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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 ..... Appellant: Shri David Z. Chowngthu, Addl. CIT DR For the Respondent: Shri Miraj D. Shah, AR ORDER M.Balaganesh, AM 1. These cross appeals by the Revenue and the Assessee arise out of the order of the Commissioner of Income Tax(Appeals)- XXX, Kolkata [in short the Ld. CIT(A)] in appeal No. 255/CIT(A)-XXX/Wd-46(1)/2011-12 dated 12.09.2014 against the order passed by the ITO, Ward-46(1), Kolkata [in short the Ld. AO] u/s 143(3) of the Income Tax Act, 1961 [hereinafter referred to as the Act ] dated 29.12.2011 for the assessment year 2009-10. Both the appeals are taken up together for convenience. 2. The only issue involved in these appeals is as to whether any addition could be made towards unexplained stock of gold in the facts and circumstances of the case. Both revenue as well as the assessee are in appeals against this addition except with variance in the quantum agitated. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available in the Pledged register maintained by the assessee which shows also the details of stock on required dates and the same can be examined from the Xerox Copy of the Pledged Register annexed hereto comprising page No. 58 to 90 duly marked with Annexure- J. (ii) The Purchase and sales register shows the details of purchases and sales as well as the stock of gold during the year 2008-09 along with particulars of the parties i.e. their name address, bill no., quantity and amount. The quantitative details of the same can be examined from the Xerox Copy of the purchase and sales Register annexed hereto comprising page No. 91 to 140 duly marked with Annexure- K. 3.2. The ld AO observed that again on 17.10.2011 , the A/R of the assessee appeared and submitted as under:- That again in continuation to my first submission dated 20.09.2011 and in reply to Query No. 4 of your requisition dated 28.07.2011; I am furnishing a chart which shows details 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. The ld AO brought the remaining stock of 6144.718 grams as undisclosed stock in business which was valued at ₹ 1280 per gram and addition to the tune of ₹ 78,65,239/- was made towards unexplained stock of gold in the assessment. 4. The ld CITA accepted the existence of pledged stock maintained by the assessee which has been used by the assessee for his money lending business. Infact he observed that the assessee had actually maintained register of pledged stock which finds mention in the list of documents found and inspected by the survey team in page 52 of survey folder. The ld CITA found from page 42 of survey folder as under:- Opening Stock as on 1.4.08 1,21,28,921.60 Add: Purchases during the period 1.4.08 26.9.08 9,99,223.00 ------------------- 1,31,28,144.60 Less: Sales during the period 1.4.08 26.9.08 23,13,655.00 ------------------- Closing stock as on 26.9.08 representing stock found And ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had made no attempts to correlate the stock found on date of survey of 8448.820 grams with the pledged stock claimed as received from Grandfather of assessee and how the book stock of 2304.102 grams was arrived at. 4.3. The ld CITA also observed that from the balance sheet of the assessee as on 31.3.2009, the assessee had reflected the stock under pledged items as stock in trade. He observed in his order as under:- The AO has simply rejected all the pledged stock as trading stock. In assessment year 2007-08 if some stock was treated as trading stock (weight about 27 kgs. And valued about ₹ 1.52 crores), it is intriguing as to why the Survey Report is silent on the pledged stock so treated as trading stock and the impact of the same treatment on the book stock quantity and value. The AO has failed to show linkage from the alleged pledged stock of 27 kgs. Treated as business stock and therefore his finding that the stock has to be treated as business stock without allowing credit or consideration for the huge stock of earlier year, is without any basis. It is seen that the sales and purchases during the year is only of ₹ 43,00,651/- / ₹ 29,13,517/- respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explain how the difference pointed out on Survey date by Survey officers can be shown as wrong. Therefore, I hold the view that the said amount of ₹ 18.5 lacs can be rightly taken as undisclosed income corresponding to the excess stock described above. Therefore, I confirm this addition to the total income by the AO up to the amount of ₹ 18.5 lacs and the balance amount of ₹ 78,65,239/- (-) ₹ 18,50,000/- = ₹ 60,15,239/- is deleted. 4.4. Aggrieved, both the assessee as well as the revenue are in appeal before us on the following grounds:- I.T.A No. 2037/Kol/2014 for the Assessment year 2009-10 1. That the Ld. CIT(A)-XXX, Kolkata has erred in facts and circumstances of the case by giving relief to the tune of ₹ 60,15,239/- from total addition of ₹ 78,65,231/- made by the AO on account of undisclosed stock. 2. That Ld. CIT(A) has failed to consider the facts and circumstances of the case that the assessee has resorted two ways to mislead the AO and also the Appellate Authority by camouflaging the trading stock as pledged stock of the business. 3. The appellant craves leave to add, supplement, amend or alter before or at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this tribunal had appreciated the fact that the assessee was indeed carrying on money lending business thereon. We also find that pledged stock register maintained by the assessee is part of the records which were found and inspected by the survey team at the time of survey which has been noticed by the ld CITA also in his order. This has not been controverted by the revenue before us. We find that the ld CITA had duly appreciated the existence of money lending business based on pledged stock of gold belonging to outsiders and the assessee had duly explained that 6120.618 grams of gold pertain to the pledged stock which were kept in showroom and 23359.072 grams of pledged stock of gold were kept in safe vault as could be seen from the above table. Hence we are convinced that the assessee had duly explained the difference in the stock of gold found at the time of survey and there is no reason to disbelieve the version of the assessee. Even in Asst Year 2007-08, this tribunal in ITA No. 774/Kol/2012 dated 23.12.2016 had accepted the pledged stock of gold received as gift by the assessee from his grand father as genuine transaction. The relevant operative portion of the said order is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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