9911796707
TMI Blog2014 (3) TMI 1217X X X X Extracts X X X X X X X X Extracts X X X X ..... - was found from vault (Tijori) and Rs. 3,472/- from the counter. Statement of Shri Manish Nayak was recorded during the course of survey. Books of account were found written upto 08.11.2001, according to which the cash balance was of Rs. 73,742/-. The assessee could not explain the difference of Rs. 99,730/-. The AO, therefore, made addition u/s. 68 holding the same to be unaccounted cash. It was contended before the ld. CIT(A) that cash kept in Tijori was divided into two parts - one that surplus cash was kept for longer period in Tijori and other taken out daily from Tijori for day-to-day expenditure. Surplus cash kept in Tijori was debited to Tijori account in books of account as on the date of survey. Cash in Tijori account was Rs. 1,00,000/-. The copy of Tijori account and relevant portion of the cash book was submitted and it was submitted that if cash of Rs. 100000/- is added to the cash balance of Rs. 73,743/-, the total cash on the date of survey found would have been 1,73,743/-. It was argued that since source is explained, therefore, the addition is unjustified. The ld. CIT(A) found the contention of the assessee to be correct. Copy of cash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The gross profit was around 20% and therefore, further stock worth Rs. 1,20,692/- stands explained and after reducing from Rs. 1,20,692/- the value of stock purchased but not accounted for amounting to Rs. 50,000/-, there remains stock worth Rs. 70,692/-. After reducing 20% GP of Rs. 11,782/-, the balance remains difference in stock of Rs. 58,910/-. The assessee during the course of survey had agreed to surrender unaccounted income to this extent and offered Rs. 58,910/- for taxation on account of unaccounted stock. The AO did not accept the contention of the assessee. The assessee had mentioned the receipts against opening stock, purchase, sales and closing stock in silver account. According to the AO, the value stated by the assessee was not logical relating to rates etc. The AO observed that the facts are distorted. According to the AO, it applied the rate for closing stock @ 6135/- per kg. Thus, it valued the stock of 42.944 kgs at Rs. 2,63,586/-. As per the survey, the stock of silver was found weighing 100.475 kgs and as per the books of account, the stock of silver was weighing 42.944 kgs. Thus, there was a difference of 57.531 kgs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uation made by them was correct and should not have been disturbed by the AO who has not seen the physical inventory prepared by the survey team. Further as per inventory, the value of silver stock varied from Rs. 1245/- per kg. to Rs. 7053/- per kg. This valuation was based on ground reality and not on guess work. It was submitted that the stock as per books of account of silver ornaments like payal Kardon etc. was having more purity than gift items and have more value than unaccounted gift items, hence, the rate applicable to stock in the books could not be applied to the total stock. The AO has given lesser benefit of goods received from Kolhapur. It was argued similarly more valuation made on the basis of chit attached has been accepted by the AO. The assessee in statement recorded on 09.11.2001 had given the details of excess value of stock of Rs. 58,910/- and made surrender. The addition made by the AO is, therefore, unjustified. The ld. CIT(A) on examination of the facts and material on record found the contention of the assessee to be correct. It was found that it was not ethically correct on the part of the AO to sate that the assessee had tried to befool th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as declared by the assessee as Rs. 4,08,793/- as on 31.03.2002. According to the AO, it could not be accepted as true and correct figure. He, therefore, took out the rate of silver as on 31.03.2002 from Bharat Direct Tax Ready Recknor which reflected the same to Rs. 7875/- per kg. According to the AO, the assessee was in habit of showing the turnover 50% of the closing stock whereas the local profit shown the closing stock of 25% to 30% of the turnover. He, therefore, applied the provision of section 145 and estimated the total sales at Rs. 5 lacs and applying the GP rate of 20% worked out the profit of Rs. 1,00,000/-. Since the assessee had shown GP of Rs. 39,211/-, the balance of Rs. 60,789/- was brought to tax. It was submitted that the weight was wrongly taken at 113.459 kgs by the AO whereas the correct weight was only 98.095 kgs. Further the AO had wrongly applied pure silver rate as per Bharat Direct Tax Ready Recknor. The stock is to be valued at cost or market price whichever is lesser. In the case of assessee average purchase price comes to Rs. 4172/- per kg. Therefore, even if the formula of the AO is applied, the sales would be less th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp;3,00,000/-. Therefore, further addition was unjustified. The ld. CIT(A) accepted the contention of the assessee and found that the stock items have 18 and 20 carats of gold and accordingly, addition was deleted. 13. On consideration of the rival submissions, we are of the view the addition has been rightly deleted by the ld. CIT(A). The ld. Counsel for the assessee demonstrated before us that when the assessee has made surrender of excess stock of Rs. 3,00,000/-, therefore, further addition would be unjustified. In this case, survey party accepted the surrender of the assessee of excess stock of gold. Therefore, the AO should not have substituted the opinion of the survey party without any material in his possession. This ground is accordingly dismissed. 14. On ground No. 5, the Revenue challenged the deletion of addition of Rs. 10,61,752/- made by the AO on account of gold ornaments found in a black bag during the survey. The AO in the assessment order observed that the survey party had found a black bag filled with new gold ornaments weighing 4130.610 gms., the details of which were brought out in the assessment order. This was valued @ Rs. 3,200/- per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ishing and making new ornaments. According to the A.O. none of the gold ornaments found in the black bag appeared as if they were used or old ornaments. According to him, they were brand new ornaments. None of the gold ornaments had any tag as a mark of belonging to some one else. Moreover, the assessee had not been showing receipt for repairing and polishing in the P&L account, he was not showing any amount paid to polish-man and repairer. Therefore in absence of clinching evidences and corroborative material it was held by him that the assessee had purchased the entire gold which was found in black bag weighing 4130.610 gms. from undisclosed sources. The rate prevailing on that date was of Rs. 4,268/- per 10 gms. and therefore its value should have been Rs. 17,62,9447-. Since the value of Rs. 7,01,192/- was shown by the assessee, the balance of Rs. 10,6 1,752/- was brought to tax. 15. It was vehemently contended before the ld. CIT(A) that during survey a black bag containing gold ornaments belonging to the appellant as well as the customers was found. The gold ornaments on which chits containing the names of the customers was attached were of the customers wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s findings in the appellate order are reproduced as under : "Now the contention of the appellant is found to be correct. The bag contained the gold ornaments not only belonging to the appellant but also to the customers for the reason that in respect of certain gold ornaments, chits containing the name of the customers were found attached with such gold ornaments. As a matter of fact, on the basis of these documentary evidences only the appellant during the course of survey itself, while his statement was being recorded was able to specify as to how much gold ornaments belonged to which person. In fact, if chits were not available, it would not have been possible for the appellant to name the parties to whom they belonged. There were 15 parties and each has submitted gold ornaments of a particular^ weight on a particular date and it was not possible for the appellant to mention such details in his statement. As a matter of fact, all these have been brought out in the assessment order itself which make it clear that to the extent it has been identified to be belonging to other parties, they cannot be held to be belonging to the appellant. Since the appellant was not in a position ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven on this issue. PB 14 is final statement and question No. 3 is regarding surrender made. The assessee on the basis of material on record has been able to explain part of the gold ornaments and whatever stock could not be explained, the assessee has made surrender of the same. The ld. CIT(A), therefore, on proper appreciation of facts and material on record has rightly deleted the addition on this issue. This ground is accordingly dismissed. 18. On ground No. 6, the revenue challenged the deletion of addition of Rs. 1,21,691/- on account of gold ornaments. The AO observed that the assessee is indulged in purchase and sales of gold ornaments outside the books and accordingly book results were rejected and addition was made. It was submitted before the ld. CIT(A) that no query was raised on this issue and there was no basis to make addition. The ld. CIT(A) accepted the contention of the assessee and the addition was accordingly deleted. It is stated by both the parties that this ground is same as is considered on account of silver account in which the ld. CIT(A) similarly deleted the addition. Following the same finding we dismiss this ground of appeal of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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