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Issues:
1. Addition of profit on unexplained gold/jewelry found short during search and seizure operation. 2. Estimation of profit/income on the sale of jewelry outside books of account. 3. Addition on account of job work. 4. Addition on account of initial investment on the sale of jewelry outside books of account. 5. Addition of interest on pawning of jewelry. Issue 1: The appeal concerned the addition of Rs. 42,350 by the Assessing Officer (AO) on account of profit taken on the value of unexplained gold/jewelry worth Rs. 16,94,000 found short during a search and seizure operation. The assessee explained the shortage, mentioning that some gold was issued to Karigars for making ornaments and some were given to customers for approval. The AO made the addition based on the unexplained discrepancy. However, the Commissioner of Income Tax (Appeals) (CIT(A)) found merit in the assessee's argument that profit from the sale of gold jewelry outside the books of account had already been separately assessed by the AO. The CIT(A) concluded that the alleged missing gold jewelry was part of the sale outside the books of account and deleted the addition. Issue 2: The second issue involved the addition of Rs. 90,000 by the AO as profit/income estimated on the sale of jewelry outside the books of account, which was later restricted to Rs. 73,500 by the CIT(A). The AO estimated the profit based on a 25% rate, assuming all sales were of gold jewelry. The assessee argued that more than 50% of the sales were of silver jewelry, which had a lower profit margin of 15%. The CIT(A) considered the bifurcation provided by the assessee and reduced the addition to Rs. 17,500, acknowledging the difference in profit margins between gold and silver jewelry. Issue 3: Regarding the addition on account of job work, the AO estimated Rs. 40,000 from repair work carried out by the assessee on jewelry. The assessee contended that most repair work was done free of charge to build goodwill and no incriminating documents regarding income from repair work were found during the search. The CIT(A) reduced the estimated income to Rs. 10,000, considering the nature of repair work and lack of evidence for higher income. Issue 4: The addition of Rs. 50,000 on account of initial investment by the assessee for the sale of jewelry outside the books of account was challenged. The CIT(A) deleted the addition based on the assessee's explanation that sufficient gold was available for sales and a significant amount had been surrendered in the previous year, which could cover any alleged investment. The Tribunal upheld the CIT(A)'s decision, finding the explanations satisfactory. Issue 5: The final issue revolved around the addition of Rs. 1 lakh as interest on pawning of jewelry. The AO estimated the interest income based on previous year's data, but the CIT(A) found no specific evidence for such income during the current year. As no concrete proof of interest income from pawning business was found during the search, the CIT(A) deleted the addition. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of evidence for the addition. In conclusion, the Tribunal dismissed the appeal of the Revenue, upholding the decisions of the CIT(A) regarding all the issues raised in the case.
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