Income Tax Appellate Tribunal - Chandigarh
Dcit, Ludhiana vs M/S Radhe Sham Jain Diamonds Jewellers ... on 30 May, 2019
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "बी" , च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B' , CHANDIGARH
ी संजय गग , याय क सद य एवं ीमती अ नपण
ू ा गु&ता, लेखा सद य
BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.109/Chd/2017
नधा रण वष / Assessment Year : 2010-11
The D.C.I.T, बनाम M/s Radhe Sham Jain
Central Circle-III, Diamonds Jewellers Pvt. Ltd.,
Ludhiana. B-XIX, 549/1, College Road,
Fountain Chowk, Ludhiana.
थायी लेखा सं./PAN NO.AADCR8437J
अपीलाथ /Appellant यथ /Respondent
C.O. No.13/Chd/2018
In
आयकर अपील सं./ ITA No.109/Chd/2018
नधा रण वष / Assessment Year : 2010-11
M/s Radhe Sham Jain बनाम The D.C.I.T,
Diamonds Jewellers Pvt. Ltd., Central Circle-III,
B-XIX, 549/1, College Road, Ludhiana.
Fountain Chowk, Ludhiana.
थायी लेखा सं./PAN NO.AADCR8437J
अपीलाथ /Appellant यथ /Respondent
C.O. No.14/Chd/2018
नधा रण वष / Assessment Year : 2011-12
M/s Radhe Sham Jain बनाम The D.C.I.T,
Diamonds Jewellers Pvt. Ltd., Central Circle-III,
B-XIX, 549/1, College Road, Ludhiana.
Fountain Chowk, Ludhiana.
थायी लेखा सं./PAN NO.AADCR8437J
अपीलाथ /Appellant यथ /Respondent
2 ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017
A.Ys.2010-11 to 2012-13
आयकर अपील सं./ ITA No.245/Chd/2017
नधा रण वष / Assessment Year : 2012-13
The D.C.I.T, बनाम M/s Radhe Sham Jain
Central Circle-III, Diamonds Jewellers Pvt. Ltd.,
Ludhiana. B-XIX, 549/1, College Road,
Fountain Chowk, Ludhiana.
थायी लेखा सं./PAN NO.AADCR8437J
अपीलाथ /Appellant यथ /Respondent
C.O. No.24/Chd/2018
In
आयकर अपील सं./ ITA No.245/Chd/2018
नधा रण वष / Assessment Year : 2012-13
M/s Radhe Sham Jain बनाम The D.C.I.T,
Diamonds Jewellers Pvt. Ltd., Central Circle-III,
B-XIX, 549/1, College Road, Ludhiana.
Fountain Chowk, Ludhiana.
थायी लेखा सं./PAN NO.AADCR8437J
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Rajiv Gupta, CA
राज व क ओर से/ Revenue by : Shri G.S.Phani Kishore, CIT.DR
सन
ु वाई क तार$ख/Date of Hearing : 11.03.2019
उदघोषणा क तार$ख/Date of Pronouncement: 30.05.2019
आदे श/ORDER
PER BENCH:
Al l t he ca p ti oned a p pe a ls of the Re ve n ue a n d the C r oss ob j e ct ion o f the a s se s se e re la ti n g to the s a me a sse sse e a nd a r e a g a in st the se p a r a te or de r s p a s se d b y t he C om mis si on e r of I n co me Ta x (A p p e a ls )- 5, Lu d hi a na [ (i n sh or t ' C I T( A) ]' u/s 2 5 0( 6 ) 3 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 of th e I nc ome Ta x Act , 1 9 6 1 (h e re in a fte r re fe r red t o a s 'Act ') d a te d 7 .1 0 .2 0 1 6, 7 .1 0 .2 0 1 6 a n d 3 0 .1 1 .2 0 1 6 , a nd r e l a ti ng to a ss e s sme n t ye a r s 2 0 10 -1 1 , 2 0 11 -1 2 a nd 2 0 1 2 -1 3 r esp e cti ve ly .
2. We sh a l l fi r st b e ta k in g up th e a p pe a l a nd C r oss O b je c ti on r e l a ti ng to a sse ssme n t ye a r 2 01 0 -1 1 .
ITA N o .1 0 9/C h d /2 01 8 : A .Y 20 1 0 -1 1
3. B ri e f fa c ts r e l a tin g to the ca se a re tha t t he a s ses se e is a P vt. Ltd . co mpa n y e ng a ge d i n the r e t a il a n d w ho le sal e je we lle r y b us in e s s. A se a r ch u /s 132 of th e I . T. A ct , 19 6 1 , was co nd uc te d a t the p re mi se s of the a s se s se e on 14 . 03 . 2 01 2 . Th e r e a f te r i n p ur su a nc e t o no tice is sue d u/s 1 5 3A ( 1 ) o f t he Ac t , th e a s se sse e f i le d the re tur n of i nc ome de cl a r in g i n come of Rs . 2, 8 6 ,3 8 0 /-. Su bs e q ue n tly a ss e ss me n t w a s ma d e u/s 1 4 3( 3) of th e Ac t. The A. O . re je cte d the bo ok s of a ccou nt s p r od u ce d b y th e a s se s see und e r se cti on 14 5 (3) of th e Ac t, a n d ma d e a n a d d it ion of Rs. 6 2 ,5 9 ,5 2 4 /- on a ccou nt of u nde r sta te me n t of gr os s p ro fi t r a te . Th e A. O . a l so ma d e a d d iti on of Rs . 9 5 .2 7 0 /- on a c cou nt of d i sa l l ow a nc e of repair ch a r ge s of je we l le r y, d is a l low e d I /5 th of d e pre ci a ti on cl a ime d on c a r a nd a l so a d de d Rs . 2 , 98 , 0 09 /- o n a cc oun t of u na c cou nte d s a le s, u/s 6 9 of t he Ac t, to th e tota l in come . Th e ma tte r was c a r ri e d in ap pe a l b e f ore the CI T(A ) , wh o p a r tl y a ll ow e d the a s se sse e's a p p e a l . 4 ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13
4. Agg ri e ve d b y the sa me , the Re ve nu e h a s come u p in a p pe al b e f ore us a n d a ss e s see f ile d C r oss O b j e cti on .
5. We sh a l l fi r st ta k e up Re ve n ue 's a ppe a l in IT A No. 1 09 /C hd /20 1 7.
6. Gr ou nd N o.1 r a is e d b y the Re ve n ue re a d s a s un de r :
"1. That the Ld.CIT(A)-5, Ludhiana has erred in law and on facts in deleting the addition of Rs.62,59,524/- not appreciating the fact that the G.P. rate shown by the assessee at 1.68% is very much on lower side vis-a-vis previous years and also that other traders in the similar business and in the same area have also shown G.P. rate of more than 5%. The assessee failed to provide the carat wise details of opening stock of gold/diamond jewellery, purchase/sale of gold jewellery and closing stock of gold jewellery/ produce stock register/sales bills with complete narration in respect of same."
7. B ri e f fa c ts re l a ti ng t o t he i ss ue a r e th a t the As se s si ng O ff i ce r re je c te d th e bo oks of a ccou nts u /s 1 4 5( 3 ) an d ma d e a d d it ion of Rs . 62 , 5 9, 5 24 /- on a c cou nt of l ow gr oss p r ofi t ra t e . Th e p e r us a l of t he a sse ss me n t or d e r re ve a l s th a t t he As se s si ng O ff i ce r h a d r e cord e d t he fa c t th a t th e a sse sse e h a d sh ow n a gr os s p ro fi t of Rs . 3 1 ,7 1 ,1 1 8 7- on a t ur n ove r of R s. 1 8 ,9 5 ,3 1 ,6 6 6 7 /-, gi vi ng G P r a te of 1. 6 8 %. The As se ssi n g O f fi ce r me n ti one d tha t t o ve r i fy the sa me , the a ss e ssee wa s r e q ue ste d to f il e th e c a ra t wi s e de ta i ls of O p e n in g S tock , p u rc ha s e /s a le of je we lle ry a nd C l osi ng S toc k . I n re sp on se to th e sa me t he a ss e s see sub mi tte d t ha t n o s uch ca r a t w i se de tai l s cou l d be ma d e a va i l a b le a s t he b ook s of a cco un ts d id no t c on ta in su ch 5 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 d e ta i l s. The A ss ess in g O ff i ce r a l so h ig hl i ght e d the fa c t th a t on so me b i ll s the amou nt ch a r ge d w a s ve r y le ss a s comp a r e d to th e r a te s of 2 2 ca r a ts of j e w e ll e r y. Th e sa i d a l l e ga ti on w a s r e p l ie d to b y the a ss e s see b y s ubmi tti ng tha t th e j e we l le r y s old co ul d be l e ss tha n 2 2 c a ra t s w h ic h w a s not a cc e p te d b y t he As se ssi n g O f fi ce r on t he gr ou nd th a t t he a s se sse e h a d s old j e we l le r y of 2 2 ca r a ts onl y. The A sse ssi n g O ff ice r on the b a sis of a b ove me nti one d ob se r va ti on s r e je c te d the b ook s o f a cc oun ts un d e r se ct io n 1 4 5 (3 ) of t he Ac t a n d th e r e a f te r e st ima t e d G P r a te on the sa le of j e we l le r y i te m a t 6 % a n d on th e s a l e of p ure gol d a t 3 % ,ma k i ng a n a d di ti on of Rs .6 2 ,5 9 , 52 4/- on a ccou nt of l ow gr oss p r ofi t r a te sh ow n b y the a s se s se e .
8. Th e Ld .C I T( A ) de ci d e d b oth t he i ss ue s of r e je cti on of b ook s of a c cou nt a n d a d d iti on b y e s tima ti on of G P r a t e i n fa v our of th e a sse ssee on f in d in g th a t i d e n ti ca l i ss ue h a d b ee n de ci de d i n a ss e s sme n t ye a r 20 0 9 -1 0 i n th e ca se of the a s se s se e b y CI T(A ).
9. B e f ore u s a t the ou tse t i tse lf , the Ld . cou ns e l f or a ss e ssee p oi nte d ou t th a t t he or d e r pa ss e d by th e Ld .C I T(A ) for a ss e s sme n t ye a r 20 0 9 -1 0 , fol l ow in g wh i ch th e issu e ha d be e n d e c ide d in f a vo ur o f the a s se s se e i n the imp u gn e d ye a r , h a d b ee n u phe l d b y the I . T. A. T. in th e a p pe a l f ile d b y the Re ve n ue a ga i n st t he or de r of th e C I T( A) . O u r a tte n ti on w a s dr a w n to t he or d e r p a s se d by the I . T. A. T. f or th e s a id ye a r in I TA 6 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 N o. 8 47 /C h d /20 1 4 d a te d 1 3 .1 . 201 7 mor e s p e ci f ic a ll y t o p a ra 5 (i ) & 6 a s un d e r:
"5(i) In assessment year 2009-10, revenue has raised sim ilar ground No. 1 challe nging the deletion of additio n of Rs. 58,09,670/-. It is no ted in the impugned order that Assessing Off icer has applied g r o s s p r o f i t r a t e @ 6 % o f t h e t o t a l s a l e s o f j e we l l e r y items and gross prof it rate of 3% on pure gold sales without recording any basis to adopt the s ame and without conf ronting assessee with the proposed addition of comparative gross prof it rate . The Assessin g Off ic er mad e this ad di tion o n ac coun t of lo w gross prof it rate. T h e l d . C IT ( A p p e a l s ) n o t e d th a t i t is a f act th a t same Assessin g Off ic er has a c c e p t e d t h e g r o s s p r o f i t r a t e s h o wn b y t h e asse ssee o n th e basis of the books of account maintained by him f or assessment year 2008-09. The f al l in gross prof it ra te to 1. 58% d urin g th e year under consideration is attr ibu table to the f act of i n c r e a s i n g g o l d p r i c e b e c a u s e o f wh i c h we i g h t e d average cost of purchases adopted by the assessee l e a d s t o l o we r G P r a t e . H o we v e r , t h e m e t h o d o f accounting in th e event of f all in gold price, in any p a r t i c u l a r y e a r wo u l d l e a d t o n o r m a l l y h i g h g r o s s p r o f i t r a t e a s w e l l . T h e l d . C IT ( A p p e a l s ) , t h e r e f o r e , f o u n d t h a t i n t h e s e c i r c u m s t a n c e s , f a u l t canno t be f ound wi th the method o f a c c o u n t i n g a d o p t e d b y t h e asse ssee as f or the imme diate preceding year, the gro ss prof it rate has been f ound to be satisf actorily wo r k e d o u t b y t h e A s s e s s i n g O f f i c e r . I n a s s e s s m e n t year 200 8- 09 , A ssessing Of f icer mad e addition of R s . 1 7 , 6 8 , 7 9 3 / - o n a c c o u n t o f j e we l l e r y m a k i n g charges and this addition f or the year under consideration has not been made f or no reasons spe cif ied in the assessment order. T he order of the A s s e s s i n g O f f i c e r wa s , t h e r e f o r e , a r b i t r a r y t o h o l d d i f f e r e n t v i e w i n t wo a s s e s s m e n t y e a r s . A s s e s s i n g O f f i c e r d i s a l l o we d t h e a m o u n t b u t i n t h i s y e a r Assessing Off icer made addition on account of lo w gross prof it rate. T he rejectio n of the boo ks of ac count h as n ot bee n f ou nd jus tif ie d. The ld. C IT ( A p p e a l s ) , t h e r e f o r e , f o u n d t h a t s i n c e t h i s a d d i t i o n i s m a d e wi t h o u t g i v i n g o p p o r t u n i t y t o t h e a s s e s s e e , t h e r e f o r e , s u c h a d d i t i o n i s n o t wa r r a n t e d and acco rdingly, deleted the addition.7 ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13
6. A f t e r c o n s i d e r i n g r i v a l s u b m i s s i o n s , we d o n o t f ind merit in th is grou nd of appeal of the revenue. This addition is made merely on account of lo w GP r a t e . H o we v e r , t h e l d . C I T ( A p p e a l s ) d i d n o t j u s t i f y the rejection of the books of account under section 1 4 5 ( 3 ) o f t h e In c o m e T a x A c t o n wh i c h n o s p e c i f i c ground have been raised by the revenue. In preceding assessme nt year 2008-09, on the basis of same me th od of acc oun tin g, th e Assess in g Of f icer accepted the GP rate disclosed by the assessee, th eref ore, Asse ssin g Of f icer shou l d f ollo w rule of consistency and on the same method of accounting, merely on lo w GP rate, such addition should not be made. Since the assessee maintained the books of account on the same accounting me thod as of the preceding assessment year as well as in asse ssment year under appeal, theref ore, there was no basis f or making the addition against the a d d i t i o n p a r t i c u l a r l y wh e n n o s p e c i f i c d e f e c t s h a v e bee n pointed out in m ain tenance of the books of a c c o u n t a n d t h a t l d . C IT ( A p p e a l s ) d i d n o t a p p r o v e re jec tion of th e books of accoun t. In t h e s e c i r c u m s t a n c e s , we d o n o t f i n d a n y i n f i r m i t y i n t h e order of the ld. CIT(Appeals) in deleting the addition. T his ground of appeal of the revenue is also dismissed."
10. Th e Ld . DR c onc e d e d t ha t i de nt ic al i ssu e ha d be e n d e c ide d i n fa v our of the a sse ssee for a sse ss me n t ye a r 2 00 9 -1 0 b y t he I . T.A . T. , th oug h he he a vi l y re lie d up on t he or de r of th e A. O.
11. We ha ve he a r d t he r i va l co nte nti on s a n d p e ru se d the or d e r s of t he a uth or i ti e s be low a s a l so t he or de r of the I . T.A . T. p a ss e d i n the c a se of the a s se s se e f or a s se ssme nt ye a r 20 0 9 -1 0 r e fe r re d to be fore u s. On g oing th r ough the o rd e r of t he I . T.A . T. , we f in d th a t i n a ss e ssme n t ye a r 2 00 9-1 0 al so t he b ook s o f a c cou nt of t he a sse ssee ha d b ee n re je cte d by th e A .O. u/s 1 4 5( 3 ) of t he Act for t he ide nti ca l re a s on tha t th e ca r a t w i se de ta i ls of the je we l le r y h a d no t b ee n ma i nt a in e d b y the 8 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 a ss e s see a n d a p p l yi ng th e G P r a te of 6 % on the t otal s a le s of j e we l le r y ite ms a n d 3 % on p u re g old sol d , th e p r ofi t of t he a ss e s see h a d bee n e st ima t e d by t he A .O . Th e CI T(A h a d se t a si d e t he or de r of th e A .O . rej e c tin g the b ooks o f a c cou nt f in d in g n o se r i ous d e f e c t p oi nted ou t b y th e A . O . con si d e r i ng th e fa c t th a t othe r w ise the a s se sse e h a d ma i n ta in e d comp l ete q u a nti ta ti ve de tai ls i n r e s pe ct of a l l i te ms sol d b y i t i . e . p ure gol d j e we l le r y an d d ia mo nd i tems a nd n oti n g th a t i t w a s not f e a si b le to ma i nta i n ca r a t w is e de ta i l. Th e C I T( A) fu r th e r h a d h e l d tha t the e st ima ti on of gr os s p r of it w a s a lso w i th out a ny b a si s a n d the ass e ssee h a d e xpla in e d fa l l i n gros s p r ofi t of 1 .5 8 % a s b e in g a t tr ib u ta b le to th e f a ct of i ncre a se i n gol d p r ic e . Th e I . T. A. T. , w e ha ve not e d , up he l d th e or de r of t he C I T( A ) on f i nd i ng th a t n o g r o un d h a s b e e n r a is e d by t he Re ve n ue a ga i ns t r e je c tio n of b ooks of a cc oun t a n d fu rt he r t hat i n a ss e s sme n t ye a r 2 0 08 -0 9 the GP r a te d i scl os e d b y the a ss e s see h a d bee n a cc e p te d a nd , th e re f ore , f ol lo wi ng t he r ule of co ns is te n cy, the G P r a te of the impu gn e d ye a r a ls o ou gh t to be a cc e p te d. Th e I TA T h e l d th a t re je ct ion of b ook s me r e l y on t he b a si s of l ow G P r a t e w a s n ot ju sti fie d.
Th e fa c ts i n t he p r e se n t ca se , a dmi tte dl y, a r e i de nt ic a l to tha t in a s se s sme nt year 2 0 09 -1 0 wit h th e b oo ks ha v i ng b e en r e je c te d on a c cou nt of n on ma in te n a n ce of re co rd of stoc k of i te ms so ld ca r a t wi se a n d GP r a te of 3 % o n gol d s o ld a n d 6 % of 9 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 j e we l le r y ite ms b e i ng e sti ma te d w ith ou t a n y ba s is . B e f ore us a l so th e Re ve n ue h a s n ot r a is e d a ny g ro un d i n r el a ti on to t he i ssu e of r ej e cti on o f b ook s of a c co u nts . N o d is ti ng u is hi n g f a cts h a ve bee n b r ought to our not ic e b y the Ld . D R. Th e i ss ue th e re f ore , we hol d is sq u a r e l y c ove re d by the or d e r o f the I . T.A . T. i n the p r e ce d in g ye a r , foll ow i ng w hi ch w e up ho ld t he or d e r of t he C I T( A) d e le tin g th e a d d it ion ma d e of Rs .6 2 ,5 9 ,5 2 4 /- b y e sti ma ti n g GP r a te . Gr ou nd N o. 1 ra i s e d by th e Re ve n ue i s the re f ore d i smi ss e d.
12. Gr ou nd N o.2 r a is e d b y the Re ve n ue re a d s a s un de r :
"2. That the Ld.CIT(A)-5, Ludhiana has erred in law and on facts in deleting the addition of Rs.95,270/- on account of repair charges, not appreciating the fact that as per sales bills or books of accounts, the assessee has not shown this amount as received from the customers which are difficult to believe because no prudent businessman shall omit to receive the charges from his customers which has been incurred by him."
13. Th e i ss ue in th e a b ove gr oun d per ta i ns to d i sa l lo wa n ce of r e p a i r ch a r ge s of Rs. 9 5 ,2 7 0 /- on old je we lle r y whi ch ha d be e n d is a l low e d by the A sse ss in g O f fice r on the gr ound t ha t the se d i d no t f i nd me nt ion i n th e sa le s bi ll .
14. Th e Ld. C I T( A) n ote d th a t th i s i ss ue w a s de ci de d b y t he h is P r e de ce s sor i n fa vour of the a sse sse e f or A .Y . 2 0 0 9 ; 1 0 on f in d in g tha t th e Ass e s si ng O ff ice r h a d ma d e the a dd i ti on si mp ly on t he g ro un d th a t i mpu g n e d r e pa i r ch a r ge s d i d n ot f in d me n ti on in the s a le s b i ll a n d ha d i gn ore d th e b oo ks of 10 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 a cc oun ts w h e re in a n e la bor a t e sys te m of j e w e ll e ry r e ce i ve d on r e p a i r ha d be e n cr e a te d s o a s to a cco un t f or th e je we lle r y r e ce i ve d on re p a ir a nd s e n t fo r re p a ir to di f fe re nt pe r son s. The C I T( A ) no te d t ha t th e ch a r ge s s o re ce i ve d h a d be e n a c cou nte d f or a nd on l y ch a r ge s i n e xce ss pa i d on j e w e l le ry s old b y t he a ss e s see ha d bee n c la ime d a s a n e xpe n se . Th e se ch a r ge s we re , th e re f ore , d i ffe ren t fr om je we lle r y ma k i ng ch a r ge s f or w hi ch the As se ssi n g O ff icer ha d ma d e a d d i tio n i n th e A sse ss me nt Ye a r 2 0 08 -0 9 . The A sse ss in g Of fi cer , he n ote d , ha d t he re fore co ns id e re d b oth wi th the sa me a r gu me n t. Th e Ld. C I T( A) , f oll ow i ng t he or de r of h is Pr e de ce ssor de le te d t he a d d i ti on so ma d e on fi nd i ng t ha t i d e n tic a l i ss ue w a s de ci de d in fa v our of th e a sse ssee b y the CI T(A ) i n a ss e ss me n t y e a r 2 0 09 -1 0.
15. B e f ore u s a t the ou tse t i tse lf , the Ld . cou ns e l f or a ss e ssee p oi nte d ou t th a t t he or d e r pa ss e d by th e Ld .C I T(A ) for a ss e s sme n t ye a r 20 0 9 -1 0 , fol l ow in g wh i ch th e issu e ha d be e n d e c ide d in f a vo ur o f the a s se s se e i n the imp u gn e d ye a r , had b ee n u phe l d b y the I . T. A. T. in th e a p pe a l f ile d b y the Re ve n ue a ga i n st t he or de r of th e C I T( A) . O u r a tte n ti on w a s dr a w n to t he or d e r p a s se d by the I . T. A. T. f or th e s a id ye a r in I TA N o. 8 47 /C h d /20 1 4 d a te d 1 3. 1 .2 01 7 mor e sp e c if ica l ly to p a r a 8 (i i ) & 9 a s un d er :
"8(ii) In assessment year 2009-10, revenue challenged the de letion of addition of Rs. 98,436/-. T h i s a d d i t i o n p e r t a i n s t o d i s a l l o wa n c e o f r e p a i r 11 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 charges on old j e we l l e r y , which have been d i s a l l o we d b y t h e A s s e s s i n g O f f i c e r o n t h e g r o u n d that the y do not f ind mention in the sale bills. The ld. CIT(Appeals) f ound that the charges so received have been accounted f or and only charges in excess p a i d o n j e we l l e r y s o l d b y t h e a s s e s s e e h a v e b e e n claimed as expenses. T he ld. C IT(Appeals) f ound that on the same, he has deleted the additio n in asse ssment year 2008-09 and accordingly delete d the additio n.
9. A f t e r c o n s i d e r i n g r i v a l s u b m i s s i o n s , we d o n o t f ind an y merit i n th is ground of appeal of revenue . The Assessing Off icer did not poin t ou t an y spe cif ic def ect in main tenance of the books of account by the asse ssee o n this ite m. T he assessee has properly re corded the net amount of repair charges of both the counts in books of acco unt. The ld.
C IT ( A p p e a l s ) delete d the similar addition in a s s e s s m e n t y e a r 2 0 0 8 - 0 9 a n d we h a v e c o n f i r m e d his f indings. This ground of appeal of the revenue is, theref ore, identical as have been considered in assessment year 2008-09. T his ground of appeal of the revenue is accordingly dismisse d."
16. Th e Ld . DR c onc e d e d t ha t i de nt ic al i ssu e ha d be e n d e c ide d i n fa v our of the a sse ssee for a sse ss me n t ye a r 2 00 9 -1 0 b y t he I . T.A . T. , th oug h he he a vi l y re lie d up on t he or de r of th e A. O.
17. We ha ve he a r d t he r i va l co nte nti on s a n d p e ru se d the or d e r s o f the a uth or it ie s be l ow . We ha ve a l so gon e th r oug h the or d e r of the I . T.A . T. p a s se d in the c a se o f the a sse ssee f or a ss e s sme n t ye a r 2 00 9 -1 0 r e fe r red to b e f ore us a n d fi n d tha t i de nt ic a l d i sa l lowa nce of re p a i r ch a r ge s pe rt a in ing to j e we lle r y w a s di sa l l ow e d on th e gr oun d th at t he y d id not fi nd me n tio n i n th e sa le b i l ls . Th e Ld .C I T( A ) i n th a t ye a r ha d d e le te d t he d is a l low a n ce on no ti ng tha t th e se c ha r ge s s o r e ce ive d ha d be en a cc oun te d f or a nd on l y ch a r ge s in e xce s s p a id on ol d j e we lle r y 12 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 h a d be e n cl a i me d a s e xp e n se s. The I . T.A . T. up he ld t he or de r of th e CI T( A) n oti n g t ha t th e A. O. d i d n ot po in t ou t an y s p e ci fi c d e fe ct in the ma i n te na n ce of b ook s of a cc oun t b y th e a sse ssee on th i s i te m a n d th a t the a sse ssee ha s p r ope r l y r e cor de d the n e t a mou nt of re p a ir c ha r ge s o n b ot h c oun ts in i ts b ook s of a cc oun t.
S in ce the is sue r a i se d be f ore us is i d e n ti ca l to th a t in a ss e s sme n t ye a r 20 0 9 -1 0 re la t in g to di s a ll ow a n ce of re p a i r ch a r ge s on ol d je we lle r y a n d t he p le a d i ngs o f the a sse ssee i n th is r e ga r d a r e i de nt ic a l to t ha t i n A. Y 2 0 0 9-1 0 th a t p ro pe r a cc oun ti ng of a l l c ha r ge s pa i d a nd r e c ove re d f r om c us tome r s on a cc oun t of o ld j e we l le r y re ce ive d fo r r e p a i r s h a d b ee n d one , w hi c h h a s r e ma i ne d u nc on tr ove rt e d be fo re us , An d fu r the r si n ce the Ld . D R ha s n ot b ro ught a ny d i sti n gui sh i ng f a cts to ou r n oti ce , t he d e c is io n re nde red i n a s se s sme n t ye ar 20 0 9 -1 0 w i ll a p p l y t o th e p re se nt ca se a lso , fol l ow in g wh i ch w e de le te th e di s a ll ow a n ce of r e p a i r c ha r ge s a moun ti ng to Rs .9 5 ,2 7 0 /-.
18. Gr ou nd of a p p e a l N o. 2 r a i se d b y the Re ve nue is d ismi sse d .
19. Gr ou nd of a p p e a l N o.3 r a i se d b y the R e ve nue re a d s a s un d e r :
"3. That the Ld.CIT(A)-5, Ludhiana has erred in law and on facts in restricting the addition of Rs.2,98,009/- to Rs.1,17,880/- on account of unaccounted sales as per seized record without appreciating the fact that 17% G.P. on the sales of Rs.2.98,009/- comes out to be 13ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 Rs.50,662/- and remaining amount of Rs.2,47,347/- is the total undisclosed investment in the unaccounted purchases u/s 69."
20. B ri e f f a cts r e l a ting t o th e i ss ue a r e tha t th e A. O. ma d e a d d it ion of Rs . 2, 9 8, 0 0 9/- on a ccou nt of p ro fi t on u na c cou nte d sa l e s . The A. O . me n tio ne d tha t d ur i ng th e se a r c h at the b us in e s s pre mis e s of the a sse ssee a n d re s ide ntia l p r e mi se s of th e D i re cto rs , c er ta i n in cr i min a ti ng d ocu me nt s w e r e fou nd a n d se ize d i n va r i ous A nn e xu re s l i ke A -0 5 , A-0 6 , A 16 & A -2 5 . The A. O . fu r th e r me nti on e d tha t on v e r i fi ca t ion , i t wa s f ou nd tha t so me sa l e s r e cor de d i n th e d ocu me n ts w e re e nte re d i n t he b ook s of a cc oun t s b u t ce rt a in sa l e s a s p e r de ta i l s gi ve n i n t he a ss e s sme n t or der we re not f ou nd e n te re d i n th e b ook s of a cc oun ts . Th e tota l of su ch u na c cou nte d sa le s c a me to R s. 2 ,9 8 , 00 9 /-. Wh e n con fr on te d , t he a s se sse e st a ted th a t the se w e re r ou gh c a lcul a ti on s and e sti ma te s . Th e reply of the a ss e s see w a s n ot f oun d con vi nc i n g a n d th e A. O . m a d e a dd i ti on of Rs. 2 ,9 8 ,0 0 9 /- sp l itt in g the amou nt a s on a cc oun t of g r oss p r ofi t th e re o n e s ti ma te d @ 1 7% of sa l e s a mo un tin g to R s. 5 0 ,6 6 2 /- a n d t h e b a l a nce be i ng i nv e st me nt f or the p u rp ose of un a cc oun te d sa les a t Rs . 2 ,4 7 ,3 4 7 /- .
21. Th e Ld. C I T( A) r e str i cte d the a d d it ion o n a c cou nt of gr oss p r ofi ts o n un a cc oun te d sa le s @ 6 % a moun ti ng to R s.1 7 , 88 0 /-, w hi l e a d di ti on ma d e on a cco un t of i nv e stme nt ma d e f or t he p ur p ose of u na ccou n te d s a le s w a s re str i cte d to Rs.1 l a c h old i ng 14 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 1 /3 r d of t he tota l s a le s to be p r ope r e s tima te o f the i nv e st me nt ma d e. A cc or di n gl y, th e a sse ssee w a s gr a n te d a re l ie f of R s. 1, 8 0 ,1 2 9/ -, w hi l e a dd i ti on of Rs. 1 ,1 7 , 8 8 0 /- was su sta i n e d . I t is a ga i n st t he a dd i ti on d e le te d by the CI T(A ) tha t th e Re ve n ue h a s come up in a pp e a l b e f ore u s.
22. At th e o uts e t it se l f , the Ld . c oun se l for a ss e ssee p oi nte d ou t tha t t hi s i ss u e h a d a l so b ee n d e a l t w it h b y th e I . T.A . T. i n th e ca se of the a sse ssee i n a s se ssme nt ye a r 20 09 -1 0 i n t he C r os s O b j e cti on f i le d b y t he a ss ess ee i n C .O . N o.49 /C h d /2 0 1 4 d a te d 9 . 12 . 2 01 6 . I t w a s p oin te d o ut t ha t i n a ssess me n t ye ar 2 0 09 -1 0 th e Ld .C I T( A ) h a d u p he l d th e e n ti re a d diti on ma de b y th e A. O . on a cco un t of u na c cou nte d s a le s d is cov e re d d ur i ng se a r ch re l a ti ng to th e g ro ss p r of it a nd u na c cou nt e d i nve stme nt ma d e f or the same . I t w a s p oi nte d out t ha t t he I . T. A. T. h a d up h e l d the a dd i tion ma d e o n a ccoun t of gr os s pr ofi t on a c cou nt of un a cc oun te d s a le s, wh i le the a d d iti on ma d e of i nve stme nt ma d e th e re t o h ad b ee n de le te d . Ou r a t te n ti on wa s d r a w n to p a r a N o s.5 to 6 .1 o f the or de r a s un d e r :
"5. On ground No. 6, assessee challenged the o r d e r o f l d . C IT ( A p p e a l s ) i n m a i n t a i n i n g t h e a d d i t i o n of Rs. 1,63,950/- under sectio n 69 of the Income Tax Act. During the course of search in the premises of the assessee, certain incriminating documents were f ound and seized. One of these a n n e x u r e s i s A n n e x u r e A - 2 0 a s p e r wh i c h s o m e sales are entered into the books of account which have been verif ied du ring th e c ou rse of examin ation of the books of account and so me of the sales are n o t e n t e r e d i n t o b o o k s o f a c c o u n t wh i c h a r e 15 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 tabulated in para 5 of the assessmen t order totaling t o R s . 1 , 6 3 , 9 5 0 / - . T h e s a m e we r e c o n s i d e r e d a s undisclosed sales in a sum of Rs. 1,63,950/-. The Assessin g Off ic er d id no t ac cept expl an a tion of th e asse ssee that these are calculatio ns on estimate . T h e s a m e we r e , t h e r e f o r e , t r e a t e d a s u n a c c o u n t e d sales out of the books of account of the assessee. The Assessin g Off ic er al so noted th at f or makin g unaccounted sales, assessee has to make investment in purchases which are also u n d i s c l o s e d . T h e G P r a t e o f 1 7 % wa s a p p l i e d a n d to tal investment in purchases was de termined at Rs. 1,36,078/- and balance of Rs. 27,872/- was considered as busine ss income of the asse ssee. The ld. C IT ( A p p e a l s ) conf irmed the addition and dismissed this ground of appeal of the assessee.
6. A f t e r c o n s i d e r i n g r i v a l s u b m i s s i o n s , we a r e o f the vie w additio n on account of inve stmen t in a sum of Rs. 1,36,078/- is unjustif ied. During the course of search, ce rtain incriminating documents were found sho wing th at certain s ales have not been entered into the books of account of the assessee, t h e r e f o r e , u n a c c o u n t e d s a l e s we r e f o u n d i n a s u m o f Rs. 1,63,950/-. T he to tal sales could not be treated as prof it of the assessee. T he ld. counsel f or the asse ssee admitted that prof it rate may be applie d against the se sales which Asse ssing Off icer has applied in this case @ 17% and treated Rs. 27,872/- as business income. The order of authorities belo w to th at ex tent is, theref ore, conf irmed an d add ition of Rs. 27,872/- is conf irmed.
6 ( i ) H o we v e r , a s r e g a r d s t h e a d d i t i o n o f R s . 1,36,078/- on account of investment in purchases, n o i n c r i m i n a t i n g m a t e r i a l wa s f o u n d t o m a k e t h i s addition. Further, it is presumption of the au thoritie s below only that f or making unaccounte d sales, the assessee has made unaccounte d investments in the purchases. Since no mate rial is found during the co urse of search that asse ssee made any investment in purchases, theref ore, on m e r e p r e s u m p t i o n , s u c h a d d i t i o n i s n o t wa r r a n t e d . The orders of authorities belo w to that exten t are s e t a s i d e a n d we d e l e t e t h e a d d i t i o n o f R s . 1,36,078/-. T his ground of Cross Objection is par tly."16 ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13
23. Th e Ld . DR c onc e d e d t ha t i de nt ic al i ssu e ha d be e n d e c ide d p a r tl y i n f a vou r of th e a sse ssee fo r a ss e ss me n t year 2 0 0 9-1 0 by th e I . T.A . T., thou gh h e he a vi ly re l ie d up on the or der o f the A .O .
24. We ha ve heard th e r i va l con te nti on s and ha v e gone th r oug h th e or de r of the I . T. A. T. a n d w e f in d th a t th e I . T.A . T. f or a s se ssme nt ye a r 2 0 0 9 -1 0 h a d u p he l d onl y a d d i tio n on a cc oun t of gr os s p r of it e a rne d on un a cc oun te d sa l e s , de le ti ng th e a d d i tio n ma d e on a cc oun t of inv e st me n t the re to, on f i nd i ng th a t n o i nc ri mi na ti n g ma te ri a l w a s f oun d d ur i ng se ar ch to ma k e thi s a d d it ion .
Th e fa c ts i n th e p re se nt ca se a r e ide nti ca l t o th a t i n a ss e s sme n t ye a r 2 00 9 -1 0 a n d th e Ld. DR h a s no t b r ou ght to ou r n oti ce a ny d i sti n gui sh i ng f a cts . B u t a t th e same ti me ,w e h a ve a ls o n ote d th a t th e re i s n o b a s is me n ti one d b y t he A. O f or a p p ly in g GP r a te of 1 7 % on th e u na ccou nte d sa l e s. O n t he co ntr a r y w e fi nd th a t t he AO ha d a p pl i e d a G P r a te of 6 % on j e we l le r y sol d b y th e a ss e ssee a f te r re je c ti ng th e B ook s of t he a ss e s see . The re fo re we d o n ot fin d a n y in f ir mi ty i n the o rde r p a ss e d by t he CI T( A ) r e s tr i cti ng t he a d d i tio n ma d e on a c cou nt of p r ofi ts e a r n e d on u na c cou nte d sa l e s to R s. 17 , 880 /- a pp l yi ng G P r a te of 6 %. F ur th e r si n ce no i nc r imi na tin g m a te r i a l vi s a vi s i n ve s tme n t ma d e i n u na c cou nte d s a le s w a s f ou nd d ur i ng se a r ch i n t he p rese nt ca se a l so , the de ci si on of the I . T.A . T. f or a ss e s sme n t ye a r 2 0 0 9- 10 w i l l squ a re ly a p p ly , foll ow in g w h i ch 17 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 w e up ho ld the ord e r of the CI T(A ) d e le ti n g the a d diti on ma d e on a cc oun t of in ve stme nt i n u n a ccoun te d sa le s to th e e xte n t of Rs .1 , 47 , 34 7 /-. I n e ffe ct we u p hol d th e o rde r of th e Ld .C I T( A) d e le ti n g the a d d it ion ma d e on a cc oun t of un a ccoun te d sa le s of Rs .1 , 80 , 12 9 /-.
25. Th e gr oun d N o. 3 r a is e d by t he Re ve n ue is th e re fore d is mi sse d.
26. I n e f fe ct the a p pe a l of the Re ve n ue i s d is mis se d .
27. We sh a l l now ta k e u p C .O .N o. 13 /C hd /2 01 7 fi l e d b y t he a ss e s see .
28. Th e on ly gr ou nd r a is e d b y the a sse ssee re a d s a s un d e r :
"1. That the learned CIT(A)-5, Ludhiana has erred by not deleting the entire amount of addition on account of deemed investment for unaccounted sales and confirm the addition amounting to Rs. 1,00,000/- as investment on estimate basis, l/3rd of total unaccounted sales, along with GP amounting to Rs. 17880/- @ 6% on unaccounted sales which was against the law as well as against the facts of the case."
29. Th e a s se s se e in th e a b ove gr ou nd ha s ch a ll en ge d the co nf ir ma ti on b y th e CI T( A) of a d d it ion ma d e on a ccou nt of i nv e st me nt i n una cc oun te d sa le s a mo un tin g to Rs. 1 l a c.
30. We ha ve de a lt w it h t hi s i ss ue in g ro un d N o.3 o f R e ve nue 's appeal in I TA N o .1 0 9 /C hd /2 01 7 , we h a ve no te d th a t t he I . T.A . T. i n a s se ssme nt ye a r 2 00 9 -1 0 ha d de le te d the e nt ire a d d it ion ma de o n a cc oun t of i nve st me nt ma d e i n u na c cou nte d 18 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 sa l e s h ol di n g th at the sa me w a s not su sta i n a bl e in th e a b se n ce of a n y i nc r i mi n a tin g ma te r i a l fo u nd d u r in g s e a r ch r e l a ti n g to th e sa me .
Si nc e i n the imp u gne d ye a r a l so th e re i s n o me nti on of any i nc r imi na ti n g ma t e r ia l f ou nd p e r ta i n in g to i nv e stme nt ma d e f or th e p ur p ose of s a le m a d e ou tsi de the b ook s of t he a ss e s see a n d e ven t he Ld . D R h a s no t b r oug ht to our no tic e a ny su ch fa c t, th e or d e r p a sse d by the I . T. A. T. i n a s s e s sme n t ye ar 2 0 09 -1 0 w i ll sq ua r e l y a p p l y to the i mpu gn e d i ssu e , fo ll ow i ng w hi c h w e de le te th e a dd i ti on u ph e l d b y the C I T( A ) of Rs. 1 l a c on a c cou nt of i nv e s tme n t ma d e i n un a cc oun te d sa les .
31. Gr ou nd N o.1 r a is e d b y the a sse ssee i s a ll owe d .
32. I n e ffe c t the C ros s O b je cti on f ile d by the a ss ess ee is a l lo we d .
33. We sh a l l now ta k e u p C .O .N o. 14 /C hd /2 01 7 fi l e d b y t he a ss e s see pe r ta i n in g to A.Y 2 01 1- 12 .
34. At th e ou tse t i t w a s p oi n te d out tha t th e a p p e al of t he Re ve n ue fo r the i mp ugn e d ye a r i n I TA N o .1 1 0 /C hd /2 01 7 w a s d is mi sse d on a c cou nt of th e ta x e ff e c t i n vol ve d be ing b e l ow t hat p r e sc r ibe d b y the C B D T C i r cu la r N o. 3 of 2 01 8 da t e d 11 -0 7 -1 8 f or f il i ng a p p e a l s to the I TA T, vi d e or de r d a te d 2 1 -01-1 9 . 35 . Gr ou nd N o.1 r a is e d b y the a s se s se e re a d s a s un de r : 19 ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13
1. That the learned CIT(A)-5, Ludhiana has erred by not deleting the entire amount of addition on account of deemed investment for unaccounted sales and confirm the addition amounting to Rs. 3,30,000/- as investment on estimate basis, l/3rd of total unaccounted sales, along with GP amounting to Rs. 53863/- @ 5.49% on unaccounted sales, which was against the law as well as against the facts of the case.
36. It w a s c ommon gr ou nd th a t the issu e ra i se d i n thi s C r oss O b je cti on w a s i de n ti ca l to th a t r a is e d by t he a sse s se e in i ts C r os s O b j e ct ion N o.1 3 /C h d /2 0 1 7 de a lt w i th us a bo ve . O ur f in d in gs gi ve n the re i n a t p a r a 3 0 of ou r or de r wi l l a p p ly to thi s gr ou nd w i th e q ua l fo rc e f oll ow i ng wh i ch w e d e le te the a dd i ti on ma d e of Rs .3 , 3 0, 0 00 /- on a c cou nt of in ve s tme n t in un a cc oun te d sa les .
37. I n e f fe ct the C r oss O b je cti on of the a s se s se e i s a l low e d .
38. We s ha l l now ta k e u p a p pe a l of t he Re ve nue i n ITA N o .2 45 /C h d /2 0 1 7 p e r ta i ni n g t o A. Y 20 12 -1 3.
39. Gr ou nd N o.1 r a is e d b y the Re ve n ue re a d s a s un de r :
"1. That the Ld.CIT(A)-5, Ludhiana has erred in law and on facts in deleting the addition of Rs.49,41,145/- not appreciating the fact that the G.P. rate shown by the assessee at 4.02% is very much on lower side vis-a-vis previous years and also that other traders in the similar business and in the same area have also shown G.P. rate of more than 5,49%. The assessee failed to provide the carat wise details of opening stock of gold/diamond jewellery, purchase/sale of gold jewellery and closing stock of gold jewellery/ produce stock register/sales bills with complete narration in respect of same."
40. It w a s com mon gr ou nd th a t t he is sue r a ise d i n the a b ove gr ou nd w a s id e nti ca l to th a t r a is e d i n gr oun d N o. 1 of t he 20 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 Re ve n ue s a p pe a l i n I TA N o.1 0 9 /C hd /2 0 1 7 a b ove . O u r de ci si on r e n de re d the re i n a t p a r a 1 1 of our or d e r w i ll a p p ly t o th is gr ou nd wi th e q ua l f or ce f ol low i ng w h ic h w e up h ol d th e o rd e r of th e CI T( A) o n th e i ss ue a n d d i smi ss th e gr oun d r a i se d b y t he Re ve n ue .
41. Gr ou nd N o.1 r a is e d b y the Re ve n ue i s di smi s se d .
42. Gr ou nd N o.2 r a is e d b y the Re ve n ue re a d s a s un de r :
"2. That the Ld.CIT(A)-5, Ludhiana has erred in law and on facts in deleting the addition of Rs.92,190/- on account of repair charges, not appreciating the fact that as per sales bills or books of accounts, the assessee has not shown this amount as received from the customers which are difficult to believe because no prudent businessman shall omit to receive the charges from his customers which has been incurred by him."
43. I t w a s com mon g r ou nd th a t th e i s sue r a is e d i n the a b ove gr ou nd wa s si m i la r to g r oun d N o. 2 r a i se d by the Re ve n ue in I TA N o. 10 9 /C h d /2 0 1 7 de a lt w ith b y u s a b ove . O u r de ci si on gi ve n the re i n a t p a r a 17 wi l l a p p l y to thi s gr ou n d w i th e q u a l f or ce fol l ow in g w hi ch w e u ph ol d th e or de r of t he Ld .C I T(A 0 d e le ti n g the d is a l low a n ce of re p a i r ch a rge s amo un ti ng to Rs .9 2 ,1 9 0 /-.
44. Gr ou nd N o.2 r a is e d b y the Re ve n ue i s di smi s se d
45. Gr ou nd N os. 3 r a is e d b y the Re ven ue re a d a s un de r :
" 3. That the Ld.ClT(A)-5, Ludhiana has erred in law and on facts in restricting the addition of Rs.14,11,093/- to Rs.5,55,030/- on account of unaccounted sales as per 21 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 seized record without appreciating the fact that 17% G.P. on the sales of Rs.14,11,093/- comes out to be Rs,2,39,886/- and remaining amount of Rs.l1,71,207/- is the total undisclosed investment in the unaccounted purchases u/s 69.
46. I t w a s com mon g r ou nd th a t th e i s sue r a is e d i n the a b ove gr ou nd wa s si m i la r to g r oun d N o. 3 r a i se d b y the Re ve n ue in I TA N o. 10 9 /C h d /2 0 1 7 de a lt with b y u s a b ove . O u r de ci si on gi ve n the re i n a t p a r a 24 wi l l a p p l y to thi s gr ou n d w i th e q u a l f or ce fol l ow in g w h i ch w e u ph old th e o rde r of the Ld .C I T(A ) r e s tr ic ti ng t he a d d iti on ma d e on a cc oun t of gr os s p r of it e a r ne d o n un a cco un te d s a le s to t he e xte n t of R s. 8 4 ,6 6 6 /- @ 6 % of sa l e s .
47. Gr ou nd N os. 3 r a is e d b y the Re ven ue i s di smi ss e d . 4 8 . Gr ou nd N o. 4 r a i se d by the Re ve n ue re a d s a s u nd e r
4. That the Ld.ClT(A)-5, Ludhiana has erred in law and on facts in restricting the addition of Rs.21,50,758/- made on account of G.P. on difference in stock sold out of the books to Rs.5,08,591/- ignoring the fact that the G.P. of the assessee has been determined at 17% as in earlier years for which departmental appeals are pending."
49. B ri e f l y s ta te d th e re wa s a shor ta ge of s tock of gol d j e we l le r y f oun d d u ri n g se a rc h a s comp a r e d to tha t r e co rde d in th e B ook s of t he a sse ssee w h ic h was va l ue d at Rs .1 , 26 , 51 , 5 20 /- . Tre a ti ng th e sa me a s s a l e s ma d e out si de t he B ook s of t he a ss e ssee , the A O ma de a d d iti on of Gr os s P r of it e a r ne d on the same e sti ma ti n g i t b y a p pl yi n g a r ate of 1 7 % on th e s a le s so tr ea te d. Th e L d . C IT( A) f oun d t h a t th e AO h a d 22 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 h ims e l f a pp l ie d a G P r a te of 6 % a f te r re je cti ng th e B ook s o f t he a ss e s see , a s a ga in st 4 .0 2 % sh ow n b y th e a sse ssee . The C I T(A ) th e re f ore a p p l ie d GP r a te of 4. 0 2%,h a vi n g d is mis s e d the a cti on of r e je c tio n o f B o ok s of a c cou nts b y th e AO a n d th u s r e str i cte d th e a d di ti on to Rs .5 , 08 , 5 91 /-
50. B e f ore us Ld . D R w a s u na b l e to con tr ove r t t he f a ctu a l f in d in gs of t he LD .C I T(A ) th a t the GP ra te sh ow n by t he a ss e s see w a s 4. 0 2 % . F ur th e r w e fi nd tha t th e Re ve nue h a s not r a i se d a ny gr ou nd a ga i ns t t he ac tio n of th e Ld .C I T(A ) se tti ng a si d e t he re je ction of B ook s of a c cou nt s of th e a s se s se e. Mor e o ve r we ha v e u p he l d t he ord e r of the Ld .C I T( A ) de le ti ng th e a d d i ti on ma de b y e st ima ti n g G P @ 6 % in G r oun d No. 1 r a i se d i n the p rese nt a ppe a l a s ab ov e . I n nu tshe l l th e B ook s of th e a s se sse e s ta n d a cce pte d . We the re f ore do not fi n d a ny i nf ir mi ty i n the or d e r of the Ld . C I T( A) e sti ma ti ng th e g r oss p r ofi t on sa le s ma d e ou tsi d e the B ook s b y a p p lyi ng G P ra te of 4 .0 2 % w hi ch c o m e s to Rs .5 ,0 8 , 591 /-
51. Gr ou nd of a pp e a l N o. 5 r a is e d by the Re ve n ue i s th e re fore d is mi sse d.
52. Gr ou nd N o.6 r a is e d b y the Re ve n ue re a d s a s un de r :
"5. That the Ld.ClT(A)-5, Ludhiana has erred in law and on facts in deleting the disallowance of interest of Rs.l5,18,1827- u/s 36(i)(iii) calculated at the rate of 12% on total unaccounted sales of Rs.l,26,51,520/- as the assessee has used the cash of unaccounted 23 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 sale for purpose other than his accounted business and paid interest to bank of Rs.29,49,436/- in accounted business."
53. B ri e f l y sta te d the AO me nt ione d tha t the a sse ss ee h ad us e d ca sh of u n a ccou nt e d sa le s fo r pu r po se s oth e r th an b us in e s s a nd on th e o the r ha nd pa i d i n te re s t to bank a mou nti n g t o Rs .2 9 , 49 , 43 6 /-. The r e fore he di sa l l ow e d i nte re st on un a cc oun te d sa l e s ( Rs. 1, 2 6 ,51 ,5 2 0 /-) a t the r a te of 1 2 % w hi c h ca me to Rs. 1 5 ,1 8 ,1 8 2 /-.
54. Th e Ld .C I T( A ) d e le te d the d i sa l l owa nc e hol d in g th at f or t he p ur p ose of di sa ll ow a nc e it has to be s how n t ha t i nte re st b e a r i ng fu nd s ha ve be e n u se d for n on b us in e s s p u rp o s e s. He f ur th e r note d tha t the re w a s i ncr e a se in sto ck of d i a mon d a n d si l ve r a n d a l so una c cou nte d re ce iv a b le s, w hi ch he he ld s howe d th e us a ge of f un d s f r om un a cco un te d s a le s i n th e bu si ne ss i tse lf .
55. B e f ore us Ld . D R w a s un a b le to contr ov e r t t he fa ctua l as w e l l a s le ga l fi n di n gs of the Ld .C I T( A ). I n v ie w of the s a me s in ce th e re i s a n u ncont r ove r te d fi nd in g of fa c t b y th e CI T(A ) tha t th e re w a s i nc rea se i n s tock of d i a mon d a n d s il ve r an d a l so un a cc oun te d re ce iv a ble s, we c oncur w i th the Ld . C IT( A) th a t t he i mpu gn e d f un d s w e re the re f ore use d i n th e bu si n e ss of t he a ss e s see onl y. Mor e o ve r the Re ve nu e h a s n ot b r oug ht a nyt hi ng on r e c or d e ve n be f ore u s s ho wi n g t he use r of the sai d f un ds f or n on-b u si ne ss p urp os e . We the re for e a gree w it h th e Ld .C I T(A ) 24 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 th a t t he re w a s no ba si s f or ma k i ng a ny d is a l low a n ce of in te re st u/s 3 6 (1 ) ( ii i ) in th e a fore sa i d fa cts a n d ci r cu ms tan ce s . The or d e r of t he Ld . C I T( A) on t he i mp ug ne d i ss ue i s th e re fore up h e l d .
56. Gr ou nd of a p pe a l N o .5 . r a i se d by the Re ve n ue is a cc or d in gl y di sm i ss e d .
57. I n e f fe ct the a p pe a l of the Re ve n ue i s d is mis se d .
58. We sh a l l now ta k e u p C .O .N o. 24 /C hd /2 01 7 fi l e d b y t he a ss e s see .
59. Gr ou nd N o.1 r a is e d b y the a sse ssee re a d s a s un de r:
"1. That the learned CIT(A)-5, Ludhiana has erred by not deleting the entire amount of addition on account of deemed investment for unaccounted sales and confirm the addition amounting to Rs.4,70,364/- as investment on estimate basis. l/3rd of total unaccounted sales, along with GP amounting to Rs.84,666/- @ 6% on unaccounted sales, which was against the law as well as against the facts of the case."
6 0 . I t w a s c omm on gr ou nd b e twe e n the p a r tie s tha t th e a b ove gr ou nd r a i se d in th i s C r os s O b j e ct ion i s si mil a r to gr oun d N o. 1 r a i se d b y the a sse ssee i n C .O . No.1 3 /C h d /2 0 1 7 . O ur f in d in gs gi ve n the re i n a t p a r a 30 wi l l a p p l y to thi s gr ou n d w i th e q ua l f or ce fol l ow in g w h i ch we a l l ow th e g ro un d r a is e d by t he a ss e s see .
61. Gr ou nd N o 2 a n d 3 r e l a te s t o the i ss ue o f a d di ti on ma d e on a cc oun t of e xc e ss sto ck of di amon d a nd si l ve r f ou nd d ur i ng 25 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 se a r ch and si nc e i de n ti ca l a r gu me n ts w e re a dv a nc e d w i th r e s pe ct to b oth the g r oun d t he y w e re ta k e n u p t oge the r f or h e a r in g
62. Th e gr ou nd no 2 a n d 3 r e a d a s und e r :
2 . T h a t t h e l e ar n e d C I T ( A ) - 5 , L u d h i a n a h a s e r r e d i n n o t d e l e t i n g t h e a d d i t i o n o f R s . 3 0 , 9 1 , 4 9 5 / - as m ad e b y t h e L d .
A . O . o n a c c o u n t o f d i s c r e p an c y i n d i a mo n d s .
3. T h a t t h e l e a r n e d C I T ( A ) - 5 , L u d h i an a h as e r r e d i n n o t d e l e t i n g t h e a d d i t i o n o f R s . 1 9 , 6 7 4 / - a s m ad e b y t h e L d . A . O . o n ac c o u n t o f d i s c r e p a n c y i n s i l v e r .
63. As me nt ion e d a b ov e d ur i ng se a rc h e xce ss stoc k of d ia mond a n d e xce s s s tock of si lv e r w a s f oun d va l ue d a t R s. 3 0 ,9 1 ,4 9 5 /- a n d Rs. 1 9 ,6 7 4 /- r e sp e c ti ve l y ,w h ic h wa s a d d e d to th e in come of the a sse ssee i n the a b se n ce of a ny e xp la n a ti on gi ve n for the sa me . Th e sa me w a s up h e l d b y the Ld . C I T(A ).
64. B e f ore u s, Ld. C ou ns e l f or the a ss e s see con te nde d t ha t he h a d ma de a to ta l sur r e n de r of Rs . 1. 7 5 C r or e s a nd th e re fore th e re w a s no need of a n y s e p a r a te a d d it ion .
65. Ld. D R on th e ot he r h a nd d r e w ou r a t te n ti on to t he b r e a k up of sur re nd e r ma d e a s me nt ione d i n p a r a 2 of the Ld . C I T( A ) or d e r a s u nd e r :
Particulars A m ou n t ( in R s . )
O n a c c o u n t o f re ce i v a b le s 9 3 , 0 0 , 0 0 0 /-
O n a c co u n t o f c as h ou t o f s ale 6 1 , 0 0 , 0 0 0 /-
n o t e n te re d i n t he b o ok s
O n a c c o u n t o f s to c k ou t o f s ale 2 1 , 0 0 , 0 0 0 /-
n o t e n te re d i n to b o o ks
26
ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017
A.Ys.2010-11 to 2012-13
66. Ld. D R th e r e a f ter d r e w our a t te nti on to the fi nd in g of t he Ld . C I T( A) th a t n o su r re nd e r was ma d e o n a c co u nt of e xce ss st ock o f di a mon d or si lve r f ou nd du r in g cou r se of se a r ch a n d th e re f ore con te nd e d th a t the a r gu me n t of Ld . C o u ns e l i n thi s r e ga rd me r i te d no con ce ntr a ti on .
67. We h a ve he a r d the r i va l c on te n ti on. A d mit te d l y a su r r e nde r of Rs . 21 La cs ha d be e n ma d e on a cc oun t of stoc k ou t o f sa l e not e nte re d i n the b ook s. Th e e xce ss st ock fou nd , w e ho ld the re f ore , to t hi s e xte n t i s to be a d j usted a ga i nst t he su r r e nde r so ma de . S i nce t he re st of th e s ur re n der ma d e i s not i n r e l a ti on to e xc e ss s tock of d i a mond or si l ve r, n o b e ne fi t of th e sa me , w e h old, c a n b e g iv e n to th e a sse ssee . Acc or di n gl y w e d ir e ct t ha t t he ad di ti on ma d e of Rs. 3 0 ,9 1 ,4 9 5 /- on a cco un t of e x ce s s s tock of di a mon d a n d Rs. 1 9 ,6 7 4 /- on a cc o un t o f e xce ss st ock of s il ve r f oun d d ur i ng the se a r c h, be a d ju ste d a ga i ns t t he su r r e nde r of Rs . 21 la c s ma d e by t he a sse s see on a c cou nt of st ock o ut of sa l e no t e nte re d i n the bo ok s. The b a l a nc e a dd i ti on i s the re f ore u p he ld .
68. Gr ou nd of a p p e a l n o. 2 a n d 3 a r e t he re fore p a r tl y a ll ow e d . G r oun d n o. 4 r e a ds a s u nd e r :
4. T h a t t h e l e a r n e d C I T ( A ) - 5 , L u d h i a n a h as e r r e d i n n o t a l l o wi n g r e l i e f r e g ar d i n g c h ar g i n g o f i n t e r e s t u / s 2 3 4 B a n d 2 3 4 C wi t h o u t a l l o w i n g t h e a d j u s t me n t o f s e iz e d c a s h a mo u n t i n g to R s . 6 1 , 0 0 , 0 0 0 / - a s ad v a n c e t ax .27 ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 Th e a b ov e gr oun d is r e ga r d i ng ch a r gi ng of i nte re s t u nde r se cti on 23 4 B a nd 2 3 4 C w i th out a ll ow i ng a d j us tme n t of se i ze d ca s h a mou nti n g t o Rs . 6 1 l a cs a s a d va n ce d ta x.
69. Th e fa c ts re le van t to th e i ss ue a r e tha t a se ar ch w a s co nd uc te d a t the p re mi se s of as se s se e o n 14 /0 3 /20 1 2 . The a ss e see h a d s ur r e n de re d a n a mo u nt of Rs . 6 1 la c s on a c cou nt of ca s h. The a ss e ssee ha d s ub mi tte d on 2 2 /0 8/2 0 1 2 a le tte r r e q ue st in g f or tr e a tin g the se ize d c a sh a s a d va n ce ta x b ut e v e n a f te r the c omp le tio n of a ss e ss me nt p r oce e d in g the R e ve nue d id n ot a dj us t the sei ze d ca s h a s a d va n ce ta x.
70. Th e Ld . C I T( A ) d is mis se d th e gr ou nd r a is e d by t he a ss e s see i n th is r e g a r d b e f ore hi m, sta t in g tha t a s p e r t he p r ovi si on s of se c ti on 1 3 2 B of t h e A ct, w hi ch pr ov i de d t he ma n ne r in which a sse ts se i ze d u nde r se c tion 1 32 or r e q u is it ione d und e r se ct ion 1 3 2 A a r e t o b e de a l t wi th a g a in st th e e xis ti ng li a bil i ti e s, a d va n ce ta x w a s not to b e tre a te d a s e x is tin g l i a bi l it y. Th e Ld . C I T( A) r e fe r re d to e x pla n a ti on 2 to se cti on 13 2 B i ns e r te d b y F i na nce A ct 2 0 1 3 ,s ta ti ng t ha t t he sa i d e xp la n a ti on cl a r if i e d th a t t he a ss e ssee w a s n ot e n ti tle d for a d j ust me nt of ad va nce ta x p a ya b l e ou t of c a sh se i ze d . He a cc or d in gl y di sm i ss e d the gr ou nd r a is e d by the a sse ssee .
71. B e f ore u s, Ld . C ou ns e l f or the ass e s see p oi nte d ou t tha t th e e x pl a n a ti on w a s in se rte d w .e .f 01 -0 6 - 2 0 13 b y th e F i na n ce 28 ITA Nos.109 & 245/Chd/2017 CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13 Ac t 2 0 1 3 , w hi le th e se a rc h took pla ce i n 2 01 2 a nd t he sa me d id n ot h a ve a r e tr osp e ct ive a p p l ic a ti on. Ld . C oun se l re lie d up on th e de c is io n of th e H on 'b le ju ris d ic ti ona l H ig h C o ur t i n t he ca s e of P CI T V s. Su r in d e r Ku ma r Khi n dr i re p or te d in 2 9 7 C TR 1 0 9 i n th is r e g a rd. C opy of the s ame wa s p l a ce d bef or e us.
72. Ld. D R on th e oth e r re lie d on the or d e r of the l d . CI T( A) .
73. We h a ve he a r d the r iv a l con te n tion s. W e h a ve a ls o g one th r oug h t he or de r of the Hon 'b le j ur i sd i cti on a l H igh C o ur t i n th e ca se of Su r in d e r Kuma r Kh ind e r i ( sup r a ) . O n goi ng t hr ou gh th e s a me we fi n d th a t i t h a s be e n ca te gor i ca l ly he ld in th e sa id ca s e t ha t e xp l a na ti on 2 to se c ti on 13 2 B, not in clu di n g a d va n ce ta x p a ya b l e a s exi st in g li a b i li ty f or t he p ur p ose of a d ju stme nt of se i ze d ca s h a ga in st the sa me as p e r the p r ovi s ion of se c ti on 1 3 2B o f th e Ac t, w a s p r os pe cti ve in na t ur e i .e wa s e f fe c ti ve f ro m 0 1 /0 6 /2 0 1 3 o nw a r d s on ly . Si n ce s e a r ch in the imp u gne d ca s e w a s c on du cte d i n 2 01 2 , th e sa i d e xp l a n a tio n w il l n ot b e a p p li ca b l e to t he p r e se n t ca se a nd a c cor d in gl y the se ize d c a sh of R s. 6 1 la c s i s w e hol d to be all ow e d to be a d ju st e d a g a in st th e a d va nce ta x li a b i li ty.
74. Gr ou nd of a p pe a l n o. 4 r a i se d by the a s se s se e is a cc or d in gl y a ll ow e d .
75. I n e f fe ct the C .O . of the a s se s se e is p a r tl y a l l ow e d . 29 ITA Nos.109 & 245/Chd/2017
CO Nos.13,14, &24/chd/2017 A.Ys.2010-11 to 2012-13
76. In the result,
i) A p pe a l of t he Re v e n u e i n I TA N o . 1 0 9 & 2 4 5 / C h d / 2 0 1 7 are dismissed.
ii) Cross Objection of t he A s s e s se e in C.O. N o. 1 3 , 1 4 / C h d / 2 0 1 7 a r e a l l o w e d w h e r e a s C . O . N o. 2 4 / C h d / 2 0 1 7 i s p a r t l y a l l ow e d .
O r de r p r o n o u n ce d i n t he O p e n C ou r t .
संजय गग अ नपण ू ा ग&ु ता
(SANJAY GARG ) (ANNAPURNA GUPTA)
याय क सद य/ Judicial Member लेखा सद य/ Accountant Member
*दनांक /Dated: 30th May, 2019
*रती*
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar