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Facts
The assessee, a retail gold jewellery businessman, had a survey conducted where departmental valuation of jewellery differed from the assessee's valuation based on gold purity. The AO added the difference, which was upheld by the CIT(A). The assessee also made an investment in land, partly in cash, and explained the source of cash from opening balance, which was partially accepted by the AO.
Held
The tribunal held that the addition on account of the difference in jewellery valuation was not sustainable as the assessee provided a plausible explanation regarding the lower purity of gold. Regarding the land investment, the tribunal allowed credit for a portion of the opening cash balance, treating the remainder as unexplained investment.
Key Issues
Whether the addition based on the difference in jewellery valuation due to varying purity is justified, and whether the cash investment in land was adequately explained.
Sections Cited
143(3), 133A
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Income Tax Appellate Tribunal, AGRA BENCH “DB”: AGRA
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in for AY 2012-13, arises out of the order of the ld. Ld. Commissioner of Income Tax (Appeals)-1, Agra [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 03-10-2017 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 07-05-2015 by the Assessing Officer, ACIT, Mathura (hereinafter referred to as ‘ld. AO’).
The first issue to be decided in this appeal is as to whether the Learned CITA was justified in confirming the addition in the sum of Rs 10,47,227 on account of difference in valuation of jewellery without any quantity difference.
None appeared on behalf of the assessee despite issuance of notice on several occasions. This being an old appeal, hence we proceed to dispose of this appeal on hearing the Learned DR and based on materials available on record.
We have heard the Learned DR and perused the materials available on record. The Assessee is a retail businessman of gold jewellery. The return of income for the assessment year 2012-13 was filed by the Assessee on 30-07- 2012 declaring total income of Rs. 51,94,980. The revised return was filed on 15-08-2012 declaring total income of Rs. 52,11,350 and agricultural income of Rs. 1,25,991. A survey under Section 133A of the Act was conducted in the business premises of the Assessee on 29-09-2011 wherein the Assessee surrendered an amount of Rs. 50 lakhs as additional income. This additional income was duly offered by the Assessee in the return of income filed on 30-07- 2012. During the course of survey, gold jewellery available in the premises of the Assessee was valued at Rs. 60,47,227 by the departmental valuer. The Assessee surrendered Rs. 50 lakhs on account of jewellery. The Assessee submitted that the departmental valuer had considered the purity of gold at 97% and had valued the jewellery of Rs. 60,47,227 whereas the purity of gold found in the premises was only ranging between 80 - 85% and accordingly the Assessee had come forward to surrender only a sum of Rs. 50 lakhs on account of jewellery. The Learned AO however did not agree to the contentions of the Assessee and proceeded to add the differential sum of Rs. 10,47,227 in the assessment. This action was upheld by the Learned CITA.
At the outset, we find that the addition has been made only based on the difference in valuation of jewellery. The Assessee had given an explanation that purity of gold kept in the premises of the Assessee was only in the range of 80 to 85 percent. Whereas the Departmental Valuer had considered the purity of gold to be at 97% and had valued at Rs. 60,47,227. We find that Assessee had given a plausible explanation with regard to the purity of gold at the time of survey and he had not changed his statement from the time of survey till the completion of assessment proceedings. Considering the same to be a plausible explanation, the addition made in the sum of Rs. 10,47,227 purely based on difference in value cannot be sustained in the eyes of law. Accordingly the same is hereby directed to be deleted. The Ground Nos. 2 to 2.3 raised by the Assessee are hereby allowed.
The Ground No. 1 raised by the Assessee is general in nature and does not require any specific adjudication.
The Ground No. 3 raised by the Assessee is challenging the addition of Rs. 3 lakhs made on account of alleged investment in land.
We have heard the Learned DR and perused the materials available on record. The Assessee made investment in land of Nagla Kiki both in cheque as well as in cash. The total cash investment made thereon was Rs 4,27,500 and the Assessee explained that Rs 1,27,500 was withdrawn in cash from Union Bank of India during the year and to that extent, the source of investment was accepted as genuine by the Learned AO. With regard to remaining Rs 3,00,000 investment made in cash for purchase of land, the Assessee submitted that the said cash emanated out of opening cash balance held with him. This explanation was disbelieved and the Learned AO proceeded to treat the sum of Rs 3,00,000 as unexplained investment made in land for want of proper explanation of source. This action of the Learned AO was upheld by the Learned CITA.
At the outset, we find that the books of accounts of the Assessee had been produced by the Assessee and the same was stated to be lost by the Assessee as stated in Page 1 of the assessment order that the books of accounts had fallen during his movement on motorcycle. To this effect, the Assessee had also filed a complaint with the police station and enclosed the relevant documents to prove the same which was accepted by the Learned AO. The Learned AO had felt that the opening cash balance of Rs 3,00,000 stated by the Assessee could not be cross-verified for want of books and had made this addition . However considering the fact that Assessee has been in this business for quite a long time and has been regularly assessed to income tax and had also disclosed Agricultural Income, we find that Assessee should be given the credit to the extent of Rs 2,00,000 as available opening cash balance. Hence, we hold that Assessee was able to explain Rs 2,00,000 in cash on account of investment made in land and remaining sum of Rs 1,00,000 is hereby treated as unexplained and hence the addition to that extent is sustained herein. Accordingly, the Ground No. 3 raised by the Assessee is partly allowed.
In the result, the appeal of the Assessee is partly allowed.
Order pronounced in the open court on 17/03/2026.