2021 (2) TMI 273 - AT - Income Tax

Unexplained jewellery - excess gold and silver ornaments/excess stock - HELD THAT - The fact remains that Assessee has not been able to explain each and every item in both gold as well as silver stock(s). We notice that it has placed on record a detailed reconciliation statement of both stocks of gold as well as silver items before us; the very discrepancy continues in the instant second appellate proceedings as well. We therefore deem it appropriate that a lump sum addition of ₹ 2 lakhs qua excess gold and ₹ 1 lakh pertaining to excess silver stock; respectively (over and above the survey disclosure of ₹ 10 lakhs), would meet the ends of justice. The same shall be deemed to have covered all the alleged shortfalls as well. Both parties get part relief in foregoing terms. It is also made clear that our instant estimation shall not be taken as a precedent in any other assessment year. Necessary computation to follow as per law.

Summary

Issues:
1. Delay in filing appeal condonation.
2. Challenge to the correctness of CIT(A)'s action on gold and silver stock additions.

Analysis:
1. The judgment addresses the issue of delay in filing the appeal, where the delay of 291 days in the assessee's appeal was condoned due to the misplacement of appeal papers by office staff. The delay was not intentional or delinquent on the part of the assessee, and the appeal was taken up for adjudication on merits.

2. Regarding the challenge to the correctness of the CIT(A)'s action on gold and silver stock additions, the Revenue sought to revive the challenge on the excess gold addition of ?2,33,15,262, while the assessee contested the excess silver ornaments/stock addition of ?17,29,072. The CIT(A) detailed the findings concerning the gold stock, highlighting discrepancies between physical stock and stock as per books. The CIT(A) considered the reconciliation provided by the appellant, indicating the issuance of gold bullion and old gold to workers for making gold ornaments. The CIT(A) directed the AO to delete the addition of ?2,33,15,262 concerning gold ornaments.

3. On the issue of silver ornaments, the CIT(A) confirmed the addition of ?17,29,072 as the AR of the appellant did not provide any submissions or substantiation during the proceedings. The Revenue contended that the CIT(A) erred in deleting the excess gold addition, but the CIT(A)'s factual finding supported the deletion based on the reconciliation statement. The assessee's grievance regarding the excess silver ornaments was not upheld entirely, as the assessee failed to explain all items in the silver stock. The tribunal decided on a lump sum addition of ?2 lakhs for excess gold and ?1 lakh for excess silver stock, in addition to the survey disclosure of ?10 lakhs, providing partial relief to both parties.

4. The cross-appeals were partly allowed, with the order pronounced in open court on 29th January 2021. The judgment provides a detailed analysis of the issues related to the delay in filing the appeal and the challenges to the additions of gold and silver stock, ultimately providing a balanced resolution to the parties involved.