SHRI KAMAL MOHAN GUPTA,JAIPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-7, JAIPUR

ORDER PER SANDEEP GOSAIN, J.M. The present appeal has been filed by the assessee against the order of CIT(A) -3,Jaipur dated 11.03.2019 for the assessment year 2014-15 wherein the assessee has raised the following grounds of appeal. ‘’1. That the AO as well as ld. CIT(A) has erred in not allowing revaluation of jewellery seized by ADIT, Kolkatta on dated 30-10-2013 for which several applications were submitted to Pr.CCIT, Rajasthan on dated 29-01-2016 and Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur

2. That the AO as well as ld. CIT(A) has erred in treating seized jewellery of Rs. 77,81,035/- as unaccounted for in hands of appellant whereas same is properly shown in books of account, income tax returns of Mr.Chandra Prakash Soni (owner of goods) and in which app was working/ engaged as broker in the case and for which several documentary evidences have been submitted and same is also accepted by Department while passing the assessment order u/s 143(3) of Mr. Chandra Prakash Soni (owner).

3. That ld. CIT(A) has erred in not allowing the additional ground for doing double addition of declared stock value of seized jewellery of Rs. 26,72,808/- which is shown in books of accounts of Shri Chandra Prakash Soni (owner) and further added in hands of Shri Chandra Prakash Soni on protective basis and same is again added in hands of appellant by treating as unaccounted for stock. That date of passing of assessment order of Shri Chandra Prakash Soni (owner) is later in date then date of passing of assessment order of appellant. Thus this ground taken before the ld. CIT(A) was not available at the time of filing of appeal, therefore, taking at the time of hearing of appeal.’’ 2.1 During the course of hearing, the ld. AR of the assessee submitted that the assessee has filed the appeal late by 21 days for which an Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur application for condonation of delay has been filed by the assessee with following prayer.

‘’1. That the appeal order passed by ld. CIT(A)-III Jaipur was served upon an old aged father of appellant (Shri Ram Swaroop Guputa) vide registered post on 18-03-2019 at jhis residential stage at Agra Road, Jaipur. That due to old he could not understand the intricacies of case and could not communicate same to appellant (Kamal Mohan Gupta) and who is residing at Flat No. 701, SDC Euro Exotica, Shri Kushal Nagar, Sanganer, Jaipur. That after check by counsel from the office ld. CIT(A), Jaipur about non-delivery of order, it came to know that appeal order has already been sent at given address and only then for the first time it has come to know that order has been passed and sent to address of appellant. The immediate appellant searched the sealed envelop with his father and immediately contact to his counsel.

Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur

Thus it is humbly requested to kindly condone the delay of 21 days in submission of appeal and the same may please be heard on merits.’’ 2.2 On the other hand, the ld. DR opposed the condonation application of the assessee.

2.3 We have heard the rival contentions, perused the materials available on record and also the affidavits of the assessee and his aged father Shri Ram Swaroop Gupta. Taking into consideration the facts and circumstances of the case and also the decision of Hon'ble Apex Court in the case Collector, Land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC), we are of the considered view that in the given facts and circumstances of the case, the assessee was prevented by sufficient cause which was beyond his control. Therefore, the delay is condoned.

3.1 Brief facts in this case are that an information received by NSCBI Airport, Kolkata on 30.10.2013 as the assessee- Shri Kamal Mohan Gupta was carrying with him large quantity of gold ornaments. He was asked to produce the supporting documents in respect of the source, ownership, possession and application of the said Gold ornaments in his possession.

In response, he could only submit an approval memo from M/s Amit Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur Gems (Proprietorship concern of assessee himself.) As, at the time of verification, Sh. Kamal Mohan Gupta ( assessee) could not explain satisfactory explanation. In the light of the above, a warrant of authorization u/s 132(1) of the IT Act, 1961 was duly executed by the DIT Investigation Wing, on Mr. Kamal Mohan Gupta at the NSCBI Airport, Kolkata on 30.10.2013 and a Search and Seizure operation under section 132 of the Income Tax Act, 1961 was conducted on Mr. Kamal Mohan Gupta at NSCBI Airport, Kolkata resulting in the seizure of stone studded gold jewellery (Jadau) weighing 2141.000 Gms. The Order u/s. 127 issued by the Commissioner of Income-tax-III, Jaipur on 19.03.2014 and case was transferred from ITO, Ward- 7(3), Jaipur to Circle-7, Jaipur. In view of term of section 153 of I.T. Act, 1961, notice u/s. 153 A was issued to assessee on 20.05.2015 requiring him to furnish his return of income for A.Y. 2014-15 within 30 days of receipt of the said notice. In response assessee vide its reply dated 24/06/2015 submitted that the assessee has filed return of income on 20/10/2014 with acknowledgment No. 182201014010459. Notice u/s. 143(2) was issued on 01.09.2015.

Subsequently, the AO passed the assessment order. Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur 3.2 Aggrieved by the order of the AO, the assessee preferred the appeal before the ld. CIT(A) and the ld. CIT(A) after considering the case of both the parties dismissed the appeal of the assessee and upheld the order of the AO.

3.3 Aggrieved by the order of the ld. CIT(A), the assessee has preferred the present appeal before us on the grounds mentioned hereinabove.

3.4 The Ground No. 1 raised by the assessee relates to challenging the order of the ld. CIT(A) in not allowing the revaluation of gold jewellery sized by ADIT team, Kolkatta.

3.5 The ld.AR , appearing on behalf of the assessee submitted before us that as per facts of the case, the assessee was carrying with him gold ornaments which were seized by ADIT team, Kolkatta. The said jewllery belonged to Shri Chandra Prakash Soni and the assessee was only the broker who was carrying the sample of the jewellery for display and seeking the orders. It was submitted by the ld.AR of the assessee that the order of the AO is based on valuation report sought by the Department but the said valuation report is very excessive and is not as per factual position of the jewellery in question. It was further submitted that the Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur assessee has filed several applications to the Pr.CCIT, Rajasthan on 29- 01-2016 and 23-02-2016 and before the ld. CIT(A)-III, Jaipur on 19-01- 2016 and explained the circumstances with evidences which explicitly shows that seized gold jewellery is highly excessively valued by the Department Valuer during the course of seizure and that too in the absence of owner of goods. The ld.AR of the assessee reiterated the same arguments as were raised by him before the ld. CIT(A) which is contained in para 4.1 of the order passed by the ld. CIT(A) and the same is reproduced below.

‘’4.1 During the appellate proceeding the appellant has filed written submission along with additional evidence. The submission is as under and also argued the case on the same basis. "That the Ld. AO has erred in passing of impugned assessment order dt. 22.3.2016 which is without providing proper opportunity of being heard. That appellant has made several request for getting revaluation of seized jewellery by stating that goods which were carrying by appellant were of studded jewellery which is containing WAX of about60% to 70% WAX of total weight whereas valuer has valued entire jewellery at the rate of pure gold-which is absolutely improper and Ld. AO has further erred in not allowing to provide opportunity for revaluation of seized jewellery which is against the principle of natural justice and is uncalled for. That Ld. AO has erred in contending that the appellant has himself has accepted the valuation whereas fact of the case is that the appellant was under acute mental pressure and was compelled to accept the valuation. He was suddenly caught by team of departmental officers at Kolkatta. Appellant belongs from average family and is also not so literate. He felt himself in trouble and was also being threatened that lot of bad things will happen with him, if he did not accept the search proceedings and valuation report. As appellant has sworn on Affidavit dt.18.1.2016 submitted during assessment proceedings alongwith request letter di. 18.1.2016 whereby he has said that "Valuation report dt. 30.10.2013 was got signed by him before departmental officers under acute mental pressure and without understanding the correct valuation amount." Meaning Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur thereby the valuation report was signed without understanding the contents of the same. Thus action of Ld. AO that appellant has accepted the valuation is improper and without ascertaining the factual circumstances under which he was compelled to accept the valuation and assessment based on that valuation report is improper and unjustified in the facts & circumstances of the case. That appellant has submitted application for revaluation of seized jewellery to Hon'ble Pr. Commissioner-Ill, Jaipur on dt.19.1.2016 and to Hon'ble Pr. CCIT, Jaipur on dt.23.2.2016, dt. 29.1.2016 and without getting outcome of those application the Ld. AO has passed the asstt. order which is absolutely illegal and unjustified in the facts & circumstances of the case and may please be held as illegal. That after completion of seizure proceedings of entire record was transferred by the ADI wing, Kolkatta to the office of .1 CI T, Cirlce-7, Jaipur and Ld. AO was the officer who was incharge and having proper jurisdiction over the appellant and therefore all such application for revaluation were made before the jurisdictional office at Jaipur. That several grounds have been raised before Ld. AO for getting revaluation of seized jewellery and all these grounds have been unattended while passing the assessment order by Ld. AO as below:- GROUNDS FOR WANT OF REVALUATION OF SEIZED JEWELLERY (a) That the valuation of goods were taken in presence of appellant who was working as broker on behalf of Mr. Chandra Prakash Soni for carrying the jewellery for display purposes in the open market at Kolkatta. Owner - Mr. Chandra Prakash Soni has never been confronted with such valuation at any point of time during seizure proceedings, thus entire valuation proceedings are non-est. (b) That copy of statement of Mr. Chandra Prakash Soni-owner was provided by Ld. AO dt. 18. 1.2016 for which application dt.25.5.2015 was submitted thus after pwsing of more than seven(7) months statements were provided. Thus appellant was unable to say anything without getting copy of the statements. The valuation of studded jewellery was got done within such a short span of two only, which is not at all possible to get the same done as it takes to value such type of Jadau, Studded jewellery of at least 1-2 whole day. The valuation report was got done by the then valuer Shri Hareram Roy, 21/B, Golap, Sastri Lane, P.L. Aluchipara, Kolkatta in the office of department and later on it has also come to know that he has also been suspended by I.T. department due to inconsistencies in doing valuation. That the valuation of studded jewellery seized is valued at Rs.77,81,035/- which are manufactured from Gold (999 purity) and semi previous stones studded therein of Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur which gross weight was counted for 3121.86 gms and net weight was conted for 2141.00 gms. By said valuer. That value of Gold has been taken at Rs.2935/- per gms. and rates of precious & precious stones are varying from one to another very much. The rate of polka (semi previous stone) ;s taken from Rs.2914/- to Rs. 10,000/- per cts. i.e. in item no. 1 of valuation report, quantity of polka is written as 30.00 gms. and value is taken for Rs. 1,80,000/-, thus rate of polka is taken for Rs.6,000/- per cts. And correspondingly at sr. no. 3 = quantity of polka is taken at 18,000 cts and value is taken for Rs.1,80,000/- , thus value is taken for Rs. 10,000/- per cts. Whereas the prevailing market rate of polki is in between of Rs.1500/- to Rs.1700/- per carat (maximum) in open market of Jaipur which can very well be ascertained and taken from Jewellers of Jaipur. The following are the prevailing rates of semi precious stones in open market at Jaipur:- (a) Polki = Rs.1500 - 1700 per carat (b) Pearl & Beads = Rs. 20-70 per carat Whereas the valuer has taken the minimum rate of Rs.3,000/- per carat and on higher side the rate has been taken at Rs.10,000/- per carat which is on too higher side and shows that entire valuation is done wrongly. The copy of following purchase bills of Polki (cut & polished diamonds) were also submitted to Ld. AO as below:- Name of Party & Address Bill No. Date Amount Rate/Carat

0M/s Bahubali Diamonds Pvt. Ltd. 3 06.07.2013 500000/- 1600/- (ii)—Do- 8 22.10.2013 300000/- 1500/- (i)M/s Sankalp Dim Exports 112 28.08. 2013 300000/- 1200/- (ii)M/s Naman Gems, Surat 117 01. 11 . 2013 300000/- 1500/- (1 M/s Kedia E.,,ports Pvt. Ltd., Jaipur 50 04.11.2013 472800/- 1500/- M/s Bahubali Diamonds Pvt Ltd Sur 01 20.11.2013 231008/- 1600/- ( v That purchase rates of these bills are varying from 1200 to 1600 per carat which were studded in those jewellery which were caught and wrongly seized by I.T. Department. Whereas the valuer has taken up the rate of such polka (cut & polished diamonds) varying from Rs.6000/- to Rs. 10000/- per carat. Thus it is very much unclea,• that from where the above rates have been taken. Thus it is very much proved that valuation of jewellery was made under pressure and looking to the actuality of material used therein. As the appellant is dealer in such Studded Jewellery and understands the very basic of these gold jewellery. As these studded Jewellery are containing at maximum WAX Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur therein and which is containing in these jewellery about 60% to 70% of weight. The studded jewellery is manufactured with filling of WAX therein only then such semi p, ecious stones arc affixed therein. As a manufacturing process of the same, the gold leaf is prepared and then thick WAX is put therein and on upside the stones are studded therein. Thus it contains not more than 19-20% of pure gold (999purity). While valuing the same the valuer has taken the entire weight as pure gold (999purity) without considering the quantity for WZX & CH4PDI therein. Thus in other words the value of WAX fillea in jewellery is valued at rate of pure . The rate of WAX is about Rs. 1.50 per gms which is easily available in local market aipur and can also be got ascertained by you at your end, whereas the rate of pure gold taken for valuation is of Rs.2,935/- per gms. Thus there is difference of Rs. 2933.50 per gram or 29,33,500/- per kilo gram. That jewellery is containing DORI so that it becomes wearable. Dori is made of cotton thread foiled with GOTA. The weight of DORI is about 10% to 15% of total weight. The valuer has counted weight of these DORI in total pure weight of gold (999 purity). That while valuing studded jewellery, the quantity of gold is measured about 68% in total weight by valuer which is absolutely wrong and without any basis and based on his whims & fancies and without any basis. While manufacturing of such type of studded jewellery WAX CHAPDI is used there so that it may hold semi precious stones i.e. pearls, polka etc. While valuing above studded jewellery the percentage of gold is taken about 68% of total weight, whereas it contains not more than 20% of total weight, thus 4850% of gold weight is excessively taken by valuing the studded jewellery. As an exemplary calculation in such studded jewellery the composition of jewellery is given as under:- Typical composition Composition Of studded jewellery taken by valuer (without basis) Gold weight 17-18% 68% Other alloyes 5.6% 0% Semi precious stones 18-20% 32%

WAX, CHAPDI, DORI etc. 60-65% 0% Thus valuation as taken by valuer is without any basis and is totally misconceived. It is further to note that entire valuation process was completed by him within a period Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur

2 hours (at maximum), whereas to ascertain correct value of such type of studded jewellery more than one day is required so as to arrive the correct purity and value thereof Thus it is crystal clear just to co-operate the search team the entire valuation was done and appellant was also put under huge pressure to adopt such valuation. That appellant has submitted his Affidavit stating therein about not properly undertaking valuation of jewellery before Ld. AO and that has remain controverter. On the other side, the valuer while doing valuation has computed pure gold out of total weight and he has not mentioned any details of such difference of pure and net weight. The percentage of other alloys is not properly taken. It is very common science of metallurgy that pure gold cannot be stand alone and it will be bend away immediately and stones, fittings cannot be studded therein. To hold gold in a wearable condition it is very essential to mix other alloys, only then stones etc, alloys be studded/affixed. In pure gold without mixing of other alloys, stones, pearls etc, cannot affixed. The valuation as undertaken by valuer is based on pure gold without discriminating the value of other alloys therein. That the owner of goods (Mr. C-1;andra Prakash Soni) has disclosed the value of such goods in his audited books of account as on 31.3.2014 (as seized jewellery) for Rs.26, 72,808/-, whereas the valuation of these goods have been taken by valuer for Rs.77,81,035/-, thus there is a difference of Rs.51,08,227/-. That appellant has submitted certificate from M/s. S.J. Gems & Jewels, 2456, Tatehra Ka Tiba, Dhobi Ghat Ka Rasta, Purani Basti, Jaipur who has certified that gold red jewellery generally being contains of following ingriendents:- (a) Gold-pure = 15%-20% (b) WAX/Chapdi = 65%-70% (c) Dori, Sarafa etc. = 5%40% Above certificate was submitted to Ld. AO before passing of assessment and Ld. AO has erred in not putting any reliance to same and no contrary evidence have been brought on record for not accepting the same. That Ld. AO has erred in not appreciating the statements of Mr. Chandra Prakash Soni recorded on same date of search proceedings of appellant i.e. on 30.10.2013 wherein relevant question no. 8 which is reproduced as below:- Q.No.8:- Please explain the item wise details of sample given on dt.3.10.2013 and on dt.14.10.2013 to Mr. Kamal Mohan Gupta and get it matched with your books of accounts. fins- That I have given total 2050 gms. gross weight studded jewellery to Shri Kamal Mohan Gupta and it is containing about 20% Gold content therein ...........

Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur

That at same time of search proceedings when the statements were being reco-ded for and owner of goods is contending that it is containing gold content about 20% of total weight and even though the same is not accepted by Ld. AO while passing the assessment order is totally unjustified in the facts & circumstances of the case. That in broad sense gross weight of seized jewellery is of 3120.55 Gms. and of its 20% gold is computed then it becomes to 624.11 gins. of gold content and of which value is not more than 18 Lacs (approx.) and not 71 Lacs. Thus by not providing opportunity for getting same revalued is absolutely improper action on part of the Ld. AO and assessment based on that value is also illegal and against the principle of natural justice. That while passing the: assessment order no where the finding or contrary evidence have been brought on record neither by the investigation agency nor by the Ld. AO about status of Kamal Mohan Gupta. That nowhere in the assessment order the status of Kamal Mohan Gupta is denied as broker of M/s. Gold Theme Jewels Prop. Chandra Prakash Soni and more so when statements of both the persons are simultaneously were recorded and in which one person was at Kolkatta and at same time one person was at Jaipur and answers of both persons are in same line and which is corroboratively matched as is appearing from the statements of both the persons. That Ld. AO has erred in contending that appellant has not challenged the valuation of jewellery earlier whereas facts of the case is that appellant has filed Writ Petition No. 8900/2014 before Hon 'ble Rajasthan High Court on the ground of illegal seizure of Stock in Trade (Jewellery) as Stock in Trade cannot be seized by Income tax department. The Hon 'ble RHC vide their judgment dt. 23.02.2017 has directed to release the seized jewellery forthwith, but even after direction of Hon'ble Raj. HC the same have not been released by department till date. Thus contention of Ld. AO to the extent the valuation should have been challenged before RHC is without any legs and improper in the facts & circumstances of the case. When the basic substratum of seizure is challenged in Writ Petition then there does not remain any reason to challenge valuation in that Writ Petition. That the proceedings u/s. 143(3) are independent proceedings and in which Assessing Officer should apply his mind afresh so as to make a proper and justified assessment of the income and which is lacking in the present case and thus impugned assessment order is absolutely illegal and may please be deleted.’’ Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur 3.6 On the other hand, ld. DR relied on the order passed by the ld. CIT(A).

3.7 We have ld. counsel for both the parties, perused the materials placed on record and also perused the orders passed by the lower authorities. Before we decide the merits of this ground, it is necessary to evaluate the order passed by the ld. CIT(A) while disposing off this ground. The ld. CIT(A) had adjudcated this ground in para 4.2 of his order which is reproduced as under:-

‘’4.2 I have carefully consider the material before me I find that the jewellery was seized from the assessee by the Investigation Wing, Income Tax Department at Airport, Koikata on 30.10.2013 which was valued by the Registered Valuer at Rs.77,81,035/-. During the course of statement of the assessee recorded by the Investigation Wing, the assessee accepted the value of the above movable property at Rs.77,81,035/-. During the course of search and seizure operation, the assessee failed to explain the source of investment submitting the proper evidences. Hence, the claim of the assessee is baseless that the value of the jewellery did not made properly i.e. on actual weight. Further I find that the jewellery was seized on 30.10.2013. The appellant was silent upto almost 2 1/2 years. Firstly he raised this issue on 18.01.2016 which shows that the valuation taken by the valuer is correct and the objection raised by the appellant is without any basis and baseless. This argument taken by the appellant is after thought therefore there is no issue for again revaluation of seized jewellery. Hence I reject the claim of the appellant for revaluation of seized jewellery so I am the view that the Authorised valuer rightly valued the seized jewellery. Therefore these grounds are not allowed.’’ Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur After having gone through the order passed by the ld. CIT(A) and after hearing both the ld. counsels at length, we found that during the course of appellate proceedings, the ld. CIT(A) had sought the remand report from the AO in respect of the grounds raised by the assessee on the ground of revaluation of jewellery in question. The said remand report was given to the assessee and assessee also had filed his rejoinder which is reproduced below.

‘’The copy of the remand report given to the A/R of the appellant for rejoinder which is as under — "That the appellant has filed the application u/rule 46A of I.T. Rules with the request to ascertain actual/correct value of seized jewellery by getting the same revalued as the same is falling in the jurisdiction of assessing officer to undertake those aspects which might have left which are essential for deciding of the case. That the appellant has filed detailed submission with evidences in the support of the getting the seized jewellery revalued with the assessing officer vide submissions dt.30.1.2018 with ALIT, Circle-7, Jaipur and in which complete details with elaborated reasons are mentioned for want of revaluation of seized jewellery but despite of submission of all those relied upon evidences no opportunity is allowed by Ld. AO in remand proceedings also and has not allowed to get revalue the seize jewellery which is absolutely illegal and without providing any opportunity of being heard and thus remand report as sent by Ld. AO may please be declared as non-est and no cognizance on such remand report may please be drawn. That the Ld. AG has not taken into consideration following facts while preparing remand report which are essential and inevitable for deciding the case: - That applications which have been submitted to Pr. CCIT, CIT on dt. 19.1.2016, 23.2.2016, 29.1.2016 before passing of assessment has remain unanswered and now in second innings of factual findings offacts these facts have again being ignored by the Ld. AO. That basic object of rule 46A is to bring those facts on record which are essential for deciding of the case and which could not brought on Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur record during the assessment proceedings. And while issuing the remand report he has ignored all those aspects which were ignored by his predecessor which is absolutely illegal and unjustified in the facts & circumstances of the case. That the Ld. AO has not based his remand report on those points on which the application u/rule 46A is submitted That Ld. AO is focusing in the remand report on the source of funds used for these seized jewellery rather the ground of Revaluation of seized jewellery. That no reason for not allowing the revaluation of seized jewellery is given by Ld. AO in remand proceedings. That Ld. AO has not provide any opportunity of being heard before issuing the remand report. That in the submissions dt. 30.1.2019 the appellant has categorically requested for deposition of government fees for getting the revaluation of seized jewellery but Ld. AO has ignored those aspects while issuing the remand report, which is absolutely illegal and is breach of principle of natural justice. That Ld. AO during remand proceedings has not make any independent inquiry in the jewellery market about gold content in studded jewellery whereas the appellant has submit report of the independent jeweller of the market during the assessment proceedings (M/s S.J. Gems & Jewels) and there is no finding in remand is given. Thus Ld. AO has not discharged his duty by ignoring all these factual material aspects into consideration before issuance of remand report and thus it is humbly requested that this remand report which is improper in the facts & circumstances of the case may not please be taken into consideration while deciding the appeal and case may please be heard and decided on merits of case. You are humbly requested to kindly acknowledge written submissions and appeal may evaluation of seized jewellery may please be allowed so as to record and due justice may please be made available to the passed by Ld. AO may please be deleted & oblige."

From the totality of the facts and circumstances of the case, we found that the assessee has taken a specific stand from the very beginning that the goods which were being carried by the assessee were of studded jewellery Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur which is containing WAX of about 60% to 70% of total weight whereas the valuer has valued the entire jewellery at the rate of pure gold and thus in this way according to the assessee, the AO has erred in not allowing to provide opportunity for revaluation of seized jewellery which is against the principles of natural justice. From the order of the ld. CIT(A),we noticed that this request of the assessee was rejected on the ground that the jewellery was got valued by the Registered Valuer and the assessee himself had accepted by recording his statement about the valuation of the jewellery before the Investigation Wing. It was further held that the assessee was silent for almost 2 ½ years and at a very later stage raised the objection of revaluation of jewellery which is without any basis and it is an afterthought. However, it was submitted by the ld.AR of the assessee that the assessee was under acute mental pressure and is not so literate and the assessee was compelled to accept the valuation of the jewellery. The assessee was suddenly caught by the team of Departmental Officers at Kolkatta and thus there is no acceptance by free will of the assessee. In this respect, the assessee had also filed an affidavit dated 18- 01-2016 wherein it was categorically submitted during the assessment proceeding that Valuation Report dated 30-10-2013 was got signed by Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur him under acute mental pressure and the same is not correct valuation of jewellery. It was submitted by the ld.AR that the assessee was not even told about the contents of the said Valuation Report and therefore, the assessee had submitted the applications for revaluation of seized jewellery to Pr.CIT on 19-01-2016 and to Pr. CCIT, Jaipur 23-02-2016 and 29-01-2016. However, without deciding the said applications, the AO in hurriedly manner had passed the order of assessment. It was submitted that the valuation of studded jewellery seized is valued at Rs.77,81,035/- which are manufactured from Gold (999 purity) and semi previous stones studded therein of which gross weight was counted for 3121.86 gms and net weight was counted for 2141.00 gms. by said valuer. The value of Gold has been taken at Rs.2935/- per gms. and rates of precious & semi precious stones are varying from one to another very much. The rate of polka (semi previous stone) is taken from Rs.2914/- to Rs. 10,000/- per cts. i.e. in item no. 1 of valuation report, quantity of polka is written as 30.00 gms. and value is taken for Rs. 1,80,000/-, thus rate of polka is taken for Rs.6,000/- per cts. and correspondingly at sr. no. 3 = quantity of polka is taken at 18,000 cts and value is taken for Rs.1,80,000/-. Thus value is taken for Rs. 10,000/- per cts. whereas the prevailing market rate Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur of polki is in between of Rs.1500/- to Rs.1700/- per carat (maximum) in open market of Jaipur which can very well be ascertained and taken from Jewellers of Jaipur. According to the ld.AR, the following are the prevailing rates of semi precious stones in open market at Jaipur:-

(c) Polki = Rs.1500 - 1700 per carat

(d) Pearl & Beads = Rs. 20-70 per carat

However, the valuer has taken the minimum rate of Rs.3,000/- per carat and on higher side the rate has been taken at Rs.10,000/- per carat which is on too higher side and shows that entire valuation is done wrongly. The copy of following purchase bills of Polki (cut & polished diamonds) were also submitted to AO as below:-

Name of Party & Address Bill No. Date Amount Rate/Carat

0M/s Bahubali Diamonds Pvt. Ltd. 3 06.07.2013 500000/- 1600/- (iii)—Do- 8 22.10.2013 300000/- 1500/- (iii)M/s Sankalp Dim Exports 112 28.08. 2013 300000/- 1200/- (iv)M/s Naman Gems, Surat 117 01. 11 . 2013 300000/- 1500/- (1 M/s Kedia E.,,ports Pvt. Ltd., Jaipur 50 04.11.2013 472800/- 1500/- M/s Bahubali Diamonds Pvt Ltd Sur 01 20.11.2013 231008/- 1600/- ( v The purchase rates of these bills are varying from 1200 to 1600 per carat which were studded in those jewellery which were caught and wrongly seized by I.T. Department, whereas the valuer has taken up the Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur rate of such polka (cut & polished diamonds) varying from Rs.6000/- to Rs. 10000/- per carat. Thus it is very much unclear that from where the above rates have been taken. The ld.AR submitted that it is very much proved that valuation of jewellery was made under pressure and looking to the actuality of material used therein. As the assessee is dealer in such Studded Jewellery and understands the very basic of these gold jewellery. These studded Jewellery are containing at maximum WAX therein and which is containing in these jewellery about 60% to 70% of weight. The studded jewellery is manufactured with filling of WAX therein only then such semi precious stones arc affixed therein. As a manufacturing process of the same, the gold leaf is prepared and then thick WAX is put therein and on upside the stones are studded therein.

Thus it contains not more than 19-20% of pure gold (999purity). While valuing the same the valuer has taken the entire weight as pure gold

(999purity) without considering the quantity for WZX & CHAPDI therein. Thus in other words the value of WAX filled in jewellery is valued at rate of pure . The rate of WAX is about Rs. 1.50 per gms which is easily available in local market Jaipur and can also be got ascertained the department whereas the rate of pure gold taken for valuation is of Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur

Rs.2,935/- per gms. Thus according to the ld.AR, there is difference of Rs.

2933.50 per gram or 29,33,500/- per kilo gram. The jewellery is containing DORI so that it becomes wearable. Dori is made of cotton thread foiled with GOTA. The weight of DORI is about

10% to 15% of total weight. The ld.AR contended that the valuer has counted weight of these DORI in total pure weight of gold

(999 purity).While valuing studded jewellery, the quantity of gold is measured about 68% in total weight by valuer which is absolutely wrong and without any basis and based on his whims & fancies and without any basis. While manufacturing of such type of studded jewellery, WAX CHAPDI is used there so that it may hold semi precious stones i.e. pearls, polka etc. While valuing above studded jewellery the percentage of gold is taken about 68% of total weight, whereas it contains not more than 20% of total weight, thus 4850% of gold weight is excessively taken by valuing the studded jewellery. An exemplary calculation in such studded jewellery the composition of jewellery is given as under:-

Typical composition Composition Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur of studded jewellery taken by valuer (without basis)

Gold weight 17-18% 68% Other alloyes 5.6% 0% Semi precious stones 18-20% 32%

WAX, CHAPDI, DORI etc. 60-65% 0% The ld.AR of the assessee further submitted that thus valuation as taken by valuer is without any basis and is totally misconceived. It was further submitted that even during the course of remand proceedings the AO had focused on the source of funds used for this seized jewellery and ignored the ground of revaluation of seized jewellery. while passing the assessment of Chandra Prakash Soni the declared value of stock as on 31.3.2014 is of Rs.31,58,699/- which includes seized stock of Rs.2672808/- and same is accepted by AO and no adverse finding is given in the assessment order. Meaning thereby, the AO has accepted the value of seized stock at Rs.2672808/- and further the difference of Rs. 5108227/- is added on "Protective Basis" in the hands of Chandra Prakash Soni to make it a total of Rs.7781035/- (already shown Rs. 2672808/- + addition on protective basis of Rs.5108227/-). If it would have been intention to treat entire seized Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur jewellery at Rs. 7781035/- as undisclosed then Rs. 7781035/- would have been added on protective basis in hands of Chandra Prakash Soni and not difference value of Rs. 2672808/-.Keeping in view the facts and circumstances of the case narrated above, we are of the view that admittedly no valuation of the seized jewellery was carried out in the presence of Shri Chandra Prakash Soni who according to the assessee is, Owner of the seized jewellery and the ld. CIT(A) has not dealt with the specific grounds raised by the assessee for seeking the revaluation of the seized jewellery which is contained in para 4.1 of the order of the ld. CIT(A). The AO had also not made any independent inquiry in the jewellery market about the gold contents of studded jewellery during the remand proceedings whereas the assessee has submitted the report of independent jewelers of the market during the assessment proceeding. The assessee had also submitted three applications, the copy of which is placed at pages 145 to 157 of the paper book, for seeking the revaluation of seized jewellery. It is important to mention here that application for seeking the revaluation of seized jewellery was not only moved by the assessee but also by the alleged owner i.e. Shri Chandra Prakash Soni. Even otherwise, it is the legitimate Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur and legal right of the assessee or Shri Chandra Prakash Soni to get the revaluation of the jewellery in their presence and no prejudice shall be caused to the Department because said seized jewellery is still in the possession of the Department from the date of seizure whereas in this case the specific points/grounds raised by the assessee in para 4.1 as reproduced above are not adjudicated upon. Hence, the rights of the assessee had been prejudiced. Therefore, keeping in view the interest of natural justice, equity and fair play and while taking into consideration the grounds as raised by the assessee in para 4.1 (supra) for seeking revaluation of the seized jewellery, we allow this ground of the assessee and direct the Department to get the seized jewellery revalued by the Registered Valuer of the Department and also to get the valuation report while keeping in view all the points raised by the assessee as mentioned above. Hence, this issue is restored back to the file of the AO for afresh adjudication as directed above. Thus Ground No. 1 of the assessee is allowed for Statistical purposes.

4.1 Since we have restored back the Ground No. 1 to the file of the AO for afresh adjudication, therefore, it is not imperative to adjudicate upon the Ground No. 2 and 3 of the assessee which are interconnected. Shri Kamal Mohan Gupta vs DCIT,Circle-7, Jaipur 5.0 In the result, the appeal filed by the assessee is allowed for Statistical purposes with no order as to cost. Order pronounced in the open court on 23/01/2020.