Income Tax Appellate Tribunal - Ahmedabad
The Ito, Ward-1, Mehsana vs Shri Rasiklal Ranchhodbhai Patel,, ... on 19 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "B" BENCH
(BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
& SHRI MAHAVIR PRASAD, JUDICIAL MEMBER)
ITA. No: 2426/AHD/2015
(Assessment Year: 2012-13)
Income Tax Officer, Ward- V/S Shri Rasiklal
2, Mehsana Ranchhodbhai Patel Prop.
of Utsav Jewellers, Opp.
Jain Derasar Station Road,
Mehsana-384001
(Appellant) (Respondent)
PAN: AIVPP1292J
Appellant by : Smt. Sonia Kumar, Sr. D.R.
Respondent by : Shri Anil Kshatriya, A.R.
(आदे श)/ORDER
Date of hearing : 17 -01-2018
Date of Pronouncement : 19-01-2018
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:
1. This appeal by the Revenue is preferred against the order of the Ld. CIT(A), Gandhinagar, Ahmedabad dated 12.06.2015 pertaining to A.Y. 2012-13.
2 ITA No. 2426/Ahd/2015. A.Y. 2012-13
2. The substantive grievance of the revenue reads as under:
1. The learned CIT(Appeals) has erred in law and on facts in deleting the addition of Rs.46,15,631/-made by the AO on account of under valuation of stock of gold jewellery.
2. The learned CIT(Appeals) has erred in law and on facts in deleting the addition of Rs. 10,56,004/- made by the A.O. on account of MRP of jewellery.
3. Representatives of both sides were heard at length. Having heard the rival contentions, we have carefully perused the orders of the authorities below. We have carefully considered the relevant documentary evidences brought on record in the form of a paper book in the light of Rule 18(6) of the ITAT Rules.
4. Facts as emanating from the assessment record show that a survey had been carried out at the premises of the assessee on 02.09.2011. During the course of the survey proceedings, stock difference in gold & silver and in cash was found and the same was confronted to the assessee. The assessee declared undisclosed income of Rs. 55,95,970/-.
5. Following notice dated 02.03.2015 was issued and served upon the assessee and the same is exhibited at page 54 of the paper book:-
Office of the Income Tax Officer, Ward-1, Mehsana Room No. 204, 2nd Floor, Apollo Enclave, Opp.- SimandhaTTemple Highway, Mehsana-384002 Date : 02/03/2015 PAN: AIVPP1292J To Shri Rasiklal Ranchhodbhai Patel, Prop.- M/s Ulsav Jewellers, Opp.- Jain Derasar, Station Road, Mehsana Sub: Assessment Proceedings for A.Y. 2012-13.
Please refer to above.3 ITA No. 2426/Ahd/2015
. A.Y. 2012-13
2. A survey u/s 133A of I.T.Act was conducted at your business premises on 02.09.2011. During the course of survey proceedings, the value of stock difference as per books of accounts and as per physical verification was reported at Rs. 5520043/- taking the prevailing market price of gold at Rs.2800 per gram. It was also seen that the above findings was confronted to you in your statement on oath during survey, which was admitted by you and had agreed to pay tax on the same.
2.1 Subsequently, you had disclosed income of Rs. 55,20,043/- in respect of stock differences.
On verification of submission, it is seen that the valuation of the closing stock of gold ornaments were made at average rate of 2,135.79 per gram.
2.2 Scrutiny of stock records revealed that you have dealing in readymade jewellery. You have dealt in various MRP jewelleries as well as gold jewelleries. Neither, you had maintained item wise stock of gold jewellery nor had contended the valuation of jewellery @ 2800 per gram. In absence of item wise jewellery details, the valuation adopted to take average purchase price seems to be incorrect and cannot be relied on. Therefore, you are show caused why the valuation of closing stock of gold jewellery should not be made @ 2800 per gram.
3. On perusal of submission, it is noticed that there is difference between closing stock of MRP jewellery shown by you and jewellery found during the survey on 02.09.2011 which is shown as under:-
Brand Details of Closing stock Physical Stock found Cost price of Difference Name as on 02.09.2011 during the course of physical stock (Rs.) furnished by assessee survey on found on during the assessment 02.09.2011 (MRP) 02.09.2011 (MRP-
proceedings (cost price) 15%)
Qty. Amounts (Rs.) Qty. Amounts (Rs.) Amounts (Rs.)
Utsav 365 2588357 229 2113236 1796250 7,92,107/-
Gold
Ishta 72 451569 53 316629 269134, 1,82,435/-
Gold
Nishta 68 316136 52 276088 234674 81,462/-
a Gold
Total 10,56,004/-
21. Therefore, your are show caused why the difference of Rs. 10,56,004/- in the value of MRP jewelry should not be added to your income.
3. Your reply to the above issues must reach the undersigned by 09703/2015 failing which it will be assumed that you have nothing more to say on any of these issues and additions on all the above issues will be made as per the information on record.
PRAVIN KUMAR AGRAWAL) Income Tax Officer Ward-1, Mehsana 4 ITA No. 2426/Ahd/2015 . A.Y. 2012-13
6. While scrutinizing the return of income, the A.O. noticed that the assessee has valued its closing stock of gold ornaments at average rate of Rs. 2135.79 per gms. The A.O. was of the firm belief that the same should have been valued at Rs. 2800 per gms. The difference of Rs. 664.21 per gms was considered as under valuation of closing stock of gold, jewellery and addition of Rs. 46,15,631/- was made.
7. Proceeding further, the A.O. noticed that the assessee has also dealt in ready- made jewellery bearing brand name Utsav Gold, Ishta Gold and Nishtaa Gold, the A.O. compared the stock as on the date of survey furnished by the assessee with the physical stock statement prepared by the survey party on the date of survey and concluded by holding that there is a difference of Rs. 10,56,004/-. The A.O. concluded by holding that the same is suppression of sale and accordingly made the addition.
8. Insofar as the valuation of stock is concerned, we find that the Assessing Officer has grossly erred in disturbing the method of valuation of the closing stock adopted by the assessee since past many years. Moreover, the action of the Assessing Officer is uncalled for and unwarranted. For the reason that the survey party determined the value of stock difference at Rs. 55,20,043/- and not only the assessee accepted the difference but subsequently also disclosed the same in its return of income. This fact has nowhere been denied by the A.O. The only reason for making the addition of Rs. 46,15,631/- is that the assessee valued its closing stock at average rate. The A.O. totally ignored the fact that whatever the valuation difference was determined by the survey party was offered for taxation by the assessee in its return of income. We do not find any lawful reason for rejecting a well recognized method of valuation followed 5 ITA No. 2426/Ahd/2015 . A.Y. 2012-13 by the assessee. The First Appellate Authority has appreciated the facts in their true perspective and had allowed the relief on the given facts. We do not find any reason to disturb the findings of the ld. CIT(A). Ground no. 1 is accordingly dismissed.
9. Insofar as the grievance raised vide ground no. 2 is concerned, we find that the A.O. has misinterpreted the correct facts. The true facts can be appreciated from the following two charts:-
M.R.P. Items of Utssav CZ Jewellery found From Ground Floor SrNo DESCRIPTION As per Valuer As per Books 1 18 Kt Gold & CZ Stones Pendent Butti Set 34 34 2 18 Kt Gold & CZ Pendent 14 14 3 18 Kt Gold & CZ Rings 17 17 4 18 Kt Gold & CZ Pendent & Butti Set-7 7 21 5 18 Kt Gold & CZ Oval Brecelete 3 3 6 18 Kt Gold & CZ Rings 35 35 7 18 Kt Gold & CZ Butti Pair-41 41 82 8 18 Kt Gold & CZ Butti Pair-48 48 96 9 18 Kt Gold & CZ Rings 8 8 10 18 Kt Gold & CZ Ball Pair & Butti 10 20 11 18 Kt Gold & CZ Pendent Butti Set 5 5 15 12 18 Kt Gold & CZ MS Pendent Butti Set 5 5 15 13. 18KtGold,&CZ Pendent 2 2 14 G L S 3 A-7 1 15 NOSE PIN 1 , 16 KADA 1 TOTAL 229 365 18 Kt Gold CZ MRP Jewellery of ISHTAA Sr No DESCRIPTION As per Valuer As per Books 1 18 Kt Gold CZ Rings 12 12 6 ITA No. 2426/Ahd/2015 . A.Y. 2012-13 2 18 Kt Gold CZ Pendent Butti Set 9 9 3 18 Kt Gold CZ Pendent, Rings, Butti Pair 11 11 4 18 Kt Gold CZ Pendents 18 18 5 ISHTA TOPS 17 6 ISHTATOPS 5 TOTAL 50 72 22kt.Gold M.R.P. Items of Brand NISHTAA SrNo DESCRIPTION As per Valuer As per Books 1 22 Kt Gold Pendent Butti Set 3 3 3 2 22 Kt Gold CZ Rings 22 22 3 22 Kt Gold CZ Butti 10 10 4 22 Kt Gold CZ Pendent 17 17 5. Nishtaa Tops 16 TOTAL 52 68 NACHIKET SATISBHAI MAVALANKAR REGISTERED VALUER FOR JEWELLERY, GOLD & SILVER ORNAMENTS 105,Iscon Centre Centre, REGISTERED NO. CAT V III 154 Shivranjani Cross Road, (APPROVED BY GOVT. OF INDIA) Satellite, Ahmedabad-380015 Sr Description No. Gross Wt. (Gram) Net Wt. Valut (Gram) Rs 67] Gold Ring-1 4.100 4.100 11480.00 @ Rs. 28000 per 10 Gms.
68 ] Gold & Copper Kadli-2 with White Rodiyam. 52.700 25.500 71400.00 @ Rs. 28000 per 10 Gms.
69 ] Gold Set-17 with Marbal Mina & Mina.(Pieces-51) 960.750 960.750 2690100.00 @ Rs. 28000 per 10 Gms.
70] Gold Karap Chain-1 53.950 53.950 151060.00 @ Rs. 28000 per 10 Gms.
71 ] Gold Mangalsutra-1 with Pendent. 24.860 22.680 63504.00
7 ITA No. 2426/Ahd/2015
. A.Y. 2012-13
@ Rs. 28000 per 10 Gms.
72] 24Kt.Gold Pieces-2. 20.600 20.600 57680.00
@ Rs. 28000 per 10 Gms.
73] 24Kt.Gold Coins-1 5.000 5.000 14000.00
@ Rs. 28000 per 10 Gms.
74] 18Kt.Gold Coin-1 3.000 3.000 6300.00
@ Rs. 21 000 per 1 0 Gms.
M.R.P Items of Utssav CZ Jewellery Found From Ground Floor.
75 ] 1 8Kt.Gold & CZ Stones Pendent Butti^et-34. 0.000 - 531335.00
76 ] 18Kt.Gold C.Z Pendents Pieces-14. 0.000 - 108418.00
77] 18Kt.Gold C.Z Rings Pieces-17 0.000 - 102595.00
78 ] 18Kt.Gold C.Z Pendent & Butti Set-7. (Pcs-21) 0.000 - 128265.00
79] 18Kt.GoldC.ZOvalBrecelete-3. ' 0.000 - 71400.00
80 ] 1 8Kt.Gold C.Z Rings Pieces-35. 0.000 - 174590.00
81 ] l8Kt.Gold C.Z Butti Pair-41. ( Pieces-82) 0.000 - 315188.00
82] 18Kt.Go!d C.Z Butti Pair-48.(Pcs-96) 0.000 - 348245.00
83] 18Kt.Gold C.Z Rings Pieces-8. 0.000 - 65960.00
84 ] 18Kt.Gold C.Z Bali Pair-5 Pieces-10 & Butti Pair-5.(Pcs-10) 0.000 - 93585.00
85] 1 8Kt. Gold C.Z. Pendent Butti Set-5.(Pcs-15) 0.000 - 81600.00
86 ] 18Kt.Gold C.Z. MS Pendent Butti Set-5.(Pcs-15) 0.000 - 77095.00
87] 18Kt.Gold C.Z Pendent-2. 0.000 - 14960.00
18Kt.Gold C.Z M.R.P Jewellery of ISHTAA.
88] 18Kt.Gold C.Z. Rings Pieces-12. 0.000 - 72998.00
89 ] l8Kt.Gold C.Z. Pendent Butti Set-9. (pieces 27) 0.000 - 117946.00
90 ] 18Kt.Gold C.Z. Pendents-2, Ring-1, Butti Pair-1 UPcs-22). 0.000 - 66385.00
91] 18Kt. Gold C.Z. Pendents-18. 0.000 - 59300.00
22Kt.Gold W1.R.P Items of Brand NISHTAA.
92 ] 22Kt.Gold Pendent Butti Set-3.(Pieces-9) 0.000 - 30812.00
@ Rs. 20250 per 10 Gms.
93 ] 22Kt.Gold C.Z. Rings Pieces-22. 0.000 - 12687100
@ Rs. 20250 per 10 Gms.
94] 22Kt. Gold C.Z. Butti Pair-10. 0.000 - 66700.00
@ Rs. 20250 per 10 Gms.
8 ITA No. 2426/Ahd/2015
. A.Y. 2012-13
95] 22kt. Gold C.Z. Pendents Pieces-1 7. 0.000 - 51705.00
@ Rs. 20250 per 10 Gms.
96] Silver Bars Pieces-4. - 157812.00
157812.00 Silver Bars-4., 2.525 Kg.
@ Rs. 62500 per 1 Kg.
97]Silver Ornaments, Utensils & other Items. - 143520.00
143520.00 Silver Ornaments, Utensils & Others., 3.588 Kg.
143520.00 - - 177750.00
98] Silver Coins-654
177750.00 Silver Coins Pieces-654., 2.844kg.
@Rs.62500 per 1 Kg.
1777.50.00 Rupees: Three Crore Sixty Three Lacks Eight Hundred Seventy Two only 12963.350 11901.040 36300872.00
10. The First chart contains details of the items found on the date of survey considered by the A.O. and the second chart is the list of same items found on the date of survey.
11. The A.O. was of the opinion that Utsav Gold was shown by the assessee at 365 pieces whereas the same was found by the survey party at 229 pieces. Similarly, Ishta Gold was shown at 72 pieces whereas the survey party found 53 pieces and Nishtaa Gold was shown at 68 pieces and found at 52 pieces. The A.O. was of the firm belief that the assessee has sold the difference and it is clear cut case of suppression of sales.
12. A perusal of the aforementioned two charts exhibited hereinabove clearly shows that the A.O. has grossly erred in comparing the details furnished by the assessee which is in numbers of pieces with the details of the physical stock found during the course of survey which is in number of sets. If the numbers of sets are converted into number of pieces, there would remain no difference 9 ITA No. 2426/Ahd/2015 . A.Y. 2012-13 whatsoever. Just for the clarification of the afore-stated facts, 18 Kt. Gold C.Z Pendent & Butti has been shown as 21 pieces but taken by the A.O. as 7 pieces. Similarly, 18 Kt Gold C.Z Butti pair has been shown at 82 pieces but taken by the A.O. as 41 pieces. The First Appellate Authority has reconciled this factual difference and deleted the addition of Rs. 10,56,004/-. The afore-stated factual matrix clearly shows that the assessee has shown closing stock as on the date of survey in number of pieces whereas survey team has considered closing stock on the basis of pairs of ornaments or sets of ornaments. If these pairs of ornaments or sets of ornaments are converted into number of pieces, there would remain no difference at all. Considering the facts in totality, we decline to interfere with the findings of the ld. CIT(A). Ground no. 2 is also dismissed.
13. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in Open Court on 19 - 01- 2018
Sd/- Sd/-
(MAHAVIR PRASAD) (N. K. BILLAIYA)
JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER
Ahmedabad: Dated 19 /01/2018
Rajesh
Copy of the Order forwarded to:-
1. The Appellant.
2. The Respondent.
3. The CIT (Appeals) -
4. The CIT concerned.
5. The DR., ITAT, Ahmedabad.
6. Guard File.
By ORDER
Deputy/Asstt.Registrar
ITAT,Ahmedabad