Income Tax Appellate Tribunal - Agra
Madan Lal Agarwal vs Asstt. Cit on 28 November, 2003
Equivalent citations: (2004)89TTJ(AGRA)735
ORDER
M.L. Gusla AM This appeal of the assessee is directed against the assessment order passed by Assistant Commissioner, Circle 1, Mathura, for the block period 1-4-1985 to 4-9-1995.
2. The assessment order was passed under section 158BC read with section 143(3) of the Income Tax Act. In this case, search and seizure under section 132 of the Income Tax Act was conducted at the residential and business premises of the assessee on 4th and 5-6-1995. The notice under section 158BC(a) was issued on 6-11-1995. Vide the above notice, the assessee was required to file the return of undisclosed income for the block period 1-4-1985 to 4-9-1995. The return was filed in compliance to the said notice on 28-5-1996, wherein total income was declared at Rs. 50, 15,630 including undisclosed income of Rs. 42,24,490. In the return of income, the assessee had computed undisclosed income for the block period as under :
(a) Cost of silver ornaments (declared)
(i) Cost of silver 535.538 kg. (excess silver jewellery of gross weight of 1,544.901 was found during search and net weight of silver in it is worked out at 535.538 kg.) Cost of fine silver @ 68201kg. applied by approved valuer (535.538 x 6820).
36,52,370
(ii) Majdoori @ Rs. 200/kg. on the gross weight of excess silver ornaments of 1544.901 kg.
3,08,980 Total cost of ornaments 39,61,350
(b) Gold ornaments declared 1,00,755
(c) Cash debtor (surrendered) 2,00,000 Total 42,62,105 Note: (Undisclosed income of Rs. 42,62,105 has been reduced by Rs. 37,610 due to enhanced income for asst, yr. 1991-92 where the assessment was made under section 143(3) at Rs. 1,07,730 as against declared income of Rs. 70,120).
3. The undisclosed income declared by the assessee at Rs. 42,24,490 was not accepted by the assessing officer for the reason that the same has not been computed in accordance with the provisions of section 158BB of the Income Tax Act. During the course of search and seizure proceedings, undisclosed silver in the form of ornaments, Pakki and Kachchi silver was found in addition to the unrecorded silver. Empty parcel packing cloth wrappers receive from outstations by the assessee, order Bahi regarding orders given to Karigars at Mathura, loose papers, etc. were found and seized. According to the assessing officer the assessee deals in silver/silver ornaments and the modus operandi followed to earn income outside the books of account through the undisclosed business is that the assessee sends silver through insured post parcels to Salem and Rajkot in the names of different parties, Subsequently, the silver converted into silver ornaments is received by the assessee at Mathura by insured parcels from the same outside stations. It is also alleged that the silver is also given to Karigars for manufacturing silver ornaments through order Bahi at Mathura and adjoining towns. The learned Departmental Representative fully relied on the order of assessing officer.
4. During the course of heating, the learned counsel for the assessee furnished concised grounds of appeal. The first ground of appeal is that the assessing officer has arbitrarily taken the value of silver and silver ornaments found and seized amounting to Rs. 74,94,157 against the actual value at Rs. 62,42,318 and thus, difference in valuation of Rs. 12,51,839 has been illegally made in the assessment order.
5. The facts of the issue in brief, are that as per assessment order para 4. 1, during the course of search and seizure, silver of 100 per cent tunch was found at 17.500 kg. Kachchi silver at 9.500 kg. and silver ornaments at 1890 kg. and thus total silver weighing 1,917 kg. was found. However, as per chart furnished by the learned counsel for the assessee on 13-11-2003, during course of hearing before us, total silver of 1,925-320 kg. silver and silver ornaments were found. According to the learned counsel for the assessee, the silver ornaments of 1,899.520 kg., Kachchi silver 7.550 kg. and Pakki silver at 18.250 kg. totalling to 1,925-320 kg. was found. The departmental approved valuer valued the silver in 97 lots at Rs. 86,55,976. The approved valuer has taken the purity of silver in silver ornaments together with 5 per cent towards wages and wastage and thus arrived at the value of Rs. 86,55,976. The assessee objected the valuation made by the approved valuer on the ground that he has taken purity at higher side. In support of his objection, the assessee also filed three other valuation reports from local silver traders to prove that the purity is in fact at lower side. At the initial stage of the assessment proceedings, the assessee vide letter dated 21-12-1995, requested that purity tunch of the silver ornaments be evaluated from other valuer and also proposed the name of Prototype Development and Training Centre (PDTC), Okhla, for determining the purity of silver ornaments. In the assessment order, it is mentioned that 69 samples were taken from silver ornaments in the presence of assessee. However, according to assessee the samples were not sent to PDTC in his presence. It is also alleged that PDTC did not follow the correct procedure for ascertaining purity of silver articles. The said laboratory has taken the part of each silver articles and decided the purity accordingly instead of melting the whole article and then working out the tunch purity because each article of silver contains various percentage of purity. Therefore, without melting the whole basis of article, the correct purity of silver articles cannot be ascertained. During the course of hearing, the assessee filed a paper book containing total 370 pages, which is placed on record. At pp. 183A to 183K of the paper book, there is test certificate, which indicates that the said laboratory has also taken three or four parts of one article to declare purity of that article in form of A.B.C.D., which according to the assessee is not correct to ascertain accurate tunch purity of the article. The learned counsel for the assessee vehemently argued that the appellant filed three valuation reports, which are based on tunch forms found at the time of search alongwith silver ornaments and the purities of samples has been worked out from the silver articles left with the assessee during the course of search. The learned counsel for the assessee submitted that the three valuation reports submitted by him during the course of assessment proceedings declared the purity of 47 per cent in place of 56.65 per cent taken by the department. It is further argued that the assessing officer has also accepted the purity of 47 per cent while giving the credit of silver ornaments to the assessee. In support of his submission, the learned counsel for the assessee invited our attention to serial number 17 of pp. No. 183A of the paper book, which is inventory of the silver articles found during the course of search and it is mentioned therein that at serial No. 17, there is Murthi. This Murthi was sent to PDTC, which has declared the purity of silver at 77.97 per cent. It has been verified from sl. No. 17 of p. 183F of the paper book. With reference to this Murthi, the learned counsel for the assessee submitted that Murthi contains gillette inside and surface of the Murthi is of silver Patra. The purity of silver Patra is 77.97 per cent, but after melting, it, purity will come between 50 per cent to 55 per cent. With the above submission, it is claimed that the report of PDTC is not correct and the assessing officer failed to get correct tunch purity of silver articles while the valuation report furnished by the appellant was based on actual tunch purity. It is further argued that the report submitted by the appellant was neither accepted nor rejected by the assessing officer. On the other hand, the assessing officer has rejected the submissions of the assessee on the ground that name of Prototype Development and Training Centre (PDTC) was suggested by the assessee himself. During the course of assessment proceedings, the assessee vide his letter dated 3-9-1996 addressing to the assessing officer (placed at pp. 64 and 65 of the paper book, which is on record), wherein the assessee has objected the purity of the silver worked out by PDTC. It is further argued in the same letter that the purity of silver ascertained by the PDTC if compared with the departments approved valuer's report, the value comes less by Rs. 5,11,369 while addition in regard to wages in making the ornaments is to be ascertained separately. It is also mentioned in the above referred letter that the purity of silver worked out by the PDTC from a small part of a silver ornament is basically a wrong method because correct purity cannot be worked out unless the ornament is converted into bullion. The Karigars while making the ornaments use the metal other than silver as "Tanka" in silver ornaments, which affects the purity of the silver involved in the ornament. In view of this, in all the ornaments, the purity has been worked out at higher side at 12 per cent.
6. After hearing the rival contentions and considering the assessment order, we noted that the assessee has objected since beginning of the assessment proceedings that the valuation made by PDTC is at higher side. The assessee has challenged the veracity of the test certificate issued, by PDTC on the ground that the silver ornaments were not converted into bullion for determining purity. The submissions made above by the assessee are also supported by a letter addressed to the assessing officer by Bombay Bullion Association Ltd. dated 4-10-1996, which is with reference to assessing officer's letter dated 25-9-1996 (placed at p. 188 of paper book). In the said letter of the association, it is mentioned at serial No. 1 that for testing purity, the article of ornament will have to be melted. However, in the assessment order at p. 8, the assessing officer has mentioned as under:
"The basis of the above allegation is not clear because in the absence of any information to the contrary, as mentioned in the test certificate, the only presumption which can be drawn is that the analysis was made by converting the sample or ornaments into bullion."
7. From the above, it is noted that the objection raised by the assessee during the assessment proceedings was brushed aside on the basis of presumption, which is not justifiable. It is further noted that the assessee has submitted three valuation reports from different valuers, which have neither been accepted nor rejected. In such a situation, we do not have any other alternate except to accept the net purity declared at 47 per cent in place of 56.65 per cent adopted by the department.
8. It is further mentioned in the assessment order that while determining the value of silver ornaments, the approved valuer added the value of' wastage and wages for manufacturing ornaments to the value of silver determined on the basis of tunch method. For this purpose, the approved valuer had added 5 per cent of the value of gross weight of silver ornaments for determining the value of silver ornaments found. However, the assessee. submitted that at flat rate of Rs. 200 per kg. should be added instead of 5 per cent. In this regard, the assessing officer has rejected the claim of the assessee by mentioning as under:
"In this connection, it is relevant to observe that, the contention of the assessee could have been correct if it could be proved that there is no loss at the melting stage, no alloy is mixed for manufacturing ornaments and no polishing, buffing is required to be done. The Government valuer had applied 5 per cent of the value of gross weight on the following basis:
Melting Rs. 10/kg. besides 2% wastage Mixing of alloy Rs. 70/kg. varying from purity to purity Manufacturing Rs. 200/kg.
Polishing & finishing Rs. 50/kg.
Thus, he has arrived at 5 per cent of value of silver towards wastage and wages in the manufacturing of 1 kg. silver ornaments. As the argument of the assessee on this count is flimsy, it is, therefore, rejected."
9. However, the assessee submitted before the assessing officer vide his letter dated 21-12-1995, that 5 per cent addition on account of wastage is not correct for the reason that from books seized and lying in the custody of the department, it may be verified that the average expenses on account of wastage and wages are about 200 per kg. The assessing officer did not consider the above submission of the assessee and adopted the wastage at 5 per cent including wages worked out by the departmental valuer, which is purely based on estimation. The above submission of the assessee was rejected without any justification particularly in the circumstances when the books of accounts have evidentiary value to prove the average expenditure in making the ornaments of Rs. 200 per kg. In view of this, we cannot ignore the submission of the assessee and thus we accept flat rate of Rs. 200 per kg. for value of wastage and wages in manufacturing the ornaments in place of 5 per cent adopted by the assessing officer.
10. In para 4.4 of the assessment order, the assessing officer has taken the stock of silver recorded in the books of account on the date of search at Rs. 12,34,814 @ 47 per cent purity. The details are as under:
(a) Net weight of silver in silver ornaments of as per stock 158.210 kg.
337.853 kg.
(b) Silver coins and utensils declared in wealth-tax by assessee (GW 13.468) 7.880 kg.
(c) Silver ornaments belonging to Sh. Heera Singh as admitted in his statement recorded during search on 4-9-1995 and found in stock (G.W. 7.410) 3.444 kg.
(d) Silver ornaments found and seized with parchi of silver on it accepted as per certificate (G.W. 3.664 kg.) 1.716 kg.
171.150 kg.
Value of silver @ 6,820 kg.
11,67,243 Majoori @ 200 kg. on gross wt. of 337.853 kg., of silver ornaments.
67,571 12,34,814
11. From the above, it is seen that the declared silver ornaments in the books of accounts taken at 47 per cent purity, which were reduced from total jewellery found and balance seized were valued at the purity of 56.65 per cent. The above action of the assessing officer is not justifiable, as the value of ornaments recorded in the books of accounts was taken, at 47 per cent purity while value of unrecorded ornaments at the rate of 56.65 per cent. Thus, the assessing officer adopted total value of ornaments at Rs. 78,73,864 including Majdoori of Rs. 3,79,707. As per assessment order, if Majdoori excluded, the value would be at Rs. 74,94,157 (Rs. 78,73,864 - 3,79,707). The Majdoori and wastage has been taken @ 5 per cent of Rs. 74,94,157. Out of the value of Rs. 78,73,864, the assessing officer has taken Majoori and wastage at 5 per cent of Rs, 74,94,157 and worked out it at Rs. 3,79,707, while it should be amounting to Rs. 3,79,707. Thus, there is calculation mistake of Rs. 5,000, The assessing officer gave credit of net silver (in ornaments) recorded in the books of account of 171.150 kg. at Rs. 6,820 per kg. Which comes to Rs. 11,67,243. The assessing officer added in it Majoori @ Rs. 200 per kg. as recorded in books of account on gross weight of 337.880 kg. of silver ornaments, which comes to Rs. 67,571. Thus, Rs. 11,67,243 + Rs. 67,571 = Rs. 12,34,814 was reduced from total silver articles of Rs. 78,73,864. The assessing officer has worked out undisclosed stock of Rs. 66,39,050. In this way, the total silver/ornaments valued at Rs. 78,73,864 was reduced by Rs. 12,34,814. The assessing officer has accepted Majoori as declared in the books of account at @ 200 per kg. on declared ornaments at Rs. 67,571. If this amount is reduced from total Majoori including undisclosed ornaments, it comes to Rs. 3,07,136 (Rs. 3,74,707 -Rs. 67,571). This is actual Majoori of unrecorded silver ornaments. However, the assessee itself has shown Majoori of Rs. 3,08,980 which is at higher side. Therefore, Majoori has to be taken as shown by the assessee. If the purity of total silver ornaments found is taken at the rate of 47 per cent, which is evident from the books of accounts, the value of silver and silver ornaments found, comes to Rs. 62,42,318 excluding Majocri against Rs. 74,94,157. Thus, we are of the view that the difference of Rs. 12,51,839 has wrongly been added, for the reason that the assessing officer has adopted purity of undisclosed silver ornaments as valued by the PDTC @ 56.65 per cent of purity while in regard to the disclosed silver ornaments, the assessing officer has adopted purity @ 47 per cent that the same has been declared in books of account. Similarly, the Majoori and wastage of undeclared silver ornaments has been considered @ 5 per cent as adopted by the departmental valuer at the time of search while in regard to declared silver ornaments, the same (wastage and Majoori) has been taken at the rate of Rs. 200 per kg. for the reason that this rate has been recorded in books of account. Thus, the assessing officer erred in adopting different rates for declared and undeclared ornaments while both ornaments were found during the course of search. Since the values adopted by PDTC and departmental valuer are in dispute since beginning of the proceedings while the purity of ornaments and Majoori and wastage recorded in books of accounts have evidentiary value. It is further mentioned that total ornaments recorded and unrecorded remained at Rs. 62,42,318. This value is as follows :
Gross weight Purity Net weight Silver ornaments 1899.520 kg.
47% 892.818 kg.
Pakki Silver 18.250 kg.
100% 18.250 kg.
Kachchi Silver 7.550 kg.
47% 4.228 kg.
Total 100% tunch silver 915.296 kg.
12. The value of 915.296 kg. silver at the rate of Rs. 6,820 per kg. (adopted by the assessing officer) comes at Rs. 62,42,318. Thus, the difference of Rs. 12,51,839 is directed to be deleted. Hence, the ground No. 1 is allowed.
13. The ground No. 2 is that the assessing officer was not correct in disallowing the proved purchases of silver articles mentioned at serial No. 35 of seized Annex. 51 valuing at Rs. 3,30,463.
14. The facts of the issue are that as per Annex. 51, a loose paper at serial No. 35 was seized, photocopy of which is placed at serial No. 160A of the paper book and pp. 159 and 160 of the paper book are detailed descriptions mentioned in the seized loose paper No. 35. The learned counsel for the assessee argued that the said loose paper which was seized by the department during the course of search has evidentiary value showing that the assessee has received total silver ornaments of 115.512 kg. from 12 different persons. The same paper also reveals that 12.037 kg. silver ornaments were given to five different persons. The difference 115.512 - 12.037 remains at GW 103.475 kg. which has wrongly been mentioned as 106.475 kg. at para 4.3 of the assessment order. The net weight of 103.475 kg. comes at 48.455 kg. The learned counsel pleaded that credit should be given of the value of Rs. 3,30,463 of 48.455 kg. silver @ Rs. 6,820 per kg. But the assessing officer has rejected the claim of the assessee without mentioning any reason.
15. The facts of the issue are that during the course of search on 4-9-1995, the search party found the books recorded upto 31-8-1995. The loose paper serial No. 35 contains the transaction from 1-9-1995 to 3-9-1995, which remained to be recorded. This fact has been explained before the search party by the appellant in his statement recorded under section 132(4) of the Income Tax Act. This is in reply to question No. 43 at p. 10 of the statement recorded during the course of search of this appellant. The value of this at Rs. 3,30,463 has already been included in the total silver found at Rs. 62,42,318. Considering the above factual position and the statement given at the time of search, we direct to give credit of the same. Thus, this ground of appeal is allowed.
16. Ground No. 3 is that the assessing officer was not correct in disallowing the silver weighing 82.268 kg., valuing at Rs. 5,61,068, which belong to Kirti Jewellers of Salem.
17. The facts of the issue are that serial No. 5 of Annex. 44 is a loose paper found during the course of search. On being asked during the course of search on 4-9-1995, the appellant in reply to the question Nos. 20, 26 and 27 has explained that the paper reveals that 82.268 kg. silver was outstanding against the appellant which actually belongs to Kirti Jewellers of Salem. The value of this silver is at Rs. 5,61,068. However, as per the assessment order, the ADIT, Salem, after making inquiry reported that Kirti Jewellers, Salem, has refused any such silver lying with the appellant. As per assessee's explanation, the seized paper No. 5, Annex. 44, is in the writing of the person concerned with Kirti Jewellers. The assessee in support of his submission filed a report of Shri S.C. Varshney, the handwriting and fingerprint expert, Hathras. Shri Varshney furnished his report by examining the loose paper No. 5 with the bills of Kirti Jewellers referred in the regular books of accounts and reported that the handwriting of the bills resembles with the handwriting of loose paper No. 5. The opinion of Shri S.C. Varshney has been made part of the paper book, which is at p. 97 of the paper book.
18. The assessing officer rejected the claim of the assessee for the reason that Shri Varshney is not Government approved handwriting and fingerprint expert and secondly, that as per ADIT's report Sri Raj Kumar son of the proprietor of Kirti Jewellers has denied to have given 82.268 kg. silver to the appellant.
19. The learned counsel for the assessee pleaded before us that the statement of Sri Raj Kumar was recorded by ADIT at Salem. No opportunity was provided to the assessee to cross-examine Shri Raj Kumar. It is further pleaded that the bills of Kirti Jewellers prepared by the person concerned of Kirti Jewellers and entered in the regular course of business in the books of accounts of appellant resembles with the handwriting at p. 5 of Annex. A-44. In case, the assessing officer was not convinced with the report of handwriting expert. Sri Varshney then he should take further action to take the opinion of any Government approved expert, but no such action was taken by the assessing officer and fully relying on the statement of Sri Raj Kumar recorded by ADIT, the claim of assessee has been rejected.
20. After hearing the rival contentions, we are of the view that in the statement recorded at the time of search, the appellant deposed that paper No. 5 pertains to Kirti Jewellers, which indicates that the total silver of 192.208 kg. was received by the appellant and 109.940 kg. was already sent to Salem. Thus, 82.268 kg. silver remained with the appellant. The assessing officer has failed to give an opportunity to the assessee to cross-examine Shri Raj Kumar. The assessing officer further failed to get the opinion of Government approved handwriting expert. Hence, we direct that deduction of Rs. 5,61,068 should be given from total value of silver of Rs. 62,42,318. Thus, the ground is also allowed.
21. Ground Nos. 4 and 6 are that the assessing officer was not justified disallowing the net Pakki silver weighing 22.807 kg. and net Kachchi silver is 1.500 kg. valuing at Rs. 1,55,544 and Rs. 10,230, respectively, which were used for purchase of silver ornaments.
22. The facts of the issue are that during the course of search Pakki silver weighing 18.250 kg., and Kachchi silver 7.550 kg. (net 4.228 kg.) were found. As per the books of accounts there were 83.060 kg. Pakki silver and 8.257 kg. Kachchi silver. Thus, there was shortage of 64.810 kg. Pakki silver and 0.707 kg. Kachchi silver (net 0.396 kg). It was explained in the statement recorded of the appellant that as per Parcha No. 35 of Annex. 51, Pakki silver received was at 6.537 kg. and Kachchi silver at 1.970 kg. The same paper further reveals that 48.540 kg. silver was given to the outsiders. Thus, the balance shortage remains 22.807 kg. (64.810 kg. - 42.003 kg.) and Kachchi silver at 2.677 kg. net 1.500 kg. (0.707 kg. net 0.396 + 1.970 net 1.104 = 2.677 net 1.500 kg.). This shortage was for the reason that the appellant has utilised this silver in purchase of silver ornaments. Therefore, credit should have been given in regard to this silver.
23. The assessing officer has not expressed any view in this regard in the assessment order. However, he has mentioned at p. 15 that 65.560 kg. pure silver was found short at the time of search, which proves that the assessee gives silver to Karigars for manufacturing silver ornaments outside the books of accounts.
24. After hearing the rival contentions, we noted that the assessee filed an affidavit before the assessing officer, which was neither accepted nor rejected. Further, this is an admitted fact that the assessee is not carrying on the business of selling of silver but, on the other hand, the silver ornaments prepared by the Karigars are purchased by the assessee and the consideration is paid by mode of giving pure silver in return, The assessing officer has failed to bring any evidence on record to prove that the said shortage of silver was used by the assessee otherwise. In view of this, we direct that the credits of Rs. 1,55,544 and Rs. 10,230 should be given from the value of Rs. 62,42,318. Thus, this ground is allowed.
25. Ground No. 5 is that the assessing officer was wrong in disallowing the credit of silver found as per books weighing Pakki silver (17.500 kg. + 0.750 kg.) = 18.250 kg. and kachchi silver 7.550 kg. (net 4.278 kg.) total comes at 22.478 kg. valuing at Rs. 1,53,300.
26. The facts of the issue are that during the course of hearing on 28-10-2003, the learned counsel for the assessee furnished photocopy of stock register pp. 1 and 3. According to this register Kachchi silver of 7.550 kg. and Pakki silver of 18.250 kg. were available and this much Pakki and Kachchi silver were actually found by search party as per books of accounts. However, the assessing officer, while calculating the disclosed silver, considered only silver ornaments at para 4.4 of p. 11 of his order. No credit of Kachchi silver weighing 7.550 kg. and Pakki silver 18.250 kg. was given. Therefore, we direct to give credit of Rs. 1,53,300, which is value of Pakki silver @ 18.250 kg. and Kachchi silver net 4.278 kg. Thus, this ground is also allowed.
27. Ground No. 7 is that the assessing officer was not justified in disallowing the cash of Rs. 2,12,051 available as per books of accounts and seized paper, which was used for purchase of ornaments weighing 3 1. 100 kg.
28. The facts of the issue are that the books of accounts of assessee were written upto 31-8- 1995, which show cash balance of Rs. 1,60,245.70 while on the date of search on 4th Sept., 1995, cash was actually found at Rs. 9,000. Between the period 1-9-1995 to 3-9- 1995, the search party found sale bill of Rs. 9,190 and expenditure of Rs. 850. Thus, total cash remained short on the date of search by Rs. 1,59, 585 (1,68,585 minus 9,000 = 1,59,585).
The seized loose paper No. 35 of Annex. A-51 further reveals that the cash of Rs. 4,29,000 was received and cash paid of Rs. 3,76,494. Thus, the cash as per books of accounts on the date of search remained at Rs. 1,59,585 + 52,506 = 2,12,091. According to the assessee, this cash was used in purchase of ornaments of 31.100 kg. net. The assessing officer rejected the claim of the assessee on the ground that the ornaments cannot be made within a night. However, the submission of the learned counsel for the assessee is that silver bullion is not given for manufacture of ornaments, but it is given for exchange of silver ornaments. Therefore, the assessing officer should have given credit of the same. The learned counel further argued that the assessing officer has failed to bring any evidence that the said cash was not used in purchase of 31.100 kg. of silver ornaments. According to him in the Sarrafa business both cash and bullion can be used for purchase of silver ornaments at any time within a minute. It is not a consumable time factor. The learned counsel also invited our attention to para-J of the affidavit of appellant lying at p. 123 of the paper book, which states as under:
"031.100 kg. pure silver purchased and given to Karigars against silver ornaments out of cash available Rs. 1,60,435.70 as per regular books of account Rs. 52,506 as per page No. 35 of Annex. 51 totalling Rs. 2,12,091,70 (-Rs. 850 for advertising expenses)".
29. After hearing the rival contentions, we noted that the department could not bring any evidence on record that the said cash was used by the appellant otherwise than claimed. As per profession of Sarrafa line, cash and silver can be used against purchase of silver ornaments at any time. Pure silver can also be used in exchange of the silver ornaments. Reliance is also placed on the decision of Tribunal, Cochin Bench, in the case of Jose Brothers Jewellery v. Asstt. CIT (2000) 67 TTJ (Coch) 222, wherein it is held that difference between the peak amount and the balance available with the assessee as on the last date of block period in the account, was allowable to be set off against the amount added as unexplained investment. Keeping in view the above facts and circumstances, we direct to give credit of silver ornaments weighing 3 1. 100 kg. net.
30. Ground Nos. 8, 9 and 11 are as under :
"Because A.C.A. was not correct in estimating the income of Rs. 4,18,110 on the basis of parcel recd. during the assessment year 1995-96 against insured value of Rs. 3,70,000 of parcels."
Because the A.C.A. has made the intangible addition of Rs. 15,27,630 on account of alleged parcels for the assessment year 1996-97 which is wrong and unjustified. "
""Because the A.C.A. was not right for making an addition of Rs. 99,185 against order No. 39 of 53 kg. "
31. The facts of the issue are that during the course of search, eight parcels packing cloth wrappers (empty) were found from appellant's premises. On the basis of these empty wrappers, information was collected by the assessing officer from the postal authorities. The parcel authority furnished the details pertaining to the assessment years 1995-96 and 1996-97. Considering the above information, the assessing officer worked out the profit for the assessment year 1995-96 at Rs. 4,18,110 and for the assessment year 1996-97 at Rs. 15,27,630. Similarly, on the basis of order Bahi found during the course of search at the premises of the assessee, the assessing officer concluded that pure silver found short during the course of search is evident from the fact that the assessee is giving silver to the Karigars for manufacturing of silver ornaments outside the books of accounts. The total weight of silver in the 8 orders worked out at 241.200 kg. The assessing officer further mentioned that by order No. 39, the appellant had sold 53 kg. of silver ornaments to the customers. The profit on the sale of 53 kg. silver ornaments @ 49 per cent has been worked out at Rs. 99,185. Thus, the total profit of Rs. 4,18,110 + 15,27,630 + 99,185 = Rs. 20,44,925 was added as undisclosed income of the assessee.
32. The assessee contended before the assessing officer that the assessee has not purchased so much silver ornaments through the parcels referred in the assessment order and further submitted that there is no proof that said ornaments had actually been passed by the assessee as intimated by the postal authorities. It is further contended that for the assessment year 1995-96, the GP rate was adopted by the assessing officer @ 14 per cent while for the assessment year 1996-97 the GP rate has been taken at 49 per cent.
33. During the course of hearing before us, the learned counsel for the assessee vehemently argued that the assessee deals in silver/silver ornaments. The modus operandi followed by the assessee has been accepted by the assessing officer himself at para 2.2 of p. 4 of the assessment order. According to the assessee he used to send silver through insured parcels to Salem and Rajkot in the names of different parties. Subsequently, the silver converted into silver ornaments, are dispatched through insured parcels by the parties of Salem and Rajkot to the assessee at Mathura. Therefore, according to the learned counsel for the assessee, the entire receipt or dispatch of insured parcels for the assessment year 1995-96 and 1996-97 does not pertain to undisclosed business only, but also includes in disclosed business. It is, further, pleaded by the learned counsel for the assessee that the assessee had no other activities of business except dealing in silver and silver ornaments. Therefore, whatever undisclosed income earned by such insured parcels as well as order Bahi has been invested in the silver stock, which has been found by the department as excess silver and this excess silver stock has already been surrendered amounting to Rs. 42,62,105. Therefore, such profit as added by the assessing officer amounts to double taxation.
34. After considering the rival contentions, we noted that the department has found excess silver during the course of search, which has been surrendered for taxation by the appellant. Hence, if any undisclosed income earned through such undisclosed insured parcels and order Bahi, the same has been included in the stock of excess silver. The assessing officer could not bring any evidence on record to prove that the appeflant did make such investment in any other form. Hence, such profit has already been included in the surrendered amount. In view of this factual position,, we direct to delete the addition of Rs. 4,18,110, Rs. 15,27,630 and Rs. 99,185. Hence, these three grounds of appeal are allowed.
35. Ground No. 10 is as under:
"Because A.C.A. was not justified in making an addition of Rs. 7,18,773 under section 69A as there was no investment against the order given. "
36. As already mentioned that during the course of search, order Bahi was seized, which was given No. A-42 in seizure memo. In this order Bahi, page Nos. 30, 33, 37 to 42 are written which reveal that these are orders given to Karigars for making of silver ornaments. It was explained to the assessing officer by the assessee that these are the pure silver given to Karigars for manufacturing silver ornaments. It is further mentioned in the assessment order that the assessee never gave silver in advance for manufacturing of silver ornaments. Therefore, no presumption can be made that the investment in the silver ornaments through these orders is unaccounted investment. It is further mentioned in the assessment order that the assessee had filed confirmatory letters from the Karigars in support of his submission. However, according to the assessing officer, if the assessee is not doing unaccounted business from Karigars then why the pages of order Bahi had been torn out as the order Bahi is of current year only. According to the assessing officer, the modus operandi of the assessee is clear that the moment the order is fulfilled the pages from the order Bahi are removed and torn out. It is further mentioned by the assessing officer that this was the reason that pure silver of 65.560 kg. was found short during the course of search. According to the assessing officer, the total weight of silver in the 8 orders involved 241-200 kg. Vide order No. 39, the silver ornaments of 53 kg. delivered to the customers on which the profit has been included in ground No. 11, which has already been discussed in forgoing paragraphs. The balance 241-200 kg. - 53 kg. = 188-200 kg. silver ornaments were considered by the assessing officer as undisclosed investment made by the assessee. The weight of pure silver on the basis of average' purity of 56 per cent was worked out at 105.39 kg. Thus, an addition of Rs. 7,18,773 was made under section 69A of the Income Tax Act.
During the course of hearing before us, the learned counsel for the assessee furnished photocopy of Annex. A-42, which is order Bahi. Our attention was drawn to these pages of this order Bahi-and we noted that in these orders date of order, name of Karigar to whom order was given,. telephone number and details of ornaments are mentioned. According to the learned counsel for the assessee, the assessee gave orders on phone to particular Karigar to send silver ornaments as mentioned in the order Bahi and after receipt of silver ornaments, pure silver is given later on after finding out the purity in the ornaments. Thus, no pure silver at anytime was given in advance. In support of this, the assessee filed confirmatory letters from the Karigars and also filed an affidavit of the appellant to the assessing officer. Therefore, the learned counsel pleaded that no addition is required to be made in this regard.
38. After hearing the rival contentions and going through the order Bahi, we noted that nowhere it is mentioned that any pure silver was given in advance to the Karigars. The assessing officer has not brought any evidence on record in support of his conclusions. The learned counsel for the assessee placed reliance on the decision of Tribunal, Delhi Bench, in the case of Ashwani Kumar v. ITO (1991) 39 ITD 183 (Del), wherein it is mentioned that where a document is silent on a point, the authorities cannot read it as they desire on the basis of dumb document. It is necessary that the documents must be speaking one. In the instant case, the order Bahi nowhere reveals that a specific quantity of silver has been delivered to a specified Karigar. In the absence of such narration and in view of the explanation of the facts and circumstances discussed above, we direct to delete the addition of Rs. 7,18,773. Thus, this ground of appeal is allowed.
39. Ground No. 12 is that the assessing officer was wrong in holding that Rs. 4,29,000 is the income of the assessee on the basis of p. 35 of seized Annex. 51.
40. It is noted from the assessment order at para-6 that the assessing officer himself admitted that these are the credit entries in the names of different parties. The assessing officer has added the entries made in the name of Shyam Sunder (advanced against goods) Rs. 10,000, Bhimsen Rs. 1,35,000, Hawala Rs. 2,50,000, Triloki Dalal Rs. 30,000 and Jai Pal Rs. 4,000. The total of these amounts, Rs. 4,29,000 is added by the assessing officer.
41. During the course of hearing, the learned counsel for the assessee has drawn our attention to pp. 160-A, 159 and 160 of the paper book filed during the course of hearing. Page 160-A is the photocopy of p. 35 of Annex. 51 of the seizure memo. From the said paper, the details of amount received are referred above as considered by the assessing officer. However, the same loose paper further reveals that the assessee has paid Rs. 2,50,000 to Shri Bhimsen, Rs. 15,000 to Trilok Dalal, Rs. 4,000 to Shibboo, Rs. 1,02,000 to Padam Chand, Rs. 5,000 to Chunnu and Rs. 494 to Mahendra Singh. Total of these payments comes to Rs. 3,76,494. The credit of these payments was not considered by the assessing officer. Thus, the seized loose paper No. 35 of Annex. A-51 has partly been accepted, and partly been rejected. Such action on the part of the assessing officer cannot be accepted in the eye of law. In addition to that, we noted that difference of receipt of Rs. 4,29,000 and, payment of Rs. 3,76,494, comes to Rs. 52,506. According to the learned counsel for the assessee, the silver ornaments of this amount were purchased which have already come in excess silver ornaments. The submission of the learned counsel is acceptable on the ground that during the course of search, cash amounting to Rs. 9,000 only was found. Further, these are the trade creditors and seized documents do not indicate undisclosed income of the assessee. Hence, we direct to delete the addition of Rs. 4,29,000.
42. Ground No. 13 is that the Assistant Commissioner was not justified to make addition in regard to payment of Rs., 1,73,862 to telephone department for the assessment years 1992-93, 1993-94, 1994-95 and 1995-96.
43. The facts of the issue are that the addition in regard to unrecorded expenditure in respect of telephone No. 405224 was made. During the course of search, the appellant deposed that part of the expenditures incurred on the above mentioned telephone has not been debited in P&L a/c of the respective year. The assessing officer gathered the details from the accounts officer of telecom department and found that unaccounted expenditure incurred during the financial years 1991-92 to 1994-95 to the extent of Rs. 1,73,862. The assessee explained to the assessing officer that unexplained expenditure is covered from the unexplained income declared in the relevant year. The explanation of the assessee was rejected on the ground that the assessee has not disclosed any additional income in respect of the years 1991-92 to 1994-95 and, therefore, entire unexplained expenditure of Rs. 1,73,862 was added in view of the provisions of section 69C of the Income Tax Act.
44. After considering the rival contentions, we do not find any merit in the submission of the appellant and thus, this ground of appeal is dismissed.
45. Ground No. 14 has not been pressed. Therefore, the same is rejected.
46. In the result, the appeal of the assessee is partly allowed.