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RADHAKRISHNA GOLD JEWELLARY P. LTD. Versus JOINT COMMISSIONER OF INCOME-TAX (OSD)

2015 (11) TMI 729 - ITAT AHMEDABAD

Addition on excess stock found at the premises of the assessee during the course of survey - Held that:- The first and the foremost circumstance which is to be considered is the human conduct of the director at the time of survey. 3,000 grams of the gold is not a small quantity which might have not struck to the mind of the director when survey was going on. The learned first appellate authority, while appreciating this aspect has observed that conduct of the director is little unusual when he b .....

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purchase made in the recent past by heart because the purchase in terms of money is quite big.

Keeping in mind this background, we have to appreciate the alleged evidence produced by the assessee along with the explanation. The first is the bank statement of Vijaya Bank. This is the statement of the assessee's account. In this bank statement, payments to M/s. Jain Creation through account-payee cheques are available, starting from August 14, August 18, and August 19, these payments .....

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tion is available at pages 33 given by M/s. Jain Creation do indicate that the gold was sold to the assesse and it was delivered to the assesse on August 21, 2008 but neither the assessee nor M/s. Jain Creation is able to substantiate this stand with any other corroborative evidence. To our mind, this evidence has been brought in picture by the assessee during the course of assessment proceedings in an anticipation that certain payments are reflecting in the bank account to M/s. Jain Creation, t .....

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y any agency. On an analysis of the evidence available on record, we are of the view that the learned first appellate authority has appreciated the controversy in right perspective and no interference is called for in the order of the Commissioner of Income-tax (Appeals). We do not find any merit in this appeal. It is dismissed. - Decided against assessee. - I. T. A. No. 174 /Ahd/ 2013(assessment year 2009-10). - Dated:- 26-5-2015 - RAJPAL YADAV (Judicial Member) and ANIL CHATURVEDI (Accountant .....

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ptive and argumentative in nature. 2. In brief, its grievance is that the learned Commissioner of Income-tax (Appeals), has erred in confirming the addition of ₹ 26,68,441 of the assessee, which was added by the Assessing Officer, on account of alleged excess stock found at the premises of the assessee during the course of survey. 3. The brief facts of the case are that the assessee is a private limited company, engaged in the business of manufacturing and sale of gold ornaments, etc. It h .....

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tanpole on August 27, 2008. During the course of survey excess stock having value of ₹ 85,17,439 was detected. The learned Assessing Officer has noticed the working of excess stock in para 3 of the assessment order which reads as under : (Rs.) (1) Physical inventory of stock found at Vastrapur 1,33,03,011 (2) Physical inventory of stock found at Ratanpole 77,29,694 Total 2,10,32,705 Less : Stock as on 27/08/08 as per books of account 1,25,15,266 Excess stock found 85,17,439 4. During the c .....

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mount of excess stock disclosed in the survey ₹ 85,17,438 Less : Difference in bills received/not received Bill not received and taken in calculation of excess stock from Jain Creation bill No. 56 dated August 21, 2008 3000 gms ₹ 35,68,000 Less : Bill not received but taken at the time of survey from Oasis Jewells 2500 gm Less : Actual bill received for 1662.64 gm Excess taken in survey 837.36 gm 837.36 gm Net stock 2162.28 gm 22 carat ornament 2357.28 gm Valued at 1132 per gram (235 .....

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f the gold disclosed by the assessee at ₹ 58,48,997. The assessee further contended that it has received gold bar of 3000 grams from Oasis Jain Creation. These gold bars were purchased on August 21, 2008 vide bill No. 56 and these were delivered to the assessee on that very day. The assessee has submitted bill No. 56 dated August 21, 2008. It also disclosed that the payment to M/s. Jain Creation was made through account-payee cheque. This bill remained to be entered in the books of account .....

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e received is available in stock or not ? He failed to disclose about this fact during the course of survey. Therefore, whatever explanation prepared by the assessee is an afterthought. Accordingly, the learned Assessing Officer has rejected the contentions of the assessee and made an addition of ₹ 27,18,000 which include disallowance of some conversion charges. 6. Dissatisfied with the addition, the assessee carried the matter in appeal before the learned Commissioner of Income-tax (Appea .....

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ing which reads as under : "2.6 During the assessment proceedings as well as the appellate proceedings the appellant contended that 3000 gms of gold was received from M/s. Jain Creation but the bill was received beyond the date of survey. The appellant has also furnished copy of bill No. 56 dated August 21, 2008 vide which M/s. Jain Creations had statedly sold 3000 gms gold to the appellant. The appellant has also furnished a confirmation from M/s. Jain Creation wherein it is affirmed that .....

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e but forgot to inform about other purchase. The appellant and his employees was having ample time to recall this transaction and the entire books of account and other material was also available with them to work out the correct discrepancy. As per market practice the owner of jewellery shops know the gold purchases made in the recent by heart past as the purchases are monetarily big. It will also be pertinent to mention here that the delivery of gold is not given without any documentation. If .....

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dly detected just after the survey and the appellant had made necessary entries in respect of these so-called discrepancies in its books of account on August 28, 2008, i.e., just next day of survey." 8. Learned counsel for the assessee while impugning the orders of the learned Revenue authorities below contended that M/s. Jain Creation has supplied gold bars of 3000 grams which remained to be accounted in accounts. The assessee has purchased this gold on August 21, 2008. The gold was also s .....

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th of these details, learned counsel for the assessee contended that credit of 3000 grams of gold ought to have been given to the asessee. He also pointed that though during the course of survey it was contended by the assessee that jewellery of 2500 grams was purchased from M/s. Oasis Jewels which remained to be accounted. The credit of this jewellery has been given by the survey party while working out the stock, but ultimately, in the return the asessee has recognised the gold jewellery purch .....

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hawla Brothers P. Ltd. v. Asst. CIT [2011] 43 SOT 651 (Mum). 9. On the other hand, the learned Departmental representative relied upon the orders of the Revenue authorities below. He contended that full opportunity was given to the managing director at the time of survey but he did not utter a single word with regard to purchase of jewellery from M/s. Jain Creation. It is an afterthought at the end by the assessee. The learned Departmental representative drew our attention towards para 2.6 of th .....

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the assessee, during the course of survey, it was claimed that jewellery of 2500 grams was received from Oasis Jewellers which remained to be accounted in the stock. When the asessee filed the return, it contended that jewellery from Oasis Jewels was actually received at 16.62 grams and not at 2500 grams claimed during the course of survey. Thus, the value representing 837.36 grams was offered for tax. To this extent, there is no dispute between the parties. The dispute is, whether credit of ava .....

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cting information was carried out. The ultimate conclusion from those information has to be drawn at the time of assessment stage. Therefore, if an assessee has submitted a reconciliation supporting with evidence then that reconciliation cannot be brushed aside lightly. We do not dispute with regard to the proposition raised by Shri S. N. Divetia, the assessee can explain the discrepancy in the stock at the assessment proceedings. The dispute relates to the merit of explanation. The question is, .....

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the print of the accounts of the computer of your company total purchase have been shown as ₹ 3,98,55,165 so far as such purchase your company is keeping inward register, if you have then show it. And if in your purchase goods have been received and only such purchase have been made for which bill has not been received and if bill received and goods have not been received, how many such purchases are there, if are there, give its evidences. Answer 13 : In the purchase of my company the pur .....

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iness of my company. Question No. 22 : As per print given by you from the computer of your company, today's date closing stock is ₹ 1,25,15,266.99 wherein it includes the stock of both the place Ratanpole and Vastrapur, wherein on making calculation of physical stock, the total stock received of ₹ 2,10,32,705 for Ratanpur and Vastrapur, for the reason thereof the company's excess physical stock ₹ 85,17,439 received, so clarify regarding such difference. Answer 22 : In t .....

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ax to be paid over it, I am willingly giving three cheques." 11. The first and the foremost circumstance which is to be considered is the human conduct of the director at the time of survey. 3,000 grams of the gold is not a small quantity which might have not struck to the mind of the director when survey was going on. The learned first appellate authority, while appreciating this aspect has observed that conduct of the director is little unusual when he brought to the notice of jewellery p .....

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use the purchase in terms of money is quite big. Keeping in mind this background, we have to appreciate the alleged evidence produced by the assessee along with the explanation. The first is the bank statement of Vijaya Bank. This is the statement of the assessee's account. In this bank statement, payments to M/s. Jain Creation through account-payee cheques are available, starting from August 14, August 18, and August 19, these payments were of ₹ 42 lakhs then on August 21st and 23rd, .....

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