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TMI Blog2017 (12) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of 87,10,800 for the gold jewellery weighing at 4148.689 gms. which were not duly explained by the assessee-firm. Since the addition in the hands of the firm is confirmed, the order of the Commissioner of Income-tax (Appeals) deleting the additions in the hands of the individuals is also approved as there cannot be double additions. Accordingly, appeals of the Revenue stand dismissed and that of the assessee is partly allowed X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 87,10,800 was not disclosed. It was subsequently transpired from further interrogation of the said three persons and investigation that the parties at Hyderabad to whom the gold ornaments were meant and carried by them were not interested in buying the ornaments, which was found to be contradictory to the earlier statements. 3. Investigation of the firm's office at Bangalore revealed closing stock as per the statements given by its partners that gold bullion, gold ornaments owned by the firm and labour gold (i.e., gold entrusted by other jewellers for earning labour charges) weighed 1412.540 grams, 4869.565 and 4148.680 grams respectively aggregating to 10428.785 grams. 4. When the assessee was asked to reconcile the gold ornaments sent to Hyderabad with the stock available, Shri L. Prashanth, sales executive of the firm explained that the ornaments sent to Hyderabad consisted of own gold and labour gold available with the firm. From these facts, the Assessing Officer concluded that labour gold could not have been sent to Hyderabad as it belonged to some other jeweller. The Assessing Officer accordingly having relied on the provisions of section 132(4A) formed a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the employees have filed cross-objections supporting the order of the Commissioner of Income-tax (Appeals). 7. Grounds raised in the assessee-firm's appeal are extracted hereunder for the sake of reference : "1. The order of the learned authorities below in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned authorities below have erred in making an addition invoking/confirming section 69C of the Income-tax Act on the ground that the appellant was unable to reconcile 4,148.680 gms. of gold Jewellery stock contrary to the facts and evidences before them and hence deserves to be deleted. 3. The learned authorities below failed to note/appreciate that the gold jewellery seized were fully accounted in the books and reconciled resulting thereof in no investments not recorded or explained for in the books of the firm. Hence the addition made/confirmed deserves to be deleted. 4. The learned Commissioner of Income-tax (Appeals) while confirming the addition made of the value of gold jewellery weighing 4,148.680 gms. in gold, completely relies on one single factor of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly prays that the appeal may kindly be allowed." 8. During the course of hearing, the learned counsel for the assessee-firm has emphatically argued that whatever jewellery was found during the course of search from its employees, it was properly recorded in its books of account while sending its employees to Hyderabad for approval of the jewellery from the Hyderabad buyers and a printing standard/approval voucher dated June 13, 2011 was issued by the firm. He further invited our attention to the stock summary filed during the course of hearing with the submission that stock of bullion gold, gold and gold labour was of 10,428.785 gms, out of which 8691.400 gms. was sent to Hyderabad through its employees for sale. Therefore the assessee was possessing sufficient gold at the relevant point of time and no addition under section 69 is called for on account of unexplained investment. The assessee has furnished the reconciliation statement before the lower authorities but they have not appreciated the fact that the assessee possessed the sufficient gold jewellery. It is not a case where the Revenue authorities have conducted search at the office premises of the assessee-firm and f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that addition cannot be made in both hands if it is done in the hands of the firm on substantive basis, the addition in the hands of the individual deserves to be deleted. 11. Having carefully examined the order of the lower authorities, in the light of the rival submissions, we find that undisputedly the jewellery of gold ornaments weighing at 8691.400 gms. was seized from the employees of the assessee-firm i.e., Shri Kota Sandeep, Shri Pavidi Aswathanarayana, Shri Hanumantharaju and these three employees have made a categorical statement that they were the employees of the assessee-firm. They were sent along with jewellery to Hyderabad for its sale or approval from the buyers i.e., M/s. Malabar Jewellery and M/s. P. A. Jewellers, Panjagutta. The statements made by these employees were accepted by the partners of the firm and the partners of the firm owned the jewellery with a categorical statement that these gold ornaments were sent to Hyderabad for its sale or approval. On the day of arrest of these three employees and the seizure of the jewellery, two partners Mr. Rajesh and Mr. Arjun were examined by the Additional Director of Income-tax, Bangalore. During the course of exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be explained properly by the assessee-firm but the assessee- firm could not furnish a satisfactory explanation. However, the partners of the firm have come forward during the course of examination before the Additional Director of Income-tax to state that they do not have any evidence for 4.148 kgs. of gold ornaments valuing at ₹ 87,10,800, and they will offer it to tax but they did not offer it to tax. 13. Keeping in view the totality of the case, we find that since the excess gold was found from the employees of the assessee and the assessee could not furnish the satisfactory explanations, the addition under section 69 is called for and we therefore find no infirmity in the order of the Commissioner of Income-tax (Appeals) restricting the addition for the excess gold ornaments of 4.148 kgs. valuing at 87,10,800. But while confirming this addition, the Commissioner of Income-tax (Appeals) has approved the action of the Assessing Officer for making the addition of ₹ 1,96,42,564 which is not called for. The observation of the Commissioner of Income-tax (Appeals) appear to us to be correct to the extent of addition for the excess gold jewellery of 4148.689 gms. Thus w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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