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TMI Blog1990 (3) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... e of 16.62% which was found to be in order. This we are stating because though the ITO invoked the provisions of section 145(2) to raise the assessment, additions were made on specific grounds as mentioned in this order above. 3. Under the Gold (Control) Act, 1968 (hereinafter referred to as the G.C. Act), the assessee was statutorily bound to maintain registers Nos. G.S 11 and GS 12. The forms of Register Nos. G.S. 11 and GS 12 were to be as Rule 11(1) of the Gold Control (Forms, Fees and Miscellaneous matters) Rules, 1968 (hereinafter referred to as the G.C. Rule) prescribed in relation to section 55 of the G.C. Act. The said section 55 of the G.C. Act and rule 11(1) of the G.C. Rule must be brought in close focus by reproducing these because it was wrong interpretation of the said section and rule that has caused the controversy and the resultant addition in respect of value of 3217.320 gms :--- Section 55. Accounts. (1) Every licensed dealer, every licensed refiner and every certified goldsmith shall keep, in such form and in such manner as may be prescribed, a true and complete account of the gold owned, possessed, held, controlled, bought or otherwise acquired, or accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be entered as well. Sub-section (3) makes the position abundantly clear and there can be no two opinions possible in that regard. Against the above, as per the ITO, Register No. G.S. 11 was maintained for standard gold and ornaments received for milling and Register No. G.S. 12 was on account of ornaments for sale. The ITO further opined and inferred that Register No. G.S. 11 was meant for making entries in relation to ornaments or articles owned by the assessee which were meant for sale and no other entries regarding repair etc., were permissible under G.C. Act in such register. According to the Assessing Officer, gold and jewellery items in respect of which entry was made in Register No. G.S. 11 was the sole ownership of the dealer and, therefore, he came to the conclusion that the assessee's version which was supported by contemporary vouchers of receipt and delivery of certain jewellery from Smt. Kumud Jain, Shri Vijay Mohan, Smt. Krishna Jain and Shri Sukhdev Raj Jain was not believable. 5. Before proceeding further, we like to deal with the ITO's case and the ld. CIT(As') approach to the issue. As per the Assessing Officer, scrutiny of G.S. 12 revealed that as on 31st Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en in the return/issue voucher was of 198.600 gms. The assessee charged value of extra gold used as also the remodelling charges amounting to Rs. 1564. In respect of the other two persons, the items received were not returned in full as some of the jewelleries were sold to the firm. It must be mentioned here that Shri Sukhdev Raj Jain was a partner and major portion of the jewellery given to the assessee for repair/remodelling belonged to him. Not only affidavits of all the four persons were submitted before the ITO at the assessment stage itself but at the instance of the CIT(A), their statements were also recorded by the ITO in the form of questions and answers. 7. Since the ITO and the CIT(A) heavily relied on the statement of Shri Sukhdev Raj Jain, a partner of the firm, it would be in the fitness of things that the same is reproduced below, a photostat copy of which is given at pages 8, 9 and 10 of the paper-book :---- ".... Stated on oath and solemn affirmation that I am 55 years of age. I have studied upto 6th class. I am one of the partners in M/s. Nikka Mal Diamond, Chowk Nikka Mal, Ludhiana. Affidavit dated 27-2-1989 has been filed by me. Q. I am showing you Vouch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Advocate, 7-9-1989 Before me Sd/ B.S. Rathor, ITO." Same is the pattern of statements of the other persons with the material difference that the other three were not the partners. For the assessee, Shri Mohan Lal, Advovate, appearing alongwith Shri Ashwani Kumar, Chartered Accountant, very effectively submitted that if only the income tax authorities had appreciated the facts in their proper perspective and the related provisions of the G.C. Act, the cause of action for making the addition amounting to Rs. 8,07,547 would not have arisen in the first place. For the Revenue, Shri D. Chatterjee, Sr. Departmental Representative, very strongly contended that the ITO and the CIT(A) had critically examined the case at great length and came to the right conclusion that the entries of receipt and return indicated that the assessee had purchased and sold jewellery to the four persons and since the purchases had not been accounted for, the addition of Rs. 8,07,547 came to be justifiably made representing the value of 3217.320 gms. of gold. 8. After perusing the orders and the statements of the four persons, who all asserted and supported the assessee's version that they had give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal. Section 55 we have already quoted above. Therefore, on the given facts, we are of the unhesitating view that the ITO and the ld. CIT(A) both erred in making and confirming the addition on the ground that the jewellery of the four persons entered in G.S. 11 and G.S. 12 projected purchase and sale. While deleting the related addition, we have in focus the evidence referred to by the ld CIT(A) that some artisans had deposed that while remodelling jewelleries 20 pieces may be converted into 50 pieces but that to our mind, makes no difference to the case because in respect of two of the persons, same number of items were returned and in respect of other two persons, the assessee's case has been that part of the jewellery acquired for remodelling came to be sold by Shri Sukhdev Raj Jain to the firm as he was a partner. 10. It is important to note that all the four persons from whom jewellery was taken by the firm for remodelling etc., are regular income tax assessees and Shri Sukhdev Raj Jain and Smt. Kumud Jain are assessed to Wealth-tax also and the jewellery given by them were duly accounted for in their assessments and even after the assessment year in question, value of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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