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TMI Blog2020 (5) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... fore we are inclined to accept the findings of Ld. CIT(A). Interest on loans and advances taken from Bhanwarlal Jain Group - CIT(A) deleted this addition with observation that AO has rejected the books of account and the same book results cannot be considered for making this addition - HELD THAT:- We are not in agreement with the observation of Ld. CIT(A) and Ld. CIT(A) has deleted most of the additions based on the book results, therefore we are not inclined to accept the deletion on account of interest payment on alleged bogus loans. We do not know the outcome of the appeal filed by the assessee in AY 2010-11, it all depends upon the findings in above said appeal. Before us, Ld. AR has not made any submission. Moreover, we notice that assessee has only credited the interest and not actually paid. We are inclined to sustain the addition made by AO. - I.T.A. No. 3605/Mum/2017 - - - Dated:- 28-2-2020 - Shri Pawan Singh, JM And Shri S. Rifaur Rahman, AM For the Appellant : Mrs. Kavita Kaushal, DR For the Respondent : Shri Haresh P. Shah, AR ORDER PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER: The present Appeal has been filed by the revenue against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of jewellery intercepted in the Mumbai airport which was sold to M/s SBM Jewellers. b) AO made addition of profit on unaccounted sales to the extent of ₹ 48,96,798/- c) AO made addition of the value of stock found during verification u/s 131 to the extent of ₹ 1,00,45,612/-. d) AO found undisclosed payment of wages in the month of Jan 2012 and made addition of ₹ 5,00,620/-. 6. Further AO made addition of bogus unsecured loans to the extent of ₹ 70,85,000/-. The AO observed that a search and seizure action undertaken in the case of Bhanwarlal Jain Group by the Investigation Wing on 03.10.13 and the search revealed that Bhanwarlal Jain Group is a leading entry provider. AO observed that assessee has taken unsecured loans from M/s A2 Jewels M/s Maximum Gems, which are company controlled by Bhanwarlal Jain. Accordingly, he made addition. 7. Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and submitted before him as below:- 7.1. With regard to undisclosed income on account of book investment and sale to M/s SBM Jewellers, it is submitted that assessee has already accounted for the above sales in its books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e action U/s. 131(3)(b) of the Income Tax Act, 1961 was carried out (Page 13 of Paper Book). Since the Tax Invoice in question is already been accounted in the regular books of accounts and the same was offered to tax while calculating the Income from Business, further estimation of GP on the alleged sale is not warranted as it will amount to tax the same GP double which is not permitted by law. It is therefore humbly prayed that the addition of GP on this count may be deleted. M/s. Shree Manqal Jewels Pvt Ltd: The Id AO has estimated GP @ 5% on alleged sales of ₹ 3,72,80,121/- affected to M/s. Shree Mangal Jewellers Pvt Ltd. The appellant has undertaken only Labour Job to make jewellery for M/s. Shree Mangal Jewellers Pvt Ltd. This can be seen from the copy of account of the appellant as appearing in the books of M/s. Shree Mangal Jewellers Pvt Ltd for the year under consideration (Page No 25 of Paper Book). Thus the appellant has not affected any sales to M/s. Shree Mangal Jewellers Pvt It is therefore humbly prayed that the addition of GP on this count may be deleted. M/s. Hemratna Jewellers: The Id AO in his order has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the addition of GP on this count may be deleted. M/s. L K Jewellers: The Id AO in his order has estimated GP @ 5% on alleged sales of ₹ 2,11,22,7807-affected to M/s. L K Jewellers. M/s. L K Jewellers has not entered in to any transaction with the appellant company. This fact is confirmed M/s. L K Jewellers by their confirmation letter (Page No 31 of Paper Book). It is therefore humbly prayed that the addition of GP on this count may be deleted. M/s. V K Bangles: The Id AO in his order has estimated GP @ 5% on alleged sales oi ₹ 30,19,608/- affected to M/s. V K Bangles. M/s V K Bangles has not entered in to any transaction with the appellant company. This fact is confirmed M/s. V K Bangles by their confirmation letter (Page No 32 of paper book). It is therefore humbly prayed that the addition of GP on this count may be deleted. In view of the above facts and documents it is apparent that the appellant has not affected the alleged sales in question. It is important here to mention that no excess stock or cash was found during the course visit by the Deputy Director of Income Tax (Inv). Unit-III(4). Mu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the merits of the case, the assessee craves the leave to withdraw this Ground of Appeal to the extent of principal amount of ₹ 65,00,000/-. The addition of ₹ 5,85,000/- may be decided in the light of decision as may be taken in assessment year 2010-11 on this issue. The appeal of assessment year 2010-11 has come up for hearing simultaneously. 8. After considering the submission of assessee, Ld. CIT(A) deleted the additions with respect to peak investment, profit on unaccounted sales and undisclosed stock. With respect to payment of wages not disclosed in the books of account, he confirmed the addition. With regard to bogus loans and advances, he observed that it is brought to knowledge that AO has already made addition in the AY 2010-11 when the same addition is made in AY 2012-13 also, it means double addition. Accordingly, he deleted the addition. With respect to interest payment of ₹ 5,85,000/-, Ld. CIT(A) deleted the additions on technical ground that AO has already rejected the books of account and the same cannot be relied to make this addition. 9. Aggrieved with the above order, revenue has preferred the appeal before us on the ground me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndings of AO in para no. 8 of the assessment order and supported the findings of AO. With regard to additions of peak investment, GP on unaccounted sales and undisclosed investment on gold jewellery found during verification u/s 131 of the Act, he submitted that the additions made by AO is based on the impounded material found during verification and supported the orders passed by AO. With regard to deletion of interest on bogus loans of ₹ 5,85,000/-, he submitted that the loans and advances taken from Bhanwarlal Jain Group and the loan is only an accommodation entry and any interest on such transaction is also accommodation entries. Therefore, he supported the findings of AO. 11. On the other hand, Ld. AR brought to our notice the submissions made before Ld. CIT(A) which is part of order of first appellate authority and submitted that the addition of undisclosed investment with regard to jewellery intercepted in Mumbai airport. He submitted that assessee has already recorded the sales in the books of accounts on the day of verification, therefore the above sales are part of the turnover already recorded by assessee, therefore there is no suppression of sales. He furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities. Since, these sales were already recorded in the books of accounts, we do not see any reason to interfere with the order passed by Ld. CIT(A), accordingly ground no. 1 raised by the revenue is dismissed. 12.2 With regard to Groun No. 2(a) (b), we notice that AO has made addition based on undisclosed sales and undisclosed stock which was found during survey proceedings. We notice that the stock found during survey proceeding to the extent of 3,863.697 gms and assessee has already shown in stock in trade to the extent of 3942.152 gms in its books of accounts and the same was disclosed in financial statements and part of return of income filed before the tax authorities. There is no discrepancy found with the stock maintained by the assessee, therefore we are inclined to accept the findings of Ld. CIT(A). 12.3 With regard to estimation of gross profit on alleged unaccounted sales, we notice that Ld. CIT(A) considered the detail submissions and by way of reconciliation which was submitted before him with sales and job work, which are as follows:- Sr. No Name of the Party Amount as per AO Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction with V. K. Bangles Page No. 32 of the Paper Book shows that no transaction has been entered into, therefore found to be correct 12.4 After considering the above findings of Ld. CIT(A), we are inclined to accept the findings of Ld. CIT(A), therefore grounds raised in this regard is dismissed. 12.5 With regard to Ground no. 3 4, we notice that revenue is in appeal with regard to interest on loans and advances taken from Bhanwarlal Jain Group in the AY 2010-11 and in this assessment year, the addition of interest expenditure, we notice that Ld. CIT(A) deleted this addition with observation that AO has rejected the books of account and the same book results cannot be considered for making this addition. We are not in agreement with the observation of Ld. CIT(A) and Ld. CIT(A) has deleted most of the additions based on the book results, therefore we are not inclined to accept the deletion on account of interest payment on alleged bogus loans. We do not know the outcome of the appeal filed by the assessee in AY 2010-11, it all depends upon the findings in above said appeal. Before us, Ld. AR has not made any submission. Moreover, we no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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