MR. SANTOSH UTTAM KADAM,BELAGAVI V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, BELAGAVI

ITA 230/PAN/2025

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Mr. Santosh Uttam Kadam, engaged in the retail business of gold bullion and ornaments, appealed against the order of the Commissioner of Income Tax (Appeals) which sustained additions made by the Assessing Officer regarding unexplained excess stock of gold jewellery and differences in reported business income for the Assessment Year 2018-19. The Tribunal found that the issue of excess gold jewellery, claimed to be customer property, required further examination and thus restored it to the Assessing Officer. Additionally, the Tribunal agreed with the assessee regarding the business income discrepancies and directed the removal of the addition.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 846180 (ITAT-PANAJI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2026
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Panaji
• Assessment Year: 2018-2019
• Appeal Filed On: 18-08-2025
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RIJULA UNIYAL.
• Assessee Lawyers: S.R. KHOKATE; SHIVA PRASAD REDDY; LD. ARS
• Keywords: Business income; Corroborative evidences; Retraction; Principle of natural justice
• Section: 143(3); 142(1); 69; 133A

Judgement Text

"1 ITA No. 230/PAN/2025 Mr.SantoshUttam Kadam.. IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH “SMC” BENCH PANAJI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER I T A. No.230/PAN/2025 (A.Y. 2018-19) Mr. Santosh Uttam Kadam, CCB No. 112, Santosh Gold Tunch, Sapkal Complex, Dane Galli, Shahapur, Belagavi-590003, Karnataka. Vs. DCIT- Central Circle, Sharadha Building, Saraf Colony, Khanaput Road, Tilakwari, Belagavi-590001, Karnataka. PAN .No.BGVPK5933J (अपीलार्थी/Appellant) (प्रत्यर्थी/Respondent) Assessee by Shri.S.R. Khokate & Shri Shivaprasad Reddy, Ld. ARs Revenue by Smt. Rijula Uniyal.Sr. DR सुनवाईकीतारीख/Date of Hearing 09.03.2026 घोषणाकीतारीख/Date of Pronouncement 26.03.2026 ORDER PER PAVAN KUMAR GADALE, JM: The assessee has filed the appeal against the order of Commissioner of Income Tax (Appeals)/CIT(A)- 2, Panaji passed under Section 143(3) and 250 of the Income Tax Act. The assessee has raised grounds of appeals challenging the order of CIT(A) sustaining the addition of (i) unexplained / excess stock of gold jewellery under Section 69A of the Act and (ii) addition of business income made by the assessing officer. 2. The brief facts of the case are that, the assessee is an individual and is engaged in the business as retailer of gold Printed from counselvise.com 2 ITA No. 230/PAN/2025 Mr.SantoshUttamKadam.. bullion, purchase & sale of gold ornaments and job works etc. The assessee has filed the return on income for the A.Y. 2018- 19 on 30-09-2018 disclosing a total income of Rs. 7,13,060/- and the return of income was processed under Section 143(1) of the Act. There was survey operations u/se 133A of the Act conducted at the business premises of the assessee on 07-02- 2018. Whereas based on the material found and the verification of the books. The assessee has disclosed Rs.47,10,192/- as additional income for the A.Y.2018-19. Subsequently, the case was selected for complete scrutiny and notice under Section 143(2) and 142(1) of the Act are issued calling for the details and explanations in support of the return of the income filed. In compliance, the Ld. AR of the assessee appeared from time to time and submitted the information, details and produced the documents. The Assessing Officer (A.O) on perusal of the audited financial statements find that the assessee has disclosed total turnover of Rs.89,98,135/- and has disclosed net profit of Rs. 4,57,893/- including labour charges and other income. 3. Further the Assessing Officer has dealt on the facts and information of survey u/s 133A of the Act and found discrepancies of physical inventory of stock of gold bullion and gold jewellery and found excess stock of gold of 92.245gms valued at Rs. 2,83,192/- and also excess stock of jewellery of 818.925gms valued at Rs. 23,04,000/- and the assessee has admitted the excess gold bullion to tax in A.Y. 2018-19. The A.O. observed that assessee has admitted regular business income of Rs.10,00,000/- in the course of survey for A.Y. 2018- 19, but the assessee has filed the return of income of A.Y. Printed from counselvise.com 3 ITA No. 230/PAN/2025 Mr.SantoshUttamKadam.. 2018-19 on 30-09-2018 not admitting the excess gold bullion value of Rs. 2,83,192/- and the assessee has not given explanations for non-inclusion of the additional income in the return of income for A.Y. 2018-19. Subsequent to the issue of the notices, the assessee has filed retraction statement in the assessment proceedings. The A.O has recorded statement u/sec131 of the Act of the accountant of the assesse. The A.O. has dealt on the facts of excess gold bullion and the statement recorded and observed that excess stock of gold has to be taxed and made addition of Rs.2,83,192/-.On the second disputed issue, the A.O. found that assessee has not given plausible explanations in respect of excess stock of gold jewellery of 818.925gms valued at Rs. 23,04,000/- admitted during the survey u/s 133A of the Act. 4. The contentions raised by the assessee that the excess stock of gold jewellery belongs to the customers who has handed over gold for making of gold jewellery. The assessee has filed the explanations for non-inclusion of the excess stock of gold jewellery, which was admitted during the survey u/sec133A of the Act with the evidences. The assessee mentioned that they charge only labour charges for making of gold ornaments and such excess gold jewellery belongs to those persons/ customers. The A.O find that only few customers confirmations were filed and PAN details of two persons and ledger account of labour charges. Whereas A.O. observed that the assessee could not explain the basis of holding the excess gold jewellery belong to the customers with any supporting evidences, name and address of the parties. The assessee further explained that the Printed from counselvise.com 4 ITA No. 230/PAN/2025 Mr.SantoshUttamKadam.. gold received from customers for the purpose of making jewellery was not entered in to books of account and only through receipt books, the transactions are completed including handover of gold jewellery and the assessee receives the labour charges and disclosed in the profit & Loss account. The A.O was not satisfied with the explanations and details as the contentions of the assessee are not supported with material documentary evidences and dealt on the facts at Para 9.2 of the order and made addition u/s 69 A of the Act of Rs.23,04,000/- and similarly the A.O made addition of difference in business income of Rs.2,56,461 and finally assessed the total income of Rs.32,73,521/- and passed the order u/s 143(3) dated 29-06- 2021. 5. Aggrieved by the order of the A.O, the assessee has filed appeal with the Commissioner of Income Tax Appeals. In the appellate proceedings, the CIT(A) has considered the grounds of appeals, statement of facts, findings of the Assessing Officer and submissions of assessee but has sustained the addition of unexplained gold jewellery and difference of business income. Further the CIT(A) has granted relief in other grounds of appeal and partly allowed the assessee appeal. Aggrieved by the Commissioner’s appeals order on the disputed issues, the assessee has filed an appeal with the Hon'ble Tribunal. 6. At the time of hearing, the learned A.R. submitted that the CIT(A) has erred in confirming in the additions made by the A.O. on account of unexplained gold jewellery and difference of business income overlooking the facts and submissions. The Printed from counselvise.com 5 ITA No. 230/PAN/2025 Mr.SantoshUttamKadam.. learned A.R. contentions are that the unexplained/ excess stock of gold jewellery was not purchased by the assessee but was received from the customers for job works hence it is not entered in the purchase register and further it is not reflected in the opening and closing stock entered and on completion of job works, the labour charges are received and disclosed in the profit &Loss account. On the second disputed issue, the learned A.R. submitted that the CIT(A) erred in sustaining the difference of business income, which the A.O has solely relied on the declarations in survey u/sec133A of the Act. The books of account are audited and the filed the return of income disclosing the real business income earned. The Ld. A.R. substantiated the submissions with the factual paper books, written submissions, clarifications on audited financial statements and chart and prayed for allowing the appeal. Per contra, the Ld. DR submitted that the evidences of labour charges and quantity of gold received from each customer for the job works based on the receipt books maintained by the assessee were not examined by the lower authorities and the Ld. DR supported the order of the CIT(A). 7. Heard the rival submissions and perused the material on record. the Ld.AR envisaged that the CIT(A) has erred in sustaining the addition u/s 69A of the Act in respect of excess gold jewellery overlooking the facts and the information that the assessee is not the owner of the gold jewellery, but only providing job work services to the customers and earned the labour charges. The gold received from customers for the purpose of Printed from counselvise.com 6 ITA No. 230/PAN/2025 Mr.SantoshUttamKadam.. making jewellery was not entered in to books of account and only through receipt books, the transactions are completed including handover of gold jewellery and the assessee receives the labour charges and are disclosed in the profit & Loss account. The learned A.R. referred to the submissions made before the first appellate authority, confirmations/affidavits of the parties and the explanations filed in the assessment proceedings. When a query was raised to explain the basis of not including the jewellery transactions in the purchases and sales, the learned A.R. submitted that the assessee received only labour charges and has accounted in the books of account and offered to tax. Further the assessee in the course of survey u/sec133A of the Act has admitted excess stock of gold jewellery due to non- availability of information and subsequently has retracted in the assessment proceedings. Prima facie the Ld.AR contended that the excess gold jewellery belongs to the customers, who supplied primary gold for making gold chains and the assessee maintains entries of inward/outward on the basis of small receipt books The Ld.AR has filed details of job works i.e name and address of the parties, date of receipt/return, quantity of gold received returned and the labour charges collected in respect of each individual customers placed at page 1 to 23 of the submissions filed on 5th January, 2026.The Ld.DR. submitted that the assessee neither before the Assessing officer nor before the First Appellate Authority has filed this detailed information pertaining to excess jewellery and the A.O. should also be provided opportunity to verify and examine these facts with evidences. Hence considering the facts, circumstances, submissions and Printed from counselvise.com 7 ITA No. 230/PAN/2025 Mr.SantoshUttamKadam.. principle of natural justice for limited purpose this disputed issue is restored to the file of the assessing officer to examine and adjudicate afresh in accordance with the law. The assessee should be provided adequate opportunity of hearing and should cooperate in submitting the information and these grounds of appeal are allowed statistical purpose. On the second disputed issue with respect to addition of difference in business income, the learned A.R. contentions that the A.O has solely relied on the declaration in survey u/sec133A of the Act, whereas the assessee’s books of account are audited and the return of income is filed disclosing the real business income earned. On considering the facts and circumstances of the case, the assessing officer is directed to delete the addition of difference in the business income. And this ground of appeal is allowed in favour of the assessee. 8. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 26/03/2026 as per rule 34(5) of the ITAT Rules 1963. Sd/- (PAVAN KUMAR GADALE) JUDICIAL MEMBER Panaji Dated: 26/03/2026 Copy of the Order forwarded to: Printed from counselvise.com 8 ITA No. 230/PAN/2025 Mr.SantoshUttamKadam.. 1. The Appellant, 2. The Respondent 3. The CIT(A)- 4. CIT 5. DR, ITAT, 6. Guard file. //True copy// BY ORDER, (Asstt. Registrar)ITAT, Panaji Date Initial 1. Draft dictated on PS 2. Draft placed before author PS 3. Draft proposed & placed before the second member PS 4. Draft discussed/approved by Second Member. PS 5. Approved Draft comes to the Sr.PS/PS PS 6. Kept for pronouncement on 7. File sent to the Bench Clerk 8. Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Dictation Pad is enclosed Printed from counselvise.com "