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TMI Blog2023 (2) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... sactions without any rationale - HELD THAT:- Loss of gold is only 0.047% of the total transaction. Secondly that during the search the Revenue could not find any material. There is no logical explanation by the ITAT as to why loss of 0.047% must be allowed. The total loss claimed is 99.055 Kgs. The assessee s explanation at the first instance before the AO is that the gold was misappropriated. Before the First Appellate Authority the explanation is that assessee did not know about the loss till conducting annual inventory. Both explanations are not supported by any evidence. If 99.055 Kgs gold were to be misappropriated, management of any prudent company would take necessary action such as filing a police complaint etc. The second explan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case are, assessee is a public limited company engaged in manufacturing and export of gold and diamond jewellery both in the domestic and overseas market. A search was conducted under Section 132 of the Income Tax Act, 1961 in assessee s premises and an assessment order was passed under Section 153A of the Act on March 31, 2016 determining a total income of Rs. 3517,79,83,217/- by making an addition on interest on ICD [Inter-corporate Deposit] of Rs. 29,73,46,928/-, value of 99.055 kgs gold of Rs.19,39,23,044/- and Rs. 3344,94,72,518/- towards unexplained cash credit. 4. On appeal, CIT(A) [Commissioner of Income Tax (Appeal)] vide order dated February 28, 2017 deleted the addition made towards unexplained cash credit and confirmed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old has been charged off from the stock. The AO has further recorded that when called upon to substantiate the claim, the auditor had not offered any explanation. Therefore, the AO has added the value of gold of Rs. 19,39,23,044/- to assessee s income. 9. Before the CIT(A), assessee took a plea that he was not aware of the loss and learnt about it at the time of reconciling the recovery for the year. This explanation was not accepted by the Commissioner and the appeal stood dismissed. 10. The ITAT has recorded thus in its order and allowed assessee s appeal. 27. We have considered the rival submissions. We find that on page no.52 of his order, the ld. CIT(A) has stated that as per the AO, the assessee has not been able to substan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. The total loss claimed is 99.055 Kgs. The assessee s explanation at the first instance before the AO is that the gold was misappropriated. Before the First Appellate Authority the explanation is that assessee did not know about the loss till conducting annual inventory. Both explanations are not supported by any evidence. If 99.055 Kgs gold were to be misappropriated, management of any prudent company would take necessary action such as filing a police complaint etc. The second explanation that the assessee did not know about the loss at all, is on the face of it, unacceptable. In our view, the reasons recorded by the ITAT are perverse and therefore, unsustainable in law. 12. Hence, the following: ORDER (a) Appeal allowed. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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