DEPUTY COMMISSIONER OF INCOME TAX, CHENNAI vs. MOHANLAL JEWELLERS PRIVATE LIMITED, CHENNAI

आदेश / O R D E R PER ABY T. VARKEY ABY T. VARKEY, JM: These cross appeals by the Revenue and the These cross appeals by the Revenue and the assessee arise out of ssessee arise out of the orders of the Learned Commissioner of Income Tax (Appeals) the orders of the Learned Commissioner of Income Tax (Appeals) the orders of the Learned Commissioner of Income Tax (Appeals) - 20, Chennai [in short 'ld. CIT(A)'] all dated [in short 'ld. CIT(A)'] all dated 24.02.2025 against the orders against the orders passed by the Dy. CIT, Central Circle by the Dy. CIT, Central Circle-3(3), Chennai [in short 'the AO'] for [in short 'the AO'] for the Assessment Years [in short 'AYs'] the Assessment Years [in short 'AYs'] 2017-18 to 2021-22 22. Since several issues involved are common, all the appeals issues involved are common, all the appeals for all the assessment years for all the assessment years were heard together. Both the parties also argued them together raising were heard together. Both the parties also argued them together raising were heard together. Both the parties also argued them together raising similar arguments on these issues. Accordingly, for the sake of similar arguments on these issues. Accordingly, for the sake of similar arguments on these issues. Accordingly, for the sake of convenience and brevity, we dispose all the appeals by this consolidated convenience and brevity, we dispose all the appeals by this consolidated convenience and brevity, we dispose all the appeals by this consolidated order.

2. The facts in brief are that, ts in brief are that, the assessee is a private limited company the assessee is a private limited company which is engaged in the business of manufacture and wholesale trading of which is engaged in the business of manufacture and wholesale trading of which is engaged in the business of manufacture and wholesale trading of gold bullion & gold jewellery. The assessee also provides making/job gold bullion & gold jewellery. The assessee also provides making/job gold bullion & gold jewellery. The assessee also provides making/job-work services to its customers. A search action services to its customers. A search action u/s 132 of the Income Tax Act, s 132 of the Income Tax Act, 1961 (hereinafter referred to as "the Act") was conducted 1961 (hereinafter referred to as "the Act") was conducted 1961 (hereinafter referred to as "the Act") was conducted on the assessee, its director(s) and others assessee, its director(s) and others, on 10.11.2020 in the course of which 10.11.2020 in the course of which several material & electronic data was found & seized and statement(s) of several material & electronic data was found & seized and statement(s) of several material & electronic data was found & seized and statement(s) of key person(s) were recorded. Subsequent thereto, the AO issued were recorded. Subsequent thereto, the AO issued were recorded. Subsequent thereto, the AO issued notice(s) u/s 153A of the Act on 30.08.2021 and notice(s) u/s 153A of the Act on 30.08.2021 and the details of income the details of income to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd returned by the assessee in response to the said notice(s) for the AYs in returned by the assessee in response to the said notice(s) for the AYs in returned by the assessee in response to the said notice(s) for the AYs in question, are noted to be as under: question, are noted to be as under:-

1. Asst Year Return Amount (in Rs.) 2017-18 153A 4,37,68,120 2018-19 153A 32,99,63,510 2019-20 153A 33,24,62,890 2020-21 153A 32,43,15,690 2021-22 139(1) 53,75,18,770

3. The summary of the additions/disallowances in Rupees made by the The summary of the additions/disallowances in Rupees made by the The summary of the additions/disallowances in Rupees made by the AO in the assessments which were completed u/s 153A/143(3) of the Act in the assessments which were completed u/s 153A/143(3) of the Act in the assessments which were completed u/s 153A/143(3) of the Act for AYs 2017-18 to 2020 18 to 2020-21 and u/s 143(3) of the Act for AY 2021 21 and u/s 143(3) of the Act for AY 2021-22, which are in dispute in the cross which are in dispute in the cross- appeals are as follows:-

(in AYs) Sl Issue 17- -18 18-19 19-20 20-21 21-22 No.

4. It is noted that the reasoning given by the AO for making the above is noted that the reasoning given by the AO for making the above is noted that the reasoning given by the AO for making the above additions/disallowances were verbatim same across all AYs. Hence, for additions/disallowances were verbatim same across all AYs. Hence, for additions/disallowances were verbatim same across all AYs. Hence, for to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd the sake of convenience, and to avoid repetition of facts; we deem it fit to the sake of convenience, and to avoid repetition of facts; we deem it fit to the sake of convenience, and to avoid repetition of facts; we deem it fit to adjudicate each of the common issues across adjudicate each of the common issues across all AYs before us together. all AYs before us together.

5. As noted above, the first five (5) issues are common across all the As noted above, the first five (5) issues are common across all the As noted above, the first five (5) issues are common across all the AYs before us and therefore with the consent of both the parties, we take AYs before us and therefore with the consent of both the parties, we take AYs before us and therefore with the consent of both the parties, we take up and discuss the facts relating to AY 2017 up and discuss the facts relating to AY 2017-18 as the lead case lead case and our findings so rendered shall so rendered shall mutatis mutandis apply to all other AYs. Having apply to all other AYs. Having perused the assessment order for AY 2017 perused the assessment order for AY 2017-18, it is noted that 18, it is noted that, the Investigating authorities had found and seized electronic Investigating authorities had found and seized electronic Investigating authorities had found and seized electronic a data maintained in ‘J-Pack’ Software Pack’ Software, which according to them comprised of a record of the unaccounted transactions of the assessee. It is noted that, unaccounted transactions of the assessee. It is noted that, unaccounted transactions of the assessee. It is noted that, Shri. Rajendra Kothari, accountant of the assessee group, who was Shri. Rajendra Kothari, accountant of the assessee group, who was Shri. Rajendra Kothari, accountant of the assessee group, who was maintaining the data in the J maintaining the data in the J-pack software had inter alia admitted that, the entries therein comprise the entries therein comprised of both accounted and unaccounted d of both accounted and unaccounted transactions of the group. This was also confirmed by Shri. Suresh Khatri, transactions of the group. This was also confirmed by Shri. Suresh Khatri, transactions of the group. This was also confirmed by Shri. Suresh Khatri, Director of the assessee Director of the assessee-company, in his statement recorded u/s 132(4) , in his statement recorded u/s 132(4)

dated 11.11.2020. These persons had These persons had explained that, the transactions explained that, the transactions involving movement of inventory etc. were recorded ving movement of inventory etc. were recorded in the J-pack Software on the basis of daily reports prepared by the employees of the on the basis of daily reports prepared by the employees of the on the basis of daily reports prepared by the employees of the assessee and the other group concerns, which comprised of both the assessee and the other group concerns, which comprised of both the assessee and the other group concerns, which comprised of both the accounted and unaccounted transactions, and that consolid accounted and unaccounted transactions, and that consolid accounted and unaccounted transactions, and that consolidated entries were made in the J- -pack software at the end of the day. As a pack software at the end of the day. As a to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd consequence, this software served as a central depository for tracking software served as a central depository for tracking software served as a central depository for tracking stock movements across group concerns and branches and stock movements across group concerns and branches and stock movements across group concerns and branches and thus it did not contain any entity-specific ledgers. specific ledgers. The AO in assessment proceedings is AO in assessment proceedings is noted to have required the assessee to explain the nature of entries found noted to have required the assessee to explain the nature of entries found noted to have required the assessee to explain the nature of entries found in several of the ledgers extracted from the J in several of the ledgers extracted from the J-Pack software. It was Pack software. It was explained by the assessee that, these were consolidated entries explained by the assessee that, these were consolidated entries explained by the assessee that, these were consolidated entries, non- entity specific and also contained entries of inventory movements inter also contained entries of inventory movements inter also contained entries of inventory movements inter-se group entities, customers, goldsmiths etc. which had no financial group entities, customers, goldsmiths etc. which had no financial group entities, customers, goldsmiths etc. which had no financial implication. It is observed from the assessment order as well as the implication. It is observed from the assessment order as well as the implication. It is observed from the assessment order as well as the statement of Shri Kothari that, the daily reports prepar statement of Shri Kothari that, the daily reports prepared by the assessee ed by the assessee and group concerns were the source documents basis which the entries and group concerns were the source documents basis which the entries and group concerns were the source documents basis which the entries were being made in J-pack software pack software, from which the entries could have , from which the entries could have been segregated and the unaccounted entries could have been easily been segregated and the unaccounted entries could have been easily been segregated and the unaccounted entries could have been easily identified. The Investigating a . The Investigating authorities is noted to have gathered gathered in the course of search that, these daily reports were being destroyed in a these daily reports were being destroyed in a periodical manner and that they were able to find and seize the daily periodical manner and that they were able to find and seize the daily periodical manner and that they were able to find and seize the daily reports for the last three months alone. reports for the last three months alone. As a consequence, the entire As a consequence, the entire set of daily reports on the basis basis of which consolidated entries were made in J which consolidated entries were made in J- Pack Software, was not available for the relevant block period. In this was not available for the relevant block period. In this was not available for the relevant block period. In this background therefore and due to non background therefore and due to non-availability of data / source availability of data / source documentation, the AO was not able to documentation, the AO was not able to segregate or identify the segregate or identify the ITA Nos.1178 to 1182/Chny/2025 to 1182/Chny/2025 & ITA Nos.1393 to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd unaccounted transactions included in the consolidated entries, as there unaccounted transactions included in the consolidated entries, as there unaccounted transactions included in the consolidated entries, as there was no ledger-wise or entity wise or entity-wise data in the J-pack software, which pack software, which would have enabled such bifurcation. The AO would have enabled such bifurcation. The AO is therefore therefore found to have proceeded on the presumption that, all the transactions recorded in the J resumption that, all the transactions recorded in the J resumption that, all the transactions recorded in the J- pack software was unaccounted for and pack software was unaccounted for and accordingly required the assessee required the assessee to explain or reconcile the same. Though the assessee is noted to have to explain or reconcile the same. Though the assessee is noted to have to explain or reconcile the same. Though the assessee is noted to have filed their explanations and objections to the same, the filed their explanations and objections to the same, the filed their explanations and objections to the same, the AO is noted to have aggregated the unexplained entries which could not be reconciled the unexplained entries which could not be reconciled the unexplained entries which could not be reconciled and added it under different heads / nomenclatures to the total income of and added it under different heads / nomenclatures to the total income of and added it under different heads / nomenclatures to the total income of the assessee.

5.1 It is observed that, the Investigating authorities had found two It is observed that, the Investigating authorities had found two It is observed that, the Investigating authorities had found two ledgers titled ‘Byaj’ and ‘Vatav’ which according to the enquiries made by ‘Byaj’ and ‘Vatav’ which according to the enquiries made by ‘Byaj’ and ‘Vatav’ which according to the enquiries made by them suggested that these ledgers were records of unaccounted them suggested that these ledgers were records of unaccounted them suggested that these ledgers were records of unaccounted interest- income earned on delayed payment by customers and unaccounted earned on delayed payment by customers and unaccounted earned on delayed payment by customers and unaccounted commission income for for for various various various services services services rendered rendered rendered to to to customers customers customers respectively. According to the assessee, these two items had already been respectively. According to the assessee, these two items had already been respectively. According to the assessee, these two items had already been considered and offered to tax by the key person of the group, Shri considered and offered to tax by the key person of the group, Shri considered and offered to tax by the key person of the group, Shri Mohanlal Khatri in his individual hands and therefore it was claimed that Mohanlal Khatri in his individual hands and therefore it was claimed that Mohanlal Khatri in his individual hands and therefore it was claimed that no addition on this account was warranted no addition on this account was warranted. The lower authorities however . The lower authorities however were not agreeable to this plea of the assessee and therefore the sum were not agreeable to this plea of the assessee and therefore the sum were not agreeable to this plea of the assessee and therefore the sum to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd total of the entries found in these two ledgers across all the AYs 2017 total of the entries found in these two ledgers across all the AYs 2017 total of the entries found in these two ledgers across all the AYs 2017-18 to 2021-22 was added to the total income of the assessee. 22 was added to the total income of the assessee. 22 was added to the total income of the assessee.

5.2 The Investigating authorities further found a ledger titled ‘Ghat’ in g authorities further found a ledger titled ‘Ghat’ in g authorities further found a ledger titled ‘Ghat’ in the J-Pack Software allegedly allegedly comprising of metal receipts and metal comprising of metal receipts and metal issue entries. According to the Revenue, the assessee was undertaking issue entries. According to the Revenue, the assessee was undertaking issue entries. According to the Revenue, the assessee was undertaking job work for their customers job work for their customers, in the course of which, it would it would receive gold bullion or old gold ornaments bullion or old gold ornaments, which would be converted into new gold which would be converted into new gold ornaments. The AO was of the view that ornaments. The AO was of the view that, the wastage gold generated in the wastage gold generated in this conversion process was recorded by way of receipt entries in this this conversion process was recorded by way of receipt entries in this this conversion process was recorded by way of receipt entries in this ‘Ghat’ Ledger which entirely rep ‘Ghat’ Ledger which entirely represented the assessee’s profit, resented the assessee’s profit, and that such wastage gold was used outside the books to make new ornaments such wastage gold was used outside the books to make new ornaments such wastage gold was used outside the books to make new ornaments which was sold through unaccounted means. The assessee is noted to was sold through unaccounted means. The assessee is noted to was sold through unaccounted means. The assessee is noted to have disputed this version of the Revenue and instead have disputed this version of the Revenue and instead contended contended that the entries in ‘Ghat’ Ledger comprised of the alloy addition made to the new in ‘Ghat’ Ledger comprised of the alloy addition made to the new in ‘Ghat’ Ledger comprised of the alloy addition made to the new gold ornaments manufactured by the company. The assessee submitted gold ornaments manufactured by the company. The assessee submitted gold ornaments manufactured by the company. The assessee submitted that, the gold bullion which was purchased by the assessee or received that, the gold bullion which was purchased by the assessee or received that, the gold bullion which was purchased by the assessee or received from customers, was converted into gold ornaments thr from customers, was converted into gold ornaments thr from customers, was converted into gold ornaments through the goldsmiths and that the quantity of alloy which was added to the gold goldsmiths and that the quantity of alloy which was added to the gold goldsmiths and that the quantity of alloy which was added to the gold ornaments was entered in ‘Ghat’ Ledger ornaments was entered in ‘Ghat’ Ledger for record purposes, for record purposes, and that these entries did not represent any metal entry i.e. gold. The assessee did not represent any metal entry i.e. gold. The assessee did not represent any metal entry i.e. gold. The assessee is found to have later on found to have later on furnished documentary evidences to support its furnished documentary evidences to support its to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd claim, which upon being examined which upon being examined in the remand proceedings, was found in the remand proceedings, was found to be tenable. The Ld. CIT(A) for the reasons set out in his appellate to be tenable. The Ld. CIT(A) for the reasons set out in his appellate to be tenable. The Ld. CIT(A) for the reasons set out in his appellate order, is noted to have deleted the addition made on account of ‘Gh deleted the addition made on account of ‘Gh deleted the addition made on account of ‘Ghat’.

5.3 Similarly another ledger titled ‘MC Khata’ was found in the J Similarly another ledger titled ‘MC Khata’ was found in the J Similarly another ledger titled ‘MC Khata’ was found in the J-Pack Software, which according to the Revenue contained entries of making Software, which according to the Revenue contained entries of making Software, which according to the Revenue contained entries of making charges paid outside the books of accounts. The assessee, on the other charges paid outside the books of accounts. The assessee, on the other charges paid outside the books of accounts. The assessee, on the other hand, claimed that, the entries in this hand, claimed that, the entries in this ledger was relating to the making ledger was relating to the making charges received from customers and charges received from customers and furnished reconciliation in support furnished reconciliation in support of the same. Though the AO . Though the AO is noted to have disagreed with the disagreed with the submission of the assessee and added the submission of the assessee and added the entries found in ‘MC Khata’ entries found in ‘MC Khata’ Ledger to the total income in all the years, but the Ld. CIT(A) is noted to l income in all the years, but the Ld. CIT(A) is noted to l income in all the years, but the Ld. CIT(A) is noted to have deleted the same. have deleted the same.

It is further observed that It is further observed that, another ledger titled ‘Cash’ was also ledger titled ‘Cash’ was also 5.4 found in the J-Pack Software, which according to the AO Pack Software, which according to the AO Pack Software, which according to the AO inter alia contained unaccounted cash sales of contained unaccounted cash sales of the assessee. The AO is noted to the assessee. The AO is noted to have estimated the unaccounted cash sales and thereafter assessed the have estimated the unaccounted cash sales and thereafter assessed the have estimated the unaccounted cash sales and thereafter assessed the profit element embedded therein at 8% of the value of such profit element embedded therein at 8% of the value of such profit element embedded therein at 8% of the value of such unaccounted sales. The assessee however pointed out several infirmities in the AO’s sales. The assessee however pointed out several infirmities in the AO’s sales. The assessee however pointed out several infirmities in the AO’s quantification of unaccounted sales. tion of unaccounted sales. The Ld. CIT(A) is found to have The Ld. CIT(A) is found to have partially agreed with the contention and accordingly partially agreed with the contention and accordingly made downward made downward to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd revision to the quantum of unaccounted sales. Also, for the reasons set the quantum of unaccounted sales. Also, for the reasons set the quantum of unaccounted sales. Also, for the reasons set out in his appellate order, the Ld. CIT(A) brought down th out in his appellate order, the Ld. CIT(A) brought down th out in his appellate order, the Ld. CIT(A) brought down the estimation of profit element from 8% to 2.5%. profit element from 8% to 2.5%.

5.5 To sum up, perusal To sum up, perusal of the orders of the lower authorities for the AY the orders of the lower authorities for the AY 2017-18 to 2021-22, shows that, according to the AO, the J , shows that, according to the AO, the J , shows that, according to the AO, the J-Pack Software was a secret software being maintained by the assessee to Software was a secret software being maintained by the assessee to Software was a secret software being maintained by the assessee to record their unaccounted transactions and he ord their unaccounted transactions and he is noted to have is noted to have identified the unreconciled ledgers therein and added the same to the total income the unreconciled ledgers therein and added the same to the total income the unreconciled ledgers therein and added the same to the total income under different heads. Aggrieved by the order(s) of the AO under different heads. Aggrieved by the order(s) of the AO under different heads. Aggrieved by the order(s) of the AO inter alia making these five (5) additions on account o making these five (5) additions on account of unreconciled differences f unreconciled differences qua the entries found in J entries found in J-Pack Software and the regular books of Pack Software and the regular books of accounts, the assessee preferred appeal before the Ld. CIT(A). On appeal, accounts, the assessee preferred appeal before the Ld. CIT(A). On appeal, accounts, the assessee preferred appeal before the Ld. CIT(A). On appeal, the assessee is found to have submitted detailed explanation along with the assessee is found to have submitted detailed explanation along with the assessee is found to have submitted detailed explanation along with reconciliations and supporting evidences. The Ld. CIT(A) is noted to have nd supporting evidences. The Ld. CIT(A) is noted to have nd supporting evidences. The Ld. CIT(A) is noted to have called for a remand report from the AO, who after going through the called for a remand report from the AO, who after going through the called for a remand report from the AO, who after going through the submissions of the assessee admitted that the assessee was able to submissions of the assessee admitted that the assessee was able to submissions of the assessee admitted that the assessee was able to reconcile the entries found in the J reconcile the entries found in the J-Pack software with the regu Pack software with the regular books of accounts on certain issues and also accepted certain calculation & of accounts on certain issues and also accepted certain calculation & of accounts on certain issues and also accepted certain calculation & reconciliation errors in the quantum of addition(s) made by him. At the reconciliation errors in the quantum of addition(s) made by him. At the reconciliation errors in the quantum of addition(s) made by him. At the same time, the AO also gave his remarks where according to him, same time, the AO also gave his remarks where according to him, same time, the AO also gave his remarks where according to him, addition(s) were required to be upheld. addition(s) were required to be upheld. Taking into account the comments Taking into account the comments to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd of the AO, the rejoinder filed by the assessee and having regard to the of the AO, the rejoinder filed by the assessee and having regard to the of the AO, the rejoinder filed by the assessee and having regard to the facts of the case, the Ld. CIT(A) is noted to have deleted addition(s) facts of the case, the Ld. CIT(A) is noted to have deleted addition(s) facts of the case, the Ld. CIT(A) is noted to have deleted addition(s) made on certain items in its entirety and allowed partial relief on other made on certain items in its entirety and allowed partial relief on other made on certain items in its entirety and allowed partial relief on other issues emanating from the ‘J emanating from the ‘J-Pack’ Software, which we shall be discussing , which we shall be discussing in the ensuing paragraphs in the ensuing paragraphs. Being aggrieved by the order of the Ld. . Being aggrieved by the order of the Ld.

CIT(A), now both the assessee and Revenue are in appeal before us. CIT(A), now both the assessee and Revenue are in appeal before us. CIT(A), now both the assessee and Revenue are in appeal before us.

6. Before we advert to the several grounds taken in th Before we advert to the several grounds taken in the cross appeals e cross appeals impugning the above discussed addition(s), it is relevant to cull out the impugning the above discussed addition(s), it is relevant to cull out the impugning the above discussed addition(s), it is relevant to cull out the background facts which led to these addition(s), more particularly the background facts which led to these addition(s), more particularly the background facts which led to these addition(s), more particularly the nature & purpose of the ‘J nature & purpose of the ‘J-Pack’ Software which was found in the course Pack’ Software which was found in the course of search, as the same of search, as the same would be relevant to adjudicate the issue(s) would be relevant to adjudicate the issue(s)

impugned before us. It is observed that, the assessee group comprises of impugned before us. It is observed that, the assessee group comprises of impugned before us. It is observed that, the assessee group comprises of the assessee (M/s Mohanlal Jewellers Pvt Ltd) which was the flagship the assessee (M/s Mohanlal Jewellers Pvt Ltd) which was the flagship the assessee (M/s Mohanlal Jewellers Pvt Ltd) which was the flagship company, M/s Mohanlal Jewellers Chennai Private Limited, M/s Mohanlal company, M/s Mohanlal Jewellers Chennai Private Limited, M/s Mohanlal company, M/s Mohanlal Jewellers Chennai Private Limited, M/s Mohanlal Jewellers Kolkata (Prop: Shri Mohanlal Khatri HUF), M/s Shanthi Jewellers Jewellers Kolkata (Prop: Shri Mohanlal Khatri HUF), M/s Shanthi Jewellers Jewellers Kolkata (Prop: Shri Mohanlal Khatri HUF), M/s Shanthi Jewellers Mumbai (Prop: Shri Suresh Khatri) & M/s Mohanlal Jewellers Mumbai (Prop: Shri Suresh Khatri) & M/s Mohanlal Jewellers Mumbai (Prop: Shri Suresh Khatri) & M/s Mohanlal Jewellers & M/s Mohanlal Exports (Prop: Shri Mohanlal Khatri). It is noted that, the Mohanlal Exports (Prop: Shri Mohanlal Khatri). It is noted that, the Mohanlal Exports (Prop: Shri Mohanlal Khatri). It is noted that, the business operations involving manufacture, trading & sale of bullion & business operations involving manufacture, trading & sale of bullion & business operations involving manufacture, trading & sale of bullion & gold jewellery and making charges was being carried out through all gold jewellery and making charges was being carried out through all gold jewellery and making charges was being carried out through all these entities of which Shri Mohanlal Khatr these entities of which Shri Mohanlal Khatri was the key person and the key person and Director of this Group. During the course of search, it was found that irector of this Group. During the course of search, it was found that irector of this Group. During the course of search, it was found that, this to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd assessee group was using a customized software named ‘J assessee group was using a customized software named ‘J assessee group was using a customized software named ‘J-Pack’ for recording their entire gamut of business transactions, both accounted and recording their entire gamut of business transactions, both accounted and recording their entire gamut of business transactions, both accounted and unaccounted, and it was nd it was being maintained by one Shri Rajendra Kothari, maintained by one Shri Rajendra Kothari, accountant of the assessee group. When enquired about the purpose for accountant of the assessee group. When enquired about the purpose for accountant of the assessee group. When enquired about the purpose for using this software, Shri Suresh Khatri using this software, Shri Suresh Khatri, son of Shri Mohanlal Khatri, , son of Shri Mohanlal Khatri, in his statement recorded u/s 132(4) of the Act, explained statement recorded u/s 132(4) of the Act, explained statement recorded u/s 132(4) of the Act, explained that, ‘J-pack’ software is a useful software implemented to track software is a useful software implemented to track ornament ornament-based trade and that the entries therein included both accounted & unaccounted and that the entries therein included both accounted & unaccounted and that the entries therein included both accounted & unaccounted transactions. It is seen that, the Investigating authorities had also transactions. It is seen that, the Investigating authorities had also transactions. It is seen that, the Investigating authorities had also summoned the Developer of this s summoned the Developer of this software, from whom it was gathered oftware, from whom it was gathered that, it is a commonly used jewellery software package for wholesale that, it is a commonly used jewellery software package for wholesale that, it is a commonly used jewellery software package for wholesale jewellery business. The Developer had also stated that, this software tool jewellery business. The Developer had also stated that, this software tool jewellery business. The Developer had also stated that, this software tool is used primarily for inventory management and quotation purposes and is used primarily for inventory management and quotation purposes and is used primarily for inventory management and quotation purposes and that the software is so designed to only record e software is so designed to only record metal-based based trading being done by jewellers. Accordingly, though separate books of accounts for done by jewellers. Accordingly, though separate books of accounts for done by jewellers. Accordingly, though separate books of accounts for each of these concerns/entities were maintained in the Tally accounting each of these concerns/entities were maintained in the Tally accounting each of these concerns/entities were maintained in the Tally accounting software, but for comprehensive inventory manag software, but for comprehensive inventory management across all the ement across all the operating group entities, Shri Mohanlal Khatri was using this specialized J operating group entities, Shri Mohanlal Khatri was using this specialized J operating group entities, Shri Mohanlal Khatri was using this specialized J- pack software to control and manage his gold jewellery business pack software to control and manage his gold jewellery business pack software to control and manage his gold jewellery business inter alia including both his accounted and unaccounted transactions including both his accounted and unaccounted transactions. . to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::12 ::

6.1 At the time of hearin At the time of hearing, the Bench required the Ld. g, the Bench required the Ld. Counsel/AR appearing for the assessee appearing for the assessee Shri D Anand to explain the to explain the modus of assessee’s business and the purpose for using this J business and the purpose for using this J-Pack Software, when Pack Software, when the assessee was already maintaining the assessee was already maintaining separate accounts of all their group of all their group concerns in the Tally Software. In compliance, the Tally Software. In compliance, the Shri Anand Shri Anand explained the same and has filed a written note. has filed a written note. The assessee is seen to be seen to be involved in manufacturing & trading activities as well as manufacture of gold in manufacturing & trading activities as well as manufacture of gold in manufacturing & trading activities as well as manufacture of gold jewelleries for clients on a job work basis. jewelleries for clients on a job work basis. It is gathered that, as a matter It is gathered that, as a matter of practice, the three proprietorship entities i.e. M/s Mohanlal Jewellers of practice, the three proprietorship entities i.e. M/s Mohanlal Jewellers of practice, the three proprietorship entities i.e. M/s Mohanlal Jewellers Kolkata, M/s Shanthi Jewellers Mumbai & M/s Mohanlal Jewellers were Kolkata, M/s Shanthi Jewellers Mumbai & M/s Mohanlal Jewellers were Kolkata, M/s Shanthi Jewellers Mumbai & M/s Mohanlal Jewellers were based out of Kolkata & Mumbai and they were getting the gold jewellery based out of Kolkata & Mumbai and they were getting the gold jewellery based out of Kolkata & Mumbai and they were getting the gold jewellery manufactured on job work basis locally. The finished products so ured on job work basis locally. The finished products so ured on job work basis locally. The finished products so manufactured were dispatched by these entities for sale through the manufactured were dispatched by these entities for sale through the manufactured were dispatched by these entities for sale through the Chennai based companies i.e., M/s Mohanlal Jewellers Pvt Ltd & M/s Chennai based companies i.e., M/s Mohanlal Jewellers Pvt Ltd & M/s Chennai based companies i.e., M/s Mohanlal Jewellers Pvt Ltd & M/s Mohanlal Jewellers Chennai Private Limited. In April 2018, with Mohanlal Jewellers Chennai Private Limited. In April 2018, with Mohanlal Jewellers Chennai Private Limited. In April 2018, with the object of augmenting the production capacity & also for partially localizing their of augmenting the production capacity & also for partially localizing their of augmenting the production capacity & also for partially localizing their manufacturing operations, the assessee company also established an in manufacturing operations, the assessee company also established an in manufacturing operations, the assessee company also established an in- house manufacturing facility at Chennai. Consequently therefore, out of house manufacturing facility at Chennai. Consequently therefore, out of house manufacturing facility at Chennai. Consequently therefore, out of the total manufacturing ope the total manufacturing operations, almost 20% of the manufacturing rations, almost 20% of the manufacturing process got localized. The assessee also explained the process got localized. The assessee also explained the modus operandi modus operandi behind manufacture of gold jewellery, which involves procurement of 24 behind manufacture of gold jewellery, which involves procurement of 24 behind manufacture of gold jewellery, which involves procurement of 24 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd carat gold bullion and its conversion into 22 carat gold jewellery either carat gold bullion and its conversion into 22 carat gold jewellery either carat gold bullion and its conversion into 22 carat gold jewellery either through outsourced goldsmiths or through the in through outsourced goldsmiths or through the in-house manufacturing house manufacturing facility. The assessee further pointed out that, more than 95% of the total facility. The assessee further pointed out that, more than 95% of the total facility. The assessee further pointed out that, more than 95% of the total sales comprise of the sales made to retailers, who operate retail jewellery sales comprise of the sales made to retailers, who operate retail jewellery sales comprise of the sales made to retailers, who operate retail jewellery outlets and that only 3 outlets and that only 3-5% of the total sales constitutes direct sales to tal sales constitutes direct sales to end consumer. It is therefore observed that, the assessee majorly end consumer. It is therefore observed that, the assessee majorly end consumer. It is therefore observed that, the assessee majorly operates in the B2B gold jewellery segment. It was operates in the B2B gold jewellery segment. It was brought to our notice brought to our notice that, since the assessee operates in the B2B segment, it was a well that, since the assessee operates in the B2B segment, it was a well that, since the assessee operates in the B2B segment, it was a well- known and common industry practice, wherein the wholesale dealers [in ommon industry practice, wherein the wholesale dealers [in ommon industry practice, wherein the wholesale dealers [in this case, assessee] would send across their gold jewellery to retail this case, assessee] would send across their gold jewellery to retail this case, assessee] would send across their gold jewellery to retail dealers [in this case, customers] on an “ dealers [in this case, customers] on an “approval-basis basis” to their showrooms and they would subsequently confirm their purchase showrooms and they would subsequently confirm their purchase showrooms and they would subsequently confirm their purchase decision after examining the same or based on the customer response to the after examining the same or based on the customer response to the after examining the same or based on the customer response to the displays, demand patterns and marketability. The assessee emphasized displays, demand patterns and marketability. The assessee emphasized displays, demand patterns and marketability. The assessee emphasized that, the movement involving supply of goods to retailers on ‘approval that, the movement involving supply of goods to retailers on ‘approval that, the movement involving supply of goods to retailers on ‘approval- basis’ did not represent sales as the tit did not represent sales as the title in the goods continued with the le in the goods continued with the assessee and only when the goods were confirmed upon their express assessee and only when the goods were confirmed upon their express assessee and only when the goods were confirmed upon their express acceptance that, it would be regarded as a sale and invoice would be acceptance that, it would be regarded as a sale and invoice would be acceptance that, it would be regarded as a sale and invoice would be generated. It was explained that, this was a common model followed in generated. It was explained that, this was a common model followed in generated. It was explained that, this was a common model followed in the jewellery industry as it was impractical for retail dealers to maintain ndustry as it was impractical for retail dealers to maintain ndustry as it was impractical for retail dealers to maintain high inventories without gauging demand or the traction for the gold high inventories without gauging demand or the traction for the gold high inventories without gauging demand or the traction for the gold to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd jewellery designs. Further, due to the constant volatility in the price of jewellery designs. Further, due to the constant volatility in the price of jewellery designs. Further, due to the constant volatility in the price of gold, which had a direct bearing on assessee’s pric gold, which had a direct bearing on assessee’s pricing, inventory valuation ing, inventory valuation and commercial strategy, the sale price when sent on approval was not and commercial strategy, the sale price when sent on approval was not and commercial strategy, the sale price when sent on approval was not fixed and that the same was negotiated and agreed upon, only at the fixed and that the same was negotiated and agreed upon, only at the fixed and that the same was negotiated and agreed upon, only at the time of acceptance by the customers. time of acceptance by the customers.

6.2 The discussion regarding the above business model i he discussion regarding the above business model i he discussion regarding the above business model is necessitated to understand the reasons and purpose for using the J to understand the reasons and purpose for using the J-pack software and pack software and the inherent differences between the entries in the J the inherent differences between the entries in the J-pack software and pack software and the regular accounting Tally software. The assessee showed us that, in the regular accounting Tally software. The assessee showed us that, in the regular accounting Tally software. The assessee showed us that, in the J-pack software, the a pack software, the assessee was able to record the entire ssessee was able to record the entire movement of their metal items viz., (i) from issue of gold bullion to movement of their metal items viz., (i) from issue of gold bullion to movement of their metal items viz., (i) from issue of gold bullion to factory or outsourced goldsmiths, (ii) to receipt of finished goods, (iii) factory or outsourced goldsmiths, (ii) to receipt of finished goods, (iii) factory or outsourced goldsmiths, (ii) to receipt of finished goods, (iii) then dispatch of the goods to retailers under their ‘sale on approval’ then dispatch of the goods to retailers under their ‘sale on approval’ then dispatch of the goods to retailers under their ‘sale on approval’ model, (iv) any further movement from one retailer to another, (v) the del, (iv) any further movement from one retailer to another, (v) the del, (iv) any further movement from one retailer to another, (v) the return of goods, if not accepted and (vi) the final sale of the gold return of goods, if not accepted and (vi) the final sale of the gold return of goods, if not accepted and (vi) the final sale of the gold jewellery when the order is confirmed. This software therefore enabled jewellery when the order is confirmed. This software therefore enabled jewellery when the order is confirmed. This software therefore enabled accurate and real time tracking of the stock mo accurate and real time tracking of the stock movement vement across group concerns and locations. Further, this specialized software also enabled the . Further, this specialized software also enabled the . Further, this specialized software also enabled the assessee to only record the movement of goods without assigning any assessee to only record the movement of goods without assigning any assessee to only record the movement of goods without assigning any values or prices thereto. This particular feature was useful as when the values or prices thereto. This particular feature was useful as when the values or prices thereto. This particular feature was useful as when the goods were dispatched on ed on ‘approval-basis’ to customers, the sale prices to customers, the sale prices to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd were not fixed as it was to be decided and agreed upon only at the time were not fixed as it was to be decided and agreed upon only at the time were not fixed as it was to be decided and agreed upon only at the time of approval, depending upon the gold prices, as prevailing then. , depending upon the gold prices, as prevailing then. , depending upon the gold prices, as prevailing then.

Accordingly, the assessee would pass notional entries of the goods Accordingly, the assessee would pass notional entries of the goods Accordingly, the assessee would pass notional entries of the goods sent on ‘approval-basis’ in the J in the J-Pack Software but no corresponding entry Pack Software but no corresponding entry would be passed in Tally Software, as there was no financial transaction would be passed in Tally Software, as there was no financial transaction would be passed in Tally Software, as there was no financial transaction involving transfer of ownership in goods from the assessee group to the involving transfer of ownership in goods from the assessee group to the involving transfer of ownership in goods from the assessee group to the customers. This software was thus u customers. This software was thus used to integrate and manage the sed to integrate and manage the stock movement and the operational data across all entities, thereby stock movement and the operational data across all entities, thereby stock movement and the operational data across all entities, thereby providing a consolidated view of the group’s inventory and the inter providing a consolidated view of the group’s inventory and the inter providing a consolidated view of the group’s inventory and the inter-entity movement of goods. The assessee explained that, the J movement of goods. The assessee explained that, the J movement of goods. The assessee explained that, the J-pack software was not an accounting software but rather a accounting software but rather a custom- -built inventory software, meant to provide proper inventory control. On the other hand, software, meant to provide proper inventory control. On the other hand, software, meant to provide proper inventory control. On the other hand, the regular accounting software was used to maintain separate accounts the regular accounting software was used to maintain separate accounts the regular accounting software was used to maintain separate accounts for each entity as they were separate juridical persons a for each entity as they were separate juridical persons a for each entity as they were separate juridical persons and in this accounting software, only the transactions involving purchase of gold accounting software, only the transactions involving purchase of gold accounting software, only the transactions involving purchase of gold bullion, payment of making charges and sale of gold jewellery (at the bullion, payment of making charges and sale of gold jewellery (at the bullion, payment of making charges and sale of gold jewellery (at the time of final sale when the invoice is raised upon the customer) was time of final sale when the invoice is raised upon the customer) was time of final sale when the invoice is raised upon the customer) was entered into. Hence, when such costl entered into. Hence, when such costly and high valued goods are sent to y and high valued goods are sent to outsourced goldsmiths for manufacture, or on approval outsourced goldsmiths for manufacture, or on approval outsourced goldsmiths for manufacture, or on approval-basis to customers or when the goods are returned by the customers or any inter customers or when the goods are returned by the customers or any inter customers or when the goods are returned by the customers or any inter- customer movement, these movements are recorded in the J customer movement, these movements are recorded in the J customer movement, these movements are recorded in the J-pack to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd software for inventory c software for inventory control purposes but no such entries ontrol purposes but no such entries could have possibly be made in the Tally accounting software as these stock possibly be made in the Tally accounting software as these stock possibly be made in the Tally accounting software as these stock movements do not have any financial implications. movements do not have any financial implications.

6.3 Apart from the above, the assessee further brought to our notice Apart from the above, the assessee further brought to our notice Apart from the above, the assessee further brought to our notice that, they were also ren that, they were also rendering job work services which involved metal to dering job work services which involved metal to metal settlements. In such transactions, the customer supplies gold and metal settlements. In such transactions, the customer supplies gold and metal settlements. In such transactions, the customer supplies gold and the assessee undertakes undertakes the job to manufacture jewellery, which is the job to manufacture jewellery, which is dispatched back to the customer. Though there is movement of metal, dispatched back to the customer. Though there is movement of metal, dispatched back to the customer. Though there is movement of metal, which is recorded in the J which is recorded in the J-pack software for inventory control purposes, pack software for inventory control purposes, but the assessee only records the receipt of making charges from the but the assessee only records the receipt of making charges from the but the assessee only records the receipt of making charges from the customers in the Tally accounting software, as the transaction involving customers in the Tally accounting software, as the transaction involving customers in the Tally accounting software, as the transaction involving receipt of gold and issue of gold jewelle receipt of gold and issue of gold jewellery, and it does not constitute any ry, and it does not constitute any purchase or sale.

6.4 In view of the above, it is therefore understood that, the J In view of the above, it is therefore understood that, the J In view of the above, it is therefore understood that, the J-pack software was meant to capture the stock movement entries whereas the software was meant to capture the stock movement entries whereas the software was meant to capture the stock movement entries whereas the Tally accounting software, only records the final purchase or s Tally accounting software, only records the final purchase or s Tally accounting software, only records the final purchase or sale transaction. Evidently, the J transaction. Evidently, the J-pack software would contain several receipt pack software would contain several receipt and issue entries involving issue of goods to customers on approval, and issue entries involving issue of goods to customers on approval, and issue entries involving issue of goods to customers on approval, return of unapproved goods, receipt of gold from customers on job return of unapproved goods, receipt of gold from customers on job return of unapproved goods, receipt of gold from customers on job-work, issue of gold jewellery manufactured issue of gold jewellery manufactured on customers’ behalf, etc. which on customers’ behalf, etc. which to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd constitute only stock movement notings and were not financial constitute only stock movement notings and were not financial constitute only stock movement notings and were not financial transactions in themselves. We thus find that, the J transactions in themselves. We thus find that, the J-Pack Software was Pack Software was essentially specialized inventory control software being used by the inventory control software being used by the assessee, apart from their regular accounting software. their regular accounting software.

6.5 The above narrated discussion is of relevance as the five (5) The above narrated discussion is of relevance as the five (5) The above narrated discussion is of relevance as the five (5) addition(s) impugned in the lead case of AY 2017 addition(s) impugned in the lead case of AY 2017-18, which is also 18, which is also common in all other AYs, principally emanates from the entries found in J common in all other AYs, principally emanates from the entries found in J common in all other AYs, principally emanates from the entries found in J- pack software, which the AO was unable to reconcile with the entries which the AO was unable to reconcile with the entries which the AO was unable to reconcile with the entries found recorded in Tally accounting software. We now take up the found recorded in Tally accounting software. We now take up the found recorded in Tally accounting software. We now take up the individual issue(s) emanating from J individual issue(s) emanating from J-Pack Software, which are in dispute Pack Software, which are in dispute before us.

7. Issue 1: Additions made on a/c of ‘Ghat’ Issue 1: Additions made on a/c of ‘Ghat’ Ground Nos. 2 to 4 of the Revenue's appeal for AYs 2017 of the Revenue's appeal for AYs 2017-18 to 2021 18 to 2021-22 7.1 It is observed that, in the course of search, the Investigating It is observed that, in the course of search, the Investigating It is observed that, in the course of search, the Investigating authorities had come across one ledger titled ‘Ghat’ in the J authorities had come across one ledger titled ‘Ghat’ in the J authorities had come across one ledger titled ‘Ghat’ in the J-Pack Software, which contained receipt & issue entries. Software, which contained receipt & issue entries. According to the According to the Revenue, the receipt entry in this ledger was made when wastage gold Revenue, the receipt entry in this ledger was made when wastage gold Revenue, the receipt entry in this ledger was made when wastage gold was being generated from conversion of old gold / bullion bars into new was being generated from conversion of old gold / bullion bars into new was being generated from conversion of old gold / bullion bars into new gold ornaments and that the issue entries were only square off entries, gold ornaments and that the issue entries were only square off entries, gold ornaments and that the issue entries were only square off entries, which was to be ignored. T which was to be ignored. The AO was of the view that, the wastage gold he AO was of the view that, the wastage gold to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd was retained by the assessee was retained by the assessee was in lieu of the fees for the job of the fees for the job-work services rendered to its customers. The AO is noted to have explained the services rendered to its customers. The AO is noted to have explained the services rendered to its customers. The AO is noted to have explained the same with an example in his assessment order viz., if a customer same with an example in his assessment order viz., if a customer same with an example in his assessment order viz., if a customer provided gold bar weighing 995 grams, the assessee would make gold ovided gold bar weighing 995 grams, the assessee would make gold ovided gold bar weighing 995 grams, the assessee would make gold jewellery which would contain minimum of 916 grams as per the jewellery which would contain minimum of 916 grams as per the jewellery which would contain minimum of 916 grams as per the government rules and that the remaining 79 grams would be retained by government rules and that the remaining 79 grams would be retained by government rules and that the remaining 79 grams would be retained by the assessee and that would represent the income derived fr the assessee and that would represent the income derived fr the assessee and that would represent the income derived from rendering this job-work services. The AO was of the view that, this 79 grams would work services. The AO was of the view that, this 79 grams would work services. The AO was of the view that, this 79 grams would be credited in the receipt side of the Ghat ledger in the J be credited in the receipt side of the Ghat ledger in the J- -Pack and such accumulated gold would further be used for manufacturing new gold accumulated gold would further be used for manufacturing new gold accumulated gold would further be used for manufacturing new gold ornaments and the same would b ornaments and the same would be sold through unaccounted means. For e sold through unaccounted means. For arriving at this inference, the AO is noted to have relied on the statement arriving at this inference, the AO is noted to have relied on the statement arriving at this inference, the AO is noted to have relied on the statement given by Shri Rajendra Kothari u/s 131 of the Act dated 26.11.2020. given by Shri Rajendra Kothari u/s 131 of the Act dated 26.11.2020. given by Shri Rajendra Kothari u/s 131 of the Act dated 26.11.2020.

According to the AO, Shri Kothari had According to the AO, Shri Kothari had inter alia explained that he would explained that he would make the Ghat entries from seeing the ‘Ghatjama’ and ‘Ghatnamma’ from ake the Ghat entries from seeing the ‘Ghatjama’ and ‘Ghatnamma’ from ake the Ghat entries from seeing the ‘Ghatjama’ and ‘Ghatnamma’ from the daily reports given to him and that ‘Ghatjama’ means Ghat receipts the daily reports given to him and that ‘Ghatjama’ means Ghat receipts the daily reports given to him and that ‘Ghatjama’ means Ghat receipts and ‘Ghatnamma’ means adjustment entries to square off the Ghat and ‘Ghatnamma’ means adjustment entries to square off the Ghat and ‘Ghatnamma’ means adjustment entries to square off the Ghat ledger. The AO further observed that, even Shri Sure ledger. The AO further observed that, even Shri Suresh Khatri in his sh Khatri in his statement recorded u/s 132(4) dated 05.01.2021 had agreed to the statement recorded u/s 132(4) dated 05.01.2021 had agreed to the statement recorded u/s 132(4) dated 05.01.2021 had agreed to the receipt entries in the Ghat ledger but had claimed that the issue entries receipt entries in the Ghat ledger but had claimed that the issue entries receipt entries in the Ghat ledger but had claimed that the issue entries ought to be also considered and that only the gross profit element be ought to be also considered and that only the gross profit element be ought to be also considered and that only the gross profit element be to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd estimated. The AO however disb estimated. The AO however disbelieved the statement of Shri Khatri elieved the statement of Shri Khatri because when Shri Kothari was later on required to explain the issue because when Shri Kothari was later on required to explain the issue because when Shri Kothari was later on required to explain the issue entries in the Ghat ledger, he had explained that, all the issue side entries entries in the Ghat ledger, he had explained that, all the issue side entries entries in the Ghat ledger, he had explained that, all the issue side entries were to be ignored, as they were made only to square off the ledgers. were to be ignored, as they were made only to square off the ledgers. were to be ignored, as they were made only to square off the ledgers.

7.2 The AO therefore, was of the view that the entire Ghat receipts The AO therefore, was of the view that the entire Ghat receipts The AO therefore, was of the view that the entire Ghat receipts represented income of the assessee and that there were no Ghat represented income of the assessee and that there were no Ghat represented income of the assessee and that there were no Ghat payments. The AO accordingly show caused the assessee as to why, payments. The AO accordingly show caused the assessee as to why, payments. The AO accordingly show caused the assessee as to why, income on account of Ghat receipts was not offered to tax. In income on account of Ghat receipts was not offered to tax. In income on account of Ghat receipts was not offered to tax. In response, the assessee in their submission is noted to have rebutted the statement the assessee in their submission is noted to have rebutted the statement the assessee in their submission is noted to have rebutted the statement of Shri Kothari with facts and showed that Shri Khatri also had retracted of Shri Kothari with facts and showed that Shri Khatri also had retracted of Shri Kothari with facts and showed that Shri Khatri also had retracted from his admission. The assessee claimed that, the Ghat receipts from his admission. The assessee claimed that, the Ghat receipts from his admission. The assessee claimed that, the Ghat receipts comprised of the ‘alloy alloy’ [colloquially known as ‘ghat’] entries and not entries and not ‘gold’ entries and therefore no addition on this account was warranted. entries and therefore no addition on this account was warranted. entries and therefore no addition on this account was warranted.

The AO however rejected the submissions of the assessee for want of The AO however rejected the submissions of the assessee for want of The AO however rejected the submissions of the assessee for want of documentary evidences which would rebut the sworn statements recorded documentary evidences which would rebut the sworn statements recorded documentary evidences which would rebut the sworn statements recorded in the course of search. The AO accordingly added the entire Ghat receipt course of search. The AO accordingly added the entire Ghat receipt course of search. The AO accordingly added the entire Ghat receipt entries, treating it to be wastage gold entries, treating it to be wastage gold which was retained by the retained by the assessee, while converting gold into gold ornaments on behalf of , while converting gold into gold ornaments on behalf of , while converting gold into gold ornaments on behalf of customers, to the total income of the assessee across all , to the total income of the assessee across all , to the total income of the assessee across all the years in question before us. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::20 ::

Aggrieved by the order of the AO, the assessee carried the matter Aggrieved by the order of the AO, the assessee carried the matter Aggrieved by the order of the AO, the assessee carried the matter 7.3 in appeal. Before the Ld. CIT(A), the assessee submitted that in appeal. Before the Ld. CIT(A), the assessee submitted that in appeal. Before the Ld. CIT(A), the assessee submitted that, the Ghat account in the J-Pack Software was used as an Pack Software was used as an ‘alloy’ account while converting pure gold into gold ornaments and this account was converting pure gold into gold ornaments and this account was converting pure gold into gold ornaments and this account was maintained to record the difference in purity of gold. The assessee maintained to record the difference in purity of gold. The assessee maintained to record the difference in purity of gold. The assessee accordingly sought to rebut the statement of Shri Rajendra Kothari and sought to rebut the statement of Shri Rajendra Kothari and sought to rebut the statement of Shri Rajendra Kothari and for this they brought on record several brought on record several details along with evidences to details along with evidences to disprove his statement his statement. The Ld. CIT(A) is noted to have called for a . The Ld. CIT(A) is noted to have called for a remand report from the AO on this issue. In the remand proceedings, the remand report from the AO on this issue. In the remand proceedings, the remand report from the AO on this issue. In the remand proceedings, the assessee is noted to have submitted details of fifteen (15) sample assessee is noted to have submitted details of fifteen (15) sample assessee is noted to have submitted details of fifteen (15) sample transactions for AY 2017 AY 2017-18 [and similar sample size for other years as 18 [and similar sample size for other years as well] along with invoice copies of purchase, alloy addition calculation, well] along with invoice copies of purchase, alloy addition calculation, well] along with invoice copies of purchase, alloy addition calculation, making charges, ledger extracts where the purchase & sale are reflected. making charges, ledger extracts where the purchase & sale are reflected. making charges, ledger extracts where the purchase & sale are reflected.

The relevant portion of the explanation furnished by t The relevant portion of the explanation furnished by the assessee, is he assessee, is noted to be as under:

“1. The Ghat Account used in the J Pack Software was majorly used as The Ghat Account used in the J Pack Software was majorly used as The Ghat Account used in the J Pack Software was majorly used as an alloy account while converting Pure Gold into Gold Ornaments and while converting Pure Gold into Gold Ornaments and vice versa.

to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::21 ::

8. The Assessing Officer has erred by flagging the detailed submission 8. The Assessing Officer has erred by flagging the detailed submission 8. The Assessing Officer has erred by flagging the detailed submission given by the director given by the director of the appellant company as not satisfactory. company as not satisfactory. Further, the Assessing Officer has not Further, the Assessing Officer has not stated as to how the same was stated as to how the same was not satisfactory.

9. The Assessing officer has erred by merely declaring the 9. The Assessing officer has erred by merely declaring the 9. The Assessing officer has erred by merely declaring the logical submission supported by submission supported by documentary evidence as not satisfactory documentary evidence as not satisfactory without any reasoning. This action of the any reasoning. This action of the Assessing Officer is bad in law, Assessing Officer is bad in law, against the principles of n against the principles of natural justice and arbitrary in nature. nature.

10. The Assessing Officer has erred by not commenting on the 10. The Assessing Officer has erred by not commenting on the 10. The Assessing Officer has erred by not commenting on the submission with regards to submission with regards to no discovery of personal or busine no discovery of personal or business assets if such huge income was earned. such huge income was earned.”

7.4 Having considered the sample details and documentary evidences Having considered the sample details and documentary evidences Having considered the sample details and documentary evidences furnished by the assessee, the AO is noted to have acknowledged that, it furnished by the assessee, the AO is noted to have acknowledged that, it furnished by the assessee, the AO is noted to have acknowledged that, it was the ‘alloy’ and not ‘metal’ ’ and not ‘metal’ addition which corresponded to the entry addition which corresponded to the entry found in the ‘Ghat’ ledger. The AO further observed that, the found in the ‘Ghat’ ledger. The AO further observed that, the found in the ‘Ghat’ ledger. The AO further observed that, the corresponding purchase of gold which was converted into new gold corresponding purchase of gold which was converted into new gold corresponding purchase of gold which was converted into new gold ornaments, was found to be reflected in the books of either MJPL ornaments, was found to be reflected in the books of either MJPL ornaments, was found to be reflected in the books of either MJPL to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::22 ::

(assessee) or MJCPL (group entity). Likewise, the AO noted that, the sale roup entity). Likewise, the AO noted that, the sale roup entity). Likewise, the AO noted that, the sale value for the converted gold ornaments was also found reflected in the value for the converted gold ornaments was also found reflected in the value for the converted gold ornaments was also found reflected in the ‘Assorted gold Jewellery’ ledger. The AO also noted that, where the gold ‘Assorted gold Jewellery’ ledger. The AO also noted that, where the gold ‘Assorted gold Jewellery’ ledger. The AO also noted that, where the gold was being converted into new ornaments on behalf of the cust was being converted into new ornaments on behalf of the cust was being converted into new ornaments on behalf of the customers, the assessee was actually earning making charges from such job assessee was actually earning making charges from such job assessee was actually earning making charges from such job-work transactions, which was reflected in ‘Making Charges for Jewellery transactions, which was reflected in ‘Making Charges for Jewellery transactions, which was reflected in ‘Making Charges for Jewellery mfg’ ledger in Tally Accounts and the ‘MC ledger in Tally Accounts and the ‘MC-Khata’ Ledger in the J Khata’ Ledger in the J-Pack Software. Though having held so, the AO stat Software. Though having held so, the AO stated that, due to paucity of ed that, due to paucity of time, he was unable to verify each and every entry in the Ghat ledger and time, he was unable to verify each and every entry in the Ghat ledger and time, he was unable to verify each and every entry in the Ghat ledger and therefore according to him, possibility of unaccounted transactions being therefore according to him, possibility of unaccounted transactions being therefore according to him, possibility of unaccounted transactions being recorded in this ledger cannot be ruled out. The AO reiterating his reliance recorded in this ledger cannot be ruled out. The AO reiterating his reliance recorded in this ledger cannot be ruled out. The AO reiterating his reliance on the statements of Shri Kothari & Shri Khatri and the Developer of J he statements of Shri Kothari & Shri Khatri and the Developer of J he statements of Shri Kothari & Shri Khatri and the Developer of J- Pack Software, in his remand report, urged that the addition(s) made on Pack Software, in his remand report, urged that the addition(s) made on Pack Software, in his remand report, urged that the addition(s) made on account of ‘Ghat’ may be sustained. account of ‘Ghat’ may be sustained.

7.5 After considering the submissions of the assessee and the remand After considering the submissions of the assessee and the remand After considering the submissions of the assessee and the remand report of the AO, the Ld. CIT(A) is noted to have taken specific note of report of the AO, the Ld. CIT(A) is noted to have taken specific note of report of the AO, the Ld. CIT(A) is noted to have taken specific note of the AO’s finding of fact that, the entries in the ‘Ghat’ ledger are only that the AO’s finding of fact that, the entries in the ‘Ghat’ ledger are only that the AO’s finding of fact that, the entries in the ‘Ghat’ ledger are only that of ‘alloy’ addition value and not that o addition value and not that of ‘metal’ addition. The Ld. CIT(A) addition. The Ld. CIT(A) also verified and acknowledged that, the corresponding purchase of also verified and acknowledged that, the corresponding purchase of also verified and acknowledged that, the corresponding purchase of gold bullion bullion bullion for for for manufacturing manufacturing manufacturing and and and receipt receipt receipt of of of gold gold gold ornaments ornaments ornaments after after after manufacturing and the the sale of the gold ornaments, was accounted in the accounted in the to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd regular books of accounts of accounts of either the assessee or the group entities assessee or the group entities. The Ld. CIT(A) further observed that, Ld. CIT(A) further observed that, the corresponding ‘making charges making charges’ when the gold was being converted into gold ornaments on behalf of when the gold was being converted into gold ornaments on behalf of when the gold was being converted into gold ornaments on behalf of customers, was being paid by the customers through banking c being paid by the customers through banking c being paid by the customers through banking channel, which was also recorded in the regular books of accounts of the assessee also recorded in the regular books of accounts of the assessee also recorded in the regular books of accounts of the assessee and/or its related concerns. and/or its related concerns. Hence, it was not the case that, the making Hence, it was not the case that, the making charges were being received in form of ‘wastage gold’ as was being charges were being received in form of ‘wastage gold’ as was being charges were being received in form of ‘wastage gold’ as was being alleged by the AO. Having taken not Having taken note of the foregoing factual aspects, e of the foregoing factual aspects, which directly contradicted the statement given by Shri Rajendra Kothari, which directly contradicted the statement given by Shri Rajendra Kothari, which directly contradicted the statement given by Shri Rajendra Kothari, we note that, the Ld. CIT(A) himself , the Ld. CIT(A) himself also embarked on a factual exercise embarked on a factual exercise to decipher as to how these entries were made in the ‘Ghat’ Ledger. The to decipher as to how these entries were made in the ‘Ghat’ Ledger. The to decipher as to how these entries were made in the ‘Ghat’ Ledger. The Ld. CIT(A) is noted to have called for the relevant seized material for Ld. CIT(A) is noted to have called for the relevant seized material for Ld. CIT(A) is noted to have called for the relevant seized material for verification and after undertaking an elaborate analysis, he concluded verification and after undertaking an elaborate analysis, he concluded verification and after undertaking an elaborate analysis, he concluded that, the entries in this ‘Ghat’ ledger did not comprise of any ‘metal’ that, the entries in this ‘Ghat’ ledger did not comprise of any ‘metal’ that, the entries in this ‘Ghat’ ledger did not comprise of any ‘metal’ addition but was only ‘alloy’ addition an addition but was only ‘alloy’ addition and therefore deleted the addition d therefore deleted the addition made by the AO. Aggrieved by the order of the Ld. CIT(A), the Revenue is made by the AO. Aggrieved by the order of the Ld. CIT(A), the Revenue is made by the AO. Aggrieved by the order of the Ld. CIT(A), the Revenue is now in appeal before us. now in appeal before us.

7.6 Assailing the action of Ld. CIT(A), the Ld. CIT, DR appearing for the Assailing the action of Ld. CIT(A), the Ld. CIT, DR appearing for the Assailing the action of Ld. CIT(A), the Ld. CIT, DR appearing for the Revenue Ms. E. Pavuna Sundari, Ms. E. Pavuna Sundari, relied on the statement(s) recorded at relied on the statement(s) recorded at the time of search wherein it was admitted that the entries in Ghat Ledger the time of search wherein it was admitted that the entries in Ghat Ledger the time of search wherein it was admitted that the entries in Ghat Ledger represented ‘metal’ entries retained by the assessee during the process of ‘metal’ entries retained by the assessee during the process of ‘metal’ entries retained by the assessee during the process of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd conversion of gold into gold ornaments conversion of gold into gold ornaments. She further argued that, th argued that, the Director of the assessee assessee company had admitted that the J J-pack software was used for recording both accounted and unaccounted transactions and was used for recording both accounted and unaccounted transactions and was used for recording both accounted and unaccounted transactions and therefore only because the assessee was able to reconcile the entries therefore only because the assessee was able to reconcile the entries therefore only because the assessee was able to reconcile the entries recorded in ‘Ghat’ Ledger with their regul Ledger with their regular books of accounts on sample ar books of accounts on sample basis cannot ipso facto mean that all the entries are accounted for. She mean that all the entries are accounted for. She thus urged that the Ld. CIT(A) was unjustified in deleting the impugned thus urged that the Ld. CIT(A) was unjustified in deleting the impugned thus urged that the Ld. CIT(A) was unjustified in deleting the impugned addition and wants us to restore the order of the AO. Per contra, the Ld. addition and wants us to restore the order of the AO. Per contra, the Ld. addition and wants us to restore the order of the AO. Per contra, the Ld. AR heavily relied on the findings recorded by the Ld. CIT(A) for deleting vily relied on the findings recorded by the Ld. CIT(A) for deleting vily relied on the findings recorded by the Ld. CIT(A) for deleting the impugned addition.

7.7 We have heard both the parties and perused the material placed We have heard both the parties and perused the material placed We have heard both the parties and perused the material placed before us. It is observed that, the AO was of the view that before us. It is observed that, the AO was of the view that before us. It is observed that, the AO was of the view that, the ledger titled ‘Ghat’ maintained titled ‘Ghat’ maintained in the customized software ‘J-Pack’ contained Pack’ contained receipt entries (‘Ghatjama’) for the excess receipt entries (‘Ghatjama’) for the excess ‘metal’ (gold) retained by the (gold) retained by the assessee outside the books, assessee outside the books, while rendering job-work services to the work services to the customers. This analogy of the AO customers. This analogy of the AO is found to primarily emanate fro emanate from the statements given by Shri Rajendra Kothari statements given by Shri Rajendra Kothari u/s 132(4) and 131 of the Act u/s 132(4) and 131 of the Act, and we note that, there was no other corroborative material or evidence there was no other corroborative material or evidence there was no other corroborative material or evidence referred to by the AO, to justify such an inference , to justify such an inference. Relying upon their Relying upon their statements, the AO is noted to ha statements, the AO is noted to have theorized that, the assessee was the assessee was receiving old gold or bullion bars from gold or bullion bars from the customers for remaking into customers for remaking into to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ornaments, and in this process, a portion of the gold supplied and in this process, a portion of the gold supplied and in this process, a portion of the gold supplied by the customers remained as excess remained as excess, for which receipt entries (‘Ghatjama’) was , for which receipt entries (‘Ghatjama’) was passed in ‘Ghat’ Ledger and that the issue entries (‘Ghatnamma’) were passed in ‘Ghat’ Ledger and that the issue entries (‘Ghatnamma’) were passed in ‘Ghat’ Ledger and that the issue entries (‘Ghatnamma’) were essentially squaring off entries, which was to be ignored. The sum total of essentially squaring off entries, which was to be ignored. The sum total of essentially squaring off entries, which was to be ignored. The sum total of the receipt entries in the Ghat Ledger across all the years was treated as the receipt entries in the Ghat Ledger across all the years was treated as the receipt entries in the Ghat Ledger across all the years was treated as the unaccounted income in the form the unaccounted income in the form of wastage gold by the assessee. of wastage gold by the assessee.

Before the AO, the assessee Before the AO, the assessee is noted to have explained that explained that, the entries in the ‘Ghat’ Ledger actually in the ‘Ghat’ Ledger actually represented only ‘alloy’ adjustments arising adjustments arising during conversion of bullion into ornaments during conversion of bullion into ornaments, but the AO disagreed with , but the AO disagreed with this submission for want of evidence. submission for want of evidence.

7.8 As noted earlier, before the Ld. CIT(A), the assessee had reiterated As noted earlier, before the Ld. CIT(A), the assessee had reiterated As noted earlier, before the Ld. CIT(A), the assessee had reiterated that, the entries in ‘Ghat’ Ledger that, the entries in ‘Ghat’ Ledger were relating to the ‘alloy alloy’ addition to the new gold ornaments manufactured by goldsmiths and not the new gold ornaments manufactured by goldsmiths and not the new gold ornaments manufactured by goldsmiths and not ‘metal’ (gold) addition, as had been wrongly inferred by the AO. The case of the addition, as had been wrongly inferred by the AO. The case of the addition, as had been wrongly inferred by the AO. The case of the assessee was that, as and when the assessee was that, as and when the gold bullion is purchased, depending gold bullion is purchased, depending upon its purity content, specific instructions are issued to the Karigars for upon its purity content, specific instructions are issued to the Karigars for upon its purity content, specific instructions are issued to the Karigars for the addition of alloy while converting the addition of alloy while converting such bullion into gold ornaments. such bullion into gold ornaments.

The addition of ‘alloy’ by the goldsmiths in the new gold ornaments was by the goldsmiths in the new gold ornaments was by the goldsmiths in the new gold ornaments was recorded in the ‘Ghat’ ledger ’ ledger maintained in the J-Pack software, which Pack software, which essentially serves the purpose of accounting for alloy adjustments during essentially serves the purpose of accounting for alloy adjustments during essentially serves the purpose of accounting for alloy adjustments during conversion. To substantiate the same, t To substantiate the same, the assessee is found to have assessee is found to have to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd submitted the details of submitted the details of purchases of gold bullion corresponding to these corresponding to these Ghat entries, and it was shown that the purchases were Ghat entries, and it was shown that the purchases were duly recorded in duly recorded in the books of accounts. The details furnished books of accounts. The details furnished inter alia included included purchase invoices, alloy addition calculations, ledger extracts of making charges, invoices, alloy addition calculations, ledger extracts of making charges, invoices, alloy addition calculations, ledger extracts of making charges, and entries reflecting the purchase and sale and entries reflecting the purchase and sale etc. Having Having examined the same, it is noted that, the assessee was able to make same, it is noted that, the assessee was able to make out a valid case out a valid case that, the foundational premise of the impugned addition dational premise of the impugned addition made by the AO made by the AO was based on incorrect assumption of fact and therefore the impugned was based on incorrect assumption of fact and therefore the impugned was based on incorrect assumption of fact and therefore the impugned addition was deleted by the Ld. CIT(A) by the Ld. CIT(A).

7.9 The Ld. AR Shri Anand Shri Anand, at the time of hearing, b , at the time of hearing, by way of illustration, took us through took us through one such instance of entry made in the ‘Ghat’ such instance of entry made in the ‘Ghat’ Ledger. It is observed that, er. It is observed that, the assessee had purchased a 15 kg gold bar purchased a 15 kg gold bar of 99.5% purity from The Bank of Nova Scotia on 31.03.2016 of 99.5% purity from The Bank of Nova Scotia on 31.03.2016 of 99.5% purity from The Bank of Nova Scotia on 31.03.2016 bearing Invoice No. L/XG1MD 15 D 15-16/170 at the rate of Rs.2,630 0.52 per gram, amounting to Rs.3,97,57,817/ 3,97,57,817/-. We note that, the said bullion purchase is he said bullion purchase is duly reflected in the bullion purchase ledger. duly reflected in the bullion purchase ledger. As the gold purchased was the gold purchased was of 99.5% purity, on conversion it yielded 14,925 grams of pure gold. of 99.5% purity, on conversion it yielded 14,925 grams of pure gold. of 99.5% purity, on conversion it yielded 14,925 grams of pure gold.

Consequently, when alloy a hen alloy addition at 91.66% was factored in, the total ddition at 91.66% was factored in, the total weight worked out to 16,283 grams. The weight worked out to 16,283 grams. The assessee showed that assessee showed that, the difference between 16,283 grams and 14,925 grams, i.e., 1,358 grams difference between 16,283 grams and 14,925 grams, i.e., 1,358 grams difference between 16,283 grams and 14,925 grams, i.e., 1,358 grams of alloy addition, was entered entered in the ‘Ghat’ Ledger in the J- -Pack Software. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::27 ::

Having considered the foregoing, we find merit in the assessee’s claim ving considered the foregoing, we find merit in the assessee’s claim ving considered the foregoing, we find merit in the assessee’s claim that the entry in ‘Ghat’ ledger was that of that the entry in ‘Ghat’ ledger was that of ‘alloy’ addition value to the gold addition value to the gold ornaments being made by karigars on their behalf and did ornaments being made by karigars on their behalf and did ornaments being made by karigars on their behalf and didn’t constitute any entry of wastage gold retained fr any entry of wastage gold retained from the customers. It is observed om the customers. It is observed that, similar such instances were also noted by the AO in his remand that, similar such instances were also noted by the AO in his remand that, similar such instances were also noted by the AO in his remand report dated 18.11.2024, which is reproduced report dated 18.11.2024, which is reproduced hereunder: - -

BNS BANK BNS BANK INVOICE NO INVOICE NO-L/XG1MD 16-17/10 PURCHASE BULLION PURCHASE BULLION 8000.00 (8000X99.5%) (8000X99.5%) ALLOY 91.66% ALLOY 91.66% 684.27 Gold + Alloy Gold + Alloy 8684.27 GOLD WT (8000.00 X99.5) GOLD WT (8000.00 X99.5) 7960.00

BALANCE WT GHAT (P NO BALANCE WT GHAT (P NO-3) 724.27 HDFC BANK HDFC BANK INVOICE NO INVOICE NO-L/XG95 CHN 16- 17/08

PURCHASE BULLION PURCHASE BULLION 15000.00 (15000X99.5%) (15000X99.5%) ALLOY =91.66% ALLOY =91.66% 1283.00 Gold + Alloy Gold + Alloy 16283.00 GOLD WT (15000.00 GOLD WT (15000.00 X99.5) 14925.00 BALANCE WT GHAT (P NO BALANCE WT GHAT (P NO-4) 1358.00 HDFC BANK HDFC BANK INVOICE NO INVOICE NO-L/XG95CHN16- 17/182 17/182

PURCHASE BULLION PURCHASE BULLION 20000.00 (20000X99.5%) (20000X99.5%) ALLOY 91.66% ALLOY 91.66% 1710.67 Gold + Alloy Gold + Alloy 21710.67 GOLD WT (20000.00 X99.5) GOLD WT (20000.00 X99.5) 19900.00

BALANCE WT GHAT (P NO BALANCE WT GHAT (P NO- 1810.67 52) to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::28 ::

HDFC BANK HDFC BANK INVOICE NO INVOICE NO-L/XG95CHN16- 17/127 17/127

PURCHASE BULLION PURCHASE BULLION 3000.00 (3000X99.5%) (3000X99.5%) ALLOY 91.66% ALLOY 91.66% 256.60 Gold + Alloy Gold + Alloy 3256.60 GOLD WT (3000.00 X99.5) GOLD WT (3000.00 X99.5) 2985.00

BALANCE WT GHAT (PNO38) BALANCE WT GHAT (PNO38) 271.60 EPARTME EPARTME

SURABI BULLION SURABI BULLION INVOICE NO INVOICE NO-G 1040

PURCHASE BULLION PURCHASE BULLION 3000.00 (3000X100%) (3000X100%) ALLOY 91.70% ALLOY 91.70% 271.54 Gold + Alloy Gold + Alloy 3271.54 GOLD WT (3000.00 X 100) GOLD WT (3000.00 X 100) 3000.00 BALANCE WT GHAT ( P NO BALANCE WT GHAT ( P NO – 271.54 32) SURABI BULLION SURABI BULLION INVOICE NOG 1138 INVOICE NOG 1138 MOHANLAL JEWELLERS PVT MOHANLAL JEWELLERS PVT LTD INVOICE NO INVOICE NO-G-327

PURCHASE PURCHASE BULLION 7091.45 (4000.00+3091.45 (4000.00+3091.45- 7091.45X99.5%) 7091.45X99.5%) ALLOY = 91.70% ALLOY = 91.70% 603.19 Gold + Alloy Gold + Alloy 7694.64 GOLD WT (7091.45 X99.5) GOLD WT (7091.45 X99.5) 7056.00

BALANCE WT GHAT (P NO BALANCE WT GHAT (P NO- 638.64 34) MOHANLAL JEWELLERS PVT MOHANLAL JEWELLERS PVT LTD INVOICE NO G INVOICE NO G-1331

PURCHASE BULLION PURCHASE BULLION 13750.00 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::29 ::

(13750X99.5%) (13750X99.5%) ALLOY =91.70% ALLOY =91.70% 1169.57 Gold + Alloy Gold + Alloy 14919.57 GOLD WT (13750.00 X99.5) GOLD WT (13750.00 X99.5) 13681.25

BALANCE WT GHAT (PNO BALANCE WT GHAT (PNO-53) 1238.32

MOHANLAL JEWELLERS PVT MOHANLAL JEWELLERS PVT LTD INVOICE NO INVOICE NO – G-1907

PURCHASE BULLION PURCHASE BULLION 7228.00 (7228.00×100%) (7228.00×100%) ALLOY 91.70% ALLOY 91.70% 654.22 Gold + Alloy Gold + Alloy 7882.22 GOLD WT (7228.00 X100) GOLD WT (7228.00 X100) 7228.00 BALANCE WT GHAT ( P NO BALANCE WT GHAT ( P NO - 654.22 87)

MMTC- -PAMP INDIA PVT LTD INVOICE NO INVOICE NO-TN-2016-2017- 00005 PURCHASE BULLION PURCHASE BULLION 50000.00 (50000.00X99.5%) (50000.00X99.5%) ALLOY =91.70% ALLOY =91.70% 4253.00 Gold + Alloy Gold + Alloy 54253.00 GOLD WT (50000.00×99.5%) GOLD WT (50000.00×99.5%) 49750.00

BALANCE WT GHAT (PNO BALANCE WT GHAT (PNO-6) 4503.00

MMTC-PAMP INDIA PVT LTD PAMP INDIA PVT LTD INVOICE NO INVOICE NO-TN-2016-2017-0075 RADHA MOHAN PURSHOTTAM DAS RADHA MOHAN PURSHOTTAM DAS JEWELS PVT LTD JEWELS PVT LTD INVOICE NO INVOICE NO-CHN/T/16-17/0070 SAYSO EXIM PVT LTD SAYSO EXIM PVT LTD INVOICE NO INVOICE NO-113 PURCHASE BULLION PURCHASE BULLION 42000.00 (17000-15000+10000 15000+10000-42000×99.5%) ALLOY 91.70% ALLOY 91.70% 3572.52 Gold + Alloy Gold + Alloy 45572.52 GOLD WT (42000.00X99.5%) GOLD WT (42000.00X99.5%) 41790.00

BALANCE WT GHAT (P NO BALANCE WT GHAT (P NO-29) 3782.52 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::30 ::

MMTC-PAMP INDIA PVT LTD PAMP INDIA PVT LTD INVOICE NO INVOICE NO-TN-2016-2017-0121

PURCHASE BULLION (11000.00×99.5%) PURCHASE BULLION (11000.00×99.5%) 11000.00 ALLOY 91.70% ALLOY 91.70% 935.66 Gold + Alloy Gold + Alloy 11935.66 GOLD WT (11000.00X99.5%) GOLD WT (11000.00X99.5%) 10945.00

BALANCE WTGHAT ( P NO BALANCE WTGHAT ( P NO -31) 990.66

MMTC-PAMP INDIA PVT LTD PAMP INDIA PVT LTD INVOICE NO INVOICE NO-TN-2016-2017-0201

PURCHASE BULLION PURCHASE BULLION 15000.00 (15000.00X99.5%) (15000.00X99.5%) ALLOY 91.70% ALLOY 91.70% 1275.90 Gold + Alloy Gold + Alloy 16275.90 GOLD WT (15000.00X99.5%) GOLD WT (15000.00X99.5%) 14925.00

BALANCE WT GHAT (P NO BALANCE WT GHAT (P NO-35) 1350.90

ZAVERI & CO PVT LTD ZAVERI & CO PVT LTD INVOICE NO INVOICE NO-CHN/20/2016-17

PURCHASE BULLION PURCHASE BULLION 30700.00 (30700.00X99.5%) (30700.00X99.5%) ALLOY 91.70% ALLOY 91.70% 2611.34 Gold + Alloy Gold + Alloy 33311.34 GOLD WT GOLD WT (30700.00x99.5%) 30546.50

BALNCE WT GHAT (P NO BALNCE WT GHAT (P NO -40) 2764.84 7.10 It is seen that even the AO in his remand report It is seen that even the AO in his remand report had verified had verified the above instances pointed out by the assessee above instances pointed out by the assessee and noted that they and noted that they reconciled with the entries found in the ‘Ghat’ Ledger reconciled with the entries found in the ‘Ghat’ Ledger and thereafter recorded a finding of fact that, recorded a finding of fact that, the entries in ‘Ghat’ Ledger related to the entries in ‘Ghat’ Ledger related to to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::31 ::

‘alloy’ addition and not addition and not ‘metal’ (gold) addition. The relevant extracts of (gold) addition. The relevant extracts of the remand report is reproduced the remand report is reproduced hereunder: -

“Considering the volume of the transaction the Considering the volume of the transaction the above invoices were above invoices were verified on sample basis. The following are observed during the verified on sample basis. The following are observed during the verified on sample basis. The following are observed during the verification of the above sample entries selected randomly: verification of the above sample entries selected randomly:

* The bullion purchase referred to above in sample cases is found to be * The bullion purchase referred to above in sample cases is found to be * The bullion purchase referred to above in sample cases is found to be reflected in the Gold Bullion Purchase l reflected in the Gold Bullion Purchase ledger of MJPL and MJCPL. edger of MJPL and MJCPL.

* In the GHAT ledger of JPACK it is seen that only the alloy addition * In the GHAT ledger of JPACK it is seen that only the alloy addition * In the GHAT ledger of JPACK it is seen that only the alloy addition value is recorded in the sample cases. value is recorded in the sample cases.

* It is seen that in the Gold Bullion Purchase ledger the alloy addition as * It is seen that in the Gold Bullion Purchase ledger the alloy addition as * It is seen that in the Gold Bullion Purchase ledger the alloy addition as shown in GHAT is also reflected for the sample shown in GHAT is also reflected for the sample cases.

* The Gold Bullion Purchase ledger also contains entries on issue of this The Gold Bullion Purchase ledger also contains entries on issue of this The Gold Bullion Purchase ledger also contains entries on issue of this gold bullion for manufacture (including instruction for Alloy addition) for gold bullion for manufacture (including instruction for Alloy addition) for gold bullion for manufacture (including instruction for Alloy addition) for the sample cases. the sample cases.

* When the gold bullion is manufactured and returned back for the * When the gold bullion is manufactured and returned back for the * When the gold bullion is manufactured and returned back for the sample cases, the same is reflected in Assorted Gold Jewellery Register the same is reflected in Assorted Gold Jewellery Register the same is reflected in Assorted Gold Jewellery Register for the same quantity. for the same quantity.

* The sale value for selling this converted gold ornaments are found * The sale value for selling this converted gold ornaments are found * The sale value for selling this converted gold ornaments are found reflected in Assorted Gold Jewellery Ledger for the sample cases. reflected in Assorted Gold Jewellery Ledger for the sample cases. reflected in Assorted Gold Jewellery Ledger for the sample cases.

* The making charges for the above trans * The making charges for the above transaction for the sample cases is action for the sample cases is found to be reflected in “Making Charges for Jewellery found to be reflected in “Making Charges for Jewellery mfg” ledger. mfg” ledger.

* The total sale value and closing stock shown in the Assorted Gold * The total sale value and closing stock shown in the Assorted Gold * The total sale value and closing stock shown in the Assorted Gold Jewellery register is found to be reflected in the sales shown in the Profit Jewellery register is found to be reflected in the sales shown in the Profit Jewellery register is found to be reflected in the sales shown in the Profit and Loss Account. ount.

However, due to paucity of time and large volume of transaction, it was However, due to paucity of time and large volume of transaction, it was However, due to paucity of time and large volume of transaction, it was not possible to verify each and every entry in the GHAT ledger and the not possible to verify each and every entry in the GHAT ledger and the not possible to verify each and every entry in the GHAT ledger and the possibility of unaccounted transactions cannot be ruled out.” possibility of unaccounted transactions cannot be ruled out.” possibility of unaccounted transactions cannot be ruled out.”

(emphasis supplied) (emphasis supplied)

7.11 The above comments o The above comments of the AO make it amply clear that, he had it amply clear that, he had originally acted under the originally acted under the wrong assumption of fact that the entries in of fact that the entries in to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::32 ::

‘Ghat’ ledger was that of ‘Ghat’ ledger was that of ‘metal’ (gold) addition whereas the actual fact (gold) addition whereas the actual fact was that, it pertained to was that, it pertained to ‘alloy’ addition to the new gold ornaments addition to the new gold ornaments manufactured. Though the Ld. CIT, DR was unable to controvert the manufactured. Though the Ld. CIT, DR was unable to controvert the manufactured. Though the Ld. CIT, DR was unable to controvert the above findings of the AO but she contended that above findings of the AO but she contended that, the above findings of the above findings of the AO pertained to a sample set and that the assessee did the AO pertained to a sample set and that the assessee did the AO pertained to a sample set and that the assessee didn’t demonstrate the same across all entries found in the ‘Ghat’ Ledger. demonstrate the same across all entries found in the ‘Ghat’ Ledger. demonstrate the same across all entries found in the ‘Ghat’ Ledger.

According to us, once the contemporaneous facts brought on record According to us, once the contemporaneous facts brought on record According to us, once the contemporaneous facts brought on record showed that, the entries found in ‘Ghat’ Ledger (even on sample basis) showed that, the entries found in ‘Ghat’ Ledger (even on sample basis) showed that, the entries found in ‘Ghat’ Ledger (even on sample basis) pertains to alloy addition and not metal (gold), pertains to alloy addition and not metal (gold), then it is a natural then it is a natural corollary that, all receipt entries in the same ledger would pertain to the corollary that, all receipt entries in the same ledger would pertain to the corollary that, all receipt entries in the same ledger would pertain to the same item i.e. alloy and it cannot relate to metal i.e. gold. same item i.e. alloy and it cannot relate to metal i.e. gold. same item i.e. alloy and it cannot relate to metal i.e. gold. The assertion of the Ld. CIT, DR that, there may be ghat entries relating to metal (gold) of the Ld. CIT, DR that, there may be ghat entries relating to metal (gold) of the Ld. CIT, DR that, there may be ghat entries relating to metal (gold) cannot be countenanced, since it not only lacks basis but logic as well, as be countenanced, since it not only lacks basis but logic as well, as be countenanced, since it not only lacks basis but logic as well, as it would be highly unusual that the same ledger would contain some it would be highly unusual that the same ledger would contain some it would be highly unusual that the same ledger would contain some entries of ‘alloy’ and some of ‘metal’. Considering the facts discussed entries of ‘alloy’ and some of ‘metal’. Considering the facts discussed entries of ‘alloy’ and some of ‘metal’. Considering the facts discussed supra & infra, we agree with the Ld. AR that, on e agree with the Ld. AR that, once the character of entries ce the character of entries was demonstrated to be alloy additions was demonstrated to be alloy additions, then it was safe to presume that then it was safe to presume that all entries in the same ledger would bear the same character, which is all entries in the same ledger would bear the same character, which is all entries in the same ledger would bear the same character, which is that of alloy additions, unless it is disproved by relevant materials , unless it is disproved by relevant materials , unless it is disproved by relevant materials.

7.12 Coming to the Ld. CIT, DR’s contention that, all the entries ought to to the Ld. CIT, DR’s contention that, all the entries ought to to the Ld. CIT, DR’s contention that, all the entries ought to have been verified instead of a sample set, have been verified instead of a sample set, it is seen from the remand t is seen from the remand- to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd report that, the AO had had refrained from examining all entries in ‘Ghat’ refrained from examining all entries in ‘Ghat’ Ledger citing paucity of time and voluminous size Ledger citing paucity of time and voluminous size of data. In our of data. In our considered view, the AO’s inability to verify all the entries because of his considered view, the AO’s inability to verify all the entries because of his considered view, the AO’s inability to verify all the entries because of his own time constraints cannot be held against the assessee and the same own time constraints cannot be held against the assessee and the same own time constraints cannot be held against the assessee and the same cannot be the basis to assume that there may be some unaccounted cannot be the basis to assume that there may be some unaccounted cannot be the basis to assume that there may be some unaccounted transactions in the ‘Ghat’ L transactions in the ‘Ghat’ Ledger. According to us, once the assessee had edger. According to us, once the assessee had demonstrated on sample basis that demonstrated on sample basis that, the entries related to alloy addition the entries related to alloy addition and not metal addition and that the corresponding purchases & sales were and not metal addition and that the corresponding purchases & sales were and not metal addition and that the corresponding purchases & sales were forming part of the regular books of accounts and, this contenti forming part of the regular books of accounts and, this contenti forming part of the regular books of accounts and, this contention was found to be factually verifiable, then the onus lay on the Revenue found to be factually verifiable, then the onus lay on the Revenue found to be factually verifiable, then the onus lay on the Revenue to bring on record some contrary evidence that some on record some contrary evidence that some other entries may relate to entries may relate to unaccounted transactions. Without having pointed out even a single unaccounted transactions. Without having pointed out even a single unaccounted transactions. Without having pointed out even a single instance where any entry was found instance where any entry was found to be of ‘metal’ addition and not addition and not ‘alloy’ addition, we are unable to countenance the Ld. CIT DR’s plea that, addition, we are unable to countenance the Ld. CIT DR’s plea that, addition, we are unable to countenance the Ld. CIT DR’s plea that, a certain portion of the ‘Ghat’ entries may be estimated to be a certain portion of the ‘Ghat’ entries may be estimated to be a certain portion of the ‘Ghat’ entries may be estimated to be unaccounted wastage gold. unaccounted wastage gold.

7.13 The Ld. CIT, DR had further contended that, the samp The Ld. CIT, DR had further contended that, the samp The Ld. CIT, DR had further contended that, the sample size was identified by the assessee himself and therefore it was imperative to identified by the assessee himself and therefore it was imperative to identified by the assessee himself and therefore it was imperative to verify some instances on random basis to ascertain the veracity of the verify some instances on random basis to ascertain the veracity of the verify some instances on random basis to ascertain the veracity of the assessee’s claim. To this To this, the Ld. AR showed us that, the Ld. CIT(A) was , the Ld. AR showed us that, the Ld. CIT(A) was also of the same view, and the also of the same view, and therefore in exercise of his co refore in exercise of his co-terminus to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd powers, he had called for the entire seized material and thereafter himself had called for the entire seized material and thereafter himself had called for the entire seized material and thereafter himself verified the ‘ghat’ entries randomly on test verified the ‘ghat’ entries randomly on test-check basis, particularly where check basis, particularly where the gold was being re- -made into new gold ornaments on behalf of t made into new gold ornaments on behalf of the customers and not out of assessee’s own gold bullion purchases. The customers and not out of assessee’s own gold bullion purchases. The customers and not out of assessee’s own gold bullion purchases. The relevant findings of the Ld. CIT(A), taken note of by us, is as relevant findings of the Ld. CIT(A), taken note of by us, is as relevant findings of the Ld. CIT(A), taken note of by us, is as under: -

“Further, a doubt was raised by the AO that the receipt side of the GHAT ledger “Further, a doubt was raised by the AO that the receipt side of the GHAT ledger “Further, a doubt was raised by the AO that the receipt side of the GHAT ledger was not explained properly by th was not explained properly by the appellant. In this regard, I had taken into e appellant. In this regard, I had taken into account the entries made in GHAT ledger of J account the entries made in GHAT ledger of J-Pack both, receipt and issue side, Pack both, receipt and issue side, and tried to decipher how these entries were made in the GHAT account. In this and tried to decipher how these entries were made in the GHAT account. In this and tried to decipher how these entries were made in the GHAT account. In this process, I had also come to the conclusion that the process, I had also come to the conclusion that the entries in GHAT ledger is a entries in GHAT ledger is a cumulative entry for each day and the entry for a particular day is made by Shri cumulative entry for each day and the entry for a particular day is made by Shri cumulative entry for each day and the entry for a particular day is made by Shri Rajendra Kothari till 27.10.2019 and thereafter by Shri Kishore Khatri till the Rajendra Kothari till 27.10.2019 and thereafter by Shri Kishore Khatri till the Rajendra Kothari till 27.10.2019 and thereafter by Shri Kishore Khatri till the date of search with the help of daily reports prepared by Shri Nik date of search with the help of daily reports prepared by Shri Nik date of search with the help of daily reports prepared by Shri Nikhil and Shri Tulsiram on the basis of white and yellow slips for the respective day. It was Tulsiram on the basis of white and yellow slips for the respective day. It was Tulsiram on the basis of white and yellow slips for the respective day. It was also noted that the seized materials do not have the daily report along with also noted that the seized materials do not have the daily report along with also noted that the seized materials do not have the daily report along with yellow and white slips for the entire period of FY 2016 yellow and white slips for the entire period of FY 2016-17 to 2020 17 to 2020-21. However, these seized materials are available for limited period only. For the remaining eized materials are available for limited period only. For the remaining eized materials are available for limited period only. For the remaining period, these daily reports and slips were destroyed in a periodical manner by period, these daily reports and slips were destroyed in a periodical manner by period, these daily reports and slips were destroyed in a periodical manner by the appellant and it was the reason for which the search team could not find and the appellant and it was the reason for which the search team could not find and the appellant and it was the reason for which the search team could not find and seize the corresponding seize the corresponding reports and slips for the entire period from FY 2016 reports and slips for the entire period from FY 2016-17 to 2020-21. In this regard, the AO was requested to produce the relevant seized 21. In this regard, the AO was requested to produce the relevant seized 21. In this regard, the AO was requested to produce the relevant seized material for verification. In response, the AO had furnished the following seized material for verification. In response, the AO had furnished the following seized material for verification. In response, the AO had furnished the following seized material which contains the daily rep material which contains the daily reports along with yellow and white slips for orts along with yellow and white slips for verification with the GHAT entry which is available for the period mentioned as verification with the GHAT entry which is available for the period mentioned as verification with the GHAT entry which is available for the period mentioned as under:

Seized material Seized material Period ANN/VD/RK/LS/S ANN/VD/RK/LS/S-01 14.07.2020 to 21.07.2020 14.07.2020 to 21.07.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-02 22.07.2020 to 31.07.2020 22.07.2020 to 31.07.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-03 01.08.2020 to 06.08.2020 01.08.2020 to 06.08.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-04 07.08.2020 to 12.08.2020 07.08.2020 to 12.08.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-05 13.08.2020 to 19.08.2020 13.08.2020 to 19.08.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-06 20.08.2020 to 24.08.2020 20.08.2020 to 24.08.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-07 25.08.2020 to 31.08.2020 25.08.2020 to 31.08.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-08 01.09.2020 to 05.09.2020 05.09.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-09 06.09.2020 to 14.09.2020 06.09.2020 to 14.09.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-10 15.09.2020 to 19.09.2020 15.09.2020 to 19.09.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-11 21.09.2020 to 25.09.2020 21.09.2020 to 25.09.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-12 26.09.2020 to 30.09.2020 26.09.2020 to 30.09.2020 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::35 ::

ANN/VD/RK/LS/S ANN/VD/RK/LS/S-13 02.10.2020 to 08.10.2020 02.10.2020 to 08.10.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-14 09.10.2020 to 15.10.2020 09.10.2020 to 15.10.2020 ANN/VD/RK/LS/S ANN/VD/RK/LS/S-15 14.10.2020 14.10.2020

5.8.6 I had personally verified the above seized material which has the daily 5.8.6 I had personally verified the above seized material which has the daily 5.8.6 I had personally verified the above seized material which has the daily reports for the dates mentioned as above, wherein the ‘Ghat Jama’ and ‘Ghat reports for the dates mentioned as above, wherein the ‘Ghat Jama’ and ‘Ghat reports for the dates mentioned as above, wherein the ‘Ghat Jama’ and ‘Ghat Naamae’ are worked out based on the actual rec Naamae’ are worked out based on the actual receipt of gold bullion and the eipt of gold bullion and the quantity of alloy to be added for converting 24 carat gold into 22 carat gold quantity of alloy to be added for converting 24 carat gold into 22 carat gold quantity of alloy to be added for converting 24 carat gold into 22 carat gold ornament. The component of alloy to be added for manufacturing 22 carat gold ornament. The component of alloy to be added for manufacturing 22 carat gold ornament. The component of alloy to be added for manufacturing 22 carat gold ornament is cumulatively added in the GHAT ledger for a particular day b ornament is cumulatively added in the GHAT ledger for a particular day b ornament is cumulatively added in the GHAT ledger for a particular day by consolidating similar nature of entries. To understand the nature of entries made consolidating similar nature of entries. To understand the nature of entries made consolidating similar nature of entries. To understand the nature of entries made in the GHAT ledger, a verification was carried out on the basis of seized in the GHAT ledger, a verification was carried out on the basis of seized in the GHAT ledger, a verification was carried out on the basis of seized material, GHAT ledger in J material, GHAT ledger in J-Pack and Tally accounts seized during the search. For Pack and Tally accounts seized during the search. For this purpose, I had randomly selected a daily report dated 27.07.2020 seized ad randomly selected a daily report dated 27.07.2020 seized ad randomly selected a daily report dated 27.07.2020 seized vide page no. 333 of ANN/VD/RK/LS/S vide page no. 333 of ANN/VD/RK/LS/S-02 which has the daily report and yellow 02 which has the daily report and yellow and white slips for period from 22.07.2020 to 31.07.2020. The copy of the daily and white slips for period from 22.07.2020 to 31.07.2020. The copy of the daily and white slips for period from 22.07.2020 to 31.07.2020. The copy of the daily report dated 27.07.2020 is reproduced a report dated 27.07.2020 is reproduced as under: to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::36 ::

The above daily report is one of such yellow slips seized at the time of The above daily report is one of such yellow slips seized at the time of The above daily report is one of such yellow slips seized at the time of search in the case of the appellant. In the said daily report, there is a search in the case of the appellant. In the said daily report, there is a search in the case of the appellant. In the said daily report, there is a ‘Metal Jama’ i.e. receipt of gold, from one ‘T NAGAR SMJ (GRF)’ which ‘Metal Jama’ i.e. receipt of gold, from one ‘T NAGAR SMJ (GRF)’ which ‘Metal Jama’ i.e. receipt of gold, from one ‘T NAGAR SMJ (GRF)’ which states that the gold of 3090 states that the gold of 3090.720 grams of gross weight which contains .720 grams of gross weight which contains 2920.730 grams of pure gold is entered in the receipt side of the daily 2920.730 grams of pure gold is entered in the receipt side of the daily 2920.730 grams of pure gold is entered in the receipt side of the daily report as received from the said party on 27.07.2020. In the same daily report as received from the said party on 27.07.2020. In the same daily report as received from the said party on 27.07.2020. In the same daily report, in the ‘Ghat Naamae’, 165.310 grams is entered in the issued report, in the ‘Ghat Naamae’, 165.310 grams is entered in the issued report, in the ‘Ghat Naamae’, 165.310 grams is entered in the issued side. In both, ‘Metal Jama’ and ‘Ghat Naamae’ with respect to this party ide. In both, ‘Metal Jama’ and ‘Ghat Naamae’ with respect to this party ide. In both, ‘Metal Jama’ and ‘Ghat Naamae’ with respect to this party i.e., T NAGAR SMJ (GRF), Sr. no. 8 is mentioned. This Sr. no. 8 i.e., T NAGAR SMJ (GRF), Sr. no. 8 is mentioned. This Sr. no. 8 i.e., T NAGAR SMJ (GRF), Sr. no. 8 is mentioned. This Sr. no. 8 represents the number mentioned in rough estimation slip which is also represents the number mentioned in rough estimation slip which is also represents the number mentioned in rough estimation slip which is also seized as sheet no. 288 of the said annexure. The seized as sheet no. 288 of the said annexure. The same is reproduced same is reproduced as under:

From the above seized material, it is noted that the party name From the above seized material, it is noted that the party name From the above seized material, it is noted that the party name – T NAGAR SMJ (GRF), date 27.07.2020 and Sr. no. 8 is appearing on the NAGAR SMJ (GRF), date 27.07.2020 and Sr. no. 8 is appearing on the NAGAR SMJ (GRF), date 27.07.2020 and Sr. no. 8 is appearing on the top of the said slip and it is also mentioned as ‘Rt’ which denotes metal top of the said slip and it is also mentioned as ‘Rt’ which denotes metal top of the said slip and it is also mentioned as ‘Rt’ which denotes metal receipt from the said party and the quantity of receipt from the said party and the quantity of metal received is also metal received is also mentioned in both pure gold i.e. ‘Fine’ and gross weight with the purity mentioned in both pure gold i.e. ‘Fine’ and gross weight with the purity mentioned in both pure gold i.e. ‘Fine’ and gross weight with the purity percentage. In the above slip, two bars of 99.5% purity which contains percentage. In the above slip, two bars of 99.5% purity which contains percentage. In the above slip, two bars of 99.5% purity which contains 1990.00 grams of 100% pure gold along with a broken bar of 99.5% 1990.00 grams of 100% pure gold along with a broken bar of 99.5% 1990.00 grams of 100% pure gold along with a broken bar of 99.5% purity of 935.41 grams, purity of 935.41 grams, which contains 930.73 grams of 100% pure which contains 930.73 grams of 100% pure gold, was received. The weight of 100% pure gold of 2920.73 grams is gold, was received. The weight of 100% pure gold of 2920.73 grams is gold, was received. The weight of 100% pure gold of 2920.73 grams is recorded under ‘Fine’, and the gross weight is converted into 94.5% recorded under ‘Fine’, and the gross weight is converted into 94.5% recorded under ‘Fine’, and the gross weight is converted into 94.5% gold of 3090.72 grams and recorded under ‘Wt’. The GHAT issued of gold of 3090.72 grams and recorded under ‘Wt’. The GHAT issued of gold of 3090.72 grams and recorded under ‘Wt’. The GHAT issued of 165.310 grams is arrived by taking the difference between 3090.72 ms is arrived by taking the difference between 3090.72 ms is arrived by taking the difference between 3090.72 grams and 2925.41 (1990 + 935.41) grams. This difference is nothing grams and 2925.41 (1990 + 935.41) grams. This difference is nothing grams and 2925.41 (1990 + 935.41) grams. This difference is nothing but the alloy to be added for manufacturing gold ornament by but the alloy to be added for manufacturing gold ornament by but the alloy to be added for manufacturing gold ornament by to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd converting 24 carat gold into 22 carat gold ornament and also adding converting 24 carat gold into 22 carat gold ornament and also adding converting 24 carat gold into 22 carat gold ornament and also adding the making charges equal to that of gold. The same is mentioned in making charges equal to that of gold. The same is mentioned in making charges equal to that of gold. The same is mentioned in ‘Ghat Naamae’ in the daily report for the said date. Further, the total ‘Ghat Naamae’ in the daily report for the said date. Further, the total ‘Ghat Naamae’ in the daily report for the said date. Further, the total Ghat Naamae for the said date was 224.060 grams which includes Ghat Naamae for the said date was 224.060 grams which includes Ghat Naamae for the said date was 224.060 grams which includes 165.310 grams of the transactions related to ‘T NAGAR SMJ 165.310 grams of the transactions related to ‘T NAGAR SMJ 165.310 grams of the transactions related to ‘T NAGAR SMJ (GRF)’ and another party ‘MALABAR MDS’ of 58.750 grams and the same was another party ‘MALABAR MDS’ of 58.750 grams and the same was another party ‘MALABAR MDS’ of 58.750 grams and the same was debited as ‘GHAT issue’ in the GHAT ledger for the date 27.07.2020. The debited as ‘GHAT issue’ in the GHAT ledger for the date 27.07.2020. The debited as ‘GHAT issue’ in the GHAT ledger for the date 27.07.2020. The relevant page of the GHAT ledger is also reproduced as under: relevant page of the GHAT ledger is also reproduced as under: relevant page of the GHAT ledger is also reproduced as under:

If the daily report dated 27.07.2020 (reproduce If the daily report dated 27.07.2020 (reproduced above) is observed d above) is observed closely, there is a ‘Metal Naamae’ in the same report which means issue closely, there is a ‘Metal Naamae’ in the same report which means issue closely, there is a ‘Metal Naamae’ in the same report which means issue of metal. In the ‘Metal Naamae’ i.e. metal issued, Sr. no. 21 is in the of metal. In the ‘Metal Naamae’ i.e. metal issued, Sr. no. 21 is in the of metal. In the ‘Metal Naamae’ i.e. metal issued, Sr. no. 21 is in the name of ‘ARJUN FACTORY’. The Sr no. 21 is again a rough estimation name of ‘ARJUN FACTORY’. The Sr no. 21 is again a rough estimation name of ‘ARJUN FACTORY’. The Sr no. 21 is again a rough estimation slip enclosed along with slip enclosed along with the daily report for the said date, seized during the daily report for the said date, seized during the course of search in the same annexure as sheet no. 275, which is the course of search in the same annexure as sheet no. 275, which is the course of search in the same annexure as sheet no. 275, which is reproduced as under: reproduced as under: to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::38 ::

If the above seized material is observed closely, the item name is If the above seized material is observed closely, the item name is If the above seized material is observed closely, the item name is mentioned as ‘N’ which denotes ‘Naamae’ or ‘Is mentioned as ‘N’ which denotes ‘Naamae’ or ‘Is mentioned as ‘N’ which denotes ‘Naamae’ or ‘Issued’ on 27.07.2020 to Arjun Factory for the same quantity of metal i.e. 27.07.2020 to Arjun Factory for the same quantity of metal i.e. 27.07.2020 to Arjun Factory for the same quantity of metal i.e. two bars of 99.5 % purity which contains 1990 grams of 100% two bars of 99.5 % purity which contains 1990 grams of 100% two bars of 99.5 % purity which contains 1990 grams of 100% pure gold along with a broken bar of 99.5% purity of 935.41 pure gold along with a broken bar of 99.5% purity of 935.41 pure gold along with a broken bar of 99.5% purity of 935.41 grams which contains 930.73 grams of 100% pure gold, which grams which contains 930.73 grams of 100% pure gold, which grams which contains 930.73 grams of 100% pure gold, which were received from T NAGAR SMJ (GRF) for job work of received from T NAGAR SMJ (GRF) for job work of received from T NAGAR SMJ (GRF) for job work of manufacturing 22 carat ornaments by the appellant. In the said manufacturing 22 carat ornaments by the appellant. In the said manufacturing 22 carat ornaments by the appellant. In the said rough estimation slip, the total gross weight and net weight are rough estimation slip, the total gross weight and net weight are rough estimation slip, the total gross weight and net weight are not differentiated and mentioned as 3181.63 grams and the not differentiated and mentioned as 3181.63 grams and the not differentiated and mentioned as 3181.63 grams and the purity is also mentio purity is also mentioned as 100%. However, the actual 24 carat ned as 100%. However, the actual 24 carat gold is also mentioned as 1990 grams and 935.41 grams, gold is also mentioned as 1990 grams and 935.41 grams, gold is also mentioned as 1990 grams and 935.41 grams, respectively for the actual receipt of bullion bars from T NAGAR respectively for the actual receipt of bullion bars from T NAGAR respectively for the actual receipt of bullion bars from T NAGAR SMJ (GRF). The GHAT received of 256.22 grams is arrived by SMJ (GRF). The GHAT received of 256.22 grams is arrived by SMJ (GRF). The GHAT received of 256.22 grams is arrived by taking the difference between 3181. taking the difference between 3181.63 grams and 2925.41 (1990 63 grams and 2925.41 (1990 + 935.41) grams. It is also noted that the working of 3181.63 + 935.41) grams. It is also noted that the working of 3181.63 + 935.41) grams. It is also noted that the working of 3181.63 grams was arrived at to convert 2920.73 grams of 100% pure grams was arrived at to convert 2920.73 grams of 100% pure grams was arrived at to convert 2920.73 grams of 100% pure gold to manufacture 91.6% purity, the minimum requirement of gold to manufacture 91.6% purity, the minimum requirement of gold to manufacture 91.6% purity, the minimum requirement of 91.8% of pure gold is needed taking into accoun 91.8% of pure gold is needed taking into account some wastage t some wastage while melting and also the impurities in the 24 carat gold beyond while melting and also the impurities in the 24 carat gold beyond while melting and also the impurities in the 24 carat gold beyond the level mentioned in the bullion itself. Thus, the ‘Ghat Jama’ for the level mentioned in the bullion itself. Thus, the ‘Ghat Jama’ for the level mentioned in the bullion itself. Thus, the ‘Ghat Jama’ for this transaction was worked out at 256.22 grams and the same is this transaction was worked out at 256.22 grams and the same is this transaction was worked out at 256.22 grams and the same is mentioned in ‘Ghat Jama’ in the daily repo mentioned in ‘Ghat Jama’ in the daily report for the said date. rt for the said date. Further, the total ‘Ghat Jama’ for the said date was 426.790 Further, the total ‘Ghat Jama’ for the said date was 426.790 Further, the total ‘Ghat Jama’ for the said date was 426.790 grams which includes 256.22 grams of the transactions related to grams which includes 256.22 grams of the transactions related to grams which includes 256.22 grams of the transactions related to ‘T NAGAR SMJ (GRF)’ in the name of ‘ARJUN FACTORY, 169.740 ‘T NAGAR SMJ (GRF)’ in the name of ‘ARJUN FACTORY, 169.740 ‘T NAGAR SMJ (GRF)’ in the name of ‘ARJUN FACTORY, 169.740 grams in the name of ‘VIJAY FACTORY’ and 0.830 gr grams in the name of ‘VIJAY FACTORY’ and 0.830 gr grams in the name of ‘VIJAY FACTORY’ and 0.830 grams in the to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd name of another party ‘M S BACK CHAIN’ and the same was name of another party ‘M S BACK CHAIN’ and the same was name of another party ‘M S BACK CHAIN’ and the same was credited as ‘GHAT receipt’ in the GHAT ledger for the date credited as ‘GHAT receipt’ in the GHAT ledger for the date credited as ‘GHAT receipt’ in the GHAT ledger for the date 27.07.2020 as reproduced above. 27.07.2020 as reproduced above.

5.8.7. The above findings, arising out of the seized material which 5.8.7. The above findings, arising out of the seized material which 5.8.7. The above findings, arising out of the seized material which is available with the AO, clea is available with the AO, clearly proves that the GHAT issue and rly proves that the GHAT issue and receipt entered in the GHAT ledger of J receipt entered in the GHAT ledger of J-Pack are not that of gold Pack are not that of gold received from the customers as stated by Shri Rajendra Kothari in received from the customers as stated by Shri Rajendra Kothari in received from the customers as stated by Shri Rajendra Kothari in his statements or concluded by the AO in the assessment order. his statements or concluded by the AO in the assessment order. his statements or concluded by the AO in the assessment order. It is proved beyond doubt It is proved beyond doubt that GHAT is only the quantity of alloy that GHAT is only the quantity of alloy added for manufacturing 22 carat gold ornaments from gold added for manufacturing 22 carat gold ornaments from gold added for manufacturing 22 carat gold ornaments from gold bullion of 24 carat.” bullion of 24 carat.”

7.14 From the above, it is seen that, the Ld. CIT(A) had examined in the above, it is seen that, the Ld. CIT(A) had examined in the above, it is seen that, the Ld. CIT(A) had examined in detail the movement of gold received from customers to their conversion detail the movement of gold received from customers to their conversion detail the movement of gold received from customers to their conversion into gold ornaments along with their dates, weight etc. and found that the into gold ornaments along with their dates, weight etc. and found that the into gold ornaments along with their dates, weight etc. and found that the entry in the ‘Ghat’ Ledger was attributable to th entry in the ‘Ghat’ Ledger was attributable to the ‘alloy’ addition to the e ‘alloy’ addition to the gold ornaments made for the customers and that the making charges for gold ornaments made for the customers and that the making charges for gold ornaments made for the customers and that the making charges for rendering this service was received not in form of ‘gold’ but through rendering this service was received not in form of ‘gold’ but through rendering this service was received not in form of ‘gold’ but through banking channel, which was also duly recorded in the regular books of banking channel, which was also duly recorded in the regular books of banking channel, which was also duly recorded in the regular books of accounts. It was also brought to our notice that, the Ld. CIT(A) had o brought to our notice that, the Ld. CIT(A) had o brought to our notice that, the Ld. CIT(A) had similarly called for the seized material which included the daily reports similarly called for the seized material which included the daily reports similarly called for the seized material which included the daily reports and the yellow & white slips seized from the possession of Shri Rajendra and the yellow & white slips seized from the possession of Shri Rajendra and the yellow & white slips seized from the possession of Shri Rajendra Kothari. In order to test the veracity of the statement of M Kothari. In order to test the veracity of the statement of M Kothari. In order to test the veracity of the statement of Mr. Kothari, the Ld. CIT(A) is found to have required the assessee to explain the Ld. CIT(A) is found to have required the assessee to explain the Ld. CIT(A) is found to have required the assessee to explain the transactions mentioned in the mentioned in these daily reports and yellow & white slips in se daily reports and yellow & white slips in the name of ‘T NAGAR SMJ (GRF)’ name of ‘T NAGAR SMJ (GRF)’ and reconcile the same with the and reconcile the same with the regular books of accounts maintained books of accounts maintained in Tally and the ‘Ghat’ Ledger. After and the ‘Ghat’ Ledger. After to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd considering the submissions of the assessee, the Ld. CIT(A) found that considering the submissions of the assessee, the Ld. CIT(A) found that considering the submissions of the assessee, the Ld. CIT(A) found that, the entries in the daily reports along with yellow & white slips reconciled the entries in the daily reports along with yellow & white slips reconciled the entries in the daily reports along with yellow & white slips reconciled with the regular books of the assessee and that with the regular books of the assessee and that, the assessee was able the assessee was able to show that the entries in Ghat Ledger was the show that the entries in Ghat Ledger was the ‘alloy’ addition made to the addition made to the new ornaments manufactured on behalf of Shri Mahalakshmi Jewellery new ornaments manufactured on behalf of Shri Mahalakshmi Jewellery new ornaments manufactured on behalf of Shri Mahalakshmi Jewellery (‘SMJ’). The Ld. CIT(A) also noted that, the making charges were paid by (‘SMJ’). The Ld. CIT(A) also noted that, the making charges were paid by (‘SMJ’). The Ld. CIT(A) also noted that, the making charges were paid by SMJ through banking channel which was SMJ through banking channel which was also credited in the books of also credited in the books of accounts maintained in Tally Software and corresponding entry was also accounts maintained in Tally Software and corresponding entry was also accounts maintained in Tally Software and corresponding entry was also found in ‘MC Khata’ Ledger of J found in ‘MC Khata’ Ledger of J-Pack Software. This material fact, This material fact, according to us, negated the Revenue’s theory that the making charges according to us, negated the Revenue’s theory that the making charges according to us, negated the Revenue’s theory that the making charges were being received d d in in in form form form of of of wastage wastage wastage gold; gold; gold; whereas whereas whereas the the the contemporaneous facts showed that it was being paid through banking contemporaneous facts showed that it was being paid through banking contemporaneous facts showed that it was being paid through banking channel. The relevant findings rendered by the Ld. CIT(A) in this regard, The relevant findings rendered by the Ld. CIT(A) in this regard, The relevant findings rendered by the Ld. CIT(A) in this regard, and as noted by us, is as under: as under:-

“The AR has submitted that M/s Shree Maha “The AR has submitted that M/s Shree Mahalakshmi Jewellery, lakshmi Jewellery, 148, Usman Road, T.Nagar is the party mentioned as ‘T NAGAR 148, Usman Road, T.Nagar is the party mentioned as ‘T NAGAR 148, Usman Road, T.Nagar is the party mentioned as ‘T NAGAR SMJ (GRF)’ in the seized material and also submitted the delivery SMJ (GRF)’ in the seized material and also submitted the delivery SMJ (GRF)’ in the seized material and also submitted the delivery challan for the job challan for the job-work dated 25.07.2020. The same is work dated 25.07.2020. The same is reproduced as under: reproduced as under: to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::41 ::

On perusal of the above delivery challan, it is noted that M/s On perusal of the above delivery challan, it is noted that M/s On perusal of the above delivery challan, it is noted that M/s Shree Mahalakshmi Jewellery has delivered 2935.410 grams of Shree Mahalakshmi Jewellery has delivered 2935.410 grams of Shree Mahalakshmi Jewellery has delivered 2935.410 grams of bullion of 99.5% purity and gave the instruction to add alloy of bullion of 99.5% purity and gave the instruction to add alloy of bullion of 99.5% purity and gave the instruction to add alloy of 239.300 grams to make 22 carat gold ornaments of 3174.710 239.300 grams to make 22 carat gold ornaments of 3174.710 239.300 grams to make 22 carat gold ornaments of 3174.710 grams. The same bullion was received on 27.07.2020 by MJPL same bullion was received on 27.07.2020 by MJPL same bullion was received on 27.07.2020 by MJPL which has been acknowledged by both the parties. The quantity which has been acknowledged by both the parties. The quantity which has been acknowledged by both the parties. The quantity mentioned in the delivery challan is exactly matching with the mentioned in the delivery challan is exactly matching with the mentioned in the delivery challan is exactly matching with the above seized material sheet number 288 of the said annexure above seized material sheet number 288 of the said annexure above seized material sheet number 288 of the said annexure (reproduced above), bu (reproduced above), but the only difference is 14.68 grams which t the only difference is 14.68 grams which is on account of conversion of 99.5% to 100% purity. Thus, the is on account of conversion of 99.5% to 100% purity. Thus, the is on account of conversion of 99.5% to 100% purity. Thus, the seized material matches with the delivery challan. Further, the seized material matches with the delivery challan. Further, the seized material matches with the delivery challan. Further, the party ledger in the name of ‘T NAGAR SMJ’ maintained in J party ledger in the name of ‘T NAGAR SMJ’ maintained in J party ledger in the name of ‘T NAGAR SMJ’ maintained in J-Pack (reproduced in para no. (reproduced in para no. 5.8.8. below) is also examined and it is 5.8.8. below) is also examined and it is found that the metal receipt of 2920.730 grams of 100% pure found that the metal receipt of 2920.730 grams of 100% pure found that the metal receipt of 2920.730 grams of 100% pure gold with the gross of 3090.720 grams of 94.50% purity is also gold with the gross of 3090.720 grams of 94.50% purity is also gold with the gross of 3090.720 grams of 94.50% purity is also given credit. The quantity of 24 carat pure gold received from M/s given credit. The quantity of 24 carat pure gold received from M/s given credit. The quantity of 24 carat pure gold received from M/s Shree Mahalakshmi Jewell Shree Mahalakshmi Jewellery for job-work as per seized material work as per seized material in sheet no. 288 and the delivery challan are exactly matching in sheet no. 288 and the delivery challan are exactly matching in sheet no. 288 and the delivery challan are exactly matching with entries made in the party ledger maintained in J with entries made in the party ledger maintained in J with entries made in the party ledger maintained in J-Pack and the corresponding GHAT issued and received as per the above the corresponding GHAT issued and received as per the above the corresponding GHAT issued and received as per the above seized material is also entere seized material is also entered in the GHAT ledger maintained in d in the GHAT ledger maintained in J-Pack. It was also noted that after manufacturing 3174.710 Pack. It was also noted that after manufacturing 3174.710 Pack. It was also noted that after manufacturing 3174.710 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd grams of 22 carat gold ornaments, the same was also delivered grams of 22 carat gold ornaments, the same was also delivered grams of 22 carat gold ornaments, the same was also delivered to M/s Shree Mahalakshmi Jewellery on 08.08.2020. In support, to M/s Shree Mahalakshmi Jewellery on 08.08.2020. In support, to M/s Shree Mahalakshmi Jewellery on 08.08.2020. In support, the appellant had furnished the makin the appellant had furnished the making charges invoice raised by g charges invoice raised by the appellant in the name of M/s Shree Mahalakshmi Jewellery the appellant in the name of M/s Shree Mahalakshmi Jewellery the appellant in the name of M/s Shree Mahalakshmi Jewellery dated 08.08.2020, which is reproduced as under: dated 08.08.2020, which is reproduced as under:

On perusal of the above, it is observed that the appellant had raised the On perusal of the above, it is observed that the appellant had raised the On perusal of the above, it is observed that the appellant had raised the making charge invoice of Rs.3,80,965/ making charge invoice of Rs.3,80,965/- (excluding GST) for making an xcluding GST) for making an assorted gold jewellery of 3174.710 grams @ Rs.120 per gram. Further, assorted gold jewellery of 3174.710 grams @ Rs.120 per gram. Further, assorted gold jewellery of 3174.710 grams @ Rs.120 per gram. Further, the appellant had also furnished the ledger of ‘Shree Mahalakshmi the appellant had also furnished the ledger of ‘Shree Mahalakshmi the appellant had also furnished the ledger of ‘Shree Mahalakshmi Jewellery – MC’ as per Tally, wherein the party’s account was debited on MC’ as per Tally, wherein the party’s account was debited on MC’ as per Tally, wherein the party’s account was debited on 08.08.2020 and cred 08.08.2020 and crediting the Making Charges account. The said ledger iting the Making Charges account. The said ledger is also reproduced as under: is also reproduced as under: to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::43 ::

On perusal of the above ledger, it is clearly seen that the making On perusal of the above ledger, it is clearly seen that the making On perusal of the above ledger, it is clearly seen that the making charges is receivable on account of job charges is receivable on account of job-work for M/s Shree Mahalakshmi work for M/s Shree Mahalakshmi Jewellery as per the invoice raised Jewellery as per the invoice raised by the appellant dated 08.08.2020. by the appellant dated 08.08.2020.

5.8.8. Further, the entries made in ‘MC KHATA’ ledger in J 5.8.8. Further, the entries made in ‘MC KHATA’ ledger in J-Pack are also Pack are also examined to find out the corresponding entries made for the respective examined to find out the corresponding entries made for the respective examined to find out the corresponding entries made for the respective ‘Making Charges’ received/receivable from M/s Shree Mahalakshmi ‘Making Charges’ received/receivable from M/s Shree Mahalakshmi ‘Making Charges’ received/receivable from M/s Shree Mahalakshmi to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::44 ::

Jewellery. It is also found that the J t is also found that the J-Pack data has individual party Pack data has individual party ledger in the name of ‘T NAGAR SMJ’ which pertains to M/s Shree ledger in the name of ‘T NAGAR SMJ’ which pertains to M/s Shree ledger in the name of ‘T NAGAR SMJ’ which pertains to M/s Shree Mahalakshmi Jewellery. The entries made with respect to the making Mahalakshmi Jewellery. The entries made with respect to the making Mahalakshmi Jewellery. The entries made with respect to the making charges for manufacturing of gold ornaments on job charges for manufacturing of gold ornaments on job-work basis by th work basis by the appellant are found in both ‘MC KHATA’ and ‘T NAGAR SMJ’ ledger appellant are found in both ‘MC KHATA’ and ‘T NAGAR SMJ’ ledger appellant are found in both ‘MC KHATA’ and ‘T NAGAR SMJ’ ledger accounts maintained in J accounts maintained in J-Pack. Both ledgers are reproduced as under: Pack. Both ledgers are reproduced as under:

MC Khata

Party Ledger

On perusal of the ‘MC KHATA’ ledger (as reproduced above), it is noted On perusal of the ‘MC KHATA’ ledger (as reproduced above), it is noted On perusal of the ‘MC KHATA’ ledger (as reproduced above), it is noted that Rs.9785.87/- - (the actual amount is Rs.9,78,587/- as the decimal in as the decimal in the amount column in the ledger extracted from J the amount column in the ledger extracted from J-Pack is to be ignored, Pack is to be ignored, as stated by Shri. Suresh Khatri in his statement u/s. 132(4) of the Act as stated by Shri. Suresh Khatri in his statement u/s. 132(4) of the Act as stated by Shri. Suresh Khatri in his statement u/s. 132(4) of the Act dated 11.11.2020) was entered in ‘issued’ side i.e debit side o dated 11.11.2020) was entered in ‘issued’ side i.e debit side o dated 11.11.2020) was entered in ‘issued’ side i.e debit side on 11.09.2020 against T NAGAR SMJ. However, it is seen from T NAGAR 11.09.2020 against T NAGAR SMJ. However, it is seen from T NAGAR 11.09.2020 against T NAGAR SMJ. However, it is seen from T NAGAR SMJ party’s ledger (as reproduced above) that the same amount of SMJ party’s ledger (as reproduced above) that the same amount of SMJ party’s ledger (as reproduced above) that the same amount of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::45 ::

Rs.9,78,587/- was entered as receipt from M/s Shree Mahalakshmi was entered as receipt from M/s Shree Mahalakshmi was entered as receipt from M/s Shree Mahalakshmi Jewellery on 11.09.2020 in the credit side of the said ledge Jewellery on 11.09.2020 in the credit side of the said ledge Jewellery on 11.09.2020 in the credit side of the said ledger. Further, it is also noted from the party’s ledger account maintained in Tally (as is also noted from the party’s ledger account maintained in Tally (as is also noted from the party’s ledger account maintained in Tally (as reproduced above) that an amount of Rs.10,12,837/ reproduced above) that an amount of Rs.10,12,837/- was received by was received by bank transfer on 11.09.2020. The said payment received through bank bank transfer on 11.09.2020. The said payment received through bank bank transfer on 11.09.2020. The said payment received through bank on 11.09.2020 is against the making on 11.09.2020 is against the making charges payable by M/s Shree charges payable by M/s Shree Mahalakshmi Jewellery to the appellant for which the following invoices Mahalakshmi Jewellery to the appellant for which the following invoices Mahalakshmi Jewellery to the appellant for which the following invoices were raised for making charges payable: were raised for making charges payable:

Sr.No Date Date Making Charges GST (in Rs.) Total (in (in Rs.) Rs.) 1. 11-06-2020 2020 52,655 2,632 55288 2. 08-08-2020 2020 1,22,316 6,116 128432 3. 08-08-2020 2020 3,80,965 19,048 400013 4. 08-08-2020 2020 1,14,174 5,709 119883 5. 26-08-2020 2020 3,08,477 15,424 323901 TOTAL 9,78,587 48,929 10,27,517

As seen from the above table, the making charges of Rs.9,78,587/ As seen from the above table, the making charges of Rs.9,78,587/ As seen from the above table, the making charges of Rs.9,78,587/- received on 11.09.2020 is included in the amount received through bank received on 11.09.2020 is included in the amount received through bank received on 11.09.2020 is included in the amount received through bank transfer of Rs.10,12,837/ transfer of Rs.10,12,837/- (after considering TDS of Rs.14,679) and the (after considering TDS of Rs.14,679) and the same is accounted in the Tally and also in ‘MC same is accounted in the Tally and also in ‘MC KHATA’ and party’s ledger KHATA’ and party’s ledger in J-Pack. Thus, it clearly shows that the entries recorded in ‘MC KHATA’ Pack. Thus, it clearly shows that the entries recorded in ‘MC KHATA’ Pack. Thus, it clearly shows that the entries recorded in ‘MC KHATA’ ledger in J-Pack is also accounted in the regular books of accounts and Pack is also accounted in the regular books of accounts and Pack is also accounted in the regular books of accounts and offered as an income by the appellant. Further, it is also noted that after offered as an income by the appellant. Further, it is also noted that after offered as an income by the appellant. Further, it is also noted that after the amount is received in the bank account of the appellant, the party’s nt is received in the bank account of the appellant, the party’s nt is received in the bank account of the appellant, the party’s ledger in J-Pack is also credited on the same day. However, it is also Pack is also credited on the same day. However, it is also Pack is also credited on the same day. However, it is also noted that there is a reversal entry to the equivalent amount of gold for noted that there is a reversal entry to the equivalent amount of gold for noted that there is a reversal entry to the equivalent amount of gold for the amount received by way of bank transfer in the amount received by way of bank transfer in the party’s ledger on the party’s ledger on 12.09.2020 and the same is recorded as ‘RATE PURCHASE’ and against 12.09.2020 and the same is recorded as ‘RATE PURCHASE’ and against 12.09.2020 and the same is recorded as ‘RATE PURCHASE’ and against the said reversal entry, there is an entry in the debit side of the party’s the said reversal entry, there is an entry in the debit side of the party’s the said reversal entry, there is an entry in the debit side of the party’s ledger on the same day for equivalent amount. It is also observed that ledger on the same day for equivalent amount. It is also observed that ledger on the same day for equivalent amount. It is also observed that the said party’s ac the said party’s account i.e T NAGAR SMJ, is a running account where count i.e T NAGAR SMJ, is a running account where there is receipt of gold bar/ old gold from the party and issue of gold there is receipt of gold bar/ old gold from the party and issue of gold there is receipt of gold bar/ old gold from the party and issue of gold ornaments by the appellant on a continuous basis. Since it is a running ornaments by the appellant on a continuous basis. Since it is a running ornaments by the appellant on a continuous basis. Since it is a running account, each and every entry of debit and credit cannot be ve account, each and every entry of debit and credit cannot be ve account, each and every entry of debit and credit cannot be verified with the entries in Tally account w.r.t. gold received for job the entries in Tally account w.r.t. gold received for job-work from the work from the party on a specific date with subsequent gold ornaments issued by the party on a specific date with subsequent gold ornaments issued by the party on a specific date with subsequent gold ornaments issued by the appellant as recorded in J appellant as recorded in J-Pack. In other words, the gold bars/ old gold Pack. In other words, the gold bars/ old gold given for job-work by the par work by the party is adjusted against the gold ornaments ty is adjusted against the gold ornaments issued by the appellant on a continuous basis and same is shown as issued by the appellant on a continuous basis and same is shown as issued by the appellant on a continuous basis and same is shown as either outstanding debit or credit balance for any specific date in J either outstanding debit or credit balance for any specific date in J either outstanding debit or credit balance for any specific date in J-Pack ledger. Thus, there is always an outstanding balance as either the gold ledger. Thus, there is always an outstanding balance as either the gold ledger. Thus, there is always an outstanding balance as either the gold of customer is left with the appellant or vice of customer is left with the appellant or vice-versa. However, it is also versa. However, it is also noted that when the gold ornaments are issued to the parties, as in the noted that when the gold ornaments are issued to the parties, as in the noted that when the gold ornaments are issued to the parties, as in the to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd case of T NAGAR SMJ, it is always a case of mentioning the touch above case of T NAGAR SMJ, it is always a case of mentioning the touch above case of T NAGAR SMJ, it is always a case of mentioning the touch above minimum gold requirement of 91.66 perce minimum gold requirement of 91.66 percent, which vary from 93% to nt, which vary from 93% to 100% for the reason that even though 22 carat ornament is issued 100% for the reason that even though 22 carat ornament is issued 100% for the reason that even though 22 carat ornament is issued which contain minimum pure gold of 91.66%, the minimum touch is which contain minimum pure gold of 91.66%, the minimum touch is which contain minimum pure gold of 91.66%, the minimum touch is always shown above 91.66% i.e. 91.80% and over and above including always shown above 91.66% i.e. 91.80% and over and above including always shown above 91.66% i.e. 91.80% and over and above including making charges (which is normally making charges (which is normally 2-2.5%), interest charged for any 2.5%), interest charged for any late/delayed late/delayed late/delayed payment payment payment by by by the the the party party party or or or additional additional additional wastage wastage wastage for for for manufacturing delicate and specific designs, etc. Meaning thereby, the manufacturing delicate and specific designs, etc. Meaning thereby, the manufacturing delicate and specific designs, etc. Meaning thereby, the metal weight equivalent to that of making charges is already debited to metal weight equivalent to that of making charges is already debited to metal weight equivalent to that of making charges is already debited to the party’s ledger the party’s ledger before-hand and when the making charges invoices hand and when the making charges invoices are raised subsequent to delivery of the gold ornaments and receipt of are raised subsequent to delivery of the gold ornaments and receipt of are raised subsequent to delivery of the gold ornaments and receipt of payment by way of cheque, the reversal of equivalent metal for the payment by way of cheque, the reversal of equivalent metal for the payment by way of cheque, the reversal of equivalent metal for the amount received is credited in the same party’s ledger. Hence, it ca amount received is credited in the same party’s ledger. Hence, it ca amount received is credited in the same party’s ledger. Hence, it can be concluded that when the metal equivalent to that of making charges are concluded that when the metal equivalent to that of making charges are concluded that when the metal equivalent to that of making charges are debited at the time of issue of gold ornaments in advance, the parties debited at the time of issue of gold ornaments in advance, the parties debited at the time of issue of gold ornaments in advance, the parties get equivalent amount of metal back into their account by way of credit get equivalent amount of metal back into their account by way of credit get equivalent amount of metal back into their account by way of credit entry when there is a payment of maki entry when there is a payment of making charges after the invoices ng charges after the invoices were raised by the appellant for the making charges. Thus, this reversal were raised by the appellant for the making charges. Thus, this reversal were raised by the appellant for the making charges. Thus, this reversal of metal on account of receipt of making charges by way of payment of metal on account of receipt of making charges by way of payment of metal on account of receipt of making charges by way of payment does not alter the transactions already recorded in Tally on account of does not alter the transactions already recorded in Tally on account of does not alter the transactions already recorded in Tally on account of making charges received. This also proves beyond doubt that there is no received. This also proves beyond doubt that there is no received. This also proves beyond doubt that there is no escapement of income on account of MC KHATA ledger maintained in J escapement of income on account of MC KHATA ledger maintained in J escapement of income on account of MC KHATA ledger maintained in J- Pack vis-à-vis the making charges already accounted in the regular vis the making charges already accounted in the regular vis the making charges already accounted in the regular books of accounts. books of accounts.”

7.15 At the time of hearing, t At the time of hearing, the Ld. CIT, DR on behalf of the on behalf of the Revenue had referred to one debit entry of had referred to one debit entry of 95.10 grams of metal 95.10 grams of metal found in the name of the above party in the same daily report which was seized in the party in the same daily report which was seized in the party in the same daily report which was seized in the course of search, and contended that this entry also ought to have and contended that this entry also ought to have and contended that this entry also ought to have verified by the Ld. CIT(A). We find that this assertion of the Revenue is IT(A). We find that this assertion of the Revenue is IT(A). We find that this assertion of the Revenue is factually misplaced as the matter at hand factually misplaced as the matter at hand pertains specifically to the pertains specifically to the “GHAT” entries recorded in the J “GHAT” entries recorded in the J-Pack software, which as noted above, as noted above, relates to the technical accounting of the technical accounting of ‘alloy’ added during th added during the process of converting 24-carat bullion carat bullion or old gold into 22-carat ornaments. carat ornaments. It was to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd brought to our notice that, the debit of brought to our notice that, the debit of 95.10 grams of metal 95.10 grams of metal correspondedto “Metal Jama” transactions and “Metal Jama” transactions and was not made was not made in “Ghat Jama” transactions and that these two are Jama” transactions and that these two are separate and distinct accounts separate and distinct accounts having complete different purpose and accounting treatment having complete different purpose and accounting treatment having complete different purpose and accounting treatment. It was shown that the “Metal Jama Metal Jama” entries are separately accounted and not ” entries are separately accounted and not incorporated in “Ghat” ledger. We agree with the Ld. AR of the assessee incorporated in “Ghat” ledger. We agree with the Ld. AR of the assessee incorporated in “Ghat” ledger. We agree with the Ld. AR of the assessee that, this entry pointed out by the Revenue pointed out by the Revenue under the head the head ‘Metal Jama’ had no nexus with the impugned impugned issue of ‘Ghat’ entries and therefore we ‘Ghat’ entries and therefore we disregard the same as being being irrelevant and out of context to the present irrelevant and out of context to the present case before us.

7.16 Having regard to the above, we Having regard to the above, we find that, the Ld. CIT(A) had the Ld. CIT(A) had undertaken an elaborate factual exercise and has given his well undertaken an elaborate factual exercise and has given his well undertaken an elaborate factual exercise and has given his well-reasoned findings for arriving at his conclusion that the entries in ‘Ghat’ ledger was findings for arriving at his conclusion that the entries in ‘Ghat’ ledger was findings for arriving at his conclusion that the entries in ‘Ghat’ ledger was relating to ‘alloy’ addition and not addition and not ‘metal’ addition. We thus addition. We thus concur with the Ld. CIT(A) that the entire case made out by the AO was factually the Ld. CIT(A) that the entire case made out by the AO was factually the Ld. CIT(A) that the entire case made out by the AO was factually erroneous and based on wrong assumption of facts and therefore the erroneous and based on wrong assumption of facts and therefore the erroneous and based on wrong assumption of facts and therefore the impugned addition was unsustainable. impugned addition was unsustainable.

7.17 We are also not able to countenance We are also not able to countenance the Ld. CIT, DR he Ld. CIT, DR’s emphasis on the statements given by Shri Kothari and Shri Khatri to support the action nts given by Shri Kothari and Shri Khatri to support the action nts given by Shri Kothari and Shri Khatri to support the action of the AO. Instead, we are in the agreement with the Ld. CIT(A) that their e are in the agreement with the Ld. CIT(A) that their e are in the agreement with the Ld. CIT(A) that their to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd testimonies, have been shown by the assessee, testimonies, have been shown by the assessee, to be based on wrong to be based on wrong assumption of facts, which makes it unsafe to assumption of facts, which makes it unsafe to be relied upon, elied upon, and as discussed above, the assessee has , the assessee has successfully rebutted the same with rebutted the same with relevant documentary evidences. Hence, we hold in aforesaid factual Hence, we hold in aforesaid factual matrix that, the AO had had erred to draw adverse inference in the hands of erred to draw adverse inference in the hands of the assessee solely based o the assessee solely based on an incorrect admission made by n an incorrect admission made by these persons on wrong assumption of fact/mistake of fact. on wrong assumption of fact/mistake of fact. Moreover, the Revenue was also not able to bring any contrary material on record to Revenue was also not able to bring any contrary material on record to Revenue was also not able to bring any contrary material on record to dislodge the factual matrix submitted by the assessee and show that dislodge the factual matrix submitted by the assessee and show that dislodge the factual matrix submitted by the assessee and show that, the testimonies of these persons had nies of these persons had substance which would merit substance which would merit consideration. In the absence of the same, it would be consideration. In the absence of the same, it would be neither prudent neither prudent nor safe to rely on their statements safe to rely on their statements to draw adverse view to draw adverse view against assessee. In this context . In this context therefore, we concur with the following , we concur with the following findings rendered by the Ld. CIT(A), which is rendered by the Ld. CIT(A), which is reproduced hereunder: under:-

“..Firstly, the statements of the above persons are examined in detail. Firstly, the statements of the above persons are examined in detail. Firstly, the statements of the above persons are examined in detail. The AO had relied on the statement of Shri Rajendra Kothari dated The AO had relied on the statement of Shri Rajendra Kothari dated The AO had relied on the statement of Shri Rajendra Kothari dated 26.11.2020 which is also part of the assessment order. However, it is 26.11.2020 which is also part of the assessment order. However, it is 26.11.2020 which is also part of the assessment order. However, it is also noted from the assessment order that there is also noted from the assessment order that there is one more sworn one more sworn statement recorded from Shri Rajendra Kothari on 30.11.2020, which is statement recorded from Shri Rajendra Kothari on 30.11.2020, which is statement recorded from Shri Rajendra Kothari on 30.11.2020, which is after four days from the initial statement recorded from him, which is after four days from the initial statement recorded from him, which is after four days from the initial statement recorded from him, which is also part of the assessment order itself. If both these statements are also part of the assessment order itself. If both these statements are also part of the assessment order itself. If both these statements are seen closely, it is noted tha seen closely, it is noted that Shri Rajendra Kothari has changed his t Shri Rajendra Kothari has changed his initial statement dated 26.11.2020 in the subsequent statement initial statement dated 26.11.2020 in the subsequent statement initial statement dated 26.11.2020 in the subsequent statement recorded on 30.11.2020. Shri Rajendra Kothari, in his initial statement recorded on 30.11.2020. Shri Rajendra Kothari, in his initial statement recorded on 30.11.2020. Shri Rajendra Kothari, in his initial statement had explained that M/s MJPL receive gold bars for making ornaments had explained that M/s MJPL receive gold bars for making ornaments had explained that M/s MJPL receive gold bars for making ornaments from the parties and it normally receives 975 grams of gold for making es and it normally receives 975 grams of gold for making es and it normally receives 975 grams of gold for making 1 kg of gold ornaments and they add alloy to make the ornaments and 1 kg of gold ornaments and they add alloy to make the ornaments and 1 kg of gold ornaments and they add alloy to make the ornaments and make 1 kg of ornaments with only 935 grams of gold and the remaining make 1 kg of ornaments with only 935 grams of gold and the remaining make 1 kg of ornaments with only 935 grams of gold and the remaining to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::49 ::

40 grams of gold is kind of profit for them and this 40 grams 40 grams of gold is kind of profit for them and this 40 grams 40 grams of gold is kind of profit for them and this 40 grams is credited into the GHAT account and he makes this entry by seeing yellow and into the GHAT account and he makes this entry by seeing yellow and into the GHAT account and he makes this entry by seeing yellow and white slips of the daily reports prepared by Shri Nikhil and Shri Tulsiram white slips of the daily reports prepared by Shri Nikhil and Shri Tulsiram white slips of the daily reports prepared by Shri Nikhil and Shri Tulsiram from ‘Ghat Jama’ and ‘Ghat Naamae’ columns. Whereas in the from ‘Ghat Jama’ and ‘Ghat Naamae’ columns. Whereas in the from ‘Ghat Jama’ and ‘Ghat Naamae’ columns. Whereas in the subsequent statement recorded on 30.11.2020 subsequent statement recorded on 30.11.2020, Shri Rajendra Kothari , Shri Rajendra Kothari had stated that the gold ornaments are made with 91.6% purity and for had stated that the gold ornaments are made with 91.6% purity and for had stated that the gold ornaments are made with 91.6% purity and for making 1 kg of ornaments, M/s MJPL issues gold bar of 925 grams (92.5 making 1 kg of ornaments, M/s MJPL issues gold bar of 925 grams (92.5 making 1 kg of ornaments, M/s MJPL issues gold bar of 925 grams (92.5 %) to Karigars to make ornaments of 916 grams and the remaining 9 %) to Karigars to make ornaments of 916 grams and the remaining 9 %) to Karigars to make ornaments of 916 grams and the remaining 9 grams is the making charge grams is the making charge for Karigars. When M/s MJPL sells this for Karigars. When M/s MJPL sells this ornament for the rate equivalent to 940 grams (94%) and this ornament ornament for the rate equivalent to 940 grams (94%) and this ornament ornament for the rate equivalent to 940 grams (94%) and this ornament is sold for margin of 15 grams and these 15 grams is charged from the is sold for margin of 15 grams and these 15 grams is charged from the is sold for margin of 15 grams and these 15 grams is charged from the customers in the form of metal credit and the receipt side entries in customers in the form of metal credit and the receipt side entries in customers in the form of metal credit and the receipt side entries in GHAT ledger are the income of M/s MJPL. In the said statement only, edger are the income of M/s MJPL. In the said statement only, edger are the income of M/s MJPL. In the said statement only, Shri Rajendra Kothari had asked to ignore the issue side entries in the Shri Rajendra Kothari had asked to ignore the issue side entries in the Shri Rajendra Kothari had asked to ignore the issue side entries in the GHAT ledger. If both the statements are seen closely, it can be seen GHAT ledger. If both the statements are seen closely, it can be seen GHAT ledger. If both the statements are seen closely, it can be seen that Shri Rajendra Kothari is not clear about the nat that Shri Rajendra Kothari is not clear about the nature of GHAT receipts ure of GHAT receipts entries made in J entries made in J-Pack and he had explained the same transaction in Pack and he had explained the same transaction in two different manners. Further, if the said example is being taken, at two different manners. Further, if the said example is being taken, at two different manners. Further, if the said example is being taken, at the first instance, the profit of MJPL for making 1 kg of ornaments was the first instance, the profit of MJPL for making 1 kg of ornaments was the first instance, the profit of MJPL for making 1 kg of ornaments was arrived at 40 grams and arrived at 40 grams and in the second instance it is reduced to 15 grams in the second instance it is reduced to 15 grams and tried to explain that the same is entered as GHAT receipt in the and tried to explain that the same is entered as GHAT receipt in the and tried to explain that the same is entered as GHAT receipt in the GHAT ledger. Further, he had totally disregarded the entries in the issue GHAT ledger. Further, he had totally disregarded the entries in the issue GHAT ledger. Further, he had totally disregarded the entries in the issue side of GHAT ledger for the reason that there are no GHAT paymen side of GHAT ledger for the reason that there are no GHAT paymen side of GHAT ledger for the reason that there are no GHAT payments.

5.8.5. If the findings of the AO in the remand report on account of the 5.8.5. If the findings of the AO in the remand report on account of the 5.8.5. If the findings of the AO in the remand report on account of the entries made in the GHAT ledger for the purchase of gold bullion and entries made in the GHAT ledger for the purchase of gold bullion and entries made in the GHAT ledger for the purchase of gold bullion and manufacturing of gold ornaments is considered, the facts are entirely manufacturing of gold ornaments is considered, the facts are entirely manufacturing of gold ornaments is considered, the facts are entirely different from the statement of Shri Raje different from the statement of Shri Rajendra Kothari as above. In the ndra Kothari as above. In the verification carried out by the AO in the remand proceedings, he had verification carried out by the AO in the remand proceedings, he had verification carried out by the AO in the remand proceedings, he had concluded that the alloy is calculated on the basis of conversion of 24 concluded that the alloy is calculated on the basis of conversion of 24 concluded that the alloy is calculated on the basis of conversion of 24 carat bullion into 22 carat gold ornaments, the exact difference of the carat bullion into 22 carat gold ornaments, the exact difference of the carat bullion into 22 carat gold ornaments, the exact difference of the gold purity between 24 carat and 22 carat is calculated as the etween 24 carat and 22 carat is calculated as the etween 24 carat and 22 carat is calculated as the component of alloy and said alloy is added into the GHAT account. This component of alloy and said alloy is added into the GHAT account. This component of alloy and said alloy is added into the GHAT account. This proves without any doubt that the GHAT account is entered with only proves without any doubt that the GHAT account is entered with only proves without any doubt that the GHAT account is entered with only the quantity of alloy which is contrary to the statement given by S the quantity of alloy which is contrary to the statement given by S the quantity of alloy which is contrary to the statement given by Shri Rajendra Kothari… …”

7.18 Overall therefore, the specific findings rendered by the AO in his , the specific findings rendered by the AO in his , the specific findings rendered by the AO in his remand report acknowledging that remand report acknowledging that, the entries in ‘Ghat’ ledger the entries in ‘Ghat’ ledger were that of alloy adjustments and not wastage gold, coupled with the verification of alloy adjustments and not wastage gold, coupled with the verification of alloy adjustments and not wastage gold, coupled with the verification exercise undertaken by the Ld. CIT(A) clearly disproved the testimonies of aken by the Ld. CIT(A) clearly disproved the testimonies of aken by the Ld. CIT(A) clearly disproved the testimonies of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::50 ::

Shri Kothari & Shri Khatri making it unreliable. Shri Kothari & Shri Khatri making it unreliable. Hence, the reliance placed he reliance placed by the Revenue on the decision rendered in the case of B by the Revenue on the decision rendered in the case of B by the Revenue on the decision rendered in the case of B Kishore Kumar Vs CIT (52 taxmann.com 449) is found to Vs CIT (52 taxmann.com 449) is found to be misplaced ced and factually distinguishable, as that decision turned on facts where the statement was , as that decision turned on facts where the statement was , as that decision turned on facts where the statement was consistent, credible, and corroborated consistent, credible, and corroborated with evidence, which as discussed with evidence, which as discussed in the foregoing, is absent in the present case. Instead, we find the in the foregoing, is absent in the present case. Instead, we find the in the foregoing, is absent in the present case. Instead, we find the reliance placed by the Ld. AR of the assessee e Ld. AR of the assessee Shri Anand on the decision on the decision of the Hon’ble jurisdictional High Court in the case of jurisdictional High Court in the case of jurisdictional High Court in the case of CIT v. S.

Jayalakshmi Ammal (390 ITR 189 390 ITR 189)(Mad) to be of relevance, wherein it to be of relevance, wherein it was held that, unless the was held that, unless the statement recorded under Section 132(4) of t statement recorded under Section 132(4) of the Act is corroborated by Act is corroborated by documentary evidence, such statement alone such statement alone cannot be the sole basis for making additions in the sole basis for making additions in the assessment assessment. The relevant findings of the Hon’ble High Court is as under: relevant findings of the Hon’ble High Court is as under:-

“19. While adverting to the above, we are of the considered While adverting to the above, we are of the considered While adverting to the above, we are of the considered view that, for deciding any issue, against the assessee, the Authorities under the for deciding any issue, against the assessee, the Authorities under the for deciding any issue, against the assessee, the Authorities under the Income Tax Act, 1961 have to consider, as to whether there is any Income Tax Act, 1961 have to consider, as to whether there is any Income Tax Act, 1961 have to consider, as to whether there is any corroborative corroborative corroborative material material material evidence. evidence. evidence. If If If there there there is is is no no no corroborating corroborating corroborating documentary evidence, then statement recorded documentary evidence, then statement recorded under Section 132(4) under Section 132(4) of the Income Tax Act, 1961, alone should not be the basis, for arriving of the Income Tax Act, 1961, alone should not be the basis, for arriving of the Income Tax Act, 1961, alone should not be the basis, for arriving at any adverse decision against the assessee. If the authorities under at any adverse decision against the assessee. If the authorities under at any adverse decision against the assessee. If the authorities under the Income Tax Act, 1961, have to be conferred with the power, to be the Income Tax Act, 1961, have to be conferred with the power, to be the Income Tax Act, 1961, have to be conferred with the power, to be exercised, solely on exercised, solely on the basis of a statement, then it may lead to an the basis of a statement, then it may lead to an arbitrary exercise of such power. An order of assessment entails civil arbitrary exercise of such power. An order of assessment entails civil arbitrary exercise of such power. An order of assessment entails civil consequences. Therefore, under Judicial review, courts have to exercise consequences. Therefore, under Judicial review, courts have to exercise consequences. Therefore, under Judicial review, courts have to exercise due care and caution that no man is condemned, due to erroneous due care and caution that no man is condemned, due to erroneous due care and caution that no man is condemned, due to erroneous or arbitrary exercise of authority conferred. arbitrary exercise of authority conferred.

21. In the light of our discussion, we are of the considered view that the 21. In the light of our discussion, we are of the considered view that the 21. In the light of our discussion, we are of the considered view that the Revenue has not made out a case for reversal of the orders imp Revenue has not made out a case for reversal of the orders imp Revenue has not made out a case for reversal of the orders impugned, on the grounds raised, and thus we hold that all the substantial on the grounds raised, and thus we hold that all the substantial on the grounds raised, and thus we hold that all the substantial questions of law, are answered in the negative against the Revenue, and questions of law, are answered in the negative against the Revenue, and questions of law, are answered in the negative against the Revenue, and in favour of the respondent/assessee.” in favour of the respondent/assessee.”

7.19 In the present case also, apart from the unsubstantiated statements In the present case also, apart from the unsubstantiated statements In the present case also, apart from the unsubstantiated statements of Shri Kothari and Shri Khatri, no independent corroborative material has of Shri Kothari and Shri Khatri, no independent corroborative material has of Shri Kothari and Shri Khatri, no independent corroborative material has been brought on record by the AO which would show that the receipt been brought on record by the AO which would show that the receipt been brought on record by the AO which would show that the receipt entries in ‘Ghat’ ledger comprised of ‘metal’ received by the assessee. entries in ‘Ghat’ ledger comprised of ‘metal’ received by the assessee. entries in ‘Ghat’ ledger comprised of ‘metal’ received by the assessee.

Rather, the contemporaneous facts as discu Rather, the contemporaneous facts as discussed above, proves the ssed above, proves the contrary viz., the entries related to ‘alloy’ additions to the gold contrary viz., the entries related to ‘alloy’ additions to the gold contrary viz., the entries related to ‘alloy’ additions to the gold ornaments. Hence, having examined of the gamut of facts placed on having examined of the gamut of facts placed on having examined of the gamut of facts placed on record, we find that the ‘Ghat Jama’ entries only related to the quantities record, we find that the ‘Ghat Jama’ entries only related to the quantities record, we find that the ‘Ghat Jama’ entries only related to the quantities of alloy added for conv of alloy added for conversion of 24 carat bullion into 22 carat gold of 24 carat bullion into 22 carat gold ornaments and does not involve any gold ornaments and does not involve any gold entries. We thus are entirely in entries. We thus are entirely in to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd concurrence with the following conclusive findings of the Ld. CIT(A) which concurrence with the following conclusive findings of the Ld. CIT(A) which concurrence with the following conclusive findings of the Ld. CIT(A) which is reproduced hereunder: hereunder: -

“After examination and verification After examination and verification of the contents of available seized of the contents of available seized material in ANN/VD/RK/LS/S material in ANN/VD/RK/LS/S-1 to 15 for the period available (as 1 to 15 for the period available (as reproduced above in reproduced above in Para 5.8.5) with GHAT and MC KHATA ledger Para 5.8.5) with GHAT and MC KHATA ledger maintained in J-Pack software, it can Pack software, it can be concluded that:

(i) The GHAT account is entered with (i) The GHAT account is entered with only the quantity of alloy added for only the quantity of alloy added for conversion of 24 carat bullion into 22 carat gold ornaments and does not of 24 carat bullion into 22 carat gold ornaments and does not of 24 carat bullion into 22 carat gold ornaments and does not involve any gold.

(ii) The issue and receipt side of GHAT account is also verified from the (ii) The issue and receipt side of GHAT account is also verified from the (ii) The issue and receipt side of GHAT account is also verified from the daily report along with yellow and white slips available for limited period along with yellow and white slips available for limited period along with yellow and white slips available for limited period as brought out in as brought out in the above paragraphs. On the basis of verification, it is paragraphs. On the basis of verification, it is found the GHAT entered in GHAT found the GHAT entered in GHAT ledger is matching with the working in ledger is matching with the working in rough estimation slips and daily report for rough estimation slips and daily report for the available period. Further, period. Further, it is also found that the appellant is maintaining the daily it is also found that the appellant is maintaining the daily report along with yellow and white slips and on the basis of these slips only, the with yellow and white slips and on the basis of these slips only, the with yellow and white slips and on the basis of these slips only, the entries are made in GHAT account in J entries are made in GHAT account in J-Pack ledger. Without these daily Without these daily reports and slips, it is impossible either for appellant or the AO to match lips, it is impossible either for appellant or the AO to match lips, it is impossible either for appellant or the AO to match and explain each and and explain each and every entry in GHAT ledger. However, it is also every entry in GHAT ledger. However, it is also found on verification that the entries found on verification that the entries in the GHAT ledger for the period in the GHAT ledger for the period where the materials are found and seized vide where the materials are found and seized vide ANN/VD/RK/LS/S D/RK/LS/S-1 to 15 are in the nature of alloy addition only. Further, it is also are in the nature of alloy addition only. Further, it is also are in the nature of alloy addition only. Further, it is also noted that these daily reports along with slips were either destroyed or not found these daily reports along with slips were either destroyed or not found these daily reports along with slips were either destroyed or not found during the course of search for the remaining period. Thus, on the basis during the course of search for the remaining period. Thus, on the basis during the course of search for the remaining period. Thus, on the basis of verification of a verification of available seized material and the GHAT ledger in J vailable seized material and the GHAT ledger in J- Pack, it can be concluded beyond doubt that the GHAT account does not concluded beyond doubt that the GHAT account does not concluded beyond doubt that the GHAT account does not have any gold value in it. have any gold value in it.

(iii) The AO had relied on the statement of Shri Rajendra Kothari as the (iii) The AO had relied on the statement of Shri Rajendra Kothari as the (iii) The AO had relied on the statement of Shri Rajendra Kothari as the basis for arriving at the conclusion arriving at the conclusion that GHAT account has the gold that GHAT account has the gold component, however, the component, however, the same was found otherwise as observed in same was found otherwise as observed in above paragraphs. Hence, the statement above paragraphs. Hence, the statement given by Shri Rajendra Kothari given by Shri Rajendra Kothari can only be considered as mere statement without can only be considered as mere statement without any corroborative any corroborative material to support and material to support and also it is contrary to the material evidence also it is contrary to the material evidence found and seized.

(iv) Further, the AO had also relied on the statement of Shri (iv) Further, the AO had also relied on the statement of Shri (iv) Further, the AO had also relied on the statement of Shri Thavisanantham who Thavisanantham who had developed the J-Pack software. On perusal of Pack software. On perusal of the said statement, it is noted that the said statement, it is noted that J-Pack software is used f Pack software is used for recording to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd the metal-based transactions, which is not based transactions, which is not available in Tally. However, available in Tally. However, he had also stated that some of the clients are using it for he had also stated that some of the clients are using it for unaccounted cash and metal trading. This second part of statement of Shri cash and metal trading. This second part of statement of Shri cash and metal trading. This second part of statement of Shri Thavisanantham is also found to be c Thavisanantham is also found to be correct in the case of the appellant of the appellant with regard to recording unaccounted transactions w.r.t. the issue of recording unaccounted transactions w.r.t. the issue of recording unaccounted transactions w.r.t. the issue of unaccounted sales, BYAJ and unaccounted sales, BYAJ and VATAV income recorded in J VATAV income recorded in J-Pack. However, the AO cannot take shelter under this However, the AO cannot take shelter under this part of statement of part of statement of Shri Thavisanantham i Shri Thavisanantham in respect of GHAT, which is otherwise n respect of GHAT, which is otherwise also found to be correct with the other part of his statement that it is primarily to be correct with the other part of his statement that it is primarily to be correct with the other part of his statement that it is primarily used for recording metal recording metal-based trading which is not available in Tally. based trading which is not available in Tally.

(v) Furthermore, the AO had also relied on the statement of Shr (v) Furthermore, the AO had also relied on the statement of Shr (v) Furthermore, the AO had also relied on the statement of Shri Suresh Khatri dated04.12.2020, wherein he had stated that for manufacturing 1 Khatri dated04.12.2020, wherein he had stated that for manufacturing 1 Khatri dated04.12.2020, wherein he had stated that for manufacturing 1 kg of gold ornaments,960 grams of gold bar is used, whereas in the kg of gold ornaments,960 grams of gold bar is used, whereas in the kg of gold ornaments,960 grams of gold bar is used, whereas in the process of adding alloy only 930grams will be used and remaining 30 process of adding alloy only 930grams will be used and remaining 30 process of adding alloy only 930grams will be used and remaining 30 grams will be the wastage for him. Furthe grams will be the wastage for him. Further, he has also stated that small has also stated that small portion of weights will be credited in the GHAT ledger and portion of weights will be credited in the GHAT ledger and also admitted also admitted that 3764.109 kgs of gold received as per the GHAT ledger are of gold that 3764.109 kgs of gold received as per the GHAT ledger are of gold that 3764.109 kgs of gold received as per the GHAT ledger are of gold metal weight for FY 2016 metal weight for FY 2016-17 to 2020-21. He had also claimed that there lso claimed that there are GHAT outgo. On the basis of the findings of the AO in the remand outgo. On the basis of the findings of the AO in the remand outgo. On the basis of the findings of the AO in the remand report after verification report after verification carried out by him in the remand proceedings carried out by him in the remand proceedings and also the verification carried out by and also the verification carried out by me independently on the basis of me independently on the basis of seized material and ledgers of J seized material and ledgers of J-Pack and Tally, the facts are found e facts are found otherwise. Thus, this statement of Shri Suresh Khatri is found to otherwise. Thus, this statement of Shri Suresh Khatri is found to otherwise. Thus, this statement of Shri Suresh Khatri is found to be not correct as per the contents of seized material and entries made in the correct as per the contents of seized material and entries made in the correct as per the contents of seized material and entries made in the books of accounts. Hence, it can be concluded that the above statement accounts. Hence, it can be concluded that the above statement accounts. Hence, it can be concluded that the above statement of Shri Suresh Khatrica of Shri Suresh Khatrican only be considered as mere statement without n only be considered as mere statement without any corroborative material to any corroborative material to support and also it is contrary to the support and also it is contrary to the material evidence found and seized. material evidence found and seized.

5.8.10. On the basis of above findings, I am of the opinion that the 5.8.10. On the basis of above findings, I am of the opinion that the 5.8.10. On the basis of above findings, I am of the opinion that the addition made on account of GHAT re on account of GHAT receipt for the respective years ceipt for the respective years cannot be sustained. cannot be sustained.”

7.20 For the reasons set out above, we see no reason to interfere with For the reasons set out above, we see no reason to interfere with For the reasons set out above, we see no reason to interfere with the order of Ld. CIT(A) deleting the impugned addition across all the AYs the order of Ld. CIT(A) deleting the impugned addition across all the AYs the order of Ld. CIT(A) deleting the impugned addition across all the AYs 2017-18 to 2021-22. Hence, these grounds of the Revenue in 22. Hence, these grounds of the Revenue in 22. Hence, these grounds of the Revenue in all the AYs stands dismissed. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::54 ::

Ground No. 1 of the Revenue's appeal for AYs 2017 of the Revenue's appeal for AYs 2017-18 to 2021 18 to 2021-22 8.1 The facts in brief are that, the assessee being The facts in brief are that, the assessee being The facts in brief are that, the assessee being a wholesale manufacturer of gold ornaments manufacturer of gold ornaments, inter alia takes up orders from his up orders from his customers to manufacture gold ornaments on to manufacture gold ornaments on job work basis, for which basis, for which the customers pay making charges. According to AO, u the customers pay making charges. According to AO, usually, sually, the making charges rates are fixed based on the intricacies of the gold ornament charges rates are fixed based on the intricacies of the gold ornament charges rates are fixed based on the intricacies of the gold ornament designs and that in his view, nd that in his view, Shri Khatri has been receiving making eceiving making charges for gold ornaments in cash from his customers charges for gold ornaments in cash from his customers, for which he has , for which he has been maintaining a ledger named “MC maintaining a ledger named “MC Khata" in the J-pack software pack software. The AO is found to have quantified the alleged receipt of AO is found to have quantified the alleged receipt of making charges in making charges in this “MC Khata” Ledger at this “MC Khata” Ledger at Rs.136,34,23,245/- from FY 2016 from FY 2016-17 to 2020- 21.

8.2 The AO thereafter observed that The AO thereafter observed that, the assessee and the group the assessee and the group concerns, in aggregate had also incurred making charges in all these concerns, in aggregate had also incurred making charges in all these concerns, in aggregate had also incurred making charges in all these years, which amounted to Rs. years, which amounted to Rs.181,20,03,679/- and that as per the and that as per the statement of Shri Rajendra Rajendra Kothari recorded u/s. 131 of othari recorded u/s. 131 of the Act dated 26.11.2020, the entries in ‘MC Khata’ ledger was not towards the receipt , the entries in ‘MC Khata’ ledger was not towards the receipt , the entries in ‘MC Khata’ ledger was not towards the receipt of making charges but of making charges but for the making charges which was paid through making charges which was paid through to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd banking channels but received back in cash by the assessee group. The nels but received back in cash by the assessee group. The nels but received back in cash by the assessee group. The AO further observed that, Shri Khatri AO further observed that, Shri Khatri, the Director of the assessee, , the Director of the assessee, in his statement recorded u/s 132(4) of the Act had however sought time to statement recorded u/s 132(4) of the Act had however sought time to statement recorded u/s 132(4) of the Act had however sought time to explain this ledger. Relying on the statement of Shri explain this ledger. Relying on the statement of Shri Kothari, the AO is Kothari, the AO is found to have show caused the assessee to justify the genuineness of the found to have show caused the assessee to justify the genuineness of the found to have show caused the assessee to justify the genuineness of the making charges paid through banking channel and explain as to why the making charges paid through banking channel and explain as to why the making charges paid through banking channel and explain as to why the same should not be disallowed. The assessee pointed out that the show same should not be disallowed. The assessee pointed out that the show same should not be disallowed. The assessee pointed out that the show cause was based on incor cause was based on incorrect premise and also demonstrated that also demonstrated that the entries in the J-Pack Software were not pertaining to making charges Pack Software were not pertaining to making charges Pack Software were not pertaining to making charges incurred by the assessee but incurred by the assessee but related to the receipt of making charges the receipt of making charges from various parties through banking channel / RTGS. The assessee from various parties through banking channel / RTGS. The assessee from various parties through banking channel / RTGS. The assessee is found to have shown that all these entries that all these entries in ‘MC Khata’ ledger in ‘MC Khata’ ledger were that of receipts (not payments) which were accounted and credited in the of receipts (not payments) which were accounted and credited in the of receipts (not payments) which were accounted and credited in the Profit & Loss Account of the respective years across the respective Loss Account of the respective years across the respective Loss Account of the respective years across the respective concerns of the assessee group. The assessee is noted to have submitted concerns of the assessee group. The assessee is noted to have submitted concerns of the assessee group. The assessee is noted to have submitted the entry-wise details in the in the ‘MC KHATA’ ledger of J-Pack Pack software with that of the party-wise ledgers wise ledgers maintained in Tally software oftware to correlate that the entries of amount received in amount received in ‘MC KHATA’ ledger ledger was entirely accounted in the regular books of accounts of the accounted in the regular books of accounts of the assessee. .

Though the AO is found to have dropped his initial Though the AO is found to have dropped his initial show cause show cause that, 8.3 the entries in ‘MC Khata’ the entries in ‘MC Khata’ Ledger related to unaccounted making charges unaccounted making charges to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd payments which was based on the statement of Mr. Kothari, but the AO payments which was based on the statement of Mr. Kothari, but the AO payments which was based on the statement of Mr. Kothari, but the AO still treated the entries to be unaccounted for still treated the entries to be unaccounted for, by referring to one note by referring to one note book found in the course of search at book found in the course of search at Super Saravana Stores Group of Super Saravana Stores Group of companies, which was marked as ANN/SR/SSSLLP/B&D/1. According to , which was marked as ANN/SR/SSSLLP/B&D/1. According to , which was marked as ANN/SR/SSSLLP/B&D/1. According to AO, this note book contained details of AO, this note book contained details of cash received back cash received back by Super Saravana Stores from different persons on the account of bogus Making different persons on the account of bogus Making different persons on the account of bogus Making Charges which inter alia inter alia included the name of the assessee. included the name of the assessee. Referring to the statement given by Shri A Julian, Manager of the statement given by Shri A Julian, Manager of M/s Super Saravana M/s Super Saravana Stores (Jewel) Super LLP Stores (Jewel) Super LLP, the AO held that, though these making charges though these making charges were received by the assessee but they were paid back in cash to these were received by the assessee but they were paid back in cash to these were received by the assessee but they were paid back in cash to these customers and that Shri Khatri customers and that Shri Khatri was providing accommodation entries to was providing accommodation entries to his customers. The AO accordingly treated the entries found in ‘MC Khata’ his customers. The AO accordingly treated the entries found in ‘MC Khata’ his customers. The AO accordingly treated the entries found in ‘MC Khata’ Ledger as unaccounted making charges received by the assessee and Ledger as unaccounted making charges received by the assessee and Ledger as unaccounted making charges received by the assessee and made addition(s) aggregating to made addition(s) aggregating to Rs.136,34,23,245/- across AYs 2017 across AYs 2017-18 to 2021-22.

8.4 On appeal, the Ld. CIT(A) is noted to have called for a remand On appeal, the Ld. CIT(A) is noted to have called for a remand On appeal, the Ld. CIT(A) is noted to have called for a remand report from the AO to ascertain the exact nature of the entries in the report from the AO to ascertain the exact nature of the entries in the report from the AO to ascertain the exact nature of the entries in the ledger ‘MC Khata’ maintained in J ledger ‘MC Khata’ maintained in J-Pack viz., whether it was in the nature whether it was in the nature of expenses paid by the assessee or in of expenses paid by the assessee or income received by it. The AO is come received by it. The AO is noted to have verified the claim of the assessee afresh and rendered his noted to have verified the claim of the assessee afresh and rendered his noted to have verified the claim of the assessee afresh and rendered his findings that the entries found in the the entries found in the ‘MC Khata’ Ledger of J J-Pack software to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd related to making charges charges earned by the assessee, all of which was earned by the assessee, all of which was accounted for in the books of for in the books of accounts of the assessee and/or their group of the assessee and/or their group entities. The AO is noted to have examined and . The AO is noted to have examined and cross checked cross checked the same with the parties ledger in the with the parties ledger in the books of accounts of MJPL, Mohanlal books of accounts of MJPL, Mohanlal Jewellers (Prop Concern) and MJCPL Jewellers (Prop Concern) and MJCPL and found the same and found the same to be in order.

Though having observed so, the AO asserted that Though having observed so, the AO asserted that, an entry entry was found in one notebook seized from the premises of one notebook seized from the premises of M/s New Saravana Stores Saravana Stores Super LLP, as discussed in the assessment order, wherein it was found as discussed in the assessment order, wherein it was found as discussed in the assessment order, wherein it was found that the customer had received bac that the customer had received back cash from the assessee in lieu of k cash from the assessee in lieu of making charges paid to the assessee. Hence, referring to the same, the making charges paid to the assessee. Hence, referring to the same, the making charges paid to the assessee. Hence, referring to the same, the AO wanted the Ld. CIT(A) to sustain the addition. AO wanted the Ld. CIT(A) to sustain the addition.

After considering this remand report, the Ld. CIT(A) is found to After considering this remand report, the Ld. CIT(A) is found to After considering this remand report, the Ld. CIT(A) is found to 8.5 have held that, the making ch the making charges entered in ‘MC Khata’ hata’ ledger are not in the nature of expenses booked by the expenses booked by the assessee, instead, it is in the , instead, it is in the nature of income received for nature of income received for manufacturing of gold ornaments on job manufacturing of gold ornaments on job- work basis, which, as admitted by the AO, , as admitted by the AO, was already accounted in already accounted in the books of accounts of the ooks of accounts of the assessee and offered to tax in the respective and offered to tax in the respective years. and therefore, according to Ld. CIT(A), no further addition on this according to Ld. CIT(A), no further addition on this according to Ld. CIT(A), no further addition on this account was warranted account was warranted. The Ld. CIT(A) is noted to have also examined the statements of Shri Rajendra Kothari an of Shri Rajendra Kothari and Shri A. Julian of M/s Super d Shri A. Julian of M/s Super Saravana Stores (Jewel) Super LLP Saravana Stores (Jewel) Super LLP and found the same to be and found the same to be factually to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd incorrect. With these observations, the Ld. CIT(A) is noted to have incorrect. With these observations, the Ld. CIT(A) is noted to have incorrect. With these observations, the Ld. CIT(A) is noted to have deleted the impugned addition. Now, the Revenue is in appeal before us. deleted the impugned addition. Now, the Revenue is in appeal before us. deleted the impugned addition. Now, the Revenue is in appeal before us.

8.6 The Ld. CIT, DR appearing for the Revenue primarily relied on the The Ld. CIT, DR appearing for the Revenue primarily relied on the The Ld. CIT, DR appearing for the Revenue primarily relied on the note book found in the course of search at the premises of note book found in the course of search at the premises of note book found in the course of search at the premises of M/s Super Saravana Stores (Jewel) Super LLP Saravana Stores (Jewel) Super LLP which according to her suggested that the assessee was paying cash in lieu of making ch the assessee was paying cash in lieu of making charges income arges income received from the customers, to justify the impugned addition. Per contra, the Ld. , to justify the impugned addition. Per contra, the Ld. , to justify the impugned addition. Per contra, the Ld. AR relied upon the verification exercise undertaken by the AO in his AR relied upon the verification exercise undertaken by the AO in his AR relied upon the verification exercise undertaken by the AO in his remand report and also the findings rendered by the Ld. CIT(A). remand report and also the findings rendered by the Ld. CIT(A). remand report and also the findings rendered by the Ld. CIT(A).

8.7 Heard both the parties. Heard both the parties. From the facts as narrated in the foregoing, From the facts as narrated in the foregoing, it is observed that the initial case sought to be made out by the AO was it is observed that the initial case sought to be made out by the AO was it is observed that the initial case sought to be made out by the AO was that the entries found in ‘MC Khata’ Ledger represented unaccounted that the entries found in ‘MC Khata’ Ledger represented unaccounted that the entries found in ‘MC Khata’ Ledger represented unaccounted making charges payments made by the assessee, as Shri Kothari had making charges payments made by the assessee, as Shri Kothari had making charges payments made by the assessee, as Shri Kothari had averred so in his statement recorded u/s 132(4) of the Act. However, rred so in his statement recorded u/s 132(4) of the Act. However, rred so in his statement recorded u/s 132(4) of the Act. However, after considering the submissions put forth by the assessee in the course after considering the submissions put forth by the assessee in the course after considering the submissions put forth by the assessee in the course of assessment, we find that, the AO himself disregarded the statement of of assessment, we find that, the AO himself disregarded the statement of of assessment, we find that, the AO himself disregarded the statement of Shri Kothari as it was Shri Kothari as it was found to be rebuttable on facts. Though the AO le on facts. Though the AO agreed with the assessee that the entries found in ‘MC Khata’ ledger with the assessee that the entries found in ‘MC Khata’ ledger with the assessee that the entries found in ‘MC Khata’ ledger represented receipt of making charges from customers represented receipt of making charges from customers, but he treated the but he treated the same to be unaccounted income of the assessee. same to be unaccounted income of the assessee. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::59 ::

Before the Ld. CIT(A), the assessee Before the Ld. CIT(A), the assessee had shown that the had shown that the making 8.8 charges (net) earned from the customers earned from the customers had already been recorded in already been recorded in the books of account and offered to tax. The the books of account and offered to tax. The year-wise reconciliation of reconciliation of gross and net figures furnished before the Ld. CIT(A), furnished before the Ld. CIT(A), also taken note of also taken note of by us, is as under:-

FY 2016-17 Entity Gross Receipts (₹) Net Receipts ( Net Receipts (₹) MJPL 16,53,21,918 8,14,17,869 Mohanlal Jewellers (Prop. 13,91,37,035 5,00,38,778 Concern) Mohanlal Jewellers 2,59,15,185 1,46,31,971 Chennai Pvt. Ltd. Total 33,03,74,138 14,97,83,013 FY 2017-18 Entity Gross Receipts (₹) Net Receipts ( Net Receipts (₹) MJPL 34,61,69,838 10,03,77,671 MJPL HYD 1,01,83,791 64,94,332 Mohanlal Jewellers (Prop. 9,44,19,580 2,94,09,348 Concern) Mohanlal Exports (Prop. 45,59,908 17,88,029 Concern) Total 45,53,33,117 13,80,69,380 FY 2018-19 Entity Gross Receipts (₹) Net Receipts ( Net Receipts (₹) MJPL 33,42,52,831 16,45,78,603 MJPL HYD 29,07,312 20,54,826 Total 33,71,60,143 16,66,33,429 FY 2019-20 Entity Gross Receipts (₹) Net Receipts ( Net Receipts (₹) MJPL 31,32,87,048 17,55,49,384 Total 31,32,87,048 17,55,49,384 FY 2020-21 Entity Gross Receipts (₹) Net Receipts ( Net Receipts (₹) MJPL 15,75,66,963 8,44,79,471 MJCPL 95,92,855 68,43,546 Total 16,70,89,818 9,13,23,017 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::60 ::

The assessee is noted to have furnished the complete ledgers, profit The assessee is noted to have furnished the complete ledgers, profit The assessee is noted to have furnished the complete ledgers, profit 8.9 & loss account evidencing the credit of making charges and computation loss account evidencing the credit of making charges and computation loss account evidencing the credit of making charges and computation of income to show that the same was also offered to tax. It of income to show that the same was also offered to tax. It of income to show that the same was also offered to tax. It is seen that, the AO had also verified and acknowledged these contemporaneous facts the AO had also verified and acknowledged these contemporaneous facts the AO had also verified and acknowledged these contemporaneous facts in his remand report and had admitted that in his remand report and had admitted that, the entries found in ‘MC , the entries found in ‘MC Khata’ ledger fully reconciled with the books of accounts of the entities Khata’ ledger fully reconciled with the books of accounts of the entities Khata’ ledger fully reconciled with the books of accounts of the entities belonging to the assessee group and that they had offered the same tax belonging to the assessee group and that they had offered the same tax belonging to the assessee group and that they had offered the same tax in their respective ITRs for the respective years. in their respective ITRs for the respective years. The relevant verification The relevant verification observations made in the remand report in AY 2017 tions made in the remand report in AY 2017-18 [which is found to 18 [which is found to be similar in subsequent AYs 2018 be similar in subsequent AYs 2018-19 to 2021-22 as well], is noted to be 22 as well], is noted to be as under:-

“In the assessment order a sum of Rs 20,44,84,681 was added as In the assessment order a sum of Rs 20,44,84,681 was added as In the assessment order a sum of Rs 20,44,84,681 was added as unaccounted income on account of making unaccounted income on account of making charges for the AY 2017 charges for the AY 2017-18. It is seen that this is the total amount of MC Khata ledger in the JPACK seen that this is the total amount of MC Khata ledger in the JPACK seen that this is the total amount of MC Khata ledger in the JPACK software for the AY 2017 the AY 2017-18. The assessee submitted that they have The assessee submitted that they have admitted the making charges (Net admitted the making charges (Net figure) in their books of accounts and figure) in their books of accounts and offered to tax as under s under :-

Ledger of Ledger of Gross Receipts Net Receipts Net Receipts MJPL 16,53,21,918 8,14,17,869 8,14,17,869 Mohanlal Jewellers ( Prop Mohanlal Jewellers ( Prop 13,91,37,035 5,00,38,778 5,00,38,778 Concern) Mohanlal Jewellers Chennai P Ltd Mohanlal Jewellers Chennai P Ltd 2,59,15,185 1,46,31,971 1,46,31,971 Total 33,03,74,138 14,97,83,013 14,97,83,013

In order to verify the In order to verify the claim of the assessee that the entries relating to claim of the assessee that the entries relating to making charges found in the JPACK software are accounted for in their charges found in the JPACK software are accounted for in their charges found in the JPACK software are accounted for in their books of accounts, the same were examined and cross checked. The accounts, the same were examined and cross checked. The accounts, the same were examined and cross checked. The entries found in the entries found in the JPACK ledger (M C Khata) were cross checked with JPACK ledger (M C Khata) were cross checked with to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd the parties ledger in the the parties ledger in the books of accounts of MJPL, Mohanlal Jewellers books of accounts of MJPL, Mohanlal Jewellers (Prop Concern) and MJCPL. (Prop Concern) and MJCPL.

On a detailed examination of all entries found in the MC KHATA ledger On a detailed examination of all entries found in the MC KHATA ledger On a detailed examination of all entries found in the MC KHATA ledger as extracted from the JPACK software, it is seen that they are found as extracted from the JPACK software, it is seen that they are found as extracted from the JPACK software, it is seen that they are found reflected in the reflected in the parties ledger of MJPL, Mohanlal Jewellers (Prop parties ledger of MJPL, Mohanlal Jewellers (Prop Concern) and MJCPL. Concern) and MJCPL. The same is enclosed as Annexure VII. The same is enclosed as Annexure VII.

The Profit and Loss Account of MJPL, and Mohanlal Jewellers (Prop The Profit and Loss Account of MJPL, and Mohanlal Jewellers (Prop The Profit and Loss Account of MJPL, and Mohanlal Jewellers (Prop Concern) reflecting the receipt of Making Charges are enclosed in Concern) reflecting the receipt of Making Charges are enclosed in Concern) reflecting the receipt of Making Charges are enclosed in Annexure VIII Making Making Net Making Net Making Charges Charges Charges Receipt paid Mohanlal Jewellers P Mohanlal Jewellers P 16,53,21,918 8,39,04,049 8,14,17,869 8,14,17,869 Ltd Mohanlal Jewellers Mohanlal Jewellers 13,91,37,035 8,90,98,257 5,00,38,778 5,00,38,778 (Prop Concern)

It is seen that the Making charges as reflected in the MC It is seen that the Making charges as reflected in the MC KHATA ledger KHATA ledger as extracted from the JPACK software is found to be reflected in the as extracted from the JPACK software is found to be reflected in the as extracted from the JPACK software is found to be reflected in the parties ledger in the books of accounts of MJPL, and Mohanlal Jewellers parties ledger in the books of accounts of MJPL, and Mohanlal Jewellers parties ledger in the books of accounts of MJPL, and Mohanlal Jewellers (Prop Concern). The closing balance of these parties ledger are found to (Prop Concern). The closing balance of these parties ledger are found to (Prop Concern). The closing balance of these parties ledger are found to be reflected in the Making ch be reflected in the Making charges ledger, the total of which is found to arges ledger, the total of which is found to be reflected in the profit and loss account as receipt be reflected in the profit and loss account as receipt.”

(emphasis supplied) (emphasis supplied)

8.10 We note that, the he Ld. CIT(A) had taken specific cognizance of the Ld. CIT(A) had taken specific cognizance of the AO’s verification exercise wherein AO’s verification exercise wherein the AO had stated that, e each and every entry recorded in the ‘MC KHATA MC KHATA’ ledger was duly reflected in the books duly reflected in the books of accounts and offered as an income of the accounts and offered as an income of the assessee and having regard assessee and having regard to the same, deleted the impugned addition, as it had already been to the same, deleted the impugned addition, as it had already been to the same, deleted the impugned addition, as it had already been offered and assessed to tax. The offered and assessed to tax. The relevant findings of the Ld. CIT(A) taken relevant findings of the Ld. CIT(A) taken note of by us, is as follows: note of by us, is as follows:- to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::62 ::

“5.9.4. The assessment order, remand report and the rejoinder 5.9.4. The assessment order, remand report and the rejoinder 5.9.4. The assessment order, remand report and the rejoinder submitted by the submitted by the appellant are considered. During the remand appellant are considered. During the remand proceedings, the AO had verified the proceedings, the AO had verified the claim of the appellant and given his and given his findings in Para 6.4.3 of the remand report that findings in Para 6.4.3 of the remand report that he had verified the he had verified the entries found in the MC KHATA ledger in J entries found in the MC KHATA ledger in J-Pack and found that Pack and found that they are reflected in party’s ledger in the books of accounts of the appellant and reflected in party’s ledger in the books of accounts of the appellant and reflected in party’s ledger in the books of accounts of the appellant and MJCPL. He had also enclosed MJCPL. He had also enclosed the details of both MC KHATA Ledger and the details of both MC KHATA Ledger and party’s ledgers from Tally accounts in Annexure ledgers from Tally accounts in Annexure-VII along with remand VII along with remand report. Further, he report. Further, he had also verified the P & L account of the appellant had also verified the P & L account of the appellant and MJCPL and found that the and MJCPL and found that the making charges recorded as received in making charges recorded as received in the MC KHATA ledger are already offered in MC KHATA ledger are already offered in the return of income. He the return of income. He had also found that the closing balance of these parties are had also found that the closing balance of these parties are had also found that the closing balance of these parties are fully reflected in the P & L account of the appellant as a receipt. Thus, the AO reflected in the P & L account of the appellant as a receipt. Thus, the AO reflected in the P & L account of the appellant as a receipt. Thus, the AO had verified each and every entry of the MC KHATA verified each and every entry of the MC KHATA ledger in J ledger in J-Pack with the books of account maintained and the P & L account of the appellant account maintained and the P & L account of the appellant account maintained and the P & L account of the appellant and found that it is fully and found that it is fully offered as an income in the hands of the offered as an income in the hands of the appellant. In addition, the AO had also appellant. In addition, the AO had also verified and found that against verified and found that against the making charges rece the making charges received of Rs.16,53,21,918/- for the year under the year under consideration, the appellant had debited Rs.8,39,04,049/ consideration, the appellant had debited Rs.8,39,04,049/ consideration, the appellant had debited Rs.8,39,04,049/- as making charges paid and offered net income from making charges of charges paid and offered net income from making charges of charges paid and offered net income from making charges of Rs.8,14,17,869/- - in the hands of appellant. Similarly, Rs.5,00,38,778/ hands of appellant. Similarly, Rs.5,00,38,778/- was offered as net income from as net income from making charges in the hands of M/s making charges in the hands of M/s Mohanlal Jewellers, Proprietary concern of Shri Mohanlal Jewellers, Proprietary concern of Shri Mohanlal Khatri. Mohanlal Khatri. However, after coming to the conclusion that the entries made in the However, after coming to the conclusion that the entries made in the However, after coming to the conclusion that the entries made in the MC KHATA ledger are in fact making charges received by the appellant KHATA ledger are in fact making charges received by the appellant KHATA ledger are in fact making charges received by the appellant and recorded in the books of accounts, the AO had also relied on the in the books of accounts, the AO had also relied on the in the books of accounts, the AO had also relied on the statement of Shri A Julian of statement of Shri A Julian of M/s Super Saravana Stores (Jewel) Super M/s Super Saravana Stores (Jewel) Super LLP dated 01.12.2021 and stated that the LLP dated 01.12.2021 and stated that the addition made by the addition made by the Assessing Officer is on account of receiving back cash Assessing Officer is on account of receiving back cash for the for the making charges paid to the customers and he has sought the addition to be charges paid to the customers and he has sought the addition to be charges paid to the customers and he has sought the addition to be sustained.

…To verify the statement of Shri Rajendra Kothari with respect to the the statement of Shri Rajendra Kothari with respect to the the statement of Shri Rajendra Kothari with respect to the said date, the MC KHATA said date, the MC KHATA ledger and the party’s ledger along with ledger and the party’s ledger along with invoices raised for making invoices raised for making charges were called for. On examination of called for. On examination of the same, it is found that the amount of Rs.13,99,128/ the same, it is found that the amount of Rs.13,99,128/-was received for was received for six making charge invoices raised by the appellant for six making charge invoices raised by the appellant for manufacturing of manufacturing of gold ornaments on job gold ornaments on job-work basis for M/s Prince Jewellery, work basis for M/s Prince Jewellery, Chennai which is duly accounted in the books of accounts of the appellant. The ich is duly accounted in the books of accounts of the appellant. The ich is duly accounted in the books of accounts of the appellant. The relevant party’s ledger from J relevant party’s ledger from J-Pack, Tally and MC KHATA ledger are Pack, Tally and MC KHATA ledger are reproduced asunder: reproduced asunder:

Party Ledger as per J Party Ledger as per J-Pack to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::63 ::

MC Khata

Party Ledger as per Tally Party Ledger as per Tally to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::65 ::

On perusal of the MC KHATA led On perusal of the MC KHATA ledger in J-Pack (as reproduced above), it is noted Pack (as reproduced above), it is noted that on 21.03.2019, there are six entries in the name of ‘PRINCE’ for on 21.03.2019, there are six entries in the name of ‘PRINCE’ for on 21.03.2019, there are six entries in the name of ‘PRINCE’ for Rs.13,99,128/- and and the same six entries were also entered in the party’s ledger the same six entries were also entered in the party’s ledger in J-Pack vide entry Pack vide entry dated 21.03.2019 as the amount received. Further, the ved. Further, the party’s ledger in the Tally party’s ledger in the Tally account was also debited by six entries for the period account was also debited by six entries for the period of 18.01.2019 to 07.03.2019 as of 18.01.2019 to 07.03.2019 as six entries for each invoice raised and the total six entries for each invoice raised and the total amount received through bank on21.03.2019 of Rs.14,41,103/ amount received through bank on21.03.2019 of Rs.14,41,103/-, which include , which includes the Making Charges and GST, was the Making Charges and GST, was also credited in the party’s ledger maintained also credited in the party’s ledger maintained in Tally. Thus, it shows that the in Tally. Thus, it shows that the appellant has raised invoices for manufacturing appellant has raised invoices for manufacturing of gold ornaments on job of gold ornaments on job-work for M/s Prince Jewellery from 18.01.2019 to M/s Prince Jewellery from 18.01.2019 to 07.03.2019 and duly 07.03.2019 and duly entered in the party ledger in the books of accounts ledger in the books of accounts maintained in Tally and considered it as making maintained in Tally and considered it as making charges receivable from M/s charges receivable from M/s Prince Jewellery. After actual receipt of invoice amount Prince Jewellery. After actual receipt of invoice amount through bank on through bank on 21.03.2019, first the party ledger in J 21.03.2019, first the party ledger in J-Pack is credited with six ted with six entries for Rs.13,99,128/- on 21.03.2019 and then the MC KHATA ledger in J on 21.03.2019 and then the MC KHATA ledger in J on 21.03.2019 and then the MC KHATA ledger in J-Pack is debited by the same amount on the same date. It is also noted that the ‘PRINCE’ debited by the same amount on the same date. It is also noted that the ‘PRINCE’ debited by the same amount on the same date. It is also noted that the ‘PRINCE’ ledger account in J- -Pack is a running account maintained by the appellant Pack is a running account maintained by the appellant which contains both debit and credit of metal on a continuous basis during the entire both debit and credit of metal on a continuous basis during the entire both debit and credit of metal on a continuous basis during the entire year. When the gold ornaments are issued to M/s Prince Jewellery, the debit When the gold ornaments are issued to M/s Prince Jewellery, the debit When the gold ornaments are issued to M/s Prince Jewellery, the debit entries in the party’s ledger are made by debiting with equivalent weight of party’s ledger are made by debiting with equivalent weight of party’s ledger are made by debiting with equivalent weight of 91.66% ornament and 91.66% ornament and also adding additional metal weight equivalent to that of o adding additional metal weight equivalent to that of making charges payable by making charges payable by the party for job work done by the appellant. In the party for job work done by the appellant. In other words, whenever the 22 other words, whenever the 22-caratgold ornaments are issued by the appellant caratgold ornaments are issued by the appellant to the party, M/s Prince Jewellery, the to the party, M/s Prince Jewellery, the appellant debits the gold equivalent to debits the gold equivalent to that of making charges in the party’s ledger in that of making charges in the party’s ledger in J-Pack at the time of delivery of Pack at the time of delivery of ornaments to the party. However, when the making ornaments to the party. However, when the making charges are received by charges are received by way of payment through banking channel from the said way of payment through banking channel from the said party, the gold party, the gold equivalent to the amount received in bank account is duly credited in quivalent to the amount received in bank account is duly credited in quivalent to the amount received in bank account is duly credited in the same party’s ledger account in J party’s ledger account in J-Pack, otherwise, it will be a double payment by Pack, otherwise, it will be a double payment by the party towards making charges which no customer will allow to happen. In this party towards making charges which no customer will allow to happen. In this party towards making charges which no customer will allow to happen. In this case of M/s Prince Je case of M/s Prince Jewellery, the appellant had given credit of 424.620 grams wellery, the appellant had given credit of 424.620 grams equivalent to Rs.13,99,128/ equivalent to Rs.13,99,128/- in the same party’s ledger account vide entry in the same party’s ledger account vide entry dated20.03.2019 which is equivalent amount of prevailing gold rate as on that dated20.03.2019 which is equivalent amount of prevailing gold rate as on that dated20.03.2019 which is equivalent amount of prevailing gold rate as on that date. Thus, it can be stated that the making c it can be stated that the making charges included as metal weight at harges included as metal weight at the time of issue of gold ornaments by the appellant is duly reverted back once of gold ornaments by the appellant is duly reverted back once of gold ornaments by the appellant is duly reverted back once the same is paid through banking channel with equivalent amount of metal in through banking channel with equivalent amount of metal in through banking channel with equivalent amount of metal in the party’s ledger by way the party’s ledger by way of crediting their account. Since, it is running account, s running account, there cannot be one to one there cannot be one to one matching of metal receipt and issued. However, on matching of metal receipt and issued. However, on verification of the J verification of the J-Pack ledgers and Tally account, both are matching. On the and Tally account, both are matching. On the basis of examination and findings as basis of examination and findings as above, I am of the opinion that the above, I am of the opinion that the statement given by Shri Rajendra Kothari nt given by Shri Rajendra Kothari explaining the transactions of Prince explaining the transactions of Prince Jewellery with the appellant is contrary to the Jewellery with the appellant is contrary to the facts appearing from the seized facts appearing from the seized material and the books of accounts. material and the books of accounts.

5.9.6. Further, the AO had also relied on the statement of Shri A Ju 5.9.6. Further, the AO had also relied on the statement of Shri A Ju 5.9.6. Further, the AO had also relied on the statement of Shri A Julian of M/s.Super Saravana Stores (Jewel) Super LLP and stated that there is a receipt Super Saravana Stores (Jewel) Super LLP and stated that there is a receipt Super Saravana Stores (Jewel) Super LLP and stated that there is a receipt of cash back by M/s Super Saravana Stores (Jewel) Super LLP on account of back by M/s Super Saravana Stores (Jewel) Super LLP on account of back by M/s Super Saravana Stores (Jewel) Super LLP on account of making charges paid by them to the appellant and he has sought the same charges paid by them to the appellant and he has sought the same charges paid by them to the appellant and he has sought the same addition to be sustaine sustained. In this regard, the MC KHATA ledger, party’s ledger in d. In this regard, the MC KHATA ledger, party’s ledger in to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::66 ::

J-Pack and party’s ledger accounts in Tally are verified. On verification of the ledger accounts in Tally are verified. On verification of the same, it is found that the same, it is found that the findings are exactly the same as that of M/s Prince findings are exactly the same as that of M/s Prince Jewellery which has been Jewellery which has been discussed in above paragraph. The relevant copies of above paragraph. The relevant copies of the ledgers from J-Pack and Pack and Tally are reproduced as under:

Party ledger as per J Party ledger as per J-Pack;- to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::67 ::

MC Khata

Party Ledger as per Tally Party Ledger as per Tally

On perusal of the above, it is noted that the amount of Rs.5,48,573/ On perusal of the above, it is noted that the amount of Rs.5,48,573/ On perusal of the above, it is noted that the amount of Rs.5,48,573/-, Rs.5,55,037/-and Rs.4,04,841/ and Rs.4,04,841/- which was recorded in the small which was recorded in the small notebook seized from the search notebook seized from the search in the case of M/s Super Saravana Stores (Jewel) Super LLP are in the case of M/s Super Saravana Stores (Jewel) Super LLP are in the case of M/s Super Saravana Stores (Jewel) Super LLP are appearing in the appearing in the MC KHATA ledger, party’s ledger in J-Pack and the Pack and the to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ledger account in Tally. The ledger account in Tally. The same amounts are also offered as an me amounts are also offered as an income of the appellant, which is already income of the appellant, which is already subjected to tax.

5.9.7. On the basis of the above observations and findings, it can be 5.9.7. On the basis of the above observations and findings, it can be 5.9.7. On the basis of the above observations and findings, it can be concluded that the making charges entered in MC KHATA ledger are not that the making charges entered in MC KHATA ledger are not that the making charges entered in MC KHATA ledger are not in the nature of expens expenses booked by the appellant, instead, it is in the es booked by the appellant, instead, it is in the nature of income received for nature of income received for manufacturing of gold ornaments on job manufacturing of gold ornaments on job- work basis, which is already accounted in work basis, which is already accounted in the books of accounts of the the books of accounts of the appellant and offered to tax in the respective years. The appellant and offered to tax in the respective years. The AO had also verified each and every entry recorded in the MC KHATA ledger in the verified each and every entry recorded in the MC KHATA ledger in the verified each and every entry recorded in the MC KHATA ledger in the remand proceedings and found that all the entries are duly reflected in remand proceedings and found that all the entries are duly reflected in remand proceedings and found that all the entries are duly reflected in the books of accounts and offered as an income of the appellant in the accounts and offered as an income of the appellant in the accounts and offered as an income of the appellant in the ITR filed. However, the AO ITR filed. However, the AO had relied on the statement of Shri Rajendra the statement of Shri Rajendra Kothari and Shri A. Julian of M/s Super Kothari and Shri A. Julian of M/s Super Saravana Stores (Jewel) Super Saravana Stores (Jewel) Super LLP, which was also found to be incorrect as per the LLP, which was also found to be incorrect as per the detailed discussion detailed discussion in the above paragraphs. Hence, I am of the opinion that the in the above paragraphs. Hence, I am of the opinion that the in the above paragraphs. Hence, I am of the opinion that the addition of Rs.20,44,84,681/ Rs.20,44,84,681/- made by the AO on account of entries made in made by the AO on account of entries made in MCKHATA ledger account in J MCKHATA ledger account in J-Pack is to be deleted. Accordingly, these Pack is to be deleted. Accordingly, these grounds raised by the appellant are allowed.” by the appellant are allowed.”

8.11 The Ld. CIT, DR appearing for the Revenue was unable to pin point The Ld. CIT, DR appearing for the Revenue was unable to pin point The Ld. CIT, DR appearing for the Revenue was unable to pin point any factual infirmity in the above findings of the Ld. CIT(A) nor was ctual infirmity in the above findings of the Ld. CIT(A) nor was ctual infirmity in the above findings of the Ld. CIT(A) nor was she able to controvert the remarks given by the AO in his remand report able to controvert the remarks given by the AO in his remand report able to controvert the remarks given by the AO in his remand report wherein he himself had wherein he himself had accepted that the entries in the ‘MC Khata MC Khata’ ledger are duly reflected in the books of account of are duly reflected in the books of account of the assessee assessee and the corresponding amounts have already been offered to tax corresponding amounts have already been offered to tax. According to us, . According to us, when it is not in dispute that the impugned sum has already been when it is not in dispute that the impugned sum has already been when it is not in dispute that the impugned sum has already been credited and offered to tax by the assessee, the case sought to be made credited and offered to tax by the assessee, the case sought to be made credited and offered to tax by the assessee, the case sought to be made out by the Revenue for su out by the Revenue for sustaining the addition(s) being impugned before staining the addition(s) being impugned before us has no legs to stand on, has no legs to stand on, as it would amount to double addition of the double addition of the same amount, which is impermissible in law. same amount, which is impermissible in law. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::69 ::

8.12 In spite of the above admitted factual matrix, the Ld. CIT, DR still spite of the above admitted factual matrix, the Ld. CIT, DR still spite of the above admitted factual matrix, the Ld. CIT, DR still supported the order of the AO by relying on the statement recorded from r of the AO by relying on the statement recorded from r of the AO by relying on the statement recorded from Shri Julian of M/s Super Saravana Stores (Jewel) Super LLP M/s Super Saravana Stores (Jewel) Super LLP M/s Super Saravana Stores (Jewel) Super LLP who had allegedly stated that, the making charges paid by them was received back the making charges paid by them was received back the making charges paid by them was received back in cash. We however are unable to comprehend as to how does th in cash. We however are unable to comprehend as to how does th in cash. We however are unable to comprehend as to how does this statement is of any assistance to the Revenue to justify the impugned statement is of any assistance to the Revenue to justify the impugned statement is of any assistance to the Revenue to justify the impugned addition which is in dispute before us. Admittedly, the assessee has addition which is in dispute before us. Admittedly, the assessee has addition which is in dispute before us. Admittedly, the assessee has already credited the making charge received inter alia from already credited the making charge received inter alia from already credited the making charge received inter alia from M/s Super Saravana Stores (Jewel) Super LLP Saravana Stores (Jewel) Super LLP to their P&L A/c and offered the same &L A/c and offered the same to tax and therefore any further addition on this same count would to tax and therefore any further addition on this same count would to tax and therefore any further addition on this same count would evidently tantamount to double addition. tantamount to double addition.

8.13 There is also merit in the Ld. AR’s submission that, if the statement There is also merit in the Ld. AR’s submission that, if the statement There is also merit in the Ld. AR’s submission that, if the statement of Shri Julian had any substance, then corresponding entry of cash of Shri Julian had any substance, then corresponding entry of cash of Shri Julian had any substance, then corresponding entry of cash payment back to M/s Super Saravana Stores (Jewel) Super LLP M/s Super Saravana Stores (Jewel) Super LLP M/s Super Saravana Stores (Jewel) Super LLP would have been found in the ‘J have been found in the ‘J-Pack Software’, as by Revenue’s own admission ue’s own admission contained record of both accounted and unaccounted transactions of the contained record of both accounted and unaccounted transactions of the contained record of both accounted and unaccounted transactions of the assessee. It is seen that assessee. It is seen that, the Ld. CIT(A) had verified this aspect and the Ld. CIT(A) had verified this aspect and found found that that the the amounts amounts of of Rs. Rs.5,48,573/-, Rs.5,55,037/ Rs.5,55,037/- and Rs.4,04,841/- which appeared in the which appeared in the seized note-book of Saravana Stores book of Saravana Stores was also reflected in the was also reflected in the MC Khata ledger in J-Pack, the party’s le he party’s ledger in J-Pack, and the Tally ledger account of Saravana Stores he Tally ledger account of Saravana Stores and that these to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd amounts were already recorded as part of the were already recorded as part of the assessee’s making charges s making charges income and were duly offered to tax in the relevant return of income ome and were duly offered to tax in the relevant return of income ome and were duly offered to tax in the relevant return of income. We note that, there was no entry found here was no entry found in J-Pack software which suggested which suggested that this amount was paid back in cash. Hence, on these facts, that this amount was paid back in cash. Hence, on these facts, that this amount was paid back in cash. Hence, on these facts, we uphold the Ld. CIT(A)’s findings treating ’s findings treating the statement of Shri Julian was tement of Shri Julian was unreliable.

8.14 We also agree with the alternate plea of the Ld. AR that the entry of We also agree with the alternate plea of the Ld. AR that the entry of We also agree with the alternate plea of the Ld. AR that the entry of a miniscule value of Rs.20.36 lacs found in the premises of a miniscule value of Rs.20.36 lacs found in the premises of a miniscule value of Rs.20.36 lacs found in the premises of M/s Super Saravana Stores (Jewel) Super LLP Saravana Stores (Jewel) Super LLP cannot be the basis to disbelieve that cannot be the basis to disbelieve that the entire making charges of Rs.135.32 crores received and credited in the entire making charges of Rs.135.32 crores received and credited in the entire making charges of Rs.135.32 crores received and credited in P&L A/c across all the years was not genuine. W P&L A/c across all the years was not genuine. We find merit in the e find merit in the assessee’s submission that the hypothetical assessee’s submission that the hypothetical extrapolation extrapolation sought to be made by the Revenue on the basis of this entry Revenue on the basis of this entry found at the premises of found at the premises of M/s Sarvana Stores (0.1% of the total value of making charges) M/s Sarvana Stores (0.1% of the total value of making charges) M/s Sarvana Stores (0.1% of the total value of making charges) was per- se arbitrary and un-reasonable. Further, it reasonable. Further, it is an admitted fact that the an admitted fact that the assessee is in the business of rendering job work services for its assessee is in the business of rendering job work services for its assessee is in the business of rendering job work services for its customers and therefore the making charges earned by it cannot fore the making charges earned by it cannot fore the making charges earned by it cannot arbitrarily be disbelieved as non arbitrarily be disbelieved as non-genuine, particularly when no such genuine, particularly when no such contrary material or evidence was found or seized in the course of search. contrary material or evidence was found or seized in the course of search. contrary material or evidence was found or seized in the course of search.

Rather, the verification exercise done by the AO & Ld. CIT(A) is fou Rather, the verification exercise done by the AO & Ld. CIT(A) is fou Rather, the verification exercise done by the AO & Ld. CIT(A) is found to support the assessee’s case. support the assessee’s case. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::71 ::

8.15 Moreover, assuming for a moment that there is some credence in , assuming for a moment that there is some credence in , assuming for a moment that there is some credence in the statement of Shri Julian, then by that logic, the receipt of making the statement of Shri Julian, then by that logic, the receipt of making the statement of Shri Julian, then by that logic, the receipt of making charges from M/s Super Saravana Stores (Jewel) Super LLP M/s Super Saravana Stores (Jewel) Super LLP M/s Super Saravana Stores (Jewel) Super LLP as credited in the P&L A/c is to be treated as not genuine A/c is to be treated as not genuine, then such income , then such income ought to have been excluded from the computation of the assessable income, excluded from the computation of the assessable income, excluded from the computation of the assessable income, which has not been done by the Revenue. Hence, the action of the which has not been done by the Revenue. Hence, the action of the which has not been done by the Revenue. Hence, the action of the Revenue itself is found to be contrary to the statement of Shr Revenue itself is found to be contrary to the statement of Shr Revenue itself is found to be contrary to the statement of Shri Julian, which they seek to rely upon. According to us therefore, the statement of which they seek to rely upon. According to us therefore, the statement of which they seek to rely upon. According to us therefore, the statement of Shri Julian is of no assistance to the Revenue. Shri Julian is of no assistance to the Revenue.

8.16 For the above set out reasons therefore, we therefore uphold the For the above set out reasons therefore, we therefore uphold the For the above set out reasons therefore, we therefore uphold the order of Ld. CIT(A) deleting the addition(s) made on a order of Ld. CIT(A) deleting the addition(s) made on account of making ccount of making charges, as it was already charges, as it was already accounted in the regular books of accounts in the regular books of accounts and assessed to tax as well. We thus dismiss these grounds of the Revenue. assessed to tax as well. We thus dismiss these grounds of the Revenue. assessed to tax as well. We thus dismiss these grounds of the Revenue.

Equivalent Interest Interest value of received received gold(@Rs.48 Interest in Total Total Interest AY in metal metal 81 per gram Cash (in Rs.) (in Rs.) (in grams) grams) as on 10.11.2020 2017-18 6030 6030 2,94,32,430 7,45,40,039 10,39,72,469 10,39,72,469 2018-19 5784.8 5784.8 2,835,609 1,39,07,037 4,21,42,646 4,21,42,646 2019-20 7951.3 7951.3 3,88,10,295 2,32,85,519 6,20,95,814 6,20,95,814 2020-21 8397.4 8397.4 4,09,87,709 6,02,51,200 10,12,38,910 10,12,38,910 2021-22 0 0 7,80,72,778 7,80,72,778 7,80,72,778 TOTAL 28163.5 28163.5 13,74,66,043 25,00,56,573 38,75,22,617 38,75,22,617

In addition to the above, the AO also found one ledger titled ‘Vatav’ above, the AO also found one ledger titled ‘Vatav’ 9.2 in the same J-Pack Software, whose colloquial meaning was Pack Software, whose colloquial meaning was Pack Software, whose colloquial meaning was commission, rate differences etc. in the assessee’s line of business. According to the etc. in the assessee’s line of business. According to the etc. in the assessee’s line of business. According to the to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::73 ::

AO, both Shri Kothari and and Shri Khatri had admitted that, the entries in Shri Khatri had admitted that, the entries in this ledger was also unaccounted for and therefore the AO quantified the this ledger was also unaccounted for and therefore the AO quantified the this ledger was also unaccounted for and therefore the AO quantified the ‘Vatav’ income from this ledger, which is as follows: this ledger, which is as follows:-

AY Vatav (in Rs.) 2017-18 7,68,38,850 2018-19 8,80,42,489 2019-20 7,04,04,429 2020-21 8,62,761 2021-22 1,45,54,166 TOTAL 25,07,02,695 According to the AO, the above ‘byaj’ & According to the AO, the above ‘byaj’ & ‘vatav’ receipts had not ‘vatav’ receipts had not 9.3 been offered to tax and therefore added the same to the total income of been offered to tax and therefore added the same to the total income of been offered to tax and therefore added the same to the total income of the assessee across all the years. Aggrieved by the order of the AO, the the assessee across all the years. Aggrieved by the order of the AO, the the assessee across all the years. Aggrieved by the order of the AO, the assessee preferred appeal before the Ld. CIT(A). assessee preferred appeal before the Ld. CIT(A).

9.4 Before the Ld. CIT(A), the asse Before the Ld. CIT(A), the assessee is noted to have claimed that, ssee is noted to have claimed that, while calculating the ‘byaj’ income, the AO had erroneously included the while calculating the ‘byaj’ income, the AO had erroneously included the while calculating the ‘byaj’ income, the AO had erroneously included the squared off entries as interest receipts which were routed through ‘PP’ squared off entries as interest receipts which were routed through ‘PP’ squared off entries as interest receipts which were routed through ‘PP’ Account and sought exclusion of the same. The assessee further pointed Account and sought exclusion of the same. The assessee further pointed Account and sought exclusion of the same. The assessee further pointed out that, there were several debits to the account of that, there were several debits to the account of one Shri Laxmi one Shri Laxmi Pondy, expressed in gold weight (grams), expressed in gold weight (grams), but they were but they were only book entries, and no such interest was actually received in gold or cash no such interest was actually received in gold or cash no such interest was actually received in gold or cash from this person. The assessee thus prayed for deletion of the ‘byaj’ amount this person. The assessee thus prayed for deletion of the ‘byaj’ amount this person. The assessee thus prayed for deletion of the ‘byaj’ amount reflected in Shri Pondy’s account as well. The Ld. CIT(A) is noted to have reflected in Shri Pondy’s account as well. The Ld. CIT(A) is noted to have reflected in Shri Pondy’s account as well. The Ld. CIT(A) is noted to have called for a remand report on this issue from the AO. After considering the called for a remand report on this issue from the AO. After considering the called for a remand report on this issue from the AO. After considering the facts of the case and the r facts of the case and the remand report, the Ld. CIT(A) is noted to have emand report, the Ld. CIT(A) is noted to have to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd held that the assessee was unable to substantiate that the entries routed held that the assessee was unable to substantiate that the entries routed held that the assessee was unable to substantiate that the entries routed through ‘PP’ A/c were in the nature of squared off entries. So far as the through ‘PP’ A/c were in the nature of squared off entries. So far as the through ‘PP’ A/c were in the nature of squared off entries. So far as the debits appearing in the account of debits appearing in the account of Laxmi Pondy is concerned, t is concerned, the Ld.

CIT(A) is noted to have analyzed all the ledger entries and found that CIT(A) is noted to have analyzed all the ledger entries and found that CIT(A) is noted to have analyzed all the ledger entries and found that though there were debit entries in her account in all the years but the though there were debit entries in her account in all the years but the though there were debit entries in her account in all the years but the interest in form of gold was received interest in form of gold was received only in FYs 2017- -18 & 2018-19 being 3,994.520 grams and 958.750 gram ,994.520 grams and 958.750 grams respectively. The Ld. CIT(A) accordingly directed that accordingly directed that, the interest is chargeable to tax in the hands of to tax in the hands of the assessee only to the extent of value of the gold received from the said only to the extent of value of the gold received from the said only to the extent of value of the gold received from the said party and the remaining balance amount debited party and the remaining balance amount debited in Pondy’s account was in Pondy’s account was directed to be deleted from the total interest income. The Ld. CIT(A) also rected to be deleted from the total interest income. The Ld. CIT(A) also rected to be deleted from the total interest income. The Ld. CIT(A) also held that, the AO was unjustified in adopting uniform rate of Rs.4,881/gm held that, the AO was unjustified in adopting uniform rate of Rs.4,881/gm held that, the AO was unjustified in adopting uniform rate of Rs.4,881/gm prevailing as on 10.11.2020 for valuing the interest income in form of prevailing as on 10.11.2020 for valuing the interest income in form of prevailing as on 10.11.2020 for valuing the interest income in form of metal receipts in all the years and di metal receipts in all the years and directed that the market rates market rates as prevailing in the respective years be adopted. In light of these directions prevailing in the respective years be adopted. In light of these directions prevailing in the respective years be adopted. In light of these directions issued by the Ld. CIT(A), the revised quantum of ‘byaj’ income stood as issued by the Ld. CIT(A), the revised quantum of ‘byaj’ income stood as issued by the Ld. CIT(A), the revised quantum of ‘byaj’ income stood as follows:-

Interest Interest computed AY computed by by Ld. CIT(A) (in AO(inRs.) Rs.) 2017-18 10,39,72,469 8,97,71,261 8,97,71,261 2018-19 4,21,42,646 3,84,86,690 3,84,86,690 2019-20 6,20,95,814 4,48,74,607 4,48,74,607 2020-21 10,12,38,910 6,92,09,435 6,92,09,435 2021-22 7,80,72,778 6,81,77,631 6,81,77,631 TOTAL 38,75,22,617 31,05,19,624 31,05,19,624 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::75 ::

So far as the quantification of ‘vatav’ income is concerned, the So far as the quantification of ‘vatav’ income is concerned, the So far as the quantification of ‘vatav’ income is concerned, the 9.5 assessee is found to have claimed that, assessee is found to have claimed that, the ‘vatav’ ledger was closed was closed on a monthly basis by passing squaring monthly basis by passing squaring-off entries and therefore and therefore when the receipts side exceeded the issue side, the diff receipts side exceeded the issue side, the difference was recorded as a erence was recorded as a balancing entry on the issue side, and vice versa. T balancing entry on the issue side, and vice versa. T balancing entry on the issue side, and vice versa. These entries, according to the assessee, were according to the assessee, were merely adjustment entries without any merely adjustment entries without any actual inflow or outflow of cash. actual inflow or outflow of cash. The assessee further pointed out that, The assessee further pointed out that, while quantifying the ‘vatav’ income, only the credit entries had been ‘vatav’ income, only the credit entries had been ‘vatav’ income, only the credit entries had been considered and the debit entries being in the nature of cash expenses was considered and the debit entries being in the nature of cash expenses was considered and the debit entries being in the nature of cash expenses was wrongly ignored. In support, the assessee is noted to have furnished a wrongly ignored. In support, the assessee is noted to have furnished a wrongly ignored. In support, the assessee is noted to have furnished a detailed reconciliation with evidences before the Ld. CIT(A). detailed reconciliation with evidences before the Ld. CIT(A). detailed reconciliation with evidences before the Ld. CIT(A). The Ld.

CIT(A) is noted to have called for a remand report from the AO on this CIT(A) is noted to have called for a remand report from the AO on this CIT(A) is noted to have called for a remand report from the AO on this issue of ‘Vatav’. The Ld. AR showed us that, the AO had accepted these issue of ‘Vatav’. The Ld. AR showed us that, the AO had accepted these issue of ‘Vatav’. The Ld. AR showed us that, the AO had accepted these infirmities in the calculation as pointed out by the assessee, and as a infirmities in the calculation as pointed out by the assessee, and as a infirmities in the calculation as pointed out by the assessee, and as a consequence the quantum of the agg consequence the quantum of the aggregate ‘vatav’ income was reduced regate ‘vatav’ income was reduced across AYs 2017-18 18 to to 2021 2021-22 from Rs.25,07,02,695 25,07,02,695/- to Rs.11,55,12,445/-. It is observed that, after considering the remand . It is observed that, after considering the remand . It is observed that, after considering the remand report, the Ld. CIT(A) also accepted that the report, the Ld. CIT(A) also accepted that the squaring off entries squaring off entries made at the end of each month month in the ‘Vatav’ account towards the difference arising between the receipt side and arising between the receipt side and issue side and vice-versa versa, was to be deleted. The Ld. CIT(A) also held that, deleted. The Ld. CIT(A) also held that, there are both cash receipts (credit to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd entries) and cash payments (debit entries) entries) and cash payments (debit entries) on a continuous on a continuous basis which are arising out of the same are arising out of the same ‘Vatav’ ledger and therefore only the net and therefore only the net amount was to be considered. Hence, the corrected Vatav income as amount was to be considered. Hence, the corrected Vatav income as amount was to be considered. Hence, the corrected Vatav income as quantified by the Ld. CIT(A) on the basis of the AO’s remand report, is quantified by the Ld. CIT(A) on the basis of the AO’s remand report, is quantified by the Ld. CIT(A) on the basis of the AO’s remand report, is noted as under:-

Vatav computed by Vatav computed by AY AO(inRs.) Ld. CIT(A) (in Rs.) 2017-18 7,68,38,850 2,12,06,805 2,12,06,805 2018-19 8,80,42,489 4,23,91,890 4,23,91,890 2019-20 7,04,04,429 1,42,38,299 1,42,38,299 2020-21 8,62,761 2,31,21,285 2,31,21,285 2021-22 1,45,54,166 1,45,54,166 1,45,54,166 TOTAL 25,07,02,695 11,55,12,445 11,55,12,445 9.6 After quantification of the corrected ‘byaj’ and ‘vatav’ income, the After quantification of the corrected ‘byaj’ and ‘vatav’ income, the After quantification of the corrected ‘byaj’ and ‘vatav’ income, the assessee is found to have contended before the Ld. CIT(A) that, the assessee is found to have contended before the Ld. CIT(A) that, the assessee is found to have contended before the Ld. CIT(A) that, the above revised figures of ‘byaj’ and ‘vatav’ above revised figures of ‘byaj’ and ‘vatav’ pertained to Shri Mohanlal pertained to Shri Mohanlal Khatri and that he had already offered had already offered the same to tax in his returns of to tax in his returns of income filed u/s 153A of the Act for AYs 2017 income filed u/s 153A of the Act for AYs 2017-18 to 2021 18 to 2021-22 and therefore the assessee prayed that these amounts should not be added in prayed that these amounts should not be added in prayed that these amounts should not be added in the hands of the assessee, as it would result in taxation of the same the hands of the assessee, as it would result in taxation of the same the hands of the assessee, as it would result in taxation of the same amount twice. It is noted amount twice. It is noted that, the Ld. CIT(A) rejected the assessee’s plea that, the Ld. CIT(A) rejected the assessee’s plea by observing that the disclosure given by the by observing that the disclosure given by the Director, Shri Mohanlal , Shri Mohanlal Khatri did not have any break did not have any break-up. Aggrieved by the order of the Ld. up. Aggrieved by the order of the Ld.

CIT(A), the assessee is in appeal before us. CIT(A), the assessee is in appeal before us. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::77 ::

9.7 Assailing the acti Assailing the action of the Ld. CIT(A), the Ld. AR vehemently on of the Ld. CIT(A), the Ld. AR vehemently contended that, the impugned income which is sought to be taxed in the contended that, the impugned income which is sought to be taxed in the contended that, the impugned income which is sought to be taxed in the hands of the assessee hands of the assessee was inter alia included in the additional income inter alia included in the additional income declared by the assessee’s director, declared by the assessee’s director, Shri Mohanlal Khatri in in his returns of income filed under section 153A of the income filed under section 153A of the Actfor AYs 2017– –18 to 2021–22 and therefore urged us to delete the impugned sums as it would amount and therefore urged us to delete the impugned sums as it would amount and therefore urged us to delete the impugned sums as it would amount to taxation of the same amount twice. For this, the Ld. AR took us to taxation of the same amount twice. For this, the Ld. AR took us to taxation of the same amount twice. For this, the Ld. AR took us through the relevant details of additional i through the relevant details of additional income offered by ncome offered by Shri Mohanlal Khatri across AYs 2017 across AYs 2017-18 to 2021-22 along with his returns of income 22 along with his returns of income and computation of income, copies of which were placed in Paper and computation of income, copies of which were placed in Paper and computation of income, copies of which were placed in Paper-book, Volume–II, IV & V. He thus claimed that II, IV & V. He thus claimed that, since these amount(s) had since these amount(s) had already been offered to tax by already been offered to tax by Shri Mohanlal Khatri, the same additions , the same additions made in the hands of the assessee was unsustainable and therefore ought made in the hands of the assessee was unsustainable and therefore ought made in the hands of the assessee was unsustainable and therefore ought to be deleted.

9.8 Per contra, the Ld. CIT, DR opposed the plea of the assessee and Per contra, the Ld. CIT, DR opposed the plea of the assessee and Per contra, the Ld. CIT, DR opposed the plea of the assessee and relied on the findings rendered by the Ld. CIT(A) for rejecting the benefit the findings rendered by the Ld. CIT(A) for rejecting the benefit the findings rendered by the Ld. CIT(A) for rejecting the benefit of telescoping the income offered by of telescoping the income offered by Shri Mohanlal Khatri Shri Mohanlal Khatri against the impugned sums taxed in the hands of the assessee. impugned sums taxed in the hands of the assessee.

Heard both the parties. It is noted that Heard both the parties. It is noted that, the AO had originally the AO had originally 9.9 quantified the ‘byaj’ income & ‘vatav’ income at Rs.38,75,22,617/ quantified the ‘byaj’ income & ‘vatav’ income at Rs.38,75,22,617/ quantified the ‘byaj’ income & ‘vatav’ income at Rs.38,75,22,617/- & to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::78 ::

Rs.25,07,02,695/- respectively across all the AYs in question. The respectively across all the AYs in question. The respectively across all the AYs in question. The assessee had pointed out infirmities in the calculations of these two items assessee had pointed out infirmities in the calculations of these two items assessee had pointed out infirmities in the calculations of these two items of income, which the AO acceded to in his remand report(s) and the Ld. AO acceded to in his remand report(s) and the Ld. AO acceded to in his remand report(s) and the Ld. CIT(A) is accordingly found to have reduced the aggregate figures of the CIT(A) is accordingly found to have reduced the aggregate figures of the CIT(A) is accordingly found to have reduced the aggregate figures of the ‘byaj’ income & ‘vatav’ income to Rs. ‘byaj’ income & ‘vatav’ income to Rs.31,05,19,624/- & Rs. & Rs.11,55,12,445/- respectively. We find that, the Ld. CIT(A)’s quantification of respectively. We find that, the Ld. CIT(A)’s quantification of respectively. We find that, the Ld. CIT(A)’s quantification of these two items of income have not been disputed by items of income have not been disputed by either party before us and therefore we find the quantification of ‘byaj’ & ‘vatav’ quantification of ‘byaj’ & ‘vatav’ to have attained to have attained finality. The limited issue raised by the assessee in their appeal(s) is that, issue raised by the assessee in their appeal(s) is that, issue raised by the assessee in their appeal(s) is that, whether the impugned ad whether the impugned addition(s) in their hands was justified, when dition(s) in their hands was justified, when these very sum(s) had already been offered and taxed in the hands of these very sum(s) had already been offered and taxed in the hands of these very sum(s) had already been offered and taxed in the hands of Shri Mohanlal Khatri.

9.10 In this context, the Ld. AR first invited our attention to the notice(s) In this context, the Ld. AR first invited our attention to the notice(s) In this context, the Ld. AR first invited our attention to the notice(s) issued under u/s 153A of the Act on Shri issued under u/s 153A of the Act on Shri Mohanlal Khatri and the Mohanlal Khatri and the computation of income returned u/s 153A of the Act for AYs 2017 computation of income returned u/s 153A of the Act for AYs 2017 computation of income returned u/s 153A of the Act for AYs 2017-18 to 2021-22, details of which 22, details of which is found placed at Pages 16 to 48 ages 16 to 48 of Volume V of the Paper Book. It is seen that, Shri Khatri had declared the following of the Paper Book. It is seen that, Shri Khatri had declared the following of the Paper Book. It is seen that, Shri Khatri had declared the following income to tax in AYs 2017 n AYs 2017-18 to 2021-22.

AY Income declared u/s 139 Income declared u/s 139 Income declared u/s 153A Income declared u/s 153A 2017-18 12,25,27,950 22,08,89,150 22,08,89,150 2018-19 10,51,56,860 42,21,12,240 42,21,12,240 2019-20 10,47,49,160 26,47,49,160 26,47,49,160 2020-21 11,58,63,680 27,58,63,680 27,58,63,680 2021-22 NA 35,35,96,800 35,35,96,800 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::79 ::

9.11 We have also perused the computations of income filed by Shri perused the computations of income filed by Shri perused the computations of income filed by Shri Mohanlal Khatri for AYs 2017 Mohanlal Khatri for AYs 2017-18 & 2021-22 and note that 22 and note that, he had separately identified and added the following aggregate additional income separately identified and added the following aggregate additional income separately identified and added the following aggregate additional income to his regular total income. to his regular total income.

Additional Income AY offered by MLK 2017-18 9,83,61,200 2018-19 31,69,55,380 2019-20 16,00,00,000 2020-21 16,00,00,000 2021-22 22,88,85,490 Total 96,42,02,070 9.12 The Ld. AR showed us that, the AO had issued notice(s) u/s 143(2) The Ld. AR showed us that, the AO had issued notice(s) u/s 143(2) The Ld. AR showed us that, the AO had issued notice(s) u/s 143(2) of the Act upon Shri Mohanlal Khatri for all these years, and in response of the Act upon Shri Mohanlal Khatri for all these years, and in response of the Act upon Shri Mohanlal Khatri for all these years, and in response Shri Khatri had filed his consolidated reply dated 24.03.2022, which is Shri Khatri had filed his consolidated reply dated 24.03.2022, which is Shri Khatri had filed his consolidated reply dated 24.03.2022, which is found placed at Pages 5 found placed at Pages 5-62 of Volume 2 Paper Book. Having perused the Book. Having perused the same, we note that, in this reply, Shri Khatri had inter alia explained the same, we note that, in this reply, Shri Khatri had inter alia explained the same, we note that, in this reply, Shri Khatri had inter alia explained the details of the additional income declared in the returns of income filed u/s details of the additional income declared in the returns of income filed u/s details of the additional income declared in the returns of income filed u/s 153A of the Act. It is seen that, 153A of the Act. It is seen that, Shri Khatri had furnished his submission Shri Khatri had furnished his submission qua the same amounts of Rs.38,75,22,617/ the same amounts of Rs.38,75,22,617/- and Rs. and Rs.25,07,02,695/- quantified from the same ‘Byaj’ & ‘Vatav’ Ledgers from the same ‘Byaj’ & ‘Vatav’ Ledgers of the J- -Pack software.

We note that, Shri Mohanlal Khatri had acted upon his son’s offer Shri Mohanlal Khatri had acted upon his son’s offer Shri Mohanlal Khatri had acted upon his son’s offer recorded in his statement u/s 132(4) recorded in his statement u/s 132(4) in the course of search and offered in the course of search and offered these two items of income to tax in his personal hands. We observe that, these two items of income to tax in his personal hands. We observe that, these two items of income to tax in his personal hands. We observe that, Shri Mohanlal Khatri had furnished his own calculation of the ‘Byaj’ & Shri Mohanlal Khatri had furnished his own calculation of the ‘Byaj’ & Shri Mohanlal Khatri had furnished his own calculation of the ‘Byaj’ & to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::80 ::

‘Vatav’ income, computed from the entries in the J ‘Vatav’ income, computed from the entries in the J-Pack Software and Pack Software and quantified same at Paras 8 & 9 of his reply, which is noted to be as fied same at Paras 8 & 9 of his reply, which is noted to be as fied same at Paras 8 & 9 of his reply, which is noted to be as follows :-

“8. Issues Found During Search relating to "Byaj" : 8. Issues Found During Search relating to "Byaj" :-

8.1. During the course of search, the search team had found the Byaj 8.1. During the course of search, the search team had found the Byaj 8.1. During the course of search, the search team had found the Byaj ledger in J Pack software wherein the assessee used to acco ledger in J Pack software wherein the assessee used to acco ledger in J Pack software wherein the assessee used to account income with respect to business. Your kind authority in the above stated notice with respect to business. Your kind authority in the above stated notice with respect to business. Your kind authority in the above stated notice have quantified the amount in the byaj ledger as below : have quantified the amount in the byaj ledger as below :-

Assessment Assessment Year Cash 2017 2017-18 10,39,72,469 2018 2018-19 4,21,42,645 2019 2019-20 6,20,95,814 2020 2020-21 10,12,38,909 2021 2021-22 7,80,72,778 38,75,22,617

8.2. It is hereby stated that the above stated values collectively consists 8.2. It is hereby stated that the above stated values collectively consists 8.2. It is hereby stated that the above stated values collectively consists of Byaj in grams and in cash. of Byaj in grams and in cash.

8.3. It is hereby stated that while maintaining the said ledger, your 8.3. It is hereby stated that while maintaining the said ledger, your 8.3. It is hereby stated that while maintaining the said ledger, your assessee used to close this ledger by putting a square off entry on a used to close this ledger by putting a square off entry on a used to close this ledger by putting a square off entry on a monthly basis. i.e., when the Receipt side is higher than the issue side, monthly basis. i.e., when the Receipt side is higher than the issue side, monthly basis. i.e., when the Receipt side is higher than the issue side, a balancing entry on the issue side of the difference between the two a balancing entry on the issue side of the difference between the two a balancing entry on the issue side of the difference between the two sides is done and vice versa. The amount specified sides is done and vice versa. The amount specified in these entries is in these entries is only the actual income of your assess only the actual income of your assessee for the relevant period. e for the relevant period.

8.4. It is hereby stated that while arriving at the above stated figures, 8.4. It is hereby stated that while arriving at the above stated figures, 8.4. It is hereby stated that while arriving at the above stated figures, the search team had also added the transfer entries which were made at the search team had also added the transfer entries which were made at the search team had also added the transfer entries which were made at the end of each month fo the end of each month for squaring off the ledger. This is because the r squaring off the ledger. This is because the grand total was considered by the search team which was inflated due grand total was considered by the search team which was inflated due grand total was considered by the search team which was inflated due to transfer entries. to transfer entries.

8.5. Therefore, the actual income of the assess 8.5. Therefore, the actual income of the assessee for the period under e for the period under consideration being the transfer entries are as consideration being the transfer entries are as below: - to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::81 ::

Assessment Assessment Year Amount 2017 2017-18 6,92,00,000 2018 2018-19 2,52,00,000 2019 2019-20 4,54,00,000 2020 2020-21 9,14,00,000 2021 2021-22 2,25,00,000 25,37,00,000

8.6. Further, entries of one Shri Laxmi Pondywas added in the byaj 8.6. Further, entries of one Shri Laxmi Pondywas added in the byaj 8.6. Further, entries of one Shri Laxmi Pondywas added in the byaj ledger column on year on year ledger column on year on year basis. This entry was because the basis. This entry was because the receivable of metal from Laxmi Pondy was due from very long time and receivable of metal from Laxmi Pondy was due from very long time and receivable of metal from Laxmi Pondy was due from very long time and hence the interest was added. However, it is hereby stated that the hence the interest was added. However, it is hereby stated that the hence the interest was added. However, it is hereby stated that the same were merely book entries but the same were never received as same were merely book entries but the same were never received as same were merely book entries but the same were never received as evident from JPACK. evident from JPACK. Hence the same also is to be reduced in arriving at Hence the same also is to be reduced in arriving at the final figure.

8.7. Therefore, the correct figure after setting aside the transfer entries 8.7. Therefore, the correct figure after setting aside the transfer entries 8.7. Therefore, the correct figure after setting aside the transfer entries are as below:-

Assessment Assessment Year Amount 2017 2017-18 5,51,84,434 2018 2018-19 2,14,05,138 2019 2019-20 2,80,62,373 2020 2020-21 6,19,56,043 2021 2021-22 2,25,45,278 18,91,53,266

The relevant documentary evidence for the same along with the above The relevant documentary evidence for the same along with the above The relevant documentary evidence for the same along with the above stated explanation has already been submitted before your kind stated explanation has already been submitted before your kind stated explanation has already been submitted before your kind authority in my submission which was submitted before your kind authority in my submission which was submitted before your kind authority in my submission which was submitted before your kind authority on 17.03.2022. It may be noted that the above stated values authority on 17.03.2022. It may be noted that the above stated values authority on 17.03.2022. It may be noted that the above stated values consists of Byaj in grams (Converted to Rupees) and in cash. consists of Byaj in grams (Converted to Rupees) and in cash. consists of Byaj in grams (Converted to Rupees) and in cash.

9. Issue Found During Search relating to “Vatav”: 9. Issue Found During Search relating to “Vatav”:-

9.1. During the course of search, the search team had found the VATAV 9.1. During the course of search, the search team had found the VATAV 9.1. During the course of search, the search team had found the VATAV ledger in 3 Pack software wherein the asseessee Used to account income edger in 3 Pack software wherein the asseessee Used to account income edger in 3 Pack software wherein the asseessee Used to account income with respect to Business Your kind authority in the above stated notice with respect to Business Your kind authority in the above stated notice with respect to Business Your kind authority in the above stated notice have quantified the amount in the vatav ledger as below : have quantified the amount in the vatav ledger as below :- to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::82 ::

Assessment Assessment Year Amount 2017 2017-18 5,51,84,434 2018 2018-19 2,14,05,138 2019 2019-20 2,80,62,373 2020 2020-21 6,19,56,043 2021 2021-22 2,25,45,278 18,91,53,266

9.2. It is hereby stated that while maintaining the said ledger, your 9.2. It is hereby stated that while maintaining the said ledger, your 9.2. It is hereby stated that while maintaining the said ledger, your assessee used to close this ledger by putting a square off entry on a used to close this ledger by putting a square off entry on a used to close this ledger by putting a square off entry on a monthly basis. i.e., when the Receipt side is higher than the issue side, monthly basis. i.e., when the Receipt side is higher than the issue side, monthly basis. i.e., when the Receipt side is higher than the issue side, a balancing entry on the issue side of the difference between the two a balancing entry on the issue side of the difference between the two a balancing entry on the issue side of the difference between the two sides is done and vice versa. sides is done and vice versa.

9.3. It is hereby s 9.3. It is hereby stated that while arriving at the above stated figures, tated that while arriving at the above stated figures, the search team had also added the transfer entries which were made at the search team had also added the transfer entries which were made at the search team had also added the transfer entries which were made at the end of each month for squaring off the ledger. This is because the the end of each month for squaring off the ledger. This is because the the end of each month for squaring off the ledger. This is because the grand total was considered by the search team which was inf grand total was considered by the search team which was inf grand total was considered by the search team which was inflated due to transfer entries. Therefore, the correct figure can be arrived only after to transfer entries. Therefore, the correct figure can be arrived only after to transfer entries. Therefore, the correct figure can be arrived only after setting aside the transfer entries. Hence, the correct Income with setting aside the transfer entries. Hence, the correct Income with setting aside the transfer entries. Hence, the correct Income with respect to Vatav is as below: respect to Vatav is as below:-

Assessment Assessment Year Amount 2017 2017-18 2,21,06,805 2018 2018-19 4,23,91,893 2019 2019-20 1,42,32,299 2020 2020-21 2,31,21,285 2021 2021-22 10,09,52,282

The relevant documentary evidence for the same along with the above The relevant documentary evidence for the same along with the above The relevant documentary evidence for the same along with the above stated explanation has already been submitted before your kind stated explanation has already been submitted before your kind stated explanation has already been submitted before your kind authority in my submission which was submitted before authority in my submission which was submitted before authority in my submission which was submitted before your kind authority on 17.03.2022. authority on 17.03.2022.”

9.13 We thus note that, We thus note that, Shri Mohanlal Khatri had specifically explained Khatri had specifically explained that the ‘Byaj’ Ledger & that the ‘Byaj’ Ledger & ‘Vatav’ Ledger found in J-Pack software pertained Pack software pertained to him and accordingly he had offered the relevant entries therein to tax, to him and accordingly he had offered the relevant entries therein to tax, to him and accordingly he had offered the relevant entries therein to tax, to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd on the basis of his own quantification. We note that, Shri Khatri at Para on the basis of his own quantification. We note that, Shri Khatri at Para on the basis of his own quantification. We note that, Shri Khatri at Para 13 of the same reply dated 24.03.2022, had furnished the 13 of the same reply dated 24.03.2022, had furnished the 13 of the same reply dated 24.03.2022, had furnished the manner of quantification of the additional income declared u/s 153A of the Act, quantification of the additional income declared u/s 153A of the Act, quantification of the additional income declared u/s 153A of the Act, which is noted to be as under: which is noted to be as under:-

“13. Additional Business Income Offered with respect to Search 13. Additional Business Income Offered with respect to Search 13. Additional Business Income Offered with respect to Search Proceedings (Source): Proceedings (Source):-

13.1 As briefly stated above, the precise unaccounted in 13.1 As briefly stated above, the precise unaccounted in 13.1 As briefly stated above, the precise unaccounted income of the business of your assesse business of your assessee cannot be derived with precision due to cannot be derived with precision due to complexities of accounts maintained by the business of your assesse complexities of accounts maintained by the business of your assesse complexities of accounts maintained by the business of your assessee. Further, the only income which is identifiable out of all the issues during Further, the only income which is identifiable out of all the issues during Further, the only income which is identifiable out of all the issues during the course of search are "Byaj I the course of search are "Byaj Income" and "Vatav Income". ncome" and "Vatav Income".

13.2 Further, it is hereby stated that the unaccounted business income 13.2 Further, it is hereby stated that the unaccounted business income 13.2 Further, it is hereby stated that the unaccounted business income of your assessee e is again utilized in the business of the assesse is again utilized in the business of the assessee only and the same can be reflected as either excess stock or receivables in and the same can be reflected as either excess stock or receivables in and the same can be reflected as either excess stock or receivables in the J Pack Software. Further, as stated in point 12.11 above, the assets the J Pack Software. Further, as stated in point 12.11 above, the assets the J Pack Software. Further, as stated in point 12.11 above, the assets generated out of the unaccounted income as appearing in the Trial generated out of the unaccounted income as appearing in the Trial generated out of the unaccounted income as appearing in the Trial Balance of the J Pack Account are brough Balance of the J Pack Account are brought to tax as additional business t to tax as additional business income.

13.3 Furthermore, it is hereby stated that as elucidated in point 6 13.3 Furthermore, it is hereby stated that as elucidated in point 6 13.3 Furthermore, it is hereby stated that as elucidated in point 6 above, above, above, the the the unaccounted unaccounted unaccounted income income income generated generated generated through through through business business business transactions was entered in different names to have secrecy of business transactions was entered in different names to have secrecy of business transactions was entered in different names to have secrecy of business from the employees from the employees. Therefore, the peak credit theory is also utilized in . Therefore, the peak credit theory is also utilized in arriving at the additional business income. Hence, the total income arriving at the additional business income. Hence, the total income arriving at the additional business income. Hence, the total income offered for the block period is as below: offered for the block period is as below:-

Other Business Income Offered Income Offered A.Y Byaj and Vatav Byaj and Vatav Income to Income Tax to Income Tax 2015-16 - 4,21,54,799.00 4,21,54,799.00 4,21,54,799.00 2016-17 - 11,24,12,798.00 11,24,12,798.00 11,24,12,798.00 2017-18 7,63,00,000.00 7,63,00,000.00 2,20,61,198.00 9,83,61,198.00 9,83,61,198.00 2018-19 6,35,00,000.00 6,35,00,000.00 25,34,55,379.00 31,69,55,379.00 31,69,55,379.00 2019-20 4,22,00,000.00 4,22,00,000.00 11,78,00,000.00 16,00,00,000.00 16,00,00,000.00 2020-21 8,50,00,000.00 8,50,00,000.00 7,50,00,000.00 16,00,00,000.00 16,00,00,000.00 2021-22 2,28,00,000.00 2,28,00,000.00 20,60,85,490.00 22,88,85,490.00 22,88,85,490.00

TOTAL 82,89,69,644.00 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::84 ::

9.14 The Ld. AR pointed out that, after considering the above The Ld. AR pointed out that, after considering the above The Ld. AR pointed out that, after considering the above submissions of Shri Mohanlal Khatri, the same AO as that of submissions of Shri Mohanlal Khatri, the same AO as that of submissions of Shri Mohanlal Khatri, the same AO as that of the assessee had completed the income had completed the income-tax assessments u/s 153A/143(3) for AYs tax assessments u/s 153A/143(3) for AYs 2017-18 to 2021-22 in which no further addition was made 22 in which no further addition was made 22 in which no further addition was made on these issue(s) in his hands. In support, he referred to the assessment . In support, he referred to the assessment . In support, he referred to the assessment orders passed by the same AO, which passed by the same AO, which is found placed at Pages 79- -82, 87-90, 95- 98, 103-106 & 109-112 of Volume 2 of the Paper 112 of Volume 2 of the Paper-book. According to the book. According to the Ld. AR therefore, not only had the AO accepted the additional income Ld. AR therefore, not only had the AO accepted the additional income Ld. AR therefore, not only had the AO accepted the additional income offered on account of ‘byaj’ & ‘vatav’ by Shri Mohanlal Khatri but also offered on account of ‘byaj’ & ‘vatav’ by Shri Mohanlal Khatri but also offered on account of ‘byaj’ & ‘vatav’ by Shri Mohanlal Khatri but also agreed to the manner of quantification of the same. It is therefore the manner of quantification of the same. It is therefore the manner of quantification of the same. It is therefore the contention of the Ld. AR that, when both ‘byaj’ & ‘vatav’ receipts contention of the Ld. AR that, when both ‘byaj’ & ‘vatav’ receipts contention of the Ld. AR that, when both ‘byaj’ & ‘vatav’ receipts extracted from the same J extracted from the same J-Pack software has already been offered to tax Pack software has already been offered to tax by Shri Mohanlal Khatri, then the same item could not again by Shri Mohanlal Khatri, then the same item could not again by Shri Mohanlal Khatri, then the same item could not again be added in the hands of the assessee company. the hands of the assessee company.

9.15 Having gone through the computations of income, returns filed u/s Having gone through the computations of income, returns filed u/s Having gone through the computations of income, returns filed u/s 153A, replies furnished before the AO and the assessment orders passed 153A, replies furnished before the AO and the assessment orders passed 153A, replies furnished before the AO and the assessment orders passed u/s 153A of the Act in the matters of Shri Mohanlal Khatri, we u/s 153A of the Act in the matters of Shri Mohanlal Khatri, we u/s 153A of the Act in the matters of Shri Mohanlal Khatri, we find that, Shri Mohanlal Khatri had Shri Mohanlal Khatri had indeed offered additional income to tax in the offered additional income to tax in the returns of income filed u/s 153A of the Act for AYs 2017 returns of income filed u/s 153A of the Act for AYs 2017- -18 to 2021-22 and that such additional income inter alia included ‘byaj’ & ‘vatav’ receipts and that such additional income inter alia included ‘byaj’ & ‘vatav’ receipts and that such additional income inter alia included ‘byaj’ & ‘vatav’ receipts quantified from the ‘Byaj’ quantified from the ‘Byaj’ and ‘Vatav’ ledgers of the J-Pack software found Pack software found to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd in the course of search. The details of the additional income offered on in the course of search. The details of the additional income offered on in the course of search. The details of the additional income offered on these two counts are noted to be as under: these two counts are noted to be as under:-

AY Byaj Byaj Vatav Total Total 2017-18 5,51,84,434 5,51,84,434 2,12,06,805 7,63,91,239 7,63,91,239 2018-19 2,14,05,138 2,14,05,138 4,23,91,890 6,37,97,028 6,37,97,028 2019-20 2,80,62,373 2,80,62,373 1,42,38,299 4,23,00,672 4,23,00,672 2020-21 6,19,56,043 6,19,56,043 2,31,21,285 8,50,77,328 8,50,77,328 2021-22 2,25,45,278 2,25,45,278 - 2,25,45,278 2,25,45,278 Total 18,91,53,266 18,91,53,266 10,09,58,279 29,01,11,545 29,01,11,545 9.16 In view of the above, we do not countenance the Ld. CIT(A)’s In view of the above, we do not countenance the Ld. CIT(A)’s In view of the above, we do not countenance the Ld. CIT(A)’s observations that, the additional income offered by Shri Mohanlal Khatri observations that, the additional income offered by Shri Mohanlal Khatri observations that, the additional income offered by Shri Mohanlal Khatri lacked break-up, for him for him to verify whether such additional income so to verify whether such additional income so offered had emanated from the entries found in J emanated from the entries found in J-Pack Software. Instead, Pack Software. Instead, we note that, Shri Mohanlal Khatri had made it explicity clear in his that, Shri Mohanlal Khatri had made it explicity clear in his that, Shri Mohanlal Khatri had made it explicity clear in his submissions that, out of the total additional income of Rs.96.42 crores submissions that, out of the total additional income of Rs.96.42 crores submissions that, out of the total additional income of Rs.96.42 crores offered by him in AYs 2017 offered by him in AYs 2017-18 to 2021-22, the sum ag 22, the sum aggregating to Rs.29.01 crores had been disclosed towards ‘byaj’ and ‘vatav’ receipts Rs.29.01 crores had been disclosed towards ‘byaj’ and ‘vatav’ receipts Rs.29.01 crores had been disclosed towards ‘byaj’ and ‘vatav’ receipts earned by him, for which entries were made in J earned by him, for which entries were made in J-Pack Software. It is seen Pack Software. It is seen that, the AO in the assessment orders passed u/s 153A/143(3) had not that, the AO in the assessment orders passed u/s 153A/143(3) had not that, the AO in the assessment orders passed u/s 153A/143(3) had not disputed the foregoing offer disputed the foregoing offer and the manner of break and the manner of break-up of income furnished by Shri Mohanlal Khatri and rather assessed the same to tax in furnished by Shri Mohanlal Khatri and rather assessed the same to tax in furnished by Shri Mohanlal Khatri and rather assessed the same to tax in his hands. In light of the foregoing, we have no hesitation in holding that, his hands. In light of the foregoing, we have no hesitation in holding that, his hands. In light of the foregoing, we have no hesitation in holding that, as the income on account of ‘byaj’ and ‘vatav’ had already been offer as the income on account of ‘byaj’ and ‘vatav’ had already been offer as the income on account of ‘byaj’ and ‘vatav’ had already been offered by Shri Mohanlal Khatri and also assessed to tax by the same AO in his by Shri Mohanlal Khatri and also assessed to tax by the same AO in his by Shri Mohanlal Khatri and also assessed to tax by the same AO in his hands, then the impugned addition hands, then the impugned addition to that extent made again by the AO made again by the AO to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd in the hands of the assessee company amounted to taxation of the same in the hands of the assessee company amounted to taxation of the same in the hands of the assessee company amounted to taxation of the same sum twice, which is impermissible in law. sum twice, which is impermissible in law.

9.17 The Ld. CIT, DR had had brought to our notice that, Shri Mohanlal Khatri brought to our notice that, Shri Mohanlal Khatri had offered the additional income to tax had offered the additional income to tax for AYs 2014-1 15 to 2017-18 before the Income-tax Settlement Commission (‘ITSC’), pursuant to the tax Settlement Commission (‘ITSC’), pursuant to the tax Settlement Commission (‘ITSC’), pursuant to the previous search and therefore such additiona previous search and therefore such additional income could not be l income could not be attributed to ‘byaj’ & ‘vatav’ receipts of the J attributed to ‘byaj’ & ‘vatav’ receipts of the J-Pack Software found in the Pack Software found in the course of the impugned search action. It is observed that, course of the impugned search action. It is observed that, course of the impugned search action. It is observed that, Shri Mohanlal Khatri, in his individual capacity, Khatri, in his individual capacity, had admitted substantial unaccounted admitted substantial unaccounted income before the ITSC. As noted by the lower authorities, he had made ITSC. As noted by the lower authorities, he had made ITSC. As noted by the lower authorities, he had made this offer on estimate basis without any this offer on estimate basis without any reference to ‘seized material seized material’ or ‘unaccounted asset’ and therefore no specific break and therefore no specific break-up of the details of up of the details of such unaccounted income was placed before the ITS such unaccounted income was placed before the ITSC. We thus note that, We thus note that, the income offered was in the nature of an ‘intangible addition’ which was the income offered was in the nature of an ‘intangible addition’ which was the income offered was in the nature of an ‘intangible addition’ which was not specifically attributed to any particular seized material. There is force not specifically attributed to any particular seized material. There is force not specifically attributed to any particular seized material. There is force in the Ld. AR’s submission that, if the aforesaid offer of additional income in the Ld. AR’s submission that, if the aforesaid offer of additional income in the Ld. AR’s submission that, if the aforesaid offer of additional income was not attributable to any particular item, then not attributable to any particular item, then Shri Mohanlal Mohanlal Khatri was legally within his right to attribute such legally within his right to attribute such additional income so offered additional income so offered inter alia towards the ‘byaj’ & ‘vatav’ receipts the ‘byaj’ & ‘vatav’ receipts found later on in the course of found later on in the course of present search dated 10.11.2020 present search dated 10.11.2020. It is not in dispute that, , the disclosure before the ITSC was held to be true and fair. Even the Ld. CIT, DR was before the ITSC was held to be true and fair. Even the Ld. CIT, DR was before the ITSC was held to be true and fair. Even the Ld. CIT, DR was to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd unable to show us that, the additional income so offered before ITSC was unable to show us that, the additional income so offered before ITSC was unable to show us that, the additional income so offered before ITSC was attributable to some other seized material or unaccounted asset attributable to some other seized material or unaccounted asset attributable to some other seized material or unaccounted asset due to which the same could not could not have been attributed to the ‘byaj’ & ‘vatav’ attributed to the ‘byaj’ & ‘vatav’ receipts impugned before us. Moreover, receipts impugned before us. Moreover, it is noted that, in the course of that, in the course of assessments being framed u/s 153A/143(3) of the Act for AYs 2017 assessments being framed u/s 153A/143(3) of the Act for AYs 2017 assessments being framed u/s 153A/143(3) of the Act for AYs 2017-18 consequent to the present search which was conducted on 10.11.2020, consequent to the present search which was conducted on 10.11.2020, consequent to the present search which was conducted on 10.11.2020, Shri Mohanlal Khatri had furnished the break Shri Mohanlal Khatri had furnished the break-up of income as offered up of income as offered before ITSC. It is seen tha before ITSC. It is seen that the said break-up was stated to was stated to include the ‘byaj’ & ‘vatav’ receipts from the J ‘byaj’ & ‘vatav’ receipts from the J-Pack Software. The AO in the Pack Software. The AO in the assessment orders passed u/s 153A/143(3) for AYs 2017 assessment orders passed u/s 153A/143(3) for AYs 2017 assessment orders passed u/s 153A/143(3) for AYs 2017-18 has not disputed the aforesaid submission of Shri Mohanlal Khatri. disputed the aforesaid submission of Shri Mohanlal Khatri. disputed the aforesaid submission of Shri Mohanlal Khatri. In light of these facts, we reject the Ld. CIT, DR’s plea that the additional income , we reject the Ld. CIT, DR’s plea that the additional income , we reject the Ld. CIT, DR’s plea that the additional income offered to tax for AYs 2017 AYs 2017-18 cannot be said to include the impugned 18 cannot be said to include the impugned sums.

9.18 It is further observed that, for denying the benefit of the additional It is further observed that, for denying the benefit of the additional It is further observed that, for denying the benefit of the additional income offered by Shri Mohanlal Khatr income offered by Shri Mohanlal Khatri, the Ld. CIT(A) had acted on the i, the Ld. CIT(A) had acted on the mistaken understanding of fact that, the entries in J mistaken understanding of fact that, the entries in J- -Pack Software related to the assessee alone. From the discussions made in the earlier related to the assessee alone. From the discussions made in the earlier related to the assessee alone. From the discussions made in the earlier paragraphs, it is amply clear that, the J paragraphs, it is amply clear that, the J-Pack Software was being used by Pack Software was being used by the assessee group as a whole and that the entries related to all the essee group as a whole and that the entries related to all the essee group as a whole and that the entries related to all the group entities including proprietorship concerns and other companies of group entities including proprietorship concerns and other companies of group entities including proprietorship concerns and other companies of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd the assessee group. It is observed that, It is observed that, the seized J-Pack data does not Pack data does not contain any explicit reference to the assessee a contain any explicit reference to the assessee as the owner of the s the owner of the unaccounted transactions unaccounted transactions in as much as there is no reference to any in as much as there is no reference to any entity in these entries and therefore it is not entries and therefore it is not clearly discernible as to discernible as to whom they pertain to.The Ld. AR has also rightly pointed out that, there The Ld. AR has also rightly pointed out that, there The Ld. AR has also rightly pointed out that, there was also no other corr was also no other corroborative evidence was found in the course of oborative evidence was found in the course of search, which would link search, which would link the impugned entries found in ‘byaj’ & ‘vatav’ found in ‘byaj’ & ‘vatav’ ledger to the assessee company alone. assessee company alone. The fact that the entries passed in The fact that the entries passed in J-Pack software does not relate to the assessee alone but pertai Pack software does not relate to the assessee alone but pertai Pack software does not relate to the assessee alone but pertained to the entire group is inter alia evident from the Ld. CIT(A)’s own findings entire group is inter alia evident from the Ld. CIT(A)’s own findings entire group is inter alia evident from the Ld. CIT(A)’s own findings rendered in the context of making charges or ‘MC Khata’ wherein he had rendered in the context of making charges or ‘MC Khata’ wherein he had rendered in the context of making charges or ‘MC Khata’ wherein he had accepted the fact that, this ledger not only contained entries relating to accepted the fact that, this ledger not only contained entries relating to accepted the fact that, this ledger not only contained entries relating to the assessee but also other g the assessee but also other group entities viz., M/s Mohanlal Jewellers roup entities viz., M/s Mohanlal Jewellers Chennai Private Limited & M/s Mohanlal Jewellers (Prop : Shri Mohanlal Chennai Private Limited & M/s Mohanlal Jewellers (Prop : Shri Mohanlal Chennai Private Limited & M/s Mohanlal Jewellers (Prop : Shri Mohanlal Khatri). It is also noted that, Shri Suresh Khatri, son of Shri Mohanlal Khatri). It is also noted that, Shri Suresh Khatri, son of Shri Mohanlal Khatri). It is also noted that, Shri Suresh Khatri, son of Shri Mohanlal Khatri, while offering the income on account of ‘byaj’ and ‘vatav’ ha Khatri, while offering the income on account of ‘byaj’ and ‘vatav’ ha Khatri, while offering the income on account of ‘byaj’ and ‘vatav’ had not named or identified the person to whom it pertained to. Rather, he had named or identified the person to whom it pertained to. Rather, he had named or identified the person to whom it pertained to. Rather, he had simply averred that these receipts will be offered to tax. simply averred that these receipts will be offered to tax. simply averred that these receipts will be offered to tax. These facts considered cumulatively supports the assessee’s case that, the entries in considered cumulatively supports the assessee’s case that, the entries in considered cumulatively supports the assessee’s case that, the entries in the J-Pack software pertained to t Pack software pertained to the entire group and it was practically he entire group and it was practically impossible to specifically identify the unaccounted entries to any specific impossible to specifically identify the unaccounted entries to any specific impossible to specifically identify the unaccounted entries to any specific to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd entity or individual. In light of the foregoing therefore, we are of the view In light of the foregoing therefore, we are of the view In light of the foregoing therefore, we are of the view that, the Ld. CIT(A) was unjustified in assuming that, all ent that, the Ld. CIT(A) was unjustified in assuming that, all ent that, the Ld. CIT(A) was unjustified in assuming that, all entries in J-pack software related to the assessee alone, only to deny the benefit of set software related to the assessee alone, only to deny the benefit of set software related to the assessee alone, only to deny the benefit of set-off of the additional income to the extent offered by Shri Mohanlal Khatri with of the additional income to the extent offered by Shri Mohanlal Khatri with of the additional income to the extent offered by Shri Mohanlal Khatri with reference to the same entries in J reference to the same entries in J-pack software.

9.19 Further, there is here is also merit in the Ld. AR’s submission, e Ld. AR’s submission, that ordinarily the unaccounted transactions are attributable to the individual ordinarily the unaccounted transactions are attributable to the individual ordinarily the unaccounted transactions are attributable to the individual controlling the group and not the flagship company which is an artificial controlling the group and not the flagship company which is an artificial controlling the group and not the flagship company which is an artificial juridical person. The Ld. AR pointed out that, ‘byaj’ was being received juridical person. The Ld. AR pointed out that, ‘byaj’ was being received juridical person. The Ld. AR pointed out that, ‘byaj’ was being received from customers for delayed payments and ‘vatav’ for miscellaneous ustomers for delayed payments and ‘vatav’ for miscellaneous ustomers for delayed payments and ‘vatav’ for miscellaneous services rendered, and thus going by the nature of these receipts, it is services rendered, and thus going by the nature of these receipts, it is services rendered, and thus going by the nature of these receipts, it is likely that this unaccounted income would have been pocketed by likely that this unaccounted income would have been pocketed by likely that this unaccounted income would have been pocketed by individual viz., the promoter individual viz., the promoter-director i.e. Shri Mohanlal K director i.e. Shri Mohanlal Khatri of the assessee group and it would not have been received by the assessee assessee group and it would not have been received by the assessee assessee group and it would not have been received by the assessee company. According to us, i company. According to us, in the absence of clear nexus n the absence of clear nexus of the entries found in J-Pack software Pack software to any specific person or entity, the unaccounted the unaccounted income ordinarily should be at income ordinarily should be attributedto the person who exercise tributedto the person who exercise control, holds the capital and manages the operations, all of which and manages the operations, all of which and manages the operations, all of which points to Shri Mohanlal Khatri. Therefore, when clear identification as to whom the Therefore, when clear identification as to whom the Therefore, when clear identification as to whom the entries in ‘byaj’ & ‘vatav’ ledger pertained to was evidently not possible, ‘vatav’ ledger pertained to was evidently not possible, ‘vatav’ ledger pertained to was evidently not possible, and given the fact that, the key person of the assessee group i.e. Shri and given the fact that, the key person of the assessee group i.e. Shri and given the fact that, the key person of the assessee group i.e. Shri to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::90 ::

Mohanlal Khatri had owned up these entries and offered the relevant Mohanlal Khatri had owned up these entries and offered the relevant Mohanlal Khatri had owned up these entries and offered the relevant entries to tax in his individual hands, then no further add entries to tax in his individual hands, then no further add entries to tax in his individual hands, then no further addition on the same issue could have been legally made again in the hands of the same issue could have been legally made again in the hands of the same issue could have been legally made again in the hands of the assessee company.

9.20 The Ld. AR also pointed out that the applicable tax rates in the The Ld. AR also pointed out that the applicable tax rates in the The Ld. AR also pointed out that the applicable tax rates in the hands of Shri Mohanlal Khatri and the assessee was the same. Rather, the hands of Shri Mohanlal Khatri and the assessee was the same. Rather, the hands of Shri Mohanlal Khatri and the assessee was the same. Rather, the tax rate in the hands of company hands of company was comparatively lower than the lower than the individual in some years in some years. Hence, we find that, it was also not a case that . Hence, we find that, it was also not a case that there was any Revenue leakage or any tax benefit being availed by the there was any Revenue leakage or any tax benefit being availed by the there was any Revenue leakage or any tax benefit being availed by the assessee group, by offering the impugned income to tax in th assessee group, by offering the impugned income to tax in th assessee group, by offering the impugned income to tax in the hands of key individual instead of the assessee company. key individual instead of the assessee company.

9.21 So far as the reliance placed by the Ld. CIT(A) on the decision of reliance placed by the Ld. CIT(A) on the decision of reliance placed by the Ld. CIT(A) on the decision of the Hon’ble Supreme Court in Supreme Court in the case of ITO v. Ch. Atchaiah (218 ITR h. Atchaiah (218 ITR 239) is concerned, we find it to be factually distingu 239) is concerned, we find it to be factually distinguishable. In the said ishable. In the said judgment, the legal principle laid down was that, the income is to be judgment, the legal principle laid down was that, the income is to be judgment, the legal principle laid down was that, the income is to be taxed in the hands of the ‘right person’. Nowhere was it held that the taxed in the hands of the ‘right person’. Nowhere was it held that the taxed in the hands of the ‘right person’. Nowhere was it held that the same income is to be taxed in multiple hands, if the right person is not same income is to be taxed in multiple hands, if the right person is not same income is to be taxed in multiple hands, if the right person is not discernible. In light of the facts as discussed above, when the Revenue of the facts as discussed above, when the Revenue of the facts as discussed above, when the Revenue had already accepted the offer of income by already accepted the offer of income by Shri Mohanlal Khatri on Shri Mohanlal Khatri on account of the ‘byaj’ & ‘vatav’ receipts the ‘byaj’ & ‘vatav’ receipts based on the same sou based on the same source to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd documents i.e., the J documents i.e., the J-Pack entries, in our considered view, in our considered view, it is impermissible to bring the same amount to tax in the hands of the bring the same amount to tax in the hands of the bring the same amount to tax in the hands of the assessee again.

9.22 Having held so above, we find that the Ld. CIT(A) had quantified Having held so above, we find that the Ld. CIT(A) had quantified Having held so above, we find that the Ld. CIT(A) had quantified the ‘byaj’ income & ‘vatav’ income from the J the ‘byaj’ income & ‘vatav’ income from the J-Pack ledgers at Pack ledgers at Rs.31,05,19,624/- & Rs. & Rs.11,55,12,445/- respectively for AYs 2017 vely for AYs 2017-18 to 2021-22. Corresponding thereto, the ‘byaj’ income & ‘vatav’ income 22. Corresponding thereto, the ‘byaj’ income & ‘vatav’ income 22. Corresponding thereto, the ‘byaj’ income & ‘vatav’ income offered offered offered by by by Shri Shri Shri Mohanlal Mohanlal Mohanlal Khatri Khatri Khatri in in in these these these years years years totaled totaled totaled to to to Rs.18,91,53,266/- & Rs. & Rs.10,09,58,279/- respectively. The details thereof respectively. The details thereof as noted by us is as follows: as noted by us is as follows:-

Byaj yaj Vatav Vatav Amount Amount Amount Amount AY As quantified Remaining As quantified Remaining offered to offered to offered to offered to by CIT(A) Difference by CIT(A) Difference tax by MLK tax by MLK tax by MLK tax by MLK 2017-18 8,97,71,261 5,51,84,434 5,51,84,434 3,45,86,827 2,12,06,805 2,12,06,805 2,12,06,805 NIL 2018-19 3,84,86,690 2,14,05,138 2,14,05,138 1,70,81,552 4,23,91,890 4,23,91,890 4,23,91,890 NIL 2019-20 4,48,74,607 2,80,62,373 2,80,62,373 1,68,12,234 1,42,38,299 1,42,38,299 1,42,38,299 NIL 2020-21 6,92,09,435 6,19,56,043 6,19,56,043 72,53,392 2,31,21,285 2,31,21,285 2,31,21,285 NIL 2021-22 6,81,77,631 2,25,45,278 2,25,45,278 4,56,32,353 1,45,54,166 - 1,45,54,166 Total 31,05,19,624 18,91,53,266 18,91,53,266 12,13,66,358 11,55,12,445 10,09,58,279 10,09,58,279 1,45,54,166 9.23 From the above, it is observed that, though Shri Mohanlal Khatri From the above, it is observed that, though Shri Mohanlal Khatri From the above, it is observed that, though Shri Mohanlal Khatri had offered ‘byaj’ & ‘vatav’ income to tax in his hands but the amount had offered ‘byaj’ & ‘vatav’ income to tax in his hands but the amount had offered ‘byaj’ & ‘vatav’ income to tax in his hands but the amount quantified by him and assessed to tax by the AO was comparatively lower and assessed to tax by the AO was comparatively lower and assessed to tax by the AO was comparatively lower than the amounts quantified by the Ld. CIT(A) in the matters of the than the amounts quantified by the Ld. CIT(A) in the matters of the than the amounts quantified by the Ld. CIT(A) in the matters of the assessee company. The Ld. AR ha assessee company. The Ld. AR had claimed that, once the entries in ‘Byaj’ that, once the entries in ‘Byaj’ ledger has been attributed to Shri Mohanlal Khatri and his ledger has been attributed to Shri Mohanlal Khatri and his ledger has been attributed to Shri Mohanlal Khatri and his quantification

ITA Nos.1178 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd of the ‘byaj’ & ‘vatav’ income has been accepted by the AO in his personal of the ‘byaj’ & ‘vatav’ income has been accepted by the AO in his personal of the ‘byaj’ & ‘vatav’ income has been accepted by the AO in his personal income-tax assessments, then no further sum could be attributed to the tax assessments, then no further sum could be attributed to the tax assessments, then no further sum could be attributed to the assessee company qua the remaining unlinked entries. We however are assessee company qua the remaining unlinked entries. We however are assessee company qua the remaining unlinked entries. We however are unable to countenance this unable to countenance this plea of the assessee. It is indeed true that, plea of the assessee. It is indeed true that, Shri Mohanlal Khatri had admitted to the ‘byaj’ & ‘vatav’ receipts found in Shri Mohanlal Khatri had admitted to the ‘byaj’ & ‘vatav’ receipts found in Shri Mohanlal Khatri had admitted to the ‘byaj’ & ‘vatav’ receipts found in the J-Pack Software and offered the same to tax in his hands, but as Pack Software and offered the same to tax in his hands, but as Pack Software and offered the same to tax in his hands, but as noted above, the values quantified by him does not match with the noted above, the values quantified by him does not match with the noted above, the values quantified by him does not match with the amounts quantified by the Ld. CIT(A) in the impugned order(s). Before amounts quantified by the Ld. CIT(A) in the impugned order(s). Before amounts quantified by the Ld. CIT(A) in the impugned order(s). Before us, the Ld. AR was unable to show any infirmity in the calculation of the us, the Ld. AR was unable to show any infirmity in the calculation of the us, the Ld. AR was unable to show any infirmity in the calculation of the ‘byaj’ & ‘vatav’ receipts by the Ld. CIT(A) and therefore we are of the ‘byaj’ & ‘vatav’ receipts by the Ld. CIT(A) and therefore we are of the ‘byaj’ & ‘vatav’ receipts by the Ld. CIT(A) and therefore we are of the view that, this quantification is indee view that, this quantification is indeed correct. As noted above, the d correct. As noted above, the entries in the J-Pack software pertained to the entire group and there was Pack software pertained to the entire group and there was Pack software pertained to the entire group and there was no specific identification or demarcation to attribute specific unaccounted no specific identification or demarcation to attribute specific unaccounted no specific identification or demarcation to attribute specific unaccounted entries to any specific entity or individual. We therefore are of the entries to any specific entity or individual. We therefore are of the entries to any specific entity or individual. We therefore are of the considered view that, when Shri Mohanlal Khatri had admitted to the idered view that, when Shri Mohanlal Khatri had admitted to the idered view that, when Shri Mohanlal Khatri had admitted to the ‘byaj’ & ‘vatav’ receipts to the extent of Rs. ‘byaj’ & ‘vatav’ receipts to the extent of Rs.18,91,53,266 18,91,53,266/- & Rs.10,09,58,279/- respectively in his individual hands, then to that respectively in his individual hands, then to that respectively in his individual hands, then to that extent, the same amount cannot be brought to tax again in th extent, the same amount cannot be brought to tax again in th extent, the same amount cannot be brought to tax again in the hands of the assessee and the same is directed to be deleted. So far as the the assessee and the same is directed to be deleted. So far as the the assessee and the same is directed to be deleted. So far as the remaining ‘byaj’ & ‘vatav’ of Rs. remaining ‘byaj’ & ‘vatav’ of Rs.12,13,66,358/- [31,05,19,624 31,05,19,624 - 18,91,53,266] and Rs. ] and Rs.1,45,54,166/- [11,55,12,445 - 10,09,58,279 10,09,58,279] is to 1182/Chny/2025 to 1182/Chny/2025 & ITA Nos.1393 to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd concerned, as it is not clearly discernible it is not clearly discernible from the entries as to whom it from the entries as to whom it pertains to and even Shri Mohanlal Khatri had not admitted and offered Shri Mohanlal Khatri had not admitted and offered Shri Mohanlal Khatri had not admitted and offered these remaining entries to tax as his personal income. these remaining entries to tax as his personal income.

9.24 Hence, for the above reasons, and to meet the ends of justice and, Hence, for the above reasons, and to meet the ends of justice and, Hence, for the above reasons, and to meet the ends of justice and, in all fairness to the Rev in all fairness to the Revenue and with a view to protect their interests as enue and with a view to protect their interests as well, we accordingly confirm the addition on account of ‘byaj’ & ‘vatav’ to well, we accordingly confirm the addition on account of ‘byaj’ & ‘vatav’ to well, we accordingly confirm the addition on account of ‘byaj’ & ‘vatav’ to the extent of Rs.12,13,66,358 12,13,66,358/- and Rs.1,45,54,166/- in the hands of the in the hands of the assessee across AYs 2017 assessee across AYs 2017-18 to 2021-22. In light of the 22. In light of the foregoing, and for the sake of clarity, the details of the amounts on account of ‘byaj’ & for the sake of clarity, the details of the amounts on account of ‘byaj’ & for the sake of clarity, the details of the amounts on account of ‘byaj’ & ‘vatav’ being deleted and confirmed by us, is as follows: deleted and confirmed by us, is as follows:-

Byaj Vatav Vatav Addition Remaining Addition Remaining AY Amount to Amount to Amount to Amount to confirmed by amount confirmed by amount be deleted be deleted be deleted be deleted CIT(A) confirmed CIT(A) confirmed 2017-18 8,97,71,261 5,51,84,434 5,51,84,434 3,45,86,827 2,12,06,805 2,12,06,805 2,12,06,805 NIL 2018-19 3,84,86,690 2,14,05,138 2,14,05,138 1,70,81,552 4,23,91,890 4,23,91,890 4,23,91,890 NIL 2019-20 4,48,74,607 2,80,62,373 2,80,62,373 1,68,12,234 1,42,38,299 1,42,38,299 1,42,38,299 NIL 2020-21 6,92,09,435 6,19,56,043 6,19,56,043 72,53,392 2,31,21,285 2,31,21,285 2,31,21,285 NIL 2021-22 6,81,77,631 2,25,45,278 2,25,45,278 4,56,32,353 1,45,54,166 - 1,45,54,166 Total 31,05,19,624 18,91,53,266 18,91,53,266 12,13,66,358 11,55,12,445 10,09,58,279 10,09,58,279 1,45,54,166 9.25 In view of the above, these grounds of the assessee are partly In view of the above, these grounds of the assessee are partly In view of the above, these grounds of the assessee are partly allowed.

Ground No. 6 of the Assessee’s appeal for AYs 2017 Ground No. 6 of the Assessee’s appeal for AYs 2017-18 to 2021 18 to 2021-22 10.1 The facts relating to this issue are that, the AO had found a ‘Cash’ The facts relating to this issue are that, the AO had found a ‘Cash’ The facts relating to this issue are that, the AO had found a ‘Cash’ Ledger in the J-Pack Software, which according to him, contained entries Pack Software, which according to him, contained entries Pack Software, which according to him, contained entries of all their unaccounted cash transactions of all their unaccounted cash transactions and required the assessee to and required the assessee to explain the same. The assessee is found to have explained that, the AO explain the same. The assessee is found to have explained that, the AO explain the same. The assessee is found to have explained that, the AO had mistook the nature of ‘Cash’ ledger by assuming its meaning in had mistook the nature of ‘Cash’ ledger by assuming its meaning in had mistook the nature of ‘Cash’ ledger by assuming its meaning in colloquial sense. The assessee submitted that, the terms and language colloquial sense. The assessee submitted that, the terms and language colloquial sense. The assessee submitted that, the terms and language used in the J-Pack Pack account was customized to the customized to the assessee’s specifications. The assessee showed that, there was no ledger by the specifications. The assessee showed that, there was no ledger by the specifications. The assessee showed that, there was no ledger by the name ‘Bank’ in the software and that all the software and that all the payments received and paid the payments received and paid through banking channels through banking channels were also entered in the ‘Cash Cash Ledger’ as it represented the funds available with the assessee. Similarly, the assessee esented the funds available with the assessee. Similarly, the assessee esented the funds available with the assessee. Similarly, the assessee showed that the payments payments made to several parties through several parties through banking channels was also recorded in this was also recorded in this ‘Cash’ Ledger. The assessee . The assessee demonstrated the same with sample instances of sub demonstrated the same with sample instances of sub-ledger ledgers found in the ‘Cash’ ledger. The assessee further pointed out that, the ‘Cash’ Ledger ‘Cash’ ledger. The assessee further pointed out that, the ‘Cash’ Ledger ‘Cash’ ledger. The assessee further pointed out that, the ‘Cash’ Ledger also inter alia included entries relating to goods which were sent also inter alia included entries relating to goods which were sent also inter alia included entries relating to goods which were sent on approval basis to their customers, which were accompanied by proforma to their customers, which were accompanied by proforma to their customers, which were accompanied by proforma bills and since the J-Pack so Pack software was used to record the movement of ftware was used to record the movement of goods, the amounts mentioned in proforma bills, when sent on approval goods, the amounts mentioned in proforma bills, when sent on approval goods, the amounts mentioned in proforma bills, when sent on approval basis, was correspondingly routed through ‘Cash’ Ledger. Later on, if and basis, was correspondingly routed through ‘Cash’ Ledger. Later on, if and basis, was correspondingly routed through ‘Cash’ Ledger. Later on, if and to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd when the goods are returned without approval the goods are returned without approval, the entry in ‘Cash’ Ledg , the entry in ‘Cash’ Ledger would be reversed, or if there was sale of approved goods, then it would would be reversed, or if there was sale of approved goods, then it would would be reversed, or if there was sale of approved goods, then it would be automatically accounted for in the books of accounts automatically accounted for in the books of accounts. The case sought . The case sought to be made by the assessee before the AO was that, it was a misnomer to to be made by the assessee before the AO was that, it was a misnomer to to be made by the assessee before the AO was that, it was a misnomer to assume that all the entries in this assume that all the entries in this ‘Cash Ledger’ denoted unaccounted ‘Cash Ledger’ denoted unaccounted cash transactions. Rather, it was a complete record of the banking cash transactions. Rather, it was a complete record of the banking cash transactions. Rather, it was a complete record of the banking transactions, and notional entries in relation to goods sent on approval and notional entries in relation to goods sent on approval and notional entries in relation to goods sent on approval basis, or when it was returned back unapproved or when it was returned back unapproved, and also and also the cash unaccounted transactions. The assessee further contended that, since nsactions. The assessee further contended that, since nsactions. The assessee further contended that, since consolidated entries were passed at the end of day in the ‘Cash Ledger’ consolidated entries were passed at the end of day in the ‘Cash Ledger’ consolidated entries were passed at the end of day in the ‘Cash Ledger’ which included cash sales, banking sales and the notional entries where which included cash sales, banking sales and the notional entries where which included cash sales, banking sales and the notional entries where goods were sent on approval, goods were sent on approval, it was not possible to determ it was not possible to determine the exact value of cash sales due to the complexities involved in the manner of value of cash sales due to the complexities involved in the manner of value of cash sales due to the complexities involved in the manner of entries made in the J entries made in the J-Pack software. The AO however rejected the Pack software. The AO however rejected the submissions of the assessee, because S submissions of the assessee, because Shri. Rajendra Kothari, vide his hri. Rajendra Kothari, vide his sworn statement recorded u/s. 131 of sworn statement recorded u/s. 131 of the Act dated 24.1 dated 24.11.2020 had stated that the ‘Cash’ ledger pertains to unaccounted cash transaction cash transaction done by the assessee alone. The AO observed that, though Shri Suresh alone. The AO observed that, though Shri Suresh alone. The AO observed that, though Shri Suresh Khatri in his original statement u/s 132(4) dated 05.01.2021 had Khatri in his original statement u/s 132(4) dated 05.01.2021 had Khatri in his original statement u/s 132(4) dated 05.01.2021 had submitted that the ‘Cash’ Ledger which included both accounted and submitted that the ‘Cash’ Ledger which included both accounted and submitted that the ‘Cash’ Ledger which included both accounted and unaccounted transactions, but he had not submitted any bifurcation unaccounted transactions, but he had not submitted any bifurcation unaccounted transactions, but he had not submitted any bifurcation to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd working with documentary evidences. However, after considering the with documentary evidences. However, after considering the with documentary evidences. However, after considering the submissions put forth by the assessee submissions put forth by the assessee in the course of assessment in the course of assessment, the AO is found to have excluded almost twenty sub AO is found to have excluded almost twenty sub-ledgers from the ‘Cash ledgers from the ‘Cash Ledger’ across AYs 2017 Ledger’ across AYs 2017-18 to 2021-22 and thereafter quantified the ntified the cash sales, which is reproduced hereunder: , which is reproduced hereunder:-

Rs.(in Crs.)

Balance As per Balance As per Less : Sub-Ledgers Unaccounted Sales Unaccounted Sales AY Cash ledger Cash ledger excluded by AO estimated by AO estimated by AO 2017-18 3222.80 3222.80 (1229.68) 1993.12 1993.12 2018-19 5054.30 5054.30 (2328.64) 2725.66 2725.66 2019-20* 252.55 252.55 (115.66) 136.89 136.89 2020-21 1727.50 1727.50 (672.32) 1055.17 1055.17 2021-22 1005.94 1005.94 (378.82) 627.11 627.11

*There was a one decimal mistake in the AO’s calculation, which was *There was a one decimal mistake in the AO’s calculation, which was *There was a one decimal mistake in the AO’s calculation, which was later on rectified by Ld. CIT(A) rectified by Ld. CIT(A) and the assessee has not disputed the same and the assessee has not disputed the same.

10.2 Taking the above Taking the above figures of unaccounted sales, the AO estimated figures of unaccounted sales, the AO estimated the profit element embedded therein at 8% and accordingly made the the profit element embedded therein at 8% and accordingly made the the profit element embedded therein at 8% and accordingly made the addition(s) to the total income of the assessee. Aggrieved by the order of addition(s) to the total income of the assessee. Aggrieved by the order of addition(s) to the total income of the assessee. Aggrieved by the order of the AO, the assessee preferred appeal before the Ld. CIT(A). the AO, the assessee preferred appeal before the Ld. CIT(A). the AO, the assessee preferred appeal before the Ld. CIT(A).

10.3 On appeal before the Ld. CIT(A), the assessee is found to have n appeal before the Ld. CIT(A), the assessee is found to have n appeal before the Ld. CIT(A), the assessee is found to have furnished a detailed reconciliation statement with workings to show that furnished a detailed reconciliation statement with workings to show that furnished a detailed reconciliation statement with workings to show that at most the unidentifiable sales for the AYs 2017 at most the unidentifiable sales for the AYs 2017-18 to 2021 18 to 2021-22 would work out as follows:- to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::97 ::

AY Unaccounted Sales Unaccounted sales as Unaccounted sales as estimated by AO per assessee 2017-18 1993.12 699.22 2018-19 2725.66 497.84 2019-20 136.89 767.52 2020-21 1055.17 540.76 2021-22 627.11 146.91 10.4 For arriving at the above quantification, the assessee is noted to For arriving at the above quantification, the assessee is noted to For arriving at the above quantification, the assessee is noted to have pointed out calculation errors in quantification of certain ledgers, out calculation errors in quantification of certain ledgers, out calculation errors in quantification of certain ledgers, which had already been added or considered separately such as ‘Byaj’ or which had already been added or considered separately such as ‘Byaj’ or which had already been added or considered separately such as ‘Byaj’ or ‘Vatav’ etc. The assessee also furnished additional evidences tagging ‘Vatav’ etc. The assessee also furnished additional evidences tagging ‘Vatav’ etc. The assessee also furnished additional evidences tagging certain sub-ledgers and entries with the books of acc ledgers and entries with the books of accounts. The assessee ounts. The assessee also identified contra entries, group transfers and sales contra etc., which also identified contra entries, group transfers and sales contra etc., which also identified contra entries, group transfers and sales contra etc., which according to them, was to be excluded as well. The Ld. CIT(A) after according to them, was to be excluded as well. The Ld. CIT(A) after according to them, was to be excluded as well. The Ld. CIT(A) after considering the remand report furnished by the AO and the submissions considering the remand report furnished by the AO and the submissions considering the remand report furnished by the AO and the submissions of the assessee is noted to have quantified the figure of unaccounted ted to have quantified the figure of unaccounted ted to have quantified the figure of unaccounted sales across all AYs as follows: sales across all AYs as follows:-

AY Unaccounted Sales Unaccounted sales Unaccounted sales estimated by AO estimated by CIT(A) estimated by CIT(A)* 2017-18 1993.12 1527.03 2018-19 2725.66 1940.55 2019-20 136.89 767.52 2020-21 1055.17 540.76 2021-22 627.11 265.77 *The figures are noted from the Ld. CIT(A)’s order dated 24.02.2025 read *The figures are noted from the Ld. CIT(A)’s order dated 24.02.2025 read *The figures are noted from the Ld. CIT(A)’s order dated 24.02.2025 read with the corrigendum dated 05.03.2025 with the corrigendum dated 05.03.2025 10.5 It is seen that there was a calculation mistake [one short decimal is seen that there was a calculation mistake [one short decimal is seen that there was a calculation mistake [one short decimal considered] made by the AO in the assessment order for AY 2019 considered] made by the AO in the assessment order for AY 2019 considered] made by the AO in the assessment order for AY 2019-20 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd which was taken note of and rectified by the Ld. CIT(A), which resulted in which was taken note of and rectified by the Ld. CIT(A), which resulted in which was taken note of and rectified by the Ld. CIT(A), which resulted in enhancement of the quantum of the quantum of unaccounted sales in that year in that year. Having quantified the figure of unaccounted sales, the Ld. CIT(A), for the reasons quantified the figure of unaccounted sales, the Ld. CIT(A), for the reasons quantified the figure of unaccounted sales, the Ld. CIT(A), for the reasons set out in his appellate order, is noted to have adopted the gross profit set out in his appellate order, is noted to have adopted the gross profit set out in his appellate order, is noted to have adopted the gross profit rate at 2.5% instead of 8% estimated by the AO and, accordingly directed rate at 2.5% instead of 8% estimated by the AO and, accordingly directed rate at 2.5% instead of 8% estimated by the AO and, accordingly directed the AO to re-compute the profit on the above quantified value of compute the profit on the above quantified value of compute the profit on the above quantified value of unaccounted sales. Aggrieved by the order of the Ld. CIT(A), the assessee unaccounted sales. Aggrieved by the order of the Ld. CIT(A), the assessee unaccounted sales. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us assailing both the quantification of unaccounted is in appeal before us assailing both the quantification of unaccounted is in appeal before us assailing both the quantification of unaccounted sales and the estimation of gross profit rate. On the ot sales and the estimation of gross profit rate. On the ot sales and the estimation of gross profit rate. On the other hand, the Revenue in the grounds raised in their grounds raised in their appeal(s) have only disputed the only disputed the estimation of gross profit rate at 2.5% instead of 8%. It is observed estimation of gross profit rate at 2.5% instead of 8%. It is observed estimation of gross profit rate at 2.5% instead of 8%. It is observed by us that, the Revenue has not disputed the revised quantification of that, the Revenue has not disputed the revised quantification of that, the Revenue has not disputed the revised quantification of unaccounted sales made by the unaccounted sales made by the Ld. CIT(A).

10.6 Assailing the action of the Ld. CIT(A), the Ld. AR for the assessee Assailing the action of the Ld. CIT(A), the Ld. AR for the assessee Assailing the action of the Ld. CIT(A), the Ld. AR for the assessee first objected to the quantification & estimation of the unaccounted sales. first objected to the quantification & estimation of the unaccounted sales. first objected to the quantification & estimation of the unaccounted sales.

The Ld. AR pointed out that, the entries in the ‘Cash Ledger’ contained The Ld. AR pointed out that, the entries in the ‘Cash Ledger’ contained The Ld. AR pointed out that, the entries in the ‘Cash Ledger’ contained entries relating to goods sent on approval to customers, which did not ods sent on approval to customers, which did not ods sent on approval to customers, which did not materialize as sales and therefore according to him, such entries was to materialize as sales and therefore according to him, such entries was to materialize as sales and therefore according to him, such entries was to be excluded. He further submitted that, there were several untagged be excluded. He further submitted that, there were several untagged be excluded. He further submitted that, there were several untagged consolidated entries which could not be individually identified to consolidated entries which could not be individually identified to consolidated entries which could not be individually identified to the sales made across several concerns due to complexities in the manner of made across several concerns due to complexities in the manner of made across several concerns due to complexities in the manner of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd recording in the software. According to the Ld. AR, these entries were recording in the software. According to the Ld. AR, these entries were recording in the software. According to the Ld. AR, these entries were passed on consolidated basis by relying on the daily reports which passed on consolidated basis by relying on the daily reports which passed on consolidated basis by relying on the daily reports which contained details of all the group concer contained details of all the group concerns and therefore it was humanely ns and therefore it was humanely not possible for the assessee to bifurcate and tag the individual sales or not possible for the assessee to bifurcate and tag the individual sales or not possible for the assessee to bifurcate and tag the individual sales or transactions of each group entity to these consolidated entries. The Ld. transactions of each group entity to these consolidated entries. The Ld. transactions of each group entity to these consolidated entries. The Ld.

AR argued that, the Revenue had also tacitly acknowledged that the AR argued that, the Revenue had also tacitly acknowledged that the AR argued that, the Revenue had also tacitly acknowledged that the assessee was making consolidated entries on the basis of daily reports in was making consolidated entries on the basis of daily reports in was making consolidated entries on the basis of daily reports in the J-Pack Software and that these daily reports were systematically Pack Software and that these daily reports were systematically Pack Software and that these daily reports were systematically weeded out at regular intervals and therefore in absence of the same, it is weeded out at regular intervals and therefore in absence of the same, it is weeded out at regular intervals and therefore in absence of the same, it is not possible to bifurcate and tag the remaini not possible to bifurcate and tag the remaining entries with the books of ng entries with the books of accounts. The Ld. AR thus urged us that, having regard to the accounts. The Ld. AR thus urged us that, having regard to the accounts. The Ld. AR thus urged us that, having regard to the overall facts of the case, the quantum of alleged unaccounted sales may be facts of the case, the quantum of alleged unaccounted sales may be facts of the case, the quantum of alleged unaccounted sales may be estimated on a reasonable basis. estimated on a reasonable basis.

10.7 The next argument of the assessee was that the gros The next argument of the assessee was that the gros The next argument of the assessee was that the gross profit rate of 2.5% estimated by the Ld. CIT(A) was on the higher side. Taking us 2.5% estimated by the Ld. CIT(A) was on the higher side. Taking us 2.5% estimated by the Ld. CIT(A) was on the higher side. Taking us through the gross profit rates reported across several years, the Ld. AR through the gross profit rates reported across several years, the Ld. AR through the gross profit rates reported across several years, the Ld. AR showed us that, the average the average gross profit rate of the assessee for multiple assessee for multiple years did not go beyond years did not go beyond 1.5%. He further submitted that, in none of the . He further submitted that, in none of the years, had the Revenue rejected the book results. According to him years, had the Revenue rejected the book results. According to him years, had the Revenue rejected the book results. According to him therefore, the Ld. CIT(A) was unjustified in estimating the gross profit at therefore, the Ld. CIT(A) was unjustified in estimating the gross profit at therefore, the Ld. CIT(A) was unjustified in estimating the gross profit at 2.5%, and that it ought to further reduced to 1.5%. In this regar 2.5%, and that it ought to further reduced to 1.5%. In this regar 2.5%, and that it ought to further reduced to 1.5%. In this regard, the to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::100 ::

Ld. AR relied on the judgments of the Hon’ble jurisdictional Madras High Ld. AR relied on the judgments of the Hon’ble jurisdictional Madras High Ld. AR relied on the judgments of the Hon’ble jurisdictional Madras High Court in the case of PCIT vs Mar PCIT vs Marg Ltd [2017] 396 ITR 580 and this g Ltd [2017] 396 ITR 580 and this Tribunal in the case of M/s New Saravana Stores Bramandamai vs DCIT in the case of M/s New Saravana Stores Bramandamai vs DCIT in the case of M/s New Saravana Stores Bramandamai vs DCIT (ITA No. 1611/Chny/2023). No. 1611/Chny/2023).

10.8 The third and last argument of the assessee was that, the key nd last argument of the assessee was that, the key nd last argument of the assessee was that, the key person of the assessee group and Director of the assessee company, Shri person of the assessee group and Director of the assessee company, Shri person of the assessee group and Director of the assessee company, Shri Mohanlal Khatri had already identified the entries of unaccounted sales in Mohanlal Khatri had already identified the entries of unaccounted sales in Mohanlal Khatri had already identified the entries of unaccounted sales in the ‘Cash’ Ledger of J-Pack Software which pertained to hi Pack Software which pertained to hi Pack Software which pertained to him and he had offered the gross profit on such entries to tax in his personal hands. The offered the gross profit on such entries to tax in his personal hands. The offered the gross profit on such entries to tax in his personal hands. The Ld. AR showed us that, Shri Mohanlal Khatri had already disclosed gross Ld. AR showed us that, Shri Mohanlal Khatri had already disclosed gross Ld. AR showed us that, Shri Mohanlal Khatri had already disclosed gross profit aggregating to Rs. profit aggregating to Rs.65,37,97,54,716/- as his additional income in the as his additional income in the returns of income filed u/s 153A of the Act, for AYs 2017 ed u/s 153A of the Act, for AYs 2017- -18 to 2021-22 and that such income had also been accepted and assessed by the same and that such income had also been accepted and assessed by the same and that such income had also been accepted and assessed by the same AO in the hands of Shri Mohanlal Khatri. The Ld. AR accordingly claimed AO in the hands of Shri Mohanlal Khatri. The Ld. AR accordingly claimed AO in the hands of Shri Mohanlal Khatri. The Ld. AR accordingly claimed that the gross profit value to the extent already taxed in the h that the gross profit value to the extent already taxed in the h that the gross profit value to the extent already taxed in the hands of Shri Mohanlal Khatri ought to be excluded from the quantification of gross Mohanlal Khatri ought to be excluded from the quantification of gross Mohanlal Khatri ought to be excluded from the quantification of gross profit on unaccounted sales assessable in the hands of the assessee. profit on unaccounted sales assessable in the hands of the assessee. profit on unaccounted sales assessable in the hands of the assessee.

10.9 Per contra, the Ld. CIT, DR submitted that, the Ld. CIT(A) had fairly Per contra, the Ld. CIT, DR submitted that, the Ld. CIT(A) had fairly Per contra, the Ld. CIT, DR submitted that, the Ld. CIT(A) had fairly estimated the unaccounted sa estimated the unaccounted sales turnover across all the years and does les turnover across all the years and does not want us to interfere with the same. On the issue of estimation of not want us to interfere with the same. On the issue of estimation of not want us to interfere with the same. On the issue of estimation of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd gross profit, the Ld. CIT, DR referred to the provisions of Section 44AD to gross profit, the Ld. CIT, DR referred to the provisions of Section 44AD to gross profit, the Ld. CIT, DR referred to the provisions of Section 44AD to justify the adoption of 8% by the AO. The Ld. CIT, DR also objected justify the adoption of 8% by the AO. The Ld. CIT, DR also objected justify the adoption of 8% by the AO. The Ld. CIT, DR also objected to the assessee’s plea seeking benefit of telescoping the additional income assessee’s plea seeking benefit of telescoping the additional income assessee’s plea seeking benefit of telescoping the additional income offered to tax by Shri Mohanlal Khatri, as according to her, the additional offered to tax by Shri Mohanlal Khatri, as according to her, the additional offered to tax by Shri Mohanlal Khatri, as according to her, the additional income offered by Shri Khatri Shri Khatri had no nexus with the impugned addition had no nexus with the impugned addition made in the hands of the assessee made in the hands of the assessee.

We have heard both the parties and the material placed We have heard both the parties and the material placed We have heard both the parties and the material placed 10.10 before us. We first take up the issue involving quantification of before us. We first take up the issue involving quantification of before us. We first take up the issue involving quantification of unaccounted sales across AYs 2017 unaccounted sales across AYs 2017-18 to 2021-22. It is observed that, 22. It is observed that, the AO in his remand report had objectively analyzed all the AO in his remand report had objectively analyzed all the different sub the different sub- heads contained in the ‘Cash’ ledger and thereafter quantified the heads contained in the ‘Cash’ ledger and thereafter quantified the heads contained in the ‘Cash’ ledger and thereafter quantified the unidentifiable sales which was not found to be accounted in the books of unidentifiable sales which was not found to be accounted in the books of unidentifiable sales which was not found to be accounted in the books of the assessee. We find that the assessee. We find that, the Ld. CIT(A) also after undertaking an the Ld. CIT(A) also after undertaking an elaborate exercise had quant elaborate exercise had quantified the unaccounted sales for AYs 2017 ified the unaccounted sales for AYs 2017-18 to 2021-22. It is noted that, the Ld. CIT(A) had already excluded those 22. It is noted that, the Ld. CIT(A) had already excluded those 22. It is noted that, the Ld. CIT(A) had already excluded those sub-heads which were already considered separately while making other heads which were already considered separately while making other heads which were already considered separately while making other additions in the hands of the assessee and, those sub additions in the hands of the assessee and, those sub-heads which had heads which had been considered by the AO separately by the AO separately in the hands of Shri Suresh Khatri in the hands of Shri Suresh Khatri and, also those sub-heads which comprised of actual sales recorded in the heads which comprised of actual sales recorded in the heads which comprised of actual sales recorded in the books of accounts of the entities belonging to assessee group. The Ld. books of accounts of the entities belonging to assessee group. The Ld. books of accounts of the entities belonging to assessee group. The Ld.

CIT(A) is also noted to have excluded t CIT(A) is also noted to have excluded the contra entries, sales contra & he contra entries, sales contra & to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd group transfers which were identified and pointed out by the assessee group transfers which were identified and pointed out by the assessee group transfers which were identified and pointed out by the assessee with supportings. Having gone through the remand report and the with supportings. Having gone through the remand report and the with supportings. Having gone through the remand report and the findings rendered by the Ld. CIT(A) in his appellate order findings rendered by the Ld. CIT(A) in his appellate order findings rendered by the Ld. CIT(A) in his appellate order(s), we are of the view that the Ld. CIT(A)’s quantification of unaccounted sales was he Ld. CIT(A)’s quantification of unaccounted sales was he Ld. CIT(A)’s quantification of unaccounted sales was reasonable.

10.11 We find that there is force in the assessee’s contention that, We find that there is force in the assessee’s contention that, We find that there is force in the assessee’s contention that, in their line of business, where goods are sent on approval basis to the in their line of business, where goods are sent on approval basis to the in their line of business, where goods are sent on approval basis to the customers, it cannot be regarded as sales. As noted earlier, the J customers, it cannot be regarded as sales. As noted earlier, the J customers, it cannot be regarded as sales. As noted earlier, the J-Pack Software was meant to provide inventory control Software was meant to provide inventory control and therefore there and therefore there could be entries in ‘Cash Ledger’ which pertain to goods which were sent could be entries in ‘Cash Ledger’ which pertain to goods which were sent could be entries in ‘Cash Ledger’ which pertain to goods which were sent on approval basis. Further, as noted while adjudicating other issues in this on approval basis. Further, as noted while adjudicating other issues in this on approval basis. Further, as noted while adjudicating other issues in this appeal, the J-Pack Software was being used to record inventory Pack Software was being used to record inventory Pack Software was being used to record inventory movement of the goods o movement of the goods of the entire assessee group and therefore daily f the entire assessee group and therefore daily consolidated entries would also be passed in this software. Since the daily consolidated entries would also be passed in this software. Since the daily consolidated entries would also be passed in this software. Since the daily reports were regularly destroyed by the assessee and even the reports were regularly destroyed by the assessee and even the reports were regularly destroyed by the assessee and even the Investigating authorities were able to recover daily reports of only t Investigating authorities were able to recover daily reports of only t Investigating authorities were able to recover daily reports of only the past three months, it could be possible that there are consolidated entries past three months, it could be possible that there are consolidated entries past three months, it could be possible that there are consolidated entries in the ‘Cash’ Ledger which cannot be bifurcated and individually tagged to in the ‘Cash’ Ledger which cannot be bifurcated and individually tagged to in the ‘Cash’ Ledger which cannot be bifurcated and individually tagged to specific entities. Though at first blush, these arguments of the assessee specific entities. Though at first blush, these arguments of the assessee specific entities. Though at first blush, these arguments of the assessee are found persuasive but we are found persuasive but we find that, apart from making these find that, apart from making these assertions, the assessee has not been able to bring on record any further assertions, the assessee has not been able to bring on record any further assertions, the assessee has not been able to bring on record any further to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd documentary evidences or supportings to corroborate the same. We are documentary evidences or supportings to corroborate the same. We are documentary evidences or supportings to corroborate the same. We are of the considered view that, the onus is on the assessee to rebut the of the considered view that, the onus is on the assessee to rebut the of the considered view that, the onus is on the assessee to rebut the Revenue’s case by bringing on record some material to show that, the s case by bringing on record some material to show that, the s case by bringing on record some material to show that, the remaining unidentifiable unidentifiable entries in the Cash ledger, which have been entries in the Cash ledger, which have been quantified as unaccounted sales by the Ld. CIT(A) inter alia included quantified as unaccounted sales by the Ld. CIT(A) inter alia included quantified as unaccounted sales by the Ld. CIT(A) inter alia included consolidated entries or entries relating to goods which consolidated entries or entries relating to goods which consolidated entries or entries relating to goods which were sent on approval. The assessee cannot get away by citing their inability to approval. The assessee cannot get away by citing their inability to approval. The assessee cannot get away by citing their inability to undertake this voluminous exercise or due to non undertake this voluminous exercise or due to non-availability of daily availability of daily reports, which have since been destroyed. For the aforesaid reasons, we reports, which have since been destroyed. For the aforesaid reasons, we reports, which have since been destroyed. For the aforesaid reasons, we thus reject the assessee’s plea thus reject the assessee’s plea seeking further reduction in the seeking further reduction in the quantification of unaccounted sales. quantification of unaccounted sales.

We now come to the issue of estimation of profit on the We now come to the issue of estimation of profit on the We now come to the issue of estimation of profit on the 10.12 unaccounted sales. It is observed that, the AO had applied a uniform rate unaccounted sales. It is observed that, the AO had applied a uniform rate unaccounted sales. It is observed that, the AO had applied a uniform rate of 8% to the unaccounted sales for working out t of 8% to the unaccounted sales for working out the profit element he profit element embedded therein. We note that, We note that, the AO had not mentioned any cogent the AO had not mentioned any cogent basis for arriving at this rate. Rather, the AO is noted to have simply basis for arriving at this rate. Rather, the AO is noted to have simply basis for arriving at this rate. Rather, the AO is noted to have simply averred that, profit margin on such type of unaccounted transactions is averred that, profit margin on such type of unaccounted transactions is averred that, profit margin on such type of unaccounted transactions is generally 8%. We are in ag generally 8%. We are in agreement with the Ld. CIT(A) that, the AO’s reement with the Ld. CIT(A) that, the AO’s estimation exercise was unjustified as it lacked estimation exercise was unjustified as it lacked cogent rationale. The Ld. rationale. The Ld.

AR, on the other hand, , on the other hand, took us through the details of the gross profit the details of the gross profit earned by the assessee across AYs 2017 earned by the assessee across AYs 2017-18 to 2021-22 at of Volume 22 at of Volume - IV to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd of the Paperbook. Having regard to the audited financials and Form 3CD of the Paperbook. Having regard to the audited financials and Form 3CD of the Paperbook. Having regard to the audited financials and Form 3CD of the assessee, we have tabulated the gross profit rates for the AYs of the assessee, we have tabulated the gross profit rates for the AYs of the assessee, we have tabulated the gross profit rates for the AYs 2017-18 to 2021-22, as disclosed by the assessee, which is as under: 22, as disclosed by the assessee, which is as under: 22, as disclosed by the assessee, which is as under:-

Particulars 2017 2017-18 2018-19 2019-20 2020-21 21 2021-22 Gross Profit Rate 0.74% 0.74% 0.80% 1.39% 1.43% 1.43% 1.85% 10.13 It is observed that, the lower authorities had not rejected the It is observed that, the lower authorities had not rejected the It is observed that, the lower authorities had not rejected the above book results of the assessee nor had invoked provisions of Section above book results of the assessee nor had invoked provisions of Section above book results of the assessee nor had invoked provisions of Section 145(3) of the Act. In our thoughtful consideration In our thoughtful consideration therefore therefore, the average profits earned by the assessee itself in the comparable years profits earned by the assessee itself in the comparable years profits earned by the assessee itself in the comparable years is a reasonable barometer to estimate the gross profit derived by the reasonable barometer to estimate the gross profit derived by the reasonable barometer to estimate the gross profit derived by the assessee from the unaccounted sales, as the assessee from the unaccounted sales, as the business activities of the business activities of the assessee is identical. identical. Our view is supported by the decision of the Our view is supported by the decision of the jurisdictional Tribunal in the case of jurisdictional Tribunal in the case of New Saravana Stores Bramandamai New Saravana Stores Bramandamai vs DCIT (supra), wherein it was held that adopting the GP rate as adopted (supra), wherein it was held that adopting the GP rate as adopted (supra), wherein it was held that adopting the GP rate as adopted by the assessee on the accounted sales during the year, would be a by the assessee on the accounted sales during the year, would be a by the assessee on the accounted sales during the year, would be a realistic and reasonable approach. In this decision, it was also held that realistic and reasonable approach. In this decision, it was also held that realistic and reasonable approach. In this decision, it was also held that the GP rate offered on accounted sales can be adopted because there was the GP rate offered on accounted sales can be adopted because there was the GP rate offered on accounted sales can be adopted because there was no defect pointed out in the regular books of accounts. From the table no defect pointed out in the regular books of accounts. From the table no defect pointed out in the regular books of accounts. From the table above, it is observed that the averag above, it is observed that the average GP rate across the five (5) years e GP rate across the five (5) years works out to 1.5% and it ranges between 0.74% in AY 2017 works out to 1.5% and it ranges between 0.74% in AY 2017 works out to 1.5% and it ranges between 0.74% in AY 2017-18 to 1.85% in AY 2021-22. We further observe that, the Ld. CIT(A) had also . We further observe that, the Ld. CIT(A) had also . We further observe that, the Ld. CIT(A) had also to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd examined the entries in the J examined the entries in the J-Pack Software and noted that, the Gross Pack Software and noted that, the Gross Profit recorded in the J- -Pack Software ranged between 2-3% in majority 3% in majority of the transactions involving sale of gold jewellery. In light of the of the transactions involving sale of gold jewellery. In light of the of the transactions involving sale of gold jewellery. In light of the foregoing, we are unable to countenance the Revenue’s plea to estimate foregoing, we are unable to countenance the Revenue’s plea to estimate foregoing, we are unable to countenance the Revenue’s plea to estimate gross profit at 8%, when the entries in J gross profit at 8%, when the entries in J-Pack software itsel Pack software itself does not reveal such high rate of gross profit. Rather, having regard to the reveal such high rate of gross profit. Rather, having regard to the reveal such high rate of gross profit. Rather, having regard to the accounted GP rate, the GP rate found in the J accounted GP rate, the GP rate found in the J-Pack Software and taking Pack Software and taking into account the factor that, profit in unaccounted sales is usually higher into account the factor that, profit in unaccounted sales is usually higher into account the factor that, profit in unaccounted sales is usually higher than the accounted sales, we a than the accounted sales, we are in agreement with the Ld. CIT(A)’s re in agreement with the Ld. CIT(A)’s action of estimating the profit from unaccounted sales at 2.5%. action of estimating the profit from unaccounted sales at 2.5%. action of estimating the profit from unaccounted sales at 2.5%.The relevant findings of the Ld. CIT(A) in this regard, are noted to be as relevant findings of the Ld. CIT(A) in this regard, are noted to be as relevant findings of the Ld. CIT(A) in this regard, are noted to be as under:-

“5.11.8. The above submissions of the appellant with regard to adopting 5.11.8. The above submissions of the appellant with regard to adopting 5.11.8. The above submissions of the appellant with regard to adopting uniform GP rate for all the AYs 2017 uniform GP rate for all the AYs 2017-18 to 2021-22 is considered. It is 22 is considered. It is observed that in the case of the appellant during the course of search, it observed that in the case of the appellant during the course of search, it observed that in the case of the appellant during the course of search, it was found that the appellant is systematically maintaining the was found that the appellant is systematically maintaining the was found that the appellant is systematically maintaining the transactions in J transactions in J-Pack software on the basis of metal traded with its f metal traded with its customers, which includes making charges or wastage recorded at the customers, which includes making charges or wastage recorded at the customers, which includes making charges or wastage recorded at the time of issue of gold ornaments ranging from average of 2 time of issue of gold ornaments ranging from average of 2 time of issue of gold ornaments ranging from average of 2-3% on average as excess metal either in the form of Making Charges or GP average as excess metal either in the form of Making Charges or GP average as excess metal either in the form of Making Charges or GP over a period of years for FY 201 over a period of years for FY 2016-17 to 2020-21. It was also noted that 21. It was also noted that in addition to 2-3%, the appellant is also charging making charges or GP 3%, the appellant is also charging making charges or GP 3%, the appellant is also charging making charges or GP more than the average percentage of 2 more than the average percentage of 2-3% for the delicate, antique 3% for the delicate, antique designs and models for making the ornaments which goes up to even 4 designs and models for making the ornaments which goes up to even 4 designs and models for making the ornaments which goes up to even 4- 8%. Thus, it can also be verified from the parties ledgers maintained in , it can also be verified from the parties ledgers maintained in , it can also be verified from the parties ledgers maintained in J-Pack that the appellant is able to receive an average of 2 Pack that the appellant is able to receive an average of 2 Pack that the appellant is able to receive an average of 2-3% of GP in majority of transactions recorded in the J majority of transactions recorded in the J-Pack for all the years from FY Pack for all the years from FY 2016-17 to 2020- -21 where the data is available in the seized J le in the seized J-Pack. On the basis of the above, I am of the opinion that the evidences seized the basis of the above, I am of the opinion that the evidences seized the basis of the above, I am of the opinion that the evidences seized from the course of search are to be relied to find out the more realistic from the course of search are to be relied to find out the more realistic from the course of search are to be relied to find out the more realistic to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::106 ::

GP than adopting of 8% of GP as general, which is not justified by the GP than adopting of 8% of GP as general, which is not justified by the GP than adopting of 8% of GP as general, which is not justified by the AO either in the assessment order or in the remand report. Further, it is the assessment order or in the remand report. Further, it is the assessment order or in the remand report. Further, it is also noted that rejection of books of accounts is not required in the case also noted that rejection of books of accounts is not required in the case also noted that rejection of books of accounts is not required in the case of appellant for the reason that the addition/estimation of income is to of appellant for the reason that the addition/estimation of income is to of appellant for the reason that the addition/estimation of income is to be made only on account of the transactions rec be made only on account of the transactions recorded outside the books orded outside the books of accounts. It is also verified beyond doubt during remand proceedings of accounts. It is also verified beyond doubt during remand proceedings of accounts. It is also verified beyond doubt during remand proceedings that the unaccounted sale transactions of Rs.1527,03,32,138/ that the unaccounted sale transactions of Rs.1527,03,32,138/ that the unaccounted sale transactions of Rs.1527,03,32,138/- is outside the books of accounts maintained in Tally and the rejection of outside the books of accounts maintained in Tally and the rejection of outside the books of accounts maintained in Tally and the rejection of books of the appellant m books of the appellant may be detrimental to the appellant for the ay be detrimental to the appellant for the reason that the GP arrived in the regular books of accounts may also be reason that the GP arrived in the regular books of accounts may also be reason that the GP arrived in the regular books of accounts may also be altered without any findings of defects in the said books of accounts. altered without any findings of defects in the said books of accounts. altered without any findings of defects in the said books of accounts. Hence, I am of the opinion that on the facts and circumstances of the Hence, I am of the opinion that on the facts and circumstances of the Hence, I am of the opinion that on the facts and circumstances of the case of the appellant, adopting the GP% on the basis of the findings of case of the appellant, adopting the GP% on the basis of the findings of case of the appellant, adopting the GP% on the basis of the findings of the search and estimating the income at such GP rate on unaccounted the search and estimating the income at such GP rate on unaccounted the search and estimating the income at such GP rate on unaccounted sale transactions and making an addition to the total income already sale transactions and making an addition to the total income already sale transactions and making an addition to the total income already disclosed in the books of accounts will be more disclosed in the books of accounts will be more realistic approach to realistic approach to arrive at the total business income of the appellant for the year under arrive at the total business income of the appellant for the year under arrive at the total business income of the appellant for the year under consideration. I had also considered the average GP% offered by the consideration. I had also considered the average GP% offered by the consideration. I had also considered the average GP% offered by the appellant for the AY 2017 appellant for the AY 2017-18 to 2021-22. The average rate of GP for 22. The average rate of GP for these 5 years is worked o these 5 years is worked out at 1.5% as per the GP% declared by the ut at 1.5% as per the GP% declared by the appellant in the ITRs filed and it ranges from 0.74% for AY 2017 appellant in the ITRs filed and it ranges from 0.74% for AY 2017 appellant in the ITRs filed and it ranges from 0.74% for AY 2017-18 to 2.58% for the AY 2020 2.58% for the AY 2020-21. Meaning thereby, the average GP for all the 21. Meaning thereby, the average GP for all the 5 years i.e. 1.5% is almost closer to the average GP recorded in the J 5 years i.e. 1.5% is almost closer to the average GP recorded in the J 5 years i.e. 1.5% is almost closer to the average GP recorded in the J- pack ledger i.e. 2 ck ledger i.e. 2-3% for the majority of transactions recorded in J 3% for the majority of transactions recorded in J- Pack. Further, it is also observed that when unaccounted sale Pack. Further, it is also observed that when unaccounted sale Pack. Further, it is also observed that when unaccounted sale transactions are made in gold ornaments, both the buyers and sellers transactions are made in gold ornaments, both the buyers and sellers transactions are made in gold ornaments, both the buyers and sellers are saving/evading the VAT/GST and duties payable on accou are saving/evading the VAT/GST and duties payable on accou are saving/evading the VAT/GST and duties payable on account of gold to certain level of percentage of the total value of transaction compared to certain level of percentage of the total value of transaction compared to certain level of percentage of the total value of transaction compared to the accounted transactions. In other words, the GP on unaccounted to the accounted transactions. In other words, the GP on unaccounted to the accounted transactions. In other words, the GP on unaccounted gold sales is always higher than the accounted sales on account of gold sales is always higher than the accounted sales on account of gold sales is always higher than the accounted sales on account of evasion of taxes and duties payable evasion of taxes and duties payable to the Government. Hence, the to the Government. Hence, the element of additional gross profit over and above the average GP on element of additional gross profit over and above the average GP on element of additional gross profit over and above the average GP on accounted sales cannot be ruled out in the case of the appellant. On the accounted sales cannot be ruled out in the case of the appellant. On the accounted sales cannot be ruled out in the case of the appellant. On the basis of the facts and circumstances as above, I am of the opinion that basis of the facts and circumstances as above, I am of the opinion that basis of the facts and circumstances as above, I am of the opinion that adopting the GP of 2.5% for estimating the unaccounted income of the GP of 2.5% for estimating the unaccounted income of the GP of 2.5% for estimating the unaccounted income of the appellant on the unaccounted sale transactions of gold ornaments appellant on the unaccounted sale transactions of gold ornaments appellant on the unaccounted sale transactions of gold ornaments recorded in J-Pack may be reasonable and the same can be adopted for Pack may be reasonable and the same can be adopted for Pack may be reasonable and the same can be adopted for all the AYs 2017- -18 to 2021-22 which are under appeal for the rea 22 which are under appeal for the reason that the appellant had followed the same approach for all these years as that the appellant had followed the same approach for all these years as that the appellant had followed the same approach for all these years as noted from the transactions in the J noted from the transactions in the J-Pack software. Therefore, the AO is Pack software. Therefore, the AO is directed to estimate the income of 2.5% on the unaccounted sale directed to estimate the income of 2.5% on the unaccounted sale directed to estimate the income of 2.5% on the unaccounted sale transaction…” to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::107 ::

In view of the above t In view of the above therefore, the profit element on the herefore, the profit element on the 10.14 overall unaccounted sales found in the ‘Cash’ Ledger of J overall unaccounted sales found in the ‘Cash’ Ledger of J-Pack Software is Pack Software is quantified as follows:-

A.Y. Unaccounted sales GP @ 2.5% GP @ 2.5% estimated by CIT(A) [in Rs.] [in Rs.] [Rs. in crs] 2017-18 1527.03 38,17,58,303 38,17,58,303 2018-19 1940.55 48,51,38,518 48,51,38,518 2019-20 767.52 19,18,80,408 19,18,80,408 2020-21 540.76 13,51,91,246 13,51,91,246 2021-22 265.77 6,64,43,676 6,64,43,676 TOTAL 1,26,04,12,151 1,26,04,12,151 10.15 The last contention of the assessee which is to be adjudicated The last contention of the assessee which is to be adjudicated The last contention of the assessee which is to be adjudicated is, whether the above profit as quantified is to be brought to tax in their is, whether the above profit as quantified is to be brought to tax in their is, whether the above profit as quantified is to be brought to tax in their hands entirely or whether the quantum of profit(s) already offered to tax hands entirely or whether the quantum of profit(s) already offered to tax hands entirely or whether the quantum of profit(s) already offered to tax on this account by Shri Mohanlal Khatri is on this account by Shri Mohanlal Khatri is to be excluded. As noted to be excluded. As noted earlier, the J-pack software is not an accounting software but rather a pack software is not an accounting software but rather a pack software is not an accounting software but rather a specialized inventory software, which was meant to provide proper specialized inventory software, which was meant to provide proper specialized inventory software, which was meant to provide proper inventory control for the assessee group the assessee group as a whole. It is an admitted . It is an admitted factual position that, for the reasons for the reasons already discussed in preceding discussed in preceding paragraphs that, the entries in the J paragraphs that, the entries in the J-Pack software relates to all the Pack software relates to all the entities across the assessee group. It is seen that consolidated entries are entities across the assessee group. It is seen that consolidated entries are entities across the assessee group. It is seen that consolidated entries are passed in this J-pack software pack software for all the entities belongin for all the entities belonging to the assessee group. We observe that, this factual aspect also came to light assessee group. We observe that, this factual aspect also came to light assessee group. We observe that, this factual aspect also came to light while adjudicating the issue of making charges (already discussed earlier) while adjudicating the issue of making charges (already discussed earlier) while adjudicating the issue of making charges (already discussed earlier) to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd wherein it was gathered that the ‘MC Khata’ Ledger of J wherein it was gathered that the ‘MC Khata’ Ledger of J- -Pack Software included making charges credit included making charges credited to the accounts of the assessee, ed to the accounts of the assessee, Mohanlal Jewellers Chennai private Limited & M/s Mohanlal Jewellers Mohanlal Jewellers Chennai private Limited & M/s Mohanlal Jewellers Mohanlal Jewellers Chennai private Limited & M/s Mohanlal Jewellers (Prop : Shri Mohanlal Khatri). These admitted facts thus clearly evidences (Prop : Shri Mohanlal Khatri). These admitted facts thus clearly evidences (Prop : Shri Mohanlal Khatri). These admitted facts thus clearly evidences that the entries in J-Pack Software did not relate to the assessee alone Pack Software did not relate to the assessee alone Pack Software did not relate to the assessee alone but it comprised of all the entries/transactions of the entire assessee it comprised of all the entries/transactions of the entire assessee it comprised of all the entries/transactions of the entire assessee group. It is also observed that, several entries in J observed that, several entries in J-pack software lacked pack software lacked narration and therefore there was no specific demarcation or identification narration and therefore there was no specific demarcation or identification narration and therefore there was no specific demarcation or identification to any specific entity of the assesse to any specific entity of the assessee group. We note that, the assessee e group. We note that, the assessee was able to identify and correlate certain ledgers and entries in J was able to identify and correlate certain ledgers and entries in J was able to identify and correlate certain ledgers and entries in J-pack software which corresponded to the regular books of accounts of several software which corresponded to the regular books of accounts of several software which corresponded to the regular books of accounts of several entities of the assessee group and therefore the same has been entities of the assessee group and therefore the same has been entities of the assessee group and therefore the same has been appropriately considered in their respective hands. It is the remaining y considered in their respective hands. It is the remaining y considered in their respective hands. It is the remaining untagged entries, which we find that, the Revenue has summed up and untagged entries, which we find that, the Revenue has summed up and untagged entries, which we find that, the Revenue has summed up and inferred them to be pertaining to the assessee alone. According to us, inferred them to be pertaining to the assessee alone. According to us, inferred them to be pertaining to the assessee alone. According to us, such action of the Revenue such action of the Revenue could have been ordinarily jus ordinarily justified considering the assessee was the flagship company of the group, considering the assessee was the flagship company of the group, considering the assessee was the flagship company of the group, but in the given facts, it cannot be countenanced, cannot be countenanced, for the reason that for the reason that another person (in this case, Shri Mohanlal Khatri) belonging to the assessee person (in this case, Shri Mohanlal Khatri) belonging to the assessee person (in this case, Shri Mohanlal Khatri) belonging to the assessee group has already accepted and admit group has already accepted and admitted portion of the income ted portion of the income attributable to these untagged or unidentifiable entries attributable to these untagged or unidentifiable entries in ‘Cash’ Ledger in ‘Cash’ Ledger to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd and the Revenue has also assessed the same to tax in such person’s and the Revenue has also assessed the same to tax in such person’s and the Revenue has also assessed the same to tax in such person’s hands.

10.16 It was brought to our notice that, Shri Mohanlal Khatri in the It was brought to our notice that, Shri Mohanlal Khatri in the It was brought to our notice that, Shri Mohanlal Khatri in the return(s) of income filed u/s 153A of the Act had inter alia offered return(s) of income filed u/s 153A of the Act had inter alia offered return(s) of income filed u/s 153A of the Act had inter alia offered additional income on account of profit from unaccounted sales found in additional income on account of profit from unaccounted sales found in additional income on account of profit from unaccounted sales found in this same ‘Cash’ Ledger of J this same ‘Cash’ Ledger of J-Pack Software to tax in his hands. As noted his hands. As noted earlier in Para 9.11 above, Shri Mohanlal Khatri had inter alia offered above, Shri Mohanlal Khatri had inter alia offered above, Shri Mohanlal Khatri had inter alia offered additional income of Rs. additional income of Rs.96,42,02,070/- to tax in his hands. It is observed to tax in his hands. It is observed that, Shri Mohanlal Khatri, in the course of assessment proceedings u/s that, Shri Mohanlal Khatri, in the course of assessment proceedings u/s that, Shri Mohanlal Khatri, in the course of assessment proceedings u/s 153A of the Act, had explained had explained the contents of this ‘Cash’ Ledger this ‘Cash’ Ledger maintained in J-pack software, which was confronted to the assessee in pack software, which was confronted to the assessee in pack software, which was confronted to the assessee in their notice u/s 142(1) of the Act. their notice u/s 142(1) of the Act. We note that, Shri Mohanlal Khatri in , Shri Mohanlal Khatri in his reply dated 24.03.2022 had inter alia submitted that, he h his reply dated 24.03.2022 had inter alia submitted that, he h his reply dated 24.03.2022 had inter alia submitted that, he had offered the unaccounted income emanating from this the unaccounted income emanating from this ‘Cash’ ‘Cash’ ledger to tax including TTT accounts on peak including TTT accounts on peak-credit basis. He is noted to have averred He is noted to have averred that, it was not possible for him to trace and determine each and every that, it was not possible for him to trace and determine each and every that, it was not possible for him to trace and determine each and every entry and therefore by applying the entry and therefore by applying the peak credit theory, he had offered the peak credit theory, he had offered the following additional income on account of profit from unaccounted sales to following additional income on account of profit from unaccounted sales to following additional income on account of profit from unaccounted sales to tax, :- to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::110 ::

Additional Business Income (on a/c of profit from A.Y. A.Y. unaccounted sales) [in Rs.] 2017 2017-18 2,20,61,198 2018 2018-19 25,34,55,379 2019 2019-20 11,78,00,000 2020 2020-21 7,50,00,000 2021 2021-22 20,60,85,490 TOTAL TOTAL 67,44,02,067 10.17 It is seen that, the AO had not disputed the above explanation that, the AO had not disputed the above explanation that, the AO had not disputed the above explanation furnished by Shri Mohanlal Khatri furnished by Shri Mohanlal Khatri, while passing the the order(s) u/s 153A/143(3) for AYs 2017 153A/143(3) for AYs 2017-18 to 2021-22. Having gone through the 22. Having gone through the computations of income, returns filed u/s 153A, reply furnished by him computations of income, returns filed u/s 153A, reply furnished by him computations of income, returns filed u/s 153A, reply furnished by him before the AO and the assessment orders passed u/s 153A/143(3) of the before the AO and the assessment orders passed u/s 153A/143(3) of the before the AO and the assessment orders passed u/s 153A/143(3) of the Act in the matters of Shri Mohanlal Khatri, we agree with the Ld. AR that, Act in the matters of Shri Mohanlal Khatri, we agree with the Ld. AR that, Act in the matters of Shri Mohanlal Khatri, we agree with the Ld. AR that, Shri Mohanlal Khatri had offered additional income to tax in the returns of hanlal Khatri had offered additional income to tax in the returns of hanlal Khatri had offered additional income to tax in the returns of income filed u/s 153A of the Act for AYs 2017 income filed u/s 153A of the Act for AYs 2017-18 to 2021 18 to 2021-22 and that such additional income inter alia included unaccounted profit from such additional income inter alia included unaccounted profit from such additional income inter alia included unaccounted profit from business aggregating to Rs. business aggregating to Rs.67,44,02,067/-, details of which have already , details of which have already been tabulated above.

It is further further observed that, the aggregate unaccounted sales the aggregate unaccounted sales 10.18 quantified by the Ld. CIT(A) in the impugned order(s) and the profit quantified by the Ld. CIT(A) in the impugned order(s) and the profit quantified by the Ld. CIT(A) in the impugned order(s) and the profit estimated thereon is not exclusive of the profit offered to tax estimated thereon is not exclusive of the profit offered to tax estimated thereon is not exclusive of the profit offered to tax by Shri Mohanlal Khatri. It is seen from the remand report(s) and the Ld. CIT(A)’s Mohanlal Khatri. It is seen from the remand report(s) and the Ld. CIT(A)’s Mohanlal Khatri. It is seen from the remand report(s) and the Ld. CIT(A)’s order that, the Ld. CIT(A) Ld. CIT(A) had first considered the aggregate entries in had first considered the aggregate entries in to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd the ‘Cash’ Ledger and thereafter excluded (a) the ledgers relating to the ‘Cash’ Ledger and thereafter excluded (a) the ledgers relating to the ‘Cash’ Ledger and thereafter excluded (a) the ledgers relating to ‘Byaj, ‘Vatav’, ‘MC Khata’ et ‘Byaj, ‘Vatav’, ‘MC Khata’ etc. which had been separately taxed in the c. which had been separately taxed in the hands of the assessee, (b) those sub hands of the assessee, (b) those sub-ledgers which related to ledgers which related to unaccounted transactions of Shri Suresh Khatri and had been taxed in his unaccounted transactions of Shri Suresh Khatri and had been taxed in his unaccounted transactions of Shri Suresh Khatri and had been taxed in his individual hands, (c) bank entries found in the regular books of accounts individual hands, (c) bank entries found in the regular books of accounts individual hands, (c) bank entries found in the regular books of accounts and (d) reversal/ group / contra entries d) reversal/ group / contra entries; to arrive at the the quantum of unaccounted sales. Having regard to the foregoing, we are in agreement Having regard to the foregoing, we are in agreement Having regard to the foregoing, we are in agreement with the Ld. AR of the assessee that, the profit on unaccounted sales with the Ld. AR of the assessee that, the profit on unaccounted sales with the Ld. AR of the assessee that, the profit on unaccounted sales already offered to tax by Shri Mohanlal Khatri offered to tax by Shri Mohanlal Khatri had not been excluded by not been excluded by the Ld. CIT(A) but is subsumed in the aggregate unaccounted sales is subsumed in the aggregate unaccounted sales is subsumed in the aggregate unaccounted sales quantified by the Ld. CIT(A) in the impugned order(s) and the profit quantified by the Ld. CIT(A) in the impugned order(s) and the profit quantified by the Ld. CIT(A) in the impugned order(s) and the profit estimated thereon.

In view of the above therefore, we hold that, the profit on In view of the above therefore, we hold that, the profit on In view of the above therefore, we hold that, the profit on 10.19 unaccounted sales found in the ‘Cash’ ledger to the extent already taxed ales found in the ‘Cash’ ledger to the extent already taxed ales found in the ‘Cash’ ledger to the extent already taxed in the hands of Shri Mohanlal Khatri, in the hands of Shri Mohanlal Khatri, is to be excluded from the profit on s to be excluded from the profit on unaccounted sales estimated by Ld. CIT(A), to arrive at the correct value unaccounted sales estimated by Ld. CIT(A), to arrive at the correct value unaccounted sales estimated by Ld. CIT(A), to arrive at the correct value of addition which is to be added and taxed in t of addition which is to be added and taxed in the hands of the assessee. he hands of the assessee.

We concur with the Ld. AR that, if the additional income on account of We concur with the Ld. AR that, if the additional income on account of We concur with the Ld. AR that, if the additional income on account of profit from unaccounted business [‘Cash’ ledger of J profit from unaccounted business [‘Cash’ ledger of J-Pack Software] which Pack Software] which has already been taxed in hands of Shri Mohanlal Khatri is not excluded, has already been taxed in hands of Shri Mohanlal Khatri is not excluded, has already been taxed in hands of Shri Mohanlal Khatri is not excluded, then it would result in impermissible double taxation of the same amount. d result in impermissible double taxation of the same amount. d result in impermissible double taxation of the same amount. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::112 ::

We note that the objections raised by the Ld. CIT, DR to this We note that the objections raised by the Ld. CIT, DR to this We note that the objections raised by the Ld. CIT, DR to this 10.20 exercise is similar to that what was made while adjudicating the issue exercise is similar to that what was made while adjudicating the issue exercise is similar to that what was made while adjudicating the issue relating to addition(s) made on relating to addition(s) made on account of ‘byaj’ and ‘vatav’ and for the vatav’ and for the reasons already discussed at Paras reasons already discussed at Paras 9.17 to 9.21 above, we reject the above, we reject the same.

10.21 In light of the above, the profit on account of unaccounted In light of the above, the profit on account of unaccounted In light of the above, the profit on account of unaccounted sales assessable in the hands of the assessee is accordingly being sales assessable in the hands of the assessee is accordingly being sales assessable in the hands of the assessee is accordingly being quantified across AYs 2017 quantified across AYs 2017-18 to 2021-22, whose manner of calculation is 22, whose manner of calculation is as follows:-

A.Y. Profit on Less: Additional Net addition to be Business Income Unaccounted Sales Unaccounted Sales made made in hands of the offered to tax by MLK [As per CIT(A)’s [As per CIT(A)’s assessee (on a/c of profit from order] (in Rs.) order] (in Rs.) unaccounted sales) [in Rs.] (A) (A) – (B) (B) 2017-18 38,17,58,303 38,17,58,303 2,20,61,198 35,96,97,105 2018-19 48,51,38,518 48,51,38,518 25,34,55,379 23,16,83,139 2019-20 19,18,80,408 19,18,80,408 11,78,00,000 7,40,80,408 2020-21 13,51,91,246 13,51,91,246 7,50,00,000 6,01,91,246 2021-22 6,64,43,676 6,64,43,676 20,60,85,490 NIL (since negative) TOTAL 1,26,04,12,151 1,26,04,12,151 67,44,02,067 72,56,51,898 10.22 Overall therefore, out of the total profit of Rs.126,04,12,151/ therefore, out of the total profit of Rs.126,04,12,151/ therefore, out of the total profit of Rs.126,04,12,151/- estimated on the unaccounted sales found in ‘Cash’ ledger of J estimated on the unaccounted sales found in ‘Cash’ ledger of J estimated on the unaccounted sales found in ‘Cash’ ledger of J-pack software, we allow the benefit / credit for the additional income offered to software, we allow the benefit / credit for the additional income offered to software, we allow the benefit / credit for the additional income offered to tax by Shri Mohanlal Khatri on this account in his in tax by Shri Mohanlal Khatri on this account in his individual hands, and dividual hands, and to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd accordingly confirm addition(s) totaling to Rs. accordingly confirm addition(s) totaling to Rs.72,56,51,898 72,56,51,898/- across AYs 2017-18 to 2020-21 in the hands of the assessee, as tabulated above. As 21 in the hands of the assessee, as tabulated above. As 21 in the hands of the assessee, as tabulated above. As shall be seen from the above table, the addition confirmed by the Ld. shall be seen from the above table, the addition confirmed by the Ld. shall be seen from the above table, the addition confirmed by the Ld.

CIT(A) in AY 2021-22 stands deleted in full. Hence, stands deleted in full. Hence, overall therefore, overall therefore, the grounds raised by the Revenue stands dismissed and the grounds of the grounds raised by the Revenue stands dismissed and the grounds of the grounds raised by the Revenue stands dismissed and the grounds of the assessee is partly allowed. assessee is partly allowed.

814235.03 gms, 4454410.03 gms are duly reflected in the books of 814235.03 gms, 4454410.03 gms are duly reflected in the books of 814235.03 gms, 4454410.03 gms are duly reflected in the books of accounts and 56709.99 gms comprised of gold received from various accounts and 56709.99 gms comprised of gold received from various accounts and 56709.99 gms comprised of gold received from various customers for job-work. The assessee had therefore claimed that total of work. The assessee had therefore claimed that total of work. The assessee had therefore claimed that total of 502120.02 gms was accounted for 502120.02 gms was accounted for and the balance of 312115.01 gms ce of 312115.01 gms was unexplained. Later on, in the course of assessment, the assessee . Later on, in the course of assessment, the assessee . Later on, in the course of assessment, the assessee pointed out further infirmities in the calculation and showed that there pointed out further infirmities in the calculation and showed that there pointed out further infirmities in the calculation and showed that there were certain entries for goods sent from one entity to another entity or were certain entries for goods sent from one entity to another entity or were certain entries for goods sent from one entity to another entity or contra entries, which also to be also to be removed, and accordingly and accordingly the excess stock as per J-Pack software would only be 143659.38 gms. The AO Pack software would only be 143659.38 gms. The AO Pack software would only be 143659.38 gms. The AO however was not agreeable to the submission of the assessee and by however was not agreeable to the submission of the assessee and by however was not agreeable to the submission of the assessee and by relying on the statement given by Shri Suresh Khatri wherein he had relying on the statement given by Shri Suresh Khatri wherein he had relying on the statement given by Shri Suresh Khatri wherein he had stated that, out of 814235.03 gms, only 4454410.03 gms was reflected in hat, out of 814235.03 gms, only 4454410.03 gms was reflected in hat, out of 814235.03 gms, only 4454410.03 gms was reflected in the books of accounts, the AO considered the remaining balance of the books of accounts, the AO considered the remaining balance of the books of accounts, the AO considered the remaining balance of 368825 gms to be unaccounted stock. Applying gold rate of Rs.4881/gm, 368825 gms to be unaccounted stock. Applying gold rate of Rs.4881/gm, 368825 gms to be unaccounted stock. Applying gold rate of Rs.4881/gm, the AO is noted to have estimated the value of unaccount the AO is noted to have estimated the value of unaccount the AO is noted to have estimated the value of unaccounted stock at Rs.180,02,34,825/-.

11.2 In addition to the above, the AO also found that In addition to the above, the AO also found that, in the same ‘Party in the same ‘Party Balance Sheet’, there w Balance Sheet’, there were receivables from various parties aggregating from various parties aggregating to Rs.51,62,29,969/-, which according to him was also unaccounted for, , which according to him was also unaccounted for, , which according to him was also unaccounted for, and therefore he added the same u/s 69 of the Act. Further, there was added the same u/s 69 of the Act. Further, there was added the same u/s 69 of the Act. Further, there was cash of Rs.14,29,460/ cash of Rs.14,29,460/- and unexplained silver of Rs.42,67,644/ and unexplained silver of Rs.42,67,644/- to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd physically found in the premises found in the premises at the time of search, which was also , which was also added by way of unexplained asset to the total income. It added by way of unexplained asset to the total income. It added by way of unexplained asset to the total income. It is therefore observed that, the total unaccounted assets added by the AO observed that, the total unaccounted assets added by the AO observed that, the total unaccounted assets added by the AO in the hands of the assessee in AY 2021 of the assessee in AY 2021-22 comprised of the following:-

Particulars Particulars Amount (in Rs.) Amount (in Rs.) Excess Stock 152,34,33,363 152,34,33,363 Unaccounted cash receivables Unaccounted cash receivables 51,62,29,629 51,62,29,629 Unaccounted cash 14,29,460 14,29,460 Unexplained silver Unexplained silver 42,67,664 42,67,664 Total 204,53,60,116 204,53,60,116 11.3 Aggrieved by the above addition Aggrieved by the above addition(s), the assessee carried the matter , the assessee carried the matter in appeal before the Ld. CIT(A). It is noted that, the assessee furnished in appeal before the Ld. CIT(A). It is noted that, the assessee furnished in appeal before the Ld. CIT(A). It is noted that, the assessee furnished submissions objecting the above addition submissions objecting the above addition(s) and also its quantification (s) and also its quantification& valuation. The assessee alternatively claimed that, if the above items are . The assessee alternatively claimed that, if the above items are . The assessee alternatively claimed that, if the above items are treated to be unexplained treated to be unexplained, then correspondingly the unaccounted income then correspondingly the unaccounted income as taxed in AYs 2017-18 to 2021 18 to 2021-22 ought to be telescoped against the 22 ought to be telescoped against the same. The assessee is found to have contended that, the additions made he assessee is found to have contended that, the additions made he assessee is found to have contended that, the additions made on account of ‘byaj’, ‘vatav’ & ‘profit on unaccounted sales’ in their hands on account of ‘byaj’, ‘vatav’ & ‘profit on unaccounted sales’ in their hands on account of ‘byaj’, ‘vatav’ & ‘profit on unaccounted sales’ in their hands and in the hands of Shri Mohanlal Khatri, ought to be telescoped to these Shri Mohanlal Khatri, ought to be telescoped to these Shri Mohanlal Khatri, ought to be telescoped to these unexplained assets. The assessee accordin The assessee accordingly submitted before the Ld. gly submitted before the Ld.

CIT(A) that, after allowing the benefit of telescoping, no further addition , after allowing the benefit of telescoping, no further addition , after allowing the benefit of telescoping, no further addition would be warranted in this regard. would be warranted in this regard. to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::116 ::

11.4 It is observed that, the Ld. CIT(A) It is observed that, the Ld. CIT(A) had rejected had rejected each of the assessee’s objections to the merits and quantific to the merits and quantification of unexplained ation of unexplained assets unearthed from the ‘Party Balance Sheet’ and which was physically assets unearthed from the ‘Party Balance Sheet’ and which was physically assets unearthed from the ‘Party Balance Sheet’ and which was physically found in the course of search found in the course of search, except on account of quantification of quantification of excess stock, which he partially agreed , which he partially agreed and reduced the and reduced the quantum from 368825 gms to 312115 gm 368825 gms to 312115 gms. The Ld. CIT(A) also denied the benefit of The Ld. CIT(A) also denied the benefit of telescoping the ‘intangible additions’ on account of ‘Byaj’, ‘vatav’ and telescoping the ‘intangible additions’ on account of ‘Byaj’, ‘vatav’ and telescoping the ‘intangible additions’ on account of ‘Byaj’, ‘vatav’ and ‘profit from unaccounted sales’ made in the hands of Shri Mohanlal Khatri ‘profit from unaccounted sales’ made in the hands of Shri Mohanlal Khatri ‘profit from unaccounted sales’ made in the hands of Shri Mohanlal Khatri to be set-off against these unexplained assets. these unexplained assets. The Ld. CIT(A) he Ld. CIT(A) however directed that, the addition(s) to the extent which is confirmed on account the addition(s) to the extent which is confirmed on account the addition(s) to the extent which is confirmed on account of ‘Byaj’, ‘vatav’ and ‘profit from unaccounted sales’ in the hands of the of ‘Byaj’, ‘vatav’ and ‘profit from unaccounted sales’ in the hands of the of ‘Byaj’, ‘vatav’ and ‘profit from unaccounted sales’ in the hands of the assessee is allowable to be telescoped and set off is allowable to be telescoped and set off is allowable to be telescoped and set off against these unexplained assets and directed t and directed the AO to do so. The relevant findings . The relevant findings rendered by the Ld. CIT(A) in the context o rendered by the Ld. CIT(A) in the context on the issue of n the issue of excess stock [similar findings have been recorded for unaccounted receivables, [similar findings have been recorded for unaccounted receivables, [similar findings have been recorded for unaccounted receivables, unexplained cash & silver] are noted to be as follows: unexplained cash & silver] are noted to be as follows:-

“..With regard to the claim of the appellant that the unaccounted income With regard to the claim of the appellant that the unaccounted income With regard to the claim of the appellant that the unaccounted income has already been offered in the hands of Mohanlal Khatri is not has already been offered in the hands of Mohanlal Khatri is not has already been offered in the hands of Mohanlal Khatri is not acceptable for the detailed reasons given in the appeal order passed in acceptable for the detailed reasons given in the appeal order passed in acceptable for the detailed reasons given in the appeal order passed in the appellant’s own case for AY 2017 the appellant’s own case for AY 2017-18 to 2020-21. Hence, I am of the . Hence, I am of the opinion that the unaccounted income already offered in the hands of opinion that the unaccounted income already offered in the hands of opinion that the unaccounted income already offered in the hands of Shri Mohanlal Khatri is the source for unaccounted stock found in the Shri Mohanlal Khatri is the source for unaccounted stock found in the Shri Mohanlal Khatri is the source for unaccounted stock found in the case of appellant is not acceptable. However, it was held by me in the case of appellant is not acceptable. However, it was held by me in the case of appellant is not acceptable. However, it was held by me in the appeals of the appellant f appeals of the appellant for AY 2017-18 to 2020-21 and also for the 21 and also for the year under consideration that the appellant had earned unaccounted year under consideration that the appellant had earned unaccounted year under consideration that the appellant had earned unaccounted income from BYAJ, VATAV and unaccounted cash sales. The quantum of income from BYAJ, VATAV and unaccounted cash sales. The quantum of income from BYAJ, VATAV and unaccounted cash sales. The quantum of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd unaccounted income on these sustained additions in the appeals of the unaccounted income on these sustained additions in the appeals of the unaccounted income on these sustained additions in the appeals of the appellant for the AY 2017 for the AY 2017-18 to 2021-22 has to be considered as the 22 has to be considered as the source for unaccounted stock found during the course of search. The AO source for unaccounted stock found during the course of search. The AO source for unaccounted stock found during the course of search. The AO is also directed to work out the unaccounted income on the basis of the is also directed to work out the unaccounted income on the basis of the is also directed to work out the unaccounted income on the basis of the findings in the appeal orders for AY 2017 findings in the appeal orders for AY 2017-18 to 2020-21 and also for the and also for the same issues in the year under consideration and allow the value of same issues in the year under consideration and allow the value of same issues in the year under consideration and allow the value of unaccounted stock as application of income to the extent available for unaccounted stock as application of income to the extent available for unaccounted stock as application of income to the extent available for telescoping and tax only the balance as unaccounted excess stock, if telescoping and tax only the balance as unaccounted excess stock, if telescoping and tax only the balance as unaccounted excess stock, if any, as unaccounted business in any, as unaccounted business income in the year under consideration. come in the year under consideration. Further, the AO is also directed to follow up further appeal filed by the Further, the AO is also directed to follow up further appeal filed by the Further, the AO is also directed to follow up further appeal filed by the appellant, if any, against the issue of BYAJ, VATAV or unaccounted sales appellant, if any, against the issue of BYAJ, VATAV or unaccounted sales appellant, if any, against the issue of BYAJ, VATAV or unaccounted sales for the AY 2017- -18 to 2021-22 and on account of such appeal orders 22 and on account of such appeal orders from higher authorities, if the unaccounted income of the appellant is higher authorities, if the unaccounted income of the appellant is higher authorities, if the unaccounted income of the appellant is subsequently reduced on account of such appeal orders, the AO has to subsequently reduced on account of such appeal orders, the AO has to subsequently reduced on account of such appeal orders, the AO has to modify the quantum of unaccounted excess stock after giving effect to modify the quantum of unaccounted excess stock after giving effect to modify the quantum of unaccounted excess stock after giving effect to the sustained unaccounted income and the balance i the sustained unaccounted income and the balance is to be taxed as s to be taxed as unexplained business income towards application in the form of unexplained business income towards application in the form of unexplained business income towards application in the form of unaccounted excess stock for the year under consideration…” unaccounted excess stock for the year under consideration…” unaccounted excess stock for the year under consideration…”

11.5 Aggrieved by the above order of the Ld. CIT(A), the assessee is in Aggrieved by the above order of the Ld. CIT(A), the assessee is in Aggrieved by the above order of the Ld. CIT(A), the assessee is in appeal before us.

11.6 At the time of heari At the time of hearing, the Ld. AR for the assessee, without ng, the Ld. AR for the assessee, without prejudice to his objections to the merits of these addition(s), had prejudice to his objections to the merits of these addition(s), had prejudice to his objections to the merits of these addition(s), had submitted that, the Ld. CIT(A) was unjustified in valuing the excess gold submitted that, the Ld. CIT(A) was unjustified in valuing the excess gold submitted that, the Ld. CIT(A) was unjustified in valuing the excess gold stock as per the ‘party balance sheet’ and the silver found in the course stock as per the ‘party balance sheet’ and the silver found in the course stock as per the ‘party balance sheet’ and the silver found in the course of search with reference to the market rates prevailing as on 10.11.2020. search with reference to the market rates prevailing as on 10.11.2020. search with reference to the market rates prevailing as on 10.11.2020.

According to the Ld. AR, this excess stock found appearing in the J According to the Ld. AR, this excess stock found appearing in the J According to the Ld. AR, this excess stock found appearing in the J-Pack software and also the silver was a cumulation of the excess stock software and also the silver was a cumulation of the excess stock software and also the silver was a cumulation of the excess stock generated over the years and therefore it generated over the years and therefore it ought to be appropriately ought to be appropriately apportioned amongst the respective years and be valued with reference apportioned amongst the respective years and be valued with reference apportioned amongst the respective years and be valued with reference to the market rates prevailing in those years. The Ld. AR has furnished a to the market rates prevailing in those years. The Ld. AR has furnished a to the market rates prevailing in those years. The Ld. AR has furnished a to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd calculation sheet, in terms of which, the value of excess gold stock and calculation sheet, in terms of which, the value of excess gold stock and calculation sheet, in terms of which, the value of excess gold stock and silver, as per the assessee, works out to Rs.1,01,84,40,250/ r the assessee, works out to Rs.1,01,84,40,250/ r the assessee, works out to Rs.1,01,84,40,250/- and Rs.25,07,183/- respectively. The Ld. AR contended that, having regard to respectively. The Ld. AR contended that, having regard to respectively. The Ld. AR contended that, having regard to this corrected stock value this corrected stock values and the value of other unexplained assets and the value of other unexplained assets, as confirmed by the Ld. CIT(A), if the benefit of telescopi confirmed by the Ld. CIT(A), if the benefit of telescopi confirmed by the Ld. CIT(A), if the benefit of telescoping for the unaccounted income offered to tax by Shri Mohanlal Khatri unaccounted income offered to tax by Shri Mohanlal Khatri unaccounted income offered to tax by Shri Mohanlal Khatri, in addition to the unaccounted income assessed in the hands of the assessee, the unaccounted income assessed in the hands of the assessee, the unaccounted income assessed in the hands of the assessee, is also allowed, then the entire allowed, then the entire impugned addition shall stand deleted. Per addition shall stand deleted. Per contra, the Ld. CIT, DR vehementl contra, the Ld. CIT, DR vehemently supported the order of the Ld. CIT(A). y supported the order of the Ld. CIT(A).

11.7 We have heard both the parties and perused the material placed We have heard both the parties and perused the material placed We have heard both the parties and perused the material placed before us. Before adverting to the facts of the case, we first take note of Before adverting to the facts of the case, we first take note of Before adverting to the facts of the case, we first take note of the principle of telescoping which has since been judicially approved b the principle of telescoping which has since been judicially approved b the principle of telescoping which has since been judicially approved by the Hon'ble Supreme Court in the case of Anantharam the Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah Veerasinghaiah & Co. Vs CIT (123 ITR 457). In the decided case, it was held that where the Co. Vs CIT (123 ITR 457). In the decided case, it was held that where the Co. Vs CIT (123 ITR 457). In the decided case, it was held that where the assessee offers any income on ad hoc basis, then such income is assessee offers any income on ad hoc basis, then such income is assessee offers any income on ad hoc basis, then such income is commonly described as intangible addition; but commonly described as intangible addition; but it is very much a part of it is very much a part of assessee's real income as disclosed in his account books and has the assessee's real income as disclosed in his account books and has the assessee's real income as disclosed in his account books and has the same concrete existence. The Hon'ble Court held that same concrete existence. The Hon'ble Court held that, the secret profits the secret profits or undisclosed income of an assessee earned in the same or an earlier or undisclosed income of an assessee earned in the same or an earlier or undisclosed income of an assessee earned in the same or an earlier assessment year may constitute a secret fund, even though concealed, y constitute a secret fund, even though concealed, y constitute a secret fund, even though concealed, from which the assessee may draw subsequently for meeting expenditure from which the assessee may draw subsequently for meeting expenditure from which the assessee may draw subsequently for meeting expenditure to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd or introducing amounts in his account books. The intangible additions or introducing amounts in his account books. The intangible additions or introducing amounts in his account books. The intangible additions were held to be available to the assessee as the regular book pro were held to be available to the assessee as the regular book pro were held to be available to the assessee as the regular book profits could be. The Apex Court thus held when the unexplained cash deficits and the be. The Apex Court thus held when the unexplained cash deficits and the be. The Apex Court thus held when the unexplained cash deficits and the cash credits can be reasonably attributed to a pre cash credits can be reasonably attributed to a pre-existing fund of existing fund of concealed profits or by reference to concealed income earned in that very concealed profits or by reference to concealed income earned in that very concealed profits or by reference to concealed income earned in that very year then no addition is warran year then no addition is warranted on account of such cash deficits or ted on account of such cash deficits or cash credits.

11.8 Gainful reference in this regard may be made to the decision of the Gainful reference in this regard may be made to the decision of the Gainful reference in this regard may be made to the decision of the jurisdictional Hon'ble Madras High Court in the case of S K. Muralidhar Vs jurisdictional Hon'ble Madras High Court in the case of S K. Muralidhar Vs jurisdictional Hon'ble Madras High Court in the case of S K. Muralidhar Vs CIT (51 ITR 757). In the decided case the AO had initi CIT (51 ITR 757). In the decided case the AO had initi CIT (51 ITR 757). In the decided case the AO had initially made an addition by way of inflation of purchases in the hands of the assessee addition by way of inflation of purchases in the hands of the assessee addition by way of inflation of purchases in the hands of the assessee across AYs 1947-48 to 1950 48 to 1950-51. Thereafter, the AO came in possession of 51. Thereafter, the AO came in possession of information that the assessee had lent certain amounts in mortgage in the information that the assessee had lent certain amounts in mortgage in the information that the assessee had lent certain amounts in mortgage in the name of his brother and al name of his brother and also made investment in name of his wife and so made investment in name of his wife and daughter in an entity 'S', for which separate additions were made in AYs daughter in an entity 'S', for which separate additions were made in AYs daughter in an entity 'S', for which separate additions were made in AYs 1949-50 & 1950-51. On appeal, the AAC is noted to have held that there 51. On appeal, the AAC is noted to have held that there 51. On appeal, the AAC is noted to have held that there was no justification in making the subsequent addition as it stood ju was no justification in making the subsequent addition as it stood ju was no justification in making the subsequent addition as it stood justified out of the addition made on account inflated purchases in AYs 1947 out of the addition made on account inflated purchases in AYs 1947 out of the addition made on account inflated purchases in AYs 1947-48 to 1950-51. On further appeal, the Tribunal upheld the action of AO. On 51. On further appeal, the Tribunal upheld the action of AO. On 51. On further appeal, the Tribunal upheld the action of AO. On appeal by the assessee, the Hon'ble High Court is noted to have appeal by the assessee, the Hon'ble High Court is noted to have appeal by the assessee, the Hon'ble High Court is noted to have elaborately discussed the theory of telesc elaborately discussed the theory of telescoping of income against oping of income against to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd investment / expenditure and allowed the assessee's claim by holding as investment / expenditure and allowed the assessee's claim by holding as investment / expenditure and allowed the assessee's claim by holding as under:-

"The question in issue is quite simple and yet the Tribunal misdirected "The question in issue is quite simple and yet the Tribunal misdirected "The question in issue is quite simple and yet the Tribunal misdirected itself and went wrong. It is a hard fact that for the two years 1947 itself and went wrong. It is a hard fact that for the two years 1947 itself and went wrong. It is a hard fact that for the two years 1947-48 and 1948-49 a total addition of Rs. 52,230 was made by the department 49 a total addition of Rs. 52,230 was made by the department 49 a total addition of Rs. 52,230 was made by the department in computing the assessable income. This was, therefore, treated as the in computing the assessable income. This was, therefore, treated as the in computing the assessable income. This was, therefore, treated as the real income of the assessee for the years in question. There was nothing real income of the assessee for the years in question. There was nothing real income of the assessee for the years in question. There was nothing notional or fictional about it. However convenien notional or fictional about it. However convenient it might be to describe t it might be to describe the addition as "intangible" as has been done by the department and the the addition as "intangible" as has been done by the department and the the addition as "intangible" as has been done by the department and the Tribunal, the fact is that it was found to have accrued to the assessee Tribunal, the fact is that it was found to have accrued to the assessee Tribunal, the fact is that it was found to have accrued to the assessee and was not merely supposed to have been earned by him. Once the and was not merely supposed to have been earned by him. Once the and was not merely supposed to have been earned by him. Once the addition is made the addition is made the department is fixed to the position that the department is fixed to the position that the assessee earned the amount in the relevant year. There can be no assessee earned the amount in the relevant year. There can be no assessee earned the amount in the relevant year. There can be no relaxation from that position and we have no doubt that the department relaxation from that position and we have no doubt that the department relaxation from that position and we have no doubt that the department cannot deviate from or wriggle out of it without departing from ordinary cannot deviate from or wriggle out of it without departing from ordinary cannot deviate from or wriggle out of it without departing from ordinary standards of justice and fair andards of justice and fair play. If in such a case the assessee points play. If in such a case the assessee points to that addition as the source from which he got a particular amount to that addition as the source from which he got a particular amount to that addition as the source from which he got a particular amount which he is called upon to explain, the department is bound to accept it which he is called upon to explain, the department is bound to accept it which he is called upon to explain, the department is bound to accept it as exceedingly likely and probable, as exceedingly likely and probable, consistent with its previous act in consistent with its previous act in treating the addition as income, unless it be that it is possible to say treating the addition as income, unless it be that it is possible to say treating the addition as income, unless it be that it is possible to say that the source was not available to the assessee. The onus of proving that the source was not available to the assessee. The onus of proving that the source was not available to the assessee. The onus of proving this would be on the department. Otherwise, it would amount to the this would be on the department. Otherwise, it would amount to the this would be on the department. Otherwise, it would amount to the department saying, "heads I win, tails you lose". t saying, "heads I win, tails you lose".

The decision of the Andhra High Court in Lagadapati Subba Ramaiah v. The decision of the Andhra High Court in Lagadapati Subba Ramaiah v. The decision of the Andhra High Court in Lagadapati Subba Ramaiah v. Commissioner of Income Commissioner of Income-tax [1956] 30 ITR 593 is a case in point. In tax [1956] 30 ITR 593 is a case in point. In that case the assessee was a shareholder of a private limited company that case the assessee was a shareholder of a private limited company that case the assessee was a shareholder of a private limited company styled the Nellore Bus Transport Co. Ltd. According to the books of the he Nellore Bus Transport Co. Ltd. According to the books of the he Nellore Bus Transport Co. Ltd. According to the books of the company its profits for its entire period of existence, that is to say, for company its profits for its entire period of existence, that is to say, for company its profits for its entire period of existence, that is to say, for the years of account ending with 31st December, 1946, 31st December, the years of account ending with 31st December, 1946, 31st December, the years of account ending with 31st December, 1946, 31st December, 1947, 31st December, 1948, nth May, 1949, amoun 1947, 31st December, 1948, nth May, 1949, amounted in all to Rs. ted in all to Rs. 34,352. The revenue declined to accept the books of the company and 34,352. The revenue declined to accept the books of the company and 34,352. The revenue declined to accept the books of the company and estimated its income at a higher sum on which tax to the tune of Rs. estimated its income at a higher sum on which tax to the tune of Rs. estimated its income at a higher sum on which tax to the tune of Rs. 62,000 was assessed and paid. The company purported to issue the 62,000 was assessed and paid. The company purported to issue the 62,000 was assessed and paid. The company purported to issue the dividend warrants to its shareholder dividend warrants to its shareholders aggregating to a sum of Rs. s aggregating to a sum of Rs. 1,16,280. The assessee stated that he got the dividends of Rs. 6,800 1,16,280. The assessee stated that he got the dividends of Rs. 6,800 1,16,280. The assessee stated that he got the dividends of Rs. 6,800 and Rs. 4,800 for the account years ending with 31st December, 1946, and Rs. 4,800 for the account years ending with 31st December, 1946, and Rs. 4,800 for the account years ending with 31st December, 1946, and 31st December, 1947, respectively, the dividends having been and 31st December, 1947, respectively, the dividends having been and 31st December, 1947, respectively, the dividends having been declared by the company declared by the company on 2nd March, 1949. The assessee, however, on 2nd March, 1949. The assessee, however, claimed a refund on the basis of only one dividend warrant dated June claimed a refund on the basis of only one dividend warrant dated June claimed a refund on the basis of only one dividend warrant dated June 9, 1949, for Rs. 6,800. The department as well as the Tribunal rejected 9, 1949, for Rs. 6,800. The department as well as the Tribunal rejected 9, 1949, for Rs. 6,800. The department as well as the Tribunal rejected to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd the claim of the assessee. The view taken was that after the payment o the claim of the assessee. The view taken was that after the payment o the claim of the assessee. The view taken was that after the payment of income- tax of Rs. 62,000 levied on the company there were no funds tax of Rs. 62,000 levied on the company there were no funds tax of Rs. 62,000 levied on the company there were no funds available with it out of which, dividends could have been declared and available with it out of which, dividends could have been declared and available with it out of which, dividends could have been declared and paid. The question before the High Court was whether the assessee was paid. The question before the High Court was whether the assessee was paid. The question before the High Court was whether the assessee was not entitled to a refund of tax in respect of not entitled to a refund of tax in respect of the dividends in question. In the dividends in question. In dealing with the matter, Viswanatha Sastri J. observes thus at page dealing with the matter, Viswanatha Sastri J. observes thus at page dealing with the matter, Viswanatha Sastri J. observes thus at page 599:

"In the present case, it is somewhat difficult to say that there were no "In the present case, it is somewhat difficult to say that there were no "In the present case, it is somewhat difficult to say that there were no profits of the company out of which a dividend could have been paid. profits of the company out of which a dividend could have been paid. profits of the company out of which a dividend could have been paid. When the revenue authority levied a tax of Rs. 62,000 on the company, evenue authority levied a tax of Rs. 62,000 on the company, evenue authority levied a tax of Rs. 62,000 on the company, it proceeded on the basis that the books of the company which showed a it proceeded on the basis that the books of the company which showed a it proceeded on the basis that the books of the company which showed a total income of only Rs. 34,532 for all the four years of its existence total income of only Rs. 34,532 for all the four years of its existence total income of only Rs. 34,532 for all the four years of its existence were unreliable and that the bulk of the company's pr were unreliable and that the bulk of the company's profits had been kept ofits had been kept outside its books. Now those secret profits less the income outside its books. Now those secret profits less the income outside its books. Now those secret profits less the income-tax paid, therefore, would be available with the company for distribution as therefore, would be available with the company for distribution as therefore, would be available with the company for distribution as dividends. Once the secret profits had been assessed to tax, it would dividends. Once the secret profits had been assessed to tax, it would dividends. Once the secret profits had been assessed to tax, it would have been open to the company have been open to the company to bring those profits into the books to bring those profits into the books and distribute them, or what remained after payment of tax, as and distribute them, or what remained after payment of tax, as and distribute them, or what remained after payment of tax, as dividends.... Having assessed the company on a large sum as its dividends.... Having assessed the company on a large sum as its dividends.... Having assessed the company on a large sum as its undisclosed income, it cannot, at the same breath, say that these profits undisclosed income, it cannot, at the same breath, say that these profits undisclosed income, it cannot, at the same breath, say that these profits did not in fact exist because they did not appear from the company's exist because they did not appear from the company's exist because they did not appear from the company's books and could not, therefore, have been available for the payment of books and could not, therefore, have been available for the payment of books and could not, therefore, have been available for the payment of dividends. Among common men, such an attitude would be regarded as dividends. Among common men, such an attitude would be regarded as dividends. Among common men, such an attitude would be regarded as blowing hot and cold or playing fast and loose." blowing hot and cold or playing fast and loose."

The order of the The order of the Tribunal shows that it has missed the real point for Tribunal shows that it has missed the real point for decision. The only question that the Tribunal had to decide was whether decision. The only question that the Tribunal had to decide was whether decision. The only question that the Tribunal had to decide was whether the assessee could have derived the amount of Rs. 52,230 from the the assessee could have derived the amount of Rs. 52,230 from the the assessee could have derived the amount of Rs. 52,230 from the prior years which according to the department the assessee did e prior years which according to the department the assessee did e prior years which according to the department the assessee did earn. The Tribunal does not say, nor would the materials on record enable it The Tribunal does not say, nor would the materials on record enable it The Tribunal does not say, nor would the materials on record enable it to say, that the sum was not available to the assessee either to advance to say, that the sum was not available to the assessee either to advance to say, that the sum was not available to the assessee either to advance the mortgage loan in the name of Murugesa Mudaliar or for the other the mortgage loan in the name of Murugesa Mudaliar or for the other the mortgage loan in the name of Murugesa Mudaliar or for the other advances. If there had been any evidenc advances. If there had been any evidence to show that the assessee e to show that the assessee devoted that amount for other purposes it may well be that the devoted that amount for other purposes it may well be that the devoted that amount for other purposes it may well be that the mortgage loan and other advances were made from an unexplained or mortgage loan and other advances were made from an unexplained or mortgage loan and other advances were made from an unexplained or undisclosed source. But that is not so in the present case. The Tribunal's undisclosed source. But that is not so in the present case. The Tribunal's undisclosed source. But that is not so in the present case. The Tribunal's conception of "intangibl conception of "intangible additions" is somewhat queer and we confess e additions" is somewhat queer and we confess our inability to appreciate it. The Tribunal observes in its order : our inability to appreciate it. The Tribunal observes in its order : our inability to appreciate it. The Tribunal observes in its order : "Intangible additions, as the name itself suggests, are purely matters of "Intangible additions, as the name itself suggests, are purely matters of "Intangible additions, as the name itself suggests, are purely matters of estimate which may err on the wrong side for the department. For wa estimate which may err on the wrong side for the department. For wa estimate which may err on the wrong side for the department. For want of proper evidence, additions on account of deficiency of gross profit or of proper evidence, additions on account of deficiency of gross profit or of proper evidence, additions on account of deficiency of gross profit or other defects may be made but this would not mean putting in other defects may be made but this would not mean putting in other defects may be made but this would not mean putting in possession of the assessee their equivalent in hard cash available for possession of the assessee their equivalent in hard cash available for possession of the assessee their equivalent in hard cash available for to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd expenditure or investment. It may be said that expenditure or investment. It may be said that having suffered a harsh having suffered a harsh assessment in a particular year, the assessee's case should be assessment in a particular year, the assessee's case should be assessment in a particular year, the assessee's case should be considered sympathetically in the subsequent year when an investment considered sympathetically in the subsequent year when an investment considered sympathetically in the subsequent year when an investment of the nature we are discussing is brought to light." Additions are no of the nature we are discussing is brought to light." Additions are no of the nature we are discussing is brought to light." Additions are no doubt made very often on esti doubt made very often on estimate basis. But it can never be said, or at mate basis. But it can never be said, or at any rate the department cannot contend, that the amount of the any rate the department cannot contend, that the amount of the any rate the department cannot contend, that the amount of the addition is not the real income but something which the assessee may addition is not the real income but something which the assessee may addition is not the real income but something which the assessee may not have earned. It is wholly illogical for the department to contend that not have earned. It is wholly illogical for the department to contend that not have earned. It is wholly illogical for the department to contend that the addition was only for purposes of taxation and that it should never ddition was only for purposes of taxation and that it should never ddition was only for purposes of taxation and that it should never be taken as true income of the assessee. We must point out that the be taken as true income of the assessee. We must point out that the be taken as true income of the assessee. We must point out that the Tribunal is wrong in thinking that an assessee suffers a "harsh Tribunal is wrong in thinking that an assessee suffers a "harsh Tribunal is wrong in thinking that an assessee suffers a "harsh assessment" when his income is computed by making additio assessment" when his income is computed by making additio assessment" when his income is computed by making additions. Such an assessment is perfectly within the four corners of the Act and there is no assessment is perfectly within the four corners of the Act and there is no assessment is perfectly within the four corners of the Act and there is no reason to suppose that it is in any way inequitable or unjust. We are reason to suppose that it is in any way inequitable or unjust. We are reason to suppose that it is in any way inequitable or unjust. We are also unable to understand the real scope of a sympathetic treatment of also unable to understand the real scope of a sympathetic treatment of also unable to understand the real scope of a sympathetic treatment of the assessee in the matter o the assessee in the matter of assessment to tax. The assessee is either f assessment to tax. The assessee is either liable to tax or not, and if he is really liable to tax he cannot get rid of it liable to tax or not, and if he is really liable to tax he cannot get rid of it liable to tax or not, and if he is really liable to tax he cannot get rid of it by pleading equity or by invoking the sympathy of the assessing by pleading equity or by invoking the sympathy of the assessing by pleading equity or by invoking the sympathy of the assessing authority. The faulty reasoning of the Tribunal was certainly not authority. The faulty reasoning of the Tribunal was certainly not authority. The faulty reasoning of the Tribunal was certainly not conducive to a correct conclusion in the matter. In our opinion, there are nducive to a correct conclusion in the matter. In our opinion, there are nducive to a correct conclusion in the matter. In our opinion, there are no materials for the addition of Rs. 40,000 and Rs. 12,230 in respect of no materials for the addition of Rs. 40,000 and Rs. 12,230 in respect of no materials for the addition of Rs. 40,000 and Rs. 12,230 in respect of the two assessment years 1949 the two assessment years 1949-50 and 1950-51 respectively, and that 51 respectively, and that the order of the Tribunal cannot be sustai the order of the Tribunal cannot be sustained."

11.9 The above view is noted to have been reiterated by Hon'ble The above view is noted to have been reiterated by Hon'ble The above view is noted to have been reiterated by Hon'ble jurisdictional Madras High Court in the case of CIT v. K. S. M Guruswamy jurisdictional Madras High Court in the case of CIT v. K. S. M Guruswamy jurisdictional Madras High Court in the case of CIT v. K. S. M Guruswamy Nadar and Sons, [1984] 149 ITR 127. In the decided case also, it was Nadar and Sons, [1984] 149 ITR 127. In the decided case also, it was Nadar and Sons, [1984] 149 ITR 127. In the decided case also, it was held that when there are two separate additi held that when there are two separate additions viz., one on account of ons viz., one on account of suppression of profit and another on account of cash credit, then it is suppression of profit and another on account of cash credit, then it is suppression of profit and another on account of cash credit, then it is open to the assessee to explain that, the suppressed profits had been open to the assessee to explain that, the suppressed profits had been open to the assessee to explain that, the suppressed profits had been brought in as cash credits and has to be telescoped into the other. brought in as cash credits and has to be telescoped into the other. brought in as cash credits and has to be telescoped into the other.

11.10 Gainful refe Gainful reference may also be made to the decision of the rence may also be made to the decision of the Hon'ble Bombay High Court in the case of CIT vs J.J. Gandhi (39 CTR Hon'ble Bombay High Court in the case of CIT vs J.J. Gandhi (39 CTR Hon'ble Bombay High Court in the case of CIT vs J.J. Gandhi (39 CTR to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::123 ::

127). In this judgment also, the Hon'ble High Court had approved the 127). In this judgment also, the Hon'ble High Court had approved the 127). In this judgment also, the Hon'ble High Court had approved the theory of telescoping and held that it could be applied in cases where theory of telescoping and held that it could be applied in cases where theory of telescoping and held that it could be applied in cases where additions in relation of unexplained money/investment are sought to be ditions in relation of unexplained money/investment are sought to be ditions in relation of unexplained money/investment are sought to be made in the hands of the assessee. The Hon'ble Court explained that if an made in the hands of the assessee. The Hon'ble Court explained that if an made in the hands of the assessee. The Hon'ble Court explained that if an addition towards undisclosed income was made and the AO also seeks to addition towards undisclosed income was made and the AO also seeks to addition towards undisclosed income was made and the AO also seeks to make certain addition in relation to unexpl make certain addition in relation to unexplained investment then, it can ained investment then, it can be treated by the assessee that the unexplained investment is sourced be treated by the assessee that the unexplained investment is sourced be treated by the assessee that the unexplained investment is sourced out of the undisclosed income already taxed. out of the undisclosed income already taxed.

11.11 The principle which emerges from the above is that, the same The principle which emerges from the above is that, the same The principle which emerges from the above is that, the same income should not be taxed twice i.e. once a income should not be taxed twice i.e. once at the time of generation and t the time of generation and thereafter at the time of application for making investment or any thereafter at the time of application for making investment or any thereafter at the time of application for making investment or any undisclosed asset. Having regard to this settled legal position, we now undisclosed asset. Having regard to this settled legal position, we now undisclosed asset. Having regard to this settled legal position, we now come back to the facts of the case. come back to the facts of the case. From the discussions set out above, From the discussions set out above, we find that, the additions on account of ‘byaj’, ‘vatav’ & ‘profit on e additions on account of ‘byaj’, ‘vatav’ & ‘profit on e additions on account of ‘byaj’, ‘vatav’ & ‘profit on unaccounted sales’ as confirmed in the hands of the assessee is as unaccounted sales’ as confirmed in the hands of the assessee is as unaccounted sales’ as confirmed in the hands of the assessee is as follows:-(in Rs.)

AY Byaj Vatav Profit on Total unaccounted sales 2017-18 -- 3,45,86,827 35,96,97,105 39,42,83,932 2018-19 -- 1,70,81,552 23,16,83,139 24,87,64,691 2019-20 -- 1,68,12,234 7,40,80,408 9,08,92,642 2020-21 -- 72,53,392 6,01,91,246 6,74,44,638 2021-22 -- 4,56,32,353 1,45,54,166 6,01,86,519 Total 72,56,51,898 12,13,66,358 1,45,54,166 86,15,72,422 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::124 ::

11.12 As noted above, the Ld. CIT(A) had upheld the judicially noted above, the Ld. CIT(A) had upheld the judicially noted above, the Ld. CIT(A) had upheld the judicially approved principle of telescoping and had directed that the benefit of approved principle of telescoping and had directed that the benefit of approved principle of telescoping and had directed that the benefit of telescoping the unaccounted income being assessed in the hands of the telescoping the unaccounted income being assessed in the hands of the telescoping the unaccounted income being assessed in the hands of the assessee across AYs 2017 assessee across AYs 2017-18 to 2021-22 be allowed against the 22 be allowed against the value of these unaccounted assets. This finding of the Ld. CIT(A) has not been these unaccounted assets. This finding of the Ld. CIT(A) has not been these unaccounted assets. This finding of the Ld. CIT(A) has not been disputed by the Revenue before us. We are therefore of the considered disputed by the Revenue before us. We are therefore of the considered disputed by the Revenue before us. We are therefore of the considered view that, the assessee is undoubtedly entitled to the benefit of view that, the assessee is undoubtedly entitled to the benefit of view that, the assessee is undoubtedly entitled to the benefit of telescoping qua the unaccounted income a telescoping qua the unaccounted income assessed in their hands i.e. ssessed in their hands i.e. Rs.86,15,72,422/- against the value of the impugned unexplained against the value of the impugned unexplained against the value of the impugned unexplained asset(s).

11.13 The next issue which arises for our consideration is, whether The next issue which arises for our consideration is, whether The next issue which arises for our consideration is, whether the unaccounted income aggregating to Rs. the unaccounted income aggregating to Rs.96,42,02,070/- - so assessed in the hands of Shri Mohanlal Khatri, Director of the assessee could also be the hands of Shri Mohanlal Khatri, Director of the assessee could also be the hands of Shri Mohanlal Khatri, Director of the assessee could also be telescoped against the impugned unexplained assets found in the course telescoped against the impugned unexplained assets found in the course telescoped against the impugned unexplained assets found in the course of search. It is observed that, the reasons given by the Ld. CIT(A) for of search. It is observed that, the reasons given by the Ld. CIT(A) for of search. It is observed that, the reasons given by the Ld. CIT(A) for denying this benefit of telescoping against the income offered to tax by of telescoping against the income offered to tax by of telescoping against the income offered to tax by Shri Mohanlal Khatri was Shri Mohanlal Khatri was the same reasoning given by him by him for denying the benefit of set-off while quantifying the value of ‘byaj’ & ‘vatav’ off while quantifying the value of ‘byaj’ & ‘vatav’ off while quantifying the value of ‘byaj’ & ‘vatav’ assessable in the hands of the assessee. We have already discuss assessable in the hands of the assessee. We have already discuss assessable in the hands of the assessee. We have already discussed this aspect extensively while adjudicating Issues 3 to 5 above and rejected aspect extensively while adjudicating Issues 3 to 5 above and rejected aspect extensively while adjudicating Issues 3 to 5 above and rejected this line of reasoning given by the Ld. CIT(A). We are of the considered reasoning given by the Ld. CIT(A). We are of the considered reasoning given by the Ld. CIT(A). We are of the considered

ITA Nos.1178 to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd view that, the entries in the J view that, the entries in the J-Pack software was not specifically Pack software was not specifically identifiable to any specific entity o identifiable to any specific entity of the assessee group. Rather, the facts f the assessee group. Rather, the facts placed on record showed that, they comprised of consolidated and placed on record showed that, they comprised of consolidated and placed on record showed that, they comprised of consolidated and complex mix of entries & transactions relating to all the entities of the complex mix of entries & transactions relating to all the entities of the complex mix of entries & transactions relating to all the entities of the assessee group. As a corollary therefore, even the unexplained asset(s) assessee group. As a corollary therefore, even the unexplained asset(s) assessee group. As a corollary therefore, even the unexplained asset(s) identified from this software was not individually identifiable to any ified from this software was not individually identifiable to any ified from this software was not individually identifiable to any specific entity of the assessee group. Instead, it represented the specific entity of the assessee group. Instead, it represented the specific entity of the assessee group. Instead, it represented the unaccounted assets of the entire assessee group as a whole. In that view unaccounted assets of the entire assessee group as a whole. In that view unaccounted assets of the entire assessee group as a whole. In that view of the matter, according to us according to us, the aggregate unaccounted income offered counted income offered to tax by the entities of the assessee group qua the entries found in this to tax by the entities of the assessee group qua the entries found in this to tax by the entities of the assessee group qua the entries found in this J-Pack software is to be allowed to be telescoped against the unexplained Pack software is to be allowed to be telescoped against the unexplained Pack software is to be allowed to be telescoped against the unexplained assets found from the same J assets found from the same J-Pack software. As noted earlier, the Pack software. As noted earlier, the additional income of Rs. of Rs.96,42,02,070/- offered to tax by Shri Mohanlal offered to tax by Shri Mohanlal Khatri, key person & Director of the assessee, was with reference to the Khatri, key person & Director of the assessee, was with reference to the Khatri, key person & Director of the assessee, was with reference to the same entries found in the same J same entries found in the same J-Pack software. It is observed that . It is observed that, there is a clear nexus between the additional income offered s a clear nexus between the additional income offered s a clear nexus between the additional income offered to tax by Shri Mohanlal Khatri apropos the impugned unexplained asset(s) identified in Mohanlal Khatri apropos the impugned unexplained asset(s) identified in Mohanlal Khatri apropos the impugned unexplained asset(s) identified in the course of search from the same J the course of search from the same J-Pack Software. The Revenue has Pack Software. The Revenue has also not been able to make out able to make out any case before us which shows that which shows that, the unaccounted income offered to unaccounted income offered to tax by Shri Mohanlal Khatri had been set Shri Mohanlal Khatri had been set- off or telescoped against any other unaccounted assets found in the off or telescoped against any other unaccounted assets found in the off or telescoped against any other unaccounted assets found in the to 1182/Chny/2025 to 1182/Chny/2025 & ITA Nos.1393 to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd course of search and was therefore unavailable for being telescoped course of search and was therefore unavailable for being telescoped course of search and was therefore unavailable for being telescoped further. Instead, the Ld. AR brought to our notice that, Shri Mohanlal further. Instead, the Ld. AR brought to our notice that, Shri Mohanlal further. Instead, the Ld. AR brought to our notice that, Shri Mohanlal Khatri in his reply dated 24.03.2022 filed before the AO had inter alia in his reply dated 24.03.2022 filed before the AO had inter alia in his reply dated 24.03.2022 filed before the AO had inter alia claimed that, the additional income offered by him in his return(s) of claimed that, the additional income offered by him in his return(s) of claimed that, the additional income offered by him in his return(s) of income filed u/s 153A of the Act may be telescoped against these income filed u/s 153A of the Act may be telescoped against these income filed u/s 153A of the Act may be telescoped against these impugned unexplained asset(s) found in the course of se impugned unexplained asset(s) found in the course of search. It is seen arch. It is seen that, the AO did not dispute this claim in the income that, the AO did not dispute this claim in the income-tax assessment tax assessment completed u/s 143(3) in the matters of Shri Mohanlal Khatri for AY 2021 completed u/s 143(3) in the matters of Shri Mohanlal Khatri for AY 2021 completed u/s 143(3) in the matters of Shri Mohanlal Khatri for AY 2021-

11.14 For the reasons discussed in the foregoing, For the reasons discussed in the foregoing, we we thus hold that the additional income of Rs. the additional income of Rs.96,42,02,070/- taxed in the hands of Shri taxed in the hands of Shri Mohanlal Khatri represented an intangible addition or to say secret profit represented an intangible addition or to say secret profit represented an intangible addition or to say secret profit available with the assessee group with the assessee group, which applying the judicially approved , which applying the judicially approved principle of telescoping, was legally available for being set off against principle of telescoping, was legally available for being set off against principle of telescoping, was legally available for being set off against the impugned unexplained unexplained asset(s) found by the Revenue in this search action.

11.15 In this regard, we may gainfully refer to the decision of the In this regard, we may gainfully refer to the decision of the In this regard, we may gainfully refer to the decision of the coordinate bench of this Tribunal at Pune in the case of DCIT coordinate bench of this Tribunal at Pune in the case of DCIT coordinate bench of this Tribunal at Pune in the case of DCIT v. Dhariya to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd ::127 ::

Construction Pvt Ltd (ITA No.1440/Pun/2015) dated 11.02.2020 wherein Construction Pvt Ltd (ITA No.1440/Pun/2015) dated 11.02.2020 wherein Construction Pvt Ltd (ITA No.1440/Pun/2015) dated 11.02.2020 wherein on somewhat similar facts and circumstances, the Tribunal had allowed n somewhat similar facts and circumstances, the Tribunal had allowed n somewhat similar facts and circumstances, the Tribunal had allowed the benefit of telescoping the unaccounted income assessed in the hands the benefit of telescoping the unaccounted income assessed in the hands the benefit of telescoping the unaccounted income assessed in the hands of the assessee company against the unexplained asset found in the of the assessee company against the unexplained asset found in the of the assessee company against the unexplained asset found in the name of the Director of the assessee company. Th name of the Director of the assessee company. The relevant findings are e relevant findings are noted to be as follows:- -

“7.5. If we look into the above said proposition of law laid down “7.5. If we look into the above said proposition of law laid down “7.5. If we look into the above said proposition of law laid down by the Hon’ble High Courts, it is clear that in the present case the High Courts, it is clear that in the present case the High Courts, it is clear that in the present case the assessee had agreed for the addition of undisclosed income for assessee had agreed for the addition of undisclosed income for assessee had agreed for the addition of undisclosed income for the earlier years of Rs.64,20,637/ the earlier years of Rs.64,20,637/-, Rs.1,03,91,626/ , Rs.1,03,91,626/- and Rs.1,67,29,248/ Rs.1,67,29,248/- ( for the assessment year under appeal) and ( for the assessment year under appeal) and has sought for tele has sought for telescoping for the amount of Rs.2,53,59,490/ scoping for the amount of Rs.2,53,59,490/-. In our view, telescoping is permissible to be granted to the assessee our view, telescoping is permissible to be granted to the assessee our view, telescoping is permissible to be granted to the assessee as the flat was purchased in the name of the Director.” as the flat was purchased in the name of the Director.” as the flat was purchased in the name of the Director.”

We also gainfully refer to the decision of the ITAT, Mumbai in We also gainfully refer to the decision of the ITAT, Mumbai in We also gainfully refer to the decision of the ITAT, Mumbai in 11.16 the the case case of of ACIT ACIT Vs Vs Konark Konark Infrastructure Infrastructure (ITA (ITA Nos. Nos. 3021 3021- 3024/Mum/2023) dated 27.02.2024 wherein also the unaccounted income 3024/Mum/2023) dated 27.02.2024 wherein also the unaccounted income 3024/Mum/2023) dated 27.02.2024 wherein also the unaccounted income offered to tax by the individual offered to tax by the individual JV partners was held to be eligible for partners was held to be eligible for telescoping against the unaccounted asset found in the hands of the telescoping against the unaccounted asset found in the hands of the telescoping against the unaccounted asset found in the hands of the assessee-JV in the same search. The findings of the Tribunal which are JV in the same search. The findings of the Tribunal which are JV in the same search. The findings of the Tribunal which are found to be relevant in the context of the present case, is as follows: found to be relevant in the context of the present case, is as follows: found to be relevant in the context of the present case, is as follows:-

“57. The principle which emerges from the above is that, the “57. The principle which emerges from the above is that, the “57. The principle which emerges from the above is that, the same income should not be taxed twice i.e. once at the tim same income should not be taxed twice i.e. once at the tim same income should not be taxed twice i.e. once at the time of generation and thereafter at the time of application for routing generation and thereafter at the time of application for routing generation and thereafter at the time of application for routing back into the business. The said principle would equally apply back into the business. The said principle would equally apply back into the business. The said principle would equally apply where the cash generated by business concerns are routed where the cash generated by business concerns are routed where the cash generated by business concerns are routed to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd through partners/directors. Having regard to this settled legal through partners/directors. Having regard to this settled legal through partners/directors. Having regard to this settled legal position, we now come back to the facts of the case. It is not in sition, we now come back to the facts of the case. It is not in sition, we now come back to the facts of the case. It is not in dispute that the assessee had declared additional income of dispute that the assessee had declared additional income of dispute that the assessee had declared additional income of Rs.9,50,56,072/ Rs.9,50,56,072/- before the ITSC, Mumbai in AY 2013 before the ITSC, Mumbai in AY 2013-14. It is noted that the assessee had also filed a letter dated 28.10.2014 noted that the assessee had also filed a letter dated 28.10.2014 noted that the assessee had also filed a letter dated 28.10.2014 before the ITSC wherein it was specifically clarified that this e the ITSC wherein it was specifically clarified that this e the ITSC wherein it was specifically clarified that this income was utilized by way of investment in the on income was utilized by way of investment in the on-going work of going work of water pipeline project at Ulhasnagar. The details of utilization water pipeline project at Ulhasnagar. The details of utilization water pipeline project at Ulhasnagar. The details of utilization inter inter inter alia alia alia comprised comprised comprised of of of sum sum sum of of of Rs.4,50,56,072/ Rs.4,50,56,072/ Rs.4,50,56,072/- and Rs.5,00,00,000/ Rs.5,00,00,000/- by KIL and Eagle Infra Limited, represented by by KIL and Eagle Infra Limited, represented by Shri U.M. Rupchandani, respectively. It is therefore evident that Shri U.M. Rupchandani, respectively. It is therefore evident that Shri U.M. Rupchandani, respectively. It is therefore evident that the JV partners had disclosed income in the hands of the assessee the JV partners had disclosed income in the hands of the assessee the JV partners had disclosed income in the hands of the assessee JV before the ITSC, Mumbai and such additional income of JV before the ITSC, Mumbai and such additional income of JV before the ITSC, Mumbai and such additional income of Rs.9,50,56,072/ Rs.9,50,56,072/- represented the intangible addition / secret epresented the intangible addition / secret profit, which applying the judicially approved principle of profit, which applying the judicially approved principle of profit, which applying the judicially approved principle of telescoping, telescoping, telescoping, could could could be be be set set set off off off against against against any any any unexplained unexplained unexplained money/investment found by the Revenue. money/investment found by the Revenue.

Having Having Having regard regard regard to to to our our our above above above findings, findings, findings, the the the aggregate aggregate aggregate 11.17 unaccounted income taxed in the hands of the assessee and Shri Mohanlal unaccounted income taxed in the hands of the assessee and Shri Mohanlal unaccounted income taxed in the hands of the assessee and Shri Mohanlal Khatri available for the benefit of telescoping is f Khatri available for the benefit of telescoping is f Khatri available for the benefit of telescoping is found to be Rs.182,57,74,492/- (Rs.86,15,72,422 + Rs. (Rs.86,15,72,422 + Rs.96,42,02,070 96,42,02,070) which is eligible to be set off against the eligible to be set off against the impugned unexplained asset(s) found in unexplained asset(s) found in the course of search.

Having held so above, we now turn our attention to the Having held so above, we now turn our attention to the Having held so above, we now turn our attention to the 11.18 quantification of the un quantification of the unexplained asset(s) unearthed by the Revenue in explained asset(s) unearthed by the Revenue in the course of search. It is noted that, one of the arguments raised by the the course of search. It is noted that, one of the arguments raised by the the course of search. It is noted that, one of the arguments raised by the assessee was against the valuation of the excess stock found in the ‘Party the valuation of the excess stock found in the ‘Party the valuation of the excess stock found in the ‘Party Balance Sheet’, as extracted from the J Balance Sheet’, as extracted from the J-Pack Software. Pack Software. The Ld. AR pointed out that, the excess stock , the excess stock mentioned therein was not the result of not the result of the FY 2020-21 alone but represents the cumulative sum of excess stock 21 alone but represents the cumulative sum of excess stock 21 alone but represents the cumulative sum of excess stock generated over the years from the unaccounted business conducted by generated over the years from the unaccounted business conducted by generated over the years from the unaccounted business conducted by the assessee group. We agree with t the assessee group. We agree with the Ld. AR that, the impugned excess the impugned excess to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd stock cannot be the product of a single year’s undisclosed income, but the product of a single year’s undisclosed income, but the product of a single year’s undisclosed income, but represents the accumulation of unaccounted income earned over represents the accumulation of unaccounted income earned over represents the accumulation of unaccounted income earned over years.

We thus find force in the Ld. AR’s plea that, the impugned excess stock We thus find force in the Ld. AR’s plea that, the impugned excess stock We thus find force in the Ld. AR’s plea that, the impugned excess stock ought to then be attributed across the years in proportion to the then be attributed across the years in proportion to the then be attributed across the years in proportion to the unaccounted income assessed in those years and be valued at the prices unaccounted income assessed in those years and be valued at the prices unaccounted income assessed in those years and be valued at the prices prevailing in the respective years, as otherwise it would result in taxation prevailing in the respective years, as otherwise it would result in taxation prevailing in the respective years, as otherwise it would result in taxation of notional appreciation of the stock. The Ld. AR of notional appreciation of the stock. The Ld. AR also brought to our also brought to our notice that, similar ‘gold’ metal entries was found in the ‘Byaj’ Ledger notice that, similar ‘gold’ metal entries was found in the ‘Byaj’ Ledger notice that, similar ‘gold’ metal entries was found in the ‘Byaj’ Ledger of J-Pack software, which was which was originally valued by the AO at Rs.4881/gm valued by the AO at Rs.4881/gm being the rate prevailing as on 10.11.2020 and thereafter, on appeal the being the rate prevailing as on 10.11.2020 and thereafter, on appeal the being the rate prevailing as on 10.11.2020 and thereafter, on appeal the Ld. CIT(A) had held that, the same ought to be appropriately quantified d that, the same ought to be appropriately quantified d that, the same ought to be appropriately quantified across the years and be valued at the market rates prevailing in the across the years and be valued at the market rates prevailing in the across the years and be valued at the market rates prevailing in the respective years. It is observed that, this finding of the Ld. CIT(A) respective years. It is observed that, this finding of the Ld. CIT(A) respective years. It is observed that, this finding of the Ld. CIT(A) rendered in the context of ‘byaj’ income has not been disputed rendered in the context of ‘byaj’ income has not been disputed rendered in the context of ‘byaj’ income has not been disputed by the Revenue and the same has attained finality. According to us therefore, Revenue and the same has attained finality. According to us therefore, Revenue and the same has attained finality. According to us therefore, the same analogy should be applied to the excess stock found in the the same analogy should be applied to the excess stock found in the the same analogy should be applied to the excess stock found in the ‘Party Balance Sheet’ of the J ‘Party Balance Sheet’ of the J-Pack Ledger.

11.19 It is well-settled that settled that, in cases where material is detected in cases where material is detected consequent to search action, the AO is consequent to search action, the AO is required to determine the required to determine the undisclosed income and that, in such cases and that, in such cases the additions are generally additions are generally based on estimates. It has been judicially held that, i It has been judicially held that, i It has been judicially held that, in matters of to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd estimation some amount of latitude is required to be shown to amount of latitude is required to be shown to amount of latitude is required to be shown to the AO, when the relevant seized material is not seized material is not forthcoming. However, forthcoming. However, at the same time, it does not mean that the it does not mean that the AO can arrive at any can arrive at any notional figure by adopting an arbitrary basis. In the present case, it i by adopting an arbitrary basis. In the present case, it is observed that, s observed that, the assessee has been generating income from unaccounted sale the assessee has been generating income from unaccounted sale the assessee has been generating income from unaccounted sale transactions, ‘byaj’ & ‘vatav vatav’ receipts etc. over the years and therefore it receipts etc. over the years and therefore it is safe to presume that, the excess stock found in the course of search is safe to presume that, the excess stock found in the course of search is safe to presume that, the excess stock found in the course of search would have been gradually ac would have been gradually acquired over the years and it cannot be solely quired over the years and it cannot be solely out of the unaccounted income derived in the year of search i.e. FY 2020 out of the unaccounted income derived in the year of search i.e. FY 2020 out of the unaccounted income derived in the year of search i.e. FY 2020-

11.20 In light of the above, we find it fit and reasonable to apportion In light of the above, we find it fit and reasonable to apportion In light of the above, we find it fit and reasonable to apportion the excess stock found in J the excess stock found in J-Pack software in the ratio of the of the unaccounted income taxed in the hands of the assessee and Shri Mohanlal Khatri with taxed in the hands of the assessee and Shri Mohanlal Khatri with taxed in the hands of the assessee and Shri Mohanlal Khatri with reference to the entries found in the same J reference to the entries found in the same J-Pack Software and Pack Software and, to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd accordingly revise the revise the value the excess stock at the stock at the market rates prevailing in those years. prevailing in those years. Accordingly, the computation of the same, ngly, the computation of the same, works out as follows:-

Asst Income taxed Income taxed Income taxed Total Ratio Excess Rate Rate Value Year in hands of in hands of in hands of Stock taken taken MLK assessee assessee apportioned for for valuing valuing ‘byaj’ ‘byaj’ 2017- 9,83,61,198 39,42,83,932 39,42,83,932 49,26,45,130 26.98% 84217.37 2930 2930 24,67,56,909 18 2018- 31,69,55,379 24,87,64,691 24,87,64,691 56,57,20,070 30.99% 96709.49 2978 2978 28,80,00,861 19 2019- 16,00,00,000 9,08,92,642 9,08,92,642 25,08,92,642 13.74% 42889.94 3181 3181 13,64,32,897 20 2020- 16,00,00,000 6,74,44,638 6,74,44,638 22,74,44,638 12.46% 38881.52 3723 3723 14,47,55,891 21 2021- 22,88,85,490 6,01,86,519 6,01,86,519 28,90,72,009 15.83% 49416.68 4881 4881 24,12,02,805 22 TOTAL 96,42,02,067 86,15,72,422 86,15,72,422 182,57,74,489 312115.01 105,71,49,363 11.21 Having regard to the above revised value of excess stock of Having regard to the above revised value of excess stock of Having regard to the above revised value of excess stock of Rs.105,71,49,363/-, it is observed that the aggregate sum , it is observed that the aggregate sum , it is observed that the aggregate sum for application of income in the form of unexplained asset(s) of income in the form of unexplained asset(s) of income in the form of unexplained asset(s) works out to works out to works out to Rs.157,90,76,296/-, whose whose calculation is as under;-

Particulars Particulars Amount (in Rs.) Amount (in Rs.) Excess Stock 105,71,49,363 105,71,49,363 Unaccounted cash receivables Unaccounted cash receivables 51,62,29,629 51,62,29,629 Unaccounted cash 14,29,460 14,29,460 Unexplained silver Unexplained silver 42,67,664 42,67,664 Total 157,90,76,296 157,90,76,296 11.22 It is noted that, the aggregate unaccounted income of It is noted that, the aggregate unaccounted income of It is noted that, the aggregate unaccounted income of Rs.182,57,74,492/- as quantified above, which has been taxed in the as quantified above, which has been taxed in the as quantified above, which has been taxed in the hands of the assessee and Shri Mohanlal Khatri is sufficient to be hands of the assessee and Shri Mohanlal Khatri is sufficient to be hands of the assessee and Shri Mohanlal Khatri is sufficient to be to 1182/Chny/2025 to 1182/Chny/2025 & to 1397/Chny/2025 (AYs: 2017 : 2017-18 to 2021-22) M/s. Mohanlal Jewellers Pvt. Ltd M/s. Mohanlal Jewellers Pvt. Ltd telescoped / set-off against the above aggregate value of unexplain off against the above aggregate value of unexplain off against the above aggregate value of unexplained assets of Rs.157,90,76,296/ assets of Rs.157,90,76,296/-. Hence, applying the principle of telescoping pplying the principle of telescoping therefore, the separate addition(s) made by the AO on account of excess therefore, the separate addition(s) made by the AO on account of excess therefore, the separate addition(s) made by the AO on account of excess stock, unaccounted cash receivables, unexplained cash & silver is hereby stock, unaccounted cash receivables, unexplained cash & silver is hereby stock, unaccounted cash receivables, unexplained cash & silver is hereby directed to be deleted.

11.23 In view of our above findings, all other objections raised by view of our above findings, all other objections raised by view of our above findings, all other objections raised by the assessee on the merits of the addition made on account of impugned the assessee on the merits of the addition made on account of impugned the assessee on the merits of the addition made on account of impugned unexplained asset(s) and also the quantification & valuation of other unexplained asset(s) and also the quantification & valuation of other unexplained asset(s) and also the quantification & valuation of other assets (apart from excess stock) have become academic a assets (apart from excess stock) have become academic a assets (apart from excess stock) have become academic and infructuous and is therefore not being separately adjudicated upon and is being left and is therefore not being separately adjudicated upon and is being left and is therefore not being separately adjudicated upon and is being left open. Overall therefore, these grounds of the assessee stands allowed. Overall therefore, these grounds of the assessee stands allowed. Overall therefore, these grounds of the assessee stands allowed.

Order pronounced on the 26th day of September, 2025 Order pronounced on the 25, in Chennai.