M/S. KAMBLE GOLD,,SOLAPUR vs. INCOME-TAX OFFICER, WARD - 1,, PANDHARPUR

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.”

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