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TMI Blog2018 (4) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... er, the valuation of jewellery made by the assessee on cost basis was also not disputed contrarily the cost of the jewellery was supported with the bills showing rates of purchases. Merely non maintenance of stock register by the assessee cannot result into addition unless the AO shows with conclusive evidence that quantitative details submitted by the assessee is incorrect. Admittedly the assessee has produced the books of account before the ld AO and DDI, no defects were pointed out therein. Therefore, merely because books were not produced at the time of search, such addition cannot be made. - Decided against revenue - ITA No. 1124/Del/2016 And CO No. 154/Del/2016 - - - Dated:- 20-2-2018 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Revenue : Ms. Ashima Neb, Sr. DR For The Assessee : Shri Sajjan Kumar Tulsiyan, CA Ms. Nisha Rachh, CA Shri Karan Kumra, CA ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue and cross objection filed by the assessee against the order of the ld CIT(A)-27, New Delhi dated 04.12.2015 for the AY 2013-14. 2. The revenue has raised the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nning a proprietary concern in the name and style of Jewel By Preeti . The business was started in October 2010 of purchase and sale of jewellery and accessories. She also undertakes services of organizing events for design and promotion of the jewellery on commission basis. The search and survey u/s 132 were conducted on 12.04.2012 in one of the group of which assessee is a member. The assessee filed her return of income on 17.03.2015 at ₹ 3,34,028/-. As the return was pending as on that date of search the assessment was carried out. 5. During the course of search, jewellery valued at ₹ 37877297/- was found and the AO noted that books of accounts were not available at the business premises. Therefore, above jewellery was seized. The statement of the assessee was recorded on 12.04.2012 wherein, it was also mentioned that she does not maintain stock register. Further, in the post search proceedings, she submitted reconciliation of stock along with the purchase and sale bills and approval notes. She also supported it by the income tax returns and balance sheet and profit and loss account. She further showed that as on 31.03.2011 she had the stock of ₹ 23585908/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. She has also submitted copy of ITR filed on 28.09.2011 for asst year 2011-12, Balance sheet and Profit Loss account wherein closing stock as on 31.03.2011 of M/S Jewels by Preeti has been reflected as ₹ 2,35,85,908/-. The value of closing stock a on 31.03.2011 and 31.03.2012 has been arrived as under:- Opening Stock - Nil Add Purchase during F.Y. 2010-11 Rs.2,41,90,431 Less Cost of sales of ₹ 7,07,048 Rs.6,04,523 Closing Stock as on 31.03.211 Rs.2,35,85,908 Opening stock as on 01.04.2011 Rs.2,35,85,908 Add Purchase during the F.Y. 2011-12 Nil Less Purchase RETURN DURING F.Y. 2011-12 Rs.3,90,000 Less sales during F.Y. 2011-12 Rs.4,20,000 Closing stock as on 31.03.2012 Rs.2,27,75,908 The appellant had furnished documentary evidence such as vouchers supporting her cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Purchase Return 472.300 458.491 39.50 Sent on Approval 249.449 235.984 18.14 Total 5,288.883 4,337.920 358.15 Item Received on Approval 2,066.668 1,567.976 94.52 Grand Total 7,355.551 5,905.896 452.67 Total as per valuation Report dated 12.04.2012 7,361.49 5,902.84, 449.91 As per the reconciliation prepared and submitted by the Appellant there was insignificant difference between jewelry physically found during search with jewelry available as per boons accounts. This insignificant difference can arise due to the fact that the ' n report is an estimate made by the Valuer whereas the quantity and weigh: as per books of accounts is supported by invoices and vouchers. Therefore, the primary grouse of the appellant is that the AO has erroneously considered the value of stock as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prevailing on the date of purchase of respective item. The appellant had furnished to the DDI (Inv) vide their letter dated 14.06.2012 the complete details of purchases supported by purchase bills, details of goods received on approval supported by requisite voucher of third parties, complete details of sales as supported by sale invoices and goods sent on approval as supported by requisite vouchers in favour of third parties. It indeed is a common trade practice in jewelry trade that expensive items are received or sent on approval basis . 12.2 Copy of ARs letter to DDI (Inv) dated 14.06.2012 was filed before the AO vide ARs letter on 20.03.2015 along with all the details and reconciliations between jewelry physically found during search with jewelry available as per books of accounts. There is insignificant difference in the net weight of gold and diamonds that can arise due to the fact that the valuation report is an estimate made by the Valuer whereas the quantity and weight as per books of accounts is supported by invoices and vouchers. 12.3 The AO has merely alleged that the appellant s contention regarding the receipt and issue of jewelry on approval basis wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by customers on approval basis (after payment of lump sum amount). When jewellery items were sent on approval basis, an estimate was prepared and sent along with jewellery. When the sale doesn t get materialise, the amount received from the customers were returned back after deduction of certain percentage. The amount deducted was included in Total Income and offered for taxation. 2. The search seizure and survey operation were conducted on assessee on 12.04.2012 along with other cases of Aryan Sainik Group at various residential and business premises. 3. The assessee filed return of income for AY 2013-14 on 17.03.2015 declaring income of ₹ 3,34,028/-. 4. The Ld. AO passed assessment order u/s 143(3) of the Act on 27.03.2015. In the assessment order, the Ld. AO had alleged that the value of stock as on 12.04.2012 (i.e. on the date of search) as estimated by the Department Valuer was ₹ 3,78,77,297/-. As against this, the value of stock as per books of accounts was ₹ 2,27,75,908/-. Therefore AO considered the difference of ₹ 1,51,01,389/- as undisclosed investment in stock in AY 2013-14. 5. Appeal was preferred by the assessee again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wellery: Gross Weight 7361.487 gms Net Weight 5902.838 gms Dia Weight 449.91 gms 3.2. As per the reconciliation prepared and submitted by the Assessee, there was insignificant difference between jewellery physically found during search with jewellery available as per books of accounts. This insignificant difference can arise due to the fact that the valuation report is an estimate made by the valuer whereas the quantity and weight as per books of accounts is supported by invoices and vouchers. 4. The Assessee had also submitted before the Ld. AO the reconciliation of stock position as on 12.04.2012 on the basis of actual purchase and sale bills, goods received on approval and goods sent on approval. Also a copy of ITR filed for AY 2011-12 on 28.09.2011 was submitted along with Balance Sheet and Profit Loss wherein closing stock as on 31.03.2011 was reflected as ₹ 2,35,85,908/-. (Copy of said documents are attached in pages of the paper book. The value of closing stock as on 31.03.2011 and 31.03.2012 has been arrived as under:- Opening Stock Nil Add: Purchase during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jected the contention of the Assessee on the basis of the following observation:- Here, it is pertinent to mention that during the search proceedings, Ms.Preeti Jain, Proprietor of M/s Jewels by Preeti in her preliminary statement, has stated that neither she has kept nor received any valuable items, documents etc with somebody else. The relevant part of her statement dated 12.04.2012 is reproduced below: In view of the above facts, it may be concluded that her submission regarding jewellery sent for approval and received on approval is nothing but the after- thought and documents submitted in support of goods received on approval and sent for approval are not reliable and cannot be accepted. 6.1. In this regard it is submitted that the Ld. AO has misinterpreted the statement of assessee by correlating the same with the business stock of the assesse, part and parcel of which is under movement for approval of sale. It is to be noted that the assessee has not kept any valuables with any other person for the purpose of safe custody. Goods sent on approval are for the purpose of effecting sale and not with the purpose of keeping the stock with customers. No prude ..... X X X X Extracts X X X X X X X X Extracts X X X X
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