TMI Blog2017 (11) TMI 2042X X X X Extracts X X X X X X X X Extracts X X X X ..... y decided by CIT(A) Authorized Representative claimed that the cash bill of sale of articles dated 20.01.2012 had been produced but since the sale was in cash the address was not available with the assessee and neither any confirmation was produced nor the party could be produced for the verification. It is seen that the books of accounts are audited and hence the mistake would have been detected. Secondly, no advance has been found recorded in the name of Jai Singh Kumawat on 13.03.2012, further no evidence in the form of confirmation or producing the party was undertaken and in fact the authorized Representative submitted that his address was also not available. In view of the above facts, the explanation of the appellant cannot be accepted and the addition made is confirmed. Disallowance of various expenses - expenses are not properly vouched, some of payment in cash, personal use etc. - HELD THAT:- Assessee placed reliance on the Coordinate Bench decision [ 2016 (4) TMI 658 - ITAT JAIPUR] in the case of Shri Anil Kumar Agarwal vs. ITO wherein similar additions on identical facts have been deleted. In the present case the AO has not rejected the books of accounts of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. AO is bad in law and deserves to be quashed. 5. That the appellant reserves the right to add, amend, withdraw or alter any ground of appeal before the finalization of said appeal. 2. Briefly stated the facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 19.02.2015. While framing the assessment, the AO made addition of ₹ 1,23,917/- on account of payment of packing expenses and advertising expenses violating the provisions of section 40A(3) of the Act. The AO has also made additions of ₹ 2,34.498/- on account of unexplained cash and ₹ 24,587/- on account of conveyance expenses (Rs. 12345/-), office general expenses (Rs. 5004/-) and telephone expenses (Rs. 7238/-). Against this, the assessee preferred an appeal before ld. CIT (A), who after considering the submissions, partly allowed the appeal. Aggrieved by this, the assessee has preferred the present appeal before this Tribunal. 3. Ground No. 1 relates to confirming the disallowance of payment of packing expenses and adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere in the order of ld. CIT (A), which is hereby affirmed. The ground of the assessee is dismissed. 4. Ground No. 2 relates to confirming the addition on account of unexplained cash. 4.1. The ld. Counsel for the assessee reiterated the submission as made in the written brief, as under :- In this regard it is submitted that in assessee s business mostly sales are made in cash. Since purchasers are last user of goods. The sale by the assessee are made as per individual satisfaction of each time. Usually customer changes the article as per his choice and some time due to non availability of desired design of gold ornaments purchasers left cash with the assessee and purchases the item as and when desired gold ornaments are ready as per their satisfaction and bill of purchases is issued on the date of delivery. In this case also the one customers of the assessee namely Sh. Jai Singh Kumawat has also came to the shop of the assessee for purchase of gold on 12.01.2012 and due to not availability of his required items he has left cash of ₹ 4,00,000/- and asked to by the goods for his requirement. However the assessee has not shown that cash of ₹ 4,00,000/- as advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lain the same. It has been submitted that the entire sales are made in cash and in this case one customer Shri Jai Singh Kumawat had left his articles for some modification as well as paid in advance ₹ 4,00,000/- to the assessee which was not credited in the regular books of accounts but was deposited in the bank account. It was submitted that due to this the cash book has shown an OD balance of ₹ 2,34,798/- on 13.01.2012. The Authorized Representative claimed that the cash bill of sale of articles dated 20.01.2012 had been produced but since the sale was in cash the address was not available with the assessee and neither any confirmation was produced nor the party could be produced for the verification. It is seen that the books of accounts are audited and hence the mistake would have been detected. Secondly, no advance has been found recorded in the name of Jai Singh Kumawat on 13.03.2012, further no evidence in the form of confirmation or producing the party was undertaken and in fact the authorized Representative submitted that his address was also not available. In view of the above facts, the explanation of the appellant cannot be accepted and the addition made is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). 4. Wrong basis at all: It is further submitted that the ld. AO has taken own imaginary basis which is not a good basis looking to the nature of expenses or business of the assessee and made higher estimated disallowance. The AO has not brought any other single evidence or material on record before making disallowance. Therefore, also the entire disallowance, so made may kindly be deleted in full. And it is settled that no disallowance and addition can be made without any basis and material. 5. Reasonable Claim made: It is submitted that looking to a turnover of more than ₹ 6.87 Crore (approx), claim of above expenditure which is otherwise very lesser or reasonable or meager looking to the business of the assessee. Thus such a claim to achieve such a turnover is not at all unjustified when the assessee is a distributer and commission agent where the margin of profit almost fix and very low. 6. Business Purpose: All these expenses were incurred exclusively for the purpose of businesses and are under the provisions of the Act. On bare perusal of the expenses it shall revel that the expenses has been claimed for the business and on these account there is no e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and all the sales and purchases are duly maintained by it, therefore, we do not find any justification for disallowing 5% of the expenses towards Conveyance, Deepawali, General, Telephone, Transport etc. Hence in view of the above submission the disallowance so made may kindly be deleted in full. 5.2. On the contrary, the ld. D/R supported the orders of the authorities below. 5.3. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. The ld. Counsel for the assessee placed reliance on the Coordinate Bench decision in ITA No. 288/JP/2014 dated 24.02.2016 in the case of Shri Anil Kumar Agarwal vs. ITO wherein similar additions on identical facts have been deleted. In the present case the AO has not rejected the books of accounts of the assessee. The additions made merely on adhoc basis is not sustainable. We, therefore, delete the addition. The ground of the assessee is allowed. 6. Ground No. 4 5 are general in nature, needs no adjudication. 7. In the result, appeal of the assessee is partly allowed. 8. Now take up the appeal of the assessee in ITA No. 83/JP/2017 pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal are related to each other. Thus all these grounds are adjudicated together. The ld. Counsel for the assessee reiterated the submission as made in the written brief. The submissions of the assessee are as under :- 1. Correct Facts: At the very outset we submit the correct position, facts which have been ignored by both the lower authority despite the available on record or misinterpreted by them. As the assessee is a dealer and manufacturer of gold and diamond ornaments and jewellery since long. During the year survey u/s 133A was conducted on dated 06.11.2012. During the course of survey actual position of stock was found and as per books of accounts and valued by the AO and departmental valuer were as under: 2. Statement has been read wrongly or misinterpreted: The ld. AO and CIT(A) has wrongly read or misinterpreted the statements of the assessee they have not appreciated the statement in their true sense perspective. In the whole statements there are only three question No. 13,14, and 24(PB5,6,7,12) are related to this issue. ( a) In the statements in Ans.13(PB5) the question is that during the course of survey today on physical verification the invento ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve made payment but we have not received the bill (the details of the same is given at page 7 PB7). There apart I also want to say that according to books of account in which the summary of opening stock is there, which also include the 1289.800 gm Diamond gold jewellery, the calculation of which has been taken by you in the valuation of stock i.e included in the opening stock valuation of ₹ 3,95,21,744/- but not included in the quantity of opening stock of gold. Because it has been shown separately. Thus according to me the difference in the quantity of gold come to 5277.72 gm. Thus the assessee has accepted the weight of excess stock of gold at 5267.72 gms (wrongly written as 5277.72 gms in the statements). Not the quantity of Stones or diamond. Otherwise the department must asked separate or specific question or separate or specific answer given. ( c) In the statements in Ans.24 (PB12) the question is that during the survey upon you stock of total value of ₹ 6,59,32,376/- has found, which not include the stock of silver which has been determined by the department valuer at ₹ 201600/-. Thus on physical verification total stock comes to ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue of surrender amount vide AnnexureA-2 attached with this WS. The assessee after reading the total facts of statement the value of surrender amount as per statement recorded and books of accounts come to know that surrender value wrong due to mistake and same was retracted by him by filing detailed note alongwith return of income AnnexureA-2 attached with this WS. Thus the assessee has filed objection against surrendering amount within a period of 7 days from the date of receipts of statements. In the above statement the assessee nowhere has stated that I surrender such amount or quantity of color stone in the x quantity and x value. He has only stated about the Gold . Further in the assessment order itself the ld. AO at page 3 in middle para stated that it resulted in final weight of excess stock of jewellery at 5267.72 gms . It means it is an admitted that the surrender was only for Gold not for studded stone because the weight of stone comes in Carrot not in grams and the valuation of 5267.72 grams at ₹ 2,10,77,5858/- is wrong. Otherwise weight would have come more than to 5267.72 gm. Due to wrong valuation in absence of specific question by the Revenue assessee sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Statement recorded during survey has no evidentiary value as held in Paul Mathews Sons (2003) 263 ITR 101 (Ker.). It was held that statement during survey does not give the same status of evidence . Section 132(2) specifically states that such statement can be used as evidence in any proceedings under the Act. However section 133A does not give statement during survey the status of an evidence. It is further submitted that as per section 133A, there is nothing which suggest that a statement can be recorded on oath before the commencement of survey or during survey. However it recourse is taken to section 131(1). During the survey, a statement can be recorded on oath, as the powers to record a statement on oath are vested in the authority u/s 131(1) read with section 133A (6) and in the circumstance specified u/s 133A (6) only. Section 133A does not empower any ITO to examine any person on oath, so statement recorded under section 133A has no evidentiary value and any admission made during such statement cannot be made basis of addition. In support of his contention, the ld. Counsel for the assessee placed reliance in the following case CIT V/s M/s Maver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs In respect of surrendered stock as income from other sources in place of business income and disallowing the remuneration of ₹ 64,10,000/- to partners, the ld. Counsel for the assessee submitted as under :- At the very outset it is submitted that the above matter is directly covered by the recent decision of this Honble bench in the case of DCIT v/s Sh. Ram Narayan Birla in ITA No. 482/Jp/2015 dt. 30.09.2016, where the Honble Bench at page 4 in para 4.3 held that Undisputed facts emerged from the record that at the time of survey excess stock was found. It is also not disputed the assessee is engaged in the business of jewellery. During the course of survey excess stock valuing ₹ 77,66,887/- was found in respect of gold and silver jewellery. The coordinate Bench in the case of Chokshi Hiralal Maganlal v/s DCIT 131 TTJ(Ahd)1 has held that in a case where source of investment/ expenditure is clearly identifiable and alleged undisclosed assets has no independent existence of its own or there is no separate physical identity of such investment/expenditure then first was to be taxed is the undisclosed business receipts invested in unidentifiable unacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d related to the regular business stock of the assessee. The decision of the Coordinate Bench in case of DCIT v/s Sh. Ram Narayan Birla(Supra) supports the case of the assessee in this regard. Therefore the investment in the excess stock has to be brought to tax under the head business income and not under the head income from other sources . The ld. Counsel placed reliance on the following judgments :- CIT vs. Babulal K. Daga (2016) 387 ITR 0114 (Guj.) ITO vs. Sadbhav Developers Co Vandana Trading (2013) 37 CCH 0396 (Ahd. Trib.) The ld. Counsel submitted that in view of the above facts, submissions and legal position, the addition so made may kindly be deleted in full. 10.1. On the contrary, the ld. D/R opposed the submissions and supported the orders of the authorities below. 10.2. We have heard rival contentions, perused the material on record and gone through the orders of the authorities below. At the time of hearing, the ld. Counsel for the assessee drew our attention to page 53 of the paper book annexure wherein various details of gold and diamonds ornaments and valuation thereof are mentioned. After considering these details, we find that the de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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