GOUTAM KUMAR RANKA,BHILWARA vs. ACIT, CENTRAL CIRLCE, AJMER

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL,
JAIPUR BENCHES, ‘’A” JAIPUR

Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh xxu Xkks;y ys[kk lnL; ds le{k
BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No.1487/JP/2024
fu/kZkj.k o"kZ@Assessment Year : 2020-21

Shri Gautam Kumar Ranka
M/s. Anand Jewellers
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHNPR 6761 K vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Suchek Anchaliya, CA jktLo dh vksj ls@ Revenue by: Shri Arvind Kumar, CIT-DR (Thru” VC) lquokbZ dh rkjh[k@ Date of Hearing

: 06/02/2025

mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/02/2025

vkns'k@ ORDER

PER: SANDEEP GOSAIN, JM
The assessee has filed an appeal against the order of the ld. CIT(A), Jaipur-5
dated 09-04-2024 for the assessment year 2020-21 in the matter of Section 143 (3) of the Act wherein the assessee has raised the following grounds of appeal.
‘’1.On the facts and in the circumstances of the case and in law the ld.CIT(A) has erred in upholding the addition of Rs.4,96,60,427/- being value of alleged undisclosed excess stock found during the course of search proceedings in appellant’s case by disregarding the fact that the purchase of impugned stock had been duly recorded in the books of accounts and substantiated alongwith corroborating documentary evidence before the DDIT (Inv)-1, Udaipur during the 2
2. On the facts and circumstances of the case and in law the addition of Rs.4,96,60,427/- being value of alleged undisclosed excess stock found during the course of search proceedings in the appellant’s case has resulted in double taxation as the appellant had duly accounted the purchase of impugned stock in his books of accounts alomngwith the corresponding sales and duly offered the profits resulting from such transaction as his business income in his return of income and the books of accounts of the appellant had not been rejected and therefore, the impugned addition must be deleted.

The appellant also craves to raise following grounds of appeal over and above the grounds of appeal raised before the ld.CIT(A).

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Accountant on 03-12-2024 and the delay took place in filing the appeal before the ITAT. He submitted that that this is an inadvertent mistake and it was not malafide.
To this effect, the assessee has filed an affidavit deposing the above facts.
2.2
On the other hand, the ld. DR opposed the delay made by the assessee in filing the appeal. However, he submitted that the Court may decide the issue as deemed fit and proper in the case.
2.3
After hearing both the parties and perusing the materials available on record, the Bench noted that there is merit in submission of the assessee and the assessee is prevented by sufficient cause in late filing of the appeal. Hence, the delay is condoned.
3.0
Apropos grounds of appeal of the assessee raised above, it is noticed that the ld.CIT(A) has dismissed the appeal of the assessee by observing at para 12 of his order as under:-
‘’12. The contention of the appellant that valuation of ‘’Business Stock’’ at ‘’Market Price’’ instead of cost price is not acceptable. On perusal of the assessment order and facts of the case, it is noticed that the excess stock found at the time of search proceedings were out of the books of account.
Stock. The above purchase bills cannot be relied upon as the same were only after thought and do not match with the business trends of the appellant. Hence the AO was justified to make an addition of Rs.4,96,60,427/- on account of excess stock found. The AO was justified to make addition after allowing the opening stock of Rs.10,25,874/- as per ITR for the FY 2018-19, the purchase bills produced by the appellant for Rs.44,43,733/- and allowing the credit of Rs.7,40,000/- for bills not received till search proceedings. On perusal of the evidences and facts of the case, it is clear that the appellant had not maintained the books of accounts properly and was unable to justify the closing stock of Rs. 1,52,11,368/- shown in books of account with support of evidences. The AO was also justified to consider the valuation of the stock on the market price as made by the registered Valuer

Thus, the ground no 1 and 2 are hereby dismissed.
3.1
In short, it is pertinent to mention that the AO had passed an order u/s 143(3) of the Act dated 29-09-2021 on the total income of Rs.5,11,68,657/- by making the addition of Rs.4,96,60,427/- considering the undisclosed income of the assessee on account of excess stock found during the search proceedings.

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During the course of hearing, the ld. AR submitted that the ld.CIT(A) is not justified in confirming the addition of Rs.4,96,60,427/- made by the AO and to this effect the ld. AR has submitted the following submission.
‘’Assessee submission:
1. The case of the assessee was selected for scrutiny assessment proceeding which was the part of Block Assessment Period. A search has been carried out on 03.04.2019 at the residential premises and business premises of the assessee.
During the year under consideration, the assessee is engaged in the business of Gold and Silver Ornaments in the name of “Anand Jeweller” (proprietorship of the assessee).

S. No Item
Net Weight (grams)
1
Gold Bullion and Jewelry
9700.350
2
Silver Bullion & Jewelry
633.446

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10. During the course of first appellant proceedings before the Hon’ble
CIT(A), Jaipur, at the time of the remand proceedings, all the suppliers, either through mail or physical submission, had complied with the summons issued under section 133(6) of the Act by the Ld. AO and confirmed the transactions with the assessee.

SHRI GAUTA

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During the course of hearing, the ld.DR supported the order of the ld.CIT(A) and also filed a self explanatory report of the ACIT, Central Circle, Ajmer, the contents of the letter dated 04-02-2025 issued by Shri Rakesh Ranjan, ACIT,
Central Circle, Ajmer is reproduced as under:-
Office of the सहायक आयकर आयुÈत
Asstt. Commissioner of Income Tax,
केÛġȣय वृत, कमरा नं.109 केÛġȣय राजèव भवन, अजमेर
Central Circle, Room No. 109, Central Revenue Buliding. Ajmer
क.स.आ.आ./के.यू/अज./2024-25/670

Ǒदनांकः 04.02.2025
To The Commissioner of Income-tax (DR)
Income-tax Appellate Tribunal,
Jaipur.

(Through the Addl. CIT, Central-Range, Udaipur)
Respected Sir,
Sub: Calling for factual report in the case of Shri Goutam Kumar Ranka, PAN-
AHNPR5761K, A.Y.2020-21, Appeal Number ITA/1487/JPR/2024-Regarding

Kindly refer to above, on the above cited subject.
2 In this connection, it is submitted that as par facts available on record, the factual report in the case of Shri Goutam Kumar Raznika for AY 2020-21 is being submitted as under-

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In this regard, intimation for completion of the assessment proceedings was generated through DIN on 31.03.2022 vide No. ITВА/COM/8/91/2021-
22/1036211186(1) after obtaining necessary approval required u/s 153D of the Act from the competent authority. Copy of the above intimation and approval letter are attached herewith. Thus, instruction contained in the Boards circular No. 19/2019
dated 14.08.2019 was duly complied.

Submitted for kind consideration.
Thanking You.
भवदȣय (राकेश रंजन)
सहायक आयकर आयुÈत, केÛġȣय वृत, अजमेर
सलÊनः उपरोÈतानुसार
3.4
We have heard both the parties and perused the materials available including the submissions made by both the parties. In this appeal, it is noted that the case of the AO is that during the course of search and survey conducted at the assessee’s premises on 03.04.2019, there was a difference in the physical stock and stock appearing in the Books of Account as on that date. The AO in the assessment order recorded that the assessee had produced the purchase invoices only before the Investigation Wing during the post Investigation proceedings and was unable to reproduce the same at the time of Search and recording of statement during Search and that the assessee was not able to justify the excess stock found during the search. Thus the sole addition of Rs.4,96,60,427/- was made by the AO by holding

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4,96,60,427/- and thus, held such excess stock as his unexplained income.
Aggrieved by the same, the assessee preferred an appeal before the ld. CIT(A). It is noted that during the appellate proceedings, the ld. CIT(A) called for a report from the AO vide his office letter No.37 dated 11.08.2023. In compliance of the above letter, the AO has submitted his report through proper channel vide his office letter
No.742 dated 01.11.2023. In the remand report, it was stated that the information was called for u/s 133(6) of the Act from various parties to verify the genuineness of the claim of the assessee by issuing a separate letter to each on 23.08.2023. In response the AO stated that out of the 10 parties, only 5 parties have furnished the requisite information. In response the remand report, the assessee filed a rejoinder clarifying that the other 5 parties have also physically/ e-filed the requisite replies in compliance to the notice u/s 133(6) of the Act along with the confirmations, bank statement and GST details and submitted the proof of the reply letters filed by the parties. It is noted that the ld. CIT (A) after considering the submission of the assessee, the remand report of the AO, rejoinder of the assessee decided the case against the assessee by confirming the addition made by the AO. The ld. CIT (A) observed that the assessee had introduced the new parties and bills to cover up the excess stock found in the search which according to him was only an afterthought.
AR argued that the assessee has discharged the onus of proving the excess stock found in the course of Search Proceedings. The Ld. AR emphasized on the verification exercise carried out by the Investigation Wing in the post search proceeding and by the AO at the time of the remand proceedings wherein the supplier parties have duly confirmed their sale transaction with the assessee. The Ld AR also stated that due to the festive season, the books of accounts of the assessee were not complete for want of closing of accounts as on 31.03.2019. He further argued that the quantity of stock of jewellery and bullion found during the course of search was duly reconciled along with supporting evidences which have also been confirmed by all the parties on two separate occasions before the AO and the Investigation Wing. Further, it was the submission of the assessee that after the reconciliation of stock quantity, the difference in value was on account of the difference in rate of different purities of the ornaments. The Bench noted that on the other hand, the Ld. DR strongly relied on the findings recorded by the AO in the assessment order and ld. CIT(A)’s order. The ld DR further contended that the assessee failed to justify the excess stock found during the course of search and 14
SHRI GAUTAM KUMAR RANKA VS ACIT, CENTRAL CIRCLE, AJMER that the submissions made post-search were mere afterthoughts, introduced with the intent to cover up undisclosed income. The ld DR also emphasized that the search proceedings were conducted on 03.04.2019, during which the physical stock was inventoried, and a clear discrepancy was noted between the stock recorded in the books of accounts and the stock found at the premises. The Bench took into consideration the submissions of both the parties and found that the assessee had provided purchase bills, books of accounts, vouchers, and supporting documents during post-search proceedings and at the remand stage, which were verified by the Investigation Wing and AO during the remand proceedings. The AO has primarily relied on statements recorded at the time of search, neglecting the post investigation proceedings and statements given by the assessee and his key managerial person, Shri Mukesh Ranka. It is also noted that the AO also did not consider the confirmations filed by supplier parties before the investigation wing in response to summons u/s 131 of the Act. Thus the assessee has discharged the onus cast upon him and has proved the genuineness of transactions entered into by submitting the copies of purchase invoices and confirmations before the investigation wing and the AO, which have been also subsequently been verified by the investigation wing by issuing summons u/s 131 of the Act and by the AO by calling for information u/s 133(6) of the Act from the relevant parties. In view of the above, we are of the considered view that the assessee has reconciled the 15
Further, on going through the supporting documents, including invoices evidencing the purchase cost, it is evident that the assessee has recorded the stock at cost as per the recognized accounting principles. The approach adopted by the registered valuer, wherein a blanket rate of 24K gold and 99.99% purity silver has been applied, without distinguishing between gold bars and jewellery, is not appropriate.
The valuation methodology should consider the actual quality and composition of the stock, which has not been done in the present case. The assessee’s explanation given post-search has not been rebutted by any positive material, and the department has failed to establish that the stock was acquired out of undisclosed income. Furthermore, as the assessee has maintained stock valuation in accordance with cost basis, duly substantiated by purchase invoices, the difference arising due to the application of market rates by the valuer does not justify any addition. Hence in view of the entire conspectus of the facts and the submissions as made by the ld.
Rules, 1963 by placing the details on the notice board. ¼xxu Xkks;y ½

¼lanhi xkslkbZ½
(Gagan Goyal)

(Sandeep Gosain) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member

Tk;iqj@Jaipur fnukad@Dated:- 26/02/2025
*Mishra
आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
1. The Appellant- Shri Gautam Kumar Ranka, Bhilwara
2. izR;FkhZ@ The Respondent- The ACIT, Central Circle-, Ajmer
3. vk;dj vk;qDr@ The ld CIT
4. vk;dj vk;qDr¼vihy½@The ld CIT(A)
5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत
6. xkMZ QkbZy@ Guard File (ITA No. 1487/JP/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत