TaxTMI 
TaxTMI 
TaxTMI 
2021 (11) TMI 762
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....seized. Declaration of income under various heads was made by the partners on behalf of the assessee firm in the statement recorded u/s 132(4) placed at Pg.74-126 of PB-I. It was submitted by the partner that the cash balances are shown by pencil, however, in the computer data the exact cash balance are recorded. It was further submitted that as per the estimate the cash balance is around 42 to 45 lakhs. In the statement Shri Sanjay Jain surrendered the additional income of Rs. 1,60,00,000/- on account of loose papers in his hands and in the hands of the members of the family and the firm. It was further stated that person wise, concern wise and year wise details would be submitted subsequently. Thus, the income declared in the statement u/s 132(4) was vague and general in nature and was on a rough estimate basis. The income was subsequently quantified on the basis of seized records and the income was offered to tax in the respective hands. 3. The assessee is filing the return of income regularly. Books of account are audited u/s 44AB of the Act. Notices u/s 153A of the Act were issued for A.Y. 2012-13 to 2015-16. Instant appeal relates to A.Y. 2016-17 since the date of search was....
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....n. The declaration is made in reply to Question 54 of the statement recorded on 22.08.2015 in which the partner has stated (English version) that: "I have seen the various papers obtained in the search proceedings at various premises. Keeping in mind the business activities of my firm and family and the facts have discussed with them. Keeping in mind all incriminating documents and issues, I on behalf of myself, family members and the firm in addition to the amount mentioned herein above, accept Rs. 1,60,00,000/- as additional undeclared income. Year wise and concern wise bifurcation of this Rs. 1,60,00,000/- will be submitted by me to the Income Tax Department after some time" Thus the declaration is made in a consolidated manner for the entire group without mention of any assessment year or to the concern in which case it is being made. The declaration is not made specifically in the hands of the assessee firm. The Ld. A.O. has made the addition solely on the basis of the declaration made u/s 132(4). The Ld. CIT(A) has upheld the addition relying on the Evidence Act remarking that the statement made during the course of the search is binding and as such the addition is ....
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....s and incriminating material found during the course of search. 8. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions referred and relied by Ld. counsel for the assessee. Ld. counsel for the assessee had mainly contended that the alleged addition of Rs. 1.60 cr. is made by Ld. AO only on the basis of the statement recorded during the course of search without referring to any incriminating/seized material. Ld. counsel for the assessee also submitted that for various loose papers and incriminating material found during the course of search, assessee had already offered additional income and the Ld. AO has also made separate additions under various heads pertaining to stock, cash, pawning and moneylending business. 9. We find merit in the contention of the Ld. counsel for the assessee that Ld. AO had made various other additions based on the seized documents apart from the addition made for surrendered of Rs. 1.60 cr. made u/s 132(4) of the Act. On perusal of the assessment order we find that the Ld. AO while making the impugned addition has observed as follows: "13.1 During the course of search, Shri Sanjay Jain offer....
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....014-15 respectively for the amount declared by the assessee u/s 132(4) of the Act contending that the same is without corroborating with any incriminating material found during the course of search. 26. We observe that the search was conducted on Signature Group including the assessee on 29.1.2014. Certain loose papers were seized.Additional income of Rs. 3,25,00,000/- (Rs. 25,00,000/- + Rs. 3,00,00,000/-) was offered for Assessment Years 2013-14 and 2014- 15 respectively. However in the return of income filed post search u/s 153A of the Act such additional income of Rs. 25,00,000/- and Rs. 3,00,00,000/- was not offered in the return of income. During the assessment proceedings it was submitted that various loose papers and documents narrated by the Ld. A.O found during the course of search does not pertain to the assessee. Since there was no such incriminating material relating to the assessee found during the course of search relating to the addition in question the alleged addition was made purely on the basis of the statement given u/s 132(4) of the Act. 27. We also observe that in the assessment order as well as order of the first appellate authority there is no mention of....
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.... 750 7 Sainath Infrastructure P. Ltd. 25 25 Total 1100 8 Ultimate Builders 225 225 9 Virasha Infrastructure 225 225 450 10 M/s Sainath Colonizers P. Ltd. 110 110 11 Shri Anil Kered Khilwani 40 40 Total 150 30. From the above we find that in the case of M/s Ultimate Builders also additional income was surrendered in the statement given u/s 132(4) of the Act for which the addition was made by the Ld. A.O without corroborating it with any incriminating material and the addition was confirmed by Ld. CIT(A). When the matter travelled before this Tribunal the addition of Rs. 2.25 crores was deleted by this Tribunal observing as follows:- "9. We have heard rival contentions and perused the records placed before us and carefully gone through the judgments referred to and relied by both the parties. The sole grievance of the assessee raised in Ground No.1 of the instant appeal is against the order of Ld. CIT(A) confirming the addition of Rs. 2,25,00,000/- made by the Ld. A.O on account of undisclosed income surrendered during the course of search by th....
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....urse of hearing before us Ld. Counsel for the assessee contended that during the course of search i.e. between 29.1.14 to 31.1.2014 no cash or unrecorded assets was found, no incriminating material was found and no income was offered to tax in the statement recorded u/s 132(4) of the Act of the person found to be in the possession and control of the books of premises. Relevant questions asked about the loose paper found were duly replied in the statement. 12. Ld. Counsel for the assessee further contended that since the search in the case of assessee was concluded on 31.1.2014 the alleged statement of the partner Mr. Vipin Chouhan taken on 02.02.2014 cannot be construed as a statement given during the course of search u/s 132(4) of the Act so far as relating to the assessee since the search in its case already concluded on 31.1.2014. He further submitted that no incriminating material was found during the course of search and as held by Hon'ble Tribunal in the latest decision in the case of ACIT(1) vs. Sudeep Maheshwari (supra) that "no addition was called for which has been made merely on the basis of the statement without correlating the disclosure made in the statement wit....
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....ch is initiated and concluded. In the instant case the search was initiated on 29.1.2014 and concluded on 31.1.2014 by a authorised officer for the assessee which is verifiable from the Panchanama framed by the search team. The statement of Mr. Vipin Chouhan was taken on 02.02.2014 by another authorised officer and this date is after the conclusion of the search in the case of the assessee on 30.01.2014. 18. There may have been some force in the contention of the revenue authorities if the statement u/s 132(4) of the Act was taken during the course of search at the assessee's premises or during the continuation of search, the statement may have been recorded on other places but the fact is that so far as the assessee M/s. Ultimate Builders is concerned the search concluded on 31.01.2014 and before the conclusion of the search no surrender of undisclosed income was made in the statement recorded u/s 132(4) of the Act by the persons available at the assessee's business premises. 19. As regards the statement of Mr. Vipin Chouhan given on 02.02.2014 is concerned, we find that this statement contains the surrender for various group concerns and not specifically for the asses....
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....n personal name. It is also stated that the case laws as relied by the A.O. are not applicable on the facts of the present case. The assessee has relied on the decision of the Hon'ble Supreme Court rendered in the case of Pullangode Rubber Produce Co. Ltd. 91 ITR 18 (SC), wherein the Hon'ble Court has held that admission cannot be said that it is conclusive. Retraction from admission was permissible in law and it was open to the person who made the admission to show that it was incorrect. However, reliance is placed on the judgement of the Hon'ble Gujarat High Court rendered in the case of CIT Vs. Chandrakumar Jethmal Kochar (2015) 55 Taxmann.com 292 (Gujarat), wherein it has been held that merely on the basis of admission that few benami concerns were being run by assessee, assessee could not be basis for making the assessee liable for tax and the assessee retracted from such admission and revenue could not furnish any corroborative evidence in support of such evidence. It was further urged by the assessee that admission should be based upon certain corroborative evidences. In the absence of corroborative evidences, the admission is merely a hollow statement. We have g....
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....ed after search, the income of Rs. 20 lacs surrendered by Shri Sheo Kumar Kejriwal was not declared by the assessee-firm. On being asked to explain the reason for not showing the surrendered amount in the returns, it was submitted by the assessee that declaration made by the partner was misconceived and divorced from real facts. It was contended that the declaration was made after persuasion, which, according to the learned counsel for the assessee, Shri Binod Poddar, in fact, was because of coercion exerted by the search officers. In explanation, it was submitted that the firm or the individual had no undisclosed income. The assessee's said retraction was not accepted by any of the authorities below on the ground that the statement given by the assessee appears to be voluntarily given statement disclosing undisclosed income of Rs. 20 lacs. According to the learned counsel for the assessee, Shri Binod Poddar, the Assessing Officer had full jurisdiction to proceed for further enquiry and could have collected evidence in support of alleged admission of undisclosed income of the assessee. 6. We are of the considered opinion that statement recorded under section 132(4) of the Inc....
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....ious judgments referred above including one in the case of ACIT(1) Vs. Sudeep Maheshwari (supra) decided by us wherein also we, after referred various judgments of Hon'ble High Courts have held that additions cannot be sustained merely on the basis of statement given during the course of search without correlating the addition with the incriminating seized material. Therefore the decision relied by Ld. Departmental Representative laying down the ratio that addition can be made even on the basis of statement given during the course of search u/s 132(4) of the Act irrespective of the fact whether any incriminating material is found or not, will not support Revenue in the instant case. 26. In the given facts and circumstances of the case and respectfully following the judgements and decisions referred above we find that firstly the statement given by Mr. Vipin Chouhan u/s 132(4) of the Act on 02.02.2014 cannot be considered as the statement given u/s 132(4) of the Act in the instant case of the assessee firm since the search action in case of assessee was concluded on 31.1.2014 by the Authorised Officer. Secondly as regards to other business concerns referred by Mr. Vipin in his....
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....ed, as it is based only on the statement recorded u/s 132(4) having no nexus whatsoever with any incriminating/seized material found during the course of search carried out u/s 132 of the Act at the premises of the assessee. Accordingly sole ground raised by the assessee is allowed. 13. Now we take up Revenue's appeal in IT(SS)ANo.205/Ind/2019 the revenue has raised following grounds of appeal: "1.On facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 18,84,500/- made by assessing officer u/s 69 of the Income Tax Act 1961 on account of undisclosed investment in loans in pawning business. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 3,07,500/- made by assessing officer u/s 69 of the Income Tax Act, 1961 on account of undisclosed investment in loans in money lending business as per diary BS-4. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 60,00,000/- made by Assessing officer on account of unexplained cash found during course of search. 4. On the facts and in the circumstances of the case, the ld. CIT(A) erred in....
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....putation of income of Shri Alok Jain for A Y. 2012-13 to 2016-17 and Balance Sheet, P&L Alc for AY. 2010-11 to 2016-17 301-321 4. Copy of assessment order of Shri Sanjay Jain 322-344 5. Copy of assessment order of Shri Rajeev Jain 345-365 6. Copy of BS-44 Pg.ll 366-367 7. Copy ofLPS -1 Page 2, 3, 19,21,50,62,63 & 64 368-375 8. Details of Donations given to Pandit Todarmal Smarak Trust 376-381 INDEX-III S.NO. PARTICULARS PAGE NOS. 1. List of inventory of jewellery found and seized 382-385 2. Copy of ledger account of purchase of gold and silver 386-390 3. Copy of Death Certificate and will of Cham eli Devi with copy of Bhu-Adhikar and Rin Pustika of agricultural land held by executor and copies of affidavit of SI-ll'i Arun Karnekar, Mr. Malukchand, Mr. Kalyanmal and Mr. Devendra Jain who are witness to the will and the advocate who drafted the will. 391-413 4. Copy of wealth tax returns ofShikharchand Jain, Ajay jain, Sanjay Jain, Monika Jain, Bhawna Jain and Rajeev Jain 414-448 5. Copy of bills for purchase of jewellery before the search but entered after search 449-505 6. Copy of affidavits of various parties from whom....
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....ion in the hands of the firm of Rs. 18,84,500/- on the ground of undisclosed investment in the pawning business on the basis of the entries in diary in BS-4. The A.O. disregarded the submission of the assessee and the cash flows/fund flow/balance sheets/ cash book ledger/details of interest income and investment, filed and held that the activity of financing was done by the assessee firm and the transactions undertaken were all unrecorded and made additions in various years in which the financed amount was given.Such inference was drawn by the Ld. AO after observing that Shri Sanjay Jain in the statement recorded u/s 132(4) during the course of search have accepted disclosure of Rs. 65 lac in the hands of Alankar Jewelers on account of entries in BS-4 which contained list of some pawning article found during the course of search. The Ld. AO further held that the family members have not shown interest income on money lending business regularly in their ITR and thus concluded that the explanation of the assessee is an afterthought. 20. We further note that the matter was taken before the Ld. CIT(A) who accepted the assessee's contention that the interest income from pawning business....
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....the loan amounts given were also physically found and inventoried by the search party. Details of the dates on which the loan/advance was given and other condition of the loans were found attached to the pledged jewellery items based on which the year wise amount of loans given were tabulated and mentioned at Page No. 11to 14 of the assessment order. The appellant before the AO as well as before me has submitted that the pawning business was carried out by the partners of the assessee and their family members and all the transactions relating to pawning business are fully recorded in books of account of respective family member. The various family members of the partners of the assessee firm has been showing interest income from pawning business in the ITR filed by them uls 139. The income is shown by them on cash basis as and when it is received. Thus, this fact clearly shows that all the transction relating to , pawing business are carried out by the family members. The appellant has also filed copy of detailed chart detailed chart containing the interest income earned from pawning activity and investment made in such business in various years by the various family members. On pe....
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....artners have quantified the investment in Girvi transactions and found a sum of Rs. 15,33,0001- as unexplained investment which have already been offered by respective family member while filing return of income U/S 153A of the Act. Once, the AO, has accepted unexplained income and income declared by the family members in their respective returns of income for earlier years relating to pawning and money lending business, there lies no locus on the, AD to presume that the transactions relating to pawing and money lending business have been actually done by the appellant. 5.1.5 Further, there were various entries corresponding to which no pledged jewellery was found during the course of search. The appellant in this regard has stated that the loan given was repaid by the beneficiary of the loan. After considering the entire facts into totality the only picture which emerges out is that the additions have been made by the AO on presumptive belief that the impugned diary was found during the search contains unrecorded transactions of pawning and money lending business of the appellant. However, the AO failed to bring any corroborative evidence having direct nexus of undisclosed pawni....
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....n of Rs. 60,00,000/- made by the Ld. AO on account of unexplained cash found during the course of search. 26. Brief facts relating to this addition as stated by ld. counsel for the assessee are that the assessee has been maintaining regular books of accounts which are duly audited and these were presented before the Ld. AO during the course of assessment proceedings. The AO had not found any deficiency in the books of accounts and has not rejected them and has also not invoked the provisions of section 145(3). The balance as per the computerized books of account as on the date of search was Rs. 73,31,037/- and the source of such cash balance was duly recorded in the books and was readily verifiable. The AO could not have disbelieved the cash balance appearing in the books of accounts without rejecting the books of account. However, as per the manually maintained books the balance was 10,15,919/- as on 08/08/2015. It was submitted before the Ld. A.O. that these balances in the manually maintained books are coming from 01/04/2015 which were not correct and were recorded in pencil. Since the audit for the F.Y. 2014-15 was pending the balances were not inked out. The Ld. AO had howeve....
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....h balance of about 25-30 lakh may be unexplained. However, the other partner considering the manual cash book has surrendered an amount of Rs. 60 lakhs as undisclosed income. It was also submitted on behalf of assessee that one of the partners in his statement (Pg.119 of PB-I) has stated that the cash book has been written upto 08/08/2015, the cash balances have been noted with pencil in manual cash book and the cash balance as on 08/08/2015 has been mentioned at Rs. 10,47,368/-. It is further submitted that the cash balance was not inked out because the books of accounts for F.Y. 2014-15 were under audit and were to be finalized. As per the audited books of accounts the cash balance is shown at Rs. 73,31,037/- as on 21/08/2015. The balance shown in the computerized cash book as on 01/04/2015 is Rs. 76,16,708/- while in the manual cash book, the balance as on 01/04/2015 is taken at Rs. 26,13,010/-. After the completion of the audit, the assessee produced the books of accounts which showed the cash balance as on the date of the search at Rs. 73,31,037/-. It is humbly submitted that the cash balance as on 31/03/2015 in the audited books of accounts has been accepted by the Ld. A.O. O....
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....earch. During the course of search cash amounting to Rs. 69.25 lakhs was found from show room of the assessee. Shri sanjay Jain was required to explain the source and acquisition of cash amounting to Rs. 60 lakhs; however, he failed to explain the source of cash found during the course of search and made voluntary disclosure of Rs. 60 Iakhs as additional income of the assessee firm. However, the assessee firm failed to offer the said additional income to tax while filing return of income u/s 153A of the Act. Therefore, the AO during the course of search required the assessee to explain the reasons for offering lower value of undisclosed income in return of income. The assessee in reply submitted that the books of accounts were not completed as on date of search and later on when the same were completed, there is cash balance of the impunged amount in books of accounts. The AO after considering reply of the assesse did not find the same acceptable and stated that submission of the assesse is nothing but an afterthought. 5.6.1 The appellant during the course of appellate proceedings has submitted that Shri Shikar Chand Jain during his statement recorded on oath has submitted that t....
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....le and purchase. It is also important to mention that the AO has not rejected books of accounts even after noticing such huge discrepancies and has taken manual cash book to be true and correct even when the opening balance is taken as wrong. If the opening balance in manual cash book would have been taken correct as per audited balance sheet following picture will emerges out:- S.No. Particulars Amount 1. Opening balance as per audited books of accounts as on 01.04.2015 Rs. 76,16,708.711 2 Less: Opening Balance as per manual cash book as on 01.04.2015 Rs. 26,13,010/- Add: Closing Balance as per manual cash book as on 08.08.2015 Rs. 10,15,919/- Total closing balance as on 08.08.205 Rs. 60,19,617.711/- Hon'ble ITAT Indore in the case of Urmila Agarwal vs ACIT (2014) 24 ITJ 785(Indore) has held that in case where the Cash book is produced before the AO- the same neither rejected nor any deficiency pointed out-no justification to disallow credit of day to day cash balance. In the instant case, if the AO would have adopted opening balance as per audited books of accounts which were not rejected by him, there would remain no difference in cash f....
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....04.2015 in the audited books of accounts was Rs. 76,16,708/- but in the manual cash book the balance as on 01.04.2015 was taken at Rs. 26,13,010/- which was marked in pencil. Since the audit for F.Y. 2014-15 was undergoing when the search took place on 21.08.2015, the assessee subsequently completed books of account, got them audited and produced such audited books before Ld. AO. During the course of assessment proceedings no additions have been made during A.Y. 2015-16 for the alleged cash in hands shown as on 31.03.2015. Thus Ld. AO has neither brought on record any deficiency in the books produced nor has rejected books of account. Therefore Ld. AO should have considered the opening balance of cash in hands as on 01.04.2015 of Rs. 76,16,708.71/-. On considering the opening balance as on 01.04.2015 at Rs. 76,16,708/- the alleged unexplained cash stands explained. Thus, no interference is called for in the finding of Ld. CIT(A) deleting the addition of Rs. 60,00,000/- ground no.3 raised by the revenue stands dismissed. 31. Ground No.4 of the revenue's appeal relates to addition of Rs. 2,25,544/- made u/s 69 of the Act based on the seized diary BS44 page 11 for the alleged moneyle....
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....e paper as a whole shall have to be read. No addition can be made on the basis of the presumption. The Ld. CIT(A) has correctly deleted these additions. 36. We find that Ld. CIT(A) has deleted this addition of Rs. 5,00,000/- observing as follows: 5.3.2 I have considered the reasoning of the case, evidences filed by the appellant and findings of the AO. During the course of search LPS-1 "vas found and seized which contains 64 pages. Therefore, keeping in view the complexity of the issue I find is convenient to discuss each paper of LPS-1, on the basis of which additions have been made, individually.' My findings on this issue are as under:- * Page No 2 of LPS-1- During the course of search page no 2 of LPS-1 was found and seized. The said loose paper has narration at the top "Pandit shikhar Chand Jain, Vidisha" and gives brief description of the idols of god against which an amount of Rs. 12,50,000/- is mentioned. A sum of Rs. 7,50,000/- is mentioned as paid with receipt numbers on various dates as detailed in the loose paper and Rs. 5,00,000/- is appearing as balance payable. The appellant before me as well as before AO has contended that the said loose paper does not ha....
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....s uncontroverted by the Ld. DR and the undisputed fact emerge that the alleged loose papers as per the diary BS43 which are the foundation for the addition of Rs. 5,00,000/- do not belongs to the assessee. It actually belongs to Jain trust namely Pandit Todarmal Smarak Trust. One of the partners of the firm namely Shikhar Chand Jain is known to be a preacher and a renowned speaker on Jain Dharma and also attached to the said Jain Trust. These loose papers refer to purchase of the idols of God worshiped by the Jain Community for being placed in a Jain Temple. Therefore, under the given facts and circumstances of the case since the alleged loose paper do not belong to the assessee firm, Ld CIT(A) has rightly deleted the addition. The finding of Ld CIT(A) needs no interference. Accordingly ground no.5 raised by the revenue stands dismissed. 38. Through ground No.6 revenue has challenged the finding of Ld. CIT(A) deleting the addition of Rs. 4,18,16,751/- made by the ld. AO. 39. Brief facts relating to this addition as submitted by the ld. counsel for the assessee are that during the course of search valuation of inventory which comprised of gold and diamond jewellery and silver orna....
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....nations of the assessee and made an addition of Rs. 4,18,16,751/- ( Rs. 7,19,27,190/-(income declared u/s 132(4) (-) Rs. 3,03,10,439/- (income offered in the ITR) It was submitted before the ld. A.O. that the partners/family members are staying in the same premises in which the show room of the assessee is situated. The AO in Para 7.2 of his assessment order have specifically mentioned that the jewellery under consideration was found at the residence and show room. The statement of Mr. Shikhar Chand Jain made on 22.08.15 and the inventory prepared at that time and place makes a specific mention of the fact that gold jewellery of 7764.24 grams valued at app Rs. 1,95,05,738/- was found in the bed room of Shikhar Chand Jain. The Ld. A.O. did not accept the contention of the assessee. The Ld. AO disregarded the will and the submissions of the assessee and did not make any adjustment for such jewellery and the reasons for disbelieving the contentions of the assessee are summarized herein below. Para No Observation of the AO 7.16 Jewellery mentioned in the W.T return was not physically found Proof of conversion of gold into stock in trade was not furnished Assesse....
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....or the purpose of obtaining VISA she had required the assessee firm to give a valuation report of the jewelry owned by her family and with this object she had brought her jewelry to the assessee firm. As she had planned to leave for Canada after obtaining the VISA she had kept her jewelry with her father/brothers for safe keeping which was kept in the business/residential premises of the assessee. The quantum of jewelry belonging to the lady and her husband is readily verifiable from the copy of valuation report of her jewelry dated 12.05.2015 seized during the course of search (LPS-1 Page No 23-24). The said lady left for Canada on 29.07.2015 and returned back to India on 27.10.2015 and this fact is also readily verifiable from the copy of her pass port. During post search enquiries this fact was brought to the knowledge of the Investigation wing which issued summons to the said persons and duly recorded their statement in which both the persons confirmed these facts. They also filed an affidavit before the investigation wing confirming these facts. The copy of the statement recorded was not provided to the assessee. 44. When the matter came up before the ld. CIT(A) all the neces....
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.... search. The assessee in reply submitted that out of total jewelley 10987 gms belongs to partners and the same has been included in stock. Bills of jewellery of 5685.92 gms were pending as on date of search and were received after search. Jewellery of 448 gms belongs to Smt Meena Jain and jewellery of 331.64 gms belongs to Shri Ashok Jain. The AO after considering reply of the assessee did not find the same acceptable and stated that no such jewellery was found as mentioned in wealth tax return as physically found during the course of search. The assessee could not prove the conversion of such gold in stock in trade. Further, the bills received by the assessee after date of search are relating to parties not trading with assessee. Also, jewellery belonging to Smt Meena Jain and Shri Ashok Jain has not been claimed' to have been kept in showroom of the assessee. 5.5.1 The appellant during the course of appellate proceedings submitted late smt. Chameli Devi had executed a will on 30.05.2000 making distribution 0: her assets including gold/gold jewellery among various family members. The will was drafted by advocate Mr Ajay Khanerkar and Vias signed in presence of two witness Sh....
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.... After considering the plea- raised by the appellant I find it considerate to discuss this issue in depth and wider- . (a) Personal Jewellery of Partners (10987 gms) The appellant during the course of assessment proceedings as well as appellate proceedings has claimed that out of total jewelley found during the course of search jewellery of 10987 gms belongs to family members and partners of the appellant firm. The appellant has also explained the acquisition of jewellery and stated that Mrs. Chameli Devi the wife' of the partner Mr. Shikar Chand Jain got married appx. 65 years back and belonged to an affluent family. She got married to a family of jewelers and as per the prevailing custom in the Indian society got substantial quantity of jewellery as gift from her parents and in laws and on other important occasions. However, she died on 04.06.2COO. Prior to her death she had executed a will on 30.05.2000 making distribution of her assets including gold/gold jewellery amongst her various family members, Tile will was drafted by her advocate Mr. AjayKhanerkar and was signed by two 'witnesses namely Maluk Chand Jain & Kalyan 1-1&! Jain. As per the will, the entire asset ....
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....ks of account. Person wise details' of gold ornament aggregating to 10987.35 gram so included in the stock were also mentioned in the statement recorded: Therefore, it cannot be said that the assessee did not provide the details of jewelley of 10987 gms. As regard to observation made in (iii) & (v) it is seen that the assessee has submitted affidavits of four persons i.e. advocate (preparer of will), two witness and executor of the will, confirming the genuineness of the will, however, the AO did not raise any doubt on affidavits filed. The family members and partners have disclosed the jewellery in their wealth Tax Return which \Va3 submitted before the search. This cannot be called a case of afterthought. It may further be appreciated that no item wise inventory was prepared and the quantification/valuation was done on weight basis only in a lump SUD. manner as would be verifiable from the copy of inventory/valuation sheet enclosed. The fact that total jewelry found with the assessee and his family members during the course of search was 33853.86 grams whicl: have totally been considered as the stock in hand of the assessee firm is not in dispute. The partners of the assessee....
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....he brief details of dealing with these suppliers are as under:- Raviraj Bullion & Jewellers since 23.08.2012 Ankur Jewellers since March 2014 Kanak Gems since September 2013 Jaina Jewellers since 06.02.2012 Shilpi Jewellers since inception of the business Nonetheless, the AO has held that the assessee was provided various opportunity to complete its books of accounts, however, failed to do so. The appellant on contrary has stated that it was not provided any opportunity to complete the books during the course of search. The assessee was made to prepare a reconciliation statement of the jeweller; by incorporating details of sales/purchase available in an excel sheet. Shri Shikar Chand Jain in his sworn statement recorded on oath on 22.08.2015 has clearly admitted that books of accounts are completed till 30.06.2016 and some entries prior to 30.06.2015 are still pending and therefore, he was unable to produce P&L/Balancc sheet/Stock Register up to 20.03.2')15. The reasons given by the appellant for in complete books was that its accountant was iII and on leave. Once, the assessee has brought in the kind notice of the AO that various bills are pending from differe....
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....oices and affidavits but \Va3 0 f the opinion that the assessee did not intent to show the same in b':'0ks of accounts. On perusal of copy of invoices, ledger account and affidavits it was observed that payments were made through cheques and various payments were made before the date of search which shown that intention of the assessee is correct and is not to hide any-purchase. The reason of non-reflection of these purchase in books of accounts was that the bills and invoices were pending from these parties and were recorded when received. The appellant has submitted that in certain cases the assessee had. purchased gold bars which were dully recorded in the regular books of accounts. These gold bars were sent for conversion into ornaments. In the conversion process the ornaments received, gain in weight due to impurities added for making off the jewellery. Thus weight of ornaments received is much more than the weight of the gold bar purchased. This excess quantity' in certain cases has escaped, adjustment while calculating the weight of the books stocks which was adjusted in the reconciliation chart prepared and submitted before the AO during the course of assessment....
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....nnot be too harsh on appellant to make addition w.r.t jewellery of Smt Meena Jain and Shri Ashok Jain and therefore, the total quantity of 'jewellery found during the course of search be reduced to this extent. The appellant by taking an additional plea submitted that the rate adopted for determining the book value of stock was estimated with estimated purity of 80% whereas the physical stock found was valued by adopting varying purity as was determined by the valuer. Further, the purity of the ornaments considered in physical stock and book stock should have been considered at The same level and accordingly the valuation should have been done at the e rates for determining the difference in value of stock. Also, If the same urity would have been adopted the book value of the stock would have een computed at Rs. 1,67,73,689.as against book value computed at Rs. 1,52,26,036/-i. as detailed below: Book Quantity Rate adopted Correct rate Value calculated Correct Value Gold/diamond 6105.928 2192 2393 13384194 14611485 Silver 85.27049 21600 25537 1841842 2162204 Total 15226036 16773689 The plea raised by the a....
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....to question 6 has stated that the jewelry of his wife has also been kept in the show room. The partner Sanjay Jain in his statement recorded on 22.08.2015 have also made a statement in reply to Q-53 that the investment in gold of the family members/ concerns which was also reported in the wealth tax return have been merged in the stock in hand of the firm for which no accounting entry has been made in the books of account. Person wise details of gold ornament aggregating to 10987.35 gram so included in the stock were also mentioned in the statement recorded. Jewelry found in the show room/residence was accumulated at one place and inventory cum valuation was done, no item wise inventory was prepared and the quantification/valuation was done on weight basis only in a lump sum manner as verifiable from the copy of inventory/valuation sheet (pg. 382-385 of the PB-III). The fact that total jewelry found with the assessee and his family members during the course of search was 33853.86 grams which have totally been considered as the stock in hand of the assessee firm is not in dispute. The partners of the assessee have filed their Wealth Tax returns and have offered their gold jewellery ....
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....the gift and the statement during the course of search are sufficient enough to explain the jewellery of 10987 grams which was included in the stock of inventory but not accounted in the books as they were personal assets of the partners and not of the assessee firm. Further in light of the evidence filed before us which were also placed before lower authorities which are of the dates preceding to the date of search it cannot be said to be an afterthought submission to explain the gold ornaments weighing 10987.35 grams. 51. We, therefore, are of the considered view that Ld. CIT(A) has rightly appreciated the facts and documentary evidences in accepting the contention of assessee that the alleged unexplained stock of gold ornament weighing 10987 gms is the personal jewellery of partners and is therefore duly explained. 52. As regards the addition for value of 5686 gms of gold jewellery claimed to be purchased prior to the date of search but bills accounted for after the date of search and addition being deleted by ld. CIT(A), we find that the assessee has provided the following details which commonly states that the payments were made prior to the date of search but the bills were....