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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI D. KARUNAKARA RAO, AM
आयकर अपीलीय अिधकरण, पुणे �यायपीठ “एक-सद�य मामला” पुणे म� IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE �ी डी. क�णाकरा राव, लेखा सद�य के सम� BEFORE SHRI D. KARUNAKARA RAO, AM आयकर अपील सं. / ITA No.899/PUN/2019 िनधा�रण वष� / Assessment Year : 2015-16 M/s. Kamble Gold, H.No.20-1/2-1/8, Kosti Galli, Near Trimurti Theatre, Sangola, Solapur – 413304. अपीलाथ�/Appellant PAN : AALFK3291N …. Vs. ITO, Ward-1, …. ��थ� / Respondent Pandharpur. अपीलाथ� क� ओर से / Appellant by : Shri Pratik Sardbhor ��थ� की ओर से / Respondent by : Shri Sanjeev Ghai सुनवाई क� तारीख / घोषणा क� तारीख / Date of Hearing : 24.09.2019 Date of Pronouncement: 24.09.2019 आदेश / ORDER PER D. KARUNAKARA RAO, AM : This appeal is filed by the assessee against the order of CIT(A)-7, Pune dated 13.05.2019 for the Assessment Year 2015-16. 2. The grounds raised by the assessee are as under :- “1. On the facts and in the circumstances of the case the assessment is bad in law in as much as the Assessing Officer has grossly erred in completing the assessment u/s 144 r.w.s. 147, despite there being not a single failure on the part of the appellant, as specifically enumerated u/s 144. 2. On the facts and in the circumstances of the case the Assessing Officer has erred in making addition of Rs.3,68,729/- on account of shortage of physical cash-in-hand as against the cash balance appearing in the books of the appellant. The above grounds of appeal may kindly be allowed to be altered, modified, amended, deleted etc.”
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Before me, at the outset, ld. Counsel for the assessee did not press the ground no.1 relating to the reassessment issue. Accordingly, the same is dismissed as not pressed. 4. Regarding the ground no.2 relates to the addition of Rs.3,68,729/-, ld, counsel for the assessee submitted that this is the case where a survey action u/s 133A of the Act was conducted on the assessee. Narrating the outcome of the said survey action, ld. Counsel submitted that there was discovery of (i) excess stock of jewellery, which is the source of addition of Rs.7,31,071/- and (ii) shortage of cash amounting to Rs.3,68,729/-. Mentioning that both the amounts were added by the Assessing Officer in the reassessment, ld. Counsel submitted that the CIT(A) granted part relief qua the addition of Rs.7,31,071/-. The CIT(A) restricted the addition of Rs.2,87,754/- as against the addition of Rs.7,31,071/- on account of said excess stock of jewellery. Further, the CIT(A) confirmed the entire cash discrepancy amounting to Rs.3,68,729/- as per the discussion given in para 6.1 and 6.1.1 of his order. For the sake of completeness, the said para 6.1 and 6.1.1 of the order of the CIT(A) is extracted hereunder :- “6.1 The appellant submitted that the cash in hand as per the books is Rs. 4,56,039/- and the physical cash in the shop at the time of survey was Rs. 87,310/-. The AO has added the shortfall of Rs. 3,68,729/- as addition u/s. 69C holding that the same has been spent and which has not been recorded in the books. The appellant claimed that the cash might have been used for expenses and might have been debited later and he relied on the decision of Kolkata Tribunal in the case of ITO vs. Shubash Brothers Jwellers Pvt. Ltd. [2014] 33 ITR (Trib) 66 (Kol). 6.1.1 The submission has been considered. The appellant has not evidenced that this cash has been utilized for making expenditure which is booked later. The appellant has also not made such claim at the time of survey. Therefore, the same is treated as an afterthought and dismissed. The addition made by the AO is sustained.”
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Before me, ld. Counsel for the assessee submitted that, as on date, there is (i) addition of Rs.2,87,754/- on account of unaccounted purchase of jewellery and (ii) addition of Rs.3,68,729/- on account of cash shortage. It is the submission of the assessee that the said cash shortage is due to use of the some expenses. Further, ld. AR submitted the said cash also found way into the said excess stock jewellery. This argument was not accepted by the revenue authorities. In support of his argument, ld. Counsel for the assessee relied on the order of the Bangalore Bench of the Tribunal in the case of M/s. Khapare Shutters vs. ITO vide ITA No.1722/Bang/2018 for the assessment year 2014-15 dated 28.06.2018 and read out the contents of para 5 of the said order of the Tribunal (supra) and various other decisions. 6. On the other hand, ld. DR for the Revenue relied on the orders of the Assessing Officer and the CIT(A). 7. After hearing both the sides and perusing the said order of the Tribunal (supra), I find the para 5 of the said order of the Tribunal (supra) is relevant for the legal proposition that the said cash shortage can be given against the unaccounted purchase of jewellery. For the sake of completeness, the said para 5 of the order of the Tribunal (supra) is extracted hereunder :- “5. From the above paras, we find that on the date of survey, stock was found in excess of book stock to the extent of Rs. 24,10,868/- and the cash was found short as compared to cash balance as per cash book to the extent of Rs. 1,82,527/-. The AO has noted that the assessee firm has declared additional income of Rs. 24.20 Lakhs in the P&L account whereas no additional income was declared in respect of short cash found of Rs. 1,82,527/- and therefore, the AO made addition of short cash found of Rs. 1,82,527/-. We fail to understand the basis of making this addition. In fact, in the absence of any other evidence regarding the user of such cash
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available as per cash book but not found physically at the time of survey, the same should have been considered as utilized for purchasing goods which was found in excess of book stock and therefore, even in respect of excess book stock, extra income to be declared or added could have been reduced to the extent of short cash found. But it is seen that the assessee has declared total amount of excess stock found as additional income. Be that as it may but in our considered opinion, no addition is called for in respect of short cash found at the time of survey in the facts and circumstances of the present case and hence, we delete the same.” 8. Thus, like in the above said case, the Revenue did not have any evidence to show that the short cash was utilized elsewhere. Considering the above and following the parity of reasoning, I am of the opinion that the said issue should be allowed in favour of the assessee. Therefore, it is directed to the Assessing Officer and the CIT(A) to delete the entire addition made on account of unaccounted purchase of jewellery as well as cash shortage. Thus, the ground no.2 raised by the assessee is allowed. 9. In the result, the appeal of the assessee is partly allowed. Order pronounced on this 24th day of September, 2019. Sd/- (D. KARUNAKARA RAO) लेखा सद� / ACCOUNTANT MEMBER पुणे / Pune; �दनांक Dated : 24th September, 2019. Sujeet आदेश क� �ितिलिप अ�ेिषत/Copy of the Order is forwarded to : अपीलाथ� / The Appellant; 1. ��यथ� / The Respondent; 2. 3. The CIT(A)-7, Pune; 4. The Pr. CIT-6, Pune; िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, पुणे “एक-सद�य मामला” / 5. DR ‘SMC’, ITAT, Pune; गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स�यािपत �ित //True Copy// Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune