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TMI Blog2017 (3) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... according to the assessee by producing such new evidences the case differs from 1989-90, as according to the assessee by using new evidences which were not there in the year 1989-90, they have been able to produce the evidence with respect to the actual consumption of gold in final product of ornaments which were exported. Considering the evidences from the paper book produced, which according to the assessee are new evidences, we are of the opinion that as rightly observed by the learned ITAT none of the evidences can be said to be contemporaneous and/or the evidences to suggest the actual consumption of gold. Most of the evidences and the material produced can be said to be the correspondences and/or general requirement of use of gold. None of the documents / materials show the actual consumption of gold. Under the circumstances, the learned Tribunal has rightly observed and held that the evidences (new evidences) are not contemporaneous and/or the evidences to suggest actual consumption of gold. - Decided against assessee - TAX APPEAL NO. 855 of 2016 TO TAX APPEAL NO. 859 of 2016 - - - Dated:- 17-2-2017 - MR. M.R. SHAH AND MR. B.N. KARIA, JJ. FOR THE APPELLANT : MR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 80HHC of the Income Tax Act, 1961 (hereinafter referred to as IT Act ). According to the assessee it was upto the AY 1989-90, the modus operandi of the same viz. it will send the raw gold to the artisans in various cities and towns of the country and all these artisans will be mixing the alloy of the quantity prescribed by the assessee and intimated to each artisan. That the total accounting of the gold outward and the gold ornaments inward have been maintained. Upto AY 1988-89, the books of accounts came to be accepted but in AY 1989-90, for the first time the then Officer raised a question and held that against the consumption of gold weighing 876610.488 gm, the actual utilization in ornaments was 864420.299 gm and the difference of 12190.189 gm was unaccounted local sales. According to the assessee the consumption of gold by artisans was arrived at on the basis of the customs procedure resulting into rejection of all the contemporaneous evidence in the books of accounts. The same resulted into an addition of ₹ 38,46,004/-by way of unaccounted income and net addition to income of ₹ 4,00,230/-. That the assessee went in appeal to CIT(A), who reduced t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the new evidence does not prove anything in light of the discussion in the ITAT s order of AY 1989-90. [2.5] Feeling aggrieved and dissatisfied with the common order passed by the learned CIT(A), the assessee preferred appeals before the learned ITAT being ITA Nos.2414/Ahd/2011 to 2418/Ahd/2011. That by common impugned judgment and order the learned ITAT has dismissed the said appeals preferred by the assessee and has confirmed the additions made by the Assessing Officer which has given rise to the present Tax Appeals. [3.0] Shri J.P. Shah, learned Senior Advocate has appeared on behalf of the assessee and Shri M.R. Bhatt, learned Senior Advocate has appeared on behalf of the Revenue. [4.0] Shri J.P. Shah, learned Counsel appearing on behalf of the assessee has vehemently submitted that in the facts and circumstances of the case the learned Tribunal has materially erred in dismissing the appeals and confirming the additions made by the Assessing Officer. [4.1] It is further submitted by Shri Shah, learned Counsel appearing on behalf of the assessee that the learned ITAT has materially erred relying upon the order passed for AY 1989-90. It is vehemently submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vidences which were not there in AY 1989-90 are contemporaneous evidences to establish actual consumption of gold at higher purity level. Making above submissions, it is requested to admit / allow the present Tax Appeals and/or remand the matter to the learned ITAT to consider the new evidences in detail. [5.0] All these appeals are vehemently opposed by Shri M.R. Bhatt, learned Counsel appearing on behalf of the Revenue. It is submitted by Shri Bhatt, learned Counsel appearing on behalf of the Revenue that the findings recorded by the learned ITAT are on appreciation of evidence more particularly considering the new evidences upon which the assessee has relied upon and after considering the said evidences the learned ITAT has observed that none of the evidences are contemporaneous evidences and/or evidences to prove the actual consumption of gold. It is submitted that therefore when the same is a finding of fact, it cannot be said that there arise any question of law much less substantial question of law. [5.1] It is submitted that as such the issue is already concluded by the decision of the Division Bench of this Court for AY 1989-90. It is submitted that the Division Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove more particularly whether the learned ITAT has missed to consider new evidences produced for the years consideration, the grounds on which the Assessing Officer made the additions are required to be considered. It appears that the Assessing Officer noticed the gold content in the final product as per the Books of Accounts and as per the appraisal of customs authority. Therefore, the Assessing Officer worked out the excess consumption of gold which according to him had been actually sold in the local market. The Assessing Officer also noticed that similar modus operandi was done in the year 1989-90 also and there was no change in the modus operandi in the subsequent years under consideration. At this stage it appears that the assessee produced some further evidence which we have perused from the paper book produced and according to the assessee by producing such new evidences the case differs from 1989-90, as according to the assessee by using new evidences which were not there in the year 1989-90, they have been able to produce the evidence with respect to the actual consumption of gold in final product of ornaments which were exported. However, considering the evidences fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned counsel Shri J.P Shah s first contention [relatable to Question No.2 framed above] was that the entire procedure of manufacturing ornaments was controlled by the State authorities under the Gold Control Act. Raw gold supplied to the karigars for preparation of ornaments was recorded in the books of the assessee. To such gold, the karigars would add alloy @ 7.100 grams per 100 grams of gold to achieve desired purity of gold of 22 carat. Even when such ornaments were received back after preparation, they were tested, certified and recorded in the assessee s records. It was thereafter not possible for any mischief or modification, particularly looking to the certificate issued by the Gems Jewellery Export Promotion Council. Counsel pointed out that 22 carat of gold or for that matter any other carats would not have precise purity and would have a range of fineness of gold. He drew our attention to the specifications laid down by the Bureau of Standards, which provides as under: 1. 22.3 Carat gold : It shall be of fineness not less than 970. 2. 22 Carat gold : It shall be of fineness not less than 916.6. 3. 21 Carat gold : It shall be of fineness not less than 875. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and received from the artisans, as compared to the gold actually exported by the assessee to its foreign importers. 8.1 This is not even seriously disputed by the assessee. If we take as sample of such discrepancy that emerges in the category of 22 Carat gold ornaments, after supplying raw gold to the artisans and the artisans preparing gold ornaments after adding alloy in the specified quantity, the assessee received gold ornaments, according to the assessee s records having purity of 93.37%. The very same ornaments when were exported, the assessee recorded its purity as 91.66%. Some of these ornaments also were subject to actual test by the Customs authorities. The result also matches the assessee s claim of gold purity of 91.66%. Thus, in fact, there was considerable discrepancy between the two sets of documents pertaining to the same set of gold ornaments is undeniable. The assessee owed an explanation and had a duty to reconcile this discrepancy. The authorities found that the assessee failed in doing so. This was on the premise that the assessee s explanation was found unacceptable and inadequate. The assessee s only explanation was that the ornaments actually carried p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents maintained by itself. 10.1 It can therefore not be stated that the finding of the authorities below, as confirmed by the Tribunal, are per verse. It is also not true that in coming to such conclusions, the Revenue authorities ignored the presence of the certificate of the Gems Jewellery Export Promotion Council. The contention that in absence of proof of local sale, it must be presumed to have been exported, in our opinion, is fallacious. It is not even the case of the assessee, barring his explanation about the higher purity of gold being exported when lower purity gold is declared in the export documents, that such gold was in some form or the other, separately or independently exported. When the authorities did not accept the assessee s explanation, it comes to a situation where such differential quantity of gold did not form part of the assessee s exports. The only conclusion, therefore, available to the authorities and therefore rightly reached at was that the gold was subjected to local sale. All in all, the issues considered by the Revenue authorities at a greater length, referring to and analyzing the evidence on record and once which were confirmed by the T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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