D.C.I.T.,CIR-1, KOLKATA, Kolkata v. M/S. A. Sirkar & Co.(Jewellers) Pvt. Ltd., Kolkata

ITA 946/KOL/2009 | 2004-2005
Pronouncement Date: 13-04-2010

Appeal Details

RSA Number 94623514 RSA 2009
Bench Kolkata
Appeal Number ITA 946/KOL/2009
Duration Of Justice 10 month(s) 15 day(s)
Appellant D.C.I.T.,CIR-1, KOLKATA, Kolkata
Respondent M/S. A. Sirkar & Co.(Jewellers) Pvt. Ltd., Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 13-04-2010
Appeal Filed By Department
Bench Allotted C
Tribunal Order Date 13-04-2010
Date Of Final Hearing 09-04-2010
Next Hearing Date 09-04-2010
Assessment Year 2004-2005
Appeal Filed On 29-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH: K OLKATA (BEFORE HON.SHRI D.K.TYAGI JM & HON. SHRI B.C.MEE NA AM) ITA NO.946/KOL/09 A.Y 2004-05 DEPUTY COMMISSIONER OF INCOME TAX -VS- M/S. A. SIRKAR & CO. CENTRAL CIRCLE-12 KOLKATA (J EWELLERS) PVT. LTD. PAN:AACCA3682P (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. JYOTI KUMARI RESPONDENT BY: SHRI J.P.KHAITAN ORDER PER B.C.MEENA A.M :- THE APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A) XXXII KOLKATA DATED 24-02-2009. 2. THE GROUND OF APPEAL TAKEN BY THE REVENUE READS AS UNDER:- UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE ON ACCOUNT OF THE DISCREPANCY IN THE VALUATION OF CLOSING STOCK OF DIAMOND AND GOLD IN VIEW OF THE FACT THAT THE ASSESSEE FAILED TO SUBMIT ANY RECONCILIATION FOR THE DISCREPANCY IN THE STOCK OF DIAMOND AND FAILED TO PRODUCE SUPPORTING EVIDENCE WITH REGARD TO THE DISCREPANCY IN THE WEIGHT OF CLOSING STOCK OF GOLD. 3. THE ONLY GROUND IN THIS APPEAL IS RELATING TO DELETION OF ADDITION MADE ON A/C OF DISCREPANCY NOTED IN THE VALUATION OF CLOSING STOCK OF DIAMOND AND GOLD. 4. THERE WAS A SURVEY OPERATION AT THE PREMISES OF THE ASSESSEE ON 14/15-08-03. DURING THE SURVEY OPERATION THE AO CA LCULATED THE EXCESS STOCK OF GOLD/DIAMOND WEIGHT OF 14 275.069 GMS/7.6 CTS. THE AO ASKED THE ASSESSEE TO RECONCILE THE DIFFERENCE. THE ASSESSEE SUBMITTED A REPLY. THE AO DID NOT BELIEVE THE RECONCILIATION STATEMENT BY STATING THAT RECONCILIATION STATEMENT WAS NOT SUPPORTED BY ANY D OCUMENT. IN RESPECT OF DIAMOND NO RECONCILIATION STATEMENT WAS FILED. ON THE BASIS OF AVERAGE 2 PRICE FOR THE PERIOD 1-4-03 TO 14-8-03 THE AO AS PE R VALUATION REPORT MADE THE ADDITIONS OF RS.69 89 509/ RS.1 28 440 ON A/C O F EXCESS STOCK OF GOLD AND DIAMOND. 5. THE LD CIT(A) HAS GRANTED RELIEF BY HOLDING AS U NDER:- 7. THE AO HAS MADE TWO ADDITIONS IN THE ASSESSME NT ORDER. ONE OF RS.69 80 550/- ON ACCOUNT OF 14279.069 GMS O F EXCESS STOCK OF GOLD AND THE OTHER OF RS.1 28 440/- ON ACCOUNTS OF 7.6 CARATS OF EXCESS STOCK OF DIAMONDS. THE A/R OF THE ASSESSEE STATES THAT THERE HAS BEEN FACTUAL MISTAKES COMMITTED BY THE AO IN ARRIVING AT THE FIGURES OF EXCESS STOCK. 8. DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLATE SUBMITTED THAT: THE APPELLANT STATES THAT IT WOULD APPEAR FROM THE SAID ASSESSMENT ORDER THAT THE ACJT CIRCLE-]2 HAD ADDED .69 80 509 ON ACCOUNT OF GOLD AND .1 28 440 ON ACCOUNT OF DIAM OND TO THE TOTAL INCOME OF THE APPELLANT. THIS ADDITION HAS BE EN MADE ON THE PREMISE THAT THERE WAS EXCESS STOCK OF GOLD AND DIA MOND TO THE EXTENT OF 14 275.069 GRAMS AND 7.6 CARATS RESPECTIV ELY BASED ON THE REPORT OF THE DEPARTMENTAL SURVEYORS/ VALUERS. THE APPELLANT STATES THAT IN ARRIVING AT THE SAID C ONCLUSION THAT THERE WAS EXCESS STOCK OF DIAMOND TO THE EXTENT OF 7.6 CARATS THE AUTHORITIES/. ACIT CIRCLE-)2 KOLKATA CONCERNED HA VE FAILED TO APPRECIATE THAT THE RECONCILIATION DONE BY THE THRE E DEPARTMENTAL SURVEYORS/ VALUERS CONTAINED AN ANOMALY AND/OR MIST AKE IN CALCULATION WHICH WAS APPARENT ON THE FACE OF THE R ECORDS. THE DIFFERENCE IN STOCK OF DIAMOND WAS ONLY TO THE EXTE NT OF 1.880 CARATS THE VALUE OF WHICH COME TO RS. 31 772 ON THE ACCEPTED VALUE MADE BY THE SURVEYOR/ VALUERS. THE APPELLANT DID NOT FILE ANY RECONCILIATION IN RECORD TO THE DIAMOND AS THE APPELLANT HAD ACCEPTED THE SAID CALCULATION MADE BY THE DEPARTMEN T. SURVEYOR/ VALUERS AND THE APPELLANT WAS READY AND WILLING TO PAY ADDITIONAL TAX ON ACCOUNT OF SUCH DIFFERENCE IN STOCK. THE AD DITIONAL TAX HAS SINCE BEEN DEPOSITED BY THE APPELLANT. A COPY OF TH E SAID RECONCILIATION STATEMENT IN REGARD TO DIAMOND IS AN NEXED HERETO AND MARKED WITH LETTER L . THE APPELLANT STATES THAT IN REGARD TO THE STOCK OF GOLD THE RESPONDENT AUTHORITIES/ ACIT CIRCLE-12 KOLKARA HA VE RECORDED EXCESS STOCK OF 14 275.069 GRAMS. IN ARRIVING AT TH E SAID WEIGHT IT APPEARS THAT THE AUTHORITIES/ACIT CIRCLE-12 KOLKA TA HAS MADE A MISTAKE IN CALCULATION AGAIN. IN ARRIVING AT THE FI GURE OF 3 14 275.069 GRAMS THE AUTHORITIES/ ACIT CIRCLE-12 KOLKATA CONCERNED HAVE FAILED TO APPRECIATE THAT IN THE REC ONCILIATION STATEMENT PREPARED BY THE APPELLANT THE VALUATION A ND WEIGHT OF GOLD WAS ARRIVED AT ON THE BASIS OF 22 KARATS OF GO LD AFTER CONVERTING 18 KARATS TO 22 KARATS AND ON SUCH CONVE RSION THE WEIGHT GOT REDUCED BY 2 480.868 GRAMS. THIS ALSO IN CLUDES CASTING (TOTALLING) MISTAKE. THE APPELLANT STATES THAT MOREOVER THE CALCULATION MADE BY THE SURVEYOR! VALUERS APPOINTED BY THE DEPORTMENT CONTA INED A MISTAKE IN CALCULATION. THE TOTAL WEIGHT OF GOLD AS FOUND B Y THE SURVEYOR IF CORRECT CALCULATION IS TAKEN WOULD COME TO 38 176.5 72 GRAMS WHEREAS THE SAME WAS TAKEN TO BE 40 657.440 GRAMS WITH A MISTAKE IN THE MATHEMATICAL ADDITION AND NOT CONVER TING 18 KARAT GOLD INTO 22 KARATS GOLD WHILE CALCULATING THE TOTA L QUANTITY OF GOLD. IF SUCH CORRECT CALCULATION IS TAKEN INTO CON SIDERATION THERE WOULD REMAIN A DIFFERENCE OF 342.379 GRAMS IN WEIGH T OF GOLD VALUE WHEREOF WOULD COME TO RS. 1 67 423. A COPY OF THE RECONCILIATION STATEMENT SHOWING CORRECT CALCULATIO N IN REGARD TO GOLD IS ANNEXED HERETO AND MARKED WITH THE LETTER M. THE APPELLANT HAS DULY PAID TAX ON THE SAID DIFFERENCE OF STOCK AND PHOTOCOPY OF CHALLAN SHOWING DEPOSIT THEREOF IS ANN EXED HERETO AND MARKED WITH THE LETTER N. THE APPELLANT STATES THAT IN THE RECONCILIATION STA TEMENT SUBMITTED BY THE APPELLANT THE APPELLANT HAD RECONCILED THE MISTAKES SHOWN IN THE VALUATION MADE BYVALUER AND THE FIGURE WAS CALCULATED CORRECTING THE AFORESAID MISTAKES AND SUCH RECONCIL IATION WAS DONE TAKEN INTO CONSIDERING THE RECORD OF THE APPEL LANT. UNFORTUNATELY THE RESPONDENT -12 KOLKARA DID NOT SERVE ANY NOTICE ON THE APPELLANT ASKING THE APPELLANT TO EXP LAIN THE RECONCILIATION STATEMENT. IN FACT THE RECONCILIATIO N STATEMENT. IN FACT THE RECONCILIATION STATEMENT FURNISHED BY THE APPELLANT WAS BASED ON CORRECTION OF MATHEMATICAL MISTAKE MADE BY THE SURVEYOR/ VALUER APPOINTED BY THE DEPARTMENT. MOREO VER THE SAID RECONCILIATION STATEMENT WAS ALSO FURNISHED CORRECT ING INCORRECT INFORMATION AND DATA FURNISHED EARLIER ON ESTIMATED BASIS. THE APPELLANT STATES THAT IN ARRIVING AT THE SAID C ONCLUSION IN THE IMPUGNED JUDGMENT AND ORDER THE AUTHORITIES/ A CIT. CIRCLE-12 KOLKATA CONCERNED HAS NOT TAKEN INTO CONSIDERATION THE MISTAKES APPARENT ON THE FACE OF THE RECORD AS APPEARING IN THE SURVEYOR/ VALUATION REPORT PREPARED BY THE VALUERS APPOINTED BY THE DEPARTMENT NOR THE AUTHORITIES/ ACJT CIRCLE-12 KO LKATA HAS TAKEN INTO CONSIDERATION THE FACTS AND FIGURES FURN ISHED BY THE 4 APPELLANT WHICH ARE BORNE OUT FROM THE RECORDS OF T HE APPELLANT AND FORM PART OF THE RECORD BEFORE THE CONCERNED AU THORITIES/ ACIT CIRCLE-12 KOLKARA. THUS THERE IS A LATENT AN D PATENT ERROR ON THE FACE OF THE RECORD. 9. IN CONNECTION WITH HIS CONTENTIONS THE A/R OF THE ASSESSEE FIRST OF ALL DREW MY ATTENTION TO THE VALUATION REPORT PR EPARED AT THE TIME OF SURVEY BY ONE OF THE DEPARTMENTAL VALUER S HRI RAJKUMAR PODDAR. THE VALUATION REPORT BY SRI PODDAR RUNS INT O 10 PAGES. IT IS NOTICED THAT UPTO PAGE 9 THE TOTAL OF THE DIAMON DS STUDDED IN JEWELLERY IS REPORTED AT 378.669 CT. NO DISPUTE IS RAISED BY THE A/R ABOUT THIS. ON PAGE 10 OF THE VALUATION REPORTS TH E TOTAL QUANTITY OF DIAMONDS STUDDED IN THE JEWELLERY IS RECORDED AS : SL.NO. WT. OF DIAMONDS (IN CTS.) 105 6.23 106 2.44 107 6.89 108 3.66 1 114 0.64 9.1 ACCORDINGLY THE TOTAL WEIGHT (IN CARATS) OF THE DIAMONDS COME TO 378.669+2.44 + 6.89 + 3.66 + 0.64 WHICH TOT ALS TO 398.529 CARATS WHEREAS THE TOTAL WEIGHT OF DIAMON DS RECORDED ON PAGE 10 OF THE VALUATION REPORT IS 404.249 CARATS. THUS IT IS CLEAR FROM THE VALUATION REPORT ITSELF THAT AS AGAINST TH E ACTUAL WEIGHT OF DIAMONDS AT 398.529 CARATS WHILE CALCULATING THE V ALUE OF THE DIAMONDS THE TOTAL WEIGHT HAS BEEN TAKEN AT 404.24 9 CARATS ACCORDINGLY THERE HAS BEEN AN APPARENT MISTAKE COM MITTED BY THE VALUER TO THE EXTENT OF EXCESS REPORTING OF DIAMOND BY 5.720 CARATS. 9.2. AS PER THE SHOW CAUSE DATED 17.09.03 BY ACIT CIRCLE- 12 KOLKATA THE EXCESS WEIGHT OF DIAMONDS WAS 7.6 C ARATS. CONSIDERING THE ABOVE FACTS ACTUAL EXCESS STOCK CO MES TO 7.6 CARATS(-) 5.720 CARTS = 1.88 CARTS ONLY. THE VALUE OF THE ACTUAL EXCESS STOCK OF DIAMONDS THEREFORE COMES TO 1.88 X RS.16 900/- (THE RATE PER CARAT OF DIAMONDS ADOPTED BY THE A.O IN ASSESSMENT ORDER) = RS.31 772. ACCORDINGLY THE ADDITION AN AC COUNT OF EXCESS STOCK OF DIAMONDS FOUND AT THIS TIME OF SURVEY IS R ESTRICTED TO RS.3 1 772/-. THE ASSESSEE GETS RELIEF OF RS.96 668/-. 10. NOW COMING TO THE ADDITION MADE ON ACCOUNT OF EXCESS STOCK OF GOLD. THE A.O. MADE AN ADDITION OF RS.69 8 0 509/- ON 5 ACCOUNT OF EXCESS STOCK OF GOLD OF 14275.069 GMS ON THE BASIS OF CALCULATION MADE DURING THE POST SURVEY PROCEEDINGS . 10.1. FROM THE COPY OF THE LETTER DATED 1 7.09.03 ADDRESSED BY THE THEN A.O. TO THE ASSESSEE THE TOTAL STOCK OF G OLD FOUND AT ITS PREMISES ON THE DATE OF SURVEY WAS 40657.44 GMS. AN D AS PER ITS AUTHORIZED REPRESENTATIVE THE STOCK WAS 26382.371 G MS. THUS EXCESS STOCK OF GOLD WAS WORKED OUT BY THE THEN A.O . AT 14273 .069 GMS. 10.2. HOWEVER DURING THE COURSE OF APPELLATE PROC EEDINGS THE A/R OF THE ASSESSEE SHOWED WITH THE HELP OF VARIOUS LETTERS DATED 26.09.03 01.10.03 AND 24.11.03 WHICH THE ASSESSEE HAD SUBMITTED TO THE THEN A.O. DURING POST SURVEY INQUIRY THAT T HE ASSESSEE HAD DISPUTED THE FIGURES OF EXCESS STOCK OF GOLD WORKED OUT BY HIM IN HIS LETTER DATED17.09.03. 10 3. THE ASSESSEE AFTER OBTAINING THE PHOTOCOPIES OF THE IMPOUNDED-MATERIAL VIDE ITS LETTER DATED 24.11.03 SUBMITTED BEFORE THE A.O. THE POSITION OF ITS GOLD STOCK AS O N 14.08.03 AS FOLLOWS; STOCK-IN-TRADE AS ON 14.08.2003/15/08.2003 GOLD OPENING BALANCE ON 01 04.2002 10 152.000 10 152 00 0 ADD:PURCHASE DURING PERIOD 01.04.2002 TO 14.08.2003 172.778.319 182 930.319 LESS. WASTAGE 5 580.832 1.77 349.987 LESS : SALES DURING PERIOD FROM 01.04.2002 TO 14.08.2003 139 515.794 CLOSING STOCK AS ON 14.08.2003/15.08.2003 3 7 834.193 NOTE. ALL CALCULATIONS HAVE BEEN MADE AFTER CONVER SION OF DIFFERENT PURITY INTO 22K 10.4. AFTER THE ASSESSEE SUBMITTED THE SAID RECONC ILIATION THE A.O. DID NOT ASK FOR ANY FURTHER CLARIFICATION FROM IT TILL THE PASSING OF ASSESSMENT ORDER. IN THE ASSESSMENT ORDER THE A. O. HAS ONLY RELIED UPON THE WORKING OF STOCK OF GOLD WORKED OUT IN THE LETTER DATED 17 09.03 BY THE THEN A.O. THE A.O. DISREGARDE D THE ASSESSEES WORKING OF STOCK OF GOLD BY STATING THE ASSESSEE FURNISHED A RECONCILIATION STATEMENT REGARDING GOLD ON 24.11.03. THIS RECONCILIATION STATEMENT HOWEVER CANNOT BE A CCEPTED AS THE ASSESSEE HAS NOT SUBSTANTIATED ANY OF THE FIGURES I N THE STATEMENT WITH SUPPORTING DOCUMENTS 10.5. DURING THE APPELLATE PROCEEDINGS THE A/R OF T HE ASSESSEE SUBMITTED THAT ALL THE RELEVANT SUPPORTING DOCUMENT S AND THE 6 COMPUTER CPU CONTAINING THE ACCOUNTS OF THE ASSESSE E WERE IMPOUNDED BY THE A.O. DURING THE COURSE OF SURVEY A ND THE SAME ARE STILL IN HIS POSSESSION AND THAT THE SAID RECON CILIATION WAS PREPARED BY THE ASSESSEE ONLY FROM THE PHOTOCOPIES OF THE DOCUMENTS/IMPOUNDED MATERIAL OBTAINED BY IT FROM TH E A.O. THE A/R FURTHER STATED THAT SINCE THE DOCUMENTS AND MAT ERIAL IMPOUNDED WERE STILL IN THE POSSESSION OF THE A.O. THE A.O. WAS NOT CORRECT IN STATING THAT THE ASSESSEE HAD NOT SU BSTANTIATED ANY OF THE FIGURES OF THE STOCK OF GOLD STATEMENT WITH SUP PORTING DOCUMENTS. 10.6. CONSIDERING THIS FACT IT WAS CONSIDERED PROP ER TO ACCORD THE ASSESSING OFFICER AN OPPORTUNITY TO VERIFY AND EXAM INE THE STATEMENT OF STOCK OF GOLD SUBMITTED BY THE ASSESS EE ON 24.11.03 AND THE WORKING OF STOCK SUBMITTED BY THE ASSESSEE WITH REFERENCE TO THE IMPOUNDED MATERIAL AND DOCUMENTS WHICH ARE S TILL IN HIS POSSESSION. ACCORDINGLY VIDE THIS OFFICE LETTER NU MBER CIT(A)- XXXII/KOL/2008-09/474 DATED 22.01.09 THE A.O. WAS R EQUESTED TO ATTENDED THIS OFFICE ON 10.02.09 ALONG WITH THE MAT ERIAL IMPOUNDED FROM THE ASSESSEES PREMISES DURING THE COURSE OF S URVEY. THE SAID LETTER WAS DULY SERVED UPON THE .A Q. ON 27.01.09. THE ASSESSEE WAS ALSO GIVEN AN OPPORTUNITY TO BE PRESENT ON THAT DATE. THE A.O. NEITHER ATTENDED NOR ANY REQUEST FOR ADJOURNMENT WA S RECEIVED FROM HIM ON THE APPOINTED DATE. THE A/R OF THE ASSE SSEE ATTENDED ON THAT DATE AND THE CASE WAS TREATED AS HEARD. 10.7. AS PER THE LETTER DATED 17.09.03 ISSUED BY TH E A.O. TO THE ASSESSEE THE TOTAL STOCK OF GOLD FOUND AT THE PREM ISES OF THE ASSESSEE AT THE TIME OF SURVEY WAS 40657.44 GMS. NET). THE WORKING SHEET ENCLOSED TO THAT LETTER TH E STOCK WAS WORKED OUT AS UNDER: ITEM QUANTITY GOLD 33 927.28 STOCK LYING IN FRANCHISEES AT GOLD FACTORY 7 143.5 PANTALOON 408.9 TOTAL GOLD 41 479.8 ADD: GOLD WITH ARTISANS 1 560.6 LESS: CUSTOMERS GOLD 2 303 TOTAL NET GOLD 40 657.44 DIAMOND 665.434 CTS PLATINUM 206.297 GMS. OTHER STONES L.S. RS.1 40 000 7 GILI DIAMOND JEWELRY FRANCHISEE STOCK GOLD OF 443.36 GMS AND DIAMOND OF 28.43 CT 10.8. THE A/R AT THE TIME OF APPELLATE PROCEEDING S POINTED OUT CERTAIN ARITHMETICAL MISTAKES IN SUCH WORKING. FIRSTLY IT IS POINTED OUT THAT THE TOTAL OF THE GOLD IN JEWELLERY VALUED BY THE DEPART MENTAL VALUERS WAS ACTUALLY 33926.065 GMS.[A. KHATTRY :25179.520+ B. B ASAK : 3106.672 GMS. + R.K. PODDAAR : 5639.873 GMS] AS AGAINST THE FIGURE OF 33927.28GMS. TAKEN BY A.O IN THE ABOVE TABLE. THERE FORE THERE WAS CALCULATION MISTAKE OF 1.2L5GMS. SECONDLY TOTAL GOLD HAS BEEN MENTIONED IN THE SAID WORKING SHEET AT 41479.8 GMS. WHEREAS THE CORRECT TOTAL IS 41479. 68 GMS. THIRDLY IN THE SAID WORKING SHEET TOTAL NET GOLD HAS BEEN WORKED OUT AT 40657.44 GMS. WHEREAS CORRECT TOTAL C OMES TO 40737.28 GMS. THUS THERE IS A TOTAL CASTING MISTAKE OF 79.84 GMS . OF EXCESS GOLD IN THE WORKING SHEET. THE MISTAKES POINTED OUT BY THE A/R ARE FOUND TO BE CORRECT ON CHECKING THE CALCULATIONS. 10.9. ALONG WITH THE APPEAL THE ASSESSEE FILED A C OPY OF RECONCILIATION IN RESPECT OF STOCK OF GOLD. AS PER THE SAID RECONCILIATION THE TOTAL STOCK OF GOLD AVAILABLE W ITH THE ASSESSEE AS ON THE DATE OF SURVEY WAS 37834.193 GMS. IF THE EN TIRE STOCK OF GOLD IS CONVERTED INTO 22 CARAT PURITY. SAME FIGURE WAS SUBMITTED BY THE ASSESSEE BEFORE THE THEN A.O. O N 24.11.03. AS DISCUSSED ABOVE THE CORRECT WEIGHT OF STOCK AS PER A.O.S WORKING COMES TO 40737.280 GMS. WHICH INCLUDES STOC K WITH 18K 20K 22K AND 22K PURITY. 10.10. THE A/R ALSO BROUGHT TO NOTICE THAT THE SAID STOCK OF 40737.28 GMS. INCLUDED GOLD LYING WITH (1) M/S. PAN TALOON WHICH THE A.O. HAD TAKEN AT GROSS WEIGHT OF 408.900 GMS. WHEREAS THE NET WEIGHT OF THE SAME WAS 408.531 GMS (I.E. DIFFERENCE OF 0.369 GMS. ONLY) (2) GOLD LYING WITH GOLD FACTORY WHICH HAD BE EN TAKEN BY THE A.O. AT GROSS WEIGHT OF 7143.600 GMS. AGAINST THE N ET WEIGHT OF 6529.357 GMS.[WHICH IS CLEAR FROM THE WORKING SHEET PREPARED BY THE A.O. ENCLOSED TO HIS SHOW CAUSE LETTER DATED 17 .09.2003]. 10.11. THE ASSESSEE HAS FOR THE PURPOSE OF CALCULAT ING THE VALUE OF STOCK CONVERTED THE STOCK OF DIFFERENT PURITIES IN TO 22 CARAT PURITY. AFTER SUCH CONVERSION THE CLOSING STOCK OF 22 CARAT PURITY COMES TO 38 176.572 GMS. 8 10.12. FROM THE RECONCILIATION SUBMITTED BY THE ASS ESSEE AT THE TIME APPEAL IT IS OBSERVED THAT IT HAS EXCLUDED 25 0.3 10 GMS. OF GOLD ON ACCOUNT OF GOLD ON APPROVAL. THE A/R WAS ASKED TO EXPLAIN THE SAME. THE A/R STATED THAT THE SAME WAS THE GOLD WHICH THE ASSESSEE HAD RECEIVED ON APPROVAL BASIS FROM ON E JEWEL CREATION MUMBAI. THE A/R FURTHER MENTIONED THAT TH E LETTER DATED 05.08.03 SHOWING THAT JEWEL CREATION HAD SENT JEWEL LERY CONTAINING 250.310 GMS. OF 18 CARAT GOLD TO THE ASS ESSEE WAS ALSO IMPOUNDED BY THE DEPARTMENT AT THE TIME OF SURVEY THEREFORE THE QUANTITY OF THAT GOLD NEEDS TO BE EXCLUDED FROM THE ASSESSEES STOCK FOUND AT THE TIME OF SURVEY. 10.13. IT IS OBSERVED THAT THE LETTER OF M/S. JEWEL CREATION IS DATED 05.08.03. THE SURVEY WAS CONDUCTED ON ASSESSEES PR EMISES ON 14/15.08.03. THE POSSIBILITY CANNOT BE RULED OUT TH AT THE JEWELLERY MENTIONED IN THAT LETTER COULD HAVE BEEN EITHER SOL D OR RETURNED BY THE ASSESSEE DURING THE INTERVENING PERIOD OF 9 DAY S. THIS IS PARTICULARLY SO BECAUSE NONE OF THE ITEMS MENTIONE D IN THE LETTER OF JEWEL CREATION IS FOUND REFLECTED IN ANY OF THE VAL UATION REPORTS PREPARED AT THE TIME OF SURVEY. THEREFORE THE A/R WAS ASKED TO PROVE THAT SUCH JEWELLERY WAS PART OF THE STOCK FOU ND AT THE TIME OF SURVEY. THE A/R SHOWED HIS OR ASSESSEES INABILITY TO DO SO. 10.14. IN THE LIGHT OF THESE FACTS THE CLAIM OF TH E ASSESSEE THAT OUT OF THE STOCK OF GOLD AT THE TIME OF SURVEY 250.3 1 0 GMS. OF GOLD WAS RECEIVED ON APPROVAL AND DID NOT BELONG TO ASSESSEE CANNOT BE ACCEPTED AND IS LIABLE TO BE REJECTED. 10.15. AS PER THE LETTER OF JEWEL CREATION THE JEW ELLERY MENTIONED THEREIN WAS OF 18 CARAT PURITY. THE SAME WHEN CONV ERTED INTO 22 CARAT PURITY COMES TO 204.80 GMS. THE EXCESS STOCK OF GOLD AS ON 14TH AUGUST 2003 THUS COMES TO 38 176.672 GMS. + 204.80 GMS. = 38381.372 GMS. (-) 37834.193 GMS. = 547 GMS. 16.16. IN THE ASSESSMENT ORDER THE AO HAS CALCULAT ED THE VALUE OF EXCESS STOCK APPLYING THE RATE OF RS.489/- PER GRA M. APPLY THE SAME RATE THE VALUE OF THE EXCESS STOCK OF 547.17 9 GMS AS DISCUSSED ABOVE COMES TO RS.2 67 570/- (547.179 GM S X RS.480/-) IN THE LIGHT OF THE ABOVE DISCUSSION AND FACTS TH E ADDITION ON ACCOUNT OF EXCESS STOCK OF GOLD TO THE TUNE OF RS.2 67 570/- IS CONFIRMED. 6. AFTER HEARING BOTH THE SIDES ON THIS ISSUE WE F IND THAT THE TOTAL WEIGHT [IN CARATS] OF DIAMOND COMES TO 398.529 CTS. THE TOTAL WEIGHT OF DIAMONDS RECORDED AT PAGE 10 OF THE VALUATION REPOR T WAS WRONGLY WRITTEN 9 AT 404.249 CTS. THUS THERE WAS A MISTAKE COMMITTED BY THE VALUER TO THAT EXTENT OF EXCESS OF DIAMOND. THE ACTUAL EXCESS STO CK OF DIAMOND AS PER WORKING WAS ONLY [ 7.6 -5.720 CTS] =1. 88CTS AND TH E LD CIT(A) HAS RIGHTLY SUSTAINED TO THE EXTENT OF RS.31 772/- [ RS.16 900 X 1.88 CTS] ON A/C OF DIFFERENCE IN STOCK OF DIAMOND. ON THIS ISSUE WE S USTAIN THE ORDER OF THE C.I.T(A). 6.1 THE SECOND ADDITION WAS ON A/C OF EXCESS STOCK OF WEIGHT OF GOLD. THE REVENUE HAS SUBMITTED THAT THE LD COMMISSIONER OF INCOME-TAX(A) HAS GRANTED RELIEF AND ACCEPTED THE ASSESSEES RECONCIL IATION STATEMENT WITHOUT ANY SUPPORTING EVIDENCE. HE SUBMITTED THAT THE ASSE SSEE HAS NOT PRODUCED ANY SUPPORTING EVIDENCE IN RESPECT OF GOLD WEIGHT O F GILLI JEWELLERY ON CONSIGNMENT A/C OF 443.360 GMS CUSTOMERS GOLD OF 80.004 GMS GOLD WITH FANCHISEE- PANTALOONS OF 0.369 GMS GOLD FACTORY OF 614.143 GMS DIFFERENCE ON A/C OF QUALITY OF GOLD IN TERMS OF CA RATS CONVERTED TO 22 CARATS OF 1160.667 GMS RECONCILIATION OF BOOK STOC K AS PER IMPOUNDED BOOK OF 11451.822 GMS AND GOLD ON APPROVAL OF 592.6 89 GMS. HE PLEADED ALL THESE REQUIRE VERIFICATION AT ASSESSING OFFICER LEVEL. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LEAR NED CIT(A) HAS GRANTED RELIEF AND ACCEPTED THE ASSESSEES RECONCILIATION S TATEMENT WITHOUT ANY SUPPORTING EVIDENCE. HE ALSO SUBMITTED THAT THE LEA RNED CIT(A) HAS NOT GRANTED PROPER OPPORTUNITY TO ASSESSING OFFICER. NO OPPORTUNITY TO AO TO COMMENT UPON THE ASSESSEES RECONCILIATION STATEMEN T. 6.2 IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE WE REMAND BACK THE ISSUE TO THE FILE TO A O TO VERIFY THE VERACITY OF THE RECONCILIATION STATEMENT WITH REFERENCE TO S UPPORTING DOCUMENTS AND TO DECIDE THE ISSUE DENOVO AFTER MAKING DUE VERIFI CATION AND AFFORDING PROPER OPPORTUNITY OF HEARING TO BOTH THE ASSESSEE AS WELL THE AO. THE GROUND RAISED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 10 7. IN THE RESULT THE REVENUES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSE. ORDER IS PRONOUNCED ON 13.4.10 SD/- SD/- (D.K.TYAGI) (B.C.MEENA) (JUDICIAL MEMBER) ACCOUNTANT MEMBER DATED :13.4.10 COPY FORWARDED TO :- 1. DCIT CIRCLE-12 3 GOVT PL(W) KOL-1 2. M/S. A. SIRKAR & CO. (JEWELLERS) PVT. LTD 171/1A R. B AVENUE KOL-19. 3. COMMISSIONER OF INCOME-TAX(A)-XXXII KOLKATA 4. COMMISSIONER OF INCOME-TAX(WB) 5. D.R. ITAT KOLKATA. *PP TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT KOLKATA 11