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TMI Blog2017 (11) TMI 1900X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The brief facts of this issue is that the assessee is an individual running a proprietory concern under the name and style of 'Abir Jewellers' engaged in the Jewellery and Money Lending Business. The assessee trades in Jewellery and also lends money against the Jewelleries taken on pledge from outsiders. The return of income for the Asst Year 2009-10 was filed by the assessee on 30.9.2009 declaring total income of Rs. 2,63,939/- . There was a survey u/s 133A of the Act in the business premises of the assessee on 26.9.2008 . During the course of survey operation, on physical verification of stock , 8448.820 grams of gold were found which were valued at Rs. 1280 per gram and value thereon was arrived at Rs. 1,08,14,490/-. Silver to the extent of 7 kgs were found during the course of survey which were valued at Rs. 15000 per kg and value thereon was arrived at Rs. 1,05,000/-. Hence the total valuation of gold and silver on the date of survey was worked out at Rs. 1,09,19,490/- . The ld AO observed that the quantitative measurement of stock was done with the help of the employees of the assessee present in the showroom. The survey team did not find any stock register. In this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tails of stock of Gold in hand during the financial year 2008-09. The said chart shows the complete movement and the quantitative details of the gold purchase/ new pledge as well as sell/release including stock in Safe vault beginning from opening stock as on 01.04.2008 to the closing stock as on 31.03.2009. This chart can be verified to the best of your satisfaction from the details of Pledged Stock of gold vide Annexure _J comprising page No. 58 to 90 as well as Trading stock of gold vide Annexure-K comprising page no. 91 to 140 of my previous submission dated 20.09.2011. The said chart is annexed hereto comprising page no. 43 duly marked with Annexure-I" The Annexure-I is reproduced hereunder:- 2.2) From the above chart, it becomes clear that:- (i) the assessee is bifurcating his stock of gold into two category namely, Pledge stock of gold and Trading stock of Gold. (ii) According to the assessee, out of total stock at the end of the month of September, 2008, Pledge stock of gold was 6120.618 gms and trading stock of gold was 2304.102 gms. Which more or less corroborates the finding of the survey team regarding quantitative details of stock of 8448.820 gms (there is diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found And inventorised (8448.820 gms * Rs. 1280 per gm) 1,08,14,489.60 Add: Stock of Silver (7 kgs * Rs. 15000 per kg) 1,05,000.00 -------------------- 1,09,19,489.60 Less: Closing stock as on 26.9.08 as per books 90,69,489.60 ------------------- Excess stock found and valued 18,50,000.00 -------------------- 4.1. The ld CITA observed that based on this workings, Question No. 8 was put to the assessee at the time of survey and reply thereon are reproduced hereinabove. The assessee also agreed to pay a sum of Rs. 5.50 lacs as advance tax for the same and further agreed to pay the same in three instalments as under:- Chq dated 10.10.08 3,00,000 Chq dated 10.11.08 1,50,000 Chq dated 10.12.08 1,00,000 -------------- 5,50,000 4.2. The ld CITA observed that the Survey officials had not pursued this matter of the difference in physical stock and book stock any further. In the preliminary survey report, the ld AO has noted at item 7, that the assessee handed over cheques of Rs. 5.50 lacs to the survey officials . In a final report, a copy of which is seen on page 116 of survey folder and appearing as en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undisclosed is arbitrary and without any basis. Even if, for the time being, the AO's argument that the pledged stock has to be treated as trading stock is accepted, the treatment of the difference of stock as undisclosed stock cannot be sustained. Even if, the AO's observation that the pledged stock are trading stock are for the time being accepted, the AO has no basis to treat the excess stock as undisclosed. The excess stock has been clearly shown as opening stock except for Rs. 18.5 lacs worth of stock in respect of which Appellant's deposition has been recorded by the Survey Team. Thus, the AO is wrong in treating Rs. 78,65,239/- worth of jewellery/gold as undisclosed stock. B(ii) The Appellant in the course of Survey has broadly accepted the finding of the Survey Team on the difference stock of Rs. 18.50 lacs, as described above. The Appellant has also committed to pay Advance Tax of Rs. 5.5 lacs on the said amount of stock found in excess of the book figures as worked out by the Survey Team. The Appellant never retracted from the statement or admission of payment of advance tax till the filing of return, in which a refund of Rs. 2,87,150/- on returned income of Rs. 2,63,93 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings while framing the Assessment order it was not open to the Appellate Authority to sustain addition merely on alleged confession on stock discrepancy or disclosure made on survey spot without at all verifying and relying upon any corroborative materials available on record. 3. For that the Ld. Commissioner of Income Tax (Appeals) simply harped upon the reply of the assessee vide which the alleged disclosure was made and the moment the statement of assessee is excluded from record then noting is left the Appellate Authority to support his conclusion. 4. For that the law has been settled by Apex Court that Section 133A does not empower any ITO to examine any person on oath; so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. 5. For that the valuation of alleged inventories of Jewellery made by the Survey Team on the date of survey is not backed by any credential as no jewellery valuer was present at survey spot and accordingly such valuation could not be relied upon for framing appellate order. 5. We have heard the rival submissions and perused the materials available on record. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his C.A. would be able to explain the same better. He only admitted that the basis of workings done by the survey team was in order which alone was accepted by him in the statement. In any case, it is now well settled by the decision of the Hon'ble Supreme Court in the case of CIT vs S Khader Khan Son reported in (2012) 25 taxmann.com 413 (SC) / 210 Taxman 248 (SC) that no addition could be made based on statement recorded during survey as the survey powers u/s 133A of the Act does not empower the ITO to examine any person on oath and hence the statement recorded thereon has got no evidentiary value. We find that the assessee had duly reconciled the entire stock of gold found in the showroom at the time of survey with proper facts and records. Hence we have no hesitation in deleting the addition sustained by Ld CITA to the tune of Rs. 18,50,000/- and the remaining portion deleted by the ld CITA also does not require any interference. Accordingly the grounds raised by the assessee are allowed and that of the revenue are dismissed. 6. In the result, the appeal of the revenue is dismissed and the appeal of the assessee is allowed. Order pronounced in the Court on 10.11.2017 X X X X Extracts X X X X X X X X Extracts X X X X
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