P. MANEKLAL AND CO.,VADODARA V. THE DY.CIT, CENTRAL CIRCLE-1, VADODARA

ITA 1864/AHD/2024

AI Insights

The case involves P. Maneklal and Co., a partnership firm engaged in trading and reselling gold and gold ornaments, which faced an addition of Rs. 4,78,500 as undisclosed income following a survey. The addition was initially made by the Assessing Officer under Section 69A of the Income-tax Act, 1961, due to a discrepancy between the physical stock of gold ornaments and the stock recorded in the books. The CIT(A) upheld this addition, leading to the appeal before the Tribunal. The Tribunal's decision was based on the finding that the purchases were recorded but not reflected in the stock register, thus allowing the appeal and removing the addition.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25804 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V.K. MANGLA
• Assessee Lawyers: M. K. PATEL
• Keywords: Unexplained expenditure; Bogus purchase; Bogus
• Section: 250; 131; 69C; 69A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No. 1864/Ahd/2024 (Assessment Year: 2019-20) P. Maneklal and Co., 201, Raama Emporio, Gotri Sevasi Road, Sevasi, Vadodara-391101 [PAN : AADFM 9703 F] Vs. The DCIT, Central Circle-1, Vadodara-390007 (Appellant) .. (Respondent) Appellant by : Shri M.K. Patel, Advocate Respondent by: Shri V.K. Mangla, Sr DR Date of Hearing 16.12.2024 Date of Pronouncement 11.02.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income-tax (Appeals)-12, Ahmedabad (hereinafter referred to as \"CIT(A)\" for short) dated 27.09.2024 passed under Section 250 of the Income-tax Act, 1961 [hereinafter referred to as \"the Act\" for short], for Assessment Year (AY) 2019-20. 2. The grounds of appeal raised by the Assessee are as follows:- “(1) That on facts and in law the learned NFAC has grievously erred in confirming the addition of Rs. 4,78,500/- made u/s 69C of the Act as alleged difference in stock, ignoring the reconciliation filed by appellant. ITA No. 1864/Ahd/2024 P. Maneklal & Co. Vs. DCIT Asst. Year : 2019-20 - 2– (2) That on facts and in law, it ought to have been held that all the purchases are duly recorded in the books of accounts and there is no unexplained expenditure. (3) That on facts, and in law, the learned AO has grievously erred in taxing the alleged bogus purchases u/s 115BBE of the Act.\" 3. The brief facts of the case are that the assessee is a Partnership Firm and carrying on business under the name and style of P Maneklal Soni and Co., which is mainly engaged in Trading and re-sell of Gold and Gold Ornaments. A survey was carried out in the three business concerns, including the assessee, which were running concurrently at one business premises. Owing to discrepancy in the quantity of stock of gold ornaments with the books of accounts found during the survey proceedings, the Assessing Officer made addition of Rs.4,78,500/- u/s 69A of the Act vide order dated 24.09.2021. 4. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who confirmed the addition made by the Assessing Officer u/s 69A of the Act. 5. Aggrieved, the assessee is now in appeal before the Tribunal. 6. The facts as per record reveals that the gold stock as per the books of accounts was of 11695 grams whereas physical stock of 11840 grams. The excess stock of gold ornaments weighing 145 gms worth Rs.4,78,500/- was found which was accepted by Sh. Narendrakomar M Soni as unaccounted stock in the statement recorded on oath u/s 131(1A) of the Act during survey proceedings. Sh. Narendrakumar M Soni is the main person of the concern and partner of Mis. P. Manekial & Co and who is also one of the ITA No. 1864/Ahd/2024 P. Maneklal & Co. Vs. DCIT Asst. Year : 2019-20 - 3– directors in M/s. P. Gold Pvt. Ltd. During the course of assessment proceedings, the AO has made addition of Rs. 4,78,500/- uls 69A of the Act having held that Sh. Narendrakumar M Soni in his statement in reply to question No. 16 has categorically admitted that he could not explain the reason behind the excess gold stock of 15 gms. The assessee, in his statement, had admitted that the excess stock valued at Rs. 4,78,500/- would be declared as undisclosed income for the AY 2019-20 and offered for taxation in addition to the regular income. However, the assessee had failed to include the surrendered amount of Rs. 4,78,500/- arising from the survey proceedings, in the income tax return filed for the relevant assessment year. Therefore, the Assessing Officer made addition of Rs.4,78,500/- to the return of income of the assessee as undisclosed income u/s 69A of the Act. Before the Ld. CIT(A) the assessee reiterated the submissions made before the Assessing Officer, asserting that the discrepancy in stock between the physical verification and the books of accounts arose due to the omission of two invoices: 1) M/s. Anja Jewels Pvt. Ltd. 2) M/s. Chains Comer Jewellers (I) Pvt. Ltd. 7. The assessee contended that no discrepancy would exist in the final accounts if the purchases of 204.360 grams of gold ornaments from M/s. Anja Jewels Pvt. Ltd. on 25.08.2018 and 24.620 grams from M/s. Chains Corner Jewellers (I) Pvt. Ltd. on 04.02.2019 were considered. It was argued that while these transactions were recorded in the books of account, they were inadvertently omitted from the stock register due to an oversight. ITA No. 1864/Ahd/2024 P. Maneklal & Co. Vs. DCIT Asst. Year : 2019-20 - 4– 8. The Ld. CIT(A) relied on the order of the Assessing Officer that the transaction with M/s. Anja Jewels Pvt. Ltd. occurred on 25th August 2018, which is nearly six months prior to the survey conducted on 6th February 2019 and the assessee failed to provide any reconciliation for the excess physical stock of gold ornaments during the course of the survey. The Ld. CIT(A) relied on the statement recorded u/s. 131 of the Act. Shri Narendrakumar M. Soni who could not explain the reason behind the excess gold stock of 145 gms. 9. We find that the payment to M/s. Anja Jewels Pvt. Ltd. was made in advance on 23.08.2018 for a quantity of 204.36 grams and to M/s. Chains Comer Jewellers (1) Pvt. Ltd. on 04.02.2019 for 24.62 grams. The transactions were duly recorded in the books of accounts but omitted in the stock register. This is also counterchecked by the data of the GST which was uploaded in the month of August 2018 as well as February 2019. Since the invoices and the payments were made even before the date of survey, it can be accepted that the assessee has indeed purchased the bullion, made payment; hence, reconciled. 10 In the result, the appeal of the Assessee is allowed. The order is pronounced in the open Court on 11.02.2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 11/02/2025 btk ITA No. 1864/Ahd/2024 P. Maneklal & Co. Vs. DCIT Asst. Year : 2019-20 - 5– आदेश की \u0007ितिलिप अ\rेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b\tथ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड\u001f फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation ……10.02.2025………. 2. Date on which the typed draft is placed before the Dictating Member ……10.02.2025……. 3. Other Member……10.02.2025…….….……………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ……10.02.2025…….……. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…11.02.2025……….… 6. Date on which the fair order comes back to the Sr.P.S./P.S ……11.02.2025…….…………. 7. Date on which the file goes to the Bench Clerk ……11.02.2025…….…………….. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "