement recorded on oath u/s 132(4) of the Act, dated 04-08-2017 did not explain such as name of the entity from which the same has been received. The assessee has came with new story during the assessment that the silver jewellery was received on approval from M/s Sangam Handicraft. However, during the course of search no evidence as such furnished by the assessee that any item was received on approval. Further, the appellant did not furnish copy of bill issued from M/s Sangam Handicraft during the assessment proceedings to substantiate his claim that excess silver item pertained to purchase from M/s Sangam Handicraft However in the appeal the appellant has raised another two issues also which are (1) purity of 90 per cent was wrongly applied uniformly to all items and (ii) rate applied for valuation was also high. The appellant has not shown that these issues were also raised during the assessment proceedings despite of the fact that in the assessment order the reply of the appellant has been extracted wherein only one ground has been taken regarding the obtaining of on approval material from Messers Sangam Handicrafts. Clearly the two new issues raised in the appeal are mere afterthoughts and are made self-serving claims without any supporting evidences. In the appeal only a general reference has been made to these issues and no specific facts in terms of the valuation report, stock register, purchase bills, sales bills etc. have been filed to substantiate these grounds of appeal. Regarding the first issue, the appellant has not filed the copy of the relevant bills and documents from M/s Sangam Handicraft even during the appeal. Further self- serving statements have been made in the appeal which are baseless and are rejected. A party who relies on a recital has to establish the truth of those recitals, otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his favour then the door will be left wide open to evade tax (CIT v. Durga Prasad More [1971] 82 ITR 540 (Supreme Court)] 18 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR Further, the claim of the appellant is contrary to the statement of director of the company wherein no where it was stated that the appellant company had received on approval items from Sangam Handicrafts. As discussed in detail in para 4.3 of this order, the statement recorded during the course of search and seizure action is an evidence itself and there is no retraction (the question of valid or invalid retraction does not arise) is on record and the statement is still in force as per the appellant itself also. Further as referred in para 3.1 of this order, the appellant was non-compliant during the assessment proceedings and the similar approach continues in the present appeal proceedings as well and the relevant documents have not been filed in the appeal. In the appeals no evidences have been filed regarding the transactions with Sangam Handicrafts and also notices have been filed regarding the movement of goods from the said firm to the appellant. The appellant has also not explained why no document was found during the course of search and seizure action in this regard as no party would give the jewellery items to another party without any payment and without any document. It is also important to note that this issue was raised for the first time by the appellant during assessment proceedings only which shows a clear cut afterthought approach. In view of the above discussion this ground of appeal is hereby dismissed.’’ 3.2 During the course of hearing, the ld.AR of the assessee submitted that the ld. CIT(A) is not justified in confirming the addition of Rs. 6,57,672/- as excess stock of silver jewellery. It may be noted that the ld. AR of the assessee repeated the same arguments as made before the ld. CIT(A) 3.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 3.4 We have heard both the parties and perused the materials available on record. The Bench noted from the orders of the lower authorities that no details or particulars were asked regarding silver jewellery received on approval by the ld. AO. The assessee had submitted the copy of statement of the Director from which facts and submissions are evident from the statement of the Director of the company recorded during the course of 19 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR search. Thus, the allegation of the AO in para No. 8 page No. 5 of assessment order that the appellant “could not explain such as name of the entity from which the same has been received.” In the statement recorded u/s 132(4) of the IT Act, 1961, the appellant further submitted that the goods received on approval was duly recorded in the stock register and a copy of purchase bills of M/s Sangam Handicrafts for purchase of silver earlier received on approval was filed. It is also evident from the assessment order that the AO made no enquiry or collected any other legal evidence at his level regarding the said silver purchased from the above said concern. Thus, the addition made by the AO on this account is against the correct facts duly supported by the documentary evidences and it is wrong in view of the decision of ITAT Jodhpur Bench in the case of Suraj Kanwar Devra Vs ITO ITA No. 50/Jodhpur/2021. It is pertinent to mention that the appellant in this regard submitted that since beginning that the purity of the silver jewellery was 72% to 75% and not 90% uniformly adopted by the registered valuer. Further, we noticed that it is evident from the order of the CIT(A) that he confirmed the action of the AO without giving legal thought to the submissions and documentary evidences submitted by the assessee which are available at assessment records. In 20 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR this view of the matter, we do not concur with the findings of the ld CIT(A). Thus the Ground No 2 of the assessee is allowed. 4.1 Apropos ground No. 3 & 4 of the assessee, it is noticed that the ld CIT(A) dismissed this ground of appeal of the assessee by observing at para 6.2 of his order as under:- ‘’6.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- Adjudication of Ground No. 3 of the Appeal During the course of physical stock as taken by a registered valuer in the presence of trusted person of the assessee company, excess stock of 18Kt gold jewellery 1567.89 gram valued at Rs. 41.48,637 was found in comparison to the books of the assessee. Appellant has claimed that in show cause notice as well in assessment order the short weight of 22 cts gold jewellery and ornaments has been taken in excess by (35894.182 gms.- 34489.250 gms) 1404.932 gms. However the appellant has not placed on record evidences and underlying documents to show this working and prove the claim made by the appellant. As referred in para 3.1 of this order, the appellant was non-compliant during the assessment proceedings and the similar approach continues in the present appeal proceedings as well and the relevant documents have not been filed in the appeal. As this claim of the appellant is hereby rejected. The appellant has also claimed that during the course of search, the jewellery items Le. 18: KT and 22 KT were mixed at one place and during that exercise / act of the approved valuer, the purity tags were displaced Because of the said fact alleged difference in weight of both the purity jewellery/gold ornaments items occurred The claim of the appellant regarding the mixup of the jewellery of 22 KL. and 18 Kt during the search and seizure action by the independent official valuer is a baseless allegation. The valuers are the experts of the field and they clearly understand the criticality of the tags of the jewellery items. Such mass scale mixup and removal of tags by the experts of their fields is a baseless claim of the appellant. The stock was taken in the presence of the assessee by an independent 21 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR registered valuer and valuation report so prepared by independent registered valuer has been duly signed by the authorized person of the assessee company During the course of physical verification no such issue was raised that 22Kt Gold jewellery has been inventoried under 18Kt Gold jewellery Also, the express legal presumption provided under sections 132(4A) and 2920 of the Act are against the appellant in this regard. Further, both gold jewellery tems Le. 18Kt and 22Kt are different all together and excess of 1 item cannot be setoff with item which is found short. Further the appellant has also raised the issue that the valuation rate is high. No specific submission has been made in this regard and no supporting evidences have been filed. This issue has been raised for the first time in the appeal. This also shows that the appellant is not acting bona fide in presenting the facts of the case. Another important aspect is that even after the conclusion of search (date of search being 03.08.2017) the appellant could have immediately gone in writing before the Investigation Wing officers had there been the discrepancy as claimed by the appellant. The same should have been noted by the appellant immediately as the stock inventory must have been taken by the appellant after the search and seizure action which is a regular affair in any jewellery business. However for a long period the appellant did not challenge the neither the carat wise quantification nor the valuation of the gold items. This shows that there was no problem in the valuation report. Only after several months, during the assessment proceedings, on 19-12-2019, the appellant claimed that the 18 Kt and 22 Kt gold items got mixed up and the valuation reports were also challenged. This proves that the claim of the appellant is a mere afterthought and self-serving statement without the support of any evidences. Further the statement of the director of the company in this regard also does not mention any such discrepancy. There is no such reference in the submissions of the appellant also. As discussed in detail in para 4.3 of this order, the statement recorded during the course of search and seizure action is an evidence itself and there is no retraction (the question of valid or invalid retraction does not arise) is on record and the statement is still in force as per the appellant itself also In view of the above discussion, this ground of appeal is hereby dismissed.’’ Adjudication of Ground No. 4 of the Appeal This ground of appeal pertains to the addition in the assessment order regarding the unaccounted or unrecorded sales of the 22 Kt jewellery The appellant has claimed that (a) the assessing officer did not accepted plea of theappellant that 22 KT And 18 KT. Jewellery was mixed up at the time of search and in some cases tags were misplaced and therefore their stock should be taken together to work out shortage or excess, if any. (b) the assessing officer did not accepted plea of the appellant that 1 kg. of 22 KT. gold jewellery was kept at 22 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR residence of director(c) the rate of gold applied by the AO is also not correct, and (d) GP. Rate applied is high The claim of the appellant regarding the mixup of the jewellery of 22 Kt. and 18 Kt. during the search and seizure action by the independent official valuer is a baseless allegation. This issue has been discussed in detail in the earlier grounds of appeal wherein this claim of the appellant has been rejected. The same is hereby referred to and this claim of the appellant is hereby rejected. Regarding the claim of the appellant that 1 kg. of 22 KT. gold jewellery was kept at residence of director, the appellant has referred to the statement of the director during the course of search and seizure action in reply to question number 29 wherein it has been stated that the said jewellery of said weight was at the residence of the director of a no book entry was done in this regard. There is no contra evidence on record. The submission of the appellant was rejected in the assessment order as there was no supporting documentary evidence with the appellant. Further the appellant has also relied upon the order of the Hon'ble Interim Board of Settlement in the case of the director of the company. Appellant has relied upon the part of the said order at Page No. 19 of the order. The appellant has submitted as under:- \"The contention of the assessee company that gold ornament weighing 1000 gms were lying at residence of the Director has been accepted by the Hon'ble Interim Board for Settlement vide order passed Uis 245 D(4) of the IT Act, 1961 date 20.11.2023. The relevant part of the said order at Page No. 19 thereof are reproduced here in below:- Verification of Gold Jewellery found at the residence of applicant during the search: PCIT's comments: 3.9 During the search at residence of applicant and his Bank Locker of Kotak Mahindra Bank, Jaipur, gold Jewellery of net eight 1610.790 grms, value of Rs. 78,40,141/- and silver items of net weight 10.441 gms, value of Rs. 3,24,866/- was found. The applicant sub mitted that having regard to customary possessions and size of the family, gold and silver jewellery /articles found is reasonable. The PCIT stated that the applicant has not filed any documentary proof regarding claim that part of jewellery (1 Kg.) belongs to showroom of M/s Kiran Fine Jewellers Pvt. Ltd. The benefit of CBDT circular Instruction No. 1916 is allowed to the applicant in view of order of Hon'ble jurisdictional High Court. Therefore, the Board is requested to make addition of Rs. 81,65,007/-on account of investment in jewellery from undisclosed income of FY 2017-18. Applicant's reply 23 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR 3.9 The family of the applicant of himself, his wife, and two children (one sone and one daughter) and his parents who also live with him. Having regard to the customary possession, part of jewellery (1Kg) belongs to the showroom of M/s Kiran Fine Jewellers Pvt. Ltd. which was brought by the applicant for showing the same to a client and jewellery in the books of Smt. Hema Kanwar Therefore, jewellery found is reasonable and no addition deserves to be made.\" There is no negative finding/direction in the order of Hon'ble Interim Board of Settlement against the above submission of the director made in the settlement application/proceedings. In view of the fact that this fact was narrated by the director of the company in the statement recorded during the course of search and seizure action itself and that this issue has also been considered by the Hon'ble Interim Board of Settlement in the case of the settlement order in the case of the director of the company, the claim of the appellant that 1 kg. of 22 KT gold jewellery was kept at residence of director is acceptable and the addition of gross profit made in the assessment order with respect to the short quantity of 22 KT gold jewellery is reduced w.r.t. the gross profit on sales of equivalent amount of 1 kg of 22 KT gold jewellery Further the contentions raised by the appellant the rate of gold applied by the AO is also not correct, and G.P. Rate applied is high, have been raised for the first time in appeal and indicate afterthought on part of the appellant. At the same time the appellant has not supported these contentions with the specific facts and the relevant evidences. As referred in para 3.1 of this order, the appellant was non- compliant during the assessment proceedings and the similar approach continues in the present appeal proceedings as well and the relevant documents have not been filed in the appeal. Thus this claim of the appellant is hereby rejected. Accordingly this ground of appeal is hereby partly allowed in above terms.’’ 4.2 During the course of hearing, the ld.AR of the assessee submitted that the ld. CIT(A) is not justified in confirming the addition of Rs.41,48,637/- on account of excess (qty)stock of 18 Cts. Gold Jewellery and addition of Rs.4,82,124/- on account of short stock quantity of 22 Cts. Gold Jewellery. It may be noted that the ld. AR of the assessee repeated the same arguments as made before the ld. CIT(A) 24 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR 4.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 4.4 We have heard both the parties and perused the materials available on record. The bench noticed that the issues involved in third and fourth grounds are almost identical, inextricably interlinked or in fact interwoven and the facts and circumstances are almost common.It is noticed that the addition of Rs. 41,48,637/- made to the declared income of the appellant on account of alleged excess stock weighing 1567.89 gms of 18 cts. Gold jewellery and Rs. 3,67,688/- as a GP on the alleged undisclosed sales of the short weight of 22 cts. jewellery and gold ornaments. The AO made the said additions for the reason that the 18 cts. Gold jewelry was in excess and 22 cts. gold jewellery was short as inventoried and valued by a registered valuer in presence of a representative of the assessee company. In this connection, it is submitted by the ld. AR that there was a shortage of 0191.142 gms. of gold and gold jewellery as against the alleged excess weight 1567.89 gms. of 18 cts. gold jewellery and alleged shortage of 2278.430 gms. of 22 cts gold jewellery, determined by the AO in the impugned Assessment Order and confirmed by the ld.CIT(A). For better understanding, the appellant company submitted a comparative chart of 18 and 22 cts gold ornaments and bullion as per books of accounts (stock 25 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR register) and as per the valuation report of registered valuer prepared at the time of search. Gold ornaments and Gold Bullion (Table-A) S.No. Description Quantity as per books of accounts (in gms.) Quantity as per valuer’s report (in gms.) Difference (in gms.) 1. 18 KT gold jewellery 4176.452 5744.340 Excess 1567.888 2. (a) 22 KT gold jewellery 31478.600 3010.650 ------------- 34489.250 Note -In show cause notice as verifiable from assessment order and the said quantity has wrongly been taken as 35894.182 gms. It appears that the gold bar stock was also added with the said weight and the said item has again taken separately. 32210.820 Short 2278.430 (b) Gold Bar, Coins & Diamond Polki 1453.600 27.000 ---------- 1480.600 1000.000 Short 480.600 As per above details / particulars, there was difference in weight of 22 cts gold ornaments adopted by the AO 35894.182 gms. as against the correct weight of the said ornaments / jewellery as per seized books of accounts 34489.250 gms. It appears / mistake occurred that the weight of diamond gold jewellery and gold coin (1453.600 gms. + 27.000 gms.) = 1480.600 gms. has been considered twice i.e. in 22 cts gold ornaments and gold bars. The facts are evident and supported from the documentary evidence available on assessment record that the total weight taken by the AO of 26 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR the 22 cts. gold jewellery was 34489.250 + 1480.600 gms. weight of diamonds gold jewellery and gold coins = 35969.850 gms. Thus, the actual correct short weight of 22 cts gold ornaments was (34489.250 – 32210.820) = 2278.430 gms. as against the short weight 3683.36 gms. worked out and considered in assessment order by the AO. The said facts were submitted before the lower authority but evident from the order of the said authority, the contention / submission of the appellant has not been addressed by the AO in assessment order and the ld CIT(A) has rejected summarily. This fact was also submitted before the AO during the course of assessment proceedings but AO did not discussthis issue in the assessment order. The appellant also submitted a statement after taking into account the above referred mistake in considering wrong weight. As per the said statement/submission, there was no excess alleged weight and the shortage works out to 0191.142 gms. as follows :- (Table – B) (i) Total excess weight of 18 cts gold ornaments as per supra chart 5.1 + 1567.888 (ii) Total short weight of 22 cts gold ornaments (-) 2278.430 (-) 710.542 (iii) Short weight of Gold Diamond jewellery / coins (-) 480 gms. (-) 1191.142 (iv) Add-Jewellery lying at residence of director (+)1000.000 Correct short weight (-) 0191.142 gms. 27 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR Looking to the inventory quantity, the small difference of 0191.142 gms. is negligible and attributable to use of different weighing machines and handling in hasty manner/hurriedly of the goods at the time of valuation. Further, regarding alleged short and excess weight of 22 cts and 18 cts gold ornament jewellery, diamond jewellery and gold coins at the time of search occurred for the reasons that the purity of gold ornaments was not embodied on the ornaments / jewellery. As per the method regularly followed by the appellant, the purity of gold ornament was mentioned on the separate tag(s) attached with the ornaments. Added to this, the 22 cts and 18 cts of gold ornaments were placed / displaced in separate shelves / show cases. However, during the course of search, the registered valuer for valuation purposes collected all the jewellery / ornaments items of 22 cts and 18 cts at one place without isolation and because of the said act, different purity gold ornaments were mixed imperfectly and also de-tagged and the registered valuer determined / assessed the purity of those de-tagged items as per his own wisdom and experience. The facts and submissions of the appellant regarding neither shortage nor excess are supported and verifiable from the overall total weight of both the purity i.e. 18 cts and 22 cts gold jewellery / ornaments items. It is noted that AO in assessment order denied the claim of the 28 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR appellant for the reasons that the registered valuer has valued of jewellery items of 22 cts. and 18 cts. in the presence of representative of the appellant company. The learned CIT(A) also upheld the said finding of the learned AO. To this effect, the ld. AR submitted that the assessee - appellant reiterated the facts and submissions made before the lower authority that purity in 22 cts. and 18 cts was not embedded on the ornaments but the said purity was mentioned in separate tags attached with the ornaments. Further, it is evident from the valuation report and a known method / procedure adopted by the valuer during the course of search that he heaped / piled up of the ornaments of both the purity items at one place instead of segregation of ornaments of both purities. It is noticed that during the said process, the tags of so many items were jumbled / separated and vice versa from the ornaments and the registered valuer valued the ornaments as per his own wisdom and experience. However, as evident from the records and Table–A and B supra that after taking together, the weight of 22 cts. and 18 cts. gold jewellery, there remains a negligible difference in the total weight of jewellery ornaments as per books of accounts and physically found and valued during search. In this connection, it is also pertinent to mention here that in jewellery shop, the movement of each and every ornament including physical existence 29 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR thereof is being monitored minutely otherwise no businessman can survive. For verification and in support of the above facts, appellant also submitted copy of day-to-day stock register maintained for the period 01.04.2017 to 02.08.2017 before the lower authorities. We noted that the said record was available at the time of search and a copy thereof is lying seized with the AO. Hence, in view of the above facts dully supported by the documentary evidence, short weight of 191.142 gms. in gold jewellery ornaments of 22 cts and 18 cts purity and valuation was negligible and the same was occurred due to using the different weighing machines, etc and thus the additions of Rs 41,48,637 and Rs. 3,67,688/-made on this account are directed to be deleted. Hence, Ground No. 3 & 4 of the assessee are allowed. 5. Apropos ground No. 5 of the assessee, it is noticed that the same is raised for charge of higher tax on the income added in the assessment proceeding. Since the addition which was subjected to dispute were deleted herein above. This ground raised by the assessee becomes academic in nature and thereby the same is disposed off. 30 ITA NO. 1232/JP/2024 M/S. KIRAN FINE JEWELLERS PVT LTD VS DCIT, CENTRAL CIRCLE-2, JAIPUR 6. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 25 /02/2025 Sd/- Sd/- ¼ jkBksM deys'k t;UrHkkbZ ½ ¼ MkWa-,l-lhrky{eh½ (RATHOD KAMLESH JAYANTBHAI) (Dr. S. Seethalakshmi) ys[kk lnL; @Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 25/02/2025 *Mishra vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- M/s. Kiran Fine Jewellers Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- The DCIT, Central Circle-2, Jaipur . 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA No. 1232/JP/2024) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asstt. Registrar "