2012 (8) TMI 123 - AT - Income Tax

Addition on account of unaccounted deposit and withdrawals in the bank account - Held that - Addition u/s 68 has been made in the hands of the assessee for the amounts which were found credited in the account of another person that too without bringing any positive material on record - the transactions in the bank account of Shri Shailendra Dubey, employee of assessee firm even technically cannot be made to be part of transactions of the assesse and consequent addition u/s 68. Even the account was opened and operated by employee and not by the partners of the assessee firm, consequently no infirmity in the conclusion drawn in deleting additions - in favour of assessee. Addition on the basis of alleged excess stock - Held that - As assessee submitted voucher issued by Agrawal Jewellers, Bhopal & M/s Kanval Jewellers evidencing confirmation of giving gold ornaments to the assessee and receipt of gold articles entry in its Vyapari register - statements of the partners were duly recorded mentioning that such stock of gold was sent to the assessee firm -as in the assessment of M/s Agrawal Jewellers, the same AO has accepted this version that stock to the extent of 2210.300 gms was sent to the assessee firm, in that case no U turn is expected or permitted - as the excess stock of 31.56 gms which was claimed to be a weighing error by the assessee, the value of which is Rs.2139.50 per gram, was treated as unexplained investment resulting into addition of Rs. 66,523/- therefore no infirmity in the stand of the learned CIT(A) - in favour of assessee. Addition on account of sales out of books - Held that - The true copy of the seized documents on the basis of which the addition was made was duly perused/examined by the learned CIT(A) and ultimately found that the unaccounted sales were only to the tune of Rs. 1,73,765 which resulted into relief of Rs.2,85,416/- out of the total addition of Rs.4,59,181 - partly in favour of assessee. Addition on account of precious stones - Held that - There is uncontoverted finding in the impugned order that the Jawaharat account was duly maintained on year to year basis and there is substantial stock in comparison to the addition, consequently no infirmity in the impugned order in deleting the addition - against revenue.

Summary

Issues Involved:

1. Deletion of addition of Rs. 20,950/- made u/s 68 of the Act.
2. Deletion of addition of Rs. 61,94,600/- on the basis of alleged excess stock.
3. Deletion of addition of Rs. 2,85,416/- on account of sales out of books.
4. Deletion of addition of Rs. 8,30,446/- on account of precious stones.
5. Sustenance of addition of Rs. 67,523/- out of the alleged excess stock of gold.
6. Sustenance of addition of Rs. 1,73,765/- out of the total addition of Rs. 4,59,181/-.

Issue-wise Detailed Analysis:

1. Deletion of addition of Rs. 20,950/- made u/s 68 of the Act:
The Revenue contended that the statement of an employee, Shri Shailendra Dubey, could not substantiate the amount of deposit and withdrawals in his bank account, suggesting unaccounted amounts routed through his account. The CIT(A) deleted the addition, noting that the transactions in Dubey's account could not be attributed to the assessee firm without positive material evidence. The tribunal affirmed the CIT(A)'s order, finding no infirmity in the conclusion that the addition was based on mere presumption without substantive evidence.

2. Deletion of addition of Rs. 61,94,600/- on the basis of alleged excess stock:
The Revenue argued that the assessee could not satisfactorily explain the excess stock of jewellery found during the search. The CIT(A) considered the stock registers and vouchers, noting that the stock received from M/s Agrawal Jewellers and M/s Kanwal Jewellers was evidenced in the seized Vyapari Register. The CIT(A) concluded that the stock was genuinely available with the assessee, reducing the addition to Rs. 67,523/- for a marginal excess stock. The tribunal affirmed this conclusion, finding no infirmity in the CIT(A)'s detailed analysis and acceptance of the assessee's explanation.

3. Deletion of addition of Rs. 2,85,416/- on account of sales out of books:
The Assessing Officer made an addition based on certain hand-written slips indicating unaccounted sales. The CIT(A) examined each entry and found that only Rs. 1,73,765/- constituted unaccounted sales, providing relief for the remaining amount. The tribunal affirmed the CIT(A)'s order, noting that the first appellate authority had objectively analyzed the observations and submissions, finding no infirmity in the decision.

4. Deletion of addition of Rs. 8,30,446/- on account of precious stones:
The Assessing Officer added this amount, observing that the stock of precious stones was not supported by valid bills/vouchers. The CIT(A) noted that these items were part of the opening stock and considered various bills and amounts with reference to the seized material. The tribunal affirmed the CIT(A)'s order, finding that the Jawaharat account was duly maintained and there was substantial stock in comparison to the addition, thus finding no infirmity in the CIT(A)'s conclusion.

5. Sustenance of addition of Rs. 67,523/- out of the alleged excess stock of gold:
The assessee's cross objection against the sustained addition of Rs. 67,523/- was dismissed. The tribunal, having affirmed the CIT(A)'s order regarding the excess stock issue, found no merit in the cross objection, considering it of academic interest only.

6. Sustenance of addition of Rs. 1,73,765/- out of the total addition of Rs. 4,59,181/-:
The assessee's cross objection against the sustained addition of Rs. 1,73,765/- was also dismissed. The tribunal, having affirmed the CIT(A)'s order on the unaccounted sales issue, found no merit in this ground as well.

Conclusion:
The tribunal dismissed both the Revenue's appeal and the assessee's cross objections, affirming the CIT(A)'s detailed and reasoned conclusions on all issues.