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TMI Blog2017 (11) TMI 2019X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Ld. Assessing officer of making impugned additions of Rs. 2,47,34,493/- on account of introduction of personal jewellery as stock in trade of the firm even when the introduction of jewellery was not genuinely declared personal wealth of the appellant. Further, Worthy CIT(A) has erred in confirming the said addition even when the said addition could not have been made u/s 68 of the Income-tax Act, 1961. 3. That on facts, circumstances and legal positon of the case, worthy CIT(A) has erred in confirming the addition of Rs. 82,50,250/- out of total addition of Rs. 99,95,327/- made by Ld. Assessing officer on account of advances received from customers even when the advances were genuine and could not have been added u/s 68 of the Income Tax Act, 1961. Further, since these advances have been offered as sales by the appellant in its book in succeeding years(s), the same amounted to double taxation of the same amount which is against the basic principles of law as well as Income Tax Act and hence the worthy CIT(A) as well as Ld. Assessing officer have grossly erred in making the said addition by erroneously invoking the provisions of section 68 of the Income-tax Act, 1961. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (assessee) which was further introduced into the capital account of the proprietorship concern namely Nikka Mal Babu Ram. The Assessing officer, however, did not agree with the above contention of the assessee. He observed that in the VDIS return, the said Babu Ram & Sons HUF had declared silver household goods, gold coins and other household goods whereas in the capital account of the proprietorship concern, the assessee had shown introduction of raw gold and silver. Even no valuation of jewellery at the time of disclosure under VDIS had been filed. That even no evidence of dissolution of Babu Rm & Sons HUF was furnished. He, therefore, held that the assessee had not satisfactorily explained the introduction of the gold and silver ornaments amounting to Rs. 2,47,34,493/- and accordingly made the addition of the aforesaid amount into the income of the assessee as unexplained investment u/s 68 of the Act. The assessee unsuccessfully contested the issue before the CIT(A). 6. Before us, Ld. Counsel for the assessee has submitted that the source of the gold and silver was duly explained. He submitted that earlier the Babu Ram & Sons (HUF) was constituted of the assessee, his father, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resaid relinquishment of their rights in assets of Babu Ram & Sons HUF. The Ld. AR has further invited our attention to the assessment order wherein the Assessing officer had made observations that the assessee has not filed any evidence regarding the dissolution of HUF of M/s Babu Ram & Sons. He in this respect has explained that an HUF is not creation of law rather HUF come into existence as a natural entity as per Hindu Law. The dissolution / partition of an HUF need not necessarily be documented. Babu Ram & Sons HUF got naturally dissolved on the death of one of its members namely Smt. Dayawanti Jain HUF leaving behind the sole Member Shri Jawahar Lal Jain who further formed Jawahar Lal Jain & Sons, HUF and the assets of the parent Babu Ram & Sons HUF automatically devolved upon the assessee HUF. The Ld. counsel has further explained regarding the discrepancy in the description of jewellery by submitting that the proprietorship concern of the assessee HUF namely M/s Nikka Mal Babu Ram is into the business of sale and purchase of gold ornaments (jeweller). As per established practice, when a seller comes to the jeweller for sale of his / her ornaments, the price is determined as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined from the purchase vouchers on account of which said ornaments were introduced into the capital account of the proprietorship concern Nikka Mal Babu Ram that the same pertain to the old ornaments but value of the raw gold and raw silver has been taken for determination of the worth of the assets introduced. 10. Now coming to the observations made by Ld. CIT(A) in the impugned order; the Ld. CIT(A) apart from the aforesaid observations made by the Assessing officer which have been duly discussed in the paras above, has further mentioned that the reliance of the assessee on the wealth tax returns filed by Babu Ram & Sons for the assessment years 2001-02 to 2006-07 was misplaced as all these returns were filed subsequently in the month of November 2006 only. He has observed that the said Babu Ram & Sons HUF did not file any wealth tax return after the declaration of the income in the VDIS declaration. May it be so, the fact is that gold and silver assets were declared by Babu Ram & Sons in the VDIS 1997 and due tax was paid thereupon. There was no question of doubting the occupation / possession of the assets in the hands of the declarants. Further, the assessment year under cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding of jewellery, advance from customers were received against supply to be made in future, which is a normal business practice. The assessee further furnished following documents before the CIT(A) :- a) Person-wise list (along with their addresses) totalling to Rs. 92,95,327/-, being advances from customers, as at 31.3.2008 (page No.152) b) Copies of ledger account of relevant customer for the year in question at page 153 to 200. c) Further, copies of ledger accounts of customer for succeeding years showing payment and / or sales made to said customers at page No.153 to 208 13. The Ld. CIT(A), however, held that the assessee had failed to prove the genuineness of the transactions and creditworthiness of the customers. He, however, agreed to the contention of the assessee that the total outstanding advances from customers as on 31.3.2008 was Rs. 92,95,327/-, which included the previous year advances. He held that the addition could have been made by the Assessing officer on the advances received during the year and not the advances shown to have been received in the preceding assessment year. He, therefore, deleted the additions of Rs. 10,45.077/- out of the aforesaid to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of opening stock of gold. He, therefore, made an addition taking the total value of closing stock at Rs. 10,21,03,792/- against Rs. 9,08,16,700/- shown by the assessee, the difference of which comes to Rs. 1,12,87,092. Thus, an addition of Rs. 1,12,87,092/- was made to the net profit of the assessee. 15. Before Ld. CIT(A), the assessee explained that Assessing officer had not raised any dispute as quantity of opening stock, purchase, sale and the closing stock of jewellery. The only dispute was regarding the method of valuation of the closing stock. It was further explained that assessee had consistently been following the method of valuation of jewellery at cost or market price, whichever is less. However, the Assessing officer had made the addition on the basis of difference between average value taken from the sale bill and the average value of opening stock of gold. It was further explained that even an assessment u/s 143(3) read with section 153A of the Act was framed by the same Assessing officer for assessment years to 2001-02 to 2007-08 and the method of valuation of the assessment was accepted by the Assessing officer and no addition was made in those assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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