TMI Blog2018 (6) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... , CA ORDER PER H.S. SIDHU, JM The Revenue has filed the appeal and Assessee has filed the Cross Objection against the impugned order dated 29.08.2014 passed by the Ld. CIT(A), New Delhi pertaining to assessment year 2011-12. The grounds raised by the Revenue read as under: 1. The order of the CIT(A) is not correct in law and facts. 2. On the facts and circumstances of the case the Ld. Commissioner of Income Tax(A) has erred in law in deleting the addition of ₹ 41,565/- made by the AO on account of profit made on sale of gold in cash. 3. On the facts and circumstances of the case the Ld. Commissioner of Income tax(A) has erred in law in deleting the addition of ₹ 46,09,580/- made by AO on account of investment in jewellery. 4. On the facts and circumstances of the case the Ld. Commissioner of income Tax(A) has erred in law in deleting the addition of ₹ 54,27,849/- made by the AO on account of interest payment to Vijay Dixit Group. 5. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal. 2. The grounds raised in the Assessee s Cross Objetion read as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it Group. Aggrieved by the order of the AO, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 29.08.2014 rejected the various legal contentions raised by the assessee. However, the Ld. CIT(A) on merit deleted all the three additions. Aggrieved with the order of the Ld. CIT(A), the Revenue is in appeal and the assessee has filed Cross Objection. The Ld. AR at the threshold, submitted that he is not pressing the cross objection filed by the assessee. Accordingly, the same is dismissed as not pressed . REVENUE S APPEAL 4. The Ground no. 1 Ground no. 5 are general in nature and therefore, need not be adjudicated. 4.1 As regards Ground no. 2 relating to deletion of addition of ₹ 41,565/- on account of enhancement of the gross profit rate is concerned, we find that Ld. CIT(A) has deleted this addition on the basis of the findings recorded by him in the case of Mrs. Kumkum Kanodia for A.Y. 2008- 09. The addition in the case of Mrs. Kumkum Kanodia were deleted by the Ld. CIT(A) as per the order placed at Paper Book Pages 151 to 156 on the basis of the finding recorded by the Ld. CIT(A) in the case of group concern i.e. Vasudeva Jewellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order . 4.8.7 The AO has also not countered the summary of the arguments/ submissions taken before the AO as reproduced by him at the later part of page 3 and the beginning part of the page 4 of the assessment order. It is also observed that the AO has not reproduced the entire contents of the written submissions of the appellant dealing with the cash sales and absence of names and addresses of the buyers in the cash sales. The relevant portion of the assessee s written submissions which have been omitted to be reproduced in the assessment order which are directly dealing with the said issues is reproduced below for ready reference: Execution of sales and disclosures in books of accounts It involves following steps 1 Execution of sales a. Orders for purchase of commodity with MMTC and other reputed organization suppliers are placed upon receipt of enquiry by the customers. Such orders are delivered by the suppliers at prevailing rates of the commodity at the time of supplies. b. Upon receipt of the supplies and costs thereof it is ensured that the supplies be made at a rate so that at least minimum of the cost be recovered. c. Further, as per market tend pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever names and addresses has been given, as the assessee has no reason to doubt the version of the buyer. In this line of business, normally, the buyers are reluctant to disclose their identity and when the assessee has shown entire sales amount in cash, which is duly recorded in books and audited as such even by tax auditors. Without prejudice it may also be appreciated that in any case no disclosure of names and addresses of the purchasers is not going to adversely affect the interest of the assessee or revenue. b. The assessee is duly maintaining dayto- day quantitative details of purchase and sales made by it. The Quantitative tallies of purchases and sales made and record thereof is duly maintained which were even examined by investigating authorities and it is a matter of fact on record that no deviation thereof was found in a conclusive proof of not only the facts stated above but also the genuineness involved thereof. c. The cash sales so made is duly recorded in the books of accounts and cash thereof after meeting necessary expenses, recorded in books is deposited in bank accounts as and when required so after considering working capital requirements and other contin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich he has made such remarks. Therefore, I do not find any merit in this kind of ad hoc additions. It is also noted that the there is merit in AR s argument that the addition is otherwise unsustainable as the AO has not rejected the books of accounts. In this regard reliance has been placed by the AR on the decision of Hon ble Delhi Bench of ITAT in the case of ACIT Vs Sh. Vijay Kumar Aggarwal (ITA No. 4183/Del/2012 dated 28/06/2013) wherein it has been held as under: 4. After considering the arguments of both the sides and the facts of the case, we do not find any infirmity in the order of learned CIT(A). The Assessing Officer has mentioned that the profit on sale of paintings is ranging between 100% to 1000%. However, on what basis he made such observation is best known to hi. The learned CIT (A) has recorded the finding that in assessee s own case, last year, the gross profit disclosed was 14.78% while the gross profit in the year under consideration was better. Further, the question of application of GP rate can arise only on the rejection of books of account as per Section 145(3). For rejection of books of account, the Assessing Officer has to record the finding that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voucher could not be verified in the absence of any details of buyers, however, no inflated sale was pointed out. On the contrary, the sale was duly declared by the assessee in his VAT returns filed before the appropriate authorities (copies of which were furnished before the AO). In the present case, it is noticed that the AO applied GP rate of 0.2% on estimate basis and made the ad-hoc addition. However, no specific instance of inflated purchase or suppressed sale was pointed out and no specific defect was pointed out in the books of accounts. The assessee furnished the books of account with purchase/sale details, ledger and day to day stock register with quantitative details, the same had been accepted by the AO. Therefore, the ad-hoc addition made by the AO, by applying the GP rate of 0.2% was not justified, particularly when no comparable case was brought on record wherein such a profit was earned. We, therefore, considering the totality of the facts as discussed hereinabove are of the view that the ld. CIT(A) rightly deleted the addition made by the AO by following his own order for the assessment year 2005- 06 in the case of M/s VasudevaJewellers Pvt. Ltd. (supra), against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or rejecting the appellant s claim of the jewellery to be stock-in-trade of M/s PashupatiJewellers is the discrepancy noted by the AO in the invoice of M/s PashupatiJewellers. The ornaments mentioned in the invoice are of 14 carats gold whereas the valuation report mentions the same to be of 18 carat gold. 4.3.7 The AR has explained that the jewellery found at the premises were very much made of 14 carats gold and not of 18 carats gold. The invoice of M/s PashupatiJewellers was produced before the authorized officer on the day of search itself and only on the basis of the said invoice and explanation, the jewellery found was not seized but released. The AO has not appreciated the facts and explanation. The invoice produced before the AO was not a fabricated one. This very invoice was present before the authorized officer. The jewellery was also physically present before him on the day of search. And only after comparing the jewellery as per the invoice and as physically available the authorized officer had taken a decision not to seize the jewellery but released it. Had there been any iota of doubt about items not matching with the invoice, the authorized officer would have r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as before the AO during assessment proceedings. There is no change of stance. Thus it does not appear to be an afterthought. Therefore, I do not find any merit in holding that jewellery which was released (presumably on the ground that the same was found in stock-in-trade of M/s PashupatiJewellers) is unexplained. I also note here that the appellant had submitted before the AO, evidences showing inclusion of the said jewellery in the closing stock of M/s PashupatiJewellers and also the breakup of the said closing stock evidencing inclusion of the jewellery. 4.3.10 During the appeal proceedings, the AR also submitted that the jewellery found during the search proceedings cannot be added in the hands of the assessee, as at no point of time assessee has claimed ownership of the said jewellery. He explained that appellant is part of the family which has 6 persons, making the entire addition in the hands of the assessee was uncalled for. He submitted that the search was carried out on Mr. Rajesh Kumar Kanodia. It was based on his statement recorded during the search that the jewellery was released. At no point of time assessee s statement has been recorded. There was no se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rajesh Kanodia and ₹ 54,27,849/- in the hands of the assessee. The Ld. CIT(A) had deleted the addition made in the hands of the assessee following the order passed by him in the case of Mr. Rajesh Kumar Kanodia. The order of the Ld. CIT(A) in the case of Mr. Rajesh Kumar Kanodia came up in appeal before the ITAT. The ITAT has confirmed the order of the Ld. CIT(A) in the case of Rajesh Kumar Kanodia in ITA No. 5680/Del/2014 dated 3.04.2018. The relevant findings of the ITAT reads as under: 14. We have considered the rival arguments made by both the sides, perused the material available on record and the Paper Book filed on behalf of the assessee. We find during the course of search at the premises of the assessee the hard disk was seized and documents bearing page no.1 to 9 were retrieved from the said hard disk which contained certain payments made to Vijay Dixit group in the firm of cheques, pay orders and in shape of cash, the total of which comes to ₹ 23,70,10,708/-. On being questioned by the Assessing Officer, the assessee made elaborate submissions and also filed reconciliation statement before the Assessing Officer. The assessee admitted to have certain bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the payments made by the assessee group and despite having the copies of bank account of Senior Builder matching with the entries on page no.5, the Assessing Officer never cross-checked the same with Vijay Dixit group. The interest calculated by the Assessing Officer at the rate of 3.3334% per month has also no basis. The various factual findings given by the ld. CIT(A) could not be controverted by the ld. DR. We find the Assessing Officer has accepted the cheque payments and pay orders mentioned on the papers retrieved from the hard disk but has conveniently ignored the explanation of the assessee regarding the cash payment although the cash payments were reflected in the bank account of Senior Builder Ltd. When Senior Builders Ltd. is an assessee and the bank account is not an undisclosed one, therefore, all those cash deposits made in the bank account could not have been from the assessee. In this view of the matter and in view of the detailed reasoning given by the ld. CIT(A), we find no infirmity in his order. Accordingly, the order of the ld. CIT(A) is upheld and the ground raised by the Revenue is dismissed. 4.7 We find that both the parties fairly admitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
