TaxTMI 
TaxTMI 
2020 (1) TMI 399
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....nafter referred to as Act) dated 27/12/2010 by the ld. ACCC-2, Mumbai (hereinafter referred to as ld. AO). 2. The only ground raised by the revenue is with regard to valuation of stock of jewellery. 3. The brief facts of this issue are that the assessee is engaged in the business of trading in diamond. There was a search and seizure action u/s.132(1) of the Act on 02/10/2004 in the case of Sunjyot Gems. In consequence to this, a survey action u/s.133A of the Act was conducted in the business premises of the assessee on 02/10/2004. The assessee filed a return of income for the A.Y.2005-06 on 28/10/2005 declaring total income of Rs. 1,09,86,750/-. During the course of survey proceedings stock of diamonds of 1089.70 Crores belonging to a....
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....assessee came forward to offer this sum of Rs. 1,59,53,910/- as it is undisclosed income by way of declaration during survey and by considering the same while filing the return of income also in respect of 823.57 carats of diamonds. The ld. AO in the original assessment completed u/s.143(3) of the Act dated 28/12/2006 made further addition of Rs. 52,64,584/- on the ground that the total closing stock of 1101.61 Crores including opening stock of Rs. 278.04 Crores which were valued at 2,02,77,216/- whereas the assessee had valued the opening stock of Rs. 43,23,306/-. Accordingly, the ld. AO computed further unaccounted investment made in the stock in the sum of Rs. 52,64,584/- as under:- Value of Stock of diamond of Rs. 1089.70 Crores as p....
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....offered by the assessee pursuant to the survey in the sum of Rs. 1,59,53,910/-. 3.4. In the first round of proceedings, the matter reached up to the Tribunal and this Tribunal remanded the matter to the file of the ld. AO with the following directions:- Para 14 : The issue of inclusion of the accounted opening stock of 266.13 cts in the said valuation report ignoring the actual cost price as per the books is analysed as under. Admittedly, assessee had the total opening stock of 278.04 cts and they are accounted. Out of the same, the stock 266.13 cts are given to Sanjyot Gems and found at their premises, which is an admitted fact both by the Sanjyot Gems and the assessee firm on one side and the revenue on the other side. As evid....
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....e CIT(A) in confirming the addition of Rs. 52,64,584/- made by the AO, the assessee has filed an appeal before the Tribunal. Assessee has filed the concise grounds as well as an additional ground pointing out the CIT(A) has erred in not increasing the purchase cost while making addition to the valuation of unexplained investment in stock. r\ Since this issue of 'not increasing the consequential purchase cost of the alleged diamonds' has not been raised during the first appellate proceedings, the AO or CIT(A) has not accession to deal with the same. Considering the merits of the issue, we proceed to admit the same and refer the same to the files of the AO for fresh adjudication after giving reasonable opportunity of being heard. Acco....
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....he revenue is in appeal before us. 7. We have heard rival submissions and perused the materials available on record including written submissions dated 28/08/2017 and 12/04/2018 of the ld. DR and written submissions of the assessee dated 25/04/2018. We find from written submissions of the ld. DR that purchase of 823.57 carats of diamonds made during the year would be unaccounted stock of the assessee. While this is so, there is no need to treat the opening balance of diamonds of 278.04 carats as unaccounted stock or make any addition thereon on account of valuation difference. It is not in dispute that the opening balance as on 01/04/2004 of 278.04 carats of diamonds have been duly reflected in the books of accounts of the assessee with ....
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....tion of addition u/s.69C of the Act. No arguments were advanced by the ld. DR at the time of hearing before us in this regard. We find that even the written submissions filed by the ld. DR, does not make any mention about the addition made u/s.69C of the Act. 7.1.1. In view of our aforesaid observations, we hold that the ld. CIT(A) had rightly deleted the addition made u/s.69C of the Act in the sum of Rs. 1,59,53,910/- on which, we do not find any infirmity. 7.2. Now, what survives is the addition made on account of value of 823.57 carats of diamonds purchased during the year. Value of 823.57 carats as per the departmental valuation - Rs. 1,93,03,901/- Less: Value of 823.57 carats of diamonds offered by the assessee -Rs. 1....