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TMI Blog2024 (12) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... lete scrutiny and the case was centralized to Central Cirle-29, New Delhi. Notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee through ITBA portal and assessee submitted the relevant information through ITBA portal and AR of the assessee attended the proceedings and submitted the documents from time to time. 3. The assessee, an individual and proprietor of M/s Jainsons Jewellers, is engaged in the business of trading of gold, diamond and silvery jewellery. Further, the assessee also earned exempt agricultural income of Rs. 50,71,980/-. During the course of survey at the business premises of the assessee stock was physically inventoried and valued by the Government Registered Valuer at Rs. 11,73,79,299/- whereas as per the books of account assessee had valued the same at Rs. 9,29,21,209/- as on 31.05.2018. Thus, there was a difference of Rs. 2,44,58,090/-, which was confronted to the assessee. Based on the statement recorded during the course of survey u/s 133A of the Act dated 03.05.2018 the Assessing Officer considered the same and observed that assessee has not given any satisfactory explanation with regard to difference in stock between physical and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see failed to do so. Further, the assessee has failed to produce its books of accounts/stock register during proceedings. It is pertinent to mention that during the course of survey proceeding while recording the statement u/s 131 of Income Tax Act, 1961 as per preliminary question No 11 the assessee stated that all the purchase/sale bills have been entered in the books of account but later on which the stock valuation has been done and there were excess stock which was confronted to the assessee, then the assessee has taken this unnecessary plea for justifying its unaccounted stock. 2. The assessee Sh. Basant Jain did not produce any supplementary documents/ evidence in respect of valuation. Further, it is pertinent to mention that there is huge difference in respect of various items like diamond quantity etc. Also during the course of survey and as per books of account. Hence the plea taken by the assessee in respect of valuation is not correct. In this regard, it is pertinent to mention that the valuation of stock has been done in the present of assessee and the inventory of valuation of stock has been duly by the assessee during the course survey and no objection has been rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the statement of the appellant. Further, there is no finding of the survey team or the Assessing Officer why the bills available at the premises and produced before the survey team shall not be considered for computing the disclosed stock as per books. The appellant had also submitted confirmations of account of these parties along with proof of payments made to them through banking channels. On perusal of bank statements of these parties, it is also noted that the payments to 3 parties (other than Ridhima Chains & Jewellery) was made before the date of survey, which cannot be held to be an afterthought. It is also noted that the appellant has declared purchase from these vendors in its GST returns placed at page No. 138-139 of the paper book. In view of the facts of the case and evidences, I am of the opinion that the above referred purchase bills shall be considered while computing the stock available in books. Accordingly, I hold that the stock in the books in the category of "22 carat gold ornaments" shall be increased by 3229.95 grams and the excess stock shall be recomputed as under:- Particulars of Jewellery Quantity as per Valuation Report (A) Quantity as per books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 336.40 cts Rs.15,609 per ct. 52,50,868 Silver 58,139.30 gms Rs.34 per gm. 19,76,736 Total 72,27,604 GP @25% of 72,27,604 = Rs. 18,06,901/-. In view of the above facts and discussions, addition of Rs. 18,06,901/- is sustained as undisclosed income." 6. Aggrieved with the above order assessee preferred appeal before us raising following grounds of appeal: "1(i) That on facts and circumstances of the case, the CIT(A) has erred in upholding the addition of Rs. 40,10,403/- made u/s 69 of the Income Tax Act, 1961 on account of unexplained investment in the jewellery stock without properly appreciating the submissions filed by the Appellant. (ii) That the part of the excess stock found at the business premises of the Appellant being in the nature of jewellery received from various customers for repairs and restoration, the Assessing Officer in total disregard to the repair receipts seized during survey has erred in treating the 217 grams of 22 carat gold jewellery as unexplained and in making consequential addition. (iii) That the action of the Department Valuation Officer in applying the hypothetical gold jewellery rates is not inconformity to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... N.A. 11,83,785 Total Value of Excess Jewellery Stock as per CIT(A) 40,10,04 As per the Appellant: Stock Items Excess quantity found except Repair items Rates applied by Department Valuer Total value of Excess Jewellery Stock Gold (22K) 422.10 grams 3,075 12,97,958 Gold (14K) 367.61 grams 2,377 8,73,809 Color Stones - Misc. Items 6,508.90 carats N.A. 11,83,785 Total Value of Excess Jewellery Stock 33,55,551 Note: The Appellant was holding around 213 grams of 22K gold jewellery as a custodian kept for repair work and accordingly, the same may be reduced from the excess jewellery found. [635 grams - 213 grams) The diary slips found during survey are enclosed at PB Page 47- 49. Value of Short Stock found during the Survey: As per the Appellant: Stock Items Short Quantity found during Survey Average purchase Cost as per the books of accounts Total value of Short jewellery Stock Diamond 336 Carats 7,075 23,77,33` Silver 58,139 grams 19 10,79,641 Total value of Short Stock 34,56,972 8. With reference to the above charts he submitted that assessee also adopted the rates applied by the Department's Valuer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee as a custodian from the customers for the purpose of repair work was not brought on record by the assessee at the time of survey itself. Learned CIT(A) has considered the difference in physical stock. After considering both the parties it is also a fact on record and the nature of business of the assessee that there are certain jewellery which may be kept for the purpose for repair purpose. In our view assessee should have brought to the notice of the officers at the time of survey itself. Since the nature of business demands that certain jewellery may be kept for repair purpose which could not be denied. For the sake of substantial justice, in our considered view, the difference claimed by the assessee is only Rs. 6,54,853/-, we are inclined to give the benefit of doubt to the assessee to the extent of 50% of the above value. Therefore, we direct the Assessing Officer to reduce the same from the amount sustained by the learned CIT(A) i.e. Rs. 36,82,978/-. 13. Coming to the next issue of short quantity found during the survey we observe that assessee is not disputing the short quantity found during the search. However, the assessee is aggrieved with the value adopte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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