TMI Blog2017 (4) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... ifference in valuation viv-a-vis the assessee and the departmental valuer and is, again, not relatable to search material. In view of the aforesaid, substantial questions No.(i) and (iii) extracted above are liable to be answered against the Revenue and in favour of the assessee. Additions made in the block assessment - no opportunity to cross-examine was granted - Held that:- It is relevant to note that the present assessment emanates from a search where gold and diamonds have been found and seized. It is incumbent upon the assessee to tender an explanation about the same. The explanation tendered has to be credible and bonafide, in the absence of which, the burden placed on the assessee would not stand discharged. In view of the elements noted by us above, being the unexplainable difference between the time of alleged receipt of gold from Ganga Jewellers and the date of accounting for the same as well as the retention of the gold with the assessee for more than 1 = years till the time of return to M/s Ganga Jewellers and in the light of the fact that the assessee could not produce even basic documents such as receipt vouchers, we believe that this burden has not been discharge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows; (i) Whether on facts and in the circumstances of the case, the Tribunal was right in deleting additions made in the block assessment on the ground that no material was found at the time of search, when the assessee himself had admitted to the undisclosed income? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in deleting additions made in the block assessment on the ground that no opportunity to cross-examine was granted, when no such opportunity was ever sought at any time? (iii) Whether on the facts and circumstances of the case the Tribunal was right in ignoring the statements recorded from the assessee, his wife, and mother admitting that the two women had no sources of income and the amounts were undisclosed income of the assessee? 3. The assessee is in the business of manufacturing, testing and carrying out job work in relation to gold and jewellery. Search and seizure action in terms of Section 132 of the Income Tax Act (in short Act ) was conducted on 13.9.2001. Incriminating documents, books of accounts, jewellery and other assets were found and seized. Statements were recorded from various persons in ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch, when questioned, the assessee offered the gold as unaccounted investment. Thereafter, in the course of assessment, he advanced an explanation to the effect that the gold was, in fact, received for manufacturing jewellery from an entity by the name and style of M/s.Ganga Jewellers on 10.8.2001. He produced a confirmation letter dated 10.5.2002 to this effect issued by the proprietor of M/s.Ganga Jewellers. To verify the authenticity of the transaction, a commission was issued by the assessing authority to the Additional Director of Income tax (Investigation) (I), Hyderabad. It was noted at the time of verification that the said Ganga jewellers has itself commenced business of jewellery only on 3.9.2001. Thereafter as per the assessee, the jewellery was manufactured and returned to Ganga jewellers on 19.3.2003. The assessing officer sought copies of the receipt vouchers, but was informed by the assessee that he had misplaced the same. He was also requested to produce the proprietor of Ganga Jewellers for examination and verification of the transaction, but expressed his inability to do so. The sequence of events, according to the assessee, is as follows; - receipt of stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of this order. We, thus reverse the order of the tribunal on this account and restore the order of the Commissioner of Income tax (appeals) to the effect that the explanation tendered by the assesee is a mere after thought to explain the excess unaccounted jewellery found on the date of search. 10. The second aspect of substantial question of law No.(ii) relates to 338.57 carats of diamonds found in the course of search. The assessee s accountant was examined at the time of search, who confirmed that apart from the diamonds seized, another 100 carats of diamonds had been given to gold smiths for manufacturing jewellery. The total quantity of diamonds available was thus confirmed to be 438.59 carats. 11. A statement recorded from the assessee on 16.09.2003 admits the aforesaid position, except to an extent of 21 carats that were duly accounted for. The assessee explained the excess diamond stock of 417.59 carats (438.59 21 cts) stating that 175 carats were received by him on approval basis from an entity by the name of M/s. Brijesh Enterprises, Surat. A confirmation letter from the proprietor was filed. It is relevant to note that the aforesaid explanation was tendered o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments such as the entrustment slips have not been produced, lead us to believe that the explanation tendered is a mere after thought. We also note the statement of the proprietor of Brijesh Enterprises who confirms that the transaction was not bonafide, but an accommodation for commission. No opportunity has been sought to cross examine the proprietor and in any event, this aspect of the matter is merely incidental and in addition to the overwhelming evidence already available to disprove the verision of events adduced by the assessee. The totality of circumstances support the conclusion that the assessee has failed to discharge the burden cast upon him to explain the diamonds in his possession. 15. The order of the commissioner of income tax (appeals) at page 11.5 has noted the aforesaid sequence as elaborated by us, in confirming the addition. We may also mention that the assessee appears to have, on 15.4.2002, retracted the sworn statements dated 13.09.2001, 7.9.2001 and 3.11.2001. The retraction has not been accepted on the ground that it is made after inordinate delay and is not supported by any material contrary to the facts set out in the sworn statements. We would endo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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