PALIWAL JEWELLERS, Jaipur v. ITO, Jaipur

ITA 82/JPR/2017 | 2012-2013
Pronouncement Date: 27-11-2017 | Result: Partly Allowed

Appeal Details

RSA Number 8223114 RSA 2017
Assessee PAN AAEFP7182L
Bench Jaipur
Appeal Number ITA 82/JPR/2017
Duration Of Justice 10 month(s) 1 day(s)
Appellant PALIWAL JEWELLERS, Jaipur
Respondent ITO, Jaipur
Appeal Type Income Tax Appeal
Pronouncement Date 27-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Partly Allowed
Bench Allotted B
Tribunal Order Date 27-11-2017
Assessment Year 2012-2013
Appeal Filed On 25-01-2017
Judgment Text
VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCHE S JAIPUR JH DQY HKKJR] U;KF;D LNL; OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT JM & SHRI VIKRAM SINGH YA DAV AM VK;DJ VIHY LA- @ ITA NO. 82 & 83/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2012-13 & 13-14. PALIWAL JEWELLERS B-360 HIMMAT NAGAR TONK ROAD JAIPUR. CUKE VS. THE INCOME TAX OFFICER WARD 6(3) JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAEFP 7182 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI SHRAWAN KR. GUPTA (ADVOCATE) JKTLO DH VKSJ LS@ REVENUE BY : SHRI SHAILENDRA SHARMA (ADDL. CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09.11.2017. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/11/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT J.M. THESE ARE TWO APPEALS BY THE ASSESSEE DIRECTED AGA INST TWO SEPARATE ORDERS OF LD. CIT (A)-2 JAIPUR DATED 15.12.2016 AND 13.12 .2016 PERTAINING TO ASSESSMENT YEARS 2012-13 AND 2013-14 RESPECTIVELY. WE FIRST T AKE THE APPEAL OF THE ASSESSEE IN ITA NO. 82/JP/2017. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT ON LAW AND FACTS THE LD. CIT (A) HAS GROSSLY E RRED IN HOLDING THAT EXPENSES OF RS. 1 23 917/- HAS BEEN DISALLOWED CORRECT BY APPLYING SECTION 40A(3). THE EXPENSES HAS BEEN DISA LLOWED WRONG ILLEGAL AND WITHOUT CONSIDERING THE SUBMISSION OF A PPELLANT. 2. THAT THE LD. CIT (A) HAS GROSSLY ERRED IN CONFIRMIN G THE ORDER OF THE LD. AO THAT EXCESS CASH BALANCE RS. 234498/- WAS TR EATED CORRECT AS UNEXPLAINED CASH AND INCOME OF THE ASSESSEE. THE ADDITION OF RS. 234498/- IS TOTALLY UNJUSTIFIED AND AGAINST THE FACTS OF RECORD. 2 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 3. THAT THE LD. CIT (A) HAS GROSSLY ERRED TO RESTRICT 10% EXPENSES UNDER THE FOLLOWING HEADS : CONVEYANCE EXPENSES RS. 12345.00 OFFICE & GENERAL EXPENSES RS. 5004.00 TELEPHONE RS. 7238.00 ---------------- TOTAL : RS. 24587.00 ---------------- THE EXPENSES HAS BEEN DISALLOWED ON ESTIMATE BASIS AND ADDITION DESERVES TO BE QUASHED. 4. THAT THE ORDER OF THE LD. AO IS BAD IN LAW AND DESE RVES TO BE QUASHED. 5. THAT THE APPELLANT RESERVES THE RIGHT TO ADD AMEND WITHDRAW OR ALTER ANY GROUND OF APPEAL BEFORE THE FINALIZATION OF SAID APPEAL. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS FRAMED VIDE ORDER DATED 19.02.2015. WHILE FRAMING THE ASSESSMENT TH E AO MADE ADDITION OF RS. 1 23 917/- ON ACCOUNT OF PAYMENT OF PACKING EXPENSE S AND ADVERTISING EXPENSES VIOLATING THE PROVISIONS OF SECTION 40A(3) OF THE A CT. THE AO HAS ALSO MADE ADDITIONS OF RS. 2 34.498/- ON ACCOUNT OF UNEXPLAINED CASH AN D RS. 24 587/- ON ACCOUNT OF CONVEYANCE EXPENSES (RS. 12345/-) OFFICE & GENERA L EXPENSES (RS. 5004/-) AND TELEPHONE EXPENSES (RS. 7238/-). AGAINST THIS T HE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT (A) WHO AFTER CONSIDERING THE SUBMI SSIONS PARTLY ALLOWED THE APPEAL. AGGRIEVED BY THIS THE ASSESSEE HAS PREFERRED THE P RESENT APPEAL BEFORE THIS TRIBUNAL. 3. GROUND NO. 1 RELATES TO CONFIRMING THE DISALLOWA NCE OF PAYMENT OF PACKING EXPENSES AND ADVERTISING EXPENSES. 3 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 3.1. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. HE SUBMITTED THAT THE ASSESSEE HAS MADE PAYMENT TO M/S BALAJI JEWELLER PURSE AND VIPUL BAG HOUSE FOR MANUFACTURE OF PURSES AND BAGS. THE MANUFACTURING ACTIVITIES ARE DONE ON A VERY SMALL B ASIS FROM HIS OWN HOUSE AND THE ACTIVITIES ARE IN THE NATURE OF COTTAGE INDUSTRIES AND WITHOUT POWER AS STATED BY THEM. HENCE THE SAME IS COVERED U/R 6DD(F) WHICH P ROVIDES AS UNDER: WHERE THE PAYMENT IS MADE FOR THE PURCHASES OF THE PRODUCTS MANUFACTURED OR PROCESSED WITHOUT THE AID OF POWER IN A COTTAGE INDUSTRIES TO PRODUCER OF SUCH PRODUCTS. THEREFORE LD. COUNSEL SUBMITTED THAT DUE TO ABOVE REASON THE ASSESSEE HAS MADE PAYMENT IN CASH WHICH IS NOT DISALLOWABLE U/S 40A( 3). THE LD. AO AND CIT(A) BOTH DENIED THE SAME FOR WANT OF EVIDENCE. THERE IS NO PROOF OR ANY ALLEGATION OF THE REVENUE THAT THE PAYMENTS ARE BOGUS OR NOT GENUINE AND NOT INCURRED. THE AO HAS NOT FOUND BOOKS OF ACCOUNT AS DEFECTIVE AND NOT REJ ECTED THE BOOKS OF ACCOUNTS. HENCE LOOKING TO NATURE OF TRANSACTION AND BUSINESS THE SAME SHOULD BE ALLOWED. 3.2. ON THE CONTRARY THE LD. D/R OPPOSED THE SUBMI SSIONS. HE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 3.3. WE HAVE HEARD RIVAL CONTENTIONS PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD . CIT (A) WHILE CONFIRMING THE DISALLOWANCE HAS OBSERVED AS UNDER :- 2.3. I HAVE PERUSED THE FACTS OF THE CASE THE AS SESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. AS NOTED AND REPR ODUCED IN THE ASSESSMENT ORDER IT WAS SEEN THAT EXPENDITURES OF MORE THAN RS. 4 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 20 000/- HAVE BEEN INCURRED IN CASH AND THE SAME WA S DISALLOWED BY THE ASSESSING OFFICER UNDER SECTION 40A(3). IN THE PRESENT PROCEEDINGS IT WAS STATED THAT M/S. BALAJI JEWELER S AND VIPUL BAG HOUSE ARE MANUFACTURER OF PURSES AND BAGS ON SMALL BASIS AND ARE IN THE NATURE OF COTTAGE INDUSTRIES. HOWEVER NO EVIDE NCE TO THAT EFFECT WAS PRODUCED BY THE AUTHORIZED REPRESENTATIVE FURT HER IT WAS ALSO NOT STATED AS TO HOW THEY ARE COVERED UNDER THE EXCEPTI ON TO THE PROVISIONS AND HENCE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS CONFIRMED. THE GROUND OF APPEAL IS DISMISSED. THE LD. COUNSEL FOR THE ASSESSEE HAS NOT CONTROVERT ED THE ABOVE FINDING OF LD. CIT (A) BY FURNISHING ANY EVIDENCE. THUS WE FIND NO RE ASON TO INTERFERE IN THE ORDER OF LD. CIT (A) WHICH IS HEREBY AFFIRMED. THE GROUND O F THE ASSESSEE IS DISMISSED. 4. GROUND NO. 2 RELATES TO CONFIRMING THE ADDITION ON ACCOUNT OF UNEXPLAINED CASH. 4.1. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSION AS MADE IN THE WRITTEN BRIEF AS UNDER :- IN THIS REGARD IT IS SUBMITTED THAT IN ASSESSEES BUSINESS MOSTLY SALES ARE MADE IN CASH. SINCE PURCHASERS ARE LAST USER OF GOODS. THE SALE BY THE ASSESSEE ARE MADE AS PER INDIVIDUAL SATISFACTIO N OF EACH TIME. USUALLY CUSTOMER CHANGES THE ARTICLE AS PER HIS CHO ICE AND SOME TIME DUE TO NON AVAILABILITY OF DESIRED DESIGN OF GOLD O RNAMENTS PURCHASERS LEFT CASH WITH THE ASSESSEE AND PURCHASES THE ITEM AS AND WHEN DESIRED GOLD ORNAMENTS ARE READY AS PER THEIR SATIS FACTION AND BILL OF PURCHASES IS ISSUED ON THE DATE OF DELIVERY. IN THI S CASE ALSO THE ONE CUSTOMERS OF THE ASSESSEE NAMELY SH. JAI SINGH KUMA WAT HAS ALSO CAME TO THE SHOP OF THE ASSESSEE FOR PURCHASE OF GO LD ON 12.01.2012 AND DUE TO NOT AVAILABILITY OF HIS REQUIRED ITEMS H E HAS LEFT CASH OF 5 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. RS.4 00 000/- AND ASKED TO BY THE GOODS FOR HIS REQ UIREMENT. HOWEVER THE ASSESSEE HAS NOT SHOWN THAT CASH OF RS.4 00 000 /- AS ADVANCE IN HIS BOOKS AND DEPOSITED RS. 5 00 000/- IN ITS BANK ACCOUNT ON 13.01.2012 WITH THE OTHER CASH BALANCE THIS RS. 5 00 000/- ALSO INCLUDE ALLEGED CASH OF RS.2 34 798/- ON DT. 13.01. 2012. SH. JAI SINGH HAS FINALLY PURCHASED GOLD ITEMS ON DT. 20.01.2012 THROUGH BILL NO.3429 COPY OF THE SAME IS ENCLOSED (PB6) BUT PRE VIOUSLY DUE TO NON AVAILABILITY OF DESIRED GOLD ITEMS CASH WAS PAID OF RS.4 00 000/-OR DEPOSITED WITH THE ASSESSEE ON DT. 12.01.2012 BUT A CTUAL DELIVERY OF GOLD ITEMS WERE TAKEN ON DT. 20.01.2012 AND BILL WA S ALSO ISSUED ON THAT DATE. AS SUCH CASH OF RS. 4 00 000/- WAS LAYI NG WITH THE ASSESSEE ON 12.01.2012 OUT WHICH BELONGS TO JAI SINGH KUMAWA T. AND SAME WAS DEPOSITED IN BANK EXCESS BY RS. 2 34 798/- ON DT. 1 3.01.2012. HOWEVER THE LD. AO HAS ACCEPTED THIS SALE TO JAI SI NGH AND NOT DOUBTED. THE LOWER AUTHORITY HAS REJECTED THE CLAIM OF THE ASSESSEE ONLY DUE TO THE REASON THAT HE HAS NOT PRODUCED SH. JAI SINGH FOR VERIFICATION. IT IS GENERAL PRACTICE NO BUSINESSMAN MENTIONED THE FULL ADDRESS OF CUSTOMERS. AND WHEN THE ASSESSEE WAS NOT HAVING ANY ADDRESS THEN HOW IT IS POSSIBLE TO PRODUCE TO HIM. 2. HERE WE WOULD LIKE TO SUBMIT THAT WHILE DOING A JU DICIOUS ACT BY A PERSON (HERE THE AO) SHOULD ALSO KEEP IN MIND THE C IRCUMSTANCE FACTS GENERAL APPROACH NATURE OF BUSINESS ETC.. HE SHOUL D NOT RESTRICT TO HIMSELF ONLY TO THE EVIDENCE WHERE THE SAME IS NOT POSSIBLE. HERE THE AO RESTRICTED TO HIMSELF ONLY EVIDENCE AND IGNORED THE CIRCUMSTANCE FACTS GENERAL APPROACH NATURE OF TERANSACTION ETC . KINDLY REFER THE DECISION OF MANGE RAM MITTAL V/S ACIT 105 TTJ 594(DEL)(SB) HENCE WE PRAY YOUR OWNER TO CONSIDER OUR CONTENTION IN THE INTEREST OF NATURAL JUSTICE AND DELETE ENTIRE ADDITION. 6 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 4.2. ON THE CONTRARY LD. D/R OPPOSED THE SUBMISSIO NS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4.3. WE HAVE HEARD RIVAL CONTENTIONS PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) HAS GIVEN HIS FINDINGS IN PARA 3.3 OF HIS ORDER AND FOR THE REASONS GIVEN THEREIN HE UPHELD THE ACTION OF THE ASSESSIN G OFFICER. THE FINDINGS OF THE LD. CIT (A) ARE AS UNDER :- 3.3. I HAVE PERUSED THE FACTS OF THE CASE THE AS SESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. ON PERUSAL OF TH E CASH BOOK THE ASSESSING OFFICER FOUND THAT THERE WAS EXCESS CASH OF AN AMOUNT OF RS. 2 34 798/- AND THE ASSESSEE WAS ASKED TO EXPLAI N THE SAME. IT HAS BEEN SUBMITTED THAT THE ENTIRE SALES ARE MADE IN CA SH AND IN THIS CASE ONE CUSTOMER SHRI JAI SINGH KUMAWAT HAD LEFT HIS AR TICLES FOR SOME MODIFICATION AS WELL AS PAID IN ADVANCE RS. 4 00 00 0/- TO THE ASSESSEE WHICH WAS NOT CREDITED IN THE REGULAR BOOKS OF ACCO UNTS BUT WAS DEPOSITED IN THE BANK ACCOUNT. IT WAS SUBMITTED THA T DUE TO THIS THE CASH BOOK HAS SHOWN AN OD BALANCE OF RS. 2 34 798/- ON 13.01.2012. THE AUTHORIZED REPRESENTATIVE CLAIMED THAT THE CASH BILL OF SALE OF ARTICLES DATED 20.01.2012 HAD BEEN PRODUCED BUT SIN CE THE SALE WAS IN CASH THE ADDRESS WAS NOT AVAILABLE WITH THE ASSESSE E AND NEITHER ANY CONFIRMATION WAS PRODUCED NOR THE PARTY COULD BE PR ODUCED FOR THE VERIFICATION. IT IS SEEN THAT THE BOOKS OF ACCOUNTS ARE AUDITED AND HENCE THE MISTAKE WOULD HAVE BEEN DETECTED. SECONDL Y NO ADVANCE HAS BEEN FOUND RECORDED IN THE NAME OF JAI SINGH KU MAWAT ON 13.03.2012 FURTHER NO EVIDENCE IN THE FORM OF CONF IRMATION OR PRODUCING THE PARTY WAS UNDERTAKEN AND IN FACT THE AUTHORIZED REPRESENTATIVE SUBMITTED THAT HIS ADDRESS WAS ALSO NOT AVAILABLE. IN VIEW OF THE ABOVE FACTS THE EXPLANATION OF THE APP ELLANT CANNOT BE ACCEPTED AND THE ADDITION MADE IS CONFIRMED. THE GR OUND OF APPEAL IS DISMISSED. 7 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. AT THE TIME HEARING LD. COUNSEL FOR THE ASSESSEE C OULD NOT CONTROVERT THE FINDINGS OF LD. CIT (A) BY PLACING ANY DOCUMENTS. WE THEREFOR E FIND NO INFIRMITY IN THE ORDER OF LD. CIT (A) THE SAME IS HEREBY AFFIRMED. THE GR OUND OF THE ASSESSEE IS DISMISSED. 5. GROUND NO. 3 RELATES TO RESTRICTING THE DISALLOW ANCE OF VARIOUS EXPENSES. 5.1. THE LD. COUNSEL FOR THE ASSESSEE REITERATED TH E SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED AS UNDER :- 1. FIRSTLY IT IS SUBMITTED THAT IN THE ENTIRE ORDER OF THE AO ON ALL THE DISALLOWANCE OF EXPENSE THE ONLY ALLEGATION IS EXPE NSES ARE NOT PROPERLY VOUCHED SOME OF PAYMENT IN CASH PERSONAL USE ETC. ONLY ON THESE BASIS NO DISALLOWANCE CAN BE MADE WITHOUT BRING ANY MATERIAL EVIDENCE INSTANCE OR PROOF ON RECORD. HOWEVER HE IGNORED THAT THE ASSESS EE HAS PRODUCED THE LEDGER ACCOUNT OF EXPENSES ALONGWITH THE BILLS AND VOUCHERS. LOOKING TO THE NATURE OF BUSINESS OF THE ASSESSEE FOR THAT HE HAS TO INCURRED VARIOUS EXPENDITURE. 2. MERE SUSPICION: A BARE READING OF THE ORDER OF THE LOWER AUTHORITY SHALL REVEAL THAT THE DISALLOWANCES OF EXPENSES HAVE BEEN MADE ON AD HOC BASIS SIMPLY ON MERE SUSPICION SURMISES AND CONJECTURES AND ON WRONG METHOD WITHOUT VERIFYING OR LOOKING TO THE NATURE OF BUSIN ESS. NO SINGLE SPECIFIC INSTANCE OF ANY NATURE WHATSOEVER HAS BEEN GIVEN BY THE AO IN THE IMPUGNED ORDER TO SUPPORT HIS CONTENTION WITH THE HELP OF DO CUMENTARY EVIDENCE THAT THE EXPENDITURES WERE INCURRED FOR NON-BUSINESS PUR POSES EXCESS AND ELEMENT OF PERSONAL USER ETC WERE THERE. AN ALLEGA TION REMAINS A MERE ALLEGATION UNLESS PROVED. SUSPICION MAY BE STRONG HOWEVER CANNOT TAKE THE PLACE OF REALITY ARE THE SETTLED PRINCIPLES KINDLY REFER DHAKESHWARI COTTON MILLS 26 ITR 775 (SC) UMA CHARAN SHAW V/S CIT 37 ITR 271 (SC). ALL THE DISALLOWANCES DESERVE DELETION ON THIS SUBMISSION A LONE. 8 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 3. BUSINESSMAN IS THE BEST JUDGE: IT IS SETTLED THAT A BUSINESSMAN IS THE BEST JUDGE TO TAKE CARE OF ITS OWN INTEREST & TO TAKE DE CISIONS AND THE AO IS NOT SUPPOSED TO INTERVENE THEREIN NOR HE CAN REPLACE TH E ASSESSEE. HERE WHATEVER DECISIONS WERE TAKEN BY THE ASSESSEE HAS TO BE UNDERSTOOD AS TAKEN OUT OF COMMERCIAL EXPEDIENCY. KINDLY REFER T. T. PVT LTD V/S CIT 121 ITR 551 (KAR) 139 ITR 827 (MP) JK WOOLEN MANUFACTURERS 72 ITR 612 (SC). 4. WRONG BASIS AT ALL: IT IS FURTHER SUBMITTED THAT THE LD. AO HAS TAKEN OWN IMAGINARY BASIS WHICH IS NOT A GOOD BASIS LOOKING T O THE NATURE OF EXPENSES OR BUSINESS OF THE ASSESSEE AND MADE HIGHER ESTIMAT ED DISALLOWANCE. THE AO HAS NOT BROUGHT ANY OTHER SINGLE EVIDENCE OR MATERI AL ON RECORD BEFORE MAKING DISALLOWANCE. THEREFORE ALSO THE ENTIRE DIS ALLOWANCE SO MADE MAY KINDLY BE DELETED IN FULL. AND IT IS SETTLED THAT N O DISALLOWANCE AND ADDITION CAN BE MADE WITHOUT ANY BASIS AND MATERIAL. 5. REASONABLE CLAIM MADE: IT IS SUBMITTED THAT LOOK ING TO A TURNOVER OF MORE THAN RS.6.87 CRORE (APPROX) CLAIM OF ABOVE EXPENDI TURE WHICH IS OTHERWISE VERY LESSER OR REASONABLE OR MEAGER LOOKING TO THE BUSINESS OF THE ASSESSEE. THUS SUCH A CLAIM TO ACHIEVE SUCH A TURNOVER IS NOT AT ALL UNJUSTIFIED WHEN THE ASSESSEE IS A DISTRIBUTER AND COMMISSION AGENT WHER E THE MARGIN OF PROFIT ALMOST FIX AND VERY LOW. 6. BUSINESS PURPOSE: ALL THESE EXPENSES WERE INCURR ED EXCLUSIVELY FOR THE PURPOSE OF BUSINESSES AND ARE UNDER THE PROVISIONS OF THE ACT. ON BARE PERUSAL OF THE EXPENSES IT SHALL REVEL THAT THE EXP ENSES HAS BEEN CLAIMED FOR THE BUSINESS AND ON THESE ACCOUNT THERE IS NO EXPEN SES WHICH CAN BE SAID AS PERSONAL AS WRONGLY ALLEGED BY THE AO AND LOOKING T O THE NATURE OF THE BUSINESS THESE EXPENSES ARE NOT HIGHER. THE AO BLIN DLY DISALLOWANCE OF 10 OR 20% EXPENSES WITHOUT GOING ON THE FACTS NATURE OF EXP. COMPARABLE CASES AND ALSO IGNORED THAT THE G.P. RATE IS VERY HIGHER IN THIS YEAR AS AGAINST THE LAST YEAR AND THE LD. AO HAS BLINDLY IGNORED THESE VERY VITAL FACTS AND MADE 9 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. THE DISALLOWANCE WITHOUT ANY BASIS AND HENCE THE SAME MAY KINDLY BE DELETED IN FULL. IN SUPPORT THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS :- MADNANI CONSTRUCTION (P) LTD V/S CIT 296 ITR 45 ( GAU) ACIT V/S SARV PRAKASH 24 DTR 91 (AGR) CIT V/S RANICHHERA TEA CO. 207 ITR 979 (CAL) CIT VS. SWAMINARAYAN VIJAY CARRY TRADE (P.)LTD. (20 13) 84 CCH 311 (GUJ) CIT VS. PORRITS & SPENCER (A) LTD. (2010) 324 ITR 260 (P&H) THE LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THA T :- BOOKS NOT REJECTED: FURTHER IT IS VERY PERTINENT TO NOTE THAT ONE SIDE THE AO HAS ACCEPTED THE TRADING RESULTS SHOWN BY TH E ASSESSEE IT MEANS HE HAS ACCEPTED THE BOOKS OF ACCOUNTS AND THE RE IS NO DEFECTS FOUNDS IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE A SSESSEE OTHER SIDE HE HAS MADE FURTHER DISALLOWANCE OF 20% /10% OF EXP ENSES WHICH IS VERY CONTRARY ITS OWN AND UNJUSTICE WITH THE ASSESS EE. FURTHER ON PERUSAL OF EXPENSES CHART IT REVEALS THAT NONE OF T HE EXPENSES HAVE BEEN CLAIMED IN EXCESS LOOKING TO NATURE OF BUSINES S AND EXPENSES. THE NATURE OF THESE EXPENSES ARE AS THAT NO ONE CA N SAID THAT THESE ARE BOGUS EXPENSES. THE ACCOUNTS OF THE ASSESSEE AR E AUDITED U/S 44AB BY QUALIFIED PERSONS AND NO DEFECT HAS BEEN PO INTED OUT BY HIM. THE AO HAS NEITHER REJECTED THE BOOKS OF ACCOUNTS N OR INVOKED THE PROVISIONS OF SEC. 145(3). BUT THE AO BLINDLY IGNOR ED THESE VERY VITAL FACTS AVAILABLE IN RECORDS BEFORE HIM AND NOT TRIED TO SEE THE SAME. FURTHER THE AO HAS NOT BROUGHT ON RECORD ANY EVIDEN CE TO PROVE THAT 10 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. THE EXPENSES CLAIMED BY THE ASSESSEE WERE BOGUS IN FLATED OR PERTAINED TO HAVE BEEN FOR NON BUSINESS PURPOSE EXC EPT WRONG ALLEGATION ON THE BASIS ON HER ASSUMPTION AND SUSPI CION. RECENTLY THIS HONBLE BENCH IN THE CASE OF SH. ANIL KUMAR AGRAWAL V/S ITO IN ITA NO. 288/JP/2014 DT. 24.02.2016. IT HAS B EEN HELD AT PAGE 10 PARA 4.4 THAT SINCE WE HAVE HELD THAT BOOKS OF A CCOUNTS WERE DULY MAINTAINED BY THE ASSESSEE AND ALL THE SALES AND PU RCHASES ARE DULY MAINTAINED BY IT THEREFORE WE DO NOT FIND ANY JUS TIFICATION FOR DISALLOWING 5% OF THE EXPENSES TOWARDS CONVEYANCE DEEPAWALI GENERAL TELEPHONE TRANSPORT ETC. HENCE IN VIEW OF THE ABOVE SUBMISSION THE DISALLOWA NCE SO MADE MAY KINDLY BE DELETED IN FULL. 5.2. ON THE CONTRARY THE LD. D/R SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW. 5.3. WE HAVE HEARD RIVAL CONTENTIONS PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE COORDINATE BENCH DE CISION IN ITA NO. 288/JP/2014 DATED 24.02.2016 IN THE CASE OF SHRI ANIL KUMAR AGA RWAL VS. ITO WHEREIN SIMILAR ADDITIONS ON IDENTICAL FACTS HAVE BEEN DELETED. IN THE PRESENT CASE THE AO HAS NOT REJECTED THE BOOKS OF ACCOUNTS OF THE ASSESSEE. TH E ADDITIONS MADE MERELY ON ADHOC BASIS IS NOT SUSTAINABLE. WE THEREFORE DELE TE THE ADDITION. THE GROUND OF THE ASSESSEE IS ALLOWED. 6. GROUND NO. 4 & 5 ARE GENERAL IN NATURE NEEDS NO ADJUDICATION. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 8. NOW TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 83/JP/2017 PERTAINING TO ASSESSMENT YEAR 2013-14. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 11 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 1. THAT ON FACTS AND LAW THE LD. CIT (A) HAS GROSSLY E RRED IN CONFIRMING THE ORDER OF LD. AO THAT SURRENDERED VALUE OF STOCK WAS RS. 2 12 79 185/- WHILE AS PER APPELLANT THE VALUE OF SURRENDERED STO CK WAS RS. 1 61 94 434/-. THE VALUE OF SURRENDERED STOCK WAS VALUED BY THE LD. AO BY IGNORING THE DEPARTMENTAL VALUER REPORT FACTS O N RECORD AND WRONGLY ENHANCED THE VALUE BY RS. 50 48 751/-. THE ADDITION IN VALUE OF SURRENDERED STOCK IS AGAINST THE FACTS ON RECORD AN D ADDITION DESERVES TO BE QUASHED. 2. THAT ON FACTS AND LAW THE LD. CIT (A) HAS GROSSLY E RRED IN CONFIRMING THE ORDER OF THE LD. AO THAT SURRENDERED STOCK VALUED R S. 1 61 94 434/- HAS NOT BEEN RECORDED IN REGULAR BOOKS OF ACCOUNTS HENC E THE SAME IS THE INCOME FROM OTHER SOURCES AND NOT THE INCOME FROM B USINESS. HENCE REMUNERATION TO PARTNERS RS. 64 10 000/- IS NOT ALL OWABLE. THE SURRENDERED VALUE OF STOCK IS THE INCOME FROM BUSIN ESS AND REMUNERATION TO PARTNERS RS. 64 10 000/- IS ALLOWABLE AND WAS DI SALLOWED WRONG AND ILLEGAL. 3. THAT ON FACTS AND LAW THE LD. CIT (A) HAS GROSSLY E RRED IN HOLDING THAT THE SURRENDERED STOCK WAS NOT IN THE NATURE OF BUSINESS INCOME. THE SURRENDERED STOCK HAS DIRECT NEXUS WITH APPELLANT B USINESS AS SUCH THE SAID SURRENDERED STOCK IS THE BUSINESS INCOME OF TH E APPELLANT. FURTHER ON SUCH SURRENDERED STOCK REMUNERATION TO PARTNERS U/S 40B IS AN ALLOWABLE EXPENSES. 4. THAT THE ORDER OF THE LD. AO IS BAD IN LAW AND DESE RVES TO BE QUASHED. 5. THAT THE APPELLANT RESERVES THE RIGHT TO ADD AMEND WITHDRAW OR ALTER ANY GROUND OF APPEAL BEFORE THE FINALIZATION OF SAID AP PEAL. 9. THE BRIEF FACTS OF THE CASE ARE THAT THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME TAX ACT 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 20.02.2016. WHILE FRAMING THE ASSESSMENT THE AO A SSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS. 2 12 09 620/- AFTER CONSIDERING THE SURRENDERED INCOME OF RS. 1 61 94 434/-. AGAINST THIS THE ASSESSEE PREFERR ED AN APPEAL BEFORE LD. CIT (A) WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOW ED THE APPEAL. AGGRIEVED BY THIS THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFOR E THIS TRIBUNAL. 12 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 10. GROUND NOS. 1 2 & 3 OF THE ASSESSEES APPEAL A RE RELATED TO EACH OTHER. THUS ALL THESE GROUNDS ARE ADJUDICATED TOGETHER. THE LD . COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION AS MADE IN THE WRITTEN BR IEF. THE SUBMISSIONS OF THE ASSESSEE ARE AS UNDER :- 1. CORRECT FACTS: AT THE VERY OUTSET WE SUBMIT THE CORRECT POSITION FACTS WHICH HAVE BEEN IGNORED BY BOTH THE LOWER AUTHORITY DESPITE THE AVAILABLE ON RECORD OR MISINTERPRETED BY THEM. AS THE ASSESSEE I S A DEALER AND MANUFACTURER OF GOLD AND DIAMOND ORNAMENTS AND JEWE LLERY SINCE LONG. DURING THE YEAR SURVEY U/S 133A WAS CONDUCTED ON DA TED 06.11.2012. DURING THE COURSE OF SURVEY ACTUAL POSITION OF STOCK WAS F OUND AND AS PER BOOKS OF ACCOUNTS AND VALUED BY THE AO AND DEPARTMENTAL VALU ER WERE AS UNDER: 2. STATEMENT HAS BEEN READ WRONGLY OR MISINTERPRETE D: THE LD. AO AND CIT(A) HAS WRONGLY READ OR MISINTERPRETED THE S TATEMENTS OF THE ASSESSEE THEY HAVE NOT APPRECIATED THE STATEMENT IN THEIR TRUE SENSE PERSPECTIVE. IN THE WHOLE STATEMENTS THERE ARE ONLY THREE QUESTION NO. 13 14 AND 24(PB5 6 7 12) ARE RELATED TO THIS ISSUE. (A) IN THE STATEMENTS IN ANS.13(PB5) THE QUESTION I S THAT DURING THE COURSE OF SURVEY TODAY ON PHYSICAL VERIFICATION THE INVENT ORY OF STOCK HAS BEEN PREPARED BY THE DEPARTMENTAL VALUER. THIS INVENTORY HAS BEEN PREPARED IN TWO LIST JF AND JF-1 ACCORDING TO THAT THE PARTICULARS OF STOCK ARE AS UNDER 1. JF(FIRST FLOOR STOCK) GOLD NET WT. 2125.100 GM VAL UE OF RS.1 03 60 549/- 2. JF-1(STOCK GROUND FLOOR) GOLD NET WT. 20357.150 GM VALUE OF RS.5 43 66 277/- THUS THE TOTAL WEIGHT OF GOLD(SWARN DHATU) COMES 22 482.25GM AND THE VALUE COMES TO RS.6 47 26 826/-. THERE APART SOME GOLD JEWELLERY HAS ALSO BEEN FOUND IN THE SAFE KEPT IN BASEMENT. THE NET WT. OF WHICH IS 446.50 GM AND THE VALUE IS RS.12 05 550/-. THUS TOTAL WT. OF GOLD 22928.75 GM IS FOUND DURING SURVEY THE VALUE OF WHICH COMES TO RS.6 59 32 376/-. IN ANS. TO THIS THE PARTNER HAS STATED THAT I HAVE NO OBJE CTION REGARDING THE INVENTORY OF STOCK PREPARED. I HAVE ALSO SEEN THE VALUATION AND I AM AGREE WITH THIS VALUATION. 13 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. IN THIS REGARD WE HAVE TO SUBMIT THAT IN THE VALUAT ION THE DEPARTMENTAL VALUER HAS TAKEN THE VALUE OF GOLD AS WELL AS STONES VIDE VALUATION REPORT (PB45A)WHICH COMES TO RS.1 03 60 549/-. (RS.52 75 7 98/- OF 2125.100 GM GOLD + RS.50 84 751/- OF STONES). THUS THE ASSESSEE HAS RIGHTLY SAID THAT I AM AGREE WITH THIS VALUATION OF JF JF-II VIDE PAGE 45 &45A. BECAUSE THE VALUER HAS TAKEN THE VALUE OF GOLD AND STONE SEPARATELY AN D MADE TOTAL OF BOTH WHICH TO RS. 1 03 60 549/-. BECAUSE THE VALUE OF 2125.100 GOLD SHALL NOT COME OF RS.1 03 60 549/- OTHERWISE THE RATE OF PER GRAMS GOLD COMES TO RS. 4875/- WHICH RATE HAS NEVER COME IN THE YEAR 2012-13 THE RATE OF GOLD WAS AROUND OF 2600-2700 PER GM IN THAT YEAR. IN ANSWER THE ALSO THE WEIGHT OF GOLD TAKEN NOT OF STONE. (B) IN THE STATEMENTS IN ANS. 14 (PB6) THE QUESTION IS THAT ON PHYSICAL VERIFICATION THE TOTAL GOLD WAS FOUND OF 22928.75 G M THE VALUE OF WHICH COMES TO RS. 6 59 32 376/-. WHILE AS PER YOUR BOOKS OF AC COUNTS THE OPENING STOCK OF TODAY I.E 06.11.2012 COMES TO 14.396 KG THE VALUAT ION OF WHICH IS 3 95 21 744/- OUT OF THE JEWELLERY OF 0.331KG IS SO LD TODAY AFTER REDUCING THIS SALE THE WEIGHT OF STOCK COMES TO 14.065 KG I.E 140 65 GRAM. THUS THE STOCK OF 8863.75 GRAM FOUND IN EXCESS. PLEASE EXPLAIN. IN ANS. (PB6-7)TO THIS THE PARTNER HAS STATED THAT I HAV E SEEN THE BOOKS OF ACCOUNTS. ACCORDING TO THAT THE STOCK OF 2306.234 W HICH HAS BEEN RECEIVED PHYSICALLY BY US AND WE HAVE MADE PAYMENT BUT WE HA VE NOT RECEIVED THE BILL (THE DETAILS OF THE SAME IS GIVEN AT PAGE 7 PB7). THERE APART I ALSO WANT TO SAY THAT ACCORDING TO BOOKS OF ACCOU NT IN WHICH THE SUMMARY OF OPENING STOCK IS THERE WHICH ALSO INCLU DE THE 1289.800 GM DIAMOND GOLD JEWELLERY THE CALCULATION OF WHICH HA S BEEN TAKEN BY YOU IN THE VALUATION OF STOCK I.E INCLUDED IN THE OPENING STOC K VALUATION OF RS. 3 95 21 744/- BUT NOT INCLUDED IN THE QUANTITY OF OPENING STOCK O F GOLD. BECAUSE IT HAS BEEN SHOWN SEPARATELY. THUS ACCORDING TO ME THE DIFFERENCE IN THE QUANTITY OF GOLD COME TO 5277.72 GM. THUS THE ASSESSEE HAS ACCEPTED THE WEIGHT OF EXCESS STOCK OF GOLD AT 5267.72 GMS (WRONGLY WRITTEN AS 5277.72 GMS IN THE STATEMENTS) . NOT THE QUANTITY OF STONES OR DIAMOND. OTHERWISE THE DEPAR TMENT MUST ASKED SEPARATE OR SPECIFIC QUESTION OR SEPARATE OR SPECIFIC ANSWER GIVEN. (C) IN THE STATEMENTS IN ANS.24 (PB12) THE QUESTION IS THAT DURING THE SURVEY UPON YOU STOCK OF TOTAL VALUE OF RS.6 59 32 376/- H AS FOUND WHICH NOT INCLUDE THE STOCK OF SILVER WHICH HAS BEEN DETERMINED BY TH E DEPARTMENT VALUER AT RS. 201600/-. THUS ON PHYSICAL VERIFICATION TOTAL STOCK COMES TO RS. 6 61 33 976/-. 14 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. WHILE AS PER YOUR BOOKS OF ACCOUNTS AND AFTER ACCOU NT FOR THE SALE DONE TODAY THE VALUE OF EXCESS STOCK COMES OF RS.2 10 77 585/ - AS PER YOU AS YOU HAVE STATED IN ANS TO 14. THUS THE TOTAL STOCK OF RS. 2 12 79 185/- HAS FOUND IN EXCESS. IN ANS. (PB12)TO THIS THE PARTNER HAS STATED THAT I AM UN ABLE TO GIVE EXPLANATION OF THIS EXCESS STOCK. IT IS CORRECT THA T THE EXCESS STOCK FOUND THE VALUE OF WHICH IS RS.2 12 79 185/- WHICH IS NOT REC ORDED IN THE REGULAR BOOKS. I SURRENDER FOR TAX. IN THIS ANSWER THE AO HAS ONLY REFERRED THE VALUE H E HAS NOT REFERRED THE QUANTITY. IN WHOLE STATEMENT NOWHERE MENTION OR ASK ED OR STATED THAT ANY EXCESS STOCK OF COLOR STONE IS FOUND IN WHAT CT. IT IS FOUND. 3. THUS ON PERUSAL OF THE ABOVE STATEMENTS IT IS VERY CLEAR THAT DURING THE COURSE OF PHYSICAL INSPECTION OF STOCK ONLY GOLD JEWELLERY WAS FOUND IN EXCESS VIDE QUE. ANS 13 14 (PB-6-7) PAGE NO. 6-7 OF STATEMENT OF SH. KULBHUSHAN PALIWAL PARTNER. HENCE VALUE OF DIAMOND AND COLOR STONES OF RS. 50 48 751.00 WAS ADDED WRONGLY WHILE CALCULATING OF EXCESS STOCK . T HE VALUE OF DIAMOND AND COLOR STONES RS. 5048751.00 DECLARED AS AN EXCESS STOCK I S AN APPARENT MISTAKE AND SHOULD BE EXCLUDED FROM THE VALUATION OF EXCESS STO CK. THE ASSESSEE DURING THE COURSE OF SURVEY WAS UNDER MENTAL PRESSURE AND AT M IDNIGHT I.E. AT 3.30 AM WAS NOT IN POSITION TO EXPLAIN HIS OWN RECORD DUE TO UN DER CONFUSION AND DISTURBED STATE OF MIND. FOR THIS REASON COULD NOT EXPLAIN TH E MISTAKE IN VALUATION BECAUSE IN QUE NO. 24 THE REVENUE HAS ONLY REFERRED THE VAL UATION OF STOCK THEY HAVE NOT REFERRED THE QUANTITY OF EXCESS STOCK THAT IS WHY H E HAS AGREED FOR SURRENDER VALUE. THE MISTAKE OF RS. 50 48 751/- IS AN APPAREN T MISTAKE IN SURRENDERING THE VALUE OF STOCK THAT IS WHY THE ASSESSEE HAS DE CLARED THE SURRENDER TO RS.1 61 94 434/- AGAINST RS. 21077585.00 DECLARED B Y THE ASSESSEE DURING THE COURSE OF SURVEY. THE LD. AO NOWHERE REBUTTED THE CONTENTION OF THE APPELLANT. THE ASSESSEE HAS COME TO KNOW ABOUT THE ABOVE MISTA KE ONLY AFTER GETTING THE COPY OF STATEMENTS BECAUSE THE COPY OF STATEMENT OF SH. KULBHUSHAN PALIWAL PARTNER OF THE FIRM AND OTHER PERSONS RECORDED DURI NG THE SURVEY WAS PROVIDED ON 20.09.2013 AND RETURN OF INCOME WAS FILED ON DAT ED 27.09.2013 THE ASSESSEE IN RETURN OF INCOME HAS GIVEN A DETAILED NOTE IN RE GARDING LESS VALUE OF SURRENDER AMOUNT VIDE ANNEXUREA-2 ATTACHED WITH THIS WS . THE ASSESSEE AFTER READING THE TOTAL FACTS OF STATEMENT THE VALUE OF S URRENDER AMOUNT AS PER STATEMENT RECORDED AND BOOKS OF ACCOUNTS COME TO KN OW THAT SURRENDER VALUE WRONG DUE TO MISTAKE AND SAME WAS RETRACTED BY HIM BY FILING DETAILED NOTE 15 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. ALONGWITH RETURN OF INCOME ANNEXUREA-2 ATTACHED WITH THIS WS . THUS THE ASSESSEE HAS FILED OBJECTION AGAINST SURRENDERING AMOUNT WITHIN A PERIOD OF 7 DAYS FROM THE DATE OF RECEIPTS OF STATEMENTS. IN THE ABOVE STATEMENT THE ASSESSEE NOWHERE HAS STA TED THAT I SURRENDER SUCH AMOUNT OR QUANTITY OF COLOR STONE IN THE X QUANTITY AND X VALUE. HE HAS ONLY STATED ABOUT THE GOLD . FURTHER IN THE ASSESSMENT O RDER ITSELF THE LD. AO AT PAGE 3 IN MIDDLE PARA STATED THAT IT RESULTED IN FINAL WEIGHT OF EXCESS STOCK OF JEWELLERY AT 5267.72 GMS. IT MEANS IT IS AN ADMITT ED THAT THE SURRENDER WAS ONLY FOR GOLD NOT FOR STUDDED STONE BECAUSE THE WEI GHT OF STONE COMES IN CARROT NOT IN GRAMS AND THE VALUATION OF 5267.72 GRAMS AT RS. 2 10 77 5858/- IS WRONG. OTHERWISE WEIGHT WOULD HAVE COME MORE THAN TO 5267. 72 GM . DUE TO WRONG VALUATION IN ABSENCE OF SPECIFIC QUESTION BY THE REVENUE ASSESSEE SHOULD NOT BE SUFFER. IN THE ASSESSMENT ORDER ALSO THE AO NOWHERE STATED THAT THE SURRENDER WAS ALSO FOR STONES. HENCE IN THE CIRCUMSTANCES THE LD AO IS TOTALLY WRO NG AND UNJUSTIFIED IN NOT ACCEPTING THE REVISED AMOUNT OF SURRENDER VALUE. 4. NO DIFFERENCE IN QUANTITY SURRENDER AND DECLARED IN RETURN: IT IS VERY PERTINENT TO NOTE THAT THERE IS NO DIFFERENCE IN QU ANTITY OF EXCESS STOCK OF 5267.716 GRAM SURRENDER DURING THE COURSE OF SURVEY AND DECLARED IN THE RETURN. IF THE STONE WERE INCLUDED IN THE SURRENDER THEN OTHERWISE WEIGHT WOULD HAVE COME MORE THAN TO 5267.72 GM FURTHER IT IS ALSO VERY IMPORTANT THAT ADMITTEDLY O N THE DATE OF SURVEY 331GM GOLD WAS SOLD FOR RS. 8 93 700/- HENCE THE RATE PER GRAMS COMES TO RS. 2700/-. IF WE CALCULATE THE EXCESS STOCK OF 5267.716 GMS TH AN IT COME TO 1 42 22 833/-. AND IF WE TAKE THE VALUE OF 5267.716 GRAM GOLD AT R S.2 10 77 583/- THAN THE RATE OF GOLD COMES TO RS. 4001/- WHICH WAS NOT OR I S NOT THE RATE TILL DATE. FURTHER THE DEPARTMENT VALUER HAS MADE VALUATION OF GOLD AND COLOR STONE ON THE SAME SHEET (VIDE PB45A) AT RS. 1 03 60 549/- WHICH INCLUDE THE VALUE OF COLOR STONE AT RS.50 84 751/- OTHERWISE THE RATE OF 2125. 100 GOLD SHALL COME RS.4875/- PER GRAM WHICH WAS ALSO NOT OR IS NOT THE RATE TIL L DATE. VIDE ANEXURE-A FURTHER SUBMITTED THAT ASSESSEE IS RIGHTFUL TO CLAI M THAT SURRENDER VALUE WAS NOT CORRECT AS PER SUBMISSION MADE IN PARA NO. 3 AND ST ATEMENT OF SH. KULBHUSHAN PARTNER. IN THE VARIOUS CASES IT HAS BEEN HELD THAT ASSESSEE CAN RETRACTED HIS STATEMENTS RECORDED DURING THE COURSE OF SEARCH AND SURVEY. 16 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. 5. NO ADDITION ON THE BASIS OF STATEMENT RECORDED D URING THE SURVEY U/S 133A: HERE WE WOULD LIKE TO DRAW KIND ATTENTION OF YOUR GOOD SELF THAT THE STATEMENT AS RECORDED IN ODD HOUR OF THE DAY I.E. L ATE NIGHT. HERE IT IS AGREED THAT NO TIME IS MENTIONED ON THE STATEMENTS AS RECORDED BY THE AUTHORITIES BUT IT CANNOT BE IGNORED THAT THE SURVE Y PROCEEDINGS WHICH WERE STARTED ON 06.11.2012 AND COMPLETED ON 07.11.2012 . THE REVENUE AUTHORITY HAS ASKED REGARDING THE EXCESS STOCK OF GOLD IN QUES NO .13-14 AND THEREAFTER ASKED FOR SURRENDER IN THE QUESTION NO.24 AND STATEMENT H AS BEEN FINISHED IN QUESTION NO. 25 ON 07.11.2012 WHY THE DEPARTMENT HAS NOT AS KED FOR SURRENDER CONTINUOUSLY AFTER THE QUES.14. 5.1 FURTHER IT IS THE SETTLED LEGAL POSITION THAT THE STATEMENT RECORDED DURING SURVEY HAS NO EVIDENTIARY VALUE AS HELD IN PAUL MATHEWS & SONS (2003) 263 ITR 101 (KER.) . IT WAS HELD THAT STATEMENT DURING SURVEY DOES NOT GIVE THE SAME STATUS OF EVIDENCE. SECTION 132(2) SPECIFICALLY STATES THAT SUCH STATEMENT CAN BE USED AS EVIDENCE IN ANY PROCEEDINGS UNDER T HE ACT. HOWEVER SECTION 133A DOES NOT GIVE STATEMENT DURING SURVEY THE STATUS OF AN EVIDENCE. IT IS FURTHER SUBMITTED THAT AS PER SECTION 133A T HERE IS NOTHING WHICH SUGGEST THAT A STATEMENT CAN BE RECORDED ON OATH BEFORE THE COMMENCEMENT OF SURVEY OR DURING SURVEY. HOWEVER IT RECOURSE IS TAKEN TO S ECTION 131(1). DURING THE SURVEY A STATEMENT CAN BE RECORDED ON OATH AS THE POWERS TO RECORD A STATEMENT ON OATH ARE VESTED IN THE AUTHORITY U/S 1 31(1) READ WITH SECTION 133A (6) AND IN THE CIRCUMSTANCE SPECIFIED U/S 133A (6) ONLY. SECTION 133A DOES NOT EMPOWER ANY ITO TO EXAMINE ANY PERSON ON OATH SO S TATEMENT RECORDED UNDER SECTION 133A HAS NO EVIDENTIARY VALUE AND ANY ADMIS SION MADE DURING SUCH STATEMENT CANNOT BE MADE BASIS OF ADDITION. IN SUPPORT OF HIS CONTENTION THE LD. COUNSEL FOR T HE ASSESSEE PLACED RELIANCE IN THE FOLLOWING CASE CIT V/S M/S MAVERICK SHARE BROKERS P. LTD 57 TW 87( RAJ.) CIT VS. KHADER KHAN SON (2008) 300 ITR 157 (MAD.) (HC). CIT VS. SATYANORAYAN AGARWAL (2002) 255 ITR (AT) 69 (KOL.) (TRIB.) ABDUL QAYMME VS. CIT (1990) 184 ITR 404 (ALL.) (HC) CITVS. ASHOK KUMAR JAIN (2014) 369 ITR 145 (RAJ.) ( HC). 17 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. THE LD. COUNSEL SUBMITTED THAT THE CENTRAL BOARD OF DIRECT TAXES HAS ISSUED FRESH INSTRUCTION VIDE F.NO. 286/98/2013-IT (INV.II) DATED 18.12.2014 THE TEXT OF WHICH IS REPRODUCED BELOW: - 1. INSTANCES / COMPLAINTS OF UNDUE INFLUENCE/ COERCIO N HAVE COME TO NOTICE OF THE CBDT THAT SOME ASSESSEE WERE COERCED TO ADMIT UNDISCLOSED INCOME DURING SEARCHES/ SURVEYS CONDUCT ED BY THE DEPARTMENT. IT IS ALSO SEEN THAT MANY SUCH ADMISSIO NS ARE RETRACTED IN THE SUBSEQUENT PROCEEDINGS SINCE THE SAME ARE NOR B ACKED BY CREDIBLE EVIDENCE. SUCH ACTION DEFEAT THE VERY PURPOSE OF SE ARCH/ SURVEY OPERATIONS AS THEY FAIL TO BRING THE UNDISCLOSED IN COME TO TAX IN A SUSTAINABLE MANNER HEAVE ALONE LEVY OF PENALTY OR L AUNCHING OF PROSECUTION. FURTHER SUCH ACTIONS SHOW THE DEPARTM ENT AS A WHOLE AND OFFICERS CONCERNED IN POOR LIGHT. 2. I AM FURTHER DIRECTED TO INVITE YOUR ATTENTION TO T HE INSTRUCTIONS/ GUIDELINES ISSUED BY CBDT FROM TIME-TO TIME AS REF ERRED ABOVE. THROUGH WHICH THE BOARD HAS EMPHASISED UPON THE NEE D TO FOCUS ON GATHERING EVIDENCES DURING SEARCH / SURVEY AND TO S TRICTLY AVOID OBTAINING ADMISSION OF UNDISCLOSED INCOME UNDER COE RCION/ UNDUE INFLUENCE. 3. IN VIEW OF THE ABOVE WHILE REITERATION THE AFORESA ID GUIDELINES OF THE HOARD I AM DIRECTED TO CONVEY THAT ANY INSTANCE OF UNDUE INFLUENCE/COERCION IN THE RECORDING OF THE STATEMEN T DURING SEARCH/ SURVEY/OTHER PROCEEDING UNDER THE I.T. ACT 1961 AND /OR RECORDING A DISCLOSURE OF UNDISCLOSED INCOME UNDER UNDUE PRESSU RE/ COERCION SHALL BE VIEWED BY THE HOARD ADVERSELY. 4. THOSE GUIDELINES MAY BE BROUGHT TO THE NOTICE OF AL L CONCERNED IN YOUR REGION FOR STRICT COMPLIANCE. 5. I HAVE BEEN FURTHER DIRECTED TO REQUEST YOU TO CLOS ELY OBSERVE/OVERSEE THE ACTIONS OF THE OFFICERS FUNCTIONING UNDER YOU I N THIS REGARD. 6. THIS ISSUE WITH APPROVAL OF THE CHAIRPERSON CBDT. 7. FURTHER IN RESPECT OF PENDING ASSESSMENT PROCEEDIN GS ALSO ASSESSING OFFICER SHOULD RELY UPON THE EVIDENCE/ MATERIALS GA THERED DURING THE COURSE OF SEARCH/ SURVEY OPERATIONS OR THEREAFTER W HILE FRAMING THE RELEVANT ASSESSMENT ORDERS IN RESPECT OF SURRENDERED STOCK AS INCOME FROM OTHE R SOURCES IN PLACE OF BUSINESS INCOME AND DISALLOWING THE REMUNERATION OF RS. 64 10 000/- TO PARTNERS THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED AS UNDER :- 18 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. AT THE VERY OUTSET IT IS SUBMITTED THAT THE ABOVE MATTER IS DIRECTLY COVERED BY THE RECENT DECISION OF THIS HONBLE BENCH IN THE CASE OF DCIT V/S SH. RAM NARAYAN BIRLA IN ITA NO. 482/JP/20 15 DT. 30.09.2016 WHERE THE HONBLE BENCH AT PAGE 4 IN PARA 4.3 HELD THAT UNDISPUTED FACTS EMERGED FROM THE RECORD THAT AT THE TIME OF SURVEY EXCESS STOCK WAS FOUND. IT IS ALSO NOT DISPUTED THE ASSESSEE IS ENGAGED IN THE BUSINESS OF JEWELLERY. DURING THE COURSE OF SURVEY EXCESS STOCK VALUING RS.77 66 887/- WAS FOUND IN RESPECT OF GOLD AND SILVER JEWELLERY. THE COORDINATE BENCH IN THE CASE OF CHOKSHI HIRALAL MAGANLAL V/S DCIT 131 TTJ(AHD)1 HAS HELD THAT IN A CASE WHERE SOURCE OF INVESTMENT/ EXPENDITURE IS CLEARLY IDENTI FIABLE AND ALLEGED UNDISCLOSED ASSETS HAS NO INDEPENDENT EXISTENCE O F ITS OWN OR THERE IS NO SEPARATE PHYSICAL IDENTITY OF SUCH INVESTMEN T/EXPENDITURE THEN FIRST WAS TO BE TAXED IS THE UNDISCLOSED BUSINESS R ECEIPTS INVESTED IN UNIDENTIFIABLE UNACCOUNTED ASSETS AND ONLY ON FAILU RE IT SHOULD BE CONSIDERED TO BE TAXED U/S 69 ON THE PREMISES THAT SUCH EXCESS INVESTMENT IS NOT IN THE BOOKS OF ACCOUNT AND ITS N ATURE AND SOURCES IS NOT IDENTIFIABLE. ONCE SUCH EXCESS INVESTMENT IS TA XED AS UNDECLARED BUSINESS RECEIPTS THEN TAXING IT FURTHER AS DEEMED INCOME U/S 69 WOULD NOT BE NECESSARY. THEREFORE THE FIRST ATTEMP T OF THE AO SHOULD BE TO FIND OUT LINK OF UNDECLARED INVESTMENT/EXPEND ITURE WITH THE KNOWN HEAD GIVE OPPORTUNITY TO THE ASSESSEE TO EST ABLISH NEXUS AND IF IT IS SATISFACTORILY ESTABLISHED THEN FIRST SUCH IN VESTMENT SHOULD BE CONSIDERED AS UNDECLARED RECEIPTS UNDER THE PARTICU LAR HEAD. IT IS OBSERVED THAT THERE IS NO CONFLICT WITH THE DECISIO N OF HONBLE GUJRAT HIGH COURT IN THE CASE OF FAKIR MOHD. HAJIHASAN(SU PRA) WHEREIN INVESTMENT IN AN ASSETS OR EXPENDITURE IS NOT IDENT IFIABLE AND NO NEXUS WAS ESTABLISHED THEN WITH ANY HEAD OF INCOME AND TH US WAS NOT AVAILABLE FOR SET OFF AGAINST ANY LOSS UNDER ANY HE AD. THEREFORE THE HONBLE COORDINATE BENCH HELD THAT WHERE ASSET IN WHICH UNDECLARED INVESTMENT IS SOUGHT TO BE TAXED IS NOT CLEARLY IDE NTIFIABLE OR DOES NOT HAVE INDEPENDENT IDENTITY BUT IS INTEGRAL AND INSE PARABLE(MIXED) PART OF DECLARED ASSET FALLING UNDER A PARTICULAR HEAD THEN THE DIFFERENCE SHOULD BE TREATED AS UNDECLARED BUSINESS INCOME EXP LAINING THE INVESTMENT. IN THE PRESENT CASE STOCK WAS PART OF T HE STOCK. THE REVENUE HAS NOT POINTED OUT THAT EXCESS STOCK HAS A NY NEXUS WITH ANY OTHER RECEIPTS. THEREFORE WE DO NOT FINE ANY FAULT WITH THE DECISION OF THE LD. CIT(A) DIRECTING TO THE AO TO TREAT THE SUR RENDERED AMOUNT AS EXCESS STOCK QUA THE EXCESS STOCK. HERE IN THE PRESENT CASE IS ALSO THE SAME POSITION. 1.2 FURTHER THE HONBLE BENCH HAS FOLLOWED THE ABOVE DE CISION IN THE CASE OF BAJRANG TRADERS V/S ACIT CIR.2 ALWAR IN ITA NO. 137/JP/17 DT. 17.03.2017 VIDE PAGE 6 PARA 2.7 OF THE ORDER OF HONBLE ITAT AND AT PAGE 10 PARA 2.11 IT HAS BEEN HE LD THAT HAVING 19 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. SAID THAT THE NEXT ISSUE THAT ARISES FOR CONSIDE RATION IS WHETHER THE AMOUNT SURRENDERED BY WAY OF INVESTMENT IN THE UNRE CORDED STOCK OF RICE HAS TO BE BROUGHT TO TAX UNDER THE HEAD BUSIN ESS INCOME OR INCOME FROM OTHER SOURCES. IN THE PRESENT CASE THE ASSESSEE IS DEALING IN SALE OF FOOD GRAINS RICE OIL SEEDS AND THE EXCESS STOCK WHICH HAS BEEN FOUND DURING THE COURSE OF SURVEY IS STOCK OF RICE IS CLEARLY IDENTIFIABLE AND RELATED TO THE REGULAR BUS INESS STOCK OF THE ASSESSEE. THE DECISION OF THE COORDINATE BENCH IN C ASE OF DCIT V/S SH. RAM NARAYAN BIRLA(SUPRA) SUPPORTS THE CASE OF THE ASSESSEE IN THIS REGARD. THEREFORE THE INVESTMENT IN THE EXC ESS STOCK HAS TO BE BROUGHT TO TAX UNDER THE HEAD BUSINESS INCOME AND NOT UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LD. COUNSEL PLACED RELIANCE ON THE FOLLOWING JU DGMENTS :- CIT VS. BABULAL K. DAGA (2016) 387 ITR 0114 (GUJ.) ITO VS. SADBHAV DEVELOPERS CO VANDANA TRADING (2013) 37 CCH 0396 (AHD. TRIB.) THE LD. COUNSEL SUBMITTED THAT IN VIEW OF THE ABOVE FACTS SUBMISSIONS AND LEGAL POSITION THE ADDITION SO MADE MAY KINDLY BE DELETE D IN FULL. 10.1. ON THE CONTRARY THE LD. D/R OPPOSED THE SUBM ISSIONS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 10.2. WE HAVE HEARD RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AT TH E TIME OF HEARING THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGE 53 OF T HE PAPER BOOK ANNEXURE WHEREIN VARIOUS DETAILS OF GOLD AND DIAMONDS ORNAMENTS AND VALUATION THEREOF ARE MENTIONED. AFTER CONSIDERING THESE DETAILS WE FIN D THAT THE DETAILS MENTIONED IN THE ANNEXURE REQUIRE VERIFICATION WHETHER THE STOCK SUR RENDERED WAS RESTRICTED TO GOLD OR 20 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS. DIAMOND AS CLAIMED BY THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDER OF THE LD. CIT (A) AND RESTORE THE FILE TO THE AO FOR DECISION AFRESH AFTER MAKING VERIFICATION OF THE STOCKS SURRENDERED. THE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 12. IN TOTALITY ITA NO. 82/JP/2017 IS PARTLY ALLOWED AND ITA NO. 83/JP/2017 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27/11/201 7. SD/- SD/- FOE FLAG ;KNO DQY HKKJR (VIKRAM SINGH YADAV) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/11/2017. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. PALIWAL JEWELLERS JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- THE ITO WARD 6(3) JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR ITAT JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 82 & 83/JP/2017} VKNS'KKUQLKJ@ BY ORDER LGK;D IATHDKJ@ ASST. REGISTRAR 21 ITA NO. 82 & 83/JP/2017 M/S. PALIWAL JEWELLERS.