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TMI Blog2014 (3) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... ee during the course of survey. The physical valuation was done of the stock on the basis of the chits attached to the silver items and surrender by assessee of Rs. 58,910/- on account of valuation of excess stock was accepted by the survey party. Therefore, the AO on the basis of his own calculation should not have disturbed the valuation done by the survey party .Assessee showed that no specific query was raised on this issue and item-wise inventory was prepared by the survey party. Therefore, the valuation done by the survey party was correctly accepted by the ld. CIT(A). We, therefore, do not find any merit in this ground of appeal of the Revenue. The same is accordingly dismissed. Addition on account of GP on silver account - AO observed that the assessee had indulged in purchase and sale of silver outside the books of account - CIT(A) deleted addition - HELD THAT:- Addition has been rightly deleted in the matter. The small excess stock was found during the course of survey, which was surrendered by the assessee and accepted by the survey party. No other material was found to prove that the assessee made sales outside the books of account. Therefore, sales could not have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unexplained cash credit - HELD THAT:- Small amounts have been taken from nine creditors and affidavits contained their monthly income and creditors have also confirmed the return of the amounts to them. AO has not adversely commented upon the affidavits of the creditors and the AO never insisted for examination of the creditors at any point of time. Considering the smallness of the amount in question and the ld. CIT(A) admitted the additional evidences which is not challenged in appeal, would suggest that the Revenue has accepted the finding of fact recorded by the ld. CIT(A) regarding genuine credit in the matter. We accordingly, in the absence of any evidence on record, do not think it proper to disturb the findings of the ld. CIT(A) in deleting the addition. This ground is accordingly dismissed. - Shri Bhavnesh Saini, Judicial Member And Shri T.S. Kapoor, Accountant Member For the Revenue : Shri K.K. Upadhyaya, D.R. For the Assessee : Shri Vijay Gupta, C.A. ORDER PER BHAVNESH SAINI, J.M.: The departmental appeal as well as cross objection by the assessee are directed against the order of ld. CIT(A)-I, Jabalpur dated 25.05.2010 for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration of the facts of the case in the light of the entries in the books of account and Tijori Khata, the assessee has been able to explain the availability of cash on the date of survey. The ld. Counsel for the assessee also pointed out that even the seized documents found signature of the survey party to show that the findings of the ld. CIT(A) are in accordance with law. In view of the above, we do not find any merit in this ground appeal of the Revenue. Same is accordingly dismissed. 6. On ground No. 2, the Revenue challenged the deletion of addition of Rs. 1,83,452/- on account of undervaluation of silver account. 7. The AO observed that the assessee had offered investment in silver ornaments of Rs. 58,910/- from undisclosed sources on account of excess stock found. The AO brought out in his order that the silver account of the assessee and also how the silver weighing 100.475 kgs found during the course of survey was valued during the course of survey operation. On the basis of the same it was brought out by the AO that excess stock valuing Rs. 3,84,278/- was found on the basis of assessee s valuation. As per trading account worked out by the assessee, the balance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 58,910/- for taxation, therefore, the balance of Rs. 1,83,452/- was added. 8. It was contended before the ld. CIT(A) that this was the first year in which the assessee started dealing in silver gift items. To meet expected market demand of the silver items in Dhanterus and Diwali, the assessee had accumulated gift items stock and to facilitate easy trading in these items, rate list was affixed. Most of the gift items stock was out of books of accounts. During the survey 100.475 kgs of silver stock was found. The survey party valued silver items on the basis of chits attached to the items. From the total value so worked, the survey party deducted value as per silver trading account prepared as on 08.11.2001, Rs. 2,63,586/- (weight 42.944 kgs) and by doing so, the value of excess silver found was worked out to 1,20,692/- (weight 57.531 kgs). Since 15.384 kgs of silver was received from M/s. Gundesha Silver Center Kolhapur, hence, 15.384 kgs was reduced and ultimately excess stock was worked out. The excess stock remained at Rs. 70,692/- and after deducting 20% of GP, the excess stock was worked out to Rs. 58,910/- which value of the excess stock was accepted and surrendered. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Survey party based on factual investigation and explanation made by the assessee during the course of survey. The physical valuation was done of the stock on the basis of the chits attached to the silver items and surrender by assessee of Rs. 58,910/- on account of valuation of excess stock was accepted by the survey party. Therefore, the AO on the basis of his own calculation should not have disturbed the valuation done by the survey party. The ld. Counsel for the assessee referred to PB 111 onwards to show that no specific query was raised on this issue and item-wise inventory was prepared by the survey party. Therefore, the valuation done by the survey party was correctly accepted by the ld. CIT(A). We, therefore, do not find any merit in this ground of appeal of the Revenue. The same is accordingly dismissed. 10. On ground No. 3, the Revenue challenged the deletion of addition of Rs. 60,789/- on account of GP on silver account. The AO observed that the assessee had indulged in purchase and sale of silver outside the books of account. It was based on unrecorded stock of silver found during the course of survey. The assessee simply mentioned Rs. 4,08,793/- as closing balance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view, the addition has been rightly deleted in the matter. The small excess stock was found during the course of survey, which was surrendered by the assessee and accepted by the survey party. No other material was found to prove that the assessee made sales outside the books of account. Therefore, sales could not have been enhanced without any evidence and for low GP, the addition would not be justified. In the result, this ground of appeal of the Revenue is dismissed. 12. On ground No. 4, the revenue challenged the deletion of addition of Rs. 80,774/- on account of undervaluation of gold ornaments. The AO observed that as a result of survey, all the stock of gold valued at the rate of purchase price was of Rs. 19,80,328/- whereas as per tentative trading account prepared on the date of survey, stock as per books was of Rs. 15,99,554/-. During the course of survey, the statement of assessee was recorded to explain the stock, in response to which the assessee submitted that entire stock was valued considering the gold to be of 22 carat whereas gold of 20 carat was also involved in this stock. Small stock was surrendered by the assessee of Rs. 3,00,000/-. The AO did not accept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lver totaling to Rs. 10,60,102/- for which he had agreed to pay the taxes and if he had any doubt about the same, he should express. In his reply the appellant had admitted that he had no objection or doubt about the surrender. During the course of assessment proceedings the assessee was again asked to submit documentary evidences in respect of claim made by him that the gold ornaments weighing 2324.810 gms. pertained to several persons who had deposited the same with the assessee for making new ornaments, repairing and polishing. The assessee's father filed an affidavit of 15 persons. The A.O. in his order brought out the contents of the affidavits and observed that all the affidavits were similar and stereo type and all the deponents were identified by Shri Rajesh Vishwakarma. Damoh. Further the contents of the affidavits and the statement of the assessee recorded on 9.11.2001 were very different. For these reasons the A.O. was not convinced with the affidavits and therefore he asked the assessee to produce all the deponents for their examination on oath. The statements of all these persons were recorded. According to the A.O. they did not produce any evidence regarding gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered the value of gold ornaments worked out by the survey party. The purity of the gold ornament was 20 carat only as is mentioned in the inventory prepared by the Survey Party. The assessee has discharged his onus in respect of gold ornaments found in black bag hence the ratio of the Hon'ble M.P. High Court in the case of Metachem Industries V CIT (2000) 245 ITR 160 was applicable. In this case it has been held that :- Once it is established that the amount has been invested by a particular person, be he a partner or an individual, then the responsibility of the assessee is over. Whether that person is an income tax payer or not and where he had brought this money from is not the responsibility of the firm. The moment the firm gives a satisfactory explanation and produces the person who has deposited the amount, then the burden of the firm is discharged and in that case that credit entry cannot be treated to be the Income of the firm for the purpose of income tax. It was argued that in view of this decision of Hon'ble M. P. High Court since all the customers has accepted the ownership of the gold ornaments in which chit of their name was attached hence, addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the appellant was accepted, otherwise the appellant would have been compelled to surrender the investment in entire gold ornaments found in the bag. Further so far the affidavits of these persons is concerned, even if they were stereo type it did not mean that the contents were incorrect or bogus and hence unverifiable. Slight variation in statement may always be there but if in sum and substance the contents of the affidavits support the statement of the appellant, they are acceptable. No drastic or substantial shortcoming has been pointed out by the A.O. nor he has been able to controvert these deponents so as to bring out the fact that the gold ornaments did not belong to them but rather belonged to the appellant himself. Further the prevailing rate applied by the A.O. @ Rs. 4,268/- per 10 gms. was also not correct because the rate and the value had already been determined by the survey party itself. It seems that the addition was made for the sake of addition only which was not called for. Accordingly the addition of Rs. 10,61,752/- is hereby deleted. 17. On consideration of the rival submissions, we do not find any merit in this ground of appeal of the Revenue. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) found that the assessee has produced all the material on record to explain the cash credits and in all fairness, the AO should have examined the creditors if he was not satisfied with the explanation of the assessee. The amount of cash credits was not found so high and accordingly, it was found that the assessee has been able to explain the credits in the matter. The addition was accordingly deleted. 20. On consideration of the rival submissions, we are of the view, the addition has been rightly deleted by the ld. CIT(A). The Revenue has not challenged the order of the ld. CIT(A) in admitting the additional evidence at appellate stage. Small amounts have been taken from nine creditors and affidavits contained their monthly income and creditors have also confirmed the return of the amounts to them. The AO has not adversely commented upon the affidavits of the creditors and the AO never insisted for examination of the creditors at any point of time. Considering the smallness of the amount in question and the ld. CIT(A) admitted the additional evidences which is not challenged in appeal, would suggest that the Revenue has accepted the finding of fact recorded by the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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