9911796707
TMI Blog2016 (1) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... the survey party of the department. 3. The first issue in this appeal of revenue is against the order of CIT(A) deleting the addition of Rs. 12,88,301/- made by AO on account of unexplained expenditure found recorded in MS-3 impounded document. For this revenue has raised the following ground no.1:- "Ground No.1: That Ld CIT(A) has erred in law as well as facts in deleting the addition of Rs. 12, 88, 301/- was made as unexplained expenditure on the basis of vouchers at MS- 3." 4. Briefly stated the facts of the case are that revenue during the course of survey found certain documents, loose papers, register etc., which were inventorised as annexure MS-l to MS-20 and were impounded. But no books of account were found during survey from the business premises of the assessee and the same were produced during the course of assessment proceedings which were considered and examined by the A.O. while completing the assessment. The AO did not consider the books of account and proceeded to assess the income of the assessee on the basis of impounded document MS-3, which is a bunch of loose papers containing pages 1-322 out of which are 136 debit vouchers without any date. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO has made mistake while making the table in the assessment order. In respect of one of the vouchers at serial no. 223, the amount in voucher was Rs. 8,500/- and not Rs. 85,000/-. In respect of the remaining vouchers for Rs. 1,40,402/- it was submitted that no entry could be found in the cash book for the assessment year in question as well as in earlier years but the assessee has admitted sales outside the books to the extent of Rs. 16,89,000/-. It was submitted that the AO has estimated profit of Rs. 2,48,048/- on such sales which is not disputed. The AO, therefore, in the process has allowed unrecorded expenses of Rs. 14,41,952/-(16,89,000 - 2,48,048). The said mount of Rs. 1,40,402/-, therefore, cannot be added since the amount was outgoing from above unrecorded sales. (1071399/- +140402/- + 76500/= 12883011-). The paper book submitted by the assessee was sent to the AO for his comments. The AO in the remand report reiterated the points mentioned in the assessment order. I have considered the assessment order, submissions made by the assessee, the remand report, rejoinder to the remand report and relevant papers filed before me. I find that the assessee submitted detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso filed. We found from the argument of assessee that the AO made a mistake while making tabulation in respect of one of the vouchers out of 136 vouchers. At SI page 223 the amount should be Rs. 8,500/- instead of Rs. 85,000/-. The total will thus come down to Rs. 12,11,301/- in place of Rs. 12,88,301/-. We find that the assessee before AO as well as before CIT(A) also claimed that all these vouchers have been entered in the regular cash book except some payments aggregating Rs. 1,40,402/-. All the payments were duly entered into in the regular books of accounts except the said sum of Rs. 1,40,402/- as is evident from the details prepared and filed before the lower authorities and also before tribunal. The accounts of the assessee are audited accounts and the entries in respect of the 136 vouchers mentioned by the AO (except Rs. 1,40,402/-) appear in the regular cash book in the same name and in respect of the same amount. Therefore the sum of Rs. 1071399/- is duly recorded in the books of accounts. We find that the AO has made the addition under misconception in respect to this amount Rs. 10,71,399/-. Even otherwise, the matter was referred to AO for remand report, who refused to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confirm the order of CIT(A) deleting this addition. 7. With regard to the disallowance of certain expenses from the impounded papers amounting to Rs. 10,71,399/- (Rs. 5,25,431+ 5,148+ 1,30,651+ 2,55,705), that the same have been correlated by the assessee in the written submissions with the unrecorded sales of Rs. 16,89,700/- on which the Ld AO himself has estimated the profit of Rs. 2,40,048/- thereby allowing the expenses of Rs. 14,40,652/-. Such expenses in fact have been found in the course of survey being the above sum of Rs. 10,57,536/- as well as the sum of Rs. 1,40,402/- and given in para-10. The AO in the remand report has reiterated his views taken in the Asstt. Order and has not disputed the claim of the assessee correlating these expenses with reference to the unrecorded sales. Therefore, we are of the view that CIT(A) has rightly correlated this addition with the profit of Rs. 2,40,048/- and we confirm the order of CIT(A) on this issue. 8. The next issue in this appeal of revenue is against the order of CIT(A) deleting the addition of Rs. 9,16,935/- made by AO on account of unexplained expenditure not recorded in the books of account but reflecting in the impounded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of jewellery, the small gold smiths who also manufactures some jewellery on their own from the small portion of gold retained by them in course of labour work, also gives their jewellery for sale to the assessee. The assessee keeps the said jewellery in the show room and sales the same to the customers and on sale the payment is made thereafter to the gold smiths. This will be apparent from the seized paper MS-5 wherein the payment for small items of jewellery is made to such gold smiths. The assessee has already admitted the sale of jewellery amounting to Rs. 16,89,700/- outside the books and on the said undisclosed sale the AO has already estimated net profit at 14.68%. We find from records that in course of survey the AO found that some of the purchased jewellery as well as the labour charges were not accounted for, as mentioned above, which is not accounted for. AO himself has presumed outgoings for such sale (Rs.16,89,700- Rs. 2,40,048) at 14,41,652/-. The AO has found in the impounded papers the payment amounting to Rs. 10,57,336/-, which is much less than the outgoing estimated by the AO on such sales. Therefore these outgoings can be telescoped with the actual expenses ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions and gone through facts and circumstances of the case. Regarding expenditure of Rs. 7,45,959/- the AO during remand proceedings observed that on verification of impounded books of accounts as per ID Marks MS-10, it is seen from handwritten loose sheets from Page 10 to Page 23 that these pages are handwritten loose sheets. In these loose sheets there were some descriptions written in left side and in weight/grams written on the right side of the pages. But, nowhere it was written labour charge paid/receipt except Serial No.24 & 19. The total weight comes to 40283.730 grams and its value comes to Rs. 7,45,959 (100+605). In Page No.24, there was written that amount paid to Ajoy Sing 605.00 as it is seen from the Ledger page of Ajay Sing. The contention of the assessee that A.O. mixed up the weight in terms of gram and amount in terms of money is not at all correct as those pages i.e. Page 10 to Page 24 are all written in terms of weight nowhere it is written as labour charges except Rs. 605 as per Sl.No.24 and Rs. 100/- as per Sl.No.19 which is amount paid are clearly mentioned. In Page 9 of Ledger Page of Ajoy Singh it is written at the top of the page as 'Rupees'. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7,97,234/-. For this, revenue has raised following ground no.4: "Ground No. 4. That Ld. CIT(A) has erred in law as well as facts in deleting addition of Rs. 7,97,234/- which was made as excess stock considered as unexplained investment." 16. Brief facts leading to the above issue are that the AO during the course of assessment proceedings noticed from the impounded documents MS-4 that there is excess stock in respect to 22 carats Gold, 18 carats gold and silver ornaments and the differential value is at Rs. 7,97,234/-. The AO brought out the difference in a chart which is reproduced from assessment order as under: Items Disclosed by Firm (in gram) Found by survey Team (In gram) Excess total (in gram) Values 22ct gold 20819.210 20409.030 410.180 Rs.3769955.42 @919/- per gm 20 ct gold 140.00 140.00 - 18ct gold 1569.422 1562.904 6.518 Rs.5449/- @ 836/- per gm Silver Ornaments 64423.287 42000 22423.287 Rs.4,14,830/- @ 18500 per kg. Total Rs.7,97,234/-" According to AO, the assessee could not explain the additional stock/excess stock found during the course of survey and accordingly, he added the same undiscl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciliation then AO cannot make any addition on this account. If the books of account show higher figure of stock then what was found in the course of survey, such excess cannot be added as undisclosed investment. Accordingly, this addition has rightly been deleted by CIT(A) and we confirm the same. 19. The next issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of customers' gold lying in stock treating the same as unexplained investment. For this, revenue has raised following ground no.5: "Ground No. 5. That Ld. CIT(A) has erred in law as well as facts in deleting addition of Rs. 51,53,238/- which was made stated by customers gold as unexplained investment." 20. Brief facts leading the above issue are that the AO during the course of assessment proceedings noticed from impounded document MS-20 that the claim of assessee regarding customers' gold is not proved because many of the persons have denied giving any gold to assessee. Therefore, the AO treated the customers' gold weighing at 5607.441 grams as undisclosed stock and thereby added the same as unexplained investment to the tune of Rs. 51,53,238/-. Aggrieved, assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n your letter (AE-335, Salt Lake City), I found that a shop, M B Sirkar & Sons, exists at the said address. 1 normally do not have much purchases made from this shop. In the FY 2006-07, I would have purchased items in the range of Rs. 18,000 to 20,000 in the entire FY from this shop . Unfortunately, I am not able to locate the purchase bills and therefore am not in a position to furnish the documentary evidence in support of my submission, The lack of documents is deeply regretted. My PAN number is AAHPP2522K. Thanking you, Yours truly, Sd- A K Prasad CF-282, Salt Lake City Kolkata 700064. " Reply of Sh. A.K. Bhadra 23RD December, 2009 "The Deputy Commissioner of Income Tax Circle-50 Bamboo villa 169, A.J.C.Bose Road Kolkata-700014. Dear Sir, Calling information u/s.133(6) of the LT. Act. In case of Mrs. Maya Sirkar of AE-335. Salt Lake, Kolkata-700 064 (or A. Y.2007-08 (FY-2006-07 I refer to your letter No. DCIT, Cir-50/Scrutiny/2009-1 0/Koll1199 dated 07.12.2009 in connection with the above matter. It may so happened that I may have purchased small item for gift purposes valuing approximately Rs. 1000/- or less from her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e lying with the above mentioned assessee on 12.9.2006. 3. Detail of payment received/made during the financial year 2006-07. 4. Please furnish your P.A.No. Please furnish the documentary evidence in support of your submission. I also find that the AO himself has accepted the deposit of gold from the customers, as per the calculations made in para 11 of the assessment order while making the addition of Rs. 7,97,234/-. From the working of the undisclosed income of Rs. 7,97,234/- "Gold ornaments belonging to customers" of 13,649.831 gms. was claimed by the assessee and that has been considered and accepted as correct by the A.O. while making the addition. I also find that the assessee has disclosed substantial receipts from job charges and such job charges are received every year. In assessment year 2006-07 such receipts were to the extent of Rs. 37,06,337/- Not only that, a separate register (marked annexure MS-20) was also found in the course of survey which proves that the assessee received gold for job working from customers. Furthermore, none of the customers have denied to have purchased ornaments from the assessee. I also find that the AO has partly accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AR admitted the discrepancy and no further action was required by which it meant that he did not want to cross examine the parties who has replied in the negative. But there still remained the parties who have confirmed having the transaction with the assessee during the year. Even if some of the parties did not accept but the fact could have been brought out from the records. We noted from the Audited Accounts filed with the return that the assessee has received making charges to the extent of Rs. 4170785/- which means that during the year the assessee has received 83414 gms of gold from the customers for remaking. (The admitted position is that making charges was Rs. 50 per Gm). The AO has not disputed the said receipts and has accepted the assessee's stand that the assessee has received the remaking charges of old jewellery given for remaking by the customers. It is of common knowledge that such remaking takes a month or two and in between such jewellery remains with the assessee. We have also gone through the reconciliation submitted on which the AO has relied on the while making addition of Rs. 797234 vide para 11 of the assessment order while considering the sto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 800 cts. The CBDT in its Press Note dated 11.5.94 has instructed that even during the search and seizure proceedings not to treat the jewellery as unexplained if the weight of the jewellery found tallies with the weight disclosed by the assessee. The assessee has been able to demonstrate the she had sufficient stock of the stones as on the date of survey. In view of the above the addition made by the AO is deleted. This ground is, hence, allowed." Aggrieved, revenue is in second appeal before Tribunal. 26. We have heard rival submissions and gone through facts and circumstances of the case. We fond that the AO has added back Rs. 39,16,154/- on the basis of the valuation done by the DVO determining the market value of the stones as undisclosed investment. On being asked to explain, the assessee explained that the assessee had with him some opening stock of the stones as well as stones purchased during the year before the date of survey and in particular the purchase of stone of Rs. 25,50,000/- immediately within one month from the date of survey the weight of which was 2578.59 gms. The said amount was also disclosed by the assessee as additional income and added back in the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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