Mangat Ram Niranjan Dass V. Commissioner of Income Tax

ITA/560/2005

AI Insights

The case involves M/S Mangat Ram Niranjan Dass, a jewelry business, appealing against the order of the Income Tax Appellate Tribunal which upheld the addition of Rs.4,20,082 to their income for the Assessment Year 1995-96. The addition was based on the assumption that the gold used in remaking ornaments was the appellant's own, not from customers as claimed. The High Court found that the Tribunal did not consider the closing stock of 1994-95, which became the opening stock of 1995-96, and thus remanded the matter for re-examination.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 830430 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 13-01-2026
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: RANVIJAYSINGH; VIDHUL KAPOOR
• Assessee Lawyers: ALOK MITTAL
• Keywords: Assessment Year; Income Tax; Income tax appellate tribunal; Jewellery business; Undisclosed stock
• Section: 260A

Judgement Text

" IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** 202 ITA-560-2005 (O&M) Date of Decision: 13.01.2026 M/S MANGAT RAM NIRANJAN DASS ...Appellant Vs. COMMISSIONER OF INCOME TAX …Respondents CORAM:- HON'BLE MR. JUSTICE JAGMOHAN BANSAL HON'BLE MR. JUSTICE AMARINDER SINGH GREWAL Present:- Mr. Alok Mittal, Advocate for the appellant Mr. Ranvijay Singh, Sr. Standing Counsel with Mr. Vidhul Kapoor, Jr. Standing Counsel for the respondent *** JAGMOHAN BANSAL, J. (ORAL) 1. The appellant through instant appeal under Section 260A of Income Tax Act, 1961 is seeking setting aside of order dated 28.04.2005 passed by Income Tax Appellate Tribunal in ITA-260/DEL of 1999 for the Assessment Year 1995-96. 2. The appellant is engaged in the business of jewellery. It is trading in gold besides getting ornaments from customers and returning after carrying out job work. The Income Tax Authorities searched its premises on 16.12.1994 and seized documents. Apart from other grounds, the Assessing Officer created demand against the petitioner with respect to old jewellery. The appellant claimed that it had received old ornaments from its customers and returned after converting into jewellery. The respondent rejected appellant’s claim on the ground that appellant failed to submit sufficient evidence in support of its claim. The authorities including Tribunal held that Printed from counselvise.com DEEPAK BISSYAN 2026.01.14 10:32 I attest to the accuracy and integrity of this document ITA-560-2005 -2- appellant had not actually received gold from customers for remaking whereas it was its own gold. Addition in appellant’s stock was made and liability of income tax for the Assessment Year 1994-95 was created. The stock which proved to be undisclosed in the Assessment Year 1994-95 became opening stock of Assessment Year 1995-96. The stock was not allegedly sold during 1994-95 whereas it was shown as closing stock on 31.03.1994. Automatically, undisclosed stock became opening stock as on 01.04.1994. The Tribunal while adjudicating demand of Assessment Year 1995-96 did not consider aforesaid fact and relying upon its order for Assessment Year 1994-95 ordered to make addition. The operative portion of order passed by Tribunal reads as:- “6. Regarding ground No. 2 for a.y. 94-95, the Tribunal accepted the ground of the revenue observing as under:- \"3.12 In the instant case of the assessee, we find that neither the assessee nor the goldsmiths from whom the assessee got the ornaments remade have maintained any proper details of the weight of gold ornaments received for remaking and the weight of the new ornaments returned after remaking. Hence, we are of the opinion that on account of the facts and circumstances of the case of the assessee and applying the law of probabilities, the plea of the asessee that it received gold ornaments for remaking from customers and returned the same after remaking and that the gold ornaments found with it belonged to the customers, cannot be believed and consequence upon this finding, this plea of the assessee is rejected and it is held that the AO by treating the gold ornaments, received by the assessee in the guise of customers gold, to be belonging to the assessee was justified in making the impugned addition of rs.1422849 treating these transactions to be ingenuine\". Printed from counselvise.com DEEPAK BISSYAN 2026.01.14 10:32 I attest to the accuracy and integrity of this document ITA-560-2005 -3- Respectfully following the said decision of the Tribunal, we reverse the order of the CIT(A) for the year under consideration and restore that of the AO. Therefore, ground No. 1 stands allowed.” 3. On being confronted that closing stock as on 31.03.1994 became opening stock as on 01.04.1994, learned counsel for the respondent expressed his inability to controvert the said fact. 4. From the perusal of record, it is evident that all the authorities have not considered the fact that addition of stock made in the Assessment Year 1994-95 needs to be taken care of while framing assessment of Assessment Year 1995-96. The matter needs to be examined in the light of said fact. 5. In the backdrop, we deem it appropriate to set aside findings of Tribunal with respect to addition of Rs.4,20,082/-. The matter is remanded back to Assessing Officer to re-examine the matter in the light of above findings and pass fresh assessment order qua said addition. 6. Allowed in above terms. 7. Pending application(s), if any, stands disposed of. (JAGMOHAN BANSAL) JUDGE (AMARINDER SINGH GREWAL) JUDGE January 13, 2026 Deepak DPA Whether Speaking/reasoned Yes/No Whether Reportable Yes/No Printed from counselvise.com DEEPAK BISSYAN 2026.01.14 10:32 I attest to the accuracy and integrity of this document "