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2015 (4) TMI 552 - CALCUTTA HIGH COURT

2015 (4) TMI 552 - CALCUTTA HIGH COURT - TMI - Reopening of assessment - Bogus purchases - Held that:- The audited accounts coupled with the records submitted by the assessee go to establish that the purchase account was debited by an excess sum of ₹ 1,51,09,660/-. In seeking to explain, the assessee came out with a disclosure that it had purchased from J.J. Gold House 83 Kgs. of Gold and not 58 Kgs. of Gold. The total cost of gold purchased by the assessee furnished at the initial stage h .....

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the same. It transpired from the fact that the purchase account was inflated by a sum of ₹ 1,51,09,660/-. It is only on the basis of the case run by the assessee during the hearing of the appeal that the Commissioner of Income Tax held that if the case of the assessee in the appeal is true, then there should have been 25 Kgs of gold in the closing balance. Since the closing balance is nil there is suppression of sale of 25 Kgs Gold.

Since the learned Tribunal was agreeing with t .....

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n was left undetermined. The case sought to be built upon on the basis of the letter dated 7th June 2010 is a new case which the authorities below had no occasion to consider. The case run by the assessee before them has been falsified. We do not think for ends of justice a remand is permissible in the facts of the case. - Decided against assessee. - ITA 59 of 2012 - Dated:- 17-3-2015 - Girish Chandra Gupta And Arindam Sinha JJ. For the Appellant. : Mr.Rahul Modi and Mr.Nand Kishore Modi in pers .....

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ssment year 2005-06 was completed under section 143(3) on 13th November, 2007 determining loss of a sum of ₹ 1,34,720/- A notice under section 148 was issued and reassessment under section 143(3)/147 was completed on 23rd December, 2009. The quantitative details of purchase and sale of gold appearing from the Audit report (P52) dated 15th June 2005 under Section 44 AB in Form No. 3CD were as follows : Gold(In gms) Opening stock nil Purchase during the previous year 22,09,402.07 Sales durin .....

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lanation offered (P157) by the assessee was as follows: - In the case of purchases from M/s. J.J.Gold House of 11/1, S.C.Bose Road, Kolkata-20, the purchase was mentioned erroneously as ₹ 3,51,58,008/- instead of ₹ 4,94,64,263/- thus a difference of ₹ 1,43,06,255/-, the balance ₹ 803405/- was directly credited and disclosed as income in the P/L a/c of the said year under the head other income & adjustment Profit on Unfixed deal - Schedule 12 . Thus the difference as a .....

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nce rate was not fixed at the time of receipt of gold, the assessee did not show it in purchase for the F/Y 2003-04. After fixing the rate on 06/07/2004, the gold bars were shown as purchase for the F/Y 2004-05. The said gold bars were sold in the f/y 2004-05. The assessing officer did not accept the explanation and proceeded to hold that there was bogus purchase of a sum of ₹ 1,51,09,660/-. The assessee preferred an appeal. The Appellate Authority remanded the matter before the Assessing .....

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n its stock 25 kilograms of gold of different brands viz FINE 9950 THE PERTH MINT, AUSTRALIA and FINE 9950 CREDIT SUISSE . The explanation offered by the Assessee did not as such impress the Assessing Officer and he held in his remand report that:- Actually the alleged gold bars of brand ARGOR, HERAEUS Switzerland were purchased & sold by the assessee-company in the financial year 2003-04 relevant to the assessment year 2004-05. There was no relation of these gold bars in the next financial .....

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e course of assessment and appellate proceeding . Considering the reply of the assessee the CIT (Appeals) held that if this is taken into consideration the total purchase during the year comes to 2234402.070 Gms. as against 2209402.070 declared by the assessee. The assessee has shown sale of 220,337.315 Gms and wastage of 64.755 Gms. Since there is no closing stock, the only conclusion can be drawn that there was unaccounted sale of 25000 Gms of gold . The assessee was given a further chance to .....

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he addition made by the Assessing Officer was confirmed. An appeal preferred by the assessee before the learned Tribunal has also failed on 20th January, 2012 which is under challenge in this appeal. The following questions of law were formulated at the time of admission of the appeal. (I) Whether on a correct interpretation of the provisions contained in section 147 read with section 148 of the Income Tax Act, 1961, the Tribunal misdirected itself in law in upholding the validity of the initiat .....

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addition of ₹ 1,51,09,660/- in paragraphs 6.2 and 6.3 of its impugned order dated 20th January 2012 are wholly erroneous in law against the facts and the evidence on record, wholly baseless, unreasonable and/or otherwise perverse ? The appeal was presented through M/s. J.P. Tibrewal & Co., Advocates. The appellant has taken change from M/s J.P. Tibrewal Co. and authorized one of its Directors Sri Nand Kishore Modi and his son Sri Rahul Modi to appear and argue on behalf of the appellan .....

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rned Tribunal which does not appear to have been done nor do the grounds of appeal contain any such grievance. In the absence of any evidence we have to rely upon the presumption under Section 114 of the Evidence Act that all judicial and official acts were regularly performed. From the records there can be no dispute as regards the fact that the case of the assessee was that there was no opening balance during the financial year nor there was any closing balance. The gold purchased during the y .....

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the assessee was that during the financial year 2003-04, to be precise, on 30th December, 2003 the assessee had received 20 kilograms of gold from M/s. J.J. Gold House. Similarly another 5 kilograms of gold was received from the same J.J. Gold House on 3rd January, 2004. The aforesaid gold received on 30th December, 2003 and 3rd January, 2004 was shown purchased by the assessee in its books of accounts on 6th July, 2004 at a sum of ₹ 1,43,06,255/-. It was contended that a sum of ₹ 8, .....

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edly done. The alleged credit to the P/L A/c by a sum of ₹ 8,03,405/- does not also match with the contention of the assessee which is as follows:- 7th July 2003 Fixed deposit of a sum of ₹ 1,50,00,000/- was created by the assessee for the purpose of pledging the same. (Page 196) 30th December, 2003 20 Kilograms of gold vide Challan No.2 was received by the assessee. (Page 196) 3rd January, 2004 5 Kilograms of gold vide Challan No.3 was received by the assessee. (Page 196) 6th July, .....

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03,405/- was shown as other income. There was no occasion in any case for an income of a sum of ₹ 8,03,405/- because the amount of interest could not have been more than ₹ 7,15,924.72 paisa. This is a clear pointer to show that the explanation did not match with the actual state of affairs. During the remand proceedings, it transpired that the case of the assessee that it had unaccounted opening stock of 25 Kgs of gold, which was indicated in the Notes on Accounts for the financial y .....

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n to have been purchased on 6th July, 2004 and received by the assessee, according to him, on 30th December, 2003 and 3rd January, 2004 contained HERAEUS mark, whereas the goods allegedly lying in unaccounted opening balance as on 1st April, 2004 was FINE 9950 (CREDIT SUISSE) etc. as more fully quoted above. Therefore, the finding of the authorities that the goods allegedly purchased on 6th July, 2004 and actually received on 30th December, 2003 and 3rd January, 2004 was, in fact, sold during th .....

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brought to our notice. The quantity and value of sales during the financial year ending 31st March, 2005 do include 25 Kgs. of Gold Bars bearing Identification Nos. 916303 to 916306, 916308 to 916310, 916312 to 916317, 916288, 916289, 916291, 916292, AC054151 to AC054153, AC 54154 to AC54158 sold to various parties, as per details given in List Y annexed hereto. The Identification Nos. of these Gold Bars, weighing about 25 Kgs., are those, which had been purchased from M/s. Jindal Dyechem Indust .....

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was, in fact, 83402 Gms. Naturally, the CIT (Appeal) asked the assessee to account for, in that case, the closing balance of 25Kgs of Gold. If the assessee had got 25 Kgs of Gold more than the declared weight for the same amount of purchase money, then the 25 Kgs of Gold should be in his closing stock, which was sought to be countered by the assessee by alleging that the purchase from Jindal Dychem Industries (P) Ltd. was overstated by 25 Kgs and there was, as such, no question of any closing st .....

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2010 appearing at page 179 of the paper book. The aforesaid figures are admittedly contrary to the Auditor's report dated 15th June, 2005 which has been quoted above. Mr. Modi contended that the assessee has been victimized due to mistake of the auditor. Whether the assessee has been victimized or the assessee is trying to improve his case, after his explanation failed on merits, is a question which does not really arise for determination in the appeal. Our attention was not drawn to any do .....

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n of the assessee and held that there was suppression of sale of 25 Gms. of Gold. He submitted that a new case was made out for which there is no foundation in the recorded reasons and therefore the entire proceeding was bad. We have not been impressed by the submission of the assessee. The case remains the same. The audited accounts coupled with the records submitted by the assessee go to establish that the purchase account was debited by an excess sum of ₹ 1,51,09,660/-. In seeking to ex .....

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losing stock. Since the closing stock is nil a view could certainly be taken that the assessee had suppressed sale of 25 Kgs of Gold. But that does not change the original position. The original position remains the same. It transpired from the fact that the purchase account was inflated by a sum of ₹ 1,51,09,660/-. It is only on the basis of the case run by the assessee during the hearing of the appeal that the Commissioner of Income Tax held that if the case of the assessee in the appeal .....

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