SARAF THE JEWELLER, CHANDIGARH,CHANDIGARH vs. THE DCIT/ACIT CENTRAL CIRCLE -2, CHANDIGARH, CHANDIGARH

4. Notwithstanding the above ground of appeal, the adoption of CPWD rates by the DVO is contrary to the judgment of Punjab & Haryana High Court in the case of Sh. Rajesh Mahajan, in which, it has been held that CPWD rates are higher by 30% and the benefit of 15% is to be for self-supervision and thus, the addition has been made u/s 69C r.w. Section 115BBE of the difference of the alleged cost of construction is not sustainable.

5. That CIT(A) has erred in making the addition of Rs.2,07,40,000/- on account of unsecured loan u/s 68 and applying the provisions of Sec.115BBE of the Income Tax Act and this addition was not called for as no incriminating evidence in respect of the unsecured loan have been found.

3 6. That the Ld. CIT(A) has erred in rejecting the ground of appeal with regard to approval as granted u/s 153D which is without any application of mind of the Addl. CIT and he has failed to consider the judgment of Hon’ble Apex Court in the case of ACIT vs. Serajuddin& CO. (2024) 168 Taxmann.com 118 and many other judgments of different high courts and benches of the ITAT. 7.That the confirmation of addition is against the facts and circumstances of the case.

1.3 The revenue’s grounds of appeal read as under: -

1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) erred in not appreciating the fact that the amount of Rs.9,99,86,930/- sale suppression during AY 2020- 21 was to be considered as undisclosed income of the assessee.

2. Whether on the facts and circumstances of the case the Ld. CIT(A) failed to appreciate the fact that the assessee failed to declare the sale receipt of Rs.9,99,86,930/- in the books of account for the said year.

3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) erred in not appreciating the fact that the amount of Rs.15,25,03,772/- income from explained sources during the AY 2020-21 was to be considered as unexplained cash credit u/s 68 of the IT Act, 1961. 1.4 The Ld. AR advanced arguments on legal grounds as well as on merits by drawing our attention to various documents as placed on record. Reference has been made to various judicial decisions, the copies of which has been placed on record. The Ld. CIT-DR also advanced arguments supporting the assessment order of Ld. AO. These cross-appeals were heard along with cross-appeals for AYs 2019-20 & 2021-22. It was admitted position that the facts as well as issues are substantially the same and our adjudication in the lead appeal would have an equal application to these cross-appeals also. The lead order has been passed by us in cross-appeals for AY 2019-20 (ITA Nos.1230 & 1592/Chandi/2025 order dated 10-03- 2026). In the said background, our adjudication would be as under. Assessment Proceedings 2.1 The assessee being resident-firm was subjected to search action u/s 132 on 21-01-2021 pursuant to which impugned assessment has been framed against the assessee. The assessee had filed regular return of 4 income u/s 139 on 01-12-2020 declaring income of Rs.75.59 Lacs. Post search proceedings, a notice u/s 153A was issued to the assessee on 20- 10-2021. In response, the assessee filed return of income declaring same income of Rs.75.59 Lacs which was subjected to scrutiny by Ld. AO. 2.2 The first issue that was identified by Ld. AO was alleged unaccounted sales on various units as sold by the assessee during AYs 2019-20 to 2021-22. The units were in the shape of Double Story Showrooms (DSSs) / Shop-cum-offices (SCOs).During survey u/s 133A at assessee’s site office viz. Mohali Citi Centre, GMADA, Aerocity, Mohali, certain digital loose papers were found and impounded as Annexure-1 (Pages 16,17 & 18). The seized papers, inter-alia, contained list of customer’s names, sale price, unit and address along with welcome letter cum receipt allegedly issued by the assessee against sale of Shop-cum-office (SCOs) / Double Story Shops (DSSs). The contents thereof have been extracted by Ld. AO in the assessment order. The Ld. AO, referring to certain whatsapp images as recovered during above action coupled with loose sheets and welcome letters, made allegation of receipt of cash against sale of units by the assessee. 2.3 The complete details of 126 units as sold by the assessee during FYs 2018-19 to 2020-21 at Mohali Citi Center and the prices declared by the assessee in the regular books was tabulated and compared with prices mentioned in the seized documents and difference was computed. The statement of one Shri Santokh Singh, as recorded by investigation wing, was referred to by Ld. AO to support the allegation of receipt of on-money. In the above background, Ld. AO tabulated variation in 41 sale instances

5 and the suppression of sales was quantified for AYs 2019-20 to 2021-22. The suppression for this year worked out to be Rs.1302.90 Lacs. Though the assessee raised various objections including the averment that the welcome letter was nothing but roughly drafted letters only showing higher values to make better negotiations with the customers and strike good bargains with the customers, all these objections stood rejected by Ld. AO. Finally, this amount was added as undisclosed income of the assessee. 2.4 The Ld. AO, thereafter, went on to extrapolate similar findings for the remaining units also. The addition of Rs.1302.90 Lacs covered 41 sale instances. The assessee had sold 126 units in the three years and similar estimation was to be made for remaining 85 sale instances also. The market price of the units was searched in the public domain website i.e., 99acres.com and average price per square yards was worked out at Rs.1,35,000/- (approx.). The same was applied to remaining 85 units as well and sale suppression was worked out for all the three years for these units. The sale suppression for this year worked out to be Rs.999.86 Lacs which was further added to assessee’s income. 2.5 The third addition as made by Ld. AO was for Rs.259.49 Lacs. The same was on the allegation that the assessee made unaccounted construction expenditure at Mohali Citi Centre. This addition stem from the fact that the assessee claimed to have sold the plots only whereas construction was outsourced to external entities namely M/s DS Construction Co. and M/s DCS Structure Company. In this regard, statement of Shri Roshan Singh (GM) was recorded who stated that he was coordinating all the overall monitoring and construction

6 related work including coordination with engineers and Architects and he reported to Shri Anil Goyal. He stated that they were selling complete SCOs. At the time of selling, the buyer was asked to issue cheques in favor of these construction companies and an agreement was signed between the customers and these construction companies for construction. Shri Anil Goyal stated that no written agreement was signed between STJ and these construction companies. However, Ld. AO observed that all the design, approvals and plans of the projects were finalized and decided by the STJ group and there was no role of the customers in it. Secondly, no liberty was available to customer with regard to customization or exercise any user specific choices as the design of all the SCOs and showrooms was required to conform to larger plan of the project which had already been decided by the STJ group. Therefore, the agreement between the buyer and construction companies was clever arrangement by STJ group to bring down the cost of the showrooms and SCOs to enable billing at reduced price to evade GST. To support the same, Ld. AO referred to the statement of Shri Santokh Singh who stated that he purchased fully constructed DSS from the assessee. The payment was made in two parts i.e., one in the name of the assessee and the other in the name of M/s DCS Structure Company. At the time of booking, construction was already completed which would show that the agreement between the construction companies and customers was a clever arrangement by the assessee group so as to evade stamp duty and GST.

7 For external validation, reply of Jasmeen Kaur Varaich (in response to summons issued by the investigation wing) was also referred to by Ld. AO. As per her reply, an agreement was signed between her and the assessee in which it was agreed that the assessee would get the work completed from M/s DS Construction Co. The copy of the agreement has been extracted at para 2.4 of the assessment order. On the basis of these facts, Ld. AO alleged that constructed units were sold at a much higher rates than the declared sale in the regular books and the difference was received in cash by the assessee. During assessment proceedings, the assessee stated that 29 units were constructed by it from two construction companies viz. M/s DS Construction and M/s DSC construction. The construction expenses were booked in the regular books of accounts. However, the case was referred by Ld. AO to DVO for valuation of the construction cost as declared by the assessee in the regular books of accounts. The report of DVO was received on 01-07-2022 who valued the construction cost at much higher figures than the recorded value. On the basis of the same, Ld. AO made allegation of unaccounted expenditure by the assessee. The assessee objected to valuation on the ground that while valuing CPWD rates were used instead of PWD rates. The Ld. AO rejected the same on the ground that valuation was done as per CBDT guidelines. The estimated difference was summarized as under:- Declared Cost Cost as per base of DVO estimation Difference 2012 Rs.94,91,575/- Rs.84,74,620/- Rs.3,44,24,100/- Rs.2,59,49,480/-

8 After rejecting assessee’s objection to valuation, the amount of Rs.259.49 Lacs was added to the income of the assessee as unexplained expenditure u/s 69C. 2.6 The fourth addition as made by Ld. AO stem from the allegation that the assessee reflected higher Gross Profit (GP) in jewellery business during this year. Upon perusal of financials of Jewellery segment, Ld. AO observed that GP Rate as declared by the assessee in this year was 53.88% whereas GP rate in earlier year AY 2019-20 was 11.84%. The assessee attributed higher GP rate to wide fluctuation in gold prices during the year. It was stated that the assessee maintained complete books of accounts and supporting documents and therefore, no adverse view was to be taken on this account. The Ld. AO, finding minor discrepancies in the sales bills (i.e., some sales bills were unsigned, some bills were not having customer’s identification, most of the bills were less than Rs.1 Lacs etc.), Ld. AO alleged that the GP rate as declared by the assessee was not verifiable. The assessee was having another sister concern M/s KLG Jewellers which was closely related to functioning of the group. Any enhancement of GP rate due to sharp jump in gold prices would have a similar impact on both the firms since the two firms were closely inter-related. The percentage increase in GP rate of KLG Jewellers for AYs 2020-21 & 2021-22 was 2.77% & 31% respectively. Assuming / Applying similar growth rates to the GP rate of the assessee, Ld. AO proceeded to computed excess profit as declared by the assessee in jewellery business. The same was quantified at Rs.1525.03 Lacs for AY 2020-21 and Rs.1443.53 Lacs for AY 2021-22.

9 The assessee objected to the same, inter-alia, on the ground that M/s KLG Jewellers was franchise of Tanishq which charges a profit before supplying the stock to the assessee. The assessee is able to make purchases at a lower cost from the market. The income declared in the regular books of account could not be treated as income from undisclosed sources. However, Ld. AO compared the GP rates of two other entities viz. Shyam Jewellers and Kalyan Jewellers who declared profits of 11.62% and 5.36% respectively in AY 2020-21 and profit of 11.19% and 4.93% respectively in AY 2021-22. Finally, the assessee’s submissions were rejected and alleged excess income as shown by the assessee was added as unexplained cash credit u/s 68 r.w.s. 115BBE of the Act. 2.7 The last of the addition was addition of unexplained cash credit u/s 68 for Rs.207.40 Lacs. It transpired that the assessee obtained unsecured loans from various entities. After rejecting assessee’s submissions as well as documentary evidences, Ld. AO made addition of unexplained cash credit u/s 68 as tabulated below: - No. Name of Lender Amount of Repayment Repayment Loan (Rs.) during AY during AY 2021- 2020-21 22 1. Baljit Singh Rs.8.00 Lacs 2. Bharpur Singh Rs.25.00 Lacs 3. M/s Chandigarh Colonisers P. Ltd. Rs.50.00 Lacs Rs.50.00 Lacs 4. M/s Consort Builders Pvt. Ltd. Rs.49.00 Lacs Rs.49.00 Lacs 5. Gurdeep Singh Rs.10.00 Lacs 6. Gurmit Singh Rs.30.00 Lacs 7. Manjot Kaur Rs.20.00 Lacs 8. Master Craft Rs.0.40 Lacs 9. Tarun Arora Rs.5.00 Lacs 10. Vinod Kumar Rs.10.00 Lacs Total Rs.207.40 Lacs 10 2.8 Finally, the assessment was framed on 28-12-2022 which was subjected to assessee’s challenge in first appeal. Appellate Proceedings 3.1 The assessee, by way of detailed written submissions, assailed the assumption of jurisdiction on legal grounds and also quantum additions in merit. The Ld. CIT(A), after due consideration thereof as well as material on record, upheld the addition of alleged on-money for Rs.1302.90 Lacs but deleted addition of Rs.999.86 Lacs which was made on the basis of extrapolation. The same form subject matter of cross-appeals before us. 3.2 On the issue of third addition of Rs.259.49 Lacs (representing difference in DVO valuation and recorded values), Ld. CIT(A) endorsed the view of Ld. AO that the assessee was not merely selling plots but delivering completed or semi-completed units. The submissions that the two construction companies were independent contractors as engaged by the buyers was not convincing. The prices were artificially split between the assessee and these so-called contractors. The assessee did not furnish any independent valuation to demonstrate that the DVO’s valuation was erroneous. Finally, the addition was confirmed against which the assessee is in further appeal before us. 3.3 On the issue of alleged higher GP in jewellery business, it was noted by Ld. CIT(A) that the assessee was running two retail showrooms selling gold and diamond jewellery. The books of accounts were duly audited and quantitative stock records of all items were maintained. The purchases were through verifiable banking channels. No discrepancy was found in the purchase vouchers or stock records. Therefore, the book results could not 11 be discarded unless there was clear evidence of suppression of sales which was not the case. M/s KLG Jewellers was exclusive franchisee of Tanishq and was bound to sell branded products at fixed prices as determined by franchisor. Its margin structure, cost profile and pricing policy is entirely different from that of an independent jewellery entity like the assessee who sells its own design and competes on prices in the open market. The department had verified the franchise status of M/s KLG Jewellers during the course of search itself. Therefore, M/s KLG Jewellers could not be said to be an independent retailer. Therefore, the allegation of Ld.AO had no foundation. Further, there was no unexplained cash credit in terms of Sec.68. The provisions would be attracted only when a credit entry is found in the books of the assessee and the assessee is unable to explain its nature and source. The receipts under consideration were recorded sales proceeds. Their nature was known and their source was the trading activity of the assessee. Therefore, this addition was deleted against which the revenue is in further appeal before us. 3.4 On the issue of addition of unexplained cash credit u/s 68, the assessee contended that it furnished complete details of all the lenders including name, address, confirmation, PAN and bank statements. The loans were received through normal banking channels. There was no material to suggest that the same represent assessee’s unaccounted money. No enquiry was made from any of the lender parties and there was no adverse material on record. However, Ld. CIT(A), at para 11.1.3, rejected the same on the ground that the assessee furnished partial 12 documents only. Accordingly, the action of Ld. AO was endorsed against which the assessee is in further appeal before us. Our findings and Adjudication 4. The first two issues viz. receipt of alleged on-money on sale of units and addition on the basis of extrapolation has already been adjudicated by us in cross-appeals for AY 2019-20 (supra) as under: - 4. We find that the assessee-firm came into existence on 10-03-2016. From the written submissions of Ld. AR, it emerges the assessee had entered into real estate business in February, 2018 and it enrolled for bid before statutory authority GMADA. The assessee was accorded permission by GMADA for construction of commercial site measuring 28348.87 Square meters in Block-F, Aero City, SAS Nagar, Mohali vide allotment letter dated 08-02- 2018. The assessee paid 15% of the initial amount and the remaining 85% of consideration was to be paid in 12 half- monthly installments with interest of 9%. Any delay in payment would attract higher interest rate of 14%. The delay could be condoned for maximum period of 3 years from due date and in case of breach of conditions of allotment letter, 10% of total price plus interest due till date would be forfeited and the site or building would be liable to be resumed. These facts are borne out of allotment letter as issued by GMADA to the assessee which has been placed in the paper-book. It could also be seen that this was the first real estate project for the assessee and there was huge burden on the assessee to make payment to GMADA within stipulated time. At the same time, the project had to be completed well within time and the assessee was to sell DSSs / SCOs within the shortest possible of time on the basis of negotiation keeping in mind that substantial amount of payment that was to be made to GMADA besides constructing the site. The assessee majorly gave the contract for construction of SCOs / DSS to third-parties to speedily construct major portion so as to attract the customers and sell the same. In order to arrange funds, the assessee adopted various marketing and sales strategies for the speedy sale of SCOs / DSSs and the assessee would negotiate with prospective buyers depending upon their willingness and financial capacity for purchasing a particular size and location of SCOs / DSSs. In such circumstances, difference prices were quoted to different customers depending upon marketing conditions and urgency and margin for negotiation so as to maximize sales. The same explain variation of sale prices amongst customers for various units. To collect higher advances from customers, the assessee apparently prepared welcome letters for individual SCOs / DSSs which were displayed at business premises so that the visiting customers could see that substantial advanced had already been received from other buyers thereby enhancing the confidence in the project. As per assessee, these letters were roughly drafted letters indicating higher amount of booking to build up confidence amongst customers regarding the demand of the project and so as to facilitate negotiations. These letters were used only as a marketing tool to demonstrate demand for SCOs / DSSs and to support negotiations. A sample copies of these welcome letters have already been extracted in the assessment order. Upon perusal of the same, it could be seen that there is no signature either of the assessee or of the customer and only certain rate and amount received has been mentioned. Pertinently, there is no mention of any cash component in the deal. The letter merely states the customer’s name, unit number, 13 rate and payment received. The same has not been acknowledged by any of the parties to the transaction. The same are not in the nature of any agreement, allotment letter, receipt or any legally enforceable document. No corroborative evidences such as cash receipt, bank trail, agreement to sale or confirmation from buyer has been brought on record to substantiate the allegation of receipts of on-money. The payment so received as per welcome letters matches with assessee’s regular books of accounts and the payments have been received through normal banking channels only. There is no mention of the fact in the welcome letter that the remaining consideration would be paid in cash and no such cash is shown to have exchanged between the parties. The findings of Ld. CIT(A) that post-search investigations, the buyers’ statements were recorded wherein the purchaser admitted to paying a portion of the consideration in cash over and above the registered value, is factually incorrect. Nothing of that sort could be borne out of assessment order. Even if presuming that such statement was ever recorded, the same was never confronted to the assessee and the same, at the most, would be third-parties’ statements. Unless the same are confronted to the assessee or the assessee is afforded opportunity of cross-examination of the so called buyers’ as alleged by Ld. CIT(A), the same, on standalone basis, could not be relied upon to make the impugned additions in the hands of the assessee since the same would be violative of principles of natural justice. It is another fact that no such statement has otherwise been referred to by Ld. AO in the assessment order nor such a fact of recording of statements have been demonstrated before us. Therefore, these findings of Ld. CIT(A) could not be accepted. The only statement as referred to by Ld. AO is the statement of Shri Santokh Singh which, in fact, favors the case of the assessee that the consideration was mentioned in the welcome letter do not representation actual sale consideration for the assessee.

5. Proceeding further, the statement of Shri Santokh Singh (who purchased one of the units) as recorded by the department, would assume much significance. The relevant questions put to him and his answers thereto has already been extracted at preceding para 2.8. Upon perusal of the same, it could be observed that the welcome letter of Shri Santok Singh mentioned a rate of Rs.119 Lacs with receipt of Rs.11 Lacs through cheque on 19-11- 2019. However, a perusal of his reply would show that the amount mentioned in the welcome letter is much higher than the actual sale consideration as admitted by him. He has categorically stated that the price quoted to him was only Rs.115 Lacs and no brochure was shown to him. Shri Santokh Singh confirmed that DSS-99 was purchased by him for Rs.73 Lacs only after negotiations and only that much of payment was made by him to the assessee. Initially, he was quoted a price of Rs.1.15 Crores but he was able to arrange funds only up to 70-80 Lakh. He had returned home without making a deal and thereafter, he was invited to the office of the assessee wherein the deal was finalized by Shri Anil Goyal for Rs.73 Lacs only for sale of plot and another Rs.11.2 Lakh was to be paid towards construction component. Therefore, the whole case of Ld. AO that the welcome letters represent actual sale consideration by the assessee fall flat on the ground. On these facts, the argument that these welcome letters were merely a marketing and negotiation tool to create perception of demand and booking momentum amongst new customers in view of heavy financial burden of GMADA installment and development commitments is to be accepted. The same would also explain sale of units by the assessee at varied rates. It is not the case of the revenue that any of the unit was sold at a consideration which is less than the stamp duty value. The final price has been arrived by the assessee on case-to-case basis depending upon commercial negotiations and considering the immediate funds requirements. Further, none of the buyers is shown to 14 have admitted paying higher sale consideration to the assessee than the recorded sales price. There is no corroboration of allegation of Ld. AO.

6. It could further be seen that the digital loose excel sheets which have been considered by Ld. AO are undated, unsigned bearing no details of receipt of alleged on-money by the assessee.These loose excel sheets have no corroboration with any other material on record. Similar is the case with whatsapp chats as relied upon by Ld. AO to fortify its allegation. The same are bereft of any third-party corroboration. It is trite law that no addition could be made merely on the basis of presumption, assumptions, conjectures or surmises. Pertinently, no enquiries have been made by Ld. AO from any of these buyers (except recording of statement of Shri Santokh Singh) to corroborate the allegations neither any such incriminating statement is borne out of the orders of lower authorities. It is settled law that no addition could be made merely on the basis of loose papers unless the same is corroborated by cogent evidences. It could be seen that no evidence of excess cash or unexplained investment by the assessee has been found during search proceedings since the only addition made is addition of alleged unaccounted sales. Therefore, the addition made by Ld. AO merely on the basis of welcome letters and loose sheets is misconceived and unjustified. The allegation that the units were sold at much higher price do not have any foundation.

15 Facts being pari-materia the same, taking the same view, we delete impugned addition of Rs.1302.90 Lacs as made by Ld. AO and confirmed by Ld. CIT(A). The assessee succeeds in its corresponding grounds of appeal

. The action of Ld. CIT(A) in deleting the addition of Rs.999.86 Lacs stand confirmed. The corresponding grounds as raised by the revenue stand dismissed.

5. The next issue is addition of alleged unaccounted expenditure for Rs.259.49 Lacs. The same has been made by Ld. AO by making a reference to DVO who has estimated the expenditure at much higher figures than the construction cost as reflected by the assessee in its regular books of accounts. From the facts, it clearly emerges that no incriminating evidence has been found during search which would indicate incurrence of unaccounted expenditure by the assessee. In the absence of such incriminating material, the reference to DVO itself would be illegal, arbitrary and bad-in-law. The facts of the present case would show that Ld. AO do not have any cogent material with him to support the allegation of unaccounted expenditure by the assessee in this year. In such a case, the reference u/s 142A could not be held to be a valid one and such a reference could not be held to be justified on the facts of the case. This proposition find support from the decision of Chandigarh Tribunal in the case of Khanna Infrabuild Pvt. Ltd. [2024; 110 ITR (Trib.) 161 dated 12- 10-2023]. The bench, while referring to the decision of Hon’ble Apex Court in the case of Abhisar Buildwell Pvt. Ltd. (149 Taxmann.com 399), observed that report of the DVO is purely based on estimation basis. The assessee raised various objections to the same including the objection that 16 the rates of construction were taken as per CPWD rates as against PWD rates which have difference of at least 25%. Reference was made to the decision of Ahmedabad Tribunal in the case of CIT vs. Jayantilal T. Jariwala (IT (SS) No.65/Ahd/2009 dated 28-10-2015). It was finally held by the bench that the reference to DVO was not valid and the consequential addition purely on the basis of estimated report of DVO could not be sustained. This case law duly supports the case of the assessee. The case of the assessee is further supported by the fact that DVO has applied CPWD rates as against PWD rates which have difference of at least 25%. Further, the benefit of self-supervision has also not been granted. This is against the settled position that local PWD rates are to be preferred over CPWD rates and CPWD rates are generally higher than local PWD rates (as per decision of Hon’ble Apex Court in Sunita Mansingha 393 ITR 121; the decision of Hon’ble Punjab & Haryana Court in the case of Rajesh Mahajan 50 Taxmann.com 206). In the case of Rajesh Mahajan (supra), it was observed by Hon’ble Court that 15% of valuation could be allowed for personal supervision. It is another fact that the assessee has engaged two contractors for construction of 29 units. The payment to the two contractors form part of assessee’s regular books of accounts which is evident from copies of ledger extract of these two entities as placed on Page No. 98 to 100 of the paper books for this year. All the payments are through banking channels after deduction of applicable TDS. No independent enquiry is shown to have been carried out from the two contractors and there is no cogent material on record to indicate incurrence of unaccounted expenditure by the 17 assessee. The assessee has maintained regular books of accounts which are duly audited as required under law. The books have not been rejected and no defect has been pointed out in the same. There is no iota of evidence which would reflect that the assessee indulged in out-of-books expenditure. It is trite law that no addition could be made merely on the basis of estimations or presumptions particularly in search cases. Finally, considering the facts and circumstances of the case, we are of the considered opinion that the impugned addition, as sustained by Ld. CIT(A) in the impugned order, is unsustainable. By deleting the same, we allow corresponding grounds of assessee’s appeal.

6. The fourth issue that fall for our consideration is alleged higher profit in jewellery business. Strangely, this addition has been made by Ld. AO on the allegation that the assessee has declared higher GP in the jewellery business. The same is in complete disregard to the audited financial statements of the assessee. The excess profit allegedly shown by the assessee has been added u/s 68 as unexplained cash credit to tax the same at higher rates of Sec.115BBE. However, the excess profit is nothing but business receipts which already forms part of assessee’s regular books of accounts. To support the impugned addition, Ld. AO has compared the GP rate shown by assessee’ sister concern M/s KLG Jewellers, which, altogether has different business model. That entity is exclusive franchisee of Tanishq whereas the assessee is an independent seller. It has been assumed that percentage of growth in both the firms would be identical which conclusion is clearly fallacious one and devoid of any merits. The Ld. CIT(A) has rightly appreciated the fact that the assessee’s books of 18 accounts were duly audited and quantitative stock records of all the items were maintained. The purchases were through verifiable banking channels. No discrepancy was found in the purchase vouchers or stock records. Therefore, the book results could not be discarded unless there was clear evidence of suppression of sales which was not the case. M/s KLG Jewellers was exclusive franchisee of Tanishq and was bound to sell branded products at fixed prices as determined by franchisor. Its margin structure, cost profile and pricing policy would entirely be different from that of an independent jewellery entity like the assessee who sells its own design and competes on prices in the open market. Therefore, M/s KLG Jewellers could not be said to be an independent retailer. It has finally been concluded that the allegation of Ld.AO had no foundation. Further, the provisions of Sec.68 would be attracted only when a credit entry is found in the books of the assessee and the assessee is unable to explain its nature and source. The receipts under consideration were recorded sales proceeds. Their nature was known and their source was the trading activity of the assessee. Therefore, in our considered opinion, this addition has rightly been deleted by Ld. CIT(A). By endorsing the adjudication of Ld. CIT(A), we dismiss the corresponding grounds of revenue’s appeal. The revenue’s appeal stands dismissed.

7. In one of the grounds, the assessee has raised the issue of mechanical approval u/s 153D. On the issue of approval u/s 153D, Ld. CIT(A), at paras 12.1 to 12.4 of the impugned order, noted that Ld. AO sent the draft assessment order along with assessment record to Addl. CIT and the requisite approval was accorded. The Ld. Addl. CIT duly considered the 21 issues involved in the draft assessment order and made the perusal of assessment record. The allegation that the approval was mechanical approval had no basis. In Central charges, all search and seizure assessments are regularly supervised and monitored by the range heads. The Addl. CIT as range head is actively involved in assessment of all such cases from beginning and at all stages of search and seizure assessment, the assessing officer discusses and seek his guidance. The CBDT Circular F.No.286/161/2006-IT (Inv. II) dated 22-12-2006 highlight the consultative approach between the Assessing Officer and the Range Head in search and seizure assessments. The range head as well as AO have followed the instructions / guidelines of the Board for the completion of search and seizure assessment and the assessment order was finalized by Ld. AO after obtaining approval u/s 153D from the Range Head. The seized documents were part of the assessment records. The approval u/s 153D was accorded after due examination and verification by the Range Head. Therefore, the allegation of the assessee qua mechanical approval was without any basis. Further, the approval was in the nature of administrative power. The Range head do not examine or adjudicate upon rights and obligations of the assessee but only consider whether AO has fulfilled the requirement of Sec.153A or not. Reference was made to the decision of Hon’ble Karnataka High Court in the case of Rishabchand Bhansali (267 ITR 577) to support the conclusion. In the given facts of the case, it could be said that Addl. CIT had applied his mind on the issues involved and accorded the requisite approval in accordance with the provisions of Act.

22 Such approval could not be said to be mechanical one or without application of mind.