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TMI Blog2015 (11) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... ause the purchase in terms of money is quite big. Keeping in mind this background, we have to appreciate the alleged evidence produced by the assessee along with the explanation. The first is the bank statement of Vijaya Bank. This is the statement of the assessee's account. In this bank statement, payments to M/s. Jain Creation through account-payee cheques are available, starting from August 14, August 18, and August 19, these payments were of ₹ 42 lakhs then on August 21st and 23rd, again the assessee paid ₹ 10 lakhs. It is not discernable against which purchases these payments have been given set off. The purchases of the jewellery on August 21, has been alleged to ₹ 35,68,000 but payments of ₹ 42 lakhs were made before August 19. If this amount was to be accounted for purchase of the jewellery then what was the need to make payment of ₹ 10 lakhs more on August 21st and 22nd. Though the confirmation is available at pages 33 given by M/s. Jain Creation do indicate that the gold was sold to the assesse and it was delivered to the assesse on August 21, 2008 but neither the assessee nor M/s. Jain Creation is able to substantiate this stand with any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected for scrutiny assessment and a notice under section 143(2) of the Income-tax Act, 1961 was issued on September 20, 2010 which was served on September 23, 2010. The learned Assessing Officer thereafter, issued a questionnaire under section 142(1) on January 12, 2011. A survey under section 133A was conducted at the business premises of the assessee at Vastrapur and Ratanpole on August 27, 2008. During the course of survey excess stock having value of ₹ 85,17,439 was detected. The learned Assessing Officer has noticed the working of excess stock in para 3 of the assessment order which reads as under : (Rs.) (1) Physical inventory of stock found at Vastrapur 1,33,03,011 (2) Physical inventory of stock found at Ratanpole 77,29,694 Total 2,10,32,705 Less : Stock as on 27/08/08 as per books of account 1,25,15,266 Excess stock found 85,17,439 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment to M/s. Jain Creation was made through account-payee cheque. This bill remained to be entered in the books of account before the date of survey and therefore credit of this gold ought to be given to the assessee. It was contented that the source of gold ought to be considered as explained. In this way, the assessee has worked out the net excess stock at 2162.64 grams. The learned Assessing Officer did not accept the contention of the assessee on the ground that during the course of survey, the director Shri Vinodbhai D. Soni was specifically asked, whether any gold purchased by the company, whose bill yet to be received is available in stock or not ? He failed to disclose about this fact during the course of survey. Therefore, whatever explanation prepared by the assessee is an afterthought. Accordingly, the learned Assessing Officer has rejected the contentions of the assessee and made an addition of ₹ 27,18,000 which include disallowance of some conversion charges. 6. Dissatisfied with the addition, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appeals). 7. The learned first appellate authority has reappreciated the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -called discrepancy was statedly detected just after the survey and the appellant had made necessary entries in respect of these so-called discrepancies in its books of account on August 28, 2008, i.e., just next day of survey. 8. Learned counsel for the assessee while impugning the orders of the learned Revenue authorities below contended that M/s. Jain Creation has supplied gold bars of 3000 grams which remained to be accounted in accounts. The assessee has purchased this gold on August 21, 2008. The gold was also supplied on that very day. In order to buttress his contention, he drew our attention towards pages 34 of the paper book where bill No. 56 dated August 21, 2008 issued by M/s. Jain Creation is available. Learned counsel for the assessee further contended that M/s. Jain Creation had given a confirmation which is available on pages 33. The payments have been made through account-payee cheque and the copy of the bank statement of the assessee's bank is available on pages 27 and 28. On the strength of these details, learned counsel for the assessee contended that credit of 3000 grams of gold ought to have been given to the asessee. He also pointed that though during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from M/s. Jain Creation is to be given to the assesse or not ? Shri. S. N. Divetia, learned counsel for the assessee at the time of hearing contended that if an assessee failed to explain a particular discrepancy at the time of survey, does not mean that the assessee would be denuded from his right to reconcile the discrepancy during the course of assessment proceeding. According to him, at the time of survey, process of collecting information was carried out. The ultimate conclusion from those information has to be drawn at the time of assessment stage. Therefore, if an assessee has submitted a reconciliation supporting with evidence then that reconciliation cannot be brushed aside lightly. We do not dispute with regard to the proposition raised by Shri S. N. Divetia, the assessee can explain the discrepancy in the stock at the assessment proceedings. The dispute relates to the merit of explanation. The question is, whether the explanation of the assessee is acceptable, when it is to be evaluated in the light of direct evidence, circumstantial evidence and with the angle of probability. Before we embark upon an inquiry with regard to the material submitted by the assesse along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e director at the time of survey. 3,000 grams of the gold is not a small quantity which might have not struck to the mind of the director when survey was going on. The learned first appellate authority, while appreciating this aspect has observed that conduct of the director is little unusual when he brought to the notice of jewellery purchased from M/s. Oasis Jewels. It is strange that the director informed one purchase but forgot to inform about other purchases. It is also pertinent to note that all the stocks as well as other details were brought to the notice of director. The employees were present and they were having ample time to recall this transaction. The learned first appellate authority also observed that as per market practice the owner of jewellery shop knew the gold purchase made in the recent past by heart because the purchase in terms of money is quite big. Keeping in mind this background, we have to appreciate the alleged evidence produced by the assessee along with the explanation. The first is the bank statement of Vijaya Bank. This is the statement of the assessee's account. In this bank statement, payments to M/s. Jain Creation through account-payee cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X
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