TMI Blog2010 (1) TMI 697X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 29-1-2010 - N. Vijayakumaran, Sanjay Arora, JJ. A.K. Thatai for the Appellant R. Krishnan for the Respondent ORDER Sanjay Arora, Accountant Member:- 1. This appeal by the revenue is arising out of the Order by the Commissioner of Income-tax (Appeals)-I, Kochi '[CIT(A)' for short] dated 14-2-2005 for the block period 1-4-1990 to 9-11-2000. 2. The first issue raised per the present appeal relates to the maintainability in law of the addition of Rs. 8,12,607 being the value of 2105.200 gms. of gold ornaments found during the search at the assessee's business premises, i.e., jewellery shop at Cherthala. 3.1 The facts of the case in brief are that consequent to a Search under section 132 of the Income-tax Act, 1961 ('the Act' hereinafter) at the business premises of the assessee, a partnership firm in jewellery business, on 9-11 -2000, gold ornaments weighing 5575.48 gms. were found in excess of that recorded in the books and the assessee questioned (through its partner, Shri R. Subramania Pillai) in its respect. The only explanation furnished was for jewellery to the tune of 500 gms., i.e., as having been received for repairs. Accordingly, the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nellore through its Inspector on 9-11-2000 itself, only to find that the said shop stood closed since 26-10-2000, so that the assessee had any way no case. 3.2 The assessee preferred an appeal whereat it found favour with the ld. CIT(A) on the basis that unless information of the impugned purchase transaction stood delivered by the assessee to the revenue at the time of Search, how could it (through Income-tax Officer, Ward-2, Kannur) conduct a spot inspection at the said supplier on 9-11-2000, with the Inspector deputed for the purpose furnishing a report on that day itself, so that the Revenue's said action itself proved the assessee's averment. As such, the assessee's claim could not be rejected out-rightly and the issue was required to be decided on the evaluation of the materials found in Search or as furnished by the assessee in support. The concerned seller was a regular supplier of goods to the assessee, as evident from its statement of account furnished by the assessee, with the amount lying to its credit being remitted by the assessee through bank demand draft(s). The Assessing Officer, in his view, ought to have conducted an enquiry on these evidences and not dismiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ADI (Inv.), Kochi, which he found to be a complete answer to all the assessee's contentions, raised per its letter dated 10-11-2000, though he also goes on to examine the alleged purchase transaction, holding it as not genuine. No doubt, the ADI (Inv.) is very categorical in his reply, which is further backed by the deposition of the Managing Partner, which is stated to be totally voluntary, so that no such claim of alleged purchase stood made at the time of Search by or on assessee's behalf, and neither any material in relation thereto stood found thereat. These two evidences should normally be sufficient to conclude the matter against the assessee. However, as pointed out by the ld. CIT(A), how could the revenue, if there was no mention of the purchase from Shree Veer Jewellers, Nellore, make an on the spot enquiry on the said party, at its address, on the same day itself. Who informed the Department, which would have normally moved at that stage through its investigation wing, and not through the field formation (as done)? These, and other such-like questions, arise, which should have been addressed as it would lead to the truth in the matter and, thus, a decision based ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess stock-in-trade found with it under section 69/69A of the Act. 5.3 Toward this, we find that the assessee has furnished a bill of Shree Veer Jewellers, Nellore dated 4-11-2000 along with an issue voucher of even date, drawn on it. While the same was considered as not representing a genuine transaction of purchase and sale by the AO, but only a cover-up device to explain the admitted excess stock found from its business premises during search on 9-11-2000, the ld. CIT(A) considered the same as adequate for the purpose, ie., the discharge of the obligation cast on it for explaining the said excess. The question therefore boils down to determining as to which of the two opposing findings is sustainable in law. The assessee has explained that the goods have arrived only on the late evening of 8-11-2000 and, therefore, there was no occasion to enter it in the stock register on the same day itself, which would have been done only on 9-11-2000 after the inspection of the goods for their quality and passing the same. When enquired by the Bench if any receipt stood issued in respect of the said receipt of goods, the ld. AR answered in the negative, further stating that that was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplier claim to have supplied the goods to the assessee and if it is indeed so, as where the assessee verbally conveys the receipt to the goods to the seller, through (say) telephone, these can only be considered as being only meant to be unaccounted in the first place. Secondly, where was the need to issue the bill along with, which, as explained, would follow the 'acceptance' of the goods, and which is not confirmed at the outset, resulting in the practice of issuing a 'issue voucher'. In that sense, the issue of the bill along with itself disproves the assessee's explanation to that extent. In fact both, ie., the transaction of the receipt of goods for approval as well as the approval itself, would be, i.e., in practice, properly documented, conveying or evidencing the same and, thereby, enabling smooth and proper execution of the suggested process. Rather, as we see it, the goods having been conveyed by hand, the courier would only leave 'accepted' goods with the buyer, getting them examined in his presence, and which only explains or justifies their transmission, the goods being otherwise valuable, through one. In any case his leaving' unaccepted goods with the assessee coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no indication, there would be reference to the design number, etc., only with reference to which the conformity or otherwise of the goods delivered therewith could be verified. Further, in that case, what is there to be checked - the price and the weight being imminent and undisputed. Another intriguing aspect of the matter is that the bill and the issue voucher stood conveyed per post. This is so as it makes little business sense, being devoid of any practical import, particularly when the goods under reference stood or were to be despatched separately through a personal courier, who, as we have presently seen, 'arrived' sans any document in their respect, so that the same are at the material time (during search) neither with the assessee (buyer) nor the seller's agent, but with the postal department, i.e., assuming so, even as the said assertion is also without any evidence. 5.6 It needs to be borne in mind that the assessee has accepted possessing excess stock to the extent of 5075.480 gms., failing to give any explanation in its respect, save for the impugned 2105.2 gms. of gold ornaments. Further, it was also found to be in possession of loose papers indicating purchases a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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