M/S. JEWEL INDIA JEWELLERS,KOLKATA V. DCIT, CENTRAL CIRCLE 4(4), KOLKATA

ITSSA 79/KOL/2025

AI Insights

The case involves M/s Jewel India Jewellers appealing against the order of the Commissioner of Income-tax (Appeals), Kolkata, which confirmed the additions made by the AO on account of undisclosed sales and investments in jewelry. A search under section 132 of the Income Tax Act was conducted on the assessee, leading to discrepancies between the physical stock and the book records. The AO made additions based on estimated undisclosed sales and purchases. The CIT(A) upheld these additions, but the Tribunal found that the evidence did not support the AO's conclusions, leading to the setting aside of the CIT(A)'s order and the deletion of the additions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 791149 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-12-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Appeal Filed On: 04-07-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P.N. BARNWAL
• Assessee Lawyers: S S.M. SURANA; SUNIL SURANA; ARS
• Keywords: Set aside
• Section: 132; 153A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRIPRADIP KUMAR CHOUBEY, JM IT(SS)A No.79/KOL/2025 (Assessment Year: 2016-17) M/s Jewel India Jewellers 41, Manohar Dass Street, Burra Bazar, Kolkata-700007, West Bengal Vs. DCIT, CC 4(4) Aaykar Bhawan Poorva, Shantipalli, 110, Eastern Metropolitan Bypass, Opposite ruby Kasaba, Kolkata-700107, West Bengal (Appellant) (Respondent) PAN No. AACFJ4832H Assessee by : S/Shri S.M. Surana & Sunil Surana, Ars Revenue by : Shri P.N. Barnwal, DR Date of hearing: 13.11.2025 Date of pronouncement: 11.12.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals), Kolkata-27(hereinafter referred to as the “Ld. CIT(A)”] dated 26.06.2025 for the AY 2016-17. 2. The issue raised in ground no.1 is general in nature, hence, need no adjudication. 3. The issues raised in ground no.2 ,3 and 4 to are against the order of learned CIT (A) confirming the addition of ₹17,84,983/- as made by the learned AO on account of profit of the undisclosed sales of jewellery and Rs. 1,17,17,159/- on account of investments in undisclosed purchases . 3.1. The facts in brief are that a search action u/s 132 of the Act was conducted on the assessee on 12.08.2015, and subsequent dates. Printed from counselvise.com Page | 2 IT(SS)A No.79/KOL/2025 M/s Jewel India Jewellers; A.Y. 2016-17 Notice u/s 153A of the Act was issued on 24.05.2017, which was complied with by filing the return of income on 10.06.2017, declaring total income of ₹3,47,55,900/-. Thereafter the statutory notices were issued along with questionnaire and duly replied by the assessee. The learned AO observed that during the course of search action the stocks of jewellery and diamond were inventorized and valued by the approved valuer. It was found that there were certain discrepancies in the stock physically found vis-à-vis, the stock as per the books of account maintained by the assessee. The learned AO noted that as per the reconciliation statement the physical stock was found excess to the tune of 402.810/- grams of 22K gold and 28.456 carrat diamond vis-à-vis stock as per the books of account which could not be explained by the assessee. Accordingly, the addition was made by the learned AO of ₹17,84,983/- towards profit on unclosed sales at the rate of 13.22% on the estimated undisclosed sale of ₹1,35,02,143/-. The calculation thereof is given on page no.3 and 4 of the assessment order by taking into account the cost of jewellery sold at ₹1,17,17,159/-. The learned AO thereafter also added on account of undisclosed investment in purchase ₹1,17,17,159/- which was calculated by reducing the profit estimated on undisclosed sales from the undisclosed sales( 1,35,02,143-17,84,983). 3.2. In the appellate proceedings, the learned CIT (A) confirmed the order of the learned AO by observing that there was shortage of stock of gold and diamond which were detected to the extent of 1189.580 grams of 22K gold and 959.620 grams of 18K gold and 201.445 carrat of diamond . The learned CIT (A) noted that the sale value of such shortage of stock was worked out at ₹1,35,02.143/-. The learned CIT (A) further noted that the profit was estimated at the rate of 13.22% and addition was made of ₹17,94,983/- to the Printed from counselvise.com Page | 3 IT(SS)A No.79/KOL/2025 M/s Jewel India Jewellers; A.Y. 2016-17 income of the assessee as profit on undisclosed sales. Besides, the balance of ₹1,17,17,159/- was added on account of unrecorded purchases corresponding to the sale of short quantity of gold and diamond not found at the business premises of the assessee. 3.3. After hearing the rival contentions and perusing the materials available on record, we find that during the course of search a document was impounded marked as JIJPL/1. The said impounded paper JIJPL/I was with regard to the jewellery in possession of the partner Puja Baid. The Ld AO did not accept the same on the ground that jewellery was not found with the partner and further in the statement recorded u/s 132(4), no averment was made that the said jewellery was lying with the partner. However, the Ld. AO accepted the fact that the said jewellery remained in the stock as at the end of the year for which he had made addition as undisclosed investment. The statement was never given to the assessee. We also note that no question was raised about the jewellery claimed to have been taken by the partner. We further note that whatever other jewellery was found short, the assessee duly explained the same that the sale was recorded on subsequent date which has been accepted by the Ld AO. Therefore, the explanation that this jewellery was with the partner supported by paper JIJPL found in the course of search should not have been rejected simply because the same was not found with the partner or that the partner did not disclose the same in her statement cannot be a ground to treat the same as sale of jewellery outside the books particularly when the very same jewellery was found included in the closing stock at the end of the year. No evidence of any sale outside the books was found in the course of search. The sale declared by the assessee has been accepted in the GST/VAT. Thus, the addition of Gross profit on assumed sale is not Printed from counselvise.com Page | 4 IT(SS)A No.79/KOL/2025 M/s Jewel India Jewellers; A.Y. 2016-17 justified. When there was no sale at all, the addition on account of the same material remaining in the closing stock cannot be added as undisclosed investment. Consequently, we set aside the order of learned CIT(A) on this issue and direct the AO to delete the additions of Rs. 17,84,983/-and Rs. 1,17,17,159/-. 4. The issue raised in Ground no. 5 is not pressed, hence, dismissed. 5. In the result, the appeal of the assessee is partly allowed Order pronounced in the open court on 11.12.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated:11.12.2025 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "