9911796707
TMI Blog1998 (3) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... old ornaments weighing 2,073.990 gms were seized by the Department. In response to a notice under s. 158BC, the assessee filed the return declaring undisclosed income of Rs. 11,19,600 for the block period from 1st April, 1985 to 22nd Dec, 1995. The AO completed the assessment determining the total undisclosed income at Rs. 16,82,370 including the value of the unaccounted jewellery of 2,073.990 gms taken at Rs. 9,72,700. The assessee had offered only Rs. 4,90,900 as the undisclosed income representing the investment in the unaccounted jewellery. In the assessment the AO also considered the investments and outgoings and the cash flow as claimed by the assessee. 3. On behalf of the assessee Shri Jayan, Chartered Accountant, submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to the AO, no credit was given for the investment as on 16th Nov., 1986. The submission raised before us by the learned representative was that at least in respect of the quantity of 1,147 gms the market value as on 16th Nov., 1986 should have been adopted. Shri Jayan raised another contention that from the market value, a deduction should have been given for the assessee's profit margin. He elaborated his argument by stating that the actual investment in the unaccounted jewellery was much lower than the market rate and that the assessee making a gross profit of 35% in the business would have invested an amount less by 35% when the jewellery was purchased. The learned representative urged us to accept the cost of investment in the account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were seized by the Department. The addition has been made on the basis that investment in the unaccounted jewellery of 2,073 gms must have come from the assessee's undisclosed income. Admittedly, the jewellery seized from the assessee's premises had not been accounted in the books of accounts maintained by the assessee. In the return filed under s. 158BC, the assessee had admitted Rs. 4,90,900 as undisclosed income representing the investment. The AO took the market value as on 22nd Dec, 1995 and on that basis determined the undisclosed income in the investment. The assessee's claim is that the total quantity of 2,073 gms was the accumulation over a number of years and so the addition should have been made on the basis of the actual investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losed income. We have already seen that in s. 69A it is the value of the bullion, jewellery or other valuable articles that may be deemed to be the income of the assessee of such financial year. No deduction is to be therefore allowed from the market value on account of the profit margin. In the circumstances of the case, we direct the AO to value 1,147 gms of jewellery at the market rate as on 16th Nov., 1986. For the remaining quantity of 926 gms alone the value as on 22nd Dec, 1995 is to be adopted. The addition on account of the value of 2,073 gms of unaccounted jewellery will be revised accordingly. 6. The assessee has also raised another ground in this appeal that the assessing authority was not justified in not allowing carry forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount drawn by him in June, 1988 for any other purpose and so the same was not available as excess fund to consider the outgoings in the subsequent years. When the partner admits that the money drawn by him was not otherwise utilised and that the same was brought back to the firm for investment in subsequent years, we are of the view that the AO should have given credit for the amount, particularly in the absence of evidence to the contrary. Hence we direct the AO to give credit for the sum of Rs. 34,217 as the cash available for the asst. yr. 1989-90 to explain the outgoings in the subsequent year. 7. As regards the claim of surplus fund relating to the asst. yr. 1994-95, in para 4(i) the AO has dealt with this matter. It was claim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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