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TMI Blog2006 (7) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... ornaments on job work basis against the material supplied by the customers. (B) M/s P.P. Jewellers (Delhi) Status : Partnership firm. Partners : Shri Kamal Gupta - 75% Smt. Ratan Devi - 25% Address : 1178, Kucha Mahajani, Chandni Chowk, Delhi. Nature of : Dealing in wholesale business of gold and gold business ornaments and manufacturing of gold ornaments on job work basis. (C) M/s P.P. Jewellers (India) Status : Partnership firm. Partners : (i) Shri Balram Garg - 25% (ii) Shri Sandeep Gupta - 15% (iii) Smt. Renu Gupta - 35% (iv) Smt. Manju Garg - 25% Address : 674/675, Sadar Bazar, Delhi. Nature of : Trading in gold, silver and precious stones, and business manufacturing of ornaments on job work basis against material supplied by the customers. 3. The premises of another concern i.e. P.P. Jewellers belonging to the same group situated at 2708, Karol Bagh,New Delhi(first floor), was also covered in the aforesaid search and seizure operation. The said concern is a partnership firm with Mr. Pawan Gupta, Mr. Padam Chand, Mr. Amar Chand and Ms. Veena Rani as its partners and carries on the business which is primarily of exporting the gold jewellery. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed income of the assessees for the block period as under: (A) M/s P.P. Jewellers (P) Ltd. (i) Profit from undisclosed sales : 34,15,000 (ii) Alleged unexplained investment made in circulating capital : 27,65,000 (iii) Undisclosed income shown by the assessee in its return of income (on protective basis) : 90,00,000 Total : 1,51,80,000 (B) M/s P.P. Jewellers (Delhi) (i) Profit on undisclosed sales : 5,17,740 (ii) Alleged unexplained investment made in circulating capital : 6,59,589 Total : 11,77,329 (C) M/s P.P. Jewellers (India) (i) Profit on undisclosed sale of silver : 19,500 (ii) Profit on undisclosed sale of gold ornaments : 1,71,000 (iii) Alleged unexplained investment in circulating capital : 1,02,032 Total : 2,92,532 Aggrieved by the aforesaid assessments made by the AO under s. 158BC, all the three assessees have preferred the present appeals before the Tribunal. 6. In the original grounds raised by the assessees in these appeals, the assessments made by the AO under s. 158BC have been challenged by the assessees in law as well as on facts. During the course of appellate proceedings before the Tribunal, the following two additional grounds have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessees. He contended that there were thus no warrants of authorization issued in the name of the asses sees and it is, therefore, to be held that there was no search initiated against them. Relying on the decision of Hon'ble Delhi High Court in the case of Ajit Jain vs. Union of India & Ors. (2000) 159 CTR (Del) 204 : (2000) 242 ITR 302 (2000), he contended that there being no valid search conducted in the case of the assessees in accordance with law, the entire proceedings initiated against them under Chapter XIV-B are without jurisdiction and the assessments framed under s. 158BC during the course of such invalid proceedings are liable to be quashed. He pointed out that this proposition propounded by the Hon'ble Delhi High Court in the case of Ajit Jain has been applied by the Tribunal in various cases to quash the assessments made under s. 158BC and also cited some of the said decisions of Tribunal, such as, Mahabir Parsad Rungta, (HUF) vs. Asstt. CIT (2002) 75 TTJ (All) 309. He also relied on the decision of Delhi, Special Bench of Tribunal, in the case of Promain Ltd. vs. Dy. CIT (2005) 95 TTJ (Del)(SB) 825 : (2005) 95 ITD 489 (Del)(SB), wherein it was held that a valid s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessees about the mistake in mentioning the full name He submitted that even the notices issued under s. 158BC were duly complied with by the assessees by filing their returns in Form 2-B and there was a participation also on their part in the proceedings for the block period wherein no such objection was raised by them. He contended that this objection now raised by the assessees after a period of ten years, therefore, need not be entertained. 10. The learned Departmental Representative also contended that the other things being regular and legal, an innocuous omission to include the words "Delhi" and/or "India" in the name of the assessee, in any case, was only a technical mistake curable by recourse to the provisions of s. 292B. In support of this contention, he relied on the decision of Hon'ble Madras High Court in the case of I. Devranjan & Ors. vs. Tamil Nadu Farmer Service Co-operative Federation & Ors. (1979)13 CTR (Mad) 280 : (1981) 131 ITR 506 (Mad) as well as that of Hon'ble Delhi High Court in the case of Sonu System (P) Ltd. vs. Chairman, CBDT (2001) 165 CTR (Del) 700 : (2001) 250 ITR 268 (Del). He also relied on the decision of Hon'ble Calcutta High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He contended that all the decisions cited by the learned Departmental Representative are distinguishable on facts and none of them being directly applicable to the facts of the present case, the reliance of the learned Departmental Representative on the said decisions was clearly misplaced. For instance, he submitted that in the case of Jai Bhagwan Om Parkash before the Hon'ble Punjab & Haryana High Court, it was amply made out clear from the record that the business run by M/s Om Parkash Som Parkash was styled as Jai Bhagwan Om Parkash and, therefore, the search warrant issued in the latter name was held to be valid by their Lordships. He submitted that in the instant case, it is not that M/s P.P. Jewellers have carried on the business in the name of the assessees, but all the three assessees were separate entities having independent existence. Relying on the decision of Hon'ble Karnataka High Court in the case of Nenmal Shankarlal Parmer vs. Asstt CIT (Inv.) (1992) 102 CTR (Kar) 64 : (1992) 195 ITR 582 (Kar), he submitted that the mention of the correct addresses of the assessees in the search warrants would not go to establish that the said warrants were validly issued in the na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P) Ltd. The name of one of the assessees in the present case i.e. M/s P.P. Jewellers (P) Ltd. thus was very much there contained in the said search warrant and the same also having been executed as is evident from the Panchnama drawn in the joint name of M/s P.P. Jewellers and the assessee, i.e. M/s P.P. Jewellers (P) Ltd., we hold that the search was not only initiated in the assessee's case but the same was also conducted in accordance with law. It clearly shows that action under s. 132(1) was duly taken in the case of M/s P.P. Jewellers (P) Ltd. under s. 132(1) and there was thus a valid search initiated and conducted in the case of the said assessee giving jurisdiction to the AO to proceed under Chapter XIV-B. The notice issued by him under s. 158BC as well as the assessment completed by the impugned order was therefore valid in the eye of law and, in our opinion, there was no legal infirmity as has been sought to be contended by the learned counsel for the assessee. 15. As regards the remaining two assessees, i.e. M/s P.P. Jewellers (Delhi) and M/s P.P. Jewellers (India), the contention of the learned counsel for the assessees is that none of the five search warrants stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , we find it difficult to agree with the contention of the learned counsel for the assessees. There cannot be a quarrel to the proposition that if there is no warrant of authorization issued in the name of the assessee under s. 132(1), the AO in law cannot proceed under Chapter XIV-B to make a block assessment under s. 158BC. The legal position emanating from the judicial pronouncements cited by the learned counsel for the assessees is very clear on the point that in the absence of search warrant in the assessee's case, he falls outside the scope of the term "a person in whose case action under s. 132(1) has been taken" and, therefore, AO has no jurisdiction to issue notice under s. 158BC to the assessee. The question before us in the present case, however, is that whether, in the facts and circumstances of the case, there was any search warrant which could be said to have been issued in the cases of two assessees in the present case i.e. M/s P.P. Jewellers (Delhi) and M/s P.P. Jewellers (India). In this regard, it is observed, at the outset, that the facts involved in the present case are different from the facts involved in the various cases cited by the learned counsel for the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t floor), and there was a separate warrant of authorization issued to search the said premises which was in the name of M/s P.P. Jewellers. On the other hand, the two premises of the assessees in the present case i.e. M/s P.P. Jewellers (Delhi) and M/s P.P. Jewellers (India) were covered by separate warrants and there is nothing on record to suggest or indicate that M/s P.P. Jewellers having its business premises at 2708, Karol Bagh, New Delhi, had anything to do with these two premises belonging to the two assessees in the present case. It was never the case of the Revenue that the warrants of authorization issued to search the premises at 1178, Kucha Mahajani, Chandni Chowk, Delhi, and at 674/675, Sadar Bazar, Delhi, were in connection with the partnership firm of M/s P.P. Jewellers and there was no such misconception or confusion either in the mind of the search party or even that of the assessees as is evident from the conduct of the assessee during the course of search proceedings and even during the course of block assessment proceedings. On the other hand, both the asses sees participated in the search proceedings as well as In the block assessment proceedings knowing well t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the ITO under s. 158 and the order passed by him could not be sustained by relying on s. 292B. 19. In the present case, the warrants of authorization were issued by the competent authority duly empowered to issue the same and the said warrants were issued in conformity with the relevant provisions of the IT Act. As already discussed, the said warrants were not only issued but were also executed in accordance with the intent and purpose of the relevant provisions of the statute and there was no confusion either in the mind of the concerned authorities issuing and executing the said search warrants or even in the mind of the assessees about the real intention and purpose of issuance and execution of the same. In the case of Jai Bhagwan Om Prakash cited by the learned Departmental Representative, the prescribed procedure for issue of warrant of authorization as well as execution thereof was meticulously followed and the learned counsel for the assessee having failed to point out anything that might have violated any of the procedural safeguards provided in r. 112 of the IT Rules, Hon'ble Punjab & Haryana High Court held that the search proceedings could not be invalidated. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e additions made in the block assessment on merits. 20. In ground Nos. 1 to 4 of its appeal being IT(SS)A No. 290/Del/1997, the assessee has challenged the additions of Rs. 34,15,000 and Rs. 27,65,000 made by the AO on account of profit on unaccounted sales and the alleged investment made in the circulating capital required for the purpose of unaccounted transactions respectively. 21. During the course of search conducted at the premises of the assessee situated at ground floor of 2708, Bank Street, Karol Bagh, inventory of physical stock of gold, gold ornaments and diamond was prepared on physical verification. The books of account and other documents found during the course of search were also seized. The stock of gold, silver and diamond physically found at the premises of the assessee during the course of search was found to be different from the stock as reflected in the books of account of the assessee in quantitative terms. The assessee company sought to explain the said difference by combining its stock with the stock of M/s P.P. Jewellers, another group concern, who was operating from the first floor of the very same building. The case attempted to be made out by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, the excess stock of both the concerns together was finally worked out by the assessee at 23 Kgs. of 22 carat gold jewellery and it was claimed that value thereof can alone be assessed in the block assessment as its undisclosed income. This stand of the assessee, however, was not accepted by the AO. He held that the assessee company and M/s P.P. Jewellers are two distinct legal entities having independent business and since the said business was done from different premises, there was no reason to combine the stocks of both these concerns to work out the difference. He found that the transactions between these two concerns were duly recorded in their respective books of account including stock registers and there being no mix-up of the stock of inventory, the same was required to be considered separately in the case of each concern. As regards the explanation offered on behalf of the assessee company explaining the difference in stock, the AO examined and verified the same by making the necessary enquiries and after discussing each and every point in detail in his impugned order, he held that the explanation offered by the assessee was merely an afterthought based on fabricate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sales 1. Total approx. sales as per loose annexures 2,50,00,000 pertaining to the assessee found and seized from various premises as discussed above. 2. GP @ 13.66% on undisclosed sales of 34,15,000 Rs. 2,50,00,000 treated as assessee's undisclosed profit for the asst. yr. 1997-98. B. Value of the investment made by the assessee for above unaccounted sales 1. Total circulating investment taken @ 20 per 50,00,000 cent on estimation of the total unaccounted sales of Rs. 2,50,00,000 Less: Gross Profit available with the assessee 3,41,500 for circulating working capital taken at 10% of the Gross Profit arrived at on account of unaccounted sales as discussed at point No. 2 of Head 'A' above (10% of Rs. 34,15,000) Less: Value of 3,787 gms. of gold ornaments 18,93,500 found short at the time of search treated as assessee's unaccounted sales i.e. the stock available with him for making unaccounted sales as discussed under the Head 'A' above (3,787 gms. x 500). ------------- 27,65,000 ------------- 24. Accordingly, he made additions of Rs. 34,15,000 and Rs. 27,65,000 to the undisclosed income of the assessee on account of profit on undisclosed sales a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as unaccounted sale by the Department of the assessee company and there were also some unexecuted orders forming part of the loose slips which have been considered by the Department as unaccounted sale of the assessee. Referring to the relevant details filed before the AO, he pointed out that the nature of each and every document/loose slip found during the course of search was explained on behalf of the assessee company and on the basis of these details, the quantum of unaccounted sale as arising from the relevant loose slips was also worked out by the assessee at about Rs. 76 lakhs. He submitted that the AO, however, ignored the same and proceeded to estimate the unaccounted sale of the assessee at Rs. 2.5 crores rejecting the submissions made on behalf of the assessee company without giving any cogent reasons. He contended that such unaccounted sale, therefore, ought to be taken at Rs. 76 lakhs as worked out by the assessee giving all the relevant details for the purpose of determining the income of the assessee from such unaccounted sale. 26. As regards the addition made by the AO on account of circulating capital required to be invested by the assessee in the unaccounted tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d reasonable. He submitted that the incriminating material found during the course of search as well as the subsequent enquiries/investigations made by the AO fully supported the said estimate. He also submitted that the unaccounted sale at Rs. 76 lakhs was worked out by the assessee only on the basis of some of the seized documents wherein values were clearly indicated, but the similar other seized loose slips were completely ignored by the assessee simply because only the quantity was mentioned therein without indicating the value thereof. He contended that such selective approach adopted by the assessee cannot be accepted and the unaccounted sale worked out at Rs. 76 lakhs on the basis of such selective approach should not be taken into account. He also contended that all the facts of the case have to be seen in totality including the discrepancies pointed out by the AO in stock to appreciate the estimate of unaccounted sale made by the AO. He submitted that on such appreciation, it can easily be inferred that the estimate of unaccounted sale made by the AO in the present case at Rs. 2.5 crores was quite fair and reasonable and both the additions made by him on account of profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to this effect was offered by the assessee by mentioning specifically the nature of the relevant loose slips in the 'Remarks' column. Similarly, some of the loose slips represented stock tally made by the assessee from time to time of different items and this aspect evident from the entries appearing in the loose slips as well as the substantial quantity or weight indicated therein was also pinpointed by the assessee in the 'Remarks' column of the statement against each of the relevant loose slips. It was also found by the assessee that some of the loose slips were appearing more than once in the statement prepared by the Department annexure-wise and these mistakes were also pointed out by the assessee in the said statement giving specific details in the 'Remarks' column against the relevant loose slips. All these submissions made by the assessee giving specific details, however, were rejected by the AO merely observing that the same were without any basis. 30. In this regard, it is interesting to note that the similar is suo was involved in the case of other concern belonging to the same group i.e. M/s P.P. Jewellers (Delhi) and when the similar explanation was advanced by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discussed above and by giving specific narration of the contents of each and every slip therein, an attempt was made by the assessee company to explain the same as is evident from the copy of the said details placed on record before us. The AO, however, brushed aside all these submissions made on behalf of the assessee company simply by observing that there was no basis whereas the relevant details filed by the assessee, in our opinion, were sufficient to show that the submission made by the assessee in respect of each and every slip was specific and self-explanatory. The action of the AO in rejecting the said explanation altogether thus was not only contrary to the submissions/explanation offered by the assessee but also to his own order passed in the case of M/s P.P. Jewellers (Delhi) on a similar issue involving identical facts and circumstances. It is pertinent to note here that the submission made by the assessee in this regard was self-explanatory in the sense that the loose slips accepted by the assessee as representing its unaccounted sale invariably indicated the values of goods supplied whereas the remaining loose slips which were claimed to be not its unaccounted sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s discussed at point No. 2 of Head 'A' above (10% of Rs. 10,37,106). Less: Value of 3787 gms. of gold ornaments found 18,93,500 short at the time of search treated as assessee's unaccounted sales i.e. the stock available with him for making unaccounted sales as discussed under the Head 'A' above (3787 gms. x 500). --------- Nil --------- 32. Accordingly, we sustain the addition of Rs. 34,15,000 made by the AO on account of profit on unaccounted sales to the extent of Rs. 10,37,106 and delete the addition of Rs. 27,65,000 made by him on account of unexplained investment made in the circulating capital. 33. We may note here for the sake of clarity and completeness that the addition of Rs. 27,65,000 made by the AO on account of alleged investment made in the circulating capital for the purpose of unaccounted transactions is also challenged by the learned counsel for the assessee by contending that there was no evidence found during the course of search to establish the factum as well as quantum of the said investment. He has also contended that the onus to establish such factum and quantum of investment was on the Revenue and having clearly failed to discharge the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also perused the relevant material on record. It is observed that as per the finding given by the AO himself in the assessment order, there was no excess stock of gold or gold jewellery found during the course of search conducted in the assessee's case. On the other hand, the stock of gold inventorised during the course of search on physical verification was finally found by the AO to be short as compared to the stock as per the books of account of the assessee. He, however, still made the addition of Rs 90 lakhs on account of excess stock of gold to the undisclosed income of the assessee on protective basis merely on the basis of the declaration made by the assessee company in its return of income. Before us, the learned Departmental Representative has sought to support this action of the AO by submitting that the declaration of the said amount as its undisclosed income made by the assessee was conclusive and since the same bound the assessee, the AO was fully justified in including the amount so declared by the assessee company in its undisclosed income computed in the block assessment order. In this regard, it is observed that a similar issue had arisen for consideration bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the block period in a specific manner and the findings of the AO regarding the undisclosed income are to be based on the material found as a result of search. A combined reading of these provisions makes it clear that the amount which is taxable as 'undisclosed income' in the block assessment should fall within the scope and ambit of the definition expressly given in Chapter XIV-B and the amount which is not covered by the said definition cannot be subjected to tax in the block assessment even though declared as such by the assessee in the return of income for block period. The procedure laid down in Chapter XIV-B also reveals that the AO has to determine the undisclosed income of the block period in the manner specified in s. 158BB and this exercise is independent of the return filed by the assessee for the block period. At this stage, it is useful to refer to the observations recorded by the Pune Bench of Tribunal in the case of Control Touch Electronics (Pune) (P) Ltd. to the effect that if any income is not taxable by virtue of any provision of the Act, then it cannot be taxed merely because it was offered by the assessee in his return of income and there cannot be any su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal. we respectfully follow the decision rendered by the Tribunal in the said case and hold that the addition of Rs. 90 lakhs made by the AO merely on the basis of the declaration made by the assessee company in its return of income without the same falling under the definition of "undisclosed income" given in s. 158B(b), was not sustainable. We, therefore, delete the same and allow ground No. 5 of the assessee's appeal. 39. Now, we shall take up the grounds originally raised in the appeal filed in the case of M/s P.P. Jewellers (Delhi) being IT(SS)A No. 291/Del/1997. There are as many as seven such grounds originally raised by the assessee in this appeal, but they all involve only two issues relating to the additions of Rs. 5,17,740 and Rs. 6,59,589 made by the AO on account of profit on unaccounted sales and alleged investment made in the circulating capital for the purpose of effecting such unaccounted sale, respectively. 40. During the course of search, the cash found physically was much less than the cash balance reflected in the cash book regularly maintained by the assessee. Similarly, difference was found in the stock inventorised during the course of search on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the quantity to the extent of 60 per cent represented unaccounted sales of the assessee company. On the basis of the said estimate of unaccounted sales made by him, the AO worked out the additions on account of profit on undisclosed sales and alleged investment made in the circulating capital required to effect such unaccounted sales at Rs. 5,17,714 and Rs. 6,59,589, respectively on the basis of following working given on p. 10 of his impughed order: 1. Total approx. gold in loose slips (as : 18,739 gms discussed in preceding paras) 2. 60% of this treated as unrecorded and : 11,243 gms. undisclosed sales on estimation. 3. Value of total undisclosed sales of : Rs. 56,21,500 11,243 gills. @ Rs. 500/gm. 4. GP @ 9.21 (shown by assessee in asst. : Rs. 5,17,740 yr. 1996-97) on Rs. 5,62,1500 to be treated as assessee's undisclosed income for asst. yr. 1997-98. (1-4-96 to 10-10-96) : Investment: 1. Total unaccounted sale : Rs. 56,21,500 2. Less: Value of 3978 gms. of gold found : Rs. 19,89,000 short @ Rs. 500 per gms. ------------- Rs. 36,32,500 3. Cost value of above 36,32,500 x 90.79 : Rs. 32,97,946 ----- 100 20% of above taken as investment : Rs. 6,59,58 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eously clearly demonstrated that the actual unaccounted sale reflected in the loose slips was Rs. 75,92,282 as against the figure of Rs. 2,30,68,055 worked out by the Department by assuming that all the loose slips represented the unaccounted sales of the assessee, which gives a ratio of 33 per cent. Since the nature of the assessee's business as well as the contents of the loose slips found in its case were almost similar to that of M/s P.P. Jewellers (P) Ltd., we are of the view that it would be fair and reasonable to adopt this ratio of 33 per cent which is based on the actual facts and figures as accepted by us in the said case as against the ratio of 60 per cent adopted by the AO without any basis to work out the quantum of unaccounted sales as evidenced by the loose slips. Accordingly, we recompute the quantum of unaccounted sales as well as profit on such unaccounted sales and the investment in circulating capital as follows: 1. Total approx. gold in loose slips : 18,739 gms (as discussed in preceding paras) 2. 33% of this treated as unrecorded and : 6,183 gms. undisclosed sales on estimation. 3. Value of total undisclosed sales of : Rs. 30,91,500 6,183 gms. @ Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d investment. 43. Now, we shall take up the grounds originally raised in the remaining appeal filed in the case of M/s P.P. Jewellers (India) being IT(SS)A No. 292/Del/1997 for consideration and decision. There are as many as seven such grounds, but the same involve only three issues relating to the additions of Rs. 19,500 and Rs. 1,71,000 made by the AO on account of profit on unaccounted sale of silver and jewellery, respectively as well as the alleged investment of Rs. 1,02,032 required to be made by the assessee in circulating capital for effecting the said unaccounted sales. 44. During the course of search, cash found from the premises of the assessee was substantially lower than the cash balance reflected in its cash book. Similarly, difference was noticed in the stock inventorised during the course of search on physical verification and the stock as per the books of account of the assessee. The said difference in cash as well as stock was attempted to be explained by the assessee and after examining the said explanation in the light of material found during the course of search as well as brought on record by the assessee during the course of assessment proceedings, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and made the addition of Rs. 1,71,000 to the undisclosed income of the assessee on account of profit calculated @ 22.82 per cent on the unaccounted sales. He also worked out the investment required to be made by the assessee in circulating capital for the said unaccounted transactions at Rs. 1,02,032 as follows: 1. Total undisclosed sales : 7,50,000 2. Less: Value of 178 gm of gold @ 500/gm. : 89,000 3. Cost value of above 77.18 x 6,61,000 : 5,10,160 ----- 100 4. 20% of above taken as investment : 10,20,320 and added the same to the total undisclosed income of the assessee. While working out the total amount involved in the transactions reflected in the seized documents, he took the amounts mentioned therein as in the multiples of 100 and accordingly, computed the unaccounted sales at Rs. 7,50,000. 45. After considering the rival submissions and perusing the relevant material on record, it is observed that no satisfactory explanation as regards the shortage in silver of 21.5 Kgs. found during the course of search was offered by the assessee during the course of assessment proceedings before the AO. Even before us, the learned counsel for the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount. As such, considering all the facts and circumstances of the case, we are of the view that it would be fair and reasonable to estimate the unaccounted sale of the assessee by adopting the same ratio of 33 per cent as applied by us in the case of M/s P.P. Jewellers (P) Ltd. and M/s P.P. Jewellers (Delhi) to work out the quantum of unaccounted sale as evidenced by the loose papers found and seized during the course of search. Accordingly, we estimate such unaccounted sale at Rs. 2,47,500 being 33 per cent of Rs. 7,50,000 and determine the quantum of profit from such unaccounted sale as well as the investment required to be made by the assessee in the circulating capital required for such unaccounted sale as follows: 1. Total undisclosed sale. : 2,47,500 (33% of Rs. 7,50,000) 2. Profit on such unaccounted sale @ 22.82% : 56,479 Investment: 1. Total unaccounted sale. : 2,47,500 2. Cost value of above. 77.18 x 2,47,500 : 1,91,020 ----- 100 3. Investment at 20 per cent of the above cost : 38,204 value. 4. Less: Value of stock found short by 178 : 89,000 grams @ Rs. 500 per gram. -------- NIL -------- 47. Accordingly, we sustain the addition made by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X
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