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of <h1>Tribunal upholds CIT(A) decision on excess stock & deficit cash additions, dismissing revenue appeal and assessee's cross objections.</h1> <h3>Asst. Commissioner of Income Tax Central Circle-1 Visakhapatnam Versus M/s Hirapanna Jewellers</h3> Asst. Commissioner of Income Tax Central Circle-1 Visakhapatnam Versus M/s Hirapanna Jewellers - TMI Issues Involved:1. Addition of Rs. 64,96,471/- relating to excess stock of gold jewellery.2. Deficit cash of Rs. 11,59,906/- found during the survey.Issue-wise Detailed Analysis:1. Addition of Rs. 64,96,471/- relating to excess stock of gold jewellery:The Income Tax Department conducted a survey under Section 133A at the business premises of the assessee on 24.11.2015, finding an excess stock of 4247.486 grams of gold jewellery. The assessee provided a purchase bill from M/s B.G. Jewellers for 1521.744 grams, reducing the excess stock to 2752.742 grams. The assessee later submitted a bill from M/s Jai Mata Di Jewellers for 2717.400 grams, which the Assessing Officer (AO) rejected due to inconsistencies and lack of supporting evidence. Consequently, the AO treated the 2717.400 grams of gold jewellery as unaccounted investment under Section 69B, adding Rs. 64,96,471/- to the income.The Commissioner of Income Tax (Appeals) [CIT(A)] found that the AO's rejection was based on suspicion without proper enquiry. The CIT(A) verified the ledger accounts and noted that the practice of not detailing the ornaments in bills was common among jewellers. The AO did not examine the partner who had the bill during the survey. The CIT(A) concluded that the AO's addition was based on mere suspicion and deleted the addition.Upon appeal, the Tribunal upheld the CIT(A)'s decision, noting that the assessee had provided sufficient evidence to reconcile the stock difference. The Tribunal emphasized that the AO did not verify the genuineness of the bill from M/s Jai Mata Di Jewellers and made the addition based on suspicion. Therefore, the Tribunal dismissed the revenue's appeal on this ground.2. Deficit cash of Rs. 11,59,906/- found during the survey:During the survey, the physical cash balance was Rs. 22,65,000/- against the book balance of Rs. 34,24,906/-, resulting in a deficit of Rs. 11,59,906/-. The assessee explained that Rs. 8,00,000/- was taken by a partner to his residence and the remaining Rs. 3,59,906/- was miscellaneous cash. The AO found a mismatch in the explanation and treated the deficit as unexplained cash credit under Section 68, adding Rs. 11,59,906/- to the income.The CIT(A) partly confirmed the addition, accepting the explanation for Rs. 8,00,000/- but upholding the addition of Rs. 3,50,000/- as admitted by the assessee. The Tribunal agreed with the CIT(A), noting that the explanation for Rs. 8,00,000/- was reasonable and supported by evidence. The Tribunal also upheld the addition of Rs. 3,50,000/- as the assessee admitted it as income. Consequently, both the revenue's appeal and the assessee's cross objections on this issue were dismissed.Conclusion:The Tribunal upheld the CIT(A)'s decision to delete the addition of Rs. 64,96,471/- relating to excess stock of gold jewellery, as the AO's addition was based on suspicion without proper enquiry. The Tribunal also upheld the CIT(A)'s decision to partly confirm the addition of Rs. 3,50,000/- for the deficit cash, while accepting the explanation for Rs. 8,00,000/-. Both the revenue's appeal and the assessee's cross objections were dismissed.
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