Income Tax Appellate Tribunal - Hyderabad
Uttam Chand Jain, Hyderabad vs Acit,Central Circle -5, Hyderabad on 9 May, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B", HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND
SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER
I.T.A. No. 1530/HYD/2013
Assessment Year: 2009-10
Uttam Chand Jain Asst. Commissioner of
HYDERABAD Vs Income Tax,
[PAN: ABCPN2423K] Central Circle-5
HYDERABAD
(Appellant) (Respondent)
For Assessee : Shri S. Rama Rao, AR
For Revenue : Shri K.J. Rao, DR
Date of Hearing : 04-05-2017
Date of Pronouncement : 09-05-2017
ORDER
PER B. RAMAKOTAIAH, A.M. :
This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-I, Hyderabad, dated 13-09-2013 on the issue of addition of Rs. 7,17,787/- towards gold and Rs. 1,58,600/- towards silver as 'un-explained investment'.
2. Briefly stated, assessee is proprietor of M/s. Uttam Silver Palace and was doing silver and gold business. During the course of search and seizure operations u/s. 132 of the Income Tax Act [Act] conducted at the business and residential premises of assessee on 05-06-2008, certain cash and excess jewellery was identified. Assessee has admitted an amount of Rs. 49,18,454/-
I.T.A. No. 1530/Hyd/2013
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towards un-accounted investment in gold bullion Rs. 8,17,715/- in silver and balance cash. Consequent to the search proceedings and declaration u/s. 132(4), assessee filed return of income on 31-01-2009 declaring total income of Rs. 91,29,350/- which includes an amount of Rs. 76,77,235/- admitted as his un- disclosed income. In the scrutiny proceedings, AO made an addition of Rs. 81,715/- as cash not disclosed which the Ld.CIT(A) deleted. Apart from that, assessee has reduced the disclosure by an amount of Rs. 7,17,787/- from the amount of disclosure made towards gold bullion on the reason that assessee had gold jewellery weighing 717.500 Gms., which was melted and value of gold by weighing 588.350 Gms., has not been excluded, as stated in the declaration u/s. 132(4). Like-wise, out of the silver declared of Rs. 8,17,715/-, assessee admitted Rs. 6,59,115/- and for the difference of Rs. 1,58,660/-, assessee had claimed opening stock of silver and on reconciliation reduced the declaration. AO, however, in the scrutiny proceedings did not agree and brought these two amounts also to tax.
3. Before the Ld.CIT(A), assessee referred to the statement given during the course of search and a slip given by the person who melted the gold ornaments, in support of the contentions. Ld.CIT(A) however, did not agree with the contentions, on the reason that there is no evidence, confirmed the additions towards gold and silver.
4. Ld. Counsel referring to the statement given on 07-07-2008 (placed in the Paper Book at pg. 13 to 15) particularly, to Question No. 7 & 8 to submit that in the course of search itself assessee has I.T.A. No. 1530/Hyd/2013 :- 3 -: Uttam Chand Jain stated that the opening stock of Rs. 717.500 Gms. was converted to pure gold weighing 588.350 Gms. It was submitted that Ld.DDIT while recording the statement asked for the evidence which was subsequently provided, but was not accepted by the authorities. He referred to the closing stock statements of earlier years, wherein both gold and silver articles were shown in the stock statements. It was the submission that assessee was having the opening stock of gold weighing 717.500 Gms., and silver of 10.350 Kgs., value of which was reduced from the declared amount. It was submitted that the balance of the amount u/s. 132(4) has been disclosed by assessee on which there is no dispute.
5. Ld.DR, however, relied on the orders of the authorities and also submitted that ornamental gold cannot be converted to gold bullion and the statement of assessee cannot be accepted as such.
6. We have considered the rival contentions and perused the documents placed on record in the Paper Book. Admittedly, assessee himself has stated in the course of search in the statement u/s. 132(4) that stock of 717.500 Gms., of gold ornaments were melted during the year, which yielded the bullion valued at Rs. 7,17,787/-. DDIT wanted the evidence of such conversion but the same was recorded in the 132(4) statement. As seen from the stock statements filed in earlier years also, assessee was showing the stock in the statements of accounts. Consequently, we are of the opinion that what assessee was telling from the date of search is the truth. Consequently, assessee is correct in taking credit for the stock available at the beginning of the year while arriving at the unexplained investment. Considering I.T.A. No. 1530/Hyd/2013 :- 4 -: Uttam Chand Jain the fact that assessee has honoured declaration of balance amount of Rs. 76,77,235/- admitted in the course of search, we are of the opinion that assessee deserves credit for the opening stock available in the business premises. The value adopted by assessee is the conversion value of the gold bullion and silver. Whether the gold ornaments can be converted into bullion or not is to be examined in another case, as AO has not made out any case on that issue, nor the DDIT in the earlier proceedings and DR's argument on a new issue cannot be entertained now. We are of the opinion that assessee deserves credit for the opening stock shown in the statements in earlier years. In that way, assessee's contentions are to be upheld. In view of that, we direct the AO to delete the additions towards the bullion of Rs. 7,17,787/- and silver of Rs. 1,58,660/- and accept the amounts as disclosed by assessee in the return of income. Grounds are allowed.
7. In the result, appeal of assessee is allowed.
Order pronounced in the open court on 9th May, 2017 Sd/- Sd/-
(P. MADHAVI DEVI) (B. RAMAKOTAIAH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated 9th May, 2017
TNMM
I.T.A. No. 1530/Hyd/2013
:- 5 -: Uttam Chand Jain
Copy to :
1. Uma Chand Jain, Hyderabad. C/o. Sri S. Rama Rao, Advocate, Flat No. 102, Shriya's Elegance, D.No. 3-6-643, Street No. 9, Himayat Nagar, Hyderabad.
2. Asst. Commissioner of Income Tax, Central Circle-5, Hyderabad.
3. CIT (Appeals)-I, Hyderabad.
4. CIT(Central), Hyderabad.
5. D.R. ITAT, Hyderabad.
6. Guard File.