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TMI Blog2020 (1) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 by the ld. ACCC-2, Mumbai (hereinafter referred to as ld. AO). 2. The only ground raised by the revenue is with regard to valuation of stock of jewellery. 3. The brief facts of this issue are that the assessee is engaged in the business of trading in diamond. There was a search and seizure action u/s.132(1) of the Act on 02/10/2004 in the case of Sunjyot Gems. In consequence to this, a survey action u/s.133A of the Act was conducted in the business premises of the assessee on 02/10/2004. The assessee filed a return of income for the A.Y.2005-06 on 28/10/2005 declaring total income of Rs. 1,09,86,750/-. During the course of survey proceedings stock of diamonds of 1089.70 Crores belonging to assessee were found alongwith Jangad Memo (Appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survey and by considering the same while filing the return of income also in respect of 823.57 carats of diamonds. The ld. AO in the original assessment completed u/s.143(3) of the Act dated 28/12/2006 made further addition of Rs. 52,64,584/- on the ground that the total closing stock of 1101.61 Crores including opening stock of Rs. 278.04 Crores which were valued at 2,02,77,216/- whereas the assessee had valued the opening stock of Rs. 43,23,306/-. Accordingly, the ld. AO computed further unaccounted investment made in the stock in the sum of Rs. 52,64,584/- as under:- Value of Stock of diamond of Rs. 1089.70 Crores as per valuation report Rs. 2,55,41,800/- Less Value of opening stock of Rs. 278.04 Crores As stated by the assessee Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal and this Tribunal remanded the matter to the file of the ld. AO with the following directions:- Para 14 : The issue of inclusion of the accounted opening stock of 266.13 cts in the said valuation report ignoring the actual cost price as per the books is analysed as under. Admittedly, assessee had the total opening stock of 278.04 cts and they are accounted. Out of the same, the stock 266.13 cts are given to Sanjyot Gems and found at their premises, which is an admitted fact both by the Sanjyot Gems and the assessee firm on one side and the revenue on the other side. As evident from the records, these diamonds were also treated by the Registered valuer on par with the other unaccounted diamonds in matters of the valuation. When the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as an additional ground pointing out the CIT(A) has erred in not increasing the purchase cost while making addition to the valuation of unexplained investment in stock. r\ Since this issue of 'not increasing the consequential purchase cost of the alleged diamonds' has not been raised during the first appellate proceedings, the AO or CIT(A) has not accession to deal with the same. Considering the merits of the issue, we proceed to admit the same and refer the same to the files of the AO for fresh adjudication after giving reasonable opportunity of being heard. Accordingly, the additional ground is set aside. 4. In the second round of proceedings, the ld AO made addition of Rs. 1,59,53,910/- being the value of purchase of diamonds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. DR and written submissions of the assessee dated 25/04/2018. We find from written submissions of the ld. DR that purchase of 823.57 carats of diamonds made during the year would be unaccounted stock of the assessee. While this is so, there is no need to treat the opening balance of diamonds of 278.04 carats as unaccounted stock or make any addition thereon on account of valuation difference. It is not in dispute that the opening balance as on 01/04/2004 of 278.04 carats of diamonds have been duly reflected in the books of accounts of the assessee with proper valuation and part of it were also found as stock on the date of survey. The total stock found during the survey was subjected to valuation by the departmental valuer and diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR, does not make any mention about the addition made u/s.69C of the Act. 7.1.1. In view of our aforesaid observations, we hold that the ld. CIT(A) had rightly deleted the addition made u/s.69C of the Act in the sum of Rs. 1,59,53,910/- on which, we do not find any infirmity. 7.2. Now, what survives is the addition made on account of value of 823.57 carats of diamonds purchased during the year. Value of 823.57 carats as per the departmental valuation - Rs. 1,93,03,901/- Less: Value of 823.57 carats of diamonds offered by the assessee -Rs. 1,59,53,910/- Difference i.e. the addition upheld by the ld. CIT(A) Rs. 33,49,991/- We find that the ld. CIT(A) had erred in holding that Rs. 33,49,991/- being the difference in value of diamond ..... X X X X Extracts X X X X X X X X Extracts X X X X
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