9911796707
TMI Blog2024 (10) TMI 850X X X X Extracts X X X X X X X X Extracts X X X X ..... ach at a true and correct conclusion. In the present case all the evidence may be after the search but are substantiated and could not be dislodged by the revenue. Even when the proceedings u/s 133(6) have been initiated all the concern parties have submitted their response and confirmed the transactions recorded in the seized documents. Such facts and circumstantial evidence favours the submissions of the assessee, at the same time the presumptive thoughts of the revenue authorities dehors any cogent support that the transactions in the seized documents which on the contrary were supported by the assessee by submitting evidence in the form of bills of the supplier parties considering the same as just a concocted story, after thought, colourable device cannot be concurred with. \The observation of the department regarding the high ratio of purchase transactions and return of goods by the assessee should be considered as nothing but managed for making the unaccounted stock to accounted, cannot be subscribed to for the reason that such transactions have been duly found in the GST return of the counter parties and the said parties have also submitted relevant documents and confirmed s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as decided by the ITAT, Raipur in the case of DCIT vs. Rajendra Sharma [ 2019 (7) TMI 2040 - ITAT RAIPUR] - Under such facts and circumstances, we do not find any substance in the decision of the Ld. CIT(A) to approve the same. We set aside the order of Ld. CIT(A) to the extent the addition made by the Ld. AO has been sustained and direct to vacate the entire addition made u/s 69A 69B. Confirmation of action of Ld. AO in invoking provisions of section 115BBE - In terms of our observations and decision in qua ground No. 1 of the present appeal, since it is concluded that the excess physical stock found at the business premises and residence of the assessee and the same pertains to business of the assessee, accordingly, provisions of Section 115BBE cannot be triggered in the present case. Resultantly, ground no. 2 of the assessee is also decided affirmative in favour of the assessee . - SHRI RAVISH SOOD, JM AND SHRI ARUN KHODPIA, AM For the Assessee: Shri R.B. Doshi, CA For the Revenue: Smt. Ila M. Parmar, CIT DR ORDER Per Arun Khodpia, AM: The present appeal is filed by the assessee against the order of Commissioner of Income Tax, Appeals-3, (in short CIT(A) ) dated 30.06.2022 u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of unexplained stock of gold, diamond silver jewellery found on business premises u/s 69B and on account of unexplained assets i.e. gold, diamond silver jewellery found on residential premises u/s 69A and charged to tax as per provisions of 115BBE of the Act. Total addition made was of Rs. 9,87,62,680/-, the appellant has already disclosed income of Rs. 68,28,637/- on account of excess stock in his return for AY 2019-20. Resulting thereby, the balance amount of Rs. 9,19,34,043/- (Rs. 9,87,62,680 Rs. 68,28,637) has been added to the total income of the appellant. 4. Being aggrieved by the assessment order, the assessee has preferred an appeal before the Ld. CIT(A), however the same has been partly allowed, therefore, the assessee is before us with the present appeal against the additions made by Ld. AO to the extent sustained by the Ld. CIT(A). 5. At the threshold of the hearing, Ld. AR on behalf of the assessee has submitted before us a request for admission of additional ground of appeal assailing the validity of assessment on the basis of illegality in the approval of Addl. CIT u/s 153D of the Act. The application for additional ground submitted by the assessee is ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 19/2019 dated 14.08.2019. In view of this, the assessee most humbly prays that he may kindly be allowed to raise argue upon the following grounds as additional grounds of appeal: 1. The assessment order passed by the AO and confirmed by Id. CIT(A) is illegal, ab initio void inasmuch as the approval given by Id. Addl. CIT u/s 153D is not in accordance with provisions of law. The assessment order is liable to be quashed in absence of valid approval 153D. 2. The assessment order passed by the M) and confirmed by Id. CIT(A) is illegal, al) initio void inasmuch as no valid approval u/s 153D was taken/given, which is violation of mandatory requirement of law, as the proposal letter sent by AO to Addl. CIT (Central) and approval given by Id. Addl. CIT (Central) Il/s 153D is in violation of CBDT circular and is consequently non est. 6. It is most humbly and respectfully submitted that the above ground could not be taken at the time of filing appeal for the reason that the case of assessee. up to the stage of first appeal. was looked after by the earlier counsel of the assessee. For preparing 2nd appeal and for arguing the matter before the Hon'ble Tribunal, the assessee has appoin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready on record therefore, respectfully following the judgment of Hon ble Apex Court in the case of NTPC (supra) and other judgments as referred to in the application for additional ground, the additional ground raised by the assessee is permitted to be admitted. First, we shall be deliberating upon the main grounds of the appeal as under: 7. Ground No. 1: Confirmation of addition u/s 69B and 69A on account of excess stock of jewellery found during the search. Apropos addition u/s 69A and 69B of the Act the brief facts as culled out by the Ld. CIT(A), for the sake of completeness and understanding of the facts same is extracted as under: 3.1 Ground Nos. 1 and 2:- Through these grounds of appeal, the appellant has challenged the addition made of Rs.9,19,34,043/- on account of unexplained/excess stock assets i.e. gold, diamond silver jewellery found on residential premises as well as business premises u/s 69A and 69B of the Act. During the course of search, hold/ silver jewellery and precious stones valued at Rs. 3,63,68,311/- were found from residential premises of the appellant out of which jewellery and precious stones of Rs. 3,42,83,305/- were seized. The details of which has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills against jewellery purchased on approval during the festival season of Diwali. Further, soon after diwali, the season for marriages start and as per business practice the stock are placed in show case during the business hours and at the time of closure of shop the same were kept in safety lock in almirah. Due to daily hectic job, the appellant has kept some goods at his residence. The appellant has also furnished details of pending bills for the jewelleries received on approval. The details have been tabulated on page no 24 to 26 of the assessment order. Statement of Sri Suklal Patel, accountant of M/S NR Jewellers was also recorded on oath wherein he admitted that books of account of the firm are complete till 19th November 2018. Thus, the AO held that the appellant has furnished counterfeit bills and the claim of the appellant that bills are pending for entry in books of account is clearly an afterthought. 3.1.3 The AO during the course of assessment proceedings, on verification of ledger account of the parties from which purchase bills have been claimed, found that except the firm AT Plus and Briana Jewells, the appellant has never purchased any goods from theses 18 parti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stock u/s 69B made addition of Rs. 6,23,94,369/- in the hands of appellant. Further, the stock valued at Rs. 3,63,68,311/- found from residence of appellant was treated as unexplained investment u/s 69A of the Act. A detail submission against the aforesaid additions have been furnished before the Ld. CIT(A) which were considered by the Ld. CIT(A) and have decided the issue by observing as under: 3.1.13 During the course of search at residential premises of the appellant jewellery amounting to Rs. 3,63,68,311/- was found out of which jewellery of Rs. 3,42,83,305/- was seized and balance jewellery of Rs. 20,85,006/- (mixed jewellery weighing 767.50 gms) was not seized placing reliance on CBDT Circular No. 1916. However, the AO has made addition of entire jewellery found in possession of the appellant from his residential premises. Since, the appellant was residing with his entire family, therefore, the benefit of CBDT Circular No 1916 ought to have been given by the AO. Keeping in view the interest of natural justice the jewellery to the tune of Rs. 20,85,006/- which has not been seized during search is treated as explained. Therefore, out of total addition of Rs. 3,63,68,311/- addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant. I have found that the Stock of jewellery as per BS-4 was kept at two places i.e. in the residence and shop premises of M/S. N. R. Jewellers. Out of such stock of Rs. 8,33,99,441/-, stock of Rs. 3,42,83,305/- was kept at residence and balance stock of Rs. 4,91,16,136/- {Excess stock at shop Rs. 6,23,94,369/- - (Rs. 8,33,99,441/- - Rs. 3,42,83,305/-)} was kept at shop which is part of total excess stock found at business premises. Transaction mentioned in seized material BS-4 have never been entered in the regular books of account of M/S. N. R. Jeweller or any of the books of account separately maintained in individual capacity by the appellant. The appellant also failed to prove contrary to it, Therefore, jewellery stock of Rs. 8,33,99,441/- as per BS-4 cannot be treated as unaccounted stock of regular business of M/S. N.R. Jeweller. This amount of stock had actually been held in the individual capacity by the appellant f r which he failed to explain the nature and source of its acquisition as per the provisions of section 69A of the Act. Accordingly, in my opinion, out of total excess stock of Rs. 9,66,77,674/-, stock of Rs. 8,33,99,441 being total of stock of Rs. 3,42,83,305 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not upset the Additions made by the Assessing Authorities below in the present case. All these 5 provisions enumerated above have been enacted with a view to bring to tax the unexplained debit balances in the Balance Sheet of the Assessee either in the form of Unexplained Investments, Expenses or Stocks, etc., or unexplained Assets, Money, Bullion, Jewellery, etc., and therefore, such unexplained investments and expenses intended to be brought to tax as Undisclosed Income, these provisions are not only clearly worded but also indicated to plug the loopholes and check the menace of black money. Likewise, unexplained credits in the Balance Sheet are also brought to tax under Section 68 of the Act . Hon'ble High Court of MP in the case of VISP Pvt Ltd, 265 ITR 202, in the similar circumstances held as under:- 4. Learned counsel, appearing for the assessee placing reliance on the decision of the Supreme Court reported in Baladin Ram v. CIT [1969] 71 ITR 427 and the decisions the Mumbai and Allahabad High Courts reported in CIT v. Bhaichand Il. Gandhi [1983/ 141 ITR 67 and Sundar Lai Jain v. CIT [1979] 117 [TR 316, respectively, contended, t/'la! Section 68 of the ACI can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iry u/s 133(6) i) Reply received by AO from 5 parties u/s 133(6) at PN 311 to 352 of PB-2. ii) All parties confirmed. 5. Stock received on approval purchases not entered in books, both found recorded in seized diary i) Entries of items in stock reconciliation placed at PN 138 of PB (purchases and received on approval not entered in books till search), found entered in seized diary being BS-4, LP no. 19, 24 32, which are at PN 218 to 220 of PB-I. ii) Quantity of gold ornaments received on approval and for which purchases not entered in books, as per above referred 3 LPs is 23,781 .220 grams (net), which is the same as is taken in reconciliation chart at PN 138 of PB. Summary of 23,781.220 gms: LP no. 218 (31.880 + 888.10 + 1120.20) 2,040.180 LP no. 210 (143.150 + 1701.650 + 508.450) 2,353.250 LP no. 220 (13,812.450 + 4,570.370 + 1,005) 19,387.820 23,781.250 iii) Silver quantity claimed similarly is 1,93,530 grams which is entered on LP no. 24 (31,400 grams) (PN 219 of PB-I) and LP no. 32 (1,62,130 grams being 50,470 + 1,11,660 grams) (PN 220 of PB-1). 6. Since impugned quantity of gold silver items found recorded in seized diary, while calculating any difference between book physica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce among jewellers to keep stock at safe place. ▪ At page 119 of appellate order, CIT(A) admits that out of stock of Rs. 8,33,99,441/- found recorded in BS-4, stock of Rs. 3,42,83,305/- kept at the residence (last 4 lines). He thus admits that business stock was kept residence. He again reiterated this on page 120, 1st para, last 5 lines. ▪ Stock found bear tags . Stock items of business, found at residence, they all bear tags containing: - Diamond jewellery - gross net gold weight, carat of diamonds, MRP of diamonds. - Silver items - Most of it was payal, all the payals contain engrossing of trade name of NR/SPL . Strong circumstantial evidence that such items pertained to business of assessee. ▪ In answer to question no. 25 of statement dated 23.11.2018 (PN 104 of PB) assessee stated that in all the jewelleries tags are attached. ▪ Silver items in the form of payal are of repetitive designs and such payals of similar design are large in number. ▪ Weight of items found, like payal, bichiya etc. all aggregating to about 243.801 kg of silver - such huge quantity cannot be personal jewellery/item. ▪ Informed ADIT (Inv.) within 6 days of conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not aware that his residence was also covered and so he did not inform the search team about stock lying at residence. iii) Further, statement dated 23.11.2018 was recorded up to late midnight of 23/24.11.2018. Answers given without verifying books and seized material. iv) About goods received on approval and against purchases not entered in books, assessee could not mention the facts due to anxiety tension. v) Surrender was made by the assessee on the basis of working prepared by the search team and the assessee did not go into correctness of such working. For these reasons, in answer to question no. 52 of the statement dated 23.11.2018 (PN 118 of PB) the assessee stated that whatever excess stock etc. was found, complete details would be given by him within 7 days of conclusion of search, which also shows that the surrender made by him was subject to verification. vi) Reliance on: - ▪ CIT vs Radha Kishan Goel (2005) 278 ITR 454 (AIL), PN 381 to 386 of PB- 2, relevant findings on PN 385, para no. 10. ▪ Sayyed Hamid Ali vs ACIT (2020) 205 TTJ 453 (Indore), para no. 17. ▪ CIT vs Mrs. Sushiladevi S. Agarwal (1994) 50 ITD 524 (Ahd.), para 7. ▪ Surinder Pal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck of Rs. 1,32,78,233/- was considered by him to be unexplained excess stock u/s 69B. iv) CIT(A) observed at page 121 that it has been held by various Courts that misquoting of a section is not fatal, relying upon Om Prakash Patidar HUF in ITA no. 220/Ind/2017 and M/S SVS Oils Mills in tax appeal no. 765/2018 of Hon'ble Madras High Court. On page 122, he concluded that correct provisions have been applied by him. v) Summary of AO's CIT(A)'s findings: - Particulars Addition made by AO Addition confirmed b Id. CIT A Remarks Sec. (IQs.) sec. (Rs.) Unexplained stock of Jewellery at shop 69B 6,23,94,369/- 69A 4,91,16,136/- 69B 1,32,78,233/- Sub-total (A) 6,23,94,369/- 6,23,94,369/- Unexplained jewellery found at residence 69A 3,63,68,311/- 69A 3,42,83,305/- CIT(A) deleted Rs. 20,85,006/- the basis of CBDT circular no. 1 91 6. Total (B) 9,87,62,680/- 9,66,77,674/- Difference of Rs. 20,85,006/- Less: Amount disclosed in return 68,28,637/- 69B 68,28,637/- Net addition (c) 9,19,34,043/- 8,98,49,037/- Difference of Rs. 20,85,005/- 10. On the basis of the aforesaid written submission by the Ld. AR, it is submitted that the excess stock of jewellery found at the shop and residence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no. 218 to 220 of the PB No.1. In order to peruse the factual aspect of the transaction Page no. 218-220 are extracted here under: 12. Regarding quantity of gold ornaments received on approval for which purchase transaction was not entered in the books, Ld. AR submitted that according to LP No. 19, 24 32, the total Gold Ornaments in quantity were 23,781.220 grams (Net), which is tailing with the quantity as evident from the said loose papers, for which the details are culled out as under: LP No / Quantities in Gms Total Qty in Gms LP no. 218 (31.880 + 888.10 + 1120.20) 2,040.180 LP no. 210 (143.150 + 1701.650 + 508.450) 2,353.250 LP no. 220 (13,812.450 + 4,570.370 + 1,005) 19,387.820 Total (In grams) 23,781.220 13. Regarding quantity of the Silver Ornaments, Ld. AR shown us LP No. 24 32 at Page 219 220 of the PB, wherein the silver received was recorded at LP No.24 from M/s Empire Bullion of 31,400 grams dated 16/11 and at LP No.32 of 1,62,130 grams consisting of two entries being 50,470 grams dated 4/11 and 1,11,660 grams dated 14/11 from M/s Saheli Jewellers. In total, the silver ornament quantity of 1,93,530 grams have been explained as either received on approval basis or goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 292(C) were not rebutted, therefore, the contents of BS-4 i.e., the seized diary and LP-19, 24 32 being the loose papers seized should be treated as correct accordingly the quantities mentioned in the seized documents regarding gold ornament, silver ornament, diamond ornament and gold bullion which were physically received by the assessee and are available at the time of the search, for which bills were yet to be received by the assessee, consequently the entries in books of accounts are pending. This shows and establishes that the quantities found in the premises of the assessee are on account of regular business practice of the assessee only, since the same were not entered in the books of accounts thus does not qualify to be treated as ingenuine and unexplained. Ld. AR further submitted that as per provisions of section 132(4A) and 292C, the quantities found during the search are to be considered as received before the search and thus, such quantities cannot be disputed, accordingly, credit for such quantities must be given while verifying the physical stock of the assessee. It is submitted that if the impugned quantities are considered, there is no further difference other tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was payal containing name of the assessee s business NR/SPL engrossed on it. Such strong circumstantial evidence also shows that these items pertains to business of assessee. Ld. AR further submitted that the weight of silver articles like Payal, Bichiya etc. found at residence of the assessee was in aggregate of about 243.801 Kgs, such huge quantity cannot be the personal jewellery of the assessee, therefore, there is no justified reason to treat them as individual personal stock of the assessee. 19. Ld. AR of the assessee further submitted that all such clarifications and explanations were furnished on 30.11.2018 before the Ld. ADIT (Inv.) within 6 days of the conclusion of the search on 24.11.2018. Copy of letter so furnished before the Ld. ADIT(Inv.) have been placed before us at page no. 136-137 of assessee s PB. Ld. AR further pleaded that no steps to verify the claim of the assessee have been initiated by the Ld. ADIT(Inv.). Regarding no further enquiry by the concerned revenue authority even after clarification by the assessee disputing the excess stock determined by the department, Ld. AR placed his reliance on the decision of ITAT Raipur in ITA no. 296/RPR/2014 vide or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repancies in the stock verification process by way of making allegation that she had signed the inventory under coercion. Not only this, the affidavit was also submitted before an authority, as high as JDIT(lnv.) immediately on 28.03.2012. In other words, the assessee brought out certain facts before the JDIT(Inv.) within the shortest possible time. In such a case, the revenue was required to immediately cause further enquiry into the matter, especially when such grave charges were levelled about the stock verification process. However, we find that no enquiry whatsoever was done either by the JDIT or by the DDIT conducting the search. The assessee not only disputed the quantities, he also claimed that the stock verification was carried out in duskiness with the help of torchlight and that the standard weight of tobacco leaves had been wrongly taken in the inventory. The assessee also explained that due to threat of fire, there was no electricity connection in the godown where materials were stored. All these claims of assessee have remained uncontroverted. We are of the considered opinion that in absence of any further enquiry conducted by the search team and without verifying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r page no. 17 para (v), wherein Ld. AO himself have also observed that, if there was shortage in the business premises then it could have been considered that items found at residence was of business concern of the assessee, this observation of the Ld AO is fortified by the evidences furnished by the assessee and confirmed by the concerned suppliers. With such submissions, Ld. AR appealed that the quantity of stock found at residence also pertains to business of the assessee. 21. Regarding applicability of sec. 69A and sec. 69B, it was the submission of Ld. AR that since there was no investment proved to be made by the assessee provisions of section 69A 69B are wrongly triggered by the Ld. AO. As per seized documents, it is a fact that there were entries of purchase found recorded with the narration that bills not received therefore, question of making any payment does not arise. It was also the contention that no evidence for any unrecorded investment or payment made by the assessee was found by the investigating team. Since all the payments pertaining to the entries in the seized documents were duly settled by the assessee from the regular books of accounts may be after the searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 597, to throw the burden of showing that there is no understatement of the consideration received, on the assessed would be to cast an almost impossible burden upon him to establish a negative, namely, that he did not receive any consideration more than what has been declared by him. Therefore, if the Revenue seeks to hold that the assessed has received more than what has been declared by him in respect of the assessment in question, the onus would lie on the Revenue to prove this fact by bringing some material on record. 11. In the instant case, the Tribunal has noted that before it the parties were ad idem that the addition in question was made only on the basis of the observations in the interim order passed by the court in a civil suit between the three parties, including the assessed. We feel that the Tribunal was correct in holding that merely because counsel for the assessed made a statement in a civil court that the total investment in the property was Rs. 13 crores and odd, it would not be sufficient material to come to the conclusion that the said figure represents the actual investment. There has to be something more than that. We are, therefore, of the view that the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... together with provisions of Section 132(4A) of the Act after dealing with the reasons given by CIT(A) instead of recording we are also at a loss to understand as to what to do with the issue at hand as recorded in paragraph No, 20 of the impugned order. 16. The question referred is, therefore, answered in the negative, i.e. in favour of the assessee and against the Revenue. The appeal shall stand restored to the file of the Tribunal and in light of the judgment of this Court, the Tribunal shall rehear the appeal after giving adequate opportunity of hearing to both the sides. ▪ C. K. Sudhakaran vs ITO (2005) 279 ITR 533 (Ker.). ▪ 4. We have considered the contentions raised by both sides meticulously and have gone through the decisions referred to by counsel. The terms and conditions mentioned in the agreement dated May 12, 1997, are revealing. The agreement clearly stipulates an amount of Rs. 49,91,842 as the value of shop room No. 115. The fact that the assessee had paid advance has also been mentioned in the agreement dated May 12, 1997. There is no dispute to that effect. Further, it is also clear that the assessee had declared payment of Rs. 12,50,000 at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of CIT v. Radha Kishan Goel (2006) 8 (J) ITCL 260 (AllHe) : (2005) 278 JTR 454 (All) : (2006) 152 Taxman 290 (All), It was observed that it is a matter of common knowledge, which cannot be ignored that the search is being conducted with the complete team of the officers consisting of several officers with the police force. Usually telephone and all other connections are disconnected and all ingress and egress are blocked. During the course of search person is so tortured, harassed and put to mental agony that he loses his normal mental state of mind and at that stage it cannot be expected from a person to pre-empt the statement required to be given in law as a part of his defense. ▪ CIT vs Mrs. Sushiladevi S. Agarwal (1994) 50 ITD 524 (Ahd.), 7. It is well-known and admitted fact that search operations, particularly under the Income-tax Act is a lawful invasion on the privacy, life and property of a citizen which may affect him/her mentally also, besides causing several other inconveniences, hardships, embarrassment and harassment. There is every likelihood of a statement tendered to or recorded by the searching officers on the search day being incoherent or at varian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pen secret and admitted fact in this ancient and cultured country that woman/females are heavily dependent on males more particularly, husbands to look after and manage, on implied authority, their business matters, property dealings, tax and legal matters and, therefore, no eyebrow should be raised in astonishment nor any adverse inference should be drawn by any Tribunal or authority that a particular Indian lady or woman is unable to say with precision the true state of affairs of her business, properties or for that matter regarding her tax and legal matters or when she says that her husband has full knowledge and information about certain facts or dealings made on her behalf on such an implied authority. The assessee, we were informed, during the course of hearing, is an illiterate, aged, rustic, domestic and tradition-bound Marwadi lady, who is not exposed to the vagaries of this now cruel world and she was, therefore, wholly dependent on her husband in relation to the entire transaction of the said shop. It is also evident from the deposition of the authorised officer in the prosecution case launched against the assessee and her husband in the Criminal Court to which our atte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of furnishing the documentary evidence wherein it is apparent that the quantities purchased / received by the assessee on approval basis for which bills are received or yet to be received on the date of the search, there was no occasion for the assessee to complete the books in absence of final approval of the stock so received or in absence of the bills which are yet to be received. Merely the statement of the assessee under pressure and anxiety cannot be the sole basis for addition. The addition should be based on corroborative evidence which rather are in favour of the assessee in the present case. Even the quantities as per seized documents are duly accounted for there was only a difference of Rs. 68,28,637/-, which the assessee has suo moto offered for taxation. The revenue has squarely failed in substantiating that the excess stock found was on account of any bogus/ unexplained investment by the assessee. On the contrary, when the proceedings u/s 133(6) have been initiated by the Ld. AO all the parties put to notice have come forward and responded affirmative in the favour of the assessee. Under such facts and circumstances, the addition made under 69A 69B are bad in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditors were settled by way of selling the stock lying with him to the said creditors. As per Ld. AR, this is a regular and common practice in the trade of the assessee. 27. We have considered the rival submissions, perused the material available on record and the case laws relied upon by the parties. On perusal of the factual matrix of the present case, it is an undisputed fact that there was a difference in physical and recorded stock of the assessee. The stock was found to be in excess than the value of stock in the books of accounts. Certain documents have been confiscated by the investigation team when the search was conducted on the business and residential premises of the assessee. The documents which became the basis for addition are seized diary (BS-4), Loose papers marked as LP No. 19, 24 32 (copies of same are extracted here in above). The main reason for difference in physical and stock as per books as explained by the assessee was that the quantity of goods received on approval but not entered in the books and the quantities received but bills are pending or the bills are yet to be received from the supplier therefore, entries of such stock was pending on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within 15 days before the date of search and the total purchase made was more than 72 % of the entire years purchase and the appellant did not remember their names, during statement recorded on oath on 3 consecutive days, (iv) It is also noted by the Ld. CIT(A) that during the course of search no document relating to delivery of the impugned excess jewellery like delivery challan, delivery memo, courier details etc. was found from the possession of the assessee, this shows that bills have been prepared after the course of search proceedings, had there been any actual purchase of said excess jewelllery there ought to have been any evidence of delivery of goods even when the same have been return back by the appellant with such observations Ld. CIT(A) concluded that the bills produced by the appellant are nothing but colourable device and clearly and after thoughts and managed, (v) It was also contended by the revenue that assessee himself during the statement recorded on oath have admitted that excess stock have found during the course of search have been acquired out of unaccounted income of past few years. 28. On perusal of the aforesaid observations of the Ld. CIT(A), we find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on no material, cannot be sustained. Ld. CIT(A) while discussing the issue has taken support from the judgment of the Hon ble Jurisdictional High Court of Chhattisgarh in the case of ITO Vs. Vijay Kumar Kesar, reported in 327 ITR 497, wherein Their Lordship had held that the addition based on mere confession and not based on any document during survey cannot be sustained. The issue was addition of unexplained investment u/s.69B of the Act, where the addition was based solely on assessee s confession during the survey which was later retracted and Commissioner (Appeals), after considering material produced by assessee during assessment proceedings and on due appreciation thereof, had accepted explanation of assessee for retraction of his admission as bona fide and further accepted books of account prepared by assessee on the basis of duly verified primary evidence and Tribunal had confirmed order of CIT(A), in view of retraction of admission by the assessee, deletion of addition was held to be justified by the Hon ble High Court. Ld. CIT(A) has further relied on the decision of ITAT Mumbai Bench of the Tribunal in the case of Chawla Brothers (P) Ltd., reported in [2011] 43 SOT 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bills and vouchers along with supporting evidence etc. were submitted by the assessee, however, the same were summarily rejected by the AO without examining the same on the basis of presumption, surmises and having a preconceived notion. Therefore, the ld.CIT(A) has rightly reversed the finding of the ld. AO by deleting the addition made in the assessment order. Since the observation of the ld. CIT(A) was based on the facts, settled position of law and on proper appreciation of submissions along with material on record, respectfully following the judicial pronouncements which are binding to decide the issue in hand, we find no interference in the findings of the ld. CIT(A) in this regard and, therefore, without hesitation, the same is upheld. Thus, the controversy raised by the revenue in its grounds of appeal is dismissed. 29. In view of aforesaid decision, the revenue authorities are under abounded obligation by virtue of CBDT s circular to focus on gathering evidence during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. Such instructions from CBDT shows that corroborative evidence should be given preference over the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... residence establishes that the onus cast upon the assessee to support the retraction has been duly discharged, therefore, the contention raised through retraction substantiated with corroborative evidence cannot be rejected at threshold, therefore, we do not found any substance in finding of Ld. CIT(A), which are totally on the foundation of assumptions, therefore, on this count also the decision of Ld. CIT(A) is liable to be struck down. 32. In view of aforesaid observations, we find force in the submissions and contentions raised by the assessee that the excess stock pertains to the business of the assessee, difference in such stock which is physically found at the time of search with the recorded stock in the books of the assessee was duly explained by way of reconciliation of the same supported with corroborative evidence like bills from the suppliers, much less the same has been fortified when the parties were put to notice u/s 133(6) and they have submitted the requisite documents a/w their confirmation, validating the contentions of the assessee. Assessee has submitted a letter to the ADIT (Inv.)-II, Raipur, dated 03.04.2019 i.e. within seven days of the conclusion of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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