NEW CHOPRA JEWELLERS,HARYANA vs. ITO WARD-1, PANIPAT

Brief facts of the case are that the assessee is a firm, engaged in the trading of jewellery and filed its return of income on 29.09.2023, declaring total income of INR 18,45,000/-. The case was selected for complete scrutiny. The AO based on the information found during the course of search carried out u/s 132 of the Act in the case of Tirath Gold at Surat on 13.09.2023 wherein several loose papers and pocket diaries, note books etc. were found and seized according to which the Tirath Group who has several sister concern of the same name at Rajkot, Ahmedabad, Bengaluru and Delhi, has made total sales of INR 26,87,498/- to the assessee as against which assessee has shown purchases of INR 2,06,149/- only. Therefore, the AO has held that the assessee has made unaccounted purchases of INR 24,81,349/- from Tirath Gold, Delhi and made the addition of the same u/s 69C of the Act as unexplained expenditure. Besides this, an addition of INR 97,137/-was made being the difference in the sales declared GST returns and the sales as per the books of accounts.

Against the said order, the assessee filed an appeal before ld. CIT(A) who vide impugned order dated 25.06.2025, has dismissed the appeal of the assessee and confirmed the additions made.

Aggrieved by the order of Ld. CIT(A), the assessee preferred an appeal before the Tribunal wherein the assessee has taken many Grounds of appeal as per appeal memo.

During the course of hearing, the assessee filed an application under Rule 11 of Income Tax Appellate Tribunal Rules, 1963, challenging the notice being issued not in the prescribed format however, the ld. AR has not pressed this additional ground of appeal taken and further not pressed the Grounds of appeal Nos. 1 & 2 raised by the assessee in the appeal memo therefore, they are dismissed being not pressed.

The Grounds of appeal Nos. 3 to 7 raised by the assessee are with respect to the confirmation of the addition of INR 24,81,349/- made u/s 69C of the Act made by alleging that assessee has made unaccounted for purchase based on the information found and seized during the course of search in the case of Tirath Gold.

Before us, Ld.AR for the assessee submits that the assessee has actual made purchase of INR 2,06,149/- only which was duly recorded in the books of accounts maintained and backed up respective bills and vouchers. Ld.AR submits that the details found noted in the books in the 3rd party has no relevance as assessee has no control over the same. It is thus prayed that the addition so made be deleted.

On the other hand, Ld. CIT DR for the Revenue vehemently supported the orders of the lower authorities and submits that evidence was found during the search carried out at the business premises of Tirath Gold in the shape of the parallel books of accounts wherein actual sales made tot eh assessee was recorded and since some of the entries appearing in the account maintained in these books was matching with the transaction disclosed by the assessee with Tirath Gold therefore, it cannot be said the remaining entries are not related to it. He therefore, submits that AO has rightly made addition and requested for the confirmation of the same.

Heard the contention of both the parties and perused the material available on record. In the instant case, entire addition was based on the entries of sales found noted in the copy of account of the assessee found in the books of 3 accounts of the supplier. It is observed that out of total seven entries of bills found noted as sales in the ledger account of assessee, totaling to INR 26,87,498/-, one sale bill of INR 2,11,412/- (net of GST) was recorded. The corresponding purchases of INR 2,12,333/- (including GST) was recorded in the books of accounts of the assessee as could be observed from page 198 of the Paper Book which the ledger account of Tirath Gold in the books of the assessee. Once some of the entries match, it cannot be claimed that other entries are not related to the assessee. It is a settled law that papers should be read as a whole. Therefore, in our considered opinion that the entire sales recorded in the ledger account of the assessee of INR 26,87,498/- in the books of Tirath Gold was related to the assessee and assessee had actually made purchase of INR 24,81,349/- which was not recorded in its books of accounts. From the perusal of the ledger accounts of the assessee appearing in the books of Tirath Gold, it is not clear whether any payments were made against such purchases or not thus, it could be presumed that payments have been made only after the sales of the said goods and therefore, instead of making the addition for the entire purchases as explained expenditure u/s 69C of the Act, only the profit contained should be added as additional income of the assessee on such unrecorded purchases.

Looking to the entirety of the facts and circumstances of the case, profit rate of 10% would be fair and reasonable applied on such unaccounted purchases of INR 24,81,349/-. Accordingly, AO is directed to recompute the addition by applying 10% profit rate on the undisclosed purchases and to this extent, addition is hereby, sustained and remaining addition is deleted. Accordingly, Ground of appeal Nos. 3 to 7 raised by the assessee are partly allowed.

Ground of appeal No.8 raised by the assessee is with respect to the confirmation of addition of INR 97,137/- made on account of variance in total sales as per GST return and audited financial statements.

From the perusal of para 5 of the appellate order, it is observed that said addition was accepted by the assessee during the course of assessment proceedings, therefore, we find no error in the order of lower authorities, confirming the said addition. Accordingly, Ground of appeal No.8 raised by the assessee is hereby, dismissed.

In the result, appeal filed by the assessee is dismissed.