DCIT, JAIPUR vs. AMRAPALI JEWELS PVT. LTD. , JAIPUR

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

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BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 750/JP/2024
fu/kZkj.k o"kZ@Assessment Year : 2021-22

Amrapali Jewels Pvt. Ltd.
K-14B Ashok Marg, C-Scheme,
Central Circle-01,
Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCA 3277 F vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 740/JP/2024
fu/kZkj.k o"kZ@Assessment Years : 2021-22
K-14B
Ashok
Marg,
C-
Scheme, Jaipur
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCA 3277 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Sanjay Jhanwar, Sr. Adv.
Sh. Prakul Khurana, Adv. &
Sh. Mukesh Soni, Adv.
jktLo dh vksj ls@ Revenue by : Mrs. Alka Gautam, CIT-DR lquokbZ dh rkjh[k@ Dates of Hearing : 18/11/2024, 20/11/2024,
28/11/2024, 02/12/2024,
09/12/2024, 18/12/2024,
19/12/2024, 07/01/2025,
09/01/2025, 16/01/2025 &
20/01/2025
mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 19/02/2025

vkns'k@ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM

Both the present cross appeals are filed because revenue and assessee aggrieved with the order of Commissioner of Income Tax
(Appeals)-4, Jaipur [ for short ‘CIT(A)’ ] dated 20.03.2024 for the Assessment Year 2021-22. The said order of the ld. CIT(A) is passed because the assessee challenged the assessment order passed by ACIT,
Central Circle-1, Jaipur passed u/s 143(3) of the Income Tax Act, 1961 [ for short “Act”] on 30.12.2022 before him.

a.
Head Office at Rs. 89,18,794/- b.
Panch Batti Stock at Rs. 63,44,89,391
c.
Delhi Branch Stock – at Rs. 25,59,78,648/- d.
Mumbai Branch Stock – at Rs. 53,62,45,741/- e.
Bangalore Branch Stock at -Rs.16,51,51,691/- f.
stock with other franchise at Rs. 10,65,57,868/- g.
Consignment Stock at UK – at Rs. Rs.11,64,46,108
h.
Consignment Stock at USA at Rs. 1,19,69,563
i.
Doha Jewellery Exhibition Stock at Rs. Rs.51,96,689/- j.
Goods sent for consignment basis to Hong Kong at Rs. 31,091/-
14. Under the facts and circumstances of the case and in law, the Ld. CIT(A) is not justified in declining the alternative relief of taxing the alleged income on account of excess stock as income under the head business or profession and other consequential/equitable relief of allowing treatment of the same as opening stock for subsequent AY etc..

Date of Valuation Report Value of Stock as per Report
1. Mr. Kamal Kant Pareek
13.07.2020

Rs. 19,70,48,486/-
2. Mr. Kailash Chauhan

Rs. 40,02,77,750/-
3.Mr. Jagdish Chandra Jajoo
15.07.2020

Rs. 6,01,84,736/-
(excluding Museum)

Total Rs. 65,75,10,972/-

Stock at the Panch Batti was undertaken only in the presence of one of our employee Shreya and we were not asked to come at the time of valuation Thus we are not present at the time of valuation and not aware of the valuation method adopted by the department for valuation of stock. Besides in valuing thousands of items no single question/doubt arose in the valuation which is very surprising. Hence it is one sided valuation and we are not agreeing with the same.

(ii)
Overvaluation of stock lying at HO:
I have also objection in valuation done of stock at Head Office, as there various items specially stones have been overvalued. Like item no 16-453 and item no M 18-109 in which various precious and semi-precious stones, have been overvalued by 10 times from its original price. And in support of this he has also shown some photos and evidence.

Registered Valuer appointed by the Income Tax Department. Stock at Head Office, Showroom and Museum situated at Ashok Marg were physically verified and valued by 3 Valuers namely Mr. Kamal Kant Pareek,
Mr. Kailash Chauhan and Mr. Jagdish Chandra Jajoo, Registered Valuers appointed by the Income Tax Department. The valuation done by the valuers were contended to be vague, arbitrary and based on assumption presumption and surmises. The stores contains thousands of items of Individual Jewellery related to Silver, Gold Metal and precious and semi- precious stones which are unique and idiosyncratic in their size, shape, content of metal, value of design, Value of Labour, marketability, appearance and class of customers. None of the items are standard items.
If a valuation of these items is required, it should have been done on item wise basis by valuing each item independently. The Valuer is required to segregate the metal value and the stone value and estimate the labour involved of each item, then only the correct value of each item may be determined at any date. In view of the large number of individual items with no similarity, the survey team avoided the individual valuation of the items as it would take at least 10-12 days. It appears that with the aim of concluding the survey quickly they adopted ad-hoc valuation approach without any rationale or basis. Even all the three valuers adopted different
During the course of survey proceedings, CCTV Camera at Showroom were operational and same was recorded. For the proper inventory valuation, each item should be properly evaluated to identify the metal used and Precious/semi-precious stone used and labour cost incurred in it. But no such exercise was done by Valuer at the time of survey. But from the valuation sheet it is seen that the valuer has taken all the arbitrary values and the approach followed by the valuer is also based on some assumptions for which no mystified base provided. Even while valuing item ad-hoc percentages were applied arbitrarily to the Tag Price for determining the valuation without valuing the entire inventory by individual item. During the course of survey, statement of one of the Director Shri
Rajesh Ajmera was recorded and in the statement recorded he has also objected the valuation method adopted by the department by stating that he is not satisfy/agree with the valuation method adopted the department.
In support of that claim that valuation done by all the three valuers was erroneous, assessee submitted that the difference in valuation undertaken
Amrapali Jewels Pvt. Ltd. vs. ACIT by the valuer while valuing each item independently as against the ad-hoc valuation approach adopted by the valuer appointed at the time of survey was different as tabulated herein below:-

The data clearly indicates that the ad-hoc approach of valuation by deducing a percentage from the tag price was erroneous and without any rationale. Further, there had been instances wherein erroneously an extra zero was added to the price or a zero was reduced in the tag price
(maximum asking price) mentioned in the list. However, this anomaly was also reflected in the valuation undertaken by the valuer, as an item whose tag price has been identified at Rs. 8.6 lakh has been valued at Rs. 57.75
Valuer instead Certain ad-hoc percentages were applied to the tag price for determining the valuation without examining the entire inventory by individual item.
3.15 At the Head Office cum retail store and Museum situated at Ashok
Marg were physically verified and valued by 3 Valuers namely Mr. Kamal
Kant Pareek, Mr. Kailash Chauhan and Mr. Jagdish Chandra Jajoo,
Registered Valuers appointed by the Income Tax Department. Based on the report of the value Mr. Kamal Kant Pareek, it was found that most of the items were very much high valued which were considered as not justified.
Director of the Company has also objected valuation done of stock at Head
Office, as there various items specially stones have been overhead. In the statement he categorically raised his objection that item no 16-453 and item no M-18-109 in which various precious and semi-precious stones, have been overvalued by 10 times from its original price. Further in case of Amrapali Jewels Pvt. Ltd. vs. ACIT

Silver Jewellery Semi the price of semi precious stones embedded in Silver
Jewellery are ranging from Rs. 2 to Rs. 10/- per Ct. The said valuation might have been done using excel sheet and formula. While entering the price of Semi-Precious Stones, he might have inadvertently entered the price of Semi-precious stones by adding extra zeros, resulting into very high valuation of Jewellery items by more than 10 to 100 times.
3.16 The assessee also pointed out the discrepancies in Method of Valuation and high valuation done. In case of Valuation done by Jagdish
Chandra Jajoo Vide report dated 15.07.2020 wherein it was noted that Mr.
Jagdish Chandra Jajoo, valued item wise valuation as is evident form the page No.1 and Page No. 2 of the valuation report of the valuer. Whereas after that page that value adopted the lump sum valuation of remaining items. All the items found in Tarang Arora's Room and Anil Ajmera's Room were mixed up and consolidated valuation of the various items was done by the valuer. Whereas in the case of Valuation done by Kailash Chauhan
Vide report dated 15.07.2020 it was noted that item wise valuation has not been conducted by the valuer, giving description of the item, Gross/net
Weight, Purity of the Metal, Rate etc. of the item. Thus, it was contended that valuation has been done on hurriedly by taking a target of completing in one day only so this exercise of consolidated all items in the valuation
Amrapali Jewels Pvt. Ltd. vs. ACIT has been followed by the valuer which is baseless and vague. It was also found that in case of Mixed Silver Item also different approaches have been adopted by the valuer like in 1 Sheet mixed silver has been valued @37/- per gram, in 2nd Sheet mixed Sttver have been valued @ 60/- per gram to 70/- per gram and in 3d sheet it has valued mixed silver item @100 to 150/- per gram, whereas the price of Silver of 999 purity was only Rs. 52,500/- as on that date. The valuer has also overvalued the stock of silver items by such a high amount.
3.17 Thus, as is clear that while valuing the inventory at the Head Office cum retail store, three valuers were appointed, out of the three, one valuer was deputed from the Paanch Batti store after completion of the valuation exercise there the same valuer Ironically, adopted an altogether different valuation approach as against the approach adopted at the Paanch Batti store even when the nature of inventory was similar at Head office.
3.18 The valuer valued the valuation at high valuation wherein they identified the high valuable Jewellery items as sample for undertaking valuation of whole inventory on that basis and then undertook an item wise valuation on such sample Inventory basis only. Thereafter, the remaining
Amrapali Jewels Pvt. Ltd. vs. ACIT inventory was valued cumulatively by applying an ad-hoc valuation approach without any rationale or basis on individual item.
3.19 Looking to the valuation method adopted by the assessee, the Valuation was done at current market price instead of cost incurred by the assessee.
3.20 The valuer team did not consider that the item they valued were much old Inventory and the same were recorded at the historical cost and the same cannot be valued on current market price. Therefore, there is huge difference in the value of stock as per books and value of the stock as per valuer. The assessee company has submitted a complete list of Jewellery found at the museum containing details of the owner of the Jewellery. Based on the above contention, the assessee claimed that there was no excess stock, as alleged in the notice, at the time of survey conducted at business premises of assessee Company.
3.21 The assessee company has two outlets / stores at Delhi one at Amarpali 39/394, Khan Market, New Delhi 110003 and another at Amarpali, Indira Gandhi, International Airport, Terminal 3, New Delhi-
110037. No Physical survey was conducted at any of stores of the company situated at Delhi. The assessee company has submitted
Amrapali Jewels Pvt. Ltd. vs. ACIT complete details of stock lying at both the outlets/stores at Delhi as on 31.03.2020 and 13.07.2020 to DDIT Investigation Jaipur. Total Value of Closing Stock of all Jewellery items at Delhi Stores was Rs. 18,75,87,847/- as per books of accounts of the company as on 13.07.2020. Whereas revenue arbitrarily taken the Value of Closing stock at Delhi Stores of Rs
25,59,78,648/- without any basis. Since no basis was available, assessee requested vide letter dated 08.12.22 to provide the basis on which such value was arrived at. In response, it was stated that Value of Stock at Delhi
Branch was has been taken from the Computerized stock list provided by assessee company in pen drive during the course of Survey. No explanation was asked from the management during the course of post survey proceedings by investigation department about such difference in the Value of Stock. As noted that at these places no physical Survey was conducted and total value of Stock of these outlets have been determined by the departmental on the basis of computerized excel stock sheet found at the time of survey proceeding at Head office of the assessee company.
The price mentioned in the computerized stock list obtained at the time of survey contains "Asking / selling price" of the jewellery and not cost at which stock is valued in the books of accounts of the company. The method of valuation of inventory is cost or market price whichever is lower.
Therefore, as stated goods mentioned in the computerized sheet were valued at cost in the books of account of the assessee and stock in the computerized excel sheet is Rs. 25,59,78,648/- which is asking/Selling price. Asking Price has Margin + Anticipated discount to be given to customer. Assessee submitted copy of certain sales bills of goods appearing in excel sheet in order to support that Rs.25.59 Crore was asking price and not cost. The Value of stock at Cost price was Rs. 18.75
crore only. The assessee also submitted that different approach in valuation of stock of different branches of same organization, where no physical survey was conducted, has been applied, which was not justified.
Based on that assessee contended that Value of stock taken by the Department at Delhi outlets of Rs. 25,59,78,648/- was erroneous. Correct value of Stock of Rs. 18,75,87,847/- is required to be considered while taking value of stock at Delhi outlets.
3.22 Stock lying at Mumbai Branch as per the Tally books of account of the branch as on 31.3.2020 and as adjusted up to 13.7.2020 reported at Rs
53,62,45,741/- and Stock lying at Bangalore Branch as per the Tally books of account of the branch as on 31.3.2020 and as adjusted up to 13.7.2020-
Rs 16,51,51,691/-. In Mumbai assessee company was having three outlets/stores at Mumbai one is at (a) Amarpali Juhu Shop, Mumbai,
Shop, Mumbai. The assessee also has 2 outlets / Stores at Bangalore, (a)
Amrapali Jaynagar Shop, Banglore and (b) Amrapali Shop, Bangalore. No Physical survey was conducted at any of the stores of the company situated at Mumbai and Bangalore by Income Tax Department. In the proceeding of post survey assessee company was asked to submit details of Stock lying at other Branches/Showrooms/other outlets of the company as at 31.03.2020 and 13.07.2020. The assessee company has submitted complete details of stock lying at all the outlets/stores at Mumbai and Bangalore as on 31.03.2020 and 13.07.2020 to DDIT Investigation Jaipur.
Total Value of Closing Stock of all Jewellery items at Mumbai Stores was Rs 24,84,70,166/- and at Bangalore Stores was Rs. 9,19,85,061/-as per books of accounts of the company as on 13.07.2020. In the assessment proceeding ld. AO taken the Value of Closing stock at Mumbai and Bangalore Stores at Rs. 53,62,45,741/- and Rs. 16,51,51,691/- respectively and the assessee contended that the same was without any basis. Since no basis was available, the assessee was requested vide letter dated
08.12.2022 to provide the basis on which such value was taken. In response, the basis was given and the same reads as under :
** Sales 2474210 – GP @ 30% = Rs. 17,31,947/-
** Sales 5086113 – GP @ 30% = Rs. 35,60,280/-

Thus, stock of Rs. 53,62,45,741/- was considered with Mumbai Branch and stock of Rs. 16,51,51,691/- was lying with Bangalore Branch, as on 13.7.2020. No explanation was asked from the management during the course of post survey proceedings by investigation department about such difference in the Value of Stock, as assessee gave details of stock lying at Mumbai and Bangalore Branches vide letter dated 16.03.2021. The assessee thus contended that the value of stock was wrongly taken based on incomplete tally data. The assessee also contended that ld. AO generated the Balance sheets of Mumbai and Bangalore, Branches for Amrapali Jewels Pvt. Ltd. vs. ACIT financial year 2019-20 from the tally data of Rinkesh Jain’s Computer. In this regard that Tally data on the Rinkesh Jain Computer was not regular tally data. Regular Books of accounts maintained by Mr. Vijay Kumar Jain on his Computer, which was also impounded during the survey. Tally data found from the Rinkesh Jain Computer was incomplete. The assessee also contended that various Jewellery items was return to the HO in the month of June 2020 and was supported with the copy of Tax Invoice for stock transfer from Bangalore to HO and was placed on record as Annexure 7
and the said stock was already included in the stock at HO by the survey team. No effect of such transfer was given while computing the stock lying at Bangalore by the ld. AO. Not only that assessee contended that different approach in valuation of stock of different branches of same organization, where no physical survey was conducted, was taken and therefore, that was also objected. Assessee also contended that the Stock transfer invoice does not reflect the actual cost of item. They are normally above the cost price including margin. The method of valuation of inventory regularly adopted is cost or market price whichever is lower. Therefore, goods lying at Mumbai and Bangalore Branches given by the company during post survey proceedings should be valued at cost and thereby objected to the Value of stock taken by the Department at Mumbai and Bangalore Stores
Amrapali Jewels Pvt. Ltd. vs. ACIT of Rs. 53,62,45,741/- and Rs. 16,51,51,691/- respectively. The correct value of Stock of all Jewellery items at Mumbai Stores and Bangalore
Stores was Rs 24,84,70,166/- and Rs. 9,19.85,061/- respectively as per books of accounts of the company as on 13.07.2020. 3.23 As regards the Goods sent on consignment basis to USA to Consignment Agent M/s Amrapali Inc. Usa there were no Physical survey.
But while proceeding to the post survey, the assessee company was asked to submit details of Stock lying with Franchisees/ Consignment Agent as at 31.03.2020 and 13.07.2020. The assessee company submitted complete details of stock lying at all the Franchisees/Consignment Agents as on 31.03.2020 and 13.07.2020 to DDIT Investigation Jaipur. Department arbitrarily taken the Value of Closing stock of Rs. 1,19.69.563 at Consignment Agent M/s Amrapali USA without any basis. Since no basis was available, vide letter dated 08.12.22. Assessee requested to provide the basis on which such value was taken. It was stated that Value of Stock
During the year 2019-20 certain unsold items were returned by Consignee, which were earlier sent on a consignment basis to USA. The same were not entered in tally due to sudden lockdown imposed by Government on account of COVID
19. These items were actually returned/reimport/received before 31 March 2020. In support of that contention assessee submitted copy of correct Consignment Account of Amrapali Inc for the period from 01.04.2019 το 31.03.2020, Return Invoice
(Unsold), Bill of Entry for Reimport(Return of Goods), List of items returned and Airway/Shipping Bill for Returned goods. After giving effects of above returned goods, the balance receivable from the above consignee as on 31.03.2020 was of Rs. 37,15,798/- on account of unsold stock lying with him. Since the Consignment Invoices were raised at selling price, the Amrapali Jewels Pvt. Ltd. vs. ACIT amount shown above was selling price of the stock lying with the consignee, not the cost. Item wise details of stock lying with the consignee as on 31.03.2020 along with its cost was given as Annexure 9. Accordingly the Cost of unsold stock with Amrapali Inc. USA as on 13.07.2020 was of Rs. 17.42.300/- only which is already included in the value of stock mentioned. Assesses submitted consignment Account of Amrapali Inc.
USA in books of account for the period 01.04.2020 to 31.03.2021. All the goods lying at Consignment agent as on 01.04.2020 have been sold by Consignee and necessary Export Sales accounted for in books of accounts in the current financial year. Cost of Stock lying with Consignment Agent
Amrapali Inc. USA of Rs. 17,42,300/- was already included in the value of stock mentioned, accordingly Value of stock of Rs. 1,19,69,563 as alleged in the notice should not be considered separately.
3.24 The assessee company has also Consignment Agent M/s Amrapali
UK Ltd., there was not physical survey / stock taking was conducted at the premises of above Consignment Agent by revenue. On being asked to submit details of Stock lying with Franchisees/ Consignment Agent as at 31.03.2020 and 13.07 2020 The assessee company submitted complete details of stock lying at all the Franchisees/Consignment Agents as on 31.03.2020 and 13.07.2020. Total Value of Closing Stock of all Jewellery
Amrapali Jewels Pvt. Ltd. vs. ACIT items at Consignment Agent Amrapali UK Ltd was Rs 1,28,19,625/- as per books of accounts of the company as on 13.07.2020. Value of Closing stock of Rs. 11,64,46,108/- at Consignment Agent M/s Amrapali UK Ltd.
without any basis. Since no basis was available, letter dated 08.12.22 to provide the basis on which such value has been taken. In response vide letter dated 21.12.2022 assessee submitted that Value of Stock lying with Amrapali UK Ltd was taken on the basis of Consignment account in Tally books of A/C for the period from 1.04.2020 to 13.07.2020. No explanation was asked from the management during the course of post survey proceedings by investigation department about such difference in the Value of Stock at Consignment Agent Amrapali UK Ltd. Assessee also contended that the tally records taken by the department was incomplete. Whenever the goods were sent on Consignment basis to any Foreign Consignment
Agent, Consignment Invoice is raised at selling price, accordingly his account debited by the Consignment invoice. Necessary documents are also sent as per Custom Laws. On receipt of sales notes same was accounted for as Export Sales in the books of accounts. In case any goods were returned the same was credited to his consignment account. During the year 2019-20 certain unsold items were returned by Consignee, which were earlier sent on consignment basis to UK. The same were not entered
Amrapali Jewels Pvt. Ltd. vs. ACIT in tally due to sudden lockdown imposed by Government on account of COVID 19. These items were actually returned/reimport/ received before
31st March 2020. In support of that contention assessee submitted copy of correct Consignment Account of Amrapali Inc. UK for the period from 01.04.2019 to 31.03.2020, Return Invoice (Unsold), Bill of Entry for Reimport( Return of Goods), List of items returned and Airway/Shipping Bill for Returned goods. After giving effects of above returned goods, the balance receivable from the above consignee as on 31.03.2020 was of Rs.
3,07,98,096/- on account of unsold stock lying with company. Since the consignment Invoices were raised at selling price, the amount shown was Selling price of the stock lying with the consignee, not the cost.
Accordingly, the Cost of unsold stock with Amrapali UK Ltd as on 13.07.2020 was Rs. 1,28,19,625/- only which was already included in the value of stock given by the assessee which was reflected in the Consignment Account of Amrapali Inc. USA from the books of account for the period 01.04.2020 to 31.03.2021 was filed.
3.25 For the goods sent to Doha for Exhibition for Rs 51,96,689/- and the same was sent to Amiri Gems on Consignment Account. In the post survey proceeding assessee was asked to submit details of Stock Lying with Franchisees/ Consignment Agent as at 31.03.2020 and 13.07.2020. The Amrapali Jewels Pvt. Ltd. vs. ACIT assessee company has submitted complete details of stock lying at all the Franchisees/Consignment Agents as on 31.03.2020 and 13.07.201 to DDIT
Investigation Jaipur. There was no stock in this consignment account as 13.07.2020. Even though the revenue consider the Value of Closing stock of Rs. 51,96,689 Jewellery & Watches Exhibition without any basis. Since no basis was available, vide letter dated 08.12.22 assessee requested to provide the basis on which such values was taken. In response, vide reply dated 21.12.2022, it was contended that value of stock lying with this consignee was taken on the basis of Consignment account in Tally books of account for the period from 1.04.2020 to 13.07.2020. There was no confrontation about the arrival of such difference in the Value of Stock at Doha Jewellery & Watches Exhibition-Amiri Gems on Consignment account. As stated repeated that the accounts were incomplete. The assessee submitted that whenever the goods were sent on Consignment basis to any Foreign Consignment Agent Consignment Invoice is raised at selling price, accordingly his account was debited by the Consignment invoice. Necessary documents were sent as per Custom Laws. Whenever any sales notes are received from the Consignee the same was accounted for as Export Sales in the books of accounts. In case any goods were returned the same way it was credited to his consignment account. During
Amrapali Jewels Pvt. Ltd. vs. ACIT the year 2019-20 certain unsold items were returned by Consignee, which were earlier sent on a consignment basis. The same were not entered in tally due to sudden lockdown imposed by Government on account of COVID 19. These items were actually returned/reimport/received before
31st March 2020. In support of that contention assessee submitted copy of correct Consignment Account of for the period from 01.04.2019 to 31.03.2020, Copy of Return Invoice (Unsold), Bill of Entry for Reimport(
Return of Goods), List of items returned and Airway/Shipping Bill for Returned goods. If this contention considered the balance receivable from the above consignee as on 31.03.2020 was of Rs. Nill- as there was no stock lying with consignee and thereby the same should not have been considered separately for an amount of Rs. 51,96,689. 3.26 Similarly the case of goods sent on consignment basis to Hongkong, as on 13.7.2020 for an amount is not required to be considered separately.
Because the assessee company has sent goods at EPOCA TRADE LTD.
Hongkong Consignment account. During the post survey proceedings, assessee company was asked to submit details of Stock lying with Franchisees/ Consignment Agent as al 31.03.2020 and 13.07.2020 The assessee company has submitted complete details of stock lying at all the Franchisees/Consignment Agents as on 31.03.2020 and 13.07.2020 to Amrapali Jewels Pvt. Ltd. vs. ACIT

DDIT Investigation Jaipur. There was no stock in this consignment account as on 13.07.2020. Ld. AO arbitrarily taken the Value of Closing stock of Rs
31,091/- at consignee at Hongkong without any basis. Since no basis was available, the assessee requested vide letter dated 08.12.22 to provide the basis on which such value was taken. In response, it was stated that Value of Stock lying with this consignee has been taken based on Consignment account in Tally books of account for the period from 1.04.2020 to 13.07.2020. No explanation was asked from the management during the course of post survey proceedings by investigation department about such difference in the Value of Stock at Consignment account Hongkong.
Whenever the goods are sent on Consignment basis to any Foreign
Consignment Agent. Consignment Invoice is raised at selling price; accordingly his account was debited by the Consignment invoice.
Necessary documents were also sent as per Custom Laws. Whenever any sales notes received from Consignee the same was accounted for as Export Sales in the books of accounts. In case any goods were returned the same is credited to his consignment account. In case of any charges on consignment the same credited to his account. As on 31.03.2020 there was a balance of Rs. 31,091/- in the consignment account. No stock was pending with him. This may be on account of certain charges which could
Amrapali Jewels Pvt. Ltd. vs. ACIT not be credited in the absence of any statement from Consignee. However, this amount was credited in the Consignment account in current Financial year i.e. 2020-21 Copy of Consignment account for the financial year 2020-
21 showing Nil Balance was placed on record. Therefore, assessee contended that there was no Stock lying with Hongkong Consignment account as on 13.07.2020. Accordingly, Value of stock of Rs. 31,091/- as alleged in the notice should not be considered separately.
3.27 Ld. AO considered the above reply and submissions made by the assessee, but the same were not found to be fully convincing and acceptable, because, the assessee has not maintained stock register, which was clear from the remarks given by the Auditor vide form No. 3CA furnished along with audit report u/s 44 AB of the Income Tax Act 1961 as extracted here in below:
S. No.

Observations/qualifications
2. Others
The stock register has not been maintained
3. Valuation of closing stock is not possible
Valuation has been taken as certified by Director.

Thus, the Auditor has categorically mentioned that no stock register has been kept by the assessee and the valuation has been taken as stated by Amrapali Jewels Pvt. Ltd. vs. ACIT the Director of the company. From the list of account books maintained as per Annexure A to the Audit report, it is obvious that no stock register has been kept. During survey, Shri Rajesh Ajmera, Director of the company, admitted in his statement recorded during the course of survey on 13/7/2020, that at the close of the financial year on 31/3/2020, physical verification of stock was not done, nor any list based on cost price was prepared. He further admitted that the profit was estimated after applying the assumed GP rate based on the profit rate declared in preceding years and the balancing figure taken as closing stock. The assessee company is engaged in the business of manufacturing gold and silver jewellery studded with precious and semi-precious stones and sale thereof. That apart, during survey, Incriminating papers were found and impounded (Exhibit 3 of Annexure AS), in which unaccounted expenses were found mentioned.
Further, incriminating papers of unaccounted sales were also found and impounded as per Exhibit AS/1, AS-2, AS-3, AS-6, AS-11 and AS-13 while survey. Thus, it was noted that the books of accounts maintained by the assessee were not reliable and the same cannot be taken to be conclusive and, therefore, the provisions of Sec. 145(3) were invoked and thereby the books of accounts were rejected.
3.28 The assessee company, M/s Amrapali Jewels Pvt. Ltd. (for short
AJPL) runs many showrooms, where gold, silver jewellery studded with diamonds, precious and semi-precious stones displayed and sold. Such show rooms/ branches situated at Jaipur, Delhi, Mumbai and Bangalore.
This Company purchases jewellery items from the manufacturing concerns of the Group as well as from outside third parties. Survey u/s 133A of the Act was carried out on 13/7/2020 at the two showrooms of M/s AJPL at Jaipur on at M.I. Road, Jaipur and H.O. cum show room at Ashok Marg, C-
Scheme, Jaipur. Assessee company was also engaged in making sales to USA and UK on consignment basis through its agents. Besides, M/s AJPL is making sales through several franchisee dealers spread across the country. It is pertinent to mention here that the stock lying with the showrooms/ branches and overseas consignment agents is owned by M/s
AJPL, as no sale bills are issued while dispatching the goods to the branches, showrooms and consignment agents. As regards the franchisee stores, Initially the jewellery items are dispatched through challans and after confirmation by the concerned franchisee, final sale bill is issued by M/s AJPL. Thus, on a given date, unbilled jewellery is also lying as stock of M/s AJPL with various franchisees. During the course of survey operation, the survey team observed discrepancies in the maintenance of the books
Ajmera , Director of M/s AJPL. The explanations offered and admissions made by Shri Rajesh Ajmera were recorded in the statements recorded during survey operation. The brief contentions as stated by Shri Rajesh
Ajmera reads as under:-
(i) Shri Rajesh Ajmera had stated that no stock register in respect of the raw material and WIP is maintained by M/s AJPL.
(ii) The quantitative details of the finished goods i.e. the items of jewellery are maintained in the customized GST billing software, which consist of the details of each item of jewellery viz. itens no., description, weight of the items consumed and selling price of each item. Further, these details are stored online on i-cloud.
(iii) No details in respect of the cost of jewellery items are maintained by M/s AJPL.
(iv) During the course of survey, the books of accounts for the year
2019-20 were found incomplete and hence the closing stock of M/s
AJPL as on 31.3.2020 had not been computed. Since, the opening stock as on 01.04.2020 was not known, the books of account for the period from 01.04.2020 to 13.07.2020 were also not complete. In these circumstances, the stock as on the date of survey i.e.
13.07.2020 as per the books of a/c, could not be computed during the course of survey operation.
(v) Subsequent to search/survey action, the assessee company has filed its ITR for the A.Y 2020-21 on 18.01.2021. In the Final accounts filed along with the return, the closing stock as on 31.03.2020 is shown as under:-
Raw Material
Rs. 1,25,66,828/-
Finished Goods
Rs. 1,26,90,17,876/-
Rs. 128,15,84,704/-
3.29 During the course of survey operation, the stock as per the book of accounts could not be computed, as the books of account of neither for the F.Y 2019-20 nor for the period from 01.04.2020 to 13.7.2020 were found complete. Print-out of the trial balance as on 31.3.2020 and as on 13.7.2020 were taken out from the computers of the Account’s Department of M/s AJPL. Moreover, the Tally Data Printouts of sales register, cash book etc. for the year 2019-20 and 2020-21 (till 13.7.2020) were also taken, during the course of the survey operation. Subsequently, the assessee company (M/s AJPL) got its accounts audited and filed the ITR for the relevant period i.e. A.Y 2020-21. On comparison of both the Trading accounts, the main points of difference have been noted which reads as under:- i) For the assessment years preceding the survey year, the assessee company had declared Gross profit @ 27.5% for F.Y. 2016-17, 27.2% for F.Y. 2017-18 and 30% for the F.Y. 2018-19. However, for the F.Y. 2019-20, the assessee company has shown Gross Profit at the Increased rate of 34%. This has been done to inflate the figure of opening stock as on 01-04-2020 and ultimately the stock, as per the books of a/c as on 13-7-2020. It needs to be noted here that the return of income for the A.Y. 2020-21 relevant to F.Y. 2019-20 had been filed after the search &
survey operation carried out on "Amrapali Group". During the course of survey operation, Shri Rajesh Ajmera, Director of M/s AJPL had agreed that following the past practice and considering the declared GP rates of the preceding years, it will be fair to apply a GP rate of 30% to compute the stock in hand as per books of a/c as on 31-3-2020. ii) Accordingly, the GP rate declared in the return was 30%. Accordingly, the stock as per the books of a/c as on 13-7-2020 was compared as detailed below:-
As per the above tabular data, the stock as per books of account was computed at Rs. 1,26,08,06,402/- as on the date of survey i.e. 13.07.2020. Based on that facts total stock of M/s AJPL physically present at different locations as on the date of survey i.e 13.07.2020 was determined as under:-
3.30 Computation of Excess stock:

Based on above chart, the total stock amounting to Rs.
267,43,88,096/- was considered physically found at different showrooms, branches, franchisee stores and with consignment agents as on the date of survey i.e. on 13.7.2020. On the other hand, the total stock as per books of account of M/s AJPL was worked out at Rs. 1,26,08,06,402/- only. On the basis of these figures, the excess / unaccounted stock as on 13.7.2020
was computed and the same was derived as under:-
Stock physically lying as on 13.7.2020

Rs. 267,43,88,096/-
Less: Stock as per books of a/c as on 13.7.2020
Rs. 126,08,06,402/-
Excess / Unaccounted stock

Rs. 141,35,81,694/-

Ld. AO thus considered this excess stock of Rs. 141,35,81,694/- as computed above liable to be added to the income of assessee company
M/s AJPL u/s 69B of the Act.
3.31 While in the preceding of survey at two showrooms situated at Panch
Batti, Jaipur and Ashok Marg, C-Scheme, Jaipur on 13.07.2020, various diaries, slip pads and loose papers were found and seized. These documents show that unaccounted sales of jewellery were made by the assessee company. During assessment proceedings, the assessee was Amrapali Jewels Pvt. Ltd. vs. ACIT issued a detailed show-cause notice along with notice u/s 142(1) on 23.11.2022 asking to explain as to how sales of Rs. 24,95,17,849/- made during the year under consideration has been accounted for, which was computed based on the above records found in survey. In response to the said show cause notice, the assessee filed a reply on 23.12.2022. Ld. AO considered the reply and submissions made by the assessee, but the same were not found to be convincing and acceptable as discussed in the assessment order and finally he considered unaccounted sales made by the assessee during the year under consideration for an amount of Rs.
24,95,17,849/- and same was considered as unaccounted sales and was added to the Total Income of M/s Amrapali Jewels Pvt Ltd for the A.Y.
2021-22 on account of unaccounted sales as the corresponding purchases are also not verifiable with books of accounts, the whole of the sale amount was considered as undisclosed Income of the assessee.
3.32 During the course of survey at the Head Office cum Showroom of the assessee, it was noticed that a total of 41 high value items of jewellery having total tag price of Rs. 11,40,00,000/- were not found on physical verification at the premise. The non-availability of the above high value 41
items of jewellery clearly proves that these items have been sold without recording the same in books of accounts. During assessment proceedings,
Amrapali Jewels Pvt. Ltd. vs. ACIT the assessee was issued a detailed show-cause notice along with notice u/s 142(1) dated 23.11.2022 on this issue. In response to the show-cause notice, the assessee filed reply on 01.12.2022. Ld. AO considered the reply and submissions made by the assessee, but the same was not found to be fully convincing and acceptable to him and therefore, he hold that the non- availability of the above high value 41 items of jewellery, clearly prove that these items have been sold without recording the same in books of account. The sale value of these high value jewellery consists of the cost of the items plus the gross profit earned thereon. Since the purchase of these high value items were also not recorded in regular books of account, the entire sale consideration i.e. 11.40 Crore was added to the income of M/s
AJPL on account of undisclosed Income as a result of unaccounted sales.
3.33 During the course of survey proceedings, certain incriminating documents were found and seized as per Annexure-AS. On perusal of the back side of page no. 115 of Exhibit-3 of Annexure-AS, it was noticed by the ld. AO that expenses of Rs. 2,00,000/- were made under various heads by the assessee. During the course of assessment proceedings, the assessee was issued a detailed show cause notice along with notice u/s 142(1) dated 23.11.2022 on this issue. In response to the show cause notice, the assessee filed a reply on 23.12.2022. The ld. AO considered the Amrapali Jewels Pvt. Ltd. vs. ACIT reply and submissions made by the assessee, but the same were not found to be fully convincing and acceptable and therefore he added unaccounted expenditure of Rs. 2,00,000/- u/s 69 of the IT Act. On perusal of page no.
119 of Exhibit-3 of Annexure-AS, it was noticed that expenses of Rs.
2,10,000/- were made under various heads by the assessee. During assessment proceedings, the assessee was issued a detailed show cause notice along with notice u/s 142(1) on 23.11.2022. In response to the show cause notice, the assessee filed a reply on 23.12.2022. The ld. AO considered the reply and submissions made by the assessee, but the same was not found to be fully convincing and acceptable. Therefore, he held that the assessee company has made unaccounted expenditure of Rs.
2,10,000/- during the year under consideration and accordingly it was considered as liable to be taxed as per provision of section 69C of the Act.
3.34 On perusal of page no. 120 of Exhibit-3 of Annexure-AS, it was noticed that expenses of Rs. 2,00,000/- were made under various heads by the assessee. The assessee was issued a detailed show-cause notice along with notice u/s 142(1) dated 23.11.2022 on this issue. In response to the show cause notice, the assessee filed a reply on 23.12.2022. Ld. AO considered the reply and submissions made by the assessee, but the same was not found to be fully convincing and acceptable and therefore, he
Amrapali Jewels Pvt. Ltd. vs. ACIT made addition of unaccounted expenditure of Rs. 2,00,000/- u/s 69C of the Act.
3.35 On perusal of back side of page no. 122 of Exhibit-3 of Annexure-AS, it was noticed that expenses of Rs. 5,55,000/- were made under various heads by the assessee. The assessee was issued a detailed show cause notice along with notice u/s 142(1) dated 23.11.2022 on this issue. In response to the show cause notice, the assessee filed reply on 23.12.2022. Ld. AO considered the reply and submissions made by the assessee, but the same were not found to be fully convincing and acceptable and therefore, he made an unaccounted expenditure of Rs. 5,55,000/-, as per provision of section 69C of the Act.
3.36 Based on the above observations so recorded by the ld. AO determined the income of the assessee at Rs. 176,78,18,453/- after allowing the business loss and unabsorbed Depreciation.
4. Aggrieved from the observations so recorded by the ld. AO while passing the assessment order, the assessee carried the matter before the learned Commissioner of Income Tax, Appeal-4, [ for short CIT(A) ] Jaipur by filling an appeal before him. While dealing with various grounds of the appeal raised by the assessee, ld. CIT(A) has partly allowed the appeal of the assessee. The relevant observations of the ld. CIT(A) on the various
Amrapali Jewels Pvt. Ltd. vs. ACIT grounds / issue raised are reiterated here in below so as to understands its contextual understanding to decide the grounds raised before us:
Finding of ld. CIT(A) for rejection of books of accounts

The ld. AO has in this regard found that the Auditor has categorically mentioned that no stock register has been kept by the appellant and the valuation has been taken as stated by the Director of the company. From the list of account books maintained as per Annexure A to the Audit report, it is obvious that no stock register has been kept. During the course of course of survey on 13/7/2020, that at the close of the financial year on 31/3/2020, physical verification of stock was not done, nor any list based on cost price was prepared. He further admitted that the profit is estimated after applying assumed GP rate based on the profit rate declared in preceding years and the balancing figure is taken as closing stock. The appellant company is engaged in the business of gold and silver jewellery studded with precious and semi-previous stones and sale thereof. That apart, during the course of survey, incriminating papers were found and impounded (Exhibit 3 of Annexure AS), in which unaccounted expenses were found mentioned. Further, incriminating papers of unaccounted sales were also found and impounded as per
Exhibit AS/1, AS-2, AS-3, AS-6, AS-11 and AS-13 during the course of survey.
From the above facts, it is noted that the books of account maintained by the assessee are not reliable and the same cannot be taken to be conclusive and, therefore, it is a case to which the provisions of Sec. 145(3) are attracted. In view of the defective nature of books of account mainained by the assessee, the same were rejected by invoking Sec. 145(3).

Further it is noticed that additions have been done in the assessment order on the ground that loose papers were found during the course of survey wherein details of sales made out of books have been detected and addition has been made to the income of the appellant in this regard. Further addition has been made in the assessment order regarding the jewellery items which were claimed by the appellant to be have been sent for the repairs however it was found and concluded in the assessment order that such jewellery items were sold by the appellant and not recorded in the books of accounts.

From the perusal of the audit report it is seen that in col. 35 page 47 (PB vol. 1) in the manufacturing column the appellant has mentioned NA meaning that not applicable. In the trading column it has been mentioned that the "the assessee has inform us that it is not possible to maintain stock register. At the same time, in the Amrapali Jewels Pvt. Ltd. vs. ACIT financial statements the appellant has shown consumption of raw material of gold and silver bullion and gemstones (Pg. 30 of PB vol 1). The appellant has also shown job charges and wages. The tax audit report is contradictory to the results shown in the financial statements and hence the same are not reliable. At the same time in the stock found during the course of survey there is no reference to the valuation of the closing stock in terms of the raw material of bullion and gemstones implying that the stock of raw material was not in existence. No work in progress has been shown anywhere - as per the statement recorded (Pg 123-PB-
Vol.1) no stock of WIP is maintained and the WIP is not recorded in books as per the regular practice,

In the profit and loss account also cost of material consumed has been claimed.
The job charges and wages are Rs. 37,96,209 in F.Y. 2019-20 and are Rs.
98,14,578 in the F.Y. 2020-21 showing an increase by almost 160% whereas the raw material consumed value is Rs. 1,84,40,923 (F.Y. 2019-20) and Rs.
2,39,83,602 (F.Y. 2020-21) showing an increase of only 30%. The aspect also remains unexplained. At the same time the sales however have gone down substantially from 117.54 Cr. to 43.03 Cr.

It is also noticed from the tax audit report of the earlier year that in the financial year 2018-19 the consumption of raw material of bullion of gold and silver and stones is nil; however at the same time even then the appellant has claimed job charges and wages of Rs. 24,72,617. (Vol 1 PB Pg 74).

From the financial statements (PB-29 of Vol. 1) it is seen that the appellant is also into business of handicraft items. In the submissions of the appellant is no reference to these items. In the survey statement and inventory also there is no reference to business in these items.

Further in the related party transactions reported in the tax audit report (col. 23)
(PB Vol.1 Pg.40), no transaction of purchase from the related party are shown whereas in the submissions the appellant has stated that purchases are made from the related party as well as from the third parties.

Further discrepancies have been found in the books of accounts with respect to the goods sent on consignment to USA, UK, Hong Kong and Doha. As per the submissions of the appellant, without accepting, the goods were received back starting the period May 2019 however the entries in the books of accounts were not done. With respect to the material in Hong Kong, the appellant has done the ledger entry in March 2021 thus indirectly accepting the error in the books of accounts.

Further the director of the company Shri Rajesh accepted in his statement that the material owned by the company which is kept in the museum is not recorded in the books of accounts and in the balance-sheet and he offered the same to be added to the stock and his income.
In view of the above discussed factual findings and infirmities and due to the non- maintenance of the stock register and due to the fact that stock was being taken as the balancing figure year after year taking an estimated rate of gross profit lead to the conclusion that the books of accounts of the appellant and the gross profit ratio
(of the earlier years also) are not reliable for the purpose of computation of income.
Thus the books of accounts have been the rightly rejected by the learned assessing officer.

Further in the present case not only the stock also the turnover is also found to be unreliable. The appellant has been estimating the gross profit year after year and not bound of the real gross profit in earlier years also. Further the addition on account of stock can be made even after applying the gross profit ratio in case the stock on hand is found excess then stock as per books even after applying the gross profit ratio. In such a situation, the purpose in the assessment order is to arrive at the amount closest to the real income of the appellant. The approach suggested or argued by the appellant does not lead to correct determination of the income in the present case. If the argument of the appellant is that no figure from the rejected books of accounts can be used in that case even the turnover amount cannot be used in case of the rejection of books of accounts and the argument of the appellant leads to impossibility. Further as per the law and as per the accounting principles addition on account of excess stock is different than the addition on account of the gross profit ratio. Hon'ble Supreme Court of India in the case of CIT Vs British Paints India Ltd (1991) 188 ITR 44 (SC) has held that it is the duty of the assessing officer to determine the taxable income by making such computation as he considers appropriate in the given situation.

As per the law, gross profit ratio pertains to the trading results of one year whereas the unexplained excess stock detected during one year may have come from possible several sources like suppression of closing stock in earlier years as well as in the current year or introduction of a unaccounted money in buying the cash stock or unaccounted stock provided by related party for sale in unaccounted manner etc.

For example:-

Trading Account as per assesse:-
Opening Stock

100000

Sales

2000000
Purchases

1500000

Closing Stock
100000
Gross Profit

500000
2100000

2100000

If in the above, Gross profit after rejection of books of accounts is increased to Rs.
5,50,000 (increased by Rs. 50 thousand) and however on physical verification the stock is found to be of Rs. 8,00,000 (as against recorded amount of Rs. 1,00,000).
In such a case the addition on account of unexplained asset u/s 69 can be done.
It is held by the Honourable Supreme Court that "There is nothing in law which prevents the Income-tax Officer in an appropriate case in taxing both the cash credit, the source and nature of which is not satisfactorily explained, and the business income estimated by him under section 13 of the Income-tax Act, after rejecting the books of account of the assessee as unreliable".

The Hon'ble Supreme Court in the case of Commissioner of Income-tax v. Devi
Prasad Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968] has held as under:- x x x x

As per the headnotes "Section 145 of the Income-tax Act, 1961 (Corresponding to section 13 of the Indian Income tax Act, 1922] Method of accounting System of accounting Assessment year 1946-47 Whether where there is an unexplained cash credit it is open to ITO to hold that it is income of assessec and no further burden lies on ITO to show that income is from any particular source Held, yes".

As per the above judgement, the observations of the Hon'ble Allahabad High Court that because the amount was entered in the books of account of the business, there was some material to hold that the amount was income of the assessee from the business and not from some other source, were not approved by the Hon'ble
Supreme Court and was reversed, as it was held by the Hon'ble Supreme Court that it assumed it was for the Income-tax Officer to indicate the source of the income which was not the correct legal position and that where there is an explained cash credit, it is open to the Income-tax Officer to hold that it is income of the assessee and no further burden lies on the Income-tax Officer to show that income is from any particular source. It is for the assessee to prove that even if the cash credit represents income it is income from a source which has already been taxed.

Further, it is held by Hon'ble Allahabad High Court in the case of Commissioner of Income-tax-I v. G.S. Tiwari & Co. [2014] 41 taxmann.com 17 (Allahabad)/[2014]
220 Taxman 111 (Allahabad) (Mag.)/[2013] 357 ITR 651 (Allahabad)[30-05-2013) that (headnote extract) In course of assessment, Assessing Officer noted that assessee had not maintained proper books of account He thus rejected book results and estimated net profit rate of 8 per cent under section 44AD Assessing
Officer also made certain addition under section 68 in respect of unexplained cash credit Commissioner (Appeals) as well as Tribunal held that once addition was made on estimate basis under section 44AD, no separate addition could be made in respect of cash credit under section 68 Whether there is nothing in law which prevents Assessing Officer in an appropriate case in taxing both sundry credit, source and nature of which is not satisfactorily explained, and business income estimated by him after rejecting books of account of assessee as unreliable Held, yes. The relevant part of the judgement is as under:-
"10. It may be mentioned that in the case of CIT v. Maduri Rajaiahgari Kistaiah [1979] 120
ITR 294 (AP), it was observed that where a particular business income of the assessee has been estimated and determined and in such a case certain sundry creditors are found, the AO may be precluded from adding the said unexplained sundry creditors as undisclosed income from the business, the income of which was determined on estimate basis. But where the unexplained sundry creditors are not referable to the business income of the assessee which was estimated, the AO is not precluded from treating the unexplained sundry creditors as income from other sources such as salaries securities or any other income from a business, the source of which was not disclosed by the assessee.
Where certain unexplained sundry creditors are found in the account books of the assessee, whose business income is determined on estimate basis and not on the basis of his returned income, the AO is not prevented from treating the unexplained sundry creditors standing in the books of account as income from undisclosed sources.

(Emphasis Supplied)

In view of the above discussion, this ground of appeal is hereby dismissed.

Finding of ld. CIT(A) for making the addition of Rs. 141,35,81,694/- u/s 69B of the Act

An indicative index of the issue and the para number in which the same has been discussed in this ground of appeal is as under:-
Valuation process and Valuation of Stock at head office, C-Scheme &
tholi mention, Panch Batti, Jaipur
(vii) to (xxx)
140-167
Valuation of stock at Delhi, Mumbai
& Bengaluru
(xxxi) to (xxxvii)
167-172
Stock on consignment
(xxxviii) to (xlii)
173-176
Items at museum
(xliiii)
176-177
Applicability of section 69B of the Act.
(xlivi) to (li)
177-196
Conclusion of grounds no 7 & 8
(lii)
196-198
Adjudication of ground of appeal 9

198-201

(i) The appellant has submitted that survey operations were carried out at Head office and Museum of the company at Ashok Marg and Showroom/Retail Store at Panch Batti from 13.07.2020. No survey was conducted at any other outlets/franchisee of the assessee company. During the course of Survey conducted by Income Tax Department at Panch Batti showroom of the company, stock was physically verified and valued by Mr. Jagdish Chandra Jajoo a Registered Valuer appointed by the Income Tax Department at Rs. 80,38,17,100/-, as per Valuation Report dated 14.07.2020. There are more than 11400 items of silver and more than 3200 items of Gold Jewellery at the store on the date of survey.

(ii) Further, that stock at Head Office, Showroom and Museum situated at Ashok
Marg were physically verified and valued by 3 Valuers namely Mr. Kamal Kant
Pareek, Mr. Kailash Chauhan and Mr. Jagdish Chandra Jajoo, Registered Valuers appointed by the Income Tax Department. Stock was valued by all the above 3
valuers as under (K-14B, Ashok Marg, C- Scheme, Jaipur):

Name of Valuer
Date of Valuation
Report
Value of Stock as per Report
Mr. Kamal Kant Pareek
13.07.2020
Rs. 19,70,48,486/-
Mr. Kailash Chauhan
15.07.2020
Rs. 40,02,77,750/-
Mr.
Jagdish
Chandra
Jajoo
(excluding Museum)
15.07.2020
Rs. 6,01,84,736/-

Total
Rs. 65,75,10,972/-

At another place, the appellant has submitted the following w.r.t the valuation at H.O. at Ashok Marg, C-Scheme, Jaipur, 65,75,10,972/-, Showroom, Panch Batti,
Jaipur- Rs. 80,38,17,100/- and Jewellery kept in the Museum, as verified and valued during survey u/s 133A- Rs. 1,54,82,625. Amrapali Jewels Pvt. Ltd. vs. ACIT

The appellant has also submitted that by mistake wrong tag price was taken by the official valuers in some of the items. The appellant has submitted few examples as under:-

(iii) The appellant has also submitted that for valuation of inventory at the Head
Office cum retail store, three valuers were appointed. Out of the three, one valuer was deputed from the Paanch Batti store after completion of the valuation exercise there. Ironically, the said valuer adopted an all together different valuation approach as against the approach adopted at the Paanch Batti store even when the nature of inventory was similar. The valuers at the Head Office cum retail store adopted an approach wherein they identified the more valuable Jewellery items and then undertook an item wise valuation of such sample inventory only.
Thereafter, the remaining inventory was valued cumulatively by applying an ad-hoc valuation approach without any rationale or basis.
(iv) The appellant has also submitted that "During the course of survey, statement of one of the Director Shri Rajesh Ajmera was recorded and in the statement recorded vide question number 39 it was asked to provide reconciliation of stock value as per physical verification of the conducted by the department with the books of account. In reply of the same he has already stated that due to Covid 19
books are incomplete therefore it is not possible to provide the recon of Value of physical stock undertaken by the department and Value of stock as per books of accounts.".

(v) During the course of Survey proceedings Director of appellant company has objected various times on method adopted by the valuer for valuation of the stock.
approved Valuer Mr. Kamal Kumar Kasliwal. The appellant had requested vide letter dated 21.07.2020, that a departmental representative, inspector/valuer be deputed at our stores to witness such valuation of individual items, but no such representative was appointed. The appellant has also submitted that the closing stock as per books of accounts was Rs. 132,77,94,165/- as on 13.07.2020 as against the amount stated by the ld. AO in Notice of Rs. 126,08,06,402/- Further that closing stock as per books of account as on 31.03.2020 was of Rs. 128,22,12,
840/- Appellant has also submitted that Ld. AO has not appreciated that actual selling price is usually much lesser than Tag fetched in software. Shri Rajesh
Ajmera has also highlighted in his statement recorded during survey proceedings that the actual selling price will be much lesser (after deduction of discount) than the tag price as mentioned in sheet extracted from the software. However, Ld. AO has ignored the same. The appellant has invited attention to answer to Q. No. 40 of statement of Shri Rajesh Ajmera, recorded during survey (PB Vol 1 page no. 142).

(vi) The appellant has submitted following factual objections to the valuation done on each location:-
Decision:
(vii) The facts of the case are that survey under section 133A of the Income-tax
Act, 1961 (hereinafter "the Act") was carried out on 13-07-2020 at various business premises of the appellant company. During the course of survey action at various business premises of assessee company, on physical verification of stock, stock of the value of Rs.267,43,88,096/ was found. As per the assessment order, the value of stock as per the books of accounts was at Rs. 126,08,06,402/-. Therefore, excess stock of Rs. 141,35,81,694/- (Rs. 267,43,88,096-126,08,06,402) was found.

(viii) The ld. AO issued a show cause notice to the appellant along with notice u/s 142(1) dated 23.11.2022 on this issue highlighting the location wise inventory as under:-
In response to the show-cause notice, the appellant submitted reply on 23.12.2022. Amrapali Jewels Pvt. Ltd. vs. ACIT

(ix) After considering the replies of the appellant the learned AO observed that the appellant has not maintained stock register, which is clear from the remarks given by the Auditor vide form No. 3CA furnished along with audit report u/s 44AB of the Income Tax Act 1961 and that the Auditor has categorically mentioned that no stock register has been kept by the assessee and the valuation has been taken as stated by the Director of the company. During the course of survey, Shri Rajesh
Ajmera, Director of the company, has admitted in his statement recorded during the course of survey on 13/7/2020, that at the close of the financial year on 31/3/2020, physical verification of stock was not done, nor any list based on cost price was prepared. He further admitted that the profit is estimated after applying assumed GP rate based on the profit rate declared in preceding years and the balancing figure is taken as closing stock. That apart, during the course of survey, incriminating papers were found and impounded (Exhibit 3 of Annexure AS), in which unaccounted expenses were found mentioned. Further, incriminating papers of unaccounted sales were also found and impounded as per Exhibit AS/1, AS-2,
AS-3, AS-6, AS-11 and AS-13 during the course of survey. From the above facts, it is noted in the assessment order that the books of account maintained by the assessee are not reliable and the same cannot be taken to be conclusive and, therefore, it is a case to which the provisions of Sec. 145(3) are attracted. In view of the defective nature of books of account maintained by the assessee, the same were rejected by invoking Sec. 145(3) in the assessment order.

(x) The learned AO has also noted that the stock lying with the showrooms/branches and overseas consignment agents is owned by M/s AJPL, as no sale bills are issued while dispatching the goods to the branches, showrooms and consignment agents. As regards the franchisee stores, initially the jewellery items are dispatched through challans and after confirmation by the concerned franchisee, final sale bill is issued by M/s AJPL. Thus, on a given date, unbilled jewellery is also lying as stock of M/s AJPL with varous franchisee.

(xi) The brief facts as stated by Shri Rajesh Ajmera in his statement as extracted in the assessment order on page No. 30 are reproduced hereunder, for ready reference: -

(i) Shri Rajesh Ajmera had stated that no stock register in respect of the raw material and WIP is maintained by M/s AJPL..

(ii) The quantitative details of the finished goods i.e. the items of jewellery are maintained in the customized GST billing software, which consist of the details of each item of jewellery viz. items no., description, weight of the items consumed and selling price of each item. Further, these details are stored online on i-cloud.

(iii) No details in respect of the cost of jewellery items are maintained by M/s AJPL.

(iv) During the course of survey, the books of accounts for the year 2019-20 were found incomplete and hence the closing stock of M/s AJPL as on 31.3.2020 had Amrapali Jewels Pvt. Ltd. vs. ACIT not been computed. Since, the opening stock as on 01.04.2020 was not known, the books of account for the period from 01.04.2020 to 13.07.2020 were also not complete. In these circumstances, the stock as on the date of survey i.e.
13.07.2020 as per the books of a/c, could not be computed during the course of survey operation.

(xii) The main issues which arise in the present ground of appeal are as under (a) valuation of the stock, and (b) applicability of section 69B of the Act on the excess stock found during the course of survey

(xiii) The valuation of the stock was done by the official valuers during the survey.
The valuation was done using different approaches by the different valuers. The appellant has filed various objections regarding the approach adopted by the official valuers. The appellant has also filed his own valuation report obtained after the conclusion of the survey from the valuer appointed by the appellant.

In this regard, some of the important facts regarding the business of the appellant which are relevant to the present proceedings as understood from the records and as explained by the learned ARs during the course of hearing are as under:-

A. The appellant is a manufacturer as well as trader in jewellery as per the financial statements whereas as per the tax audit report the appellant is only into trading.
There is no explanation regarding the nature of products in terms of design, quality, workmanship, machine requirement etcetera between the purchase jewellery and the manufactured jewellery. There is no separate maintenance of record in this regard. From the financial statements it is seen that the appellant is also into handicraft items. Appellant purchases the jewellery from the related parties of the appellant as well as some independent parties in the market.

B. The purchases are done in a general manner i.e. in the invoices there is no item wise description regarding the design, item code, mix ratio of the metals, net weight of gold or other precious stones etc.

C. The appellant is known for high quality of the finishing and designs in the jewellery market. Thus the cost of designing as well as the cost of labour and the high-tech machinery etc. which goes into making the jewellery and also the implied cost charged by the manufacturers and the designers of keeping such designs unique from other sellers are the major components of the purchase cost. The matter gets complicated as some of the manufacturing is also shown by the appellant however there are no details of the kinds of items manufactured by the appellant and the type of qualitative component going to the same in comparison to the items purchased by the appellant. There is no separate record of purchased and manufactured items. Manufacturing account is not prepared by the appellant.
E. As submitted by appellant ".....there are tens of thousands of items of individual jewellery and other items which are all unique and idiosyncratic in their size, shape, content of metal, value of design, value of labour, marketability, appearance and class of customers." The appellant has also submitted that each item needs to be valued independenly, as "each item is unique and combination of difference contents of metals". However the appellant does not maintain any record of exact quality and quantity of each metal and each stone type along with colour, size, clarity etc., value of design value of labour etc. for each unique item of the jewellery. Neither such details are mentioned in the purchase bills nor in the sales bills.

The appellant has in the context of rejection of books of accounts has also stated that "in this regard, it is humbly submitted that it is not possible to maintain item wise list of inventory due to voluminous items

F. Jewellery items can also be mixed to create a one set of jewellery. For example, one jewellery item from one purchase bill and another jewellery item from another purchase bill and the third jewellery item from some other purchase are combined together to make one single jewellery set to be sold under a single item code and tag price. Even though such purchases may be from the same manufacturer.

G. After the purchase is done some codes are assigned to each jewellery by the appellant and in this regard, no linkage is maintained between the purchase bill and the item code of the appellant. And from the ledger or the financials there is no way back to reach the exact purchase invoice with respect to one item code jewellery in the list.

The appellant submitted that "Assessee has already submitted vide para no. 3 of reply dated 20.12.2023 that purchases are generally made in bulk quantity and consolidated market rate charged by the supplier. Copy of purchase ledger along with sample invoices were also submitted. It is not possible to track the particular invoice for a particular item number as purchases were made in bulk quantity and unique item code was assigned afterwards.".
In the audit report on page 36-PB-Vol.1, it has been stated by the auditor w.r.t.
ICDS-II that "the stock items are not ordinarily interchangeable".

H. The appellant has submitted that the item code of each jewellery shows the year of the purchase. This is not a standard or common practice of the jewellery industry. Also it is seen that the number of items such numericals are not mentioned. The details in the software have never been submitted before the Department in earlier years. Such details as available in the software are not available for the earlier years. There is no linkage of the purchase bills with the so- called item code given by the appellant. Similarly there is no linkage of the purchase bill and sale bill. Most importantly the regular practice followed by the appellant is that the closing stock figure is taken as the balancing figure after arriving at an estimated gross profit figure by the management. Such statement has been made for the first time during appeal and has never been examined by the learned assessing officer and there is no application of additional evidence in this regard, the same is hereby discarded.

I. In the past years the appellant has not carried out an item wise valuation and the valuation has been done on averaging basis. This is also admitted by the director of the appellant company in the statement recorded during the survey. It is undisputed that the valuation report of the earlier years are not available.

J. List of items in the inventory is shown in the excel file provided during the survey. However this excel file never formed the basis of quantitative details and valuation of closing stock in the Income Tax proceedings as such details are nowhere disclosed. This excel was used only for sales pricing etc. and item quantitative control on staff. In the tax audit report no quantitative details are mentioned. This list is in the nature of undisclosed records or incriminating material unearthed during the survey.

(xiv) The appellant has claimed that the valuation should have been by the official valuers for each item separately of the taking into consideration the exact details of various metals which have gone into that item, the quantity colour cut clarity etcetera of the different kinds of stones studded in the jewellery, the designing, the nature of finishing, the quality and quantity of workmanship, the date/time of purchase of such jewellery item etcetera.

The appellant has also contended that where the valuation has been done by the official valuers assigning value to various raw materials of the jewellery, the gold price and silver price on the date of survey should not have been taken and the cost price of the metals should have been taken for the purposes of section 69B of the Act. This section reads as under:-

"Amount of investments, etc., not fully disclosed in books of account.
Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year"
(emphasis supplied)

(xv) This section brings to charge to tax the amount expended on making or acquiring unexplained investments etc. Accordingly the contention of the appellant is correct that the market price the gold and silver which is the raw material which has gone into the jewellery, their price on the date of survey cannot be considered for making addition under section 69B of the Act. However at the same time, there is no identification and quantification and the quality details of the workmanship, design, man hours, intricacies, machine technology used, etcetera. In case the appellant has an understanding with the supplier that similar design would not be supplied to any other trader that would lead to increase in the cost substantially as the manufacturer will not be able to replicate the design and the entire cost of designing and workmanship etcetera of each design has to be recovered from sale to the appellant only. This is for the reason that no such details are maintained by the appellant and were not provided during the course of survey. The valuation arrived at in the survey is thus does not include an important and crucial part of the cost as there as there is no quantification and the valuation and the above qualitative and quantitative aspects. Thus the raw material approach based valuation is not suitable to the facts of the case.

(xvi) However as briefly discussed in the pre-paragraph the appellant has itself never ever maintained such kind of valuation in any year as is admitted by the director of the appellant company during the statement recorded during the survey.
Further such kind of item wise details are not maintained by the appellant. Only some part basic details are maintained which are non verifiable and cannot be linked with the purchases bills and that too maintained only in their internal software which is used for the purposes of non-income tax purposes. It is undisputed that the stock register is not maintained by the appellant.

(xvii) Further the purchases are done by the appellant without reference to such kind of details meaning thereby that the valuation at the time of purchases is also not done by giving separate value to each component of the jewellery as has been referred by the appellant that the official valuers should have done. Similarly the sales are also not done by the appellant mentioning all those parameters and the sales are done on the basis of prices assigned by the appellant to the each composite unit.
The items are not similar to each other and are different in terms of the raw material and the workmanship and the design etcetera. The appellant itself has also stated that "there are tens of thousands of items of individual jewellery and other items which are all unique and idiosyncratic in their size, shape, content of metal, value of design, value of labour, marketability, appearance and class of customers.

(xviii) Even though the appellant has furnished one valuation report which has been obtained by the appellant from the valuer appointed by it after the conclusion of the survey, such valuation report suffers from similar kind of alleged infirmities which the appellant has highlighted in its objections against the valuation done by the official valuers. There is no item wise linkage to the purchase bills. The appellant purchases the stock from different suppliers. There may be or may not be items in stock which are manufactured by appellant itself. Further there is no identification and quantification and the quality details of the workmanship, design, machine technology used, etcetera. All these are very subjective elements of the cost and there cannot be any standard formula. In case the appellant has an understanding with the supplier that similar design would not be supplied to any other trader that would lead to increase in the cost substantially as the manufacturer will not be able to replicate the design and the entire cost of designing and workmanship etcetera of each design has to be recovered from one party sale itself. One jewellery designer may charge X' amount for designing one particular type of jewelry and other designer may charge 'Y' amount for designing similar type of jewelry and some other designer may charge some other amount for designing similar type of jewelry. Similarly the workmanship charges etcetera can differ from manufacturer to manufacturer. For example, cost of a silk saree cannot be determined merely by valuing the rate of silk thread gone into making of that saree. The valuation depends on number of factors like the design, the intricacies, the technology used, whether handmade or machine made, whether handpainted or machine printed, whether having hand thread work or machine work, etcetera.
For all kind of hand works the cost would be significantly more and differ from artisan to artisan. Similarly for example, cost of a painting cannot be determined merely on the basis of quantification of the quantity of different kind of paints which have gone into making of that painting.

(xix) Taking into the unique proposition and design and the finishing of each item of the appellant as discussed in detail above, and keeping in mind the profitability of the appellant which naturally comes from the design and making elements, it can be stated that the charges over and above the cost of the raw material would be very much significant and high that in the items purchased by the appellant almost
40% to 50% of the purchase cost would be on account of designing and making and the charges over and above the cost of the raw material. Such charges are likely to be higher in the gold items in comparison to silver items in view of the normal market fact that silver items are usually heavy whereas minimum amount of gold used is given the maximum spread and description in the gold jewellery which requires more time and better skill etc.
(xx) Valuation report of the valuers of the appellant:

The valuation report prepared by appellant's valuer and submitted by the appellant at volume 2,3,4 of the paper book has been perused on sample basis. As is seen from the beginning of the report itself, no cost valuation has been done with respect to the design, workmanship of different categories as it is a matter of common understanding that different specialists or artisan are involved in jewellery making. This issue has been discussed in detail in the earlier part of this order also. Further in terms of the raw material which has gone into the items the appellant has only mentioned 'Stone' or 'Pearl' or 'Diamond'. No details are mentioned regarding the cut, colour, size etcetera. For the stones there is no mention of even the type of stone used. Similar is the case with the pearl. It is a matter of common knowledge that for example diamonds' values vary very much significantly depending upon the associated factors and the appellant's valuer has not quantified these factors and has not thus assigned any value. Further in terms of size itself if 0.1 carat of Diamond costs X amount per unit, the 1 carat of Diamond will not cost simply 10X but may cost 100X or 200X amount per unit.
Further the different mix of metals and the technology and the machinery used etcetera are not considered in the valuation report. In the valuation report, in the description column, very general description has been given like Gold stone ring,
Gold stone bangle etc. and there is no reference to the particular design category, name of the manufacturer, name of the supplier entity, name of the designer and the artists who made the jewellery item, etc. The appellant itself has stated that ".....there are tens of thousands of items of individual jewellery and other items which are all unique and idiosyncratic in their size, shape, content of metal, value of design, value of labour, marketability, appearance and class of customers." The appellant has also submitted that each item needs to be valued independenly, as "each item is unique and combination of difference contents of metals". The valuer has not taken into consideration such uniqueness of each item in the valuation. All the items have been valued treating them to be same similar except in terms of weight.

(xxi) The valuer has been engaged by the appellant itself and the independence of the valuation cannot be fully relied upon. The methodology of the valuation is also not been stated in the valuation report. How the valuer has arrived at the figures of the weights of the stones and that the Diamond and the pearl and the gold etcetera? What is the basis of the taking rates for the stones, pearls and the diamonds etc. If the valuation has been done using the details mentioned in the excel sheet by the appellant in that case the valuation has not been done of the actual items but merely of the descriptions mentioned in the excel sheet. Further as seen on each page of the valuation report on the top right corner, the valuation purposes mentioned as 'market rate'. Hence on the one hand the appellant has found fault in the valuation of the official valuers that such valuation is at the market rate, on the other hand the appellant has also furnished the valuation at the market rate. Statement in this regard is also made at the bottom of the page. Further the Amrapali Jewels Pvt. Ltd. vs. ACIT valuation done of various items is also contradictory to each other. For example at page 784 of the paper book, there are some silver items of the gross weight 10.000
gms. Some of the items have been valued by the valuer at 411 per item and two items of same weight have been valued at 937 per item. Similar situation is seen in other items of the report. The appellant has not produced any valuation report of similar nature of having done such valuation in the past. Further the net gold weight is also different in the valuer report of the valuer of the appellant whereas the official valuers had adopted the gold content value as reflected in the excel sheet of the appellant. The possibilities of items getting changed after the survey and till the valuation by the appellant's valuer cannot be ruled out. Further, the appellant if was not satisfied with the valuer report of the official valuers, was required or could have highlighted and reconciled the difference in the valuation for each item along with supporting and evidences for challenging the valuation of the official valuers. However no such item wise reconciliation has been done. In view of the above detailed discussion, the valuer report of the valuers of the appellant is hereby rejected.

(xxii) The proposition of the appellant on how the valuation should have been done is impractical and not possible in view of the facts of the case and the extent of documentation maintained. It is the settled law that no one can claim benefit of its own wrong. In view of the above discussion, the approach of the valuation of the stock as proposed by the appellant is hereby rejected. The official valuers in the valuation have adopted either the raw material valuation approach to the stock valuation and also at Panch Batti store adopted selling price minus gross profit- based approach. The raw material ingredient-based approach valuation in the case of the appellant would show extremely high erroneous gross profit on sales on its comparison with the final selling price as such cost computation does not include some crucial components of cost like design, workmanship technology, man-hours etc.. The raw material approach based valuation of the jewellery stock adopted by the official valuers in some of the valuation and proposed by the appellant are not found suitable and cannot be determined in the present set of facts as reasonably correct valuation cannot be arrived at and this approach invariably leads to materially and substantially incorrect results in the present case and is rejected.
Considering the facts of the case, the practice regularly adopted by the appellant in earlier years, the acceptable practices, the extent of documentation available etcetera - it is found to be most reasonable that the valuation of the stock of the appellant is done by the averaging-based approach. Such approach is more suitable in the present set of the facts when each item is differently made in terms of various quantitative and qualitative factors and no stock register is a maintained and no sales Bill and purchase bill linkage is maintained and assessee itself also follow the gross profit-based averaging method in the earlier years etcetera. The averaging-based approach is hereby upheld and is directed to be applied with respect to all the locations where the valuation was carried out by the official valuers. The calculation is in this regard are subject to discussion in the following paragraph. One variant of such approach (taking selling price minus profitability)
(xxiii) The appellant has in the submissions filed objections against the valuation done at the Panch Batti Store. The objections are mainly that the valuation should have been done itemise and component-wise using the raw material component- based approach. This proposition of the appellant has already been rejected in the earlier paragraphs. Secondly the appellant has objected that the valuation of the stock is to be done at the cost and as the inventory of the appellant also has old items which were acquired cheap due to the lower metal prices, the appellant has claimed that deduction on account of increase in metal prices should be done.
Thirdly the appellant has objected to the rate of 67% applied on the tag price at Panch Batti Store to arrive at the cost.

(xxiv) In the present case, the tag price can be considered the selling price with respect to the retail sales, however the sales of the appellant has retail sales as well as wholesale sales. As per the survey statement of Shri Rajesh Ajmera, substantial discount is given to the franchisee stores and resellers. As such it cannot be held that the sales in the earlier periods as reported in the financial statements were only billed at the tag price. Thus the gross profit ratio of the appellant is after considering both retail sales (made at the tag price) as well as sales to the franchisee and other shopkeepers etcetera (selling price to these buyers is that discount on the tag price). However the exact discount percentage data in this regard is neither claimed to be have been furnished before the assessing authority nor the same is anyway stated to have been verified.

To apply the gross profit ratio of the appellant on the sales value, to reduce the gross profit from the sales value, to arrive at the cost it is necessary to first arrive at the sales value of the items in stock i.e. the sales value which the appellant would get if the items are sold with the same quantitative and pricing (and discounting) patterns which was there in the earlier year on average basis, which has yielded the gross profit ratio of 30%. However such details are not available to arrive at the said sales value of the items in the inventory.

(xxv) In continuation, the other way to look at it is arriving at the cost price of the items vis-à-vis the excel sheet price. It is stated by the appellant's director in the statement that the items are transferred to the branches at a price which is 30 to 50% below the tag price and the same can be considered the cost of the items.
The statement is applicable to all kinds of items of the appellant. This has not been doubted or controverted in the assessment order. There is no retraction by the appellant. For the first time in brief submission dated 01.03.2024 in the appeal proceedings the appellant has commented on the same and the submission is vague and irrelevant and found to be self-serving statement. There is no documentary support with this submission. In such a scenario and in view of the lack of documentation maintenance from the appellant, it is reasonable to use the mean and median rate of 40% to arrive at the cost (thus the cost being 60% of tag
Amrapali Jewels Pvt. Ltd. vs. ACIT price) of the items which are purchased by the appellant. Considering the facts of the case in totality. I consider this percentage rate to be appropriate. In other words, if an item is purchased by the appellant today and the same is transferred to the branch today, the appellant would transfer it at 40% below the tag price on an average. One of the official valuers at Paanch Batti Store had applied rate of 67% on the Tag price for gold items to arrive at the cost price thus allowing a deduction of 33%. Accordingly the appellant gets partial relief in this regard. At the same time some other valuers had applied the raw material-based approach which has been found to be giving lesser than real valuation of cost and not suitable as discussed in above paragraphs. Appellant has inter-alia contended that same or uniform approach should have been used by the official valuers when doing the physical valuation of the stock. The averaging based profit calculation and stock valuation practice regularly followed by the appellant from year to year has also been considered. The valuation method of tag price less 40% has been found to be most suitable. Accordingly, the uniform rate of 40% is to be used to arrive at the cost (thus the cost being 60% of tag price) to arrive at the stock valuation of the stock at all the premises in Jaipur (K-14B, Ashok Marg, C- Scheme Jaipur, Tholia
Mansion, Panch Batti, M. I. Road, Jaipur) for all the items purchased recently. The issue that valuation can be done using this rate (subject to issue of increase in metal prices which is discussed in next para) in the above factual background was queried during hearing on which the Id. ARs submitted arguments. The main contention on behalf of the appellant is that in the statement Sh. Rajesh Ajmera initially stated that the cost can be less than this and in the next question he accepted and confirmed that the same can be considered as the cost thereby that some further reduction is possible below this 60% (as arrived above) and that the statement should not be used to arrive at the cost. The appellant/ld. ARs has filed submission on 01-03-2024 on the issue of statement of Sh. Rajesh Ajmera as discussed above. Appellant itself has never submitted a valuation which meets and satisfies various issues raised by appellant itself and is based on documentary evidences. Only objections are being raised. Whereas onus is on the appellant to come clean and place on record a genuine and bonafide valuation which is complete in all respects and is duly supporeted with documents. The contentions of the appellant in submission dated 01-03-2024 are found to be devoid of merit as the statement of the director of the company is very clear and no retraction was filed on this issue and no better exact percentage working has been worked out by the appellant to rebut or counter the rate proposed. These aspects and the most reasonableness of the approach adopted in arriving at 60% ratio as discussed above have also been discussed in earlier part of the discussion. Also, statement recorded in the survey has significant evidence value. In this regard following judgements are referred to.

In the case of Bachittar Singh v. Commissioner of Income-tax [2010] 328 ITR 400 it is held by the Hon'ble Punjab & Haryana High Court as under:- x x x x

Dr. S. C. Gupta v. CIT [2001] 118 Taxman 252 (Allahabad)
The Hon'ble Delhi High Court in the case of Raj Hans Towers (P.) Ltd. v.
Commissioner of Income-tax-V [2015] 56 taxmann.com 67 (Delhi)/[2015] 230
Taxman 567 (Delhi)/[2015] 373 ITR 9 (Delhi) [27-01-2015] held that where the appellant had not offered any satisfactory explanation regarding surrendered amount being not bonafide and it was not borne out in any contentions raised by the appellant, additions made after adjusting expenditure were justified. The relevant para of the judgements are as under:- x x x x
In the case of Pebble Investment and Finance Ltd vs. ITO in ITA No. 988/2004 it is held by the Hon’ble Bombay High Court as under:- x x x x
Accordingly the contentions of the appellant in this regard are rejected. Issues regarding the valuation of items of the branches (Delhi / Mumbai / Bengaluru etc.) have been dealt with separately in this order.

(xxvi) Issue of reduction in the valuation on account of increase in prices of gold and silver and the description of item codes:-
In the case of Jewellers Co. v. Income-tax Officer [1987] 23 ITD 532
(Allahabad)/[1988] 30 TTJ 54 (Allahabad)[19-05-1987] it has been held by the Hon’ble ITAT that “FIFO assumption approximates more closely to the reality”.
Hon’ble ITAT also referred to Kanga and Palkhivala’s” The Law and Practice of Income-tax’, Seventh Edition, Volume 1. An extract of the judgment is as under:- x x x x
Secondly, in the averaging approach which is being used in the case of the appellant for the valuation of the stock as has been discussed in detail in the earlier paragraphs, the valuation is being done on the basis of cost price as a certain percentage of the tag price. In this approach, the appellant needs to prove that the tag price was being revised regularly as per the increase in the prices of the precious metals, before the claim of deduction on account of increase in precious metal prices is being claimed. However the appellant has not shown so. The appellant is having thousands of items. The appellant has claimed that the prices were manually updated in the software even during the Covid 19 period. The appellant is not having any set formula which can be applied to the weight of the item and the market price of metal to arrive at the final selling price. There is no such automation built into the software. Further, as submitted by the appellant each item of the appellant is claimed to be unique and is having unique mix of metals and composition of stones and designs etc. and thus such automated formula is not possible. Help of the staff is also needed while updating the prices of items in the software however during the start of the Covid period April to Jun 2020
lockdown was in operation and social distancing norms were in force and there was uncertainty or anxiety in social environment. This completely makes the claim of the appellant unnatural and improbable that the prices were revised even during the Covid period in April to June 2020. In the statement of the director of the company, Shri Rajesh Ajmera, there is reference to the sales invoices wherein the items have been sold above the tag price which shows the final selling price may be above the tag price in some cases. The books of accounts where only few entries were to be done are also found to be incomplete for the Covid period then
Amrapali Jewels Pvt. Ltd. vs. ACIT how thousands of entries could have been done regarding the prices. During the Covid period the trading activity was also at the minimum. Further the appellant was not also maintaining the stock registers etc. no evidences have been furnished by the appellant that such price revision was done and this is a mere self-serving statement. Accordingly this claim of the appellant that prices were revised even during the Covid period till/before the date of survey (23 March 2020 to 12 July
2020) is hereby rejected.

The appellant has also stated that "107 It is also submitted that Shri Rajesh
Ajmera, director of Appellant Company has also denied/not satisfied with valuation done by the department valuers in the answer of Q. No. 39 of his statement recorded u/s 131 of the Act. (Page no. 138-139 of PB Vol. 1). He also highlighted that stock is valued at current market rate however, the goods in stock were purchased in last 4 years which rate is 33% lower than current market rate and also there are many items which are not owned by the Appellant Company in the stock. The relevant extract of statement is reproduced hereinunder:" However no details of such items in stock out of purchases in last 4 years were furnished neither before the ld. AO nor in the appeal proceedings. Further the claim is very general as old itmes in stock (if any) would not be out of purchase on a single day/month but spread over different periods.

(xxix) Also considering the first in first-out method as discussed above, the time band during which the entire stock of the appellant is sold is in the range of 7 to 8
months (referring to the stock turnover ratio taking the cost of goods sold) for which the metal prices may require consideration. Considering the normal practice in the jewellery industry in the averaging based LIFO based valuation regarding the valuation and as is also explained by the learned ARs, the appellant is entitled to deduction on account of increase in metal prices only in the averaging based LIFO based valuation. The average monthly gold prices as per the RBI chart submitted by the appellant are as under:-
The average of the above comes to 39402.63 i.e. the gold metal prices w.r.t. the purchases of the appellant during this period. The average price of March 2020 is more by 7.316% over this average price.
Also, if looked at from the contribution of such matters in the overall cost on average basis, the cost of metals is only one factor and there are other factors also which are very crucial and material like the prices and value of diamonds, cost of designing, cost of workmanship etc. Further, from the RBI average monthly prices submitted by the appellant it is seen that prices of silver have not moved much in the year 2019-20. However at the same time gold items constitute the significant majority in the stock in terms of value. In the earlier paragraphs above, the rate of 40% deduction has been found to be reasonable and as well as arising from the evidences. In view of the above discussion, on the issue of increase in metal prices, old items and any other issues which have been taken by the appellant, it is hereby held that the rate of 47% deduction from tag price/excel sheet price would be very much appropriate and this would take care of all the contentions of the appellant.

(xxx) Considering the facts of the case, statement of the director of the company and the submissions of the appellant and the analysis above, tag price minus 47%
is held to be the cost of the stock items. This is held to be the method for the valuation of the stock at Jaipur locations (HO, Showroom etc.). This also takes care of the various objections of the appellant against the prices of the precious metal, stones etcetera taken by the official valuers in the valuation reports. Since the complete data of tag prices having been verified by the learned assessing officer, is not available on the appeal file, learned assessing officer is directed to calculate out the cost and valuation of stock in accordance with the finding in this order. The appellant has also raised the issue of tag price has been taken erroneously in some of the items, learned assessing officer is directed to verify the same from the original record of tag prices/excel sheet prices as obtained during the survey and use the correct tag prices. Appellant, if desires, may make submission before the Id. AO regarding the tag prices / calculation.

VALUATION OF STOCK AT DELHI, MUMBAI AND BENGALURU:

(xxxi) The appellant has contended that Ld. AO has opted for different valuation method to value stock for different branch. For instance, for Delhi Branch, the basis of valuation is computerized excel sheet provided by the Appellant during the survey proceedings. As per the excel sheet the value of stock was Rs.
25,59,78,648/- and Ld. AO picked the total of such prices as value of stock at Delhi branch. As stated by the director of the company in the statement that items transferred to the branches are transferred and recorded at the cost. As stated in the assessment order "In the books of a/c of the Branches, goods received from HO are shown as branch transfer purchases and goods returned back to HO are shown as Branch transfer sales. The sales made to customers and the expenses of the branch are also booked in the books of the respective branch. Opening stock and closing stock of the goods lying with branches are also shown in the Trading
Amrapali Jewels Pvt. Ltd. vs. ACIT accounts of the Branches at the transfer price of respective items of jewellery. It is an admitted fact on record that the jewellery / goods are dispatched to branches after making deduction of 30% to 50% from the tagged sale price. The appellant has contended that for Mumbai and Bangalore branch, Appellant has provided similar excel sheet of Rs. 35,58,12,452/- and Rs. 12,90,41,131/-respectively (Refer page no. 41 and 50 of AO order), however, Ld. AO has not considered the same for valuation rather picked high value from incomplete tally, which was not regular tally, and valued the stock at Rs. 53,62,45,741/- and Rs. 16,51,51,691/- for Mumbai and Bangalore Branch. It is thus not clear that the excel sheet and prices w.r.t. Bengaluru and Mumbai locations were also found during the survey or were submitted by the appellant later-on and in that case such excel files cannot be relied with supporting underlying verifiable documentation. The summary of the contention of the appellat in terms of valuation is as under:-

The appellant has concurred with the approach of the learned assessing officer with respect to the valuation of the stock at the Delhi branch. The appellant has contended that similar method of taking the tag price should have been used by the learned AO to calculate the cost of the items in the Mumbai and Bangalore branch. Appellant has contended that the tally data which Ld. AO has relied upon is incomplete tally data impounded from the computer of Shri Rinkesh Jain and Appellant has already highlighted the instances which shows that the tally relied upon by the Ld. AO is incomplete vide its letter dated 23.12.2022. The appellant has highlighted such instances as under:

•
The balance sheet itself shows the opening balance difference of 72.26
Crore.
•
Depreciation entries are not passed in the books, it shows that data considered is incomplete and cannot be relied.
•
There is variance in Sundry Debtors and Creditors as on 31.03.2020 as per audited financials as appearing in regular Tally maintained.
•
During the course of consolidation of account of each and every branch with Head office, Inter branch transactions are to be nullified in the tally and stock held at branches to be merged with Head office account so that actual position can be derived, but in the tally relied by Ld. AO, inter branch transaction were not nullified.
•
1 is submitted by the appellant in the letter submissions which is as under:-

Alternative Computation of Stock as on 13.07.2020 as per books of accounts of Mumbai and Bangalore Branch

(xxxiν) The appellant in the brief table of the summary of the issues raised against the valuation at each location has also raised the issue that for the branches in Delhi, Bengaluru and Mumbai also the data provided in the excel sheet represents the selling price and not the cost price. This appears to be a new ground as no such issue is mentioned in the assessment order. No evidences like matching sales invoices have been filed to prove the same. No application for additional evidence has been filed. At the same time this is in contradiction to the statement made by the director of the company during the survey.

The total of excel sheet price value of Delhi, Bengaluru and Mumbai locations is Rs. 74,08,32,231 (25,59,78,648 12,90,41,131 35,58,12,452) and the total cost value as claimed by appellant at each of these locations is around Rs.
52,80,43,075 (18,75,87,847 +9,19,85,062 + 24,84,70,166). The total of the cost vis-à-vis total of excel sheet value at these locations is 71.28%. As per this rate of 71.28%, the total cost value at HO and Panch Batti works out to Rs. 205,28,38,696
on the excel sheet price value of Rs. 287,99,64,500 which would lead to higher addition in terms of undisclosed stock at Jaipur locations. However 71.28% gives a G.P. Rate of 28.72% on tag price whereas discounts on wholesale/franchise sales is also given on excel sheet prices. Hence the claim of the appellant that excel sheet price reflects the selling price even in case of branches is incorrect and is rejected. It is hereby clarified that the data used in this sub-para are from the submissions of the appellant and not from the verified data from the Id. AO and are thus subject to verification by the Id. AO.
In this regard reference is made to section 292C of the Act which is as under:-

Presumption as to assets, books of account, etc.

292C. (1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed-

(i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;

(ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.

(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of sub-section (1) of Amrapali Jewels Pvt. Ltd. vs. ACIT section 132A had been found in the possession or control of that person in the course of a search under section 132

(xxxvi) It is undisputed that the tally accounts books which is relied upon by the learned assessing officer was found in the premises of the appellant and further that it is also not disputed that such document was prepared by the employees of the appellant company. The limited contention of the appellant is that such document was incomplete. The possibility of tally software showing higher stock in terms of value than the excel sheet provided by the appellant even after making the pending entries in the tally software, cannot be ruled out. Tally books are financial records whereas the excel sheet is never earlier submitted in income tax.

(xxxvii) The onus is completely on the appellant. However the appellant has merely stated some vague & irrelevant discrepancies in the tally data which have not been gone into. Supporting documents have not been provided by the appellant. The appellant cannot shrug off the onus merely by highlighting some vague and irrelevant incompleteness in the books of accounts found during the course of survey specially in a scenario when the document was prepared by the appellant and is owned by the appellant and there is no dispute in this regard and that the appellant is in a position to complete such document. For example, depreciation has no impact on stock valuation. The assessing authority cannot be expected to know the correctness or otherwise of the incompleteness highlighted by the appellant. In such a scenario it was incumbent upon the appellant to reconcile the books with the missing entries and complete the same and submitted the entries passed in the tally software to complete the incompleteness before the learned assessing officer for his verification along with the supportings. Further the analysis prepared by the appellant as referred as Annexure 1 in the paragraph above is based on the closing stock as on 31 March 2020 whereas on the date of the survey the stock of 31 March 20 was also not quantified and not valued and as such the stock on this date is also un verified and cannot be relied upon. The appellant itself has stated some other part of the submissions that addition has been made by the learned assessing officer in the earlier years on account of the gross profit due to which the value of stock has increased and such orders have been challenged by the appellant before the honourable High Court in the writ petition. Accordingly the reconciliation submitted by the appellant in the Annexure is also not reliable and is rejected.

In view of the above discussion, the value adopted in the assessment order with respect to stock at Delhi, Mumbai and Bengaluru is hereby upheld.
STOCK ON CONSIGNMENT:

(xxxviii) The company M/s AJPL is also sending goods on consignment basis to UK and USA. The goods lying with the consignee remains property of M/s AJPL till the goods are sold by the agents to third parties and the sale is booked by M/s
AJPL. As per the Tally books of a/c for the period from 01-04-2020 to 13-7-2020, the appellant had sent jewellery for sale on consignment basis, as under:-
(xxxix) Stock lying with Consignment agents at UK:

The appellant has made brief submission on the issue. During FY 2019-20, certain unsold items were returned by Consignee which were earlier sent on consignment basis to UK, the same was not entered into tally due to sudden lockdown. The appellant has also submitted that supporting documents being Current ledger of consignment agent along with return invoice, bill of entry, airway bill are available on page no. 1034-1137 of PB Vol. 6. As per the details submitted by the appellant the items were received back on 13.05.2019, 18.09.2019, 23.12.2019, 29.01.2020. The lockdown was announced in the last week of the March 2020. Hence the argument of the appellant that these items were received back and not entered in the tally due to the sudden lockdown is devoid of merit. With respect to the first return, the appellant had more than 10 months before the lockdown. Hence these documents which are submitted by the appellant represented something else. The appellant also did not file any legally valid confirmation etc. from the consignee in the UK. Accordingly the finding of the learned assessing officer in the assessment order in this regard is upheld.

Appellant had provided list of items which remain unsold along with cost available with Amrapali UK Ltd. (Refer page no. 1129-1137 and page no. 941 of PB). It is also submitted that value of these items are already included in Stock with HO and contended that therefore, double addition should be deleted. However no where the appellant has shown any reconciliation along with supporting and item codes to prove this point that the items are already included in the stock inventory of the head office. Even in the appeal this has not been shown. Hence this ground is rejected and dismissed.

(xl) Stock lying with Amrapali Inc. USA:

The appellant has made brief submission on the issue. Appellant has submitted that items were returned by Consignee which were earlier sent on consignment basis to USA, the same was not entered into tally due to sudden lockdown.
Supporting documents being current ledger of consignment agent along with return invoice, bill of entry, airway bill are available on page no. 963-1033 of PB Vol. 6. As per the details submitted by the appellant the items were received back on 7
Appellant had provided list of items which remain unsold along with cost available with Amrapali Inc. (refer page no. 1032-1033 and 941 of PB). It is also submitted value of these items are already included in Stock with HO and contended that therefore, double addition should be deleted. However no where the appellant has shown any reconciliation along with supporting and item codes to prove this point that the items are already included in the stock inventory of the head office. Even in the appeal this has not been shown. Hence this ground is rejected and dismissed.

(xli) Stock lying at Doha Jewellery Exhibition:

The appellant has made brief submission on the issue. Appellant has submitted that during FY 2019-20, certain unsold items were returned by Consignee which were earlier sent on consignment basis, the same was not entered into tally due to sudden lockdown. Copies of ledger of Doha Jewellery Exhibition, return invoice, bill of entry for return of goods are available on page no. 1138-1146 of PB vol. 6. As per the details submitted by the appellant the items were received back
21.05.2019. The lockdown was announced in the last week of the March 2020. Hence the argument of the appellant that these items were received back and not entered in the tally due to the sudden lockdown is devoid of merit. The appellant had almost 10 months before the lockdown. Hence these documents which are submitted by the appellant represent something else. The appellant also did not file any legally valid confirmation etc. from the consignee in the UK. No where the appellant has shown any reconciliation along with supporting and item codes to prove this point that the items are already included in the stock inventory of the head office. Even in the appeal this has not been shown. Accordingly the finding of the learned assessing officer in the assessment order in this regard is upheld.
(xlii) Stock lying with EPOCA Trade Ltd., Hongkong:
The appellant has made brief submission on the issue. As on 31.03.2020, there was balance of Rs. 31,091/ in the EPOCA Trade Limited Consignment Account however, there was no stock pending with them. This may be on account of certain charges which could not be credited in the absence of any statement from consignee. Later, the said amount is credited in the Consignment Account in FY
2020-21. Copy of consignment ledger is available on page no. 1147-1150 of PB
(PB Pg 138) has stated that the items in the museum are not recorded in the books of accounts and are not recorded in the balance-sheet. This clearly shows that unaccounted stock was kept by the appellant. Further he also stated that value of such items belonging to the company should be added to the value of the stock of the appellant company.

The appellant has submitted that "Appellant submitted vide reply dated 11.03.2021
in which details of jewellery held at museum owned by directors, promoter, etc., were provided, however, the said fact was not appreciated".

The Id. AO has in thus regard stated in the assessment order that"

Only 2423.600 gms. of Gold items and 61.019 kgs. of silver items, as admitted by Shri Rajesh Ajmera in his statements recorded u/s 131 are to be considered as owned by M/s AJPL……………. Accordingly, the value of the jewellery items owned by M/s AJPL comes to Rs. 1,09,06,200/- for 2423.600 gram gold items and Rs. 45,76,425/- for 61.019 kg. silver items. These figures shall be considered, while working out excess stock in the hands of M/s AJPL. From the submissions of the appellant in the letter dated 11.03.2021 referred by the appellant with the contention that the same should be considered by the assessing authority, it is seen that weight of the gold items owned by the appellant is different at 7630.3
grams and weight of the silver items owned by the appellant is 81259.31 grams
(81.259 Kgs).

The appellant has in its fairness had mentioned the higher weight of the items to be considered, however the same was not considered by the learned assessing officer. Appellant has again raised this issue in the appeal. It is not stated by the appellant or in the assessment order whether any addition has been done in the hands of the individuals in whose hands the ownership was initially claimed in the survey. In view of the whatever information on the file, this contention of the appellant is found to be correct and thus allowed. In view of the above submissions of the appellant, on this issue, learned AO is directed to take the weight of the items owned by the appellant in cost valuation as per the details submitted by the appellant in letter dated 11.03.2021. This quantification issue is decided as per the request of the appellant.

APPLICABILITY OF SECTION 69B OF THE ACT:-

(xliv) The appellant has inter-alia submitted that:- d. Income tax department has not conducted any physical verification of stock lying at some of the locations, however, value of stock at these places have been determined by the department on the basis of computerized excel stock sheet found at the time of survey proceedings at HO of Appellant and after making some arbitrarily calculation by applying GP rate of 30%.

e. Appellant received copy of alleged basis of valuation done by the Ld. AO dated
21.12.2022. Ld. AO has opted different valuation method to value stock for different branch.

For instance, for Delhi Branch, the basis of valuation is computerized excel sheet provided by the Appellant during the survey proceedings. As per the excel sheet which contains Tag price' only, the value of stock was Rs. 25,59,78,648/-and Ld.
AO picked the total of Tag price as value of stock at Delhi branch. However, for Mumbai and Bangalore branch, Appellant has provided similar excel sheet with total Tag price of Rs. 35,58,12,452/- and Rs. 12,90,41,131/-respectively (Refer page no. 41 and 50 of AO order), however, Ld. AO has not considered the same for valuation rather picked high value from incomplete tally, which was not regular tally, and valued the stock at Rs. 53,62,45,741/-and Rs. 16,51,51,691/- for Mumbai and Bangalore Branch.

(xlv) Issue of discrepancy in quantity of stock vis-à-vis books of accounts:-
(quantity actually found during the survey versus the quantity shown in the books of accounts) is not possible due to non-maintenance of the details by the assessee, the comparison is to be made on the valuations of the stock shown in the books of accounts and value of the stock found actually. The details in the software or the excel file are in the nature of the actual stock found during the survey. The software or the excel file prepared from the software during the course of the survey is in the nature of incriminating undisclosed document material unearthed during the course of survey. That the valuation of the stock as per this data is more than the valuation of the stock shown by the appellant in the books of accounts, itself shows that the appellant had excess stock or the undisclosed stock over and above the stock shown in the books of accounts.

As discussed in detail in this order in the earlier part the details of the gross and net weight of various metals, cut colour clarity quality of various precious and semiprecious stones, nature of workmanship, the rate of workmanship, the manner spent in the workmanship, the design pricing, the rate of the designer, etc. have not been maintained as has been discussed in detail in the earlier part of this order.

Further, during the course of survey at Head Office cum Showroom situated at Panch Batti, Jaipur and Ashok Marg, C-Scheme, Jaipur on 13.07.2020, it is noticed that a total of 41 high value items of jewellery having total tag price of Rs.
11,40,00,000/- though mentioned in the non-income tax records, were not found on physical verification at the premise.
In a scenario where the quantitative details as per books of accounts are not available and only the monetary value is available as per the books of accounts and when huge differences are found between the monetary value of the stock as per books of accounts and the monetary value of the stock found during the course of survey, the inescapable conclusion is that the excess value of the closing stock found during the course of survey represents the excess quantity of the stock. It is not the case of the appellant that the same quantity of the stock was being valued at much lesser value say 30% or 40% of the actual cost price to suppress the profit. The appellant has not claimed so. Rather it is a claim of the appellant that the stock was being valued correctly. The closing stock was being valued by the appellant using the gross profit ratio in the earlier years and in this year also in this order the closing stock has been valued using the gross profit ratio thus in such a scenario if the closing stock value is found to be excess by huge amount amount that itself leads to inescapable conclusion that the excess value of the stock represents the excess quantity of the stock in the same proportion.

Shri Rajesh Ajmera in his statement recorded in reply to question number 38 (PB
Pg 138) has stated that the items in the museum are not recorded in the books of accounts and are not recorded in the balance-sheet. This clearly shows that unaccounted stock was kept by the appellant. Further he also stated that value of such items belonging to the company should be added to the value of the stock of the appellant company.

Hence this argument of the appellant that no excess quantity was found during the survey is completely erroneous and is hereby dismissed.

(xlvi) Furthermore it is not the requirement of section 69B of the Act that excess quantity is required to be proved by the Revenue. As per section 69B of the Act,
"the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee, the section revolves around the amount recorded in this behalf in the books of accounts.
lakhs would be taxable under section 69B of the Act in case (as per language of the section) "the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year even though there is no difference in the actual quantity vis-
à-vis quantity recorded in the books of accounts. In the present example such 40
lakhs might have been paid by the assessee using the unaccounted cash for which the source was unknown however in this regard the assessing officer is not required to find or link the source as is the settled legal position as per the judgements of honourable Supreme Court as discussed in adjudication on ground of appeal number 7 and 8. The above is strengthened by the below expected submissions of the appellant:-

"CIT v, Dinesh Jain HUF [2012] 25 taxmann.com 550 (Delhi)
………….
…………
Applying the logic and reasoning in K.P. Varghese v. ITO [1981] 131 ITR 597/7
Taxman 13 (SC). for the purposes of section 698 it is the burden of the Assessing
Officer to first prove that there was understatement of the consideration
(investment) in the books of account. Once that undervaluation is established as a matter of fact. the Assessing Officer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the investment. One such yardstick can be the fair market value of the property determined in accordance with the Wealth Tax Act.
[Para 12]"

(xlvil) Onus is on the assessee to explain the differences. The learned AO has discharged his onus as huge difference has been found in the value of the stock actually found during the survey and the value of the stock reflected in the books of accounts. The appellant has not explained the difference. That the appellant has claimed different grounds on without prejudice basis which itself shows that these grounds are contradictory in nature and cancel each other and further shows that the appellant is merely trying to explore/shop the legal ways out instead of giving the clear factual bonafide explanation and reconciliation and valuation which meets all the issues involved in the case. During the appellate proceedings also a specific query was raised towards the beginning of the hearings to submit a reconciliation however the appellant has not been able to reconcile the differences in the value of the stock as per the learned assessing officer and as per the appellant.
(xlviii) In the case of Roshan Di Hatti v. CIT [1977] 107 ITR 938 (SC) (08.03.1977) it is held by the Hon’ble Supreme Court as under:- x x x x

In the case of Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC)
[08.02.1963] it is held by the Hon’ble Supreme Court as under:- x x x x

As per judgments of Hon’ble Supreme Court in the case of CIT vs. M. Ganapathi
Mudaliar (1964) 53 ITR 623 (SC)/A. Govindarajulu Mudaliar. V. CIT [1958] 34 ITR
807 (SC), where the assessee has failed to provide satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assessee, it is not necessary for the department to locate its exact source.

Referring to the above judgments of Hon’ble Supreme Court, it is held by the Hon’ble ITAT in the case of Navin Shantilal Mehta v. ITO, Ward-32 (2) (4), Mumbai
[2018] 90 taxmann.com 16 (Mumbai-Trib.) as under:- x x x x
In the case of Suraj Bhan Oil (P.) Ltd. v. DCIT [2022] 138 taxmann.com 19
(Madhya Pradesh)/[2022] 286 Taxman 680 (Madhya Pradesh)/[2022] 446 ITR 539
[Madhya Pradesh]/[18.02.2022] it is held as under:- x x x x
SLP against the above judgment Suraj Bhan Oil (P.) Ltd. vs. DCIT [2022] 138
taxmann.com 19 (Madhya Pradesh) was dismissed by Hon’ble Supreme Court.
Reported at [2022] 141 taxmann.com 477 (SC)/[2022] 288 Taxman 635
(SC)[25.07.2022]:- x x x x
In the case of PCIT vs. Deccan Tobacco Company [2022] 137 taxmann.com 470
(SC)/[2022] 286 Taxman 558 (SC) [11.03.2022] [Hon’ble Supreme Court], the ratio is as under:- x x x x
In the case of SVS Oil Mills v. ACIT, Non-Corporate Circle-6(1), Chennai [2020]
113 taxmann.com 388 (Madras)/[2020] 269 Taxman 508 (Madras)/[2019] 418 ITR
442 (Madras) (26.03.2019) it is held as under:- x x x x
Accordingly, the following legal position emerges:-
Amrapali Jewels Pvt. Ltd. vs. ACIT a) Onus is upon the assessee to discharge the burden so cast upon. First burden is upon the assessee to satisfactorily explain the source of amount invested/spent in his excess stock. The burden has to be discharged with positive material. [As per principles laid down in Roshan Di Hatti v. CIT [1977] 107 ITR 938
(SC)[08.03.1977], Kale Khan Mohammad Hanif v. CIT [1963] 50 ITR 1 (SC)[08-02-
1963), CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu
Mudaliar v. CIT [1958] 34 ITR 807 (SC)).
b) As per section 69B of the Act, if the burden is not discharged satisfactorily, it is open to the Revenue to hold that it is income of the assessee and no further burden lies on the Revenue to show that income is from any other particular source. As per principle laid down in CIT v. M.Ganapathi Mudaliar [1964] 53 ITR
623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC)].

c) Unexplained stock cannot be presumed to be business income. If the assesse claims so, the assesse is required to prove the same. [Hon'ble Supreme Court in the case of Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR
194 (SC) [01-08-1968) d) Once it was found by Assessing Officer that there was excess stock, in absence of explanation by assessee, conclusion was inescapable that excess stock, if any, was from undisclosed sources Further once assessee's explanation, if any, had not been accepted, resultant position was that there was excess stock undisclosed in books of account and non disclosure was only with a view to suppress income.
(Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income-tax [2022] 138
taxmann.com 19 (Madhya Pradesh)] [SLP against this judgement was dismissed reported at [2022] 141 taxmann.com 477 (SC)/[2022] 288 Taxman 635 (SC)[25-07-
2022)

Verifiable Purchase behind the stock otherwise unexplained:

If the contention of the Assessee/Appellant was to be accepted viz., by allowing the purchases corresponding to the alleged excess stock, the Assessee will have to now record verifiable purchases in his Books of Accounts and for that he will have valid as well as back-dated purchase Invoices from genuine and existing Sellers which is not possible. When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because actual purchases had already taken place and already been recorded in the books of accounts of the Assessee.

[SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-6(1),
Chennai [2020] 113 taxmann.com 388 (Madras)). Thus this is an impossible proposition of going back in time.
Regarding the contention of the appellant regarding applicability of charge to tax under a particular head, the question arises whether the income subject matter of addition is chargeable to tax as per provisions of chapters on salary, profits and gains of business and profession Or capital gain Or income from house property Or income from other sources. If the same is chargeable to tax under these chapters as per specific provisions contained therein (even before application of provisions of section 68/69/69A etc.) then section 115BBE will not have application.

Section 28 is not an inclusive definition as the opening sentence of the section 28
reads as under:-

"The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession","

Accordingly, in case the appellant claims that the income is chargeable under the head business income and nowhere else, the onus is on the appellant to show under which clause of section 28 the claimed income gets covered. Even as per judgement in the Principal Commissioner of Income-tax v. Bajargan Traders, the "source of investment/expenditure is clearly identifiable" i.e. the source must be clearly identifiable.

In this regard, as per provisions of the Act, not only the source but the year of earning of income also needs to be shown for taxing in the current year under assessment/appeal as the law provides that income for each year be taxed in the ITR/assessment of that year only. This also has ramifications on the interest payable by the taxpayer because if the income was earned in earlier year and the same is being offered to tax now in that case the taxpayer is liable to pay interest for the intervening period. Sections 68/69/69A etc. also provides for year of taxation irrespective of the year of earning of income.

However in case the subject matter of addition is not expressly falling under the four chapters of income heads and for the year under assessment/appeal (before application of provisions of section 68/69/69A etc.) in that case applicability of section 68/69/69A etc. is to be seen. If the sources, genuineness etc. are explained satisfactorily i.e. sources are out of genuine disclosed/taxed income in that case and section 68/69/69A etc. are not applicable even in that case section 115BBE will not have application. However if the asset/credit/expenditure is treated as income because of the applicability of section 68/69/69A etc. in that case section 115BBE will have application. The incomes mentioned under these sections are not specific to any head of income. Section 69C even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income. However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable.
Section 14 of the Income-tax Act, 1961 Heads of income Assessment year 1984-
85- Whether opening words of section 14, 'save as otherwise provided by this Act, clearly leave scope for 'deemed income' of nature covered under scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from other sources' Held, yes. [Fakir
Mohmed Haji Hasan v. Commissioner of Income-tax [2002] 120 Taxman 11
(Gujarat)/(2001] 247 ITR 290 (Gujarat)/[2001] 165 CTR 111 (Gujarat)(10-08-2000]|
These are the special provisions dealing with the situation and the incomes which are the subject matter of the contention in the appeal and being the specific provisions they are preferred and override the general provisions. Sections
68/69/69A etc. also provides for year of taxation of asset/credit/expenditure irrespective of the year of earning of the source revenue income (if any).

If the undisclosed income earned and accumulated over the years is taxed in the year in which it is detected by the Revenue and the same is merely taxed as per normal provisions of the law such an interpretation will place a premium on dishonesty ie. it tantamounts to rewarding the dishonesty. There is no interest burden on such taxpayer even if the income was earned over past years and there is no extra tax rate and deduction of expenses/losses will also be claimed by taxpayer if the same is taxed as per normal provisions of section 28 and onwards.

(xlix) No Presumption in favor of business income. Appellant is required to show and prove the same:

The Hon'ble Supreme Court in the case of Commissioner of Income-tax v.

Devi Prasad Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968] has held as under:- x x x x

As per the headnotes "Section 145 of the Income-tax Act, 1961 [Corresponding to section 13 of the Indian Income tax Act, 1922] Method of accounting System of accounting Assessment year 1946-47 Whether where there is an unexplained cash credit it is open to ITO to hold that it is income of assessee and no further burden lies on ITO to show that income is from any particular source Held, yes".

As per the above judgement, the observations of the Hon'ble Allahabad High Court that because the amount was entered in the books of account of the business, there was some material to hold that the amount was income of the assessee from the business and not from some other source, were not approved by the Hon'ble
Supreme Court and was reversed, as it was held by the Hon'ble Supreme Court that it assumed it was for the Income-tax Officer to indicate the source of the income which was not the correct legal position and that where there is an explained cash credit, it is open to the Income-tax Officer to hold that it is income of the assessee and no further burden lies on the Income-tax Officer to show that that income is from any particular source. It is for the assessee to prove that even if the Amrapali Jewels Pvt. Ltd. vs. ACIT cash credit represents income it is income from a source which has already been taxed.

(I) The opening words of section 14 'Save as otherwise provided by this Act' clearly leave scope for 'deemed income' of the nature covered under the scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from other sources' because the provisions of sections 69, 69A, 69B, and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Section 69C even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given /stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income. However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable. These are the special provisions dealing with the situation and the incomes which are the subject matter of the contention in the appeal and being the specific provisions they are preferred and override the general provisions. Once the income is as per these sections, there cannot be any dispute regarding the applicability of section 155BBE of the Act. These sections are in the nature of complete code in itself. In this regard it is held by Hon'ble Gujarat High Court in Fakir Mohmed Haji Hasan v. Commissioner of Income-tax [2002] 120 Taxman 11
(Gujarat)/[2001] 247 ITR 290 (Gujarat)/[2001] 165 CTR 111 (Gujarat)[10-08-2000]
that "62 The opening words of section 14 'Save as otherwise provided by this Act clearly leave scope for 'deemed income of the nature covered under the scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from 'other sources' because the provisions of sections 69, 69A, 69B, and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head, 'Income from other sources'. Therefore, the corresponding deductions, which are applicable to the incomes under any of these various heads, will not be attracted in case of deemed incomes which are covered under the provisions of sections 69, 69A, 69B and 69C in view of the scheme of those provisions."

(ii) Conclusion:
Mudaliar [1964] 53 ITR 623 (SC), A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR
807 (SC), the Revenue is not to find out the source and the assessee is required to explain the source with supportings.

Unexplained stock cannot be presumed to be business income. If the assessee claims so, the assessee is required to prove the same. [Hon'ble Supreme Court in the case of Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR
194 (SC)[01-08-1968]

Once it was found by Assessing Officer that there was excess stock, in absence of explanation by assessce, conclusion was inescapable that excess stock, if any, was from undisclosed sources - Further once assessee's explanation, if any, had not been accepted, resultant position was that there was excess stock undisclosed in books of account and non disclosure was only with a view to suppress income.
[Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income-tax [2022] 138
taxmann.com 19 (Madhya Pradesh)] [SLP against this judgement was dismissed reported at [2022] 141 taxmann.com 477 (SC)/[2022] 288 Taxman 635 (SC) [25-
07-2022). Further excess stock found cannot be presumed to be from business income of the year as the sources of buying unaccounted excess stock can be numerous. It has also not been shown with sources details that it is only the earlier earned (during the same year) business income (manner of earning and source of earning of such income) which has been invested in the excess stock..

In view of the above detailed discussion, in principle the approach of the learned
AO is hereby upheld and the excess value stock as determined as per this order is to be taxed as per section 69B of the Act. Accordingly the ground of appeal on the issue is hereby dismissed.

(lii) In view of the above discussion, stock valuation as per the assessment order at various locations / various issues stock lying at Delhi, stock lying at Mumbai, stock lying at Bangalore, stock with franchisees, goods sent on consignment basis to USA, goods sent on consignment basis to U.K., goods sent to Doha Jewellery
Exhibition, goods sent on consignment basis to Hongkong, are upheld and confirmed. Further stock of Jaipur HO and Panch Batti Store is worked out at Rs.
1,52,63,81,185 which is 53% (Tag price minus 47% as discussed on page 166) of 287,99,64,500 i.e. total value of tag price as per 1 values provided by appellant and is subject to verification by the Id. AO. Further, the Ld. AO has worked out the value of stock of all locations as per books of account in para no 3.4.7 in the assessment order was Rs. 1,26,08,06,402/- as on date of survey. I do not find any infirmity regarding work out of value of stock as per books as on 13.07.2020. The same is upheld. On the basis of figures mentioned in above discussion, the excess/ unaccounted stock other than museum stock, as on 13.07.2020 is computed at Rs. 146,31,52,182/-. Further, the AO is directed to work out the value of Jewellery kept in the Museum separately as per discussion made in para No.
(Xliii) in this order considering the request of the appellant on the quantities and give effect accordingly.
•
Valuing the stock at the market rate prevailing at the time of survey instead of cost.
•
without following applicable accounting principle of valuation of stock.
•
Without appreciating that no quantity of stock was found in excess during survey.

The first issue pertaining to the valuation of stock in the market rate prevailing at the time of survey has been dealt with in greater detail in the adjudication of ground of appeal number 7 and 8. The discussion and the adjudication and in those grounds of appeal is hereby referred to and not repeated for the sake of brevity.
The conclusion in this regard is that the valuation on the date of survey was not at the market rate prevailing at the time of survey however there were some inaccuracies in the same however the valuation arrived at was less than the market rate prevailing at the time of survey and in some cases even less than the cost which should have been worked out. The valuation has been arrived at in adjudication of ground of appeal number 7 and 8 considering the various objections raised by the appellant. Hence this issue of this ground of appeal is hereby dismissed.

The second issue that the valuation was done by the independent government empanelled valuers without following applicable accounting principle of valuation of stock is also without merits. Valuation was done by the government empanelled valuers as per the knowledge and understanding and they are expert in their field.
Further the appellant itself has not maintained the sufficient documentation to arrive at the exact cost of each of the unique item and the deficiencies in this regard have been discussed in detail in the carlier part of this order. The different valuers called by the Department took different approaches for the valuation as per their independent assessment of the material at hand and the documentation and the situation further strengthens the view regarding the independence and impartiality of the valuers. The valuation as per this appeal order has been arrived at in adjudication of ground of appeal number 7 and 8 considering the various objections raised by the appellant. Hence this issue of this ground of appeal is hereby dismissed.

The appellant has raised another issue that no quantity of stock was found in excess during survey. The appellant has made this claim with a lot of passion ignoring the real facts of the case. The question of excess quantity arises only when a quantity has been recorded in the books of accounts and the same as Amrapali Jewels Pvt. Ltd. vs. ACIT compared with the actual quality found in the physical verification during the survey. However in the present case the appellant has not maintained the quantity in the stock register. As per the tax audit report no stock register has been maintained. Even in the purchases and sales the appellant has not maintained the quantities. Even during the appellate proceedings the appellant has not produced the details of quantities of opening stock and the quantities of the purchases and the quantities of the sales and the quantities of the closing stock as per books of accounts both in terms of the quantity and in terms of the value. Once the quantities comparison (quantity actually found during the survey versus the quantity shown in the books of accounts) is not possible due to non-maintenance of the details by the assessee, the comparison is to be made on the valuations of the stock shown in the books of accounts and of the stock found actually. The details in the software or the excel file are in the nature of the actual stock found during the survey. The software or the excel file prepared from the same during the course of the survey is in the nature of incriminating undisclosed document material unearthed during the course of survey That the valuation of the stock as per this data is more than the valuation of the stock shown by the appellant in the books of accounts, itself shows that the appellant had excess stock or the undisclosed stock over and above the stock shown in the books of accounts.
Further this issue has been discussed in detail in the adjudication of ground of appeal no. 7 and 8 and the same is referred to and not repeated here. Hence this argument of the appellant that no excess quantity was found during the survey is completely erroneous and is hereby dismissed.

Further more it is not the requirement of section 69B of the Act that excess quantity is required to be proved by the Revenue. As per section 69B of the Act, "the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee, the section revolves around the amount recorded in this behalf in the books of accounts.

For example, if one asset (lets say, one diamond studded necklace) is purchased by one assessee for Rupees one crore in reality however only 60 lakhs are shown and recorded in the books of accounts having been spent in purchasing such asset and 40 lakhs are paid in unaccounted and undisclosed manner. In that case 40
lakhs would be taxable under section 69B of the Act in case (as per language of the section) "the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year even though there is no difference in the actual quantity vis-
à-vis quantity recorded in the books of accounts. In the present example such ₹ 40
lakhs might have been paid by the assessee using the unaccounted cash for which the source was unknown however in this regard the assessing officer is not required to find or link the source as is the settled legal position as per the Amrapali Jewels Pvt. Ltd. vs. ACIT judgements of honourable Supreme Court as discussed in adjudicated on ground of appeal number 7 and 8. In view of above discussion the ground of appeal no. 9 is hereby dismissed.”

Finding of ld. CIT(A) for addition of Rs. 24.95 Crores in respect of alleged unaccounted sales

The appellant commonly contended that the year of the sale is not proved. As far as the contention of the appellant on the issue of date and year is concerned, the onus as per section 292C of the Act is on the appellant to disprove the reasonable inference drawn by the learned AO which however has not been done. Further taxation in the current year is not prejudicial to the appellant as the appellant gains on the interest cost of the tax. It is the settled law that in such cases of unaccounted sales etc. clear cut documentation and/or evidences are rarely available and the adjudication is to be done on the basis of circumstantial evidences as per human probabilities. Accordingly this contention of the appellant regarding the year of sale is dismissed. This will be applied on all impounded paper discussed under these grounds of appeal. Now the respective pages and the addition made there under are discussed here under:-

Item description, item code, value of each item, customer name etc. clearly mentioned on these 3 papers. Further various sub- entries and markings are made on these pages which shows the result of finer and final discussions.
The details in the paper do indicate with reasonable certainty that there is sale out of books of accounts. The presumption under section 292C is also in favour of the revenue. There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise ie. customization / pick & choose by customers using the various item codes. The item codes most apparently indicate only the design code.
Other sales as reflected in the paper under consideration are found to be transacted out of books. In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

Addition in assessment order- Rs. 18,70,000

The details noted on this paper show various jewellery items viz. gold bangles, gold bracelet, hoops and gem stones viz. spinal, rose, ruby etc. Value of each item is also mentioned on this paper. The appellant has mainly made two contentions.
Firstly the date/year of the sale is not proved and the names etc. are not mentioned and the information is incomplete.

On perusal of the paper it is found that item code, name of customer etc. not mentioned on the paper. There is no rebuttal of the same in the assessment order.
The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted on this seized Page No. 4, jewellery items have been sold to one Sonakshi Malhan for a total consideration of Rs. 18,98,000/-. Item code, customer name & mobile no. and value of each item are clearly mentioned on the paper.
4. Page 8 of Annexure-AS/1, Addition in assessment order-31,68,000

As per the details noted on this seized paper, various jewellery items of Rs. 24.36
lakh have been sold to a customer named Bhawna and sale of Rs. 7.32 was made to another customer named Astha. The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that there was no clarity as to what item has been sold by the Appellant in respect of above noting.

There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.
5. Page No. 10 of Annexure-AS/1, Addition in assessment order Rs. 7,60,000

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that there was no documentary evidence found during the survey proceedings which substantiate the fact that any cash sale has been made by the Appellant.

On the top of the page, there is a clear mention that jewellery items worth Rs.
15.20 lacs were sold out of which a sum of Rs. 7.60 lacs (i.e. 50% of actual consideration) was paid in cash with invoice and for the balance of Rs. 7.60 lakh, 3
6. Page No. 10 back of Annexure-AS/1, Addition in assessment order- Rs.
34,27,000 As per the noting made on this seized paper, details of several jewellery items valuing Rs. 34.27 lakh have been noted, which are not recorded in regular books of account. Item and value of each item mentioned on the paper.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that above loose sheet is just vague or incomplete sheet which does not contains details like, name of parties to whom goods were alleged to be sold and no date is mentioned, made of receiving payment, etc.

There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the noting made on this seized paper total sales of Rs. 15.20 lakh had been made. There is a clear mention that amount of Rs. 7,85,000/- was received through cheque and the balance amount of Rs. 7,35,000/- was received in cash. The total sales include sales of Rs. 4.50 lakh made to Richa, sales of Rs. 3.70 lakh made to Rini and sales of Rs. 7.00 lakh made to Nilesh. Further, there is clearly indicated in front of customer name Rini "No bill".

Regarding the contention of the appellant that these are deaf and dumb piece of paper only, the onus is on the appellant as per section 292C of the act. It has been seen from other papers also that the appellant has been in the business of making jewellery as per the requirement of the customers and appellant has involved in out of the books cash sales of jewellery. Contents of the document strongly indicate that sale was made by the appellant. Hence the contention of the appellant in this regard is hereby rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

Appellant has shown that the stated item codes R-5798, N16-314, B12-1020 are mentioned in the inventory sheet of the official valuers prepared during the survey.

The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.
At the same time in this case the appellant has not reconciled the item codes((R-
5061, E-7192, В 15-1095, E-A-7869, E19-1702 & N 17-1047) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The Amrapali Jewels Pvt. Ltd. vs. ACIT totality of the facts leads to the conclusion that these item codes. jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly(Rs. 25,50,000).

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby partly confirmed.

The noting on above seized paper indicates that the various items of jewellery have been sold for a total consideration of Rs. 22.70 lakh. item name & item code clearly mentioned on the paper.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that item no. R13-656, R-2797, R-2691 and R17-857 are included in list of stock prepared by department valuer.

There are three items are also mentioned on the paper on first half of the page, the appellant has not made any reference regarding these three items.

The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.
At the same time in this case the appellant has not reconciled the item codes(E13-
322) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non
10. Page No. 14 of Annexure-AS/1, Addition in assessment order-7,60,000

The noting on above seized paper indicate that various items of jewellery have been sold for a total consideration of Rs. 7.60 lakh. Item description & item code and value of each item clearly mentioned on the paper.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that these are deaf and dumb piece of paper only without any correlation and nexus to sales of the Appellant.

In this case the appellant has not reconciled the item codes neither with the stock valuation sheet prepared by the official valuers and nor with the invoices -whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

The above seized paper consist details of various items sent to Ahemedabad for sale which include Plain polki studs, thussi, Enamel and Jhumki. The total sale consideration noted on this paper comes to Rs. 9.07 lakh.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly these noting are just memoranda noting which has no bearing on financials transaction of Appellant.

On perusal of seized papar it is found that item code, name of customer etc. not mentioned on the paper.

There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly the item code R18-1375 is available in stock even as per valuation report prepared by Income tax Department during survey.

Appellant has shown that the stated item code R18-1375 is mentioned in the inventory sheet of the official valuers prepared during the survey. The appellant is silent about other four items mentioned on the paper. However there are no item code mentioned regarding other four items on the said paper.
14. Page No. 20 of Annexure-AS/1, Addition in assessment order - Rs. 4,22,000
As per the above details total 3 jewellery items have been sold for a total consideration of Rs. 4.22 lakh. Item name & code and amount of each item are clearly mentioned on the paper. Customer name is not mentioned on the paper.
Appeallant made contention that these items bearing code no. E19-455, E15-1849
and E14-73 were sold by the Appellant in the financial year 2019-20 These items were sold to Ms. Malavika Shivakumar at the invoice value of Rs. 4,22,000/-. A copy of said invoice is available on page no. 1186 of Paper book Vol. 7. Appellant has shown that the stated item codes are mentioned in the invoice which was also submitted to the Id. AO.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted in the assessment order the seized Page No. 1 & 2, total 4
items of jewellery were sold to Rashmi Kapoor for a total sale consideration of Rs.
67 lakh. Item description, item code, value of each item, cutomer name & mobile no. etc. clearly mentioned on these 2 papers.
The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that the item code N16-931 is available in stock even as per valuation report prepared by Income tax Department during survey. The same item code is available on S.No. 1190 of page no. 1187 of PB Vol-7. Other two items
E17-228 and E16-4167 are also available in the stock and the same have been cumulated in the valuation report under one head.

However he has only one itme code reconciled in inventory sheet. Appellant has shown that the stated item codes N16-931 is mentioned in the inventory sheet of the official valuers prepared during the survey.
The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes E 17-
228 & E 16-4167 neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby partly confirmed (Rs. 41,50,000).

It is clearly mentioned on the above seized page that jewellery items no. N 18-20
was sold to Sapan (Nepal) for a sum of Rs. 8.90 lakhs. Mobile no., Name of customer, amount and item no clearly shows that the jewellery items no. N 18-20
was sold out of books.

The appeillant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that these are deaf and dumb piece of paper only without any correlation and nexus to sales of the Appellant. At the same time in this case the appellant has not reconciled the item codes N 18-20 neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code.
17. Page No. 3 of Annexure-AS/2, Addition in assessment order-3,00,000

The details on page no. 3 indicate that jewellery Item No. E14-3476 was sold to Nepal cilient for Rs. 3.59 lakh, out of which a sum of Rs. 3.0 lakh was received in cash and balance amount of Rs. 59,000/- was outstanding, this is clearly indicate that appellant has made out of the books sales. On perusal of the page it is found that account no, quoted price, best price, cash amount, due amount clearly indicate that the item has been sold out of books by the appellant.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that these are deaf and dumb piece of paper only without any correlation and nexus to sales of the Appellant. The appellant has not reconciled the item codes E14-3476 neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code.

Regarding the contention of the appellant that these are deaf and dumb piece of paper only, the onus is on the appellant as per section 292C of the act. It has been seen from other papers also that the appellant has been in the business of making jewellery as per the requirement of the customers and appellant has involved in out of the books cash sales of jewellery. Contents of the document strongly indicate that sale was made by the appellant. Hence the contention of the appellant in this regard is hereby rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

The appellant has made contentions that there was no date mentioned on the loose sheet and it was not evident that how details written on this loose sheet pertains to year under consideration. There was no clarity that what item was sold and to whom. This paper was crossed by the staff persons which shows it is a rough paper. These are deaf and dumb piece of paper only without any correlation and nexus to sales of the Appellant during year under consideration. The above seized page contains detail 2 items of jewellery had been mentioned. Customer name, item code etc is not appear on the paper.

There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that items mentioned in the loose sheet bearing code no.
E16-652, N-5968, N18-335 and E19-1450 are in stock on the date of survey which is evident from copy of valuation report of department. Item bearing code E16-652,
N-5968 and N18-335 are referred at S.no. 964, 1233 and 2141 respectively in the report of departmental valuers. Copy relevant pages are available on page no.
1188-1190 of PB Vol. 7. He further made contention item bearing code E19-1450
21. Page No. 8 of Annexure-AS/2, Addition in assessment order-33,27,000

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that that item bearing code no. N20-88, 816-365, B17-238
and N19-1078 are already included in the list of stock valued by departmental valuer and which are referred at S.No. 3197, 1566, 1820 and 2956 in the report of valuer. Further, Item bearing code no. B16-100 and B-4264 were held in stock at Hansa, Hyderabad Franchisee. Further, he made contention that item bearing code no. N19-1239 was sold to Mr. Rudran Poopalasingham in FY 2019-20 and duly recorded in book of account. A copy of the invoice is available on page no.
1191 of PB Vol. 7. Therefore, it is wrong finding of the Ld. AO that Appellant could not verify these from the regular books of accounts.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. Further, it has shown that the stated item codes are mentioned in the invoice which was also submitted to the Id. AO.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

This page contains details of sales made to Mahendra Agarwal of 3 items of jewellery for a total consideration of Rs. 15.75 lakh. As clearly mentioned on the paper, the invoice was issued for Rs. 6.0 lakh only and the balance amount of Rs.
9.75 lakh was received in cash. Item name, item code amount etc. clearly mentioned on the paper. Further, on perusal of the page it is found that the word
'all paid' clearly mentioned on the page. On this page it is clearly mentioned 'cash'
word, which indicate that cash paid by the customer for purchasing the items.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that this paper was crossed by the staff persons which shows it is a rough paper.
Like seen in number of papers (example paper numbers 1 of AS/3 etc.) and as discussed in this ground of appeal crossing on the paper shows that the transaction has been concluded and successfully taken place. Accordingly, the argument of the appellant in this regard is rejected.
23. Page No. 10 of Annexure-AS/2, Addition in assessment order-1,75,46,000

This page contains details of sales made to Anish Gupta and Madhu Gupta. A total of 6 items of jewellery have been sold for a total consideration of Rs. 175.46 lakh.
Item code, customer name, amount etc. clearly mentioned on the paper. There is a clear mention of 6 jewellery items and the price of each item is also written against them.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that four items are included in list of stock prepared by departmental valuers.

Appellant has shown that the stated item codes N18-1087, N15-697, N-2209 &
N18-1511 are mentioned in the inventory sheet of the official valuers prepared during the survey. Further, the appellant has not reconciled other two itmes N17-
1450 and N17-1079 mentioned on the paper.

The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes (N17-
1450 and N17-1079) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly (Rs. 25,10,000)
24. Page No. 15 of Annexure-AS/2, Addition in assessment order-

Ld. AO has noted in the assessment order that the page contains details of sales made to one Smt. Neetu. A total of 8 items of jewellery have been sold for a total consideration of Rs. 300 lakh. Item name, item code, customer name & mobile no and amount clearly mentioned on the paper.

The appellant made contention that Item bearing code no. N-7224, N16-314, N13-
1033, N18-160, N15-497, N16-377, N-8025 and N14-1049 are included in the list of stock prepared by departmental valuers. Copies of relevant pages of the valuation report of departmental valuers is available on page no. 1203 to 1209 of PB Vol. 7. On perusal of above said pages one item code i.e N16-314 was not found in list of departmental valuer report.

The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes( N16-
314) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly (Rs. 12,00,000).

Appellant made contention that item bearing code no. N15-867, E11-398, E11-
1419, E13-1419, N16-963, R14-1144, E15-1194, N15-852, E17-2221 and N18-769
are included in the list of stock prepared by departmental valuers.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

As noted from the assessment order the page contains details of sales of jewellery of Bridal look. Total 8 items of jewellery have been sold for a total consideration of Rs. 176.50 lakh. Item name, Code & amount clearly mentioned on the paper.

The appellant made contention that item bearing code no. B18-1277, B18-1278,
NP12-130, M-516, M12-65, N17-979, N14-1191 and N-7242 are included in the list of stock prepared by departmental valuers which further substantiate the fact that these notings are incorrect and vague. Copies of relevant pages of the valuation report of departmental valuers is available on page no. 1218 to 1225 of PB Vol. 7. Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

In the assessment order the Id. AO has noted that the page consist details of sales made to Mr. Agarwal for a consideration of Rs. 2,54,900/-, out of which a sum of Rs. 36,450/- was received as advance and the balance of Rs. 2,18,450/-was to be paid on delivery of the goods.
The appellant made contention that No item no. is mentioned on the above loose slip and No details of mode of receiving alleged sales consideration. There are neither any jewellery item mentioned nor any item code mentioned on the paper.
There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

At the same time in this case the appellant has not reconciled the item codes(E19-
4563) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly(Rs. 1,20,000).

As noted from the assessment order Page no 28 contains details of sales made to a customer named, Neha Bayas. Total 5 items of jewellery have been sold for a total consideration of Rs. 2,36,550/-. Item code, customer name and amount clearly mentioned on the paper.

The appellant contention that the item no. mentioned on page no. 28 of AS/2
namely, N17-644, N19-763, E18-1830, MS-17-82719 and MS-19-86021 which were sold to Mr. Shardul singh Prithviraj Bayas vide invoice no. JPB/2021/000010
dated 11-06-2020 which was duly recorded in books of accounts.

Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books. Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold.
There is no proof from the appellant that same design items are not manufactured
Amrapali Jewels Pvt. Ltd. vs. ACIT again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization / pick & choose by customers using the various item codes. Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As noted from the assessment order that page no. 29 contains details of sales made to some customer. Total 5 items of jewellery have been sold for a total consideration of Rs. 2,67,550/-. Item code, buyer name etc not mentioned on the paper.

As noted from the assessment order page no. 30 contains details of sales made to some customer. Total 5 items of jewellery have been sold for a total consideration of Rs. 2,35,444/-. Item code, name of customer etc. is not mentioned on the paper.

Further, the appellant made contention regarding about page no 29 and 30 that noting related to quotation for same items which were mentioned page no. 28 of AS/2 and already recorded in books of account. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.
In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

This page contains details of sales made to a customer named "Lucy". Total 7
items of stones have been sold for a total consideration of Rs. 23,72,800/-. On the top of the page, there is a clear mention that the items have been "sold". The appellant does not assign item codes to stones and in the submissions the appellant has not made reference to any sales of other than jewellery. Appellant has merely raised the issue of the date or the year of the sale. As far as the issue of year is concerned, the onus as per section 292C of the Act is on the appellant to disprove the reasonable inference drawn by the learned AO which however has not been done.

Appellant has also argued that there is a crossing on the paper and contended that this closing shows that the paper is rough. However this closing appears to be the Amrapali Jewels Pvt. Ltd. vs. ACIT indication of final completion of the transaction as it is clearly mentioned in the document as "sold and tick marks are also there.

Like seen in number of papers (example paper numbers 9 AS/2 etc) and as discussed in this ground of appeal crossing on the paper shows that the transaction has been concluded and successfully taken place. Accordingly, the argument of the appellant in this regard is rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

In this case the appellant has not reconciled the item codes neither with the stock valuation sheet prepared by the official valuers and nor with the invoices -whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

On page 5 Item code, name of customer & amount clearly mentioned on the paper.
The appellant has inter-alia contended that item bearing code no. R15-1252 is included in the list of stock prepared by departmental valuers. Appellant itself is Amrapali Jewels Pvt. Ltd. vs. ACIT also silent about the remaining six items. Whereas in some other cases the appellant has also produced the sales invoice of the item code is mentioned in such loose papers however in the present case the appellant has been silent which further proves that the remaining six items are neither mentioned in the inventory sheets (excel file) nor anywhere in any of the invoices. The only conclusion to be drawn is that the items were sold out of books. Further the item code R15-1252 as claimed by the appellant to be appearing on page number PB-1234 is actually not appearing on this sheet. Thus even this item is not reconciled from the appellant side itself.

In this case the appellant has not reconciled the item codes neither with the stock valuation sheet prepared by the official valuers and nor with the invoices –

whereas in similar such other cases the appellant has reconciled the item code.
This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes.
jewellery items were sold out of books as mentioned in the loose papers or through some other sale.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per the details noted on the above paper, total 3 items of jewellery have been sold for a total consideration of Rs. 5,62,000/-. There is a clear mention of item no., description and value against each item of jewellery sold. Appellant made contention that the item no. N14-171 and E18-60 mentioned on the above loose sheet were sold vide invoice no. JPB/1920/002713 dated 10.12.2019 and JPB/1920/002595 dated 02.12.2019 respectively, which were duly recorded in books of accounts.

Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books. Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold.
There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise ie. customization / pick & choose by customers using the various item
37. Page No. 8 of Annexure-AS/3, Addition in assessment order-Rs. 17,47,400

As per the details noted on the above paper, total 4 items of jewellery have been sold for a total consideration of Rs. 17,47,400/- to customers named Rachna
Rastogi, whose reference was given by Sanjivji and AlkaJi. Item code & amount are also clearly mentioned on the paper. Appellant has mainly contended the year and date of the sale. However this argument of the appellant is already rejected a number of other slips in the same ground of appeal as the onus in this regard is on the appellant considering section 292C of the Act.

In this case the appellant has not reconciled the item codes neither with the stock valuation sheet prepared by the official valuers and nor with the invoices -whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per the details noted on the above paper, total 5 items of jewellery have been sold for a total consideration of Rs. 3,97,000/- to customers named Dr. C L Pandey and Ananya Chouhan. There is a clear mention that the items have been sold, as per the value written on the paper. Item code & amount are also clearly mentioned on the paper. The appellant has contended that the item no. CON19-361, CON19-
374 and CON19-711 mentioned on the above loose sheet were sold in FY 2019-
20, which were duly recorded in books of accounts. The copy of said invoices is available on page no. 1237-1239 of PB Vol. 7. Also, item no. E-7278 is included in the list of stock prepared by departmental valuers.

Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant
There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization / pick & choose by customers using the various item codes. Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.

Further, the details in the paper do indicate with reasonable certainty that there is sale out of books of accounts. The presumption under section 292C is also in favour of the revenue. There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise.
Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise ie. customization / pick & choose by customers using the various item codes. The item codes most apparently indicate only the design code. Other sales as reflected in the paper under consideration are found to be transacted out of books.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per the details noted on the above paper, total 3 items of jewellery have been sold for a total consideration of Rs. 16,37,000/- to a customer from Aligargh on reference from Tarun Sir and Anil Sir. Item code & amount are clearly mentioned on the paper. Appellant has contended that No date mentioned on the loose paper.
The above page is crossed down by the staff which made it rough and incorrect.
Item bearing code no. B14-623, EA-4052 and N15-210 are included in the list of stock prepared by departmental valuers. Total of these three items on the impounded paper is Rs. 16,37,000 which has been added in the assessment order.
40. Page No. 12, 12 back of Annexure-AS/3, Addition in assessment order-Rs.
14,52,000

As per the details noted on the above papers, 2 Necklaces were sold for Rs. 13.50
lakh, out of which a sum of Rs. 10 lakh was received earlier in cash and the amount of Rs. 3.50 lakh has remained unpaid. There after, earring of Rs. 1.02 lakh were sold making the total dues to Rs. 4.52 lakh, which was all received in cash.
There is mention of the names of Aashima and Shashi Sahay on the top of the paper, who are buyers of the jewellery. Item code & amount are also mentioned on the paper.

Appellant has mainly contended that these items were transferred to Mumbai branch and has mentioned the item code in this regard. Further the appellant has raised the issue of the date and year.

As far as the issue of year is concerned, the onus as per section 292C of the Act is on the appellant to disprove the reasonable inference drawn by the learned AO which however has not been done.

Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books.
Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold. There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization / pick & choose by customers using the various item codes. Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.

Further this sheet shows that jewellery is also manufactured by the appellant as per the requirements of the customer. In this sheet the customer has selected circumference of E-19 1860 and has selected the design should be from E-19
3733. Blue ear ring should be 0.1 inch smaller. On the top of this page also the customer has selected designs from some of the codes of the appellant. This also Amrapali Jewels Pvt. Ltd. vs. ACIT shows that these code represent the design code and not the item code. On the backside it is inter-alia mentioned that "all paid".

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

The appellant has contended that no date mentioned on the loose paper. The above page is crossed down by the staff which made it rough and incorrect. Item no. CON19-696, E19-898 and E18-2868 mentioned on the above loose sheet were sold in FY 2019-20, which were duly recorded in books of accounts. Item bearing code no. E19-2434 is included in the list of stock prepared by departmental valuers. For the fifth item the item code is incomplete.

The most important noting on this page is "SOLD" and a bracket which covers the whole the item codes. This shows that these items were sold.

Like seen in number of other papers and as discussed in this ground of appeal crossing on the paper shows that the transaction has been concluded and successfully taken place. Accordingly, the argument of the appellant in this regard is rejected.

As far as the issue of year is concerned, the onus as per section 292C of the Act is on the appellant to disprove the reasonable inference drawn by the learned AO which however has not been done.
Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books. Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold.
There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization/pick & choose by customers using the various item codes. Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.
42. Page No.14 of Annexure-AS/3, Addition in assessment order-Rs. 5,60,835. As per the details noted on the above paper, one item of jewellery has been sold for a consideration of Rs. 5,60,835/ to the customer named, Maha. Item code also clearly mentioned on the paper. "sold" word is specifically mentioned. Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB

Pages 1151-1164 which is the reply of the appellant before the Id. AO on the issue.
There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books. Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold. There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization/pick & choose by customers using the various item codes.

Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.

As far as the issue of year is concerned, the onus as per section 292C of the Act is on the appellant to disprove the reasonable inference drawn by the learned AO which however has not been done.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per the details noted on the above paper, total 9 items of jewellery have been sold for a total consideration of Rs.7,80,000/-. There is a clear mention of the details of each item along with item no. and value. On the left side of the paper vertically it has also been stated that advance has already been received with respect to the transaction on this paper.

Regarding the contention of the appellant that item code details are not mentioned, the onus is on the appellant as per section 292C of the act. It has been seen from other papers also that the appellant has been in the business of making jewellery as per the requirement of the customers and there is no reference to item code on Amrapali Jewels Pvt. Ltd. vs. ACIT such customised jewelry item. Documents impounded during the survey and as discussed in this ground of appeal shows otherwise Le. customization / pick &
choose by customers using the various item codes. The item codes most apparently indicate only the design code. Contents of the document strongly indicate that sale was made by the appellant. Hence the contention of the appellant in this regard is hereby rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

In this case the appellant has not reconciled the item codes neither with the stock valuation sheet prepared by the official valuers and nor with the invoices –

whereas in similar such other cases the appellant has reconciled the item code.
This shows that these items were in existence with the appellant however these have disappeared from the official records and are not in physical possession also on the date of survey.

Like seen in number of papers (example paper numbers 9 of AS/2, 1 of AS/3 etc) and as discussed in this ground of appeal crossing on the paper shows that the transaction has been concluded and successfully taken place. Accordingly, the argument of the appellant in this regard is rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

Rajeev Sir-

Rs. 16,99,100/-
Tarang Sir -

Rs. 13,10,000/-
Rajesh Sir-

Rs. 19,87,000/-
Ramya Mam-
Rs. 2,21,000/-
Total

Rs. 52,17,100/-

Shri Rajeev Arora is a major shareholder in M/s A.JPL, Shri Tarang Arora is son of Shri Rajeev Arora, who is also a Manager in M/s AJPL. Further, Shri Rajesh Arora
Amrapali Jewels Pvt. Ltd. vs. ACIT is main working director and major shareholder in M/s AJPL and Smt. Ramya
Sharma is manager in M/s AJPL. All these key persons normally work from the H.O. at Ashok marg, C-Scheme, Jaipur. Some other names are also mentioned on the paper, it appears that other names refer to payment regarding customer.

The appellant has stated that the above memoranda noting is regarding handing over of cash collected at panch batti store from sales to responsible persons at Head Officer for deposit in bank account. This contention or the explanation of the appellant is abnormal. If the cash is collected from the sale the same will be handled by the cashier immediately and there would not arise any requirement to note the names of various persons on the slip against the cash until or unless possibly such cash is unaccounted. The inference from this is that only in case of unaccounted cash the record with the employee or key person names will be kept.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per the details noted on the above paper, total 3 items of jewellery have been sold for a total consideration of Rs. 51,67,181/- (Rs. 7,00,000+ Rs. 19,10,000+ Rs.
25,57,181) to a customer named, Nitindeep. The original price of these 3 items was Rs. 55,62,700/- which was settled for Rs. 51,67,181/-, after bargaining. There is a clear mention of item code no. and value of each item written on the paper.
Part of the sale consideration has been received in US dollars which is also mentioned on this paper.

In this case the appellant has not reconciled the item codes neither with the stock valuation sheet prepared by the official valuers and nor with the invoices -whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have disappeared from the official records and are not in physical possession also on the date of survey. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers.

Like seen in number of papers (example paper numbers 9 of AS/2, 1 of AS/3, 16 of AS/3 etc.) and as discussed in this ground of appeal crossing on the paper shows that the transaction has been concluded and successfully taken place. Accordingly, the argument of the appellant in this regard is rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

Appellant has shown that the stated item code N-18-173 mentioned in the inventory sheet of the official valuers prepared during the survey. Appellant itself is also silent about the remaining items noted on the paper. Further regarding other two items clearly mentioned word as 'sold'.

The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes (N-
18-31, N 19-1048 & N 18-1037) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly (Rs. 7, 81, 920).

As per the details noted on the above paper, total 3 items of jewellery have been sold for a total consideration of Rs. 16830 U to a customer named Shweta Puri.
Name and mobile of Sanjay Singh is also mentioned. One more item no. N-17-979
was also sold for Rs. 15.75 lakh. Thus, the total sales made as per this seized paper comes to Rs. 28,37,250/- (16830 U x75 plus Rs. 15,75,000/-). Customer name & mobile no clearly mentioned on the paper. One item code is also mentioned on the paper.

Appellant has shown that the N-17-979 code is mentioned in the inventory sheet of the official valuers prepared during the survey.
Further, the details in the paper do indicate with reasonable certainty that there is sale out of books of accounts. The presumption under section 292C is also in favour of the revenue. There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise.
Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization / pick & choose by customers using the various item codes. The item codes most apparently indicate only the design code. Other sales as reflected in the paper under consideration are found to be transacted out of books. In view of this, taking into consideration the totality of the facts, the addition with respect to this items is hereby confirmed.

However the appellant has remained silent with respect to the other sale in the US dollars. From other purpose it is found that the appellant has sold the items even without mentioning item codes.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per the details noted on the above paper, total 2 items of jewellery have been sold for a total consideration of Rs. 8.31 lakh. Item code is mentioned on the paper.

Appellant has shown that the two stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted on the above seized paper, total 8 items of jewellery have been sold for a total consideration of Rs. 11,43,000. There is a clear mention of item no. and value of each item on the seized paper. Name of customer is not mentioned on the paper. Appellant has submitted the item no. R16-1431 and E19-
3011 mentioned on the above loose sheet were sold in FY 2019-20, which were duly recorded in books of accounts. Item bearing code no. R-5258, E19-3734,
R19-1248, E13-2664, E18-4219 and E18-102 are included in the list of stock prepared by departmental valuers.

Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books. Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold.
There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization/pick & choose by customers using the various item codes. Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey.

Appellant has shown that the stated item codes R-5258, E19-3734, R19-1248,
E13-2664, E18-4219 and E18-102 are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby partly confirmed (Codes R16-1431 & E 19-
3011 of Rs. 3,36,000).

As per the details noted on the above paper, total 5 items of jewellery have been sold for a total consideration of Rs. 88.00 lakh to a customer named, Smita, who is KamayaniJi's relative. There is a clear mention of item no, and value of each item written on the paper.

In this case the appellant has not reconciled the item codes N16-1673 and N19-
207. The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the Amrapali Jewels Pvt. Ltd. vs. ACIT reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes (N16-
1673 and N19-207) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly(Rs. 19,50,000).

As per the details noted on the above paper, total 3 items of jewellery have been sold for a total consideration of Rs. 10,13,000/- to a customer whose e mail address and mobile no. is mentioned on the paper. There is a clear mention of item no and its sale value is also written on the paper.

Appellant has submitted that Item bearing code no. EA-7653 is included in the list of stock prepared by departmental valuers.

Appellant has shown that the stated item codes EA-7653 is mentioned in the inventory sheet of the official valuers prepared during the survey.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

Appellant has further submitted that the item no. B19-794 mentioned on the above loose sheet were sold in FY 2019-20, which were duly recorded in books of accounts. And Item no. N19-854 sent to Hyderabad franchise vide transfer invoice dated 19.06.2020. Amrapali Jewels Pvt. Ltd. vs. ACIT

Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the ld. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books. Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold.
There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization / pick & choose by customers using the various item codes. Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby partly confirmed (codes N19-854 & B19-794 of Rs. 9,95,000).

As per the details noted on the above paper, total 5 items of jewellery have been sold for a total consideration of Rs. 1,76,500/- to a customer named, Nitisha and one item has been sold to Jaspreet for Rs. 3.30 lakh. Thus, total sales as per this seized paper are amounting to Rs. 5,06,500/- Item code & item name and amount also mentioned on the paper.

Appellant has contended that the item no. E18-3000 mentioned on the above loose sheet were sold in FY 2019-20, which were duly recorded in books of accounts and Item bearing code no. E14-658 and E18-1827 are included in the list of stock prepared by departmental valuers.

Regarding the sale bill filed which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in tae books.
Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold. There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization / pick & choose by customers using the various item codes. Similar is the scenario with respect to item
Appellant has shown that the stated item codes E14-658 and E18-1827 are mentioned in the inventory sheet of the official valuers prepared during the survey.
Further remaining items code are not mentioned on the paper.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed partly (codes E18-3000 of Rs.29,000/-).

Appellant has contended that there is no date mentioned on the loose sheet and no clarity in the above loose sheet.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per the details noted on the above paper, total 5 items of jewellery have been sold for a total consideration of Rs. 56,00,000/-. From the notings on the seized page, it is clear that all the figures written on this paper are in lakhs. There is a clear mention of item description and item number along with value of each jewellery on the seized paper. Name of customer is not mentioned on the paper.
The appellant has mainly made two contentions. Firstly the date/year of the sale is not proved and that item bearing code no. N-7989, N18-538, N16-263, N15-134
and N14-483 are included in the list of stock prepared by departmental valuer.

There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted on the above paper, 2 items of jewellery have been sold for a total consideration of Rs. 21.35 lakh to a customer named, Gujjar. There is clearly mention of item description and number along with value of each jewellery item.

The appellant has mainly made two contentions. Firstly the date/year of the sale is not proved and that this noting related to quotation given to customer regarding certain items.

There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted on the above paper, total 5 items of jewellery have been sold for a total consideration of Rs. 40.55 lakhs. From the notings, it is clear that all the figures written on this paper are in lakhs. There is a clear mention of item description and item number along with value of each jewellery item. Name of customer is not mentioned on the paper.

The appellant has mainly made two contentions. Firstly the date/year of the sale is not proved and that item bearing code no. N17-137, N12-747 and N18-229 are included in the list of stock prepared by departmental valuer.
The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes (N
18-20 & N-8046) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly (Rs. 15,10,000).

As per the details noted on the above paper, a total 11 items of jewellery have been sold for a total consideration of Rs. 42.76 lakh. From the notings, it is clear that all the figures (Except one figure of Rs. 48,000/-) written on this paper are in lakhs. There is a clear mention of item description and item number along with value of each jewellery item on the seized paper.

The appellant has mainly made two contentions. Firstly the date/year of the sale is not proved and that item bearing code no B12-154, B14-1094 and B-2244 are included in the list of stock prepared by departmental valuers.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey.

Further, appellant itself is also silent about the remaining items.

The impounded paper under consideration does not show whether sufficient strength of the probability that the unaccounted sale in cash was done by the appellant. Accordingly even though in the later part of this paragraph the addition
Amrapali Jewels Pvt. Ltd. vs. ACIT has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes (CON
19-331, R 18-457, E14-579, E15-3574, B15-1069, R16-830) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly Rs. 10,66,000).

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that these are deaf and dumb piece of paper.

Regarding the contention of the appellant that these are deaf and dumb piece of paper only, the onus is on the appellant as per section 292C of the act. It has been seen from other papers also that the appellant has been in the business of making jewellery as per the requirement of the customers and appellant has involved in out of the books cash sales of jewellery. Contents of the document strongly indicate that sale was made by the appellant. Hence the contention of the appellant in this regard is hereby rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

The appellant has mainly made two contentions. Firstly the date/year of the sale is not proved and that item bearing code no B12-697 and E19-3040 are included in the list of stock prepared by departmental valuers.

Appellant has shown that the stated item codes B12-697 and E19-3040 are mentioned in the inventory sheet of the official valuers prepared during the survey.
Further on perusal of said paper it is found that other four items code are not mentioned on the paper.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted on the above paper, total 6 items of jewellery have been sold for a total consideration of Rs. 17,68,000/- to a customer named, Shashi
SahayJi The sale value written on this paper are in lakh as well as in thousands of rupees. Item code of some articles are also mentioned on the paper.

The appellant has mainly made contentions that paper contains noting of working of customer enquiry of the certain jewellery items and these are deaf and dumb piece of paper.

In this case the appellant has not reconciled the item codes neither with the stock valuation sheet prepared by the official valuers and nor with the invoices -whereas in similar such other cases the appellant has reconciled the item code. This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale.
62. Page No. 40 of Annexure-AS/3, Addition in assessment order-Rs. 19,60,000

As per the details noted on the above paper, total 3 items of jewellery have been mentioned for a total consideration of Rs. 19,60,000/- for a family consisting of 3
members. The sale value written on this paper are in lakh as well as in thousand of rupees. Item code, name of customer etc. is not mentioned on the paper. The appellant has contended that the above rough paper contains noting of working of customer enquiry of the certain jewellery items.

On perusal of the said paper it is found that on that paper customer name, item code etc. not mentioned. Further, there is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted on the above paper, total 5 items of jewellery have been sold for a total consideration of Rs. 1,71,000/-. Item code, name of customer etc. is not mentioned on the page. Item code, name of customer etc. is not mentioned on the paper. The appellant has contended that the above rough paper contains noting of working of customer enquiry of the certain jewellery items.

On perusal of the said paper it is found that on that paper customer name, item code etc. not mentioned. Further, there is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

On perusal of the said paper it is found that on that paper item code etc. not mentioned. Further, there is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

As per the details noted on the above seized page, 8 items of jewellery have been sold for a sum of Rs. 12,42,150. Item code and amount of each item clearly mentioned on the paper.

The appellant has made contention that item bearing code no M 15-28 is included in the list of stock prepared by departmental valuers. The relevant page of valuation report is available on page no. 1165 of PB Vol. 7. Appellant itself is also silent about the remaining seven items.

Appellant has shown that the stated item code M 15-28 is mentioned in the inventory sheet of the official valuers prepared during the survey. The impounded paper under consideration does not show whether sufficient strength of the Amrapali Jewels Pvt. Ltd. vs. ACIT probability that the unaccounted sale in cash was done by the appellant.
Accordingly even though in the later part of this paragraph the addition has been confirmed to the extent of non-reconciled item codes however the reconciled item codes are not treated as sold due to the weak nature of the document. The scenario in this paper under consideration is different from the papers where strong evidence or indicators of sale are mentioned on the paper and it has been held that unaccounted sale has taken place even when the item codes have matched with inventory/invoices.

At the same time in this case the appellant has not reconciled the item codes( N
18- 91, N18-58, N17-766, N16-1046, N 16-954, M17-46 & B14-357) neither with the stock valuation sheet prepared by the official valuers and nor with the invoices whereas in similar such other cases the appellant has reconciled the item code.
This shows that these items were in existence with the appellant however these have been removed from the official records and are not in inventory also on the date of survey. The presumption under section 292C is also in favour of the revenue. The totality of the facts leads to the conclusion that these item codes jewellery items were sold out of books as mentioned in the loose papers or through some other sale for which the document could not be found. It is a settled law that unaccounted transactions take place in secrecy and direct evidence of such transactions is very rarely available and are to be decided on the basis of circumstantial evidences. Accordingly the sale with respect to the non reconciled item codes is treated to have taken place in unaccounted manner and the addition is hereby confirmed partly (Rs. 12,11,450)

As per assessment order this seized page, 7 articles were sold for Rs. 33,70,091/.
Another two articles were sold for Rs. 1,74,69,698/- & Rs. 3,33,580/-. The total unaccounted sale as per this seized page works out to Rs. 2,11,73,369/-.

The appellant has made contention that details noted on paper has no relation to sales and purchase of items. Further, there was no date mentioned on the above rough sheet and this page is part of diary of calendar year 2017. On perusal of paper it appears to be related to C Form / F Form sales. For the last two items on the page there is no form mentioned. Further there is no item code, no customer related identity details, no product details etc.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

The appellant has mainly made two contentions. Firstly the year of the sale is not proved and secondly that the item no. E14-3476 was transferred to Chennai
Franchiees vide invoice dated 06.02.2020. Regarding the sale bill filed -which has not been examined which are not admitted being additional evidence as there is no reference to the same in PB Pages 1151-
1164 which is the reply of the appellant before the Id. AO on the issue. There is no reply on this page in annexure at PB Pages 1156 to 1164. These have not been verified by the AO and are to be treated as self-serving documents not warranting any relief. Learned AO is also stated in the assessment order that the appellant has not been able to reconcile the same in the books. Further despite of the above observation regarding the invoices, the marking on the paper clearly shows sold.
There is no proof from the appellant that same design items are not manufactured again once or after they are sold/transferred to franchise. Whereas the documents impounded during the survey and as discussed in this ground of appeal shows otherwise i.e. customization / pick & choose by customers using the various item codes. Similar is the scenario with respect to item is stated to be transferred to the franchisee. This contention of the appellant is hereby rejected.

In view of the above discussion, as per preponderance of probabilities, addition with respect of this paper is hereby confirmed.

As per this seized page, two articles were sold for Rs. 15,50,000/- & Rs. 3,75,000/- respectively to Ms Sharadha Upadhyaya on 06.06.2020. Item code, customer name, gross weight, gold weight, stone weight & amount are clearly mentioned on the paper.

The appellant has mainly made two contentions. Firstly this is a rough paper and secondly that item codes N13-765 and E-A-7719 are mentioned in the valuation report of the official valuer.
70. Page No. 35 back of Annexure-AS/13, Addition in assessment order-Rs
9,50,000

As per this seized page, an article was sold for an amount of Rs. 9,50,000/. This amount is written on the seized paper with suppression of five zeroes. Item code, gross weight of item, gold weight, diamond weight etc. clearly mentioned on the paper.

The appellant has contended that the item no. R16-184 was sold at delhi showroom vide invoice dated 28.012.2019. A copy of said invoice is available on page no. 1170 of PB Vol. 7. Appellant has shown that the stated item codes are mentioned in the invoice which was also submitted to the ld. AO.

Appellant has shown that the stated item codes are mentioned in the inventory sheet of the official valuers prepared during the survey. There is no rebuttal of the same in the assessment order. The details in the paper do not indicate with reasonable certainty that there is sale out of books of accounts. In view of this the addition with respect to these items is hereby deleted.

In view of the above discussion, as per preponderance of probabilities, the contents of the documents do not sufficiently show sale out of books of accounts, accordingly, addition with respect of this paper is hereby deleted.

The Addition sustained in this ground of appeal is summarized and tabulated as under:-
I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the assessment order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:-
(i) As stated in the assessment order, during the course of survey at the H.O. cum showroom of M/s Amrapali Jewels Pvt. Ltd., physical verification of high value jewellery items, having a tag price of Rs. 10 Lakhs and more was made on an item-to-item basis. This exercise revealed that a total of 41 high value items of jewellery having total tag price of Rs. 11.40 Crores were not found on physical verification at the premises. During the course of survey at Head Office cum
Showroom situated at Panch Batti, Jaipur and Ashok Marg, C-Scheme, Jaipur on 13.07.2020, it is noticed that a total of 41 high value items of jewellery having total tag price of Rs.11,40,00,000/- were not found on physical verification at the premise.

(ii) In the statement recorded on oath u/s 131 of the Act on the date of 16-07-2020
Shri Rajesh Ajmera, Director of the assessee company was confronted on this discrepancy and asked to explain the same. He could not explain this discrepancy.
He gave three clarifications as under:-

(a) 9 items have been sent for repairs.

(b) appellant gives discount on the tag price in the wholesale sales.

(c) tag price of one item was erroneous.

Even for the remaining 32 items there is no clarification at all in the statement recorded of the director of the company.

Issue of items sent for repairs:-

(iii) Shri Rajesh Ajmera, Director of the assessee company stated that nine items were sent for repairs. There is no explanation available with the director with respect to the remaining 32 items. Further regarding the 9 items which were claimed to have been sent for the repairs, it was asked from the director of the company to furnish the challan in support of this claim however the same were not produced and it was stated that such documents will be produced within 15 days however even after lapse of very long period such documents were not produced.
And have not been furnished till date. As per the appellant the details of the items were furnished on 05.04.2021 this letter only has an annexure having the list of items along with some names and dates claiming to be the names of the persons to whom such items were sent for repair. However the documents like challan, gate pass, acknowledgement of the receiver, the terms of the repairs required, repair cost quote document by the artisan, etcetera were not furnished. None of such documents were found during the survey not even for one of such items.
(iv) In the letter dated 05.04.2021 (Pg 905 of PB) the appellant has claimed that 11
items were traced on the date of survey itself and were shown on 13.07.2020. However the statement appears to be baseless and mere self-serving. There is no reference to any document prepared on the date of survey or statement recorded during the survey in which such matching of 11 items is discussed. Further in the Amrapali Jewels Pvt. Ltd. vs. ACIT statement of the director recorded on 16.07.2020, the director was asked to reconcile the missing 41 items (and not the missing 30 items). In the reply also the director is not referred to such 11 items and he has only referred to the claim that 9
items were sent on repairs. Thus on 16.07.2020, statements/language of both the revenue authorities as well as of the appellant, shows that none of the party had any doubt that all the 41 items were still unreconciled and unverified. Thus the assertion in this letter, after nine months of the survey and that too without any supporting, is rejected.

In the appeal proceedings the appellant has claimed that these 41 items were not sold and 30 items out of 41 were sent for repairing/rework/refurbishing to various suppliers. Appellant has submitted a list in this regard providing details of items which were sent for repair or re-work.

(v) As the initial response on 16.07.2020, it was stated by the director of the company that 9 items were sent for the repairs. However much later on 05.04.2021
the appellant has claimed that 30 items were sent for repairs. Even the appellant has indirectly accepted that 11 items were sold out of books as there is no explanation in this regard even after the finding of such sales in the assessment order. Further the contention of the appellant that 30 items were sent for repairs, is a clear case of improvement and afterthought in an effort to artificially explain the missing items. At the same time neither the documents which could support and show that the items were sent for repairs, were found during the survey and nor such documents were furnished subsequently. Non discovery of such documents during the survey and no explanation from the appellant regarding the absence of such documents during the survey, clearly points towards the fact that such documents were not in existence on the date of survey.

(vi) It is beyond human probabilities and as per normal business practices no businessman would give such precious high-value items without any record and documentation and acknowledgement to the job workers who are very small time workers and do not even have PAN in most of the cases as is seen from the affidavits furnished by the appellant as additional evidences during the appeal.
(viii) The Id. AO in the remand report has objected to the admission of the additional evidence in this regard. Concurring with the same these affidavits have not been admitted in the earlier part of this order dealing with the legal issue of the admission of the additional evidences. The learned AO has also stated that "on bare perusal of same it was noticed that these affidavits were purchased on 20.12.2023 i.e. after lapse of around three and half year. No such documents were filed by the assessee during the post search proceedings as well as during the assessment proceedings. Therefore, no cognizance of the same is required to be taken as it is a mere afterthought". The issue was also raised in the statement of the director of the company on 16-07-2020 under section 131 of the Act.

(ix) As is inferred from the discussion above the affidavits furnished by the appellant are of not so well to do or the poor individuals. The appellant has not produced any documents that these repairers have worked for the appellant in the past. Regular old relationship has not been established. The appellant has not shown how the details of the requirements of the repair were communicated to the individuals. Precise details are required to be communicated for the desired repairs outcome. There was no acknowledgement from these repairers found during the course of survey. From the details furnished by the appellant it is seen that the items were in the possession of these parties/individuals for number of months whereas the appellant has not shown on what security and guarantee such costly items were handed over to these individuals. It is seen that the appellant itself is not clear for what purposes the items were sent as it is stated by the appellant in the submissions that the items were sent for repairing/rework/refurbishing.

(x) These affidavits are silent on why and for what purpose these affidavits have been prepared. These affidavits are also silent on the various issues as discussed above of the procedure and the details of requirement from the appellant and the amounts charged etcetera. These affidavits also do not have any enclosure of the documents received from the appellant along with the jewellery items when such items. were allegedly given for the repairing/rework/refurbishing to substantiate the contents of the affidavits. The affidavits are also silent on the specific history and relationship of the individuals with the appellant. Bills raised by them are also not referred. At the same time the appellant itself is a manufacturer of the jewellery and its associated concerns are also in the same business, in such a case the claim of sending the jewellery items to the individuals with whom the appellant has claimed the relationship in terms of only 'repairs' is very much unprobable and unlikely. The tasks performed by such individuals as stated by them in their affidavits appear to Amrapali Jewels Pvt. Ltd. vs. ACIT be very basic like cleaning and polishing, laser soldering. stone polishing, stone change, daak change etc. and one person Mr Ankur Jain has stated to have done all these tasks in his affidavit with respect to various different items. Such tasks can easily be done by the manufacturing team of the appellant as well as of its group entities and as well as by the manufacturing job workers. In fact one of the affidavit is from one of the group entity of the appellant. However at the same time the appellant has not furnished the balance sheet and the profit and loss account etcetera of Amrapali design studio to see whether the income on account of repairs is being shown in the earlier years as well. At the same time if the item was given in repair to the group entity that should have been immediately informed during the survey and after the survey as the employees and the directors of the appellant company had sufficient time and opportunity to recall the details and also discuss the things amongst themselves. However that was not done. It shows afterthought on account of the appellant.

(xi) As per the details submitted by the appellant, items were given to Ankur Jain on 12 May 2020 which was the lockdown period due to Covid 19. And the items are also stated to be have been received back during the same Covid period during which lockdowns were being observed. This shows that the contention of the appellant that the items were given on repairs is not reliable.

(xii) The post search enquiries had revealed that sale of such high value items was not recorded in the regular books of a/c of the assessee. Further, the assessee was also not able to co-relate the purchase of these high value items from the regular books of account. As such these high value items were prima facie transacted outside the books of account.

(xiii) The conclusive inference from the totality of the facts and circumstances is that the contention of the appellant that these items were given on repairs is unreliable and baseless and is rejected and further that these affidavits have apparently been obtained artificially. In view of this discussion, these affidavits are found to be unreliable and are rejected on the merits also.
Finding of ld. CIT(A) on the addition of Rs. 11,65,000/- made u/s 69C of the Act

During the course of survey proceedings at the business premises of appellant
Company situated at K-14B, Ashok Marg, C-Scheme, Jaipur, certain incriminating documents were found and seized as per Annexure-AS. Learned AO has noted that expenses of Rs. 11,65,000/- were made under various heads by the appellant and the same are held to be unexplained under section 69C of the Act..

Appellant has submitted that (i) back side of page no. 115, (ii) page no. 119, (iii) page no. 120 and (iv) Back side of Page no. 122 of Exhibit-3 of Annexure-AS are part of Personal Diary of one employee Mr. Himanshu Danghi

The appellant had contended before the Id. AO that Mr. Himanshu Danghi has already left the organization in the 2018-19 i.e., approx. 1 to 1.5 year earlier than the date of Survey and he was looking after matters related with Franchisee of the company. This diary is related to calendar year 2018 and all these pages were of Oct 2018. As it can also be seen that this Rough Diary is of any DS Group
(Dharampal Satypal Group), not of assessee company. On top of the page
(Personal Memorandum) of this diary he has written his personal details viz his name, address, details of his Insurance Policy, his PAN number, details of his
Back side of page number 115 of Exhibit -3 of Annexure AS:

The Id. AO has on perusal of this page noticed that expenses of Rs.2,00,000/- were made under various heads by the assessee. The part of the document relied upon in the assessment order is a dumb document as there is neither reference to appellant or appellant's business, nor details of parties/purpose deciphered to whom such payment was done, nor the document is also not referred in any statement recorded or other enquiries and also the diary has been explained to be belonging to ex-employee and date also explained by appellant. In view of the discussion in the paragraphs above of this ground of appeal and in this para, and considering the submissions of the appellant, this addition is hereby directed to be deleted.

Page number 119 of Exhibit -3 of Annexure AS:

The Id. AO has observed that on perusal of page no.119 of Exhibit-3 of Annexure-
AS, that expenses of Rs. 2,10,000/- were made under various heads by the assessee. Ld. AO has mentioned 'heads' in the assessment order whereas the relevant part of the documents refers to some names. The part of the document relied upon in the assessment order is a dumb document as there is neither reference to appellant or appellant's business, nor no details of parties (except some first names)/purpose deciphered to whom such payment was done, nor the document is also supported through any statement recorded or through an enquiries and also the diary has been explained to be belonging to ex-employee and date also explained by appellant. In view of the discussion in the paragraphs above of this ground of appeal and in this para, and considering the submissions of the appellant, this addition is hereby directed to be deleted.
Page number 120 of Exhibit 3 of Annexure AS:

The Id. AO has held that expenses of Rs.2,00,000/- were made under various heads by the assesse. Id. AO has mentioned heads' in the assessment order whereas the relevant part of the documents refers to some names as well. The relevant part of the notings refer to instalment', 'AK', Bhim ji' etc. and opposite the total 'net required' has been written. Which shows the expenditure had not been incurred. The part of the document relied upon in the assessment order is a dumb document as neither there is reference to appellant or appellant's business, nor details of parties (except some first names)/purpose deciphered to whom such payment was done, nor the document is also not supported through any statement recorded or through an enquiries and also the diary has been explained to be belonging to ex-employee and date also explained by appellant. In view of the discussion in the paragraphs above of this ground of appeal and in this para, and considering the submissions of the appellant, this addition is hereby directed to be deleted.

Back side of page number 122 of Exhibit -3 of Annexure AS:

Ld. AO has held that expenses of Rs.5,55,000/- were made under various heads by the assesse. Ld. AO has mentioned 'heads' in the assessment order whereas the relevant part of the documents refers to some names like Abhishek, Sanjay,
Om Singh etc. and no heads are mentioned. Except name and amount nothing is mentioned. The part of the document relied upon in the assessment order is a dumb document as there is neither reference to appellant or appellant's business, nor no details of parties (except some first names)/purpose deciphered to whom such payment was done, nor the document is also supported through any statement recorded or through an enquiries and also the diary has been explained to be belonging to ex-employee and date also explained by appellant. In view of the discussion in the paragraphs above of this ground of appeal and in this para, and considering the submissions of the appellant, this addition is hereby directed to be deleted.
6. First, we take up the appeal filed by the assessee. Since the facts of the case were already stated here in above at para 3 above, the same are not repeated here. In this appeal filed by the assessee they have raised as much as 23 grounds of appeal as stated vide para 2.1 above. The issue /
addition made in the assessment order and disputed by both the parties before this tribunal is summarized herein below:
Sr.
No.
Particulars
Amount
Remarks
1. Addition on account of alleged excess stock computed based on the valuation report u/s. 69B of the Act
141,35,81,694/-
Enhanced by Ld.
CIT(A)
2. Addition in respect of high value items allegedly found short during survey proceedings
11,40,00,000/-
Confirmed by Ld.
CIT(A)
3. Addition in respect of alleged unaccounted sale based on loose papers found during survey
24,95,17,849/-
Addition of Rs.18,15,12,563
deleted by Ld.
CIT(A) and Rs.
6,80,05,286
confirmed by CIT(A)
4. Addition in respect of alleged unaccounted expense of different amount – u/s. 69C of the Act
11,65,000/-
1945 pages. As is evident that the assessee got the partial relief from the order of the ld. CIT(A) and for the sustained addition the assessee in appeal. In support of the various grounds so raised ld. AR of the assessee filed the following written submission:
BRIEF FACTS:
1. Date of survey 13.07.2020
2. Premise covered under survey are:
a.
Head Office – C Scheme Ashok Marg b.
Head Office – Museum at Basement c.
Panch Batti – Jaipur.

ASSESSEE SUBMISSION – LOCATION WISE
S.
No.

Location
ASSESSEE SUBMISSION
1. Stock at HO,
Head Office, -
C-Scheme
Ashok Marge
1. Modus operandi adopted for valuation : Raw material approach a term coined by Ld. CIT(A) i.e. estimated the gold component in jewelry item, its purity, precious stone etc. and arrived at market value of the same as on 13.07.2020(date of survey).

@ 3800/- per 1 gm
(Page No.864, Vol. 5)
3
Kailash Chauhan
@ 50500/- per 10 gms
(Page No.850 of PB,
3. The Ld. CIT(A) adopted an adhoc approach of applying 47% on Excel Price (Tag Price) to arrive at cost of inventory/stock. (Refer
Para No. xxx at Page No. 167 of CIT(A) order).

The Assessing Officer has adopted valuation reports of the department valuers as such and made addition u/s 69B (Refer Page
No. 52 of AO Order)

Relevant Findings of the Ld. CIT(A)

Submission of the Assessee Page No. 55 onwards
Submission with respect to Section 69B – Page No. 55-61
Discrepancies in valuation Page No. 62-75
Findings of the Ld. CIT(A) (Page No. 134 onwards), Relevant
Page No. 140

Para No. (xv) Page No. 148, the exercise of finding of the market price of the gold and silver used in the jewelry on the date of survey cannot form the basis for making addition u/s 69B of the Act.
Para No. (xviii) Page No. 150, the valuation report of the Assessee suffers from the same infirmities as highlighted against the valuation by the official valuers.
Para No. (xxi) Page No. 152: Appellant valuer also valued item from description made in excel sheet and not of actual items.
valuation done at market rate.
Para No. (xxii) Page No. 153-154, the method adopted by department valuer of raw material-based valuation is rejected and approach should be averaging based approach, which is directed to be applied at all the locations where the valuation was carried out by the official valuers.
Mr. Rajesh Ajmera taking the median rate of 40%.
Para No. (xxix) Page No. 165, considering increase in metal prices rate of reduction by 47% on tag price excel sheet applied.

Written Submission Reference (Vol. 9 paper Book, Internal
Page)

• The detailed written submission was made against Ground No. 8
from para 75-85
• The Appellant in Page No.75-82 in Para A under Para No. 98 of its written submission has contended and established that valuation was on assumption and presumption
• At Page No.82, Para No. 108-109, the Appellant has specifically contented that no responsible person was present at time of valuation.
• Page No.83, Para No.115, it was duly submitted that there was no dispute in quantity, moreover, there is no addition made u/s 69 of the Act.
• Page No.90, Para No.134-135 specific discrepancies in valuation were highlighted, which were further explained in Para No. 135
ASSESSEE SUBMISSION about adopting adhoc approach of valuation at 67%, 65% and 60%
after reducing 33%, 35% and 40% from excel/tag price.
3. Museum
The Ld. CIT(A) gave direction to the Ld. AO and remanded the issue to Ld. AO with direction resulting into enhancement of addition without any notice u/s 251(2) of the Act

Written Submission Reference (Vol. 9 paper Book, Internal
Page)

• Page No.51, Para A.10, it was submitted that Jewellery mounting to Rs. 1.90 crore belong to company and rest belong to other). The jewellery
• Amount taken by department valuer is of Rs. 1,54,82,625/-(Refer
Page No. 42 of Submission), which is valuation at market rate only
Other submission as for Head Office and PanchBatti.
4. Stock at Mumbai
Branch
1. Physical verification was not done by Delhi, Mumbai and other
Branches including Franchise Stock
2. Notional calculations done by Ld. AO for making impugned addition on estimations, assumption and presumption.
3. The data of closing stock was taken by Ld. AO from incomplete/incorrect tally data (Reference 19 of AO Order, reproducing our written submission) a. The balance sheet on face of it shows opening balance difference b. Depreciation entries not passed c. There is variance in sundry debtor and credits as compared to audited financials d. Inter branch or HO accounts shown which are nullified on consolidation e. Certain stock transfer entries and sales and purchase entries are not entered in the above tally.
4. Pick and choose adopted by Ld. AO (Delhi Excel sheet, Mumbai and Bangalore branches incomplete Tally) (Reference Page No. 50
• Page No.53-55, Para no.C.1, C.2, C.3(detail of Valuation)
• Page No.88-89, Para No.128-132(Different valuation approach by department and tally data is incomplete and incorrect)
• Page No.126(Vol-1), Q. No.24(Rajesh Ajmera stated that cost price is lesser than the transfer value), therefore, the excel price is neither selling price nor cost price.

Written Submission Reference (Vol. 9 paper Book, Internal
Page)

• Page No. 51, Para No.A.10 (Stock lying in Delhi is as per computerized stock list)
• Page No.52, Para No.B.2(No physical verification)
• Page No.88-89, Para No.128-130(Different branches different method of valuation)
7. Stock at Franchisees
No Physical verification
AO has accepted taken the value as per our books, which is accepted and not disputed. (Reference Page no. 941 of PB Vol. 5.).
This acceptance also implied accept the cost valuation of Rs. 132
Crore taken by Assessee as per books of accounts as no dispute raised on cost given for Franchise items.

Written Submission Reference (Vol. 9 paper Book, Internal
Page)

• Page No. 59-61(No physical verification, balance receivable from consignee as on 31.03.2020 was Rs. 37,15,798/- PB No. 964 of Vol. Vol-6. • No accounting was done before the survey
• Followed by custom documents in the same paper book like pages
967, 968, 1015
• Invoice at Page No. 990 verifiable from custom document at 1015
• Invoice for entry at page no. 963, r.w.s. custom document at 1016
• verification submitted during hearing

• Page No. 61-63, (No physical verification, Tally taken by department was incomplete (Page No. 1039 of Vol. 6)
• Corrected Tally Ledger available in Paper book in Vol. 6 at page
No. 1034-35, 1037-1038
• Custom documents also in said paper book followed by said invoices
• verification submitted during hearing

i.
List of books of accounts impounded during survey in Annexure
A Exhibit 1 to 6
105-109
Vol. 1

ii.
List of books of accounts impounded during survey in Annexure
A Exhibit 1 to 15
110-111
Vol. 1

iii.
List of books of accounts impounded during survey in Annexure
A Exhibit 1 to 4
112-113
Vol. 1

iv.
List of books of accounts impounded during survey in Annexure
A Exhibit 1 to 16
114-117
Vol. 1

v.
Other documents
118-121
5. Copy of the Statement of Mr. Rajesh Ajmera u/s 131 of the Act from 14.07.2020 to 16.07.2020
122-144
Vol. 1
6. Copy of objection letter to Ld. DIT(Inv.), Jaipur dated 21.07.2020
145-146
Vol. 1
7. Copy of Valuation reports of Independent Valuer Mr. Kamal Kumar
Kasliwal dated 30.07.2020
147-838
Vol. 2
Vol. 3
Vol. 4
8. Copy of valuation report of Stock in trade by Department valuer Mr.
Kailash Chauhan
839-851
Vol. 5
9. Copy of valuation report of Stock in trade by Department valuer Mr.
Kamal Kant Parekh
852-861
Vol. 5
10. Copy of valuation report of Stock in trade by Department valuer Mr.
Jagdish Chandra Jajoo
862-867
Vol. 5
11. Copy of objection letter dated 18.08.2020 against the valuation done by Income Tax Department
868-870
Vol. 5
12. Copy of letter dated 11.03.2021 submitted by Assessee regarding details of stock in trade as on 31st March 2020 and 13th July 2020. 871-875
Vol. 5
13. Copy of letter dated 11.03.2021 submitted by Assessee for details of jewellery along with ownership at Museum.
876
Vol. 5

Copy of Annexure 1 of above letter containing details of Jewellery &
Articles at Museum of:
i.
Mr. Rajiv Arora ii.
Rajiv Arora HUF iii.
Mr. Rajesh Ajmera iv.
Mrs. Neeru Arora v.
Amrapali Jewels Pvt. Ltd.

877
878
879
880
881-882
Vol. 5
14. Copy of Notice issued u/s 143(2) of the Act dated 21.02.2022
883-890
Vol. 5
15. Copy of letter in response to notice issued u/s 143(2) of the Act
891
Vol. 5
16. Copy of Notice issued u/s 142(1) of the Act dated 23.11.2022
892-902
Vol. 5
17. Copy of Reply dated 30.11.2022 submitted in response to point no. 1
to 4 of notice issued u/s 142(1) of the Act dated 23.11.2022
903-904
Vol. 5

i. Copy of Annexure 5 of above reply containing letter submitted to DDIT (Inv.) with complete details of items sent for repair.
905-908
Vol. 5
18. Copy of Reply dated 23.12.2022 submitted in response to point no. 5
of notice issued u/s 142(1) of the Act dated 23.11.2022. 909-936
Vol. 5

i. Copy of Annexure 1 of above reply containing details of stock lying at branches/other outlets and Franchisees and Consignment agent as at 31.03.2020 and 13.07.2020 to ADIT Inv. - 3, Jaipur
937-941
Vol. 5

ii. Copy of Annexure 2 of above reply which is submission of Assessee dated 21.07.2020
942-943
Vol. 5

iii. Copy of Annexure 3 of above reply which is valuation report of Department Valuer Mr. Kamal Kant Parekh
Refer S.No.
7
Vol. 5

iv. Copy of Annexure 4 of above reply which is objection dated
18.08.2020 of Assessee on methods adopted by Departmental
Valuers
944-948
Vol. 5

v. Copy of Annexure 5 of above reply which is month wise rate chart of Gold and Silver of last 3-4 year downloaded from RBI site.
949
Vol. 5

vi. Copy of Annexure 6 of above reply which details of jewellery along with ownership at Museum.
950-956
Vol. 5

vii. Copy of Annexure 7 of above reply which is copies of tax invoice for stock transfer from Bangalore to HO.
957-962
Vol. 5

viii. Copy of Annexure 8 of above reply which is related to returns of consignment sales to USA.
963-1033
Vol. 6

ix. Copy of Annexure 9 of above reply which is details of stock lying with consignee (USA) as on 31.03.2020
963-1033
1034-1137
Vol. 6

xi. Copy of Annexure 11 of above reply which is details of stock lying with consignee (UK) as on 31.03.2020
1034-1137
Vol. 6

xii. Copy of Annexure 12 of above reply which is related to returns of consignment sales to Doha Jewellery Exhibition.
1138-1146
Vol. 6

xiii. Copy of Annexure 13 of above reply which is related to returns of consignment sales to Hongkong.
1147-1150
Vol. 6
19. Copy of Reply dated 23.12.2022 submitted in response to point no. 7
of notice issued u/s 142(1) of the Act dated 23.11.2022. 1151-1285
Vol. 7
20. Copy of Reply dated 23.12.2022 submitted in response to point no. 8
to 11 of notice issued u/s 142(1) of the Act dated 23.11.2022. 1286-1291
Vol. 7
21. Copy of letter dated 08.12.2022 by Assessee requesting for basis of value stock in trade.
1292-1294
Vol. 7
22. Copy of notice dated 21.12.2022 providing basis of value of stock in trade.
1295-1310
Vol. 7
23. Copy of Reply dated 23.12.2022 submitted in counter of notice dated
21.12.2022. Refer S.no.
18
Vol. 7
24. Copy of Valuation reports of Independent Valuer Mr. Kamal Kumar
Kasliwal dated 05.08.2020 for head office
1311-1365
Vol. 8
25. Copy of valuation report of Stock in trade by Department valuer Mr.
Jagdish Chandra Jajoo for Panch Batti Store
1366-1511
Vol. 8
26. Copy of Written submission filed before the Ld. CIT(A)on 06.12.2023
1512-1727
Vol. 9
27. Copy of synopsis of case filed before the Ld. CIT(A) on 06.11.2023. 1728-1732
Vol. 9
28. Copy of Reply dated 06.12.2023 filed in response to the query asked during the hearing held on 23.11.2023.Ld. CIT(A) on 20.12.2023
1733-1735
Vol. 9
29. Copy of application of additional evidence filed before the Ld. CIT(A)
ON 20.12.2023
1736-1754
Vol. 9
30. Copy of remand report dated 25.01.2024
1755-1760
Vol.9
31. Copy of Reply dated 20.12.2023 filed in response to query asked during the hearing held on 06.12.2023. 1761-1770
Vol. 9
32. Copy of Reply dated 26.12.2023 filed in response to query raised during hearing held on 20.12.2023. 1771-1910
Vol. 9
33. Copy of reply dated 19.01.2024 filed before the Ld. CIT(A) with respect to the query asked during the hearing held on 10.01.2024,
1911-1932
Vol. 9
34. Copy of Reply dated 08.02.2024 filed in response to the remand report.
1933-1937
Vol. 9
35. Copy of reply filed before the Ld. CIT(A) on 10.01.2024
1938-1939
Vol. 9
36. Copy of reply dated 24.01.2024 filed in response to query asked during the hearing held on 19.01.2024. 1940-1941
Vol. 9
37. Copy of Further submission in respect of Ground no.8 dated
29.02.2024. 1942-1943
Vol. 9
38. Copy of Further submission in respect of Ground no. 8 dated
01.03.2024

1944-1945
Vol. 9
Index of Documents
S. No.
Particulars
Page No.
1. Pictures of Various Jewellery Items presented as illustrations on how jewellery items in stock are reworked to convert into a different jewellery item & for which 1-17
Details of Break-up of Manufacturing Cost as reflected in Audited Financial
Statements (Refer Note No. 22 of Audited Financial Statements of AY 2021-22)
18
3
Details of Break-up of cost of Goods Sold as reflected in Audited Financial
Statements (Refer Note No. 19-20 of Audited Financial Statements of AY 2021-
22
19

Section 69B in terms requires that the Assessing Officer has to first 'find' that the assessee has 'expended' an amount which he has not fully recorded in his books of account. It is only then that the burden shifts to the assessee to furnish a satisfactory explanation. Till the initial burden is discharged by the Assessing Officer, the section remains dormant. [Para 8]

A 'finding' obviously should rest on evidence. In the instant case, it is common ground that no incriminating material was seized during the search which revealed any understatement of the purchase price. That is precisely the reason why the Assessing Officer had to resort to Rule 3 of Schedule III to the Wealth Tax Act. [Para 9]

Section 69B does not permit an inference to be drawn from the circumstances surrounding the transaction that the purchaser of the property must have paid more than what was actually recorded in his books of account for the simple reason that 1-6
265 of the Constitution of India and Entry 82 in List I of the Seventh Schedule thereto which deals with 'Taxes on income other than agricultural income'. [Para 11]

Applying the logic and reasoning in K.P. Varghese v. ITO
[1981] 131 ITR 597 / 7 Taxman 13 (SC), for the purposes of section 69B it is the burden of the Assessing Officer to first prove that there was understatement of the consideration
(investment) in the books of account. Once that undervaluation is established as a matter of fact, the Assessing Officer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the investment. One such yardstick can be the fair market value of the property determined in accordance with the Wealth Tax Act.
[Para 12]

Since the entire case has proceeded on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account, the decision of the Income-tax Authorities cannot be approved. Section 69B was wrongly invoked. The order of the Tribunal is upheld. [Para 15]

12-
31
Section 69B of the Act is not applicable if AO does not prove that the Assessee has made purchase which exceed the purchase recorded in the books of account

36-52
Physical Verification is important for invoking Section 69B

So far as addition of income which is at Rs. 41,51,301 is concerned this is mainly for the reason that the Assessing
Officer has not properly appreciated the accounting system followed by the respondent and about the valuation of stock. The assessee has calculated the valuation of the closing stock on the basis of the cost price or market price, whichever is lessor, which is always permissible as per the principle of accountancy.
The documents contains the balance sheet, trading and profit and loss account, inventory of stock and valuation of stock for the period 1-4-2001 to 25-9-2001 showing net profit of the assessee at Rs. 41,81,301. In fact, this is an error committed by Assessing Officer without appreciating the fact that what is the basic principles of valuation of the closing stock.

In view of the principles propounded by the Supreme Court the valuation of closing stock may be 'as per the stock price or as per the market price, whichever is lower,' and, therefore, the additions made by the Assessing Officer were wrong. This principles have been properly appreciated by the Commissioner
(Appeals) and the Tribunal.

186-
193
No addition under 69B of the Act if no discrepancy in the physical quantity of stock

Where there was practically no difference in physical inventory taken by survey team vis-a-vis inventory as per Books of Account, impugned addition made on account of difference in value of stock was to be deleted
194-
202
No Section 69B addition merely on basis of statement

Commissioner (Appeals) has rightly, which was confirmed by the Tribunal. [Para 11]

No addition under 69B of the Act if books are rejected

225-
226
18. Commissioner of Income-tax v.
Gurubachhan
Singh
J.
Juneja
[2008] 171 Taxman
406 (Gujarat)

229-
238
20. Shri Nawal Kishore
Central Circle - 3
Jaipur,
ITA
No.
1256,
1257,
&
1258/JP/2019, dated 15.09.2020

239-
287
Affidavit cannot be rejected without cross examining the person filing affidavit

According to the assessee, the jewelleries belonged to different members of the family, as mentioned above. We have already noticed that the mother-in-law of the assessee changed her locker and kept the jewelleries with her daughter because in her original locker, jewelleries were being damaged due to defect in that locker. This fact is supported by her letter addressed to the bank and the reply furnished by the bank against that letter copies of which have been annexed with the Paper Book which have been noticed by us.
Similarly, small amount of jewellery weighing 40 gm. belonged to the grand-mother of the assessee. Being an old lady, she kept the jewellery with the assessee for safe custody. This fact is also supported by the affidavit sworn by her. Moreover, these two ladies had disclosed their jewelleries under the V.D.I.
Scheme.
The quantity of jewellery belonging to each person mentioned above is insignificant and not exceeding 358 gms. in each hand. It is true that an affidavit is a self-serving statement sworn by the deponent. In the case of Mehta Parikh & Co. v. CIT [1956] 30
ITR 181, the Hon’ble Supreme Court has held that unless the person making the statement in the affidavit is cross-examined by the revenue, it is not open to the revenue to challenge the correctness of the statement made by the deponent in the affidavit. Similar view has been taken by the Allahabad High
Court in the case of L. Sohan Lal Gupta v. CIT [1958] 33 ITR
786. The assessee has also filed a copy of the Instruction No.
288-
289
1916 dated 11-5-1994 issued by the CBDT where it has been held that as a common approach, at the time of search, ornaments to the extent of 500 gms. for a married lady should not be seized. The aforesaid instruction issued by the Board is based on the customary practice prevailing in the Indian society.
It is presumed that each member of the family shall possess some jewellery which was either inherited by her or she got it by way of presentation at the time of marriage and other occasions.
Therefore, looking to the circumstances of the case, we do not find any infirmity in the impugned order passed by the CIT
(Appeals).

In addition to the above case law compilation, ld. AR of the assessee further submitted additional case law compilation on this issue which reads as under;
S.
No Case law
Relevant portion
Page
No.
To Invoke Sec 69/69A/69B, the burden of proof lies on Revenue

Books of accounts not maintained; thus, no addition can be made u/s 69B
11. Dr. Prakash Tiwari v.
Commissioner of Income-tax
[1983] 14 Taxman 252 (MP)
5. We have heard the learned counsel for the parties. The learned counsel for the assessee contended that as the assessee did not maintain any account, section 69B of the Act was not applicable and, therefore, the Tribunal was not justified in adding Rs. 10,000 as the income of the assessee from undisclosed sources. In our opinion, on the facts and in the circumstances of the case, reference to section 69B was not appropriate because the assessee did not maintain any accounts. However, the matter is squarely governed by section 69 of the Act which provides that : "Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the ITO, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year."
(Para 5)
85-86
12. Shri Nanda Ram V & PO Bilu,
Makrana, Nagour V/s ITO,
Ward-1, Makrana I.T.A. No.
190/Jodh/2024 &
191/Jodh/2024 Assessment
Years: 2014-15- & 2017-18-
Income Tax Appellate
Tribunal Jodhpur Bench
Refer S.NO 2
7-52

Miscellaneous
13. Mehta
Parikh
&
Co.
v.
Commissioner of Income-tax
[1956] 30 ITR 181 (SC) CIVIL
It has to be noted, however, that beyond these calculations of figures, no further scrutiny was made by the Income-tax Officer or the Appellate Assistant
87-93
Commissioner, nor the Income-tax Officer, who was present at the hearing of the appeal before the Appellate Assistant Commissioner, considered it necessary to call for them in order to cross-examine them with reference to the statements made by them in their affidavits. Under these circumstances it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits.
14. Ushakant
N.
Patel*
v.
Commissioner of Income-tax
IT REFERENCE NO. 287 OF 1994 DECEMBER 22, 2005
[2006]
154
TAXMAN
55
(GUJ.) HIGH COURT OF GUJARAT
13. The Tribunal lost sight of the fact that section 69
of the Act opens with the words "where in the financial year immediately preceding the assessment year, the assessee has made investment...". Therefore, in the first instance it was incumbent upon the authority to establish that there were investments made by the assessee; that such investments were not recorded in the books of account maintained by the assessee; and that, such investments had been made in the financial year immediately preceding the assessment year in question. Unfortunately, despite the CIT(A) having recorded a categorical finding, the Tribunal has failed to appreciate the said finding and dealt with the same without giving cogent reasons. If the Tribunal found that the said finding was not correct, it was necessary for the Tribunal to have recorded reasons for reversing the same. The observation of the Tribunal that the difficulty as to financial year had to be finalised in accordance with the provisions and the date of search and seizure is too general and vague. It does not indicate anything. When the provision requires fulfilment of certain prerequisite conditions before the assessee can be called upon to explain, the Tribunal has to record its finding on this issue in a specific manner, because the case of the assessee all along has been that in the first place the seized documents do not reflect any investments, in the second place, even if the entries could be treated as investments made by the assessee, it was further necessary to show that such investments have been made by the assessee in the financial year immediately preceding the assessment year and are not recorded in the books maintained by the assessee. The Tribunal’s order does not record any findings. In fact, the Tribunal is 94-98
18. Going further ld. Senior counsel referring to Page no. 28 of PB Vol. I contended that AO committed error in quoting closing stock as per books of accounts at Rs. 1,26,08,60,402/- instead of Rs. 1,32,77,94,165. The said erroneous figure of closing stock has arrived on account of adoption of incorrect figure of opening stock at Rs. 120,17,89,418/- instead of Rs.
126,90,17,876/- as per audited financials at Page no. 28 of PB Vol. I.
Further while arriving at such an impugned balancing figure of closing stock as on date of survey, the AO assumed the GP rate of 30% as against the declared GP rate of 34.32% by the assessee. This all shows the way the assessee treated.
19. Ld. Senior counsel further argued that Ld. CIT(A) was not justified in estimating the cost of the stock on the basis of excel sheets impounded during survey by giving deduction of 47% to excel price (tag price) taking reference from the statement of Mr. Rajesh Ajmera, during survey. It has been contended that it is common knowledge and accepted trade practice in jewellery trade that tag price is the suggested maximum retail price and Amrapali Jewels Pvt. Ltd. vs. ACIT not the actual sale price on which discounts are being offered while negotiating the final deal with the customers.
20. Ld. Senior Counsel has vehemently argued that statement of Mr.
Rajesh Ajmera dated 16.07.2020 (PB No. 125-127 in Vol. I) is of no consequence and the same in any case cannot be made the foundation/basis for arriving at cost of the stock. Mr. Rajesh Ajmera has not made any statement that there was an understatement of purchase price or there was any extract consideration paid for purchases made by Assessee.
Mr. Rajesh Ajmera has categorially stated that stocks are valued at current market rate by the departmental however, the goods in stock were purchased in last 4 years which rate is approx. 33% lower than current market rate. He further challenging the valuation of stock at branches argued that different yardsticks have been adopted by the department as per departments convenience to maximize additions in as much as while for Delhi Branch, the valuation has been confirmed on excel price list without any deduction, but for Mumbai and Bangalore Branch, the stock has been taken from incomplete tally accounts for which specific inconsistencies were pointed out by drawing attention to written submission placed before CIT(A). It was also contended that no physical verification was done at any of the branches, thus, the question of excess stock does
Amrapali Jewels Pvt. Ltd. vs. ACIT not arise at all. Thus, modes operandi for determining stock for those locations were based on assumption, presumption and guess work and that is why the addition cannot be made u/s. 69B of the Act. In support of that contention he referred the various judgement cited herein above. It was a matter of fact that for determining the excess stock at least two things are mandatorily required i.e. quantity as per books and physical quantity. Here that is not the case of the assessee as no difference was found and recorded by the survey team. Thus, if that data is not present in no manner the excess quantity can be ascertained and thereby no addition can be done u/s. 69B of the Act.
21. Similarly, the valuation of stock lying with consignment agents, the values reported in ledger account of consignment stock as on date of survey from incomplete tally accounts have been taken, which has occurred due to omission of certain entries, which was explained through supporting evidence put forth during assessment as well as appellate proceedings. However, the same was doubted by the authorities below.
23. The ld. DR was heard in detail on the various dates as mentioned above who relied on the findings of the lower authorities. Ld. DR also filed a detailed written submission which we reproduce herein below for the better understanding of the stand taken by the revenue: -.
“The appellant has placed reliance on the judgement in the case of Principal
Commissioner of Income-tax v. Bajargan Traders [2017] 86 taxmann.com 295
(Rajasthan)[12-09-2017]. In this judgement of Hon’ble High Court, inter-alia, the following paras of the order of Hon’ble ITAT have been extracted:-
“2.7. It is further submitted that the real issue in this case is whether the excess stock surrendered should be made as a part of business income or not and if so, assessee can claim deduction on account of payment of remuneration to partners on account u/s 40b(v). In this regard, our reference was drawn to the decision of Co-ordinate Bench in case of Shri Ramnarayan Birla (in ITA No. 482/JP/15 dated
30.09.2016). In that case, the question before the Coordinate Bench was "whether the CIT(A)-2, Udaipur has erred in directing the AO to assess the unexplained investment surrendered by the assessee under the head "income from Business"
ignoring the decision of the Hon'ble Gujarat High Court in the case of Fakir Mohd.
Hazi Hasan 247 ITR 290 that unaccounted income ought to be categorized under the residuary head of 'Income from other sources'. In respect to the said issue, the findings of the Coordinate Bench are as follows:
"We have heard the rival contentions and perused the material available on record. Undisputed facts emerged from the record that at the time of survey excess stock was found. It is also not disputed that assessee is engaged in the business of jewellery. During the course of survey excess stock valuing Rs.
77,66,887/- was found in respect of gold and jewellery. The Coordinate Bench in the case of Choksi Hiralal Mangnlal v. DCIT 131, TTJ (Ahd.) 1 has held that in a cases where source of investment/expenditure is clearly identifiable and alleged undisclosed asset has no independent existence of its own or there is no separate physical identity of such investment/expenditure then first what is to be taxed is the undisclosed business receipt invested in unidentifiable unaccounted asset and only on failure it should be considered to be taxed u/s 69 on the premises that such excess investment is not recorded in the books of account and its nature and source is not identifiable. Once such excess investment is taxed as undeclared business receipt then taxing it further as deemed income under section 69 would not be necessary. Therefore, the first attempt of the assessing authority should be to find out link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish nexus and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. It is observed that there is no conflict with the decision of Hon'ble
Gujarat High Court in the case of Fakir Mohd. Jajihasan (supra) where investment in an asset or expenditure is not identifiable and no nexus was established then with any head of income and thus was not available for set off against any loss under any other head. Therefore, the Hon'ble Coordinate Bench held that where asset in which undeclared investment is sought to be taxed is not clearly identifiable or does not have independent identity but is integral and inseparable
(mixed) part of declared asset falling under a particular head, then the difference should be treated as undeclared business income explaining the investment. In the present case the excess stock was part of the stock. The revenue has not pointed out that the excess stock has any nexus with any other receipts. Therefore, we do not find any fault with the decision of the ld. CIT(A) directing the AO to treat the surrendered amount as excess stock qua the excess stock found."
2.10. We have heard the rival contentions and perused the material available on record. During the course of survey, the assessee has surrendered an amount of Rs. 70,04,814/- towards investment in stock of rice which had not been recorded in the books of accounts. Subsequently, in the books of accounts, the assessee has incorporated this transaction by debiting the purchase account and crediting the income from undisclosed sources. In the annual accounts, the purchases of Rs.
70,04,814/-were finally reflected as part of total purchases amounting to Rs.
33,47,19,658/- in the profit and loss account and the same also found included as part of the closing stock amount to Rs. 1,94,42,569/-in the profit/loss account since the said stock of rice was not sold out. In addition to the purchase and the closing stock, the amount of RS. 70,04,814/- also found credited in the profit and loss
Amrapali Jewels Pvt. Ltd. vs. ACIT account as income from undisclosed sources. The net effect of this double entry accounting treatment is that firstly the unrecorded stock of rice has been brought on the books and now forms part of the recorded stock which can be subsequently sold out and the profit/loss therefrom would be subject to tax as any other normal business transaction. Secondly, the unrecorded investment which has gone in purchase of such unrecorded stock of rice has been recorded in the books of accounts and offered to tax by crediting the said amount in the profit and loss account. Had this investment been made out of known source, there was no necessity for assessee to credit the profit/loss account and offer the same to tax.
Accordingly, we do not see any infirmity in assessee's bringing such transaction in its books of accounts and the accounting treatment thereof so as to regularise its books of accounts. In fact, the same provides a credible base for Revenue to bring to tax subsequent profit/loss on sale of such stock of rice in future.
2.11. Having said that, the next issue that arises for consideration is whether the amount surrendered byway of investment in the unrecorded stock of rice has to be brought to tax under the head "business income" or "income from other sources".
In the present case, the assessee is dealing in sale of foodgrains, rice and oil seeds, and the excess stock which has been found during the course of survey is stock of rice. Therefore, the investment in procurement of such stock of rice is clearly identifiable and related to the regular business stock of the assessee. The decision of the Co-ordinate Bench in case of Shri Ramnarayan Birla (supra) supports the case of the assessee in this regard. Therefore, the investment in the excess stock has to be brought to tax under the head "business income" and not under the head income from other sources". In the result, ground No. 1 of the assessee is allowed.”
(Emphasis supplied)
As per the above judgement (i) source of investment/expenditure is (should be) clearly identifiable and (ii) undisclosed asset has no independent existence of its own or (iii) there is no separate physical identity of such investment/expenditure
Further, in the judgement of Hon’ble High Court in the case of Principal
Commissioner of Income-tax v. Bajargan Traders [2017] 86 taxmann.com 295
(Rajasthan)[12-09-2017], the paras from the judgement of Hon’ble ITAT in the case of ‘Bajargan Traders’ have been extracted and in the judgement of the Hon’ble ITAT there is reference and reliance upon another judgement of Hon’ble
ITAT in the case of Shri Ramnarayan Birla (in ITA No. 482/JP/15 dated
30.09.2016).
Hon’ble ITAT in the case of Shri Ramnarayan Birla (in ITA No. 482/JP/15 dated
30.09.2016) which is relied upon by the Hon’ble ITAT in the case of Bajrang
Traders, it is held by the Hon’ble ITAT that the first attempt of the assessing authority should be to find out link of undeclared investment/expenditure with the known head, give opportunity to the assessee to establish nexus and if it is satisfactorily established then first such investment should be considered as undeclared receipt under that particular head. Hon’ble Supreme Court in Devi
Prasad Vishwanath [1969] 72 ITR 194 (SC) has given a verdict upholding the reverse view that onus to identify the source solely lies on the assessee and it cannot be shifted to the assessing authority.
Hon’ble ITAT in the case of Shri Ramnarayan Birla (in ITA No. 482/JP/15 dated
30.09.2016) which is relied upon by the Hon’ble ITAT in the case of Bajrang
Traders, it is held by the Hon’ble ITAT that “The revenue has not pointed out that the excess stock has any nexus with any other receipts”. As as per judgement of Hon’ble Supreme Court there is no onus on the assessing authority to look for or identify the sources. As per the ratio of the judgement, it cannot be the case that if the AO has not proved the source from some other receipts then the source is to be treated as business income of the year.
Hon’ble Supreme Court in the case of Commissioner of Income-tax v. Devi Prasad
Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968, held that onus to identify the source cannot be shifted on the assessing authority. If the assesse claims so, the assesse is required to prove the same. This judgement has been referred in detail in the later part of this order.
Hon’ble ITAT in the case of Shri Ramnarayan Birla (in ITA No. 482/JP/15 dated
30.09.2016) which is relied upon by the Hon’ble ITAT in the case of Bajrang
Traders, also observed that the in the case of Choksi Hiralal Mangnlal v. DCIT
131,
TTJ
(Ahd.)
1
“has held that in a cases where source of investment/expenditure is clearly identifiable and ……...”
Even as per the judgement of Hon’ble ITAT referred in the judgement of Bajarang
Traders (supra), source of investment/expenditure must be clearly identifiable. The onus in this regard is on the assessee to prove the source.
The appellant has not referred to judgement of Hon’ble Supreme Court in the case of Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR 194
(SC)[01-08-1968. Wherein the similar underlying legal principle as discussed in the judgement referred by the appellant has been discussed and decided in favour of the revenue. As per the judgement of Hon’ble Supreme Court, unexplained credit
(or stock) cannot be presumed to be business income. Onus to identify the source cannot be shifted on the assessing authority. If the assesse claims so, the assesse is required to prove the same.
Further, in the case also it is held by the Hon’ble Supreme Court in the case of Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-
1977] that even after the items (stock in trade) were “introduced in the books of account of its business”, the assessee was still required to “to prove satisfactorily the nature and source of these assets” and in the event of failure to prove these,
“the revenue could legitimately hold that these assets represented the undisclosed income of the assessee”.
The Hon’ble Supreme Court in the case of Commissioner of Income-tax v. Devi
Prasad Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968] has held as under:-
“There is nothing in law which prevents the Income-tax Officer in an appropriate case in taxing both the cash credit, the source and nature of which is not satisfactorily explained, and the business income estimated by him under section 13 of the Income-tax Act, after rejecting the books of account of the assessee as unreliable. This was so decided in Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1 (SC). Whether in a given case the Income-tax
Officer may tax the cash credit entered in the books of account of the business, and at the same time estimate the profit must, however, depend upon the facts of each case.
……………
The High Court, in disposing of the application under section 66(2), expressed the view that because the amount of Rs. 20,000 was entered in the books of account of the business, there was some material to hold that the amount was income of the assessee from the business and not from some other source. But it was not open to the High Court to direct the Tribunal to state a case on a question which was never raised before or decided by the Tribunal at the hearing of the appeal.
The question again assumes that it was for the Income-tax Officer to indicate the source of the income before the income could be held taxable and unless he did so, the assessee was entitled to succeed. That is not, in our judgment, the correct legal position. Where there is an explained cash credit, it is open to the Income-tax
Officer to hold that it is income of the assessee and no further burden lies on the Income-tax Officer to show that that income is from any particular source. It is for the assessee to prove that even if the cash credit represents income it is income from a source which has already been taxed”.
As per the headnotes “Section 145 of the Income-tax Act, 1961 [Corresponding to section 13 of the Indian Income tax Act, 1922] - Method of accounting - System of accounting - Assessment year 1946-47 - Whether where there is an unexplained cash credit it is open to ITO to hold that it is income of assessee and no further burden lies on ITO to show that income is from any particular source - Held, yes”.
As per the above judgement, the observations of the Hon’ble Allahabad High Court that because the amount was entered in the books of account of the business, there was some material to hold that the amount was income of the assessee from the business and not from some other source, were not approved by the Hon’ble
Supreme Court and was reversed, as it was held by the Hon’ble Supreme Court
Amrapali Jewels Pvt. Ltd. vs. ACIT that it assumed it was for the Income-tax Officer to indicate the source of the income which was not the correct legal position and that where there is an explained cash credit, it is open to the Income-tax Officer to hold that it is income of the assessee and no further burden lies on the Income-tax Officer to show that that income is from any particular source. It is for the assessee to prove that even if the cash credit represents income it is income from a source which has already been taxed.
In the case of Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938
(SC)[08-03-1977] it is held by the Hon’ble Supreme Court as under:-
“Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the revenue is entitled to treat it as taxable income. This was laid down as far back as 1958
when this court pointed out in A.
Govindarajulu
Mudaliar v. Commisioner of Income-tax [1958] 34 ITR 807 , 810 (SC) that:
"There is ample authority for the position that where an assessee fails to prove satisfactorily the source and nature of certain amount of cash received during the accounting year, the Income-tax Officer is entitled to draw the inference that the receipts are of an assessable nature."
To put it differently, where the nature and source of a receipt, whether it be of money or of other property, cannot be satisfactorily explained by the assessee, it is open to the revenue to hold that it is the income of the assessee and no further burden lies on the revenue to show that that income is from any particular source. vide
Commissioner of Income-tax v. Devi
Prasad
Vishwanath
Prasad [1969] 72 ITR 194 (SC). Here, in the present case, the assessee introduced in the books of account of its business on 30th March, 1948, capital of Rs. 3,33,414 which consisted of gold rawa, gold ornaments, stones and cash. The burden of accounting for the receipt of these assets was clearly on the assessee and if the assessee failed to prove satisfactorily the nature and source of these assets, the revenue could legitimately hold that these assets represented the undisclosed income of the assessee…..”
(emphasis supplied)
In the case of Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963]
50 ITR 1 (SC)[08-02-1963] it is held by the Hon’ble Supreme Court as under:-
“It seems to us that the answer to this question must be in the affirmative and that is how it was answered by the High Court. It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him. If he disputes liability for tax, it is for him to show either that the receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the Income-tax Officer is Amrapali Jewels Pvt. Ltd. vs. ACIT entitled to treat it as taxable income:
see A.
Govindarajulu
Mudaliar v. Commissioner of Income-tax [1958] 34 ITR 807 (SC)”.
As per judgements of Hon’ble Supreme Court in the case of CIT v. M.Ganapathi
Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR
807 (SC), where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assesse, it is not necessary for the department to locate its exact source.
Referring to the above judgements of Hon’ble Supreme Court, it is held by the Hon’ble ITAT in the case of Navin Shantilal Mehta v. Income-tax Officer, Ward-32
(2) (4), Mumbai [2018] 90 taxmann.com 16 (Mumbai - Trib.) as under:-
“3.2 As per section 68 of the Act, onus is upon the assessee to discharge the burden so cast upon. First burden is upon the assessee to satisfactorily explain the credit entry contained in his books of accounts. The burden has to be discharged with positive material (Oceanic Products Exporting Co. v. CIT [2000] 241 ITR 497
(Ker.). The legislature had laid down that in the absence of satisfactory explanation, the unexplained cash credit may be charged u/s 68 of the Act. Our view is fortified by the ratio laid down in Hon'ble Apex Court in CIT v. P.
Mohankala [2007] 291 ITR 278/161 Taxman 169. A close reading of section 68
and 69 of the Act makes it clear that in the case of section 68, there should be credit entry in the books of account whereas in the case of 69 there may not be an entry in such books of account. The law is well settled, the onus of proving the source of a sum, found to be received/transacted by the assessee, is on him and where it is not satisfactorily explained, it is open to the Revenue to hold that it is income of the assessee and no further burden lies on the Revenue to show that income is from any other particular source. Where the assessee failed to prove satisfactorily the source and nature of such credit, the Revenue is free to make the addition. The principle laid down in CIT v. M. Ganpati Mudaliar [1964] 53 ITR 623
(SC)A. Govinda Rajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC) and also CIT v.
Durga Prasad More [1969] 72 ITR 807 (SC) are the landmark decisions. The ratio laid down therein are that if the explanation of the assessee is unsatisfactory, the amount can be treated as income of the assessee. The ratio laid down in CIT v.
Daulat Ram Rawatmal [1973] 87 ITR 349 (SC) further throws light on the issue. In the case of a cash entry, it is necessary for the assessee to prove not only the identity of the creditor but also the capacity of the creditor and genuineness of the transactions. The onus lies on the assessee, under the facts available on record. A harmonious construction of section 106 of the evidence Act and section 68 of the Income Tax Act will be that apart from establishing the identity of the creditor, the assessee must establish the genuineness of the transaction as well as the creditworthiness of the creditors. In CIT v. Korlay Trading Co. Ltd. [1998] 232 ITR
820 (Cal.), it was held that mere mention of file number of creditor will not suffice and each entry has to be explained separately by the assesseeCIT v. R.S.
Rathaore [1995] 212 ITR 390/86 Taxman 20 (Raj.). The Hon'ble Guwahati High
Court in Nemi Chandra Kothari v. CIT [2003] 264 ITR 254/[2004] 136 Taxman 213
held that transaction by cheques may not be always sacrosanct. ………”.
(Emphasis Supplied)
In the following cases the excess stock was upheld as taxable in the context of section 69/69B of the Act:-
In the case of Neeraj Agrawal v. Deputy Commissioner of Income-tax [2023] 152
taxmann.com 632 (Allahabad - Trib.) it is held by the Hon’ble ITAT as under:-
Headnote extracts:-
INCOMETAX : Where during survey at premises of assessee manufacturing and trading silver ornaments certain excess stock of silver ornament was found to which assessee did not give any explanation at time of survey, explanation of assessee at time of assessment that it had purchased certain artificial silver jewellery which was not entered in stock register was merely an afterthought and therefore, Assessing Officer rightly made additions with respect to difference in physical stock of silver ornaments found during survey and stock as per stock register
INCOMETAX : Where during survey at premises of assessee, manufacturing and trading silver and gold ornaments, certain gold ornaments were found regarding which assessee did not give any explanation at time of survey but during assessment proceedings contended that same was purchased from 14 different persons who were not registered with VAT/Commercial Tax department, and purchases were claimed to be made by assessee just few days prior to date of survey, such explanation was not believable and, therefore, addition made by Assessing Officer in respect of same was to be upheld
In the case of Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income-tax
[2022] 138 taxmann.com 19 (Madhya Pradesh)/[2022] 286 Taxman 680 (Madhya
Pradesh)/[2022] 446 ITR 539 (Madhya Pradesh)[18-02-2022], it is held by the Hon’ble Madhya Pradesh High Court as under:-
Headnote:-
Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Stock) -
Assessment year 2005-06 - Assessee was engaged in manufacturing and trading of edible oils and grains - Assessing Officer having found that value of stock shown by assessee in stock statement as on 28-3-2005 submitted to bank was far in excess to value of stock shown in audit report for period ending 31-3-2005 and difference was to extent of Rs. 2.71 crores and assessee despite opportunity afforded could not either reconcile difference or explain reasons therefor, treated difference amount as unexplained investment in stock from undisclosed sources and added same to total income of assessee under section 69B - Commissioner
(Appeals) deleted impugned addition by referring to a chart indicating stock position as on 28-3-2005 submitted to bank with stock position as per stock register on 28-3-2005 - Tribunal held that assessee was bound to explain
Amrapali Jewels Pvt. Ltd. vs. ACIT difference either before Assessing Officer or before Commissioner (Appeals) or before Tribunal and same was not done - It taking view that excess stock represented income of assessee from undisclosed sources, set aside order of Commissioner (Appeals) and upheld order of Assessing Officer - It was noted that once it was found by Assessing Officer that there was excess stock, in absence of explanation by assessee, conclusion was inescapable that excess stock, if any, was from undisclosed sources - Further once assessee's explanation, if any, had not been accepted, resultant position was that there was excess stock undisclosed in books of account and non disclosure was only with a view to suppress income -
Whether order of Assessing Officer and that of Tribunal deserved to be affirmed -
Held, yes [Para 10] [In favour of revenue]
(emphasis supplied)
SLP against the above judgement Suraj Bhan Oil (P.) Ltd. v. Deputy
Commissioner of Income-tax [2022] 138 taxmann.com 19 (Madhya Pradesh) was dismissed by Hon’ble Supreme Court. Reported at [2022] 141 taxmann.com 477
(SC)/[2022] 288 Taxman 635 (SC)[25-07-2022]
Headnote:-
Section 69B of the Income-tax Act, 1961 - Undisclosed investments (Stock) -
Assessment year 2005-06 - Assessee was engaged in manufacturing and trading of edible oils and grains - Assessing Officer found that value of stock shown by assessee in stock statement as on 28- 3-2005 submitted to bank was far in excess to value of stock shown in audit report for period ending 31-3-2005 and despite opportunity afforded assessee could not either reconcile difference or explain reasons therefor - Hence, Assessing Officer treated difference amount as unexplained investment in stock from undisclosed sources and added same to total income of assessee under section 69B - Commissioner (Appeals) deleted impugned addition by referring to a chart indicating stock position as on 28-3-2005
submitted to bank with stock position as per stock register on 28-3-2005 - Tribunal observed that assessee was bound to explain difference either before Assessing
Officer or before Commissioner (Appeals) or before Tribunal and since same was not done, Tribunal set aside order of Commissioner (Appeals) and remanded matter back to Assessing Officer for adjudication afresh - High Court by impugned order upheld order of Assessing Officer and that of Tribunal taking view that excess stock represented income of assessee from undisclosed sources -
Assessee filed Special Leave Petition against above impugned order, however, after arguing for sometime sought permission to withdraw SLP - Whether therefore, SLP was to be dismissed as withdrawn - Held, yes [Para 3] [In favour of revenue]
In the case of SVS Oil Mills v. Assistant Commissioner of Income-tax, Non
Corporate Circle-6(1), Chennai [2020] 113 taxmann.com 388 (Madras)/[2020] 269
Taxman 508 (Madras)/[2019] 418 ITR 442 (Madras)[26-03-2019], it is held by the Hon’ble Madras High Court as under:-
Jewellery or other valuable articles (including excess Stocks as well) would have been more appropriate Section to be indicated in the orders passed by the Authorities below rather than Section 69C-Unexplained Expenditure. Nonetheless, we are of the clear opinion that mentioning of wrong section would not upset the Additions made by the Assessing Authorities below in the present case. All these 5
provisions enumerated above have been enacted with a view to bring to tax the unexplained debit balances in the Balance Sheet of the Assessee either in the form of Unexplained Investments, Expenses or Stocks, etc., or unexplained
Assets, Money, Bullion, Jewellery, etc., and therefore, such unexplained investments and expenses intended to be brought to tax as Undisclosed Income, these provisions are not only clearly worded but also indicated to plug the loopholes and check the menace of black money. Likewise, unexplained credits in the Balance Sheet are also brought to tax under Section 68 of the Act.
9. In the light of the above, the contention raised by the learned counsel for the Assessee has essentially emanated from a misconception that the Additions made under Section 69B/69C have to be reduced to some extent by giving leverage to the Assessee to claim some deductions from these Additions as well. If the contention of the learned counsel for the Assessee was to be accepted viz., by allowing the purchases corresponding to the alleged excess stock, the Assessee will have to now record verifiable purchases in his Books of Accounts and for that he will have valid purchase Invoices from genuine and existing Sellers which is not possible. When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because such purchases had already been recorded in the books of accounts of the Assessee. Therefore, the excess stock, per se, has to be naturally brought to tax as 'undisclosed income' by itself and there is no question of any corresponding deduction from that in such cases.
10. In our opinion, the learned Tribunal as well as the Authorities below were justified in bringing to tax the Undisclosed Income under Section 69B/69C of the Act and such findings of fact do not give rise to any substantial question of law.
The order passed by the learned Income Tax Appellate Tribunal, Ahmedabad
Bench does not enure to the benefit of the arguments advanced by the learned
Senior Counsel as there also the learned Tribunal has rightly held that the value of excess stock of Rs.58,02,095/-should suffer tax and by inclusion of those Stocks in the value of Closing Stock the Assessee has recognised income over and above recorded in its Books of Accounts. Such Additions of the excess Stocks declared by the Assessee during the course of search in the closing stock does not amount to double taxation as contended. Mere remand of the case by the Ahmedabad
Such Additions of the excess stocks declared by the Assessee during the course of search/survey in the stock does not amount to double taxation as contended.
[SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-
6(1), Chennai [2020] 113 taxmann.com 388 (Madras)]
Verifiable Purchase behind the stock otherwise unexplained:
If the contention of the Assessee/Appellant was to be accepted viz., by allowing the purchases corresponding to the alleged excess stock, the Assessee will have to now record verifiable purchases in his Books of Accounts and for that he will have valid as well as back-dated purchase Invoices from genuine and existing
Sellers which is not possible. When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because actual purchases had already taken place and already been recorded in the books of accounts of the Assessee.
[SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-
6(1), Chennai [2020] 113 taxmann.com 388 (Madras)]. Thus this is an impossible proposition of going back in time.
Head of Income
Regarding the contention of the appellant regarding applicability of charge to tax under a particular head, the question arises whether the income subject matter of addition is chargeable to tax as per provisions of chapters on salary, profits and gains of business and profession Or capital gain Or income from house property
Or income from other sources. If the same is chargeable to tax under these chapters as per specific provisions contained therein (even before application of provisions of section 68/69/69A etc.) then section 115BBE will not have application.
Section 28 is not an inclusive definition as the opening sentence of the section 28
reads as under:-
“The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession",—”
Accordingly, in case the appellant claims that the income is chargeable under the head business income and nowhere else, the onus is on the appellant to show under which clause of section 28 the claimed income gets covered. Even as per judgement in the Principal Commissioner of Income-tax v. Bajargan Traders, the “source of investment/expenditure is clearly identifiable” i.e. the source must be clearly identifiable.
In this regard, as per provisions of the Act, not only the source but the year of earning of income also needs to be shown for taxing in the current year under assessment/appeal as the law provides that income for each year be taxed in the ITR/assessment of that year only. This also has ramifications on the interest payable by the taxpayer because if the income was earned in earlier year and the Amrapali Jewels Pvt. Ltd. vs. ACIT same is being offered to tax now in that case the taxpayer is liable to pay interest for the intervening period. Sections 68/69/69A etc. also provides for year of taxation irrespective of the year of earning of income.
However in case the subject matter of addition is not expressly falling under the four chapters of income heads and for the year under assessment/appeal (before application of provisions of section 68/69/69A etc.) in that case applicability of section 68/69/69A etc. is to be seen. If the sources, genuineness etc. are explained satisfactorily i.e. sources are out of genuine disclosed/taxed income in that case and section 68/69/69A etc. are not applicable even in that case section 115BBE will not have application.
However if the asset/credit/expenditure is treated as income because of the applicability of section 68/69/69A etc. in that case section 115BBE will have application. The incomes mentioned under these sections are not specific to any head of income.
Section 69C even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income.
However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable.
Section 14 of the Income-tax Act, 1961 - Heads of income - Assessment year
1984-85 - Whether opening words of section 14, ‘save as otherwise provided by this Act,’ clearly leave scope for ‘deemed income’ of nature covered under scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from ‘other sources’ - Held, yes. [Fakir
Mohmed Haji Hasan v. Commissioner of Income-tax [2002] 120 Taxman 11
(Gujarat)/[2001] 247 ITR 290 (Gujarat)/[2001] 165 CTR 111 (Gujarat)[10-08-2000]]
These are the special provisions dealing with the situation and the incomes which are the subject matter of the contention in the appeal and being the specific provisions they are preferred and override the general provisions.
Sections
68/69/69A etc.
also provides for year of taxation of asset/credit/expenditure irrespective of the year of earning of the source revenue income (if any).
Year of earning:
If the undisclosed income earned and accumulated over the years is taxed in the year in which it is detected by the Revenue and the same is merely taxed as per normal provisions of the law such an interpretation will place a premium on dishonesty i.e. it tantamounts to rewarding the dishonesty. There is no interest burden on such taxpayer even if the income was earned over past years and there is no extra tax rate and deduction of expenses/losses will also be claimed by taxpayer if the same is taxed as per normal provisions of section 28 and onwards.
When the receipts do not pertain to the year under appeal the appellant should have declared these receipts in the appropriate year to which these receipts belong and the appellant would have paid the taxes on the same along with the penalty if any arising due to the reopening of the case of the earlier year. By offering these receipts as business receipts of the year under appeal the appellant has unfairly tried to save on these accounts. Legally as per section 28 only the income earned during the year can be taxed. The appellant has not disclosed or clarified under which subsection or clause of section 28 the income falls on this account offered by the appellant for the year.
Only by the application of sections 68/69/69A etc. the income is even if earned in earlier year but detected during the year in the form of unexplained credit /
unexplained investment etc. is to be taxed in the year in which the application of such income is found. Once sections 68/69/69A etc. are applicable, there is no dispute regarding the applicability of section 115BBE of the Act.
Complete code:
The opening words of section 14 ‘Save as otherwise provided by this Act’ clearly leave scope for ‘deemed income’ of the nature covered under the scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from ‘other sources’ because the provisions of sections 69, 69A, 69B, and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained.
Section 69C even clearly mentions that such unexplained expenditure will not be deductible under any head of income. Loans given / stock in hand / loan received etc. are otherwise not taxable as these are in the nature of asset/liability/capital nature in the hands of the taxpayer and not in the nature of revenue income.
However when these are unexplained in terms of sections 68/69/69A etc. these become income and become taxable.
These are the special provisions dealing with the situation and the incomes which are the subject matter of the contention in the appeal and being the specific provisions they are preferred and override the general provisions. Once the income is as per these sections, there cannot be any dispute regarding the applicability of section 155BBE of the Act. These sections 68/69/69A etc. along
Amrapali Jewels Pvt. Ltd. vs. ACIT with section 115BBE are in the nature of complete code in itself. In this regard it is held by Hon’ble Gujarat High Court in Fakir Mohmed Haji Hasan v. Commissioner of Income-tax
[2002]
120
Taxman
11
(Gujarat)/[2001]
247
ITR
290
(Gujarat)/[2001] 165 CTR 111 (Gujarat)[10-08-2000] that “6.2 The opening words of section 14 ‘Save as otherwise provided by this Act’
clearly leave scope for ‘deemed income’ of the nature covered under the scheme of sections 69, 69A, 69B and 69C being treated separately, because such deemed income is not income from salary, house property, profits and gains of business or profession, or capital gains, nor is it income from ‘other sources’ because the provisions of sections 69, 69A, 69B, and 69C treat unexplained investments, unexplained money, bullion, etc., and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head, ‘Income from other sources’. Therefore, the corresponding deductions, which are applicable to the incomes under any of these various heads, will not be attracted in case of deemed incomes which are covered under the provisions of sections 69, 69A, 69B and 69C in view of the scheme of those provisions.”
Summary:-
(a)
Onus is upon the assessee to discharge the burden so cast upon. First burden is upon the assessee to satisfactorily explain the source of amount invested / spent in his excess stock. The burden has to be discharged with positive material. [As per principles laid down in Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977], Kale Khan Mohammad Hanif v.
Commissioner of Income-tax [1963] 50 ITR 1 (SC)[08-02-1963], CIT v.
M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu Mudaliar v. CIT
[1958] 34 ITR 807 (SC)].
(b)
As per section 69B of the Act, if the burden is not discharged satisfactorily, it is open to the Revenue to hold that it is income of the assessee and no further burden lies on the Revenue to show that income is from any other particular source. [As per principle laid down in CIT v. M.Ganapathi Mudaliar [1964] 53 ITR
623 (SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807 (SC)].
(c)
Unexplained stock cannot be presumed to be business income. If the assesse claims so, the assesse is required to prove the same. [Hon’ble Supreme
Court in the case of Commissioner of Income-tax v. Devi Prasad Vishwanath
[1969] 72 ITR 194 (SC)[01-08-1968]
Making book entries regarding the excess / unexplained stock does not result into such stock to be treated as explained. The assessee is required to show and explain the source of the investment in such excess or unexplained stock. [Ratio of judgements of Hon’ble Supreme Court in the cases of Commissioner of Income- tax v. Devi Prasad Vishwanath [1969] 72 ITR 194 (SC)[01-08-1968 and Roshan Di
Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-03-1977]
Once it was found by Assessing Officer that there was excess stock, in absence of explanation by assessee, conclusion was inescapable that excess stock, if any, was from undisclosed sources - Further once assessee's explanation, if any, had not been accepted, resultant position was that there was excess stock undisclosed in books of account and non disclosure was only with a view to suppress income. [Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income-tax [2022] 138 taxmann.com 19 (Madhya Pradesh)] [SLP against this judgement was dismissed – reported at [2022] 141 taxmann.com 477 (SC)/[2022]
288 Taxman 635 (SC)[25-07-2022]
(e)
Undisclosed income or undisclosed investment cannot be explained through another unexplained income or unexplained source. That tantamounts to mere creation of an artificial layer. Verifiable purchases should be behind the undisclosed stock detected otherwise such excess stock is to be treated as unexplained.
(f)
Deemed income under sections 68/69/69A etc. is separate from any ‘head of income’. If the assessee claims that the undisclosed investment or undisclosed income falls under any particular head of income, the onus in this regard is on the assessee to show under which clause of with section of the respective head of income the undisclosed income of the appellant gets covered.
(g)
Taxing the undisclosed investment or the undisclosed income at the normal rates of taxes in the year in which these undisclosed were detected rewards the dishonesty. The assessee is not only required to show the sources but also to show with positive evidence the year in which the respective amounts of undisclosed income was earned which were subsequently invested in the undisclosed investment.
Sections 68/69/69A etc. along with section 115BBE are in the nature of complete code in itself.
DR stated that year to year valuation of stock exercise was not done by the assessee and that is why the valuation report of each item was considered to be the correct method to value the stock on hand available with the assessee. The valuation was done by the technical experts in the presence of the assessee and their representative. Thus, the assessee do not have any records to support the closing stock valuation there is no alternative with the revenue left and such high value item. Even the assessee also supported the stock price with the valuation report so as to demonstrate the stock value. The valuation done by the assessee’s appointed valuer also used assumption and presumptions. Thus, when the assessee unable to substantiate the details of the closing stock the revenue in all fairness conducted the valuation of each item and thereby derived the difference which were rightly added in the hands of the assessee. The ld. DR relied on the finding of the ld. CIT(A) recorded vide page 48, 49, 143, 144,145 ,
146 147, 148, 150, 153, 154, 155, 156, 161, 164 & 166 wherein all the contention of the revenue and objections were considered and thereby she
In the statement of Mr. Rajesh Ajmera, he has categorically stated the price mentioned in excel price is after 30-50% discount, so no further deduction or discount was justified. The onus of the Assessee has not been discharged as it could not explain the source of excess stock found during the survey. She further forcefully argued that no details were provided regarding which stones, such as rubies, are overvalued. There is no information about the carat weight or quality of the stones which were overvalued. It is not open to the Assessee to dispute the valuation report of the departmental valuers relied upon by the assessing officer as the Assessee’s own valuation report also uses market rates and therefore, now that the assessee does not maintain the proper records, they cannot raise the question of how they can claim that no items were found outside the books of account.
25. Ld. Sr. Revenue officer further contended that the department has valued the stock by using an Excel sheet found during the survey on the Assessee’s computer. Each item listed in the sheet contains a tag price, so Amrapali Jewels Pvt. Ltd. vs. ACIT there is no notional valuation on the part of the Ld. AO/CIT(A). Software or the excel file prepared from the software during survey proceeding along with the other loose papers and material which had the nature of incriminating document and therefore, the contention of the assessee cannot be relied upon. No evidence has been brought on record as to what was the actual price of stock that was available with the assessee. There was no stock record maintained by the assessee. There was no supporting records made available so as to arrive at the stock available. Even the statement of the Mr. Rajesh Ajmera vide statement himself dealing with question no. 23 (Q. No. 23 PB No. 126/127 of Vol. I, AO Page No. 28) submitted that after giving a discount of 30-50% the cost price derived. Ld.
DR referring the comments in the audit report supported by the statement when the assessee did not support the details of the stock and its price the revenue adopted the method to derive the correct stock value. All the items were valued based on the records given by the assessee themselves. So the process of valuation is based on the items list given by the assessee and no notional valuation was done by the revenue. Thus, when no records maintained for valuation the correct way to value the stock price and that too after considering the discount embedded in the tag price. As regards the consignment stock no details of quantity made available and how the Amrapali Jewels Pvt. Ltd. vs. ACIT same were recorded in the earlier year was made available and assessee failed to give the reconciliation of tag price and transfer price the difference in the valuation was correctly derived. The ld. CIT(A) has in detailed discussed at page 172, 178 and 183 when the revenue found that the stock is not valued properly the year of taxability can be the year of the survey as the source of investment in the excess stock was not explained. Therefore, the burden u/s 69B is on the Assessee to prove source of excess stock.
The AO is not required to inquire about the source of the amount expended by the Assessee. To drive home this contention ld. Sr. DR placed reliance on following case laws in support of addition u/s 69B of the Act:
a) CIT Vs British Paints India Ltd (1991) 188 ITR 44 (SC) b) Commissioner of Income-tax v. Devi Prasad Vishwanath [1969] 72 ITR 194
(SC)[Ol-08-1968) c) Commissioner of Income-tax-I v. G.S. Tiwari & Co. [2014] 41 taxmann.com
17 (Allahabad) d) Bachittar Singh v. Commissioner of Income-tax [2010] 328 ITR 400, e) Dr. S.C. Gupta v. Commissioner of Income-tax 120011 118 Taxman 252
(Allahabad), f) Raj Hans Towers (P.) Ltd. v. Commissioner of lncome-tax-V [2015] 56
taxmann.com 67 (Delhi) g) Pebble Investment and Finance Ltd Vs. ITO in ITA No.988/2014
h) Roshan Di Hatti v. Commissioner of Income-tax [1977] 107 ITR 938 (SC)[08-
03-1977], i) Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1
(SC)[08-02-1963
j) CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623 (SC)/A. Govindarajulu
Mudaliar v. CIT [1958] 34 ITR 807 (SC), k) Navin Shantilal Mehta v. Income-tax Officer, Ward-32 (2) (4), Mumbai [2018]
90 taxmann.com 16 (Mumbai - Trib.), l) Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income tax [2022] 138
taxmann.com 19 (Madhya Pradesh)
Amrapali Jewels Pvt. Ltd. vs. ACIT m) Principal Commissioner of Income-tax v. Deccan Tobacco Company [2022]
137 taxmann.com 470 (SC) n) SVS Oil Mills v. Assistant Commissioner of Income-tax, Non Corporate Circle-
6(1), Chennai [2020] 113 taxmann.com 388 (Madras)

•
Assessee has explained before the AO/CIT(A) that stones value ranges from Rs. 50 to Rs.
500 per Ct. only in gold items or Rs. 2 to 10
per Ct. in silver items whereas department valuer exorbitantly and without any basis adopted valuation range from Rs. 20000 to Rs.
40000/- per ct. (Reference Page No. 922 of Vol. 5)

•
Mr. Rajesh Ajmera specifically objected to the impugned valuation adopted by the department in respect of stones in his statement dated 16.07.20 (Refer page no. 139
of PB Vol-1) and categorically stated that department has overvalued items by more than 10 times.

•
Quality or carat information are not mentioned in valuation report of department (Kindly refer page no. 921 of Vol. 51 and Page No. 852 of Vol. 5) from which it is evident that adhoc value has been adopted on whims and fancies by the valuer/department.

•
Rejoinder/Counter Arguments of the Assessee
Assessee has specifically bifurcated the stones in different types such stones, pearls diamonds and has provided specific value for different category of stones used in each item.
For example, reference may be made to page no. 147 of Vol. 2. Thus, he objectively worked out the value of the stones/pearls/diamonds which goes on to show the arbitrariness in department valuation.

•
Detailed reply of Assessee -Refer Page No.
1557-1558 of Vol. 9 or 920-922 of Vol. 5
(Reply dated 23.11.2022 during assessment)

•
Argument raised by the Ld. DR is contrary to settled legal position that burden is on department for invoking and making addition u/s 69B of the Act.

B.
2. The Assessee’s own valuation report also uses market rates.

•
Since burden is on department u/s 69B, the argument raised is mis-conceived.

•
Department has to stand on its own feet by bringing on record tangible material to make/sustain addition u/s 69B instead of pointing alleged in actions on the part of the Assessee.

•
Addition u/s 69B not sustainable on hypothesis/suspicion.

•
The departments sole basis being the valuation report of department valuer for addition u/s 69B rejected by Ld. CIT(A) against which no appeal preferred by department.

•
The Assessee obtained an independent valuation after the survey to substantiate its objections that the department's valuers have not done their duty diligently or methodically and resulting valuation arrived at is also exorbitantly high and grossly arbitrary and incorrect.
Obviously,
Assessee was not knowing at that point of time that AO will make the valuation reports of the department valuer as the basis for invoking and making additions under section 69B of the Act.

•
Rejoinder/Counter Arguments of the Assessee stating that he will get the correct valuations done to disprove departments valuation through registered valuer. (REFER Q-43,
PAGE 143 VOL-1).

•
Assessee is not proposing any method. Stand of the assessee is that closing stock as on 13.07.2020 is of Rs. 132 Crore and there is no evidence with the department to prove under recording of purchase consideration which is a pre-requisite for invoking 69B of the Act.

•
Rather on the contrary it is the department which is constantly adopting/shifting stands or basis to sustain additions u/s 69B of the Act by adopting unscientific and arbitrary methodology completely overlooking the fundamental/statutory pre-requisites for invoking section 69B of the Act.

II.
No books of accounts have been maintained by Assessee
C.
4. The Assessee does not maintain books of accounts, therefore, it raises the question of how they can claim that no items were found outside the books of account.

•
In absence of books, there cannot be invocation of Section 69B of the Act.

•
Dr. Prakash Tiwari v. Commissioner of Income-tax, [1983] 14 Taxman 252 (MP), wherein it was held that:

“5. We have heard the learned counsel for the parties. The learned counsel for the assessee contended that as the assessee did not maintain any account, section 69B of the Act was not applicable and, therefore, the Tribunal was not justified in adding Rs. 10,000 as the income of the assessee from undisclosed sources. In our opinion, on the facts and in the circumstances of the case, reference to section 69B was not appropriate because the assessee did not maintain any accounts.”

Also refer:

Shri Nanda Ram V & PO Bilu, Makrana,
Rejoinder/Counter Arguments of the Assessee
Nagour vs ITO, Ward-1, Makrana, I.T.A.
No. 190/Jodh/2024

Smt.
Amar
Kumari
Surana v.
Commissioner of Income-tax
[
89
TAXMAN 544 (RAJ.)]

•
Thus, for Section 69B, maintenance of books of accounts is essential conditions before making any addition of any excess consideration paid outside the books of accounts.

D.
6. The Assessee-Appellant is engaged in the manufacturing business and thus, a raw material-based approach should be used for valuation, as there is a cost associated with raw materials from which profit is derived. The Assessee-Appellant should have maintained a trading account and manufacturing account, which is not maintained.
•
Appellant is engaged in wholesale and retail trading of jewellery and jewellery items.

•
The job charges/manufacturing charges shown in profit and loss pertain to occasional repair or rework work as and when required.

•
As the assessee is a private limited company, it has to prepare and report financials as per
Schedule III of the Companies Act. As there is no separate grouping for job work charges, hence, the assessee has to group such expenses under manufacturing expenses only.

•
Maintaining a manufacturing account is not required due to the nature of the Assessee's business as a trading company.

•
Not maintaining a trading account or books of account in the format or manner specified by the department, as opposed to industry practice, does not permit the department to perform valuations based on inconsistent approaches for making addition u/s 69B.

E.
7. The department has valued the stock by using an Excel sheet found during the survey on the Appellant's computer. Each item listed in the sheet contains a tag price, so there is no notional valuation on the part of the Ld.
AO/CIT(A).

•
There is no basis to adopt the tag price as selling price. No evidence of under recording of purchases for invoking 69B.

•
Rejoinder/Counter Arguments of the Assessee
•
Valuation on the basis of suggested Maximum
Retail Price is thus incorrect and notional only.

•
Any valuation adopted on this basis is futile exercise and addition u/s 69B on notional calculation/guess work/hypothesis is not sustainable.

•
The Ld. DR stated that the calculations for closing stock of the Appellant are notional.
Hence, such assumptions and guesses are insufficient to justify addition under section 69B of the Act without solid evidence.

•
As per section 69B of the Act, the department must first prove the understatement of purchase consideration.

III.
Books of Accounts
F.
9. Software or the excel file prepared from the software during survey proceeding is in nature of incriminating documents.

•
Excel sheet or software data found during survey is part of regular financial records of the Appellant which itself has been relied upon by the AO for making addition towards missing
41 items without alleging the same to be incriminating.

•
CIT(A) has not given any cogent basis to allege the excel sheet/software data as incriminating. Hence apparent perversity.

•
No corroboration to the allegation of incriminating material.

•
Nothing incriminatory related thereto pointed out by the department. Nevertheless, no corroboration.

•
Department made valuation on the basis of excel files only which contains necessary details for identification of items.

•
None of the arguments raised dispenses the burden of the department to prove under recording of consideration at the time of purchase. Hence, fault finding with assessee maintaining records doesn’t suffice.
IV.
The Ld. DR relied upon statement of Rajesh Ajmera, wherein he stated about the discount of 30-50% on Amrapali Jewels Pvt. Ltd. vs. ACIT

S.
No Arguments of department
Rejoinder/Counter Arguments of the Assessee
Tag Price
G.
12. Mr. Rajesh Ajmera in his statement itself (Q.
No. 23 PB No. 126/127 of Vol. I, AO Page No.
28) has stated that after giving discount of 30-
50% is cost price.
•
The Ld. DR has referred to statement of Shri
Rajesh Ajmera in Q. No. 23 wherein he has merely stated fact about transfer prices for branches.

•
Shri Rajesh Ajmera in Q. No. 23(PB No.127,
Vol.I) stated that price mentioned in excel sheet relating to branch is after 30-50%
discount regarding transfer from HO to branches which is suggested selling price.

•
Shri Rajesh Ajmera stated in Question No. 14
(PB No. 124, Vol. I) of the survey that the software lists the suggested Maximum Retail
Price (MRP).

•
Pick and choose while reading a statement of a person recorded during proceeding is not justified. Required to be construed as whole.

•
The AO and the department incorrectly interpreted Shri Rajesh Ajmera's statement, believing the branch price after a 30-50%
discount was the cost price. However, in Question No. 24, Mr. Ajmera clarified that the cost price is actually lower than the transfer value.

•
If version of department regarding statement of Rajesh Ajmera is assumed to be correct, then the statement itself is self-contradictory.
Hence not reliable.

H.
13. Nothing has been brought on record regarding cost.
•
The Appellant has duly submitted the details of cost of stock as on 13.07.2021 of Rs. 132
Crore(Approx). (REFER Page No. 1767 PB
Vol. 9)

•
Out of the total cost of Rs. 132 Crore, cost of franchise stock for various stores of Rs. 10.65
Crore has been accepted as such by the department. The Ld. AO has itself taken that cost for franchise location without any dispute. Reference Control Chart Page No. 3
submitted during hearing.

•
Rejoinder/Counter Arguments of the Assessee

•
Even otherwise, considering the GP margin of 34.32% (Approx) declared on the sales, closing stock valuation by the Appellant is reasonable and justified and thus supported.

•
Hence incorrect argument.

•
How it leads to addition u/s 69B still unknown.
I.

•
There is always a bargain margin (discount) in Tag price considering the nature of industry.

•
Considering statement of Mr. Rajesh Ajmera,
Ld. CIT(A) assumed a median rate of discount of 40% from tag price. The department is not in appeal on this issue of discount from tag price before Hon’ble Bench.
V.
Excess stock is result of trading addition made in previous years.
J.
15. There is admission on part of the Appellant that there is excess stock.

•
There is no admission of the Appellant rather an alternative argument taken which is without prejudice to the main submission and actual fact that there is no excess stock.
Refer Page No. 1594-1596 of Vol. 9 Para No.
121-123 of Written Submission2. •
There is no case of excess stock established, rather the case of the department is excess valuation based on notional/arbitrary calculations.

•
The Appellant in its Para No. 121-123 of Written Submission, without prejudice to main contentions, alternatively contended for source of alleged excess stock on the basis of impugned action of the Ld. AO making trading addition in earlier years (which is also disputed) and which actions/proceedings have been stayed by the Hon’ble High Court.
Rejoinder/Counter Arguments of the Assessee submission, that there is no excess stock at all and no addition u/s 69B of the Act is justified as the first onus/conditions of understatement of purchase price is not established.

•
In view of the above, it is incorrect argument of the Ld. DR that appellant admitted excess stock and undisclosed income was taxed in previous years.

VI.
Addition u/s 69B of the Act has rightly made by the Ld.AO
K.
17. Burden u/s 69B is on the Appellant.

•
Settled law under section 69B of the Act is that burden of proof that there is understatement of purchase price is upon the department. Thus, argument made by Ld. DR is against the law and is based on misconstruing of law.

•
In this context, it is humbly submitted that as per Section 69/69A of the Act burden is on the department to prove that the Appellant has made investment which is not recorded in books of account.

Refer Also •
S.S.
Jyothi
Prakash v.
Additional
Commisssioner of Income-tax, [2016] 71
taxmann.com 127 (Karnataka) (Sr. No. 1 in Additional Compilation)

•
Shri Nanda Ram V & PO Billu, vs. ITO Ward-
1 Makaran (190/JODH/2024) (Sr. No. 2 in Additional Compilation)

•
Commissioner of Income-tax v. Gian Gupta
[2014] 46 taxmann.com 372 (Delhi) (Sr. No. 5
in Additional case Compilation

•
Ananthakrishna Vasudev Aithal v. Income-tax
Officer,
[2023]
147
taxmann.com
376
(Bangalore - Trib.) (Sr. No. 10 in Additional
Compilation

•
Rejoinder/Counter Arguments of the Assessee investment or made purchases outside books has not been discharged.

•
The department has not brought on record any single piece of evidence that at the time of purchase, the Appellant paid extra consideration.

•
Further, relied upon decision with respect to addition made u/s 68 of the Act also does not make out the case of the department because
Section 68 addition cannot be made when books are rejected. In the instance case, at the outset, there is no addition made u/s 68 of the Act, even otherwise, addition under deeming provision of the law, is not sustainable if the books of accounts are rejected.

•
As far as provision of Section 69B of the Act is concerned, it is humbly submitted that u/s 69B of the Act, the burden is first on the revenue to establish that the amount expended on investment etc. exceeds the amount recorded in the books of account. In present case, no such evidence of understatement of purchase was brough on record and were also not found during survey to support the allegation of excess stock.
Therefore, on this ground itself addition made u/s 69B of the Act deserves to be deleted.

•
It is further submitted that for making addition u/s 69B of the Act maintaining books of account is a prime condition. In the present case, as strenuously argued by the Ld. DR, no books of account are maintained.
Therefore, on this ground alone, the addition made under Section 69B of the Act is not justified. Dr. Prakash Tiwari v. Commissioner of Income-tax, [1983] 14 Taxman 252
(MP)(Supra)

VII.
There is no enhancement by Ld. CIT(A)
L.
21. Ld.AO has made total addition of 176 crore which Ld. CIT(A) has reduced to 165 crores after appeal effect.
So, there is no enhancement by Ld. CIT(A), accordingly, no notice u/s 251 of the Act was required.
•
With respect to the enhancement of income kindly refer to the master chart which was submitted during physical hearing explaining how there is enhancement of addition by the Ld. CIT(A).

•
Rejoinder/Counter Arguments of the Assessee during the hearing.

•
As explained in the chart, there is enhancement of Rs. 7.45 Crore (Approx) on the issue of excess stock. Kindly refer appeal effect order, wherein also, Ld. AO itself while giving appeal effect has mentioned enhancement.

•
In view of the above, it is incorrect to state the notice u/s 251 of the Act was not required.
VIII.
No evidence was submitted with respect to addition for stock sent to consignment agent
M.
22. No confirmation was provided by the Assessee- Appellant of the consignment agent.
•
With respect to the stock sent on consignment, the Appellant, during the assessment proceedings, submitted the Bill of Entry (BOE), return invoice, and the correct ledger.

•
Sample of such consignments have been got verified during the proceedings before the Hon’ble Bench also.

•
No adverse findings on the said documentary evidence were submitted by Ld.AO.

•
The argument is based on doubts only as veracity of the documentary evidence has not been negated by any contrary evidence.

•
Even otherwise, the amount taken for the purpose of making impugned addition is amount which was recorded in incomplete books of accounts as available at the time of survey.

•
Third parties evidence already placed on record (REFER 963-965, 966-967, 1015 of PB Vol. 6) therefore, mere doubt and suspicion on the same at this stage is not justified.
IX.
There is no single evidence for Jewellery sent on repairs
N.
23. Affidavits of artisan and Amarpali Design
Studio has been submitted after lapse of sufficient time and that too during appeal proceedings before Ld. CIT(A))

•
In support of the fact that the items were sent for repair, the Appellant submitted affidavits from the concerned parties. However, the Ld.
AO did not conduct any independent inquiry from the parties during remand proceedings before rejecting their affidavits.

•
Rejoinder/Counter Arguments of the Assessee
25. No details when such items were sent for repairs.

•
There is no inquiry or verification if there were some doubts or suspicion. It is clarified that there was no previous occasion for submission of these affidavits as Ld. AO during the assessment proceedings did not confront the Appellant for any shortcomings in the supporting documents supplied during assessment proceedings.

•
The Appellant clarified the position before the DDIT(Inv) on 05.04.2021 itself regarding various items sent for repairs and in the statement of Mr. Rajesh Ajmera, the fact of items sent for repairs was establishes and photos of items shown.

•
The details of the parties were duly given on 5.04.21 before the investigation wing. Refer page 905- 908 PB VOL 5. •
Delay in submission of additional evidence, is not a valid ground for rejecting them, especially without conducting an independent inquiry from the parties whose affidavits were submitted. In this context, the Appellant places its reliance in case of Mehta Parikh &
Co. v. CIT [1956] 30 ITR 181 wherein Hon’ble
Apex Court has held that unless the person making the statement in the affidavit is cross- examined by the revenue, it is not open to the revenue to challenge the correctness of the statement made by the deponent in the affidavit.
Further
Reference
Deputy
Commissioner of Income-tax v. Smt. Jayita
Bose, [2004] 3 SOT 525 (KOL.) (Refer S. No.
21 of the case compilation)

•
It is humbly submitted that in the jewellery industry, it is a common practice for items to be sent for repair based on mutual trust between the parties involved as items are sent to known person/parties with huge trust and primary artisan with low-income level but very high trust in them. The repair process for a trading company is typically not documented in the same way as being wishes of the Ld. DR considering the faith and nature of the jewellery industry.
Rejoinder/Counter Arguments of the Assessee
•
Furthermore, it is important to note that only few items, which is very small fraction out of the total inventory of more than three thousand items of gold and more than 14
thousand items of silver, were found deficient and reasonably explained to be sent for repair by the Appellant.

•
This itself proves that vast majority of the stock remained present at time of impugned valuation by department.

•
Therefore, there is no ground to reject the explanation of the Appellant which is reasonable and justified.

•
No contrary evidence has been brought on record to negate the explanation of the Appellant, mere doubts or insufficiency of trails are being argued, which is not justified.

•
Based on the stance taken by the Ld. AO, the inference is that no item could have been sent for repair, which is an unreasonable and flawed conclusion. Such an assumption disregards the customary practices in the jewellery industry, where repair activities often occur, especially when dealing with trusted parties.

•
The Ld. DR has simply disapproved the affidavits without even seeing them and blindly placed reliance on one liner general comments of Ld. CIT(A) in its impugned order.

•
From the face of the affidavits placed on records, the identity, purpose, details of the movement and other particulars are duly established, which supports the details submitted during post survey proceedings itself. Kindly refer to page no. page 905- 908
PB VOL 5. duly supported by affidavits at page no. 1745-1754 of Vol. 9. •
The nature of work done and fact of items were sent for repair/refurbishing etc, is very much evident from affidavits of parties placed on record.
Rejoinder/Counter Arguments of the Assessee
O.
27. In the profit and loss account also cost of material consumed has been claimed. The job charges and wages are Rs. 37,96,209 in F.Y.
2019-20 and are Rs. 98,14,578 in the F.Y.
2020-21 showing an increase by almost 160%
whereas the raw material consumed value is Rs. 1,84,40,923 (F.Y. 2019-20) and Rs.
2,39,83,602
(F.Y.
2020-21) showing an increase of only 30%. The aspect also remains unexplained.

•
It is humbly clarified that the Appellant is primarily engaged in trading business and not manufacturing business. Rather Amrapali
Design Studio (a sister concern) is engaged in manufacturing business and accordingly, the Appellant is not required to maintain manufacturing account.

•
As far as the charges of job work is concerned, the same are regarding occasional repairs and rework required time to time for thousands of inventory items, out of which various items are held for since long period.

•
Further, the Assessee at times rework the items in stock to convert it into a new item.
For eg. A necklace may be reworked to create a smaller necklace and matching earings.

•
Further, sometimes while the assessee purchases final jewellery items for trading, it gets some opportunity to purchase certain stones at a good value. Thereafter, the assessee purchases the precious metal and uses these to get a jewellery item prepared through job work. This is not the primary model of the assessee and encompasses a negligible proportion of its entire business.

•
The job work charges for AY 2021-22
included exceptional one time charges of repair of goods damaged at the Jaipur store of the assessee due to water logging at its store. Such goods had to be repaired, polished and other similar expenses had to be incurred by the assessee which was not there in previous year.

•
Without prejudice to the explanation provided herein above, the argument raised has no force as far as the discharge of burden under the law, by the department is concerned.

P.
28. No details were provided as to year in item code was updated annually. No separate year stamping or year sticker is pasted on the items.

•
Rejoinder/Counter Arguments of the Assessee submission dated 06.12.2023 Page No. 1733-
1735 of Vol. 9, the Appellant clarified the description or parameters of various items code like ‘N’ stands for Neckles, ‘E’ for earing and “12 or 18”, mentioned in item code represent year of purchase/items entered into inventory.

•
Audited financials of the Appellant contain details of closing stock on year to year and the same has been duly reported to the department. Therefore, argument that no details of previous year is available is baseless.

•
The department has not brought on record any single piece of evidence that at the time of purchase, the Appellant paid extra consideration, therefore, arguments being raised now that details of stock and year of purchase is not given is baseless and misconceived.
Q.
30. Excel sheet downloaded from the software is not available for the earlier period.
•
Complete software data was taken by the department; Complete data is available in software.

•
Fault finding with assessee maintaining books/records doesn’t justify invocation of section 69B.
R.
31. Appellant has not justified that tag price is revised regularly as per the increase in price of precious metal.
•
The Appellant in its reply dated 29.02.2024
(Reference Page no. 1942-1943 of Vol 9) filed before Ld. CIT(A) has duly clarified that in case of the Assessee indicative price in excel sheet/software (i.e. Tag Price) are regularly updated by the centralized sales and marketing team to reflect the increase/decrease in metal prices.

•
The frequency of such revision is correlated with the frequency of movement in metal prices. For example, during the period, in and around
Covid-19, even though the organisation hardly made any purchases during the period from March 2020 to July
2020, still owning to unprecedented increment in the metal prices, the prices were regularly updated in the excel sheet as and when the stores were permitted to operate under COVID guidelines in June 2020. •
Rejoinder/Counter Arguments of the Assessee stated that material used in jewellery industry which obviously comprises of gold/silver/precious/semi-precious stones which keeps on changing.

•
This exercise of updating prices is natural exercise because of trend of increase in price of metal. This is common practice in trade/industry.

•
Thus, argument made is incorrect.
S.
32. The methodology of the valuation is also not been stated in the valuation report given by Assessee-Appellant.
•
Valuation of stock by independent valuer appointed by Appellant was done by separately valuing each item and valuing the gold and silver items at market rate, meticulously detailing each item of inventory, their component and the same is more detailed than departmental valuer report.

•
There is no force in the argument raised as these valuation reports cannot be basis of addition u/s 69B of the Act as condition precedent is proving of understatement of purchase consideration, which is not established.
XI.
Case Laws relied by Ld. DR mentioned at Page No. 51-54 of Impugned Order
(SC) wherein it was held that “it is the duty of the assessing officer to determine the taxable income by making such computation as he considers appropriate in the given situation.
•
As per the case law relied by the Ld. CIT(A), it is a duty on the AO to act in exercise of his statutory power” for determining the correct taxable income.

•
In the present case, no such duty casted on Ld.AO is discharged by him judicially because impugned assessment made by Ld. AO has resulted into exponentially higher GP beyond the industry comparable, which is not justified.

•
Thus, admittedly, there is no appropriate income determination.

•
In the case law relied upon by the Ld. DR, goods/stock was being valued below cost, whereas, in the case of the Appellant goods/stock is being valued at market value by the department itself as against the requirement of section 69B of the Act.

U.
Commissioner of Income-tax v.
Devi
Prasad
Vishwanath [1969] 72 ITR 194 (SC)[Ol-08-1968],
Whether where there is an unexplained cash credit it is open to ITO to hold that it is income of assessee and no further burden lies on ITO to show that •
The case law relied by the Ld. CIT(A) is pertaining to alleged cash credit u/s 68 of the Act.

•
Rejoinder/Counter Arguments of the Assessee income is from any particular source is distinguishable as no impugned addition is regarding excess stock which was not made u/s 68 of the Act.
V.
Commissioner of Income-tax-I v. G.S. Tiwari & Co.
[2014] 41 taxmann.com 17 (Allahabad)/[2014] 220
Taxman 111 (Allahabad) (Mag.)/[2013] 357 ITR 651
(Allahabad)[30-05-2013
•
The case law relied by the Ld. CIT(A) is pertaining to addition made u/s 68 of the Act and rejection of books of account u/s 44AD and addition of estimated net profit rate of 8%.

•
The fact of present case is distinguishable because it is not a case of alleged unexplained cash credit u/s 68 of the Act.

•
In the case law relied by the Ld. CIT(A), the Hon’ble court held that there is nothing in law which prevents in taxing both unexplained sundry credit and estimating business income.

•
The judgment is on facts wherein income was offered on estimate basis u/s 44AD
(presumptive taxation of income).

•
Without prejudice, reliance is placed on juri ictional High Court judgement in case of CIT vs. G. K. Contractor [2009] 19 DTR 305
(Raj.) wherein it was held no separate addition u/s 68 of the Act, if books of accounts are rejected.
XII.
Case laws relating to Statement recorded during survey relied upon by Ld. DR (Page No. 157-160 of Impugned Order)
W.
Bachittar Singh v. Commissioner of Income-tax
[2010] 328 ITR 400, wherein it was held that “the assessee failed to produce books of account which may have been maintained during regular course of business or any other authentic contemporaneous evidence of agricultural income.
In the circumstances, the statement of the assessee could certainly be acted upon”
•
The case law relied upon by the Ld. CIT(A) is not applicable to the facts and circumstances of the present case because no adverse statement was made by Shri Rajesh Ajmera.

•
Instead, only excerpts of his statement are being used against the Appellant, without considering the full context in which his statements were made.

•
One instance is that heavy reliance was placed on Q. No. 23/24 wherein as per department
Rajesh
Ajmera stated that discount given is between 30-50% however whole context of his statement was not understood as it was related to transfer price.

•
Rejoinder/Counter Arguments of the Assessee

•
Contents of the statement relied upon by the department has not been corroborated.

•
Hence relied upon case law is distinguishable.

X.
Dr. S.C. Gupta v. Commissioner of Income-tax
120011 118 Taxman 252 (Allahabad), wherein it was held that “The mere fact that the assessee retracted the statement could not make the statement unacceptable. The burden lay on the assessee to establish that the admission made in the statement at the time of survey was wrong and, in fact, there was no additional income”
•
No admission of alleged excess stock made by Shri Rajesh Ajmera.

•
Accordingly, the case law relied upon by the Ld. CIT(A) is clearly distinguishable from the facts and circumstances of the present case.
Y.
Raj Hans Towers (P.) Ltd. v. Commissioner of lncome-tax-V
[2015]
56
taxmann.com
67
(Delhi)/[2015] 230 Taxman 567 (Delhi)/[2015] 373
ITR 9 (Delhi)[27-0l-2015], wherein it was held that “where the appellant had not offered any satisfactory explanation regarding surrendered amount being not bonafide and it was not borne out in any contentions raised by the appellant, additions made after adjusting expenditure were justified”
•
In the present case, no such surrender of income was made.

•
No.988/2014, wherein it was held that “"9 We note that a statement made under Section 133A of the Act is not bereft of any evidentary value. The same may not be conclusive but in the absence of any contrary evidence or explanation as to why the statement made under Section 133A of the Act is not credible, it can be acted upon”
•
The case law is relied upon to place on the reliance on statement recorded during survey to ascertain fact.

•
Though the Ld. CIT(A) placed reliance on statement of Mr. Rajesh Ajmera, however, the said reliance is based on pick and choose and not entire statement has not been considered.

•
Without prejudice, it is trite law that corroboration with some tangible material is required before taking any adverse view on the basis of statement recorded during survey.

XIII.
Case Laws relied by Ld. DR mentioned at Page No. 184 of Impugned Order
AA.
Roshan Di Hatti v. Commissioner of Income-tax
[1977] 107 ITR 938 (SC)[08-03-1977], wherein it was held that “Now, the law is well settled that the onus of proving the source of a sum of money found to have been received by an assessee is on him. If he disputes the liability for tax, it is for him to show either that tl1e receipt was not income or that if it was, it was exempt from taxation under the provisions of the Act. In the absence of such proof, the revenue is entitled to treat it as taxable income. This was laid down as far back as 1958 when this court pointed out
•
In the case relied by the Ld. CIT(A), is distinguishable because, in the case relied on the Appellant has accepted that cash /cash deposit belongs to him and was from his business income and Ld.AO argued that it is not possible that business income of the Assessee could generate such income.
Accordingly, the source of money was disputed.

•
Rejoinder/Counter Arguments of the Assessee in A. Govindarajulu Mudaliar v. Commisioner of Income-tax [1958] 34 !TR 807 , 810 (SC)”
DR was not filing its regular income tax returns and non-filer of return of income for various years.

•
Accordingly, his explanation was not accepted that source of cash deposit is from business.

•
The law laid down in the relied upon case law by Ld. DR is in the context of burden of proof u/s 68 of the Act, which section is not applicable in the instant case of the Appellant.

•
In the present case, the Appellant is not admitting any fact of excess stock and there is no surrender also; rather, the Appellant is denying the allegation of excess stock.
•
Therefore, the reliance placed on judgment is misconceived besides the fact that case law relied upon is clearly distinguishable.
BB.
Kale Khan Mohammad Hanif v. Commissioner of Income-tax [1963] 50 ITR 1 (SC)[08-02-1963 wherein it was held that “"It seems to us that the answer to this question must be in the affirmative and that is how it was answered by the High Court. It is well established that the onus of proving the source of a sum of money found to have been received by the assessee is on him”
•
The case law relied by the Ld.CIT(A) is distinguishable and is not applicable on the facts and circumstances of the present case.

•
No sum of money or unexplained cash/cash credit was found during survey in present case of the Appellant.

•
The case law relied upon is also not applicable on account of fact that no burden has been discharged as to fact that there was understatement of purchase price.

•
Even otherwise, as per the contentions of the department the Appellant does not maintain books of account, therefore no question of proving credit entries in books of the Appellant would arise in case of the Appellant.

•
The case law relied upon in on the scope of unexplained cash credit, whereas there are no such facts of the present case in hand of unexplained cash credit as the impugned addition is relating to alleged excess valuation of stock.

•
Thus, case law relied upon is clearly distinguishable.
CC.
CIT v. M.Ganapathi Mudaliar [1964] 53 ITR 623
(SC)/A. Govindarajulu Mudaliar v. CIT [1958] 34 ITR
807 (SC), wherein it was held that “where the assessee has failed to prove satisfactorily the source
•
Rejoinder/Counter Arguments of the Assessee and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assesse, it is not necessary for the department to locate its exact source”

•
The case law relied upon in on the scope of unexplained cash credit, whereas there are no such facts of the present case in hand of unexplained cash credit as the impugned addition is relating to alleged excess valuation of stock.

•
Even otherwise, as per the contentions of the department the Appellant does not maintain books of account, therefore no question of proving credit entries in books of the Appellant would arise in case of the Appellant.

•
There is no case of alleged bogus purchase as was the case in hand in the case of Navin
Shanti Lal Mehta relied upon by Ld. CIT(A)

•
Thus, case law relied upon is clearly distinguishable.

DD.
Govindarajulu Mudaliar v. CIT [1958] 34 ITR 807
(SC), wherein it was held that “where the assessee has failed to prove satisfactorily the source and nature of a credit entry in his books, and it is held that the relevant amount is the income of the assesse, it is not necessary for the department to locate its exact source”
EE.
Navin Shantilal Mehta v. Income-tax Officer, Ward-32
(2) (4), Mumbai [2018] 90 taxmann.com 16 (Mumbai
- Trib.), wherein it was held that “as per section 68 of the Act, onus is upon the assessee to discharge the burden so cast upon. First burden is upon the assessee to satisfactorily explain the credit entry contained in his books of accounts. The burden has to be discharged with positive material”
FF.
Suraj Bhan Oil (P.) Ltd. v. Deputy Commissioner of Income tax [2022] 138 taxmann.com 19 (Madhya
Pradesh)/[2022] 286 Taxman 680 (Madhya Pradesh], wherein it was held that “- It was noted that once it was found by Assessing Officer that there was excess stock. in absence of explanation by assessee. conclusion was inescapable that excess stock, if any. was from undisclosed sources - Further once assessee's explanation, if any, had not been accepted, resultant position was that there was excess stock undisclosed in books of account and non disclosure was only with a view to suppress income”
•
In the case relied upon by the Ld. CIT(A), the difference in stock was based on the stock statement submitted to the bank and the stock recorded in the books of account.

•
In the present case, the allegation of excess stock valuation is based on computerized software, where the complete stock details are available at the tag price. The Ld. AO assumed it to be the cost price and used this to make the stock valuation as against the law, which requires that Ld. AO has to establish understatement of purchase price first before invoking Section 69B of the Act.

•
(2009) 308 ITR 279 (Raj), which held that merely on the basis of stock statement submitted to bank, addition u/s 69B is not justified.

•
Hence the relied upon case law is distinguishable.
GG.
Principal Commissioner of Income-tax v. Deccan
Tobacco Company [2022] 137 taxmann.com 470
(SC)/[2022] 286 Taxman 558 (SC)[ll03-2022],
•
The case relied upon by the Ld. CIT(A) is not applicable to the facts and circumstances of the present case and is distinguishable.

•
Rejoinder/Counter Arguments of the Assessee scope of revisional juri iction under Section 263 of the Act. Whether it could be exercised by the Ld. PCIT, where AO did not treat excess stock as 'undisclosed investment'
under Section 69 of the Act.

•
In this case, only notice has been issued by Hon’ble Apex Court in pending SLP, whereas relevant Hon’ble High Court of Andara
Pradesh judgment is in favour of the Appellant on the basis that Ld. AO took plausible view of taxing alleged excess stock as business income in view of consistent view of various judicial authorities that where excess stock found is neither separately identifiable nor has independent physical existence, it cannot be treated as ‘undisclosed investment’ u/s 69. •
Thus, the relied upon case law is not favouring the case of the department.
HH.
SVS Oil Mills v. Assistant Commissioner of Income- tax, Non Corporate Circle-6(1), Chennai [2020] 113
taxmann.com 388 (Madras)/ [2020], wherein it was held that “9. In the light of the above, the contention raised by the learned counsel for the Assessee has essentially emanated from a misconception that the Additions made under Section 69B/69C have to be reduced to some extent by giving leverage to the Assessee to claim some deductions from these
Additions as well. If the contention of the learned counsel for the Assessee was to be accepted viz., by allowing the purchases corresponding to the alleged excess stock, the Assessee will have to now record verifiable purchases in his Books of Accounts and for that he will have valid purchase Invoices from genuine and existing Sellers which is not possible.
When the excess stocks were found during the Survey, there is no question of allowing the Assessee to record any additional purchases because such purchases had already been recorded in the books of accounts of the Assessee. Therefore, the excess stock, per se, has to be naturally brought to tax as 'undisclosed income' by itself and there is no question of any corresponding deduction from that in such cases”
•
In the case relied by the Ld. CIT(A), physical verification was conducted, and partner of the Assessee firm has accepted excess stock difference.

•
Further excess stock was recorded in stock register but was not recorded in financial books of account. Thus, addition was made u/s 69B of the Act.

•
Thus, the facts of relied upon judgment are clearly distinguishable, there is no quantity of stock found in excess and no surrender of excess stock by Assessee.

•
The issue involved in this judgment was with reference to allowability of deduction under section 69C and not with reference to taxability of excess stock.

•
There is no claim of deduction allowing purchases made for alleged excess stock, whereas the Appellant case is that there in excess stock at all and no burden casted upon department of understatement of purchase price has been discharged.

•
Thus, the case law relied upon is clearly distinguishable and specifically countered.

Conclusion:
In view of the above, various assertions and arguments taken by Ld. DR during hearing are specifically countered and answered. Accordingly, it is prayed to not to take any adverse inference against the Appellant based on these factually and legally incorrect assertions and arguments.”

Section 69B in terms requires that the Assessing Officer has to first 'find' that the assessee has 'expended' an amount which he has not fully recorded in his books of account. It is only then that the burden shifts to the assessee to furnish a satisfactory explanation. Till the initial burden is discharged by the Assessing
Officer, the section remains dormant. [Para 8]

A 'finding' obviously should rest on evidence. In the instant case, it is common ground that no incriminating material was seized during the search which revealed any understatement of the purchase price. That is precisely the reason why the Assessing Officer had to resort to Rule 3 of Schedule III to the Wealth Tax Act.
[Para 9]

Section 69B does not permit an inference to be drawn from the circumstances surrounding the transaction that the purchaser of the property must have paid more than what was actually recorded in his books of account for the simple reason that such an inference could be very subjective and could involve the dangerous consequence of a notional or fictional income being brought to tax contrary to the strict provisions of article 265 of the Constitution of India and Entry
82 in List I of the Seventh Schedule thereto which deals with 'Taxes on income other than agricultural income'. [Para 11]

Applying the logic and reasoning in K.P. Varghese v. ITO [1981] 131 ITR 597 / 7
Taxman 13 (SC), for the purposes of section 69B it is the burden of the Assessing
Officer to first prove that there was understatement of the consideration
(investment) in the books of account. Once that undervaluation is established as a matter of fact, the Assessing Officer, in the absence of any satisfactory explanation from the assessee as to the source of the undisclosed portion of the investment, can proceed to adopt some dependable or reliable yardstick with which to measure the extent of understatement of the investment. One such yardstick can be the fair market value of the property determined in accordance with the Wealth
Tax Act. [Para 12]

Since the entire case has proceeded on the assumption that there was understatement of the investment, without a finding that the assessee invested more than what was recorded in the books of account, the decision of the Income- tax Authorities cannot be approved. Section 69B was wrongly invoked. The order of the Tribunal is upheld. [Para 15]

Commissioner of Income-tax, Delhi -I v. Agile Properties (P.) Ltd, [2014] 45
taxmann.com 512 (Delhi)
5. This Court had in the decision reported as CIT v. Dinesh Jain, HUF [2013] 352
ITR 629/[2012] 211Taxman 23/25 taxmann.com 550 and connected cases occasioned to consider an identical question. Afternoticing the relevant provision, i.e. Section 69B, the Court noticed in paragraph 9 as follows: —
13. The error committed by the income-tax authorities in the present case is to jump the first step in the process of applying section 69B – that of proving understatement of the investment – and apply the measure of understatement. If anything, the language employed in section 69B is in stricter terms than the erstwhile section 52(2). It does not even authorise the adoption of any yardstick to measure the precise extent of understatement. There can therefore be no compromise in the application of the section. It would seem to require the Assessing Officer even to show the exact extent of understatement of the investment; it does not even give the Assessing Officer the option of applying any reasonable yardstick to measure the precise extent of understatement of the investment once the fact of understatement is proved. It appears to us that the Assessing Officer is not only required to prove understatement of the purchase price, but also to show the precise extent of the understatement. There is no authority given by the section to adopt some reasonable yardstick to measure the extent of understatement. But since it may not be possible in all cases to prove the precise or exact amount of undisclosed investment, it is perhaps reasonable to permit the Assessing Officer to rely on some acceptable basis of ascertaining the market value of the property to assess the undisclosed investment. Whether the basis adopted by the Assessing Officer is an acceptable one or not may depend on the facts and circumstances of the particular case. That question may however arise only when actual understatement is first proved by the Assessing Officer. Itis only to this extent that the rigour of the burden placed on the Assessing Officer may be relaxed in cases where there is evidence to show understatement of the investment, but evidence to show the precise extent thereof is lacking.'

Gayatri
Enterprise v.
Income-tax
Officer,
Ward
1(2)4
[2020]
116
taxmann.com 359 (Gujarat)

"5. Ms. Rashmi Chopra, learned counsel for the revenue submitted that the Tribunal had erred in law in deleting the addition of 99,33,000/- as undisclosed income of the respondent-assessee under Section 69B of the Act, 1961. 6. It is settled law that the primary burden of proof to prove under-statement or concealment of income is on the revenue and it is only when such burden is discharged that it would be permissible to rely upon the valuation given by the DVO. (SeeK.P. Varghese (supra), CIT v. Shakuntala Devi , (2009) 316 ITR
46, CIT v. Manoj Jain , 287 ITR 285 and ITA No. 482/2010 decided by this Court on 5th May, 2010

Dilshad Trading Co. (P) Ltd. v. ITO, [1994] 49 ITD 348 (Bom-Trib.)
8………………………..Provisions of section 69B can be invoked if(i) it is found that the assessee has made investment; (ii) it is found that the amount expended
Amrapali Jewels Pvt. Ltd. vs. ACIT on making such investment exceeded the amount recorded in that behalf in the books of account; and (iii) either the assessee offers no explanation about such excess amount or the explanation offered is not satisfactory in the opinion of the Assessing Officer. These three findings are cumulative to be recorded on gathering the necessary facts, but the basic finding which is to be recorded on clear and cogent material is in respect of the amount expended by the assessee in excess of that shown in the books of account. In the instant case, the onus was on the department to show that the assessee had expended extra amount therefore, merely because there existed some comparable cases showing higher price in respect of similar transactions, it could not be said that the assessee had expended extra amount. Therefore, no addition could be made. There also did not exist any other material either by way of confession from some connected person with regard to the extra amount having been spent by the assessee or by way of a finding that the books of account of the assessee were not found to be reliable in any of the years when the records were examined by the Commissioner

M/s DDK Spinning Mills vs The DCIT Circle-3, [2023] 157 taxmann.com 817
(Chandigarh - Trib.)
10. It is a settled proposition of law that the statement recorded u/s 131 during the course of survey has no evidentiary value in absence of any corroborative evidence on record and in this regard, useful reference can be drawn to the decision of Hon’ble Madras High Court in case of CIT vs Khader Khan Son reported in 300 ITR 157 wherein it was held that statement recorded during the course of survey u/s 133A has no evidentiary value as the officer is not authorized to administer the oath and to take any sworn statement which alone has evidentiary value as contemplated under law and reference was drawn to provisions of section 132(4) which enables the authorized officer to examine person on oath and where any such statement so recorded can be used in evidence under the Act. In that case, it was held by the Hon’ble High Court that basis statement of one of the partner’s of the assessee firm, it cannot be held that disclosed income was assessable as lawful income of the assessee firm since there was no material on record to prove the existence of such disclosed income or earning of such income in the hands of the assessee and it cannot be held that Revenue has lost lawful tax payable by the assessee. Therefore, in our considered view, in the instant case, the statement of the partner of the assessee firm recorded u/s 131 during the course of survey and subsequent affirmation thereof by the assessee by way of surrender letter on a standalone basis and without any corroborative evidence doesn’t fulfill the statutory mandate of deeming provisions which provides that it is for the Assessing officer to records a finding that the assessee has made investments during the financial year in the construction/purchase of the building and the amount expended on making such investments in the building exceeds the amount recorded in this behalf in the books of account so maintained by the assessee and for the purposes of recording such a finding, there has to be some tangible material in possession of the Assessing officer which demonstrate that certain amount has been actually
32. Applying the aforesaid legal position with respect to the applicability of section 69B of the Act on the facts of the present case, we find that there is no discussion/observation in the Assessment Order with respect to any material found during survey evidencing understatement of purchase consideration or money expended in acquiring such jewellery or stock items are more than value recorded in books of accounts but it was merely based on the valuation done by the valuer and that too each valuer adopted the different method of valuation qua premises. It was not pointed out by the ld. DR that any incriminatory material /evidence which can establish that consideration recorded in the books were understated in books of account, or some extra consideration has been paid in acquiring the stock. Rather the Ld. DR has argued that there are no books of accounts wherein the quantity has been recorded and drew our attention to the observation of the Ld. CIT(A) in this regard.
Section 69B of the Act as comparison with books of accounts is the pre- requisite to invoke the provisions of Section 69B of the Act as evident from bare reading of the provision of Section 69B of the Act and as held in judgment of Hon’ble Madhya Pradesh High Court in case of Dr. Prakash
Tiwari v. Commissioner of Income-tax [1983] 14 Taxman 252 (MP).
Further, the said argument runs contrary to the department’s own action of using financial records of the Assessee containing price list maintained in computers as basis for making addition in respect of 41 items allegedly found short during the survey. From the audit report as well as observations of the auditors also as contained in the audited financial statements, we note that it is only item wise stock register and non- maintenance of cost of each item separately on account of nature of industry and trade practice regularly followed, the auditor has made observation in its audit report. Therefore, the same cannot be stretched to the extent that no books of accounts are maintained by Assessee.
Moreover, Mr. Rajesh Ajmera also in his statement clarified the reasons as well as practical impossibility why item-wise linking and cost of each item could not be separately maintained in the jewellery business. Thus, in this regard we find force in the argument of Senior Counsel representing
AO himself has relied upon for alleging shortage of items for making a separate addition of the same of Rs. 11.40 Crore. It is nobody’s case that the excel file contained evidence of proof of payment of high purchase consideration than recorded in the books of accounts. Further, Ld. CIT(A) has himself taken the same as the basis for arriving at the cost price by allowing deduction of 47% towards the profit margin, escalation in the metal price etc.
33. We also do not subscribe to the argument of the Ld. DR that the burden of proof for making addition u/s 69B of the Act is on the Assessee and since Assessee has not maintained quantitative and qualitative details of the stock the liability u/s 69B of the Act can be fastened upon the Amrapali Jewels Pvt. Ltd. vs. ACIT

Assessee. The said submissions are contrary to the settled legal position as is evident from the decisions cited on the applicability of section 69B of the Act mentioned above wherein it has been consistently held that burden of proof u/s 69B of the Act is on the department. We also find force in the argument of the Ld. Senior counsel for the Assessee that addition u/s 69B of the Act entails charging of tax at a higher rate of 60% u/s 115BBE and therefore, the department has to be put to strict proof and such huge tax liability cannot be fastened upon the Assessee merely on suspicion.
34. We have gone through the various judicial precedent cited by Ld. DR which are on the aspect of burden of proof u/s 68 of the Act and tax treatment of addition u/s 69B of the Act, once nature and source of excess stock found is not explained, under head of income, whether business or income from other sources. We have perused these judgments relied upon by the Ld. DR and also mentioned in the order of ld. CIT(A), which has been countered by the assessee-appellant in the written submissions in the rejoinder and find that these are clearly distinguishable as the legal position is very clear that finding of understatement of purchase price is first and foremost condition to invoke the provision of section 69B of the Act.
36. We find substance in the submission raised on behalf of the assessee-appellant that both the authorities in the present case have straightaway jumped to the exercise of estimating the extent of understatement of investment by discussing and adopting the most suitable methodology to compute/measure understatement without first establishing/proving understatement of investment, which is the foremost statutory requirement for pressing provisions of section 69B of the Act in service. The entire lengthy discussion and exercise done by the Ld. CIT(A) in the present case of estimating/deducing the cost of stock from tag price by reducing the gross profit margin, discount and metal price cannot substitute/overshadow the statutory prerequisite of proving under-recording of purchase consideration.
37. We also find that revenue failed to point out any item of identified stock items found in excess, and rather contrary, from the assessment
Amrapali Jewels Pvt. Ltd. vs. ACIT order it is noted that there was an addition made by AO of certain items of jewellery which are found shortage during survey. Furthermore, based on the statement of Mr. Rajesh Ajmera cost of stock cannot be determined because there has to be positive material to arrive at cost or understatement of consideration for purchase. It is not the case of the department that Mr. Rajesh Ajmera has stated that some extra consideration was paid out of books for purchase of jewellery by the Assessee, which is not recorded in the books of accounts. Ld. CIT(A) has made the statement of Mr. Rajesh Ajmera as the basis to estimate cost for further estimating value of stock. Moreover, there is a clear contradiction in the statement of Mr. Rajesh Ajmera in answer to Q. no. 23 and 24 as compared to answer to Q. No. 25 (PB No. 125-127 Vol. I).
38. Evidently, the present case is not a case of any understatement of consideration or excess stock in quantitative terms but only a notional addition of excess stock on account of mere valuation, which is beyond the scope of provision of Section 69B of the Act. In our view the issue on hand is squarely covered by the decision of coordinate bench in the case of M/s
Jewels Emporium vs. ACIT Central Circle-1, Jaipur in ITA 303/JP/2019
decided on 15.09.2020, wherein order of the Ld. CIT(A) deleting the addition on account of excess stock wherein the difference was on account
Amrapali Jewels Pvt. Ltd. vs. ACIT of valuation was upheld. The relevant extract of the same is reiterated here in below:
“18. Rival contentions have been heard and record perused. Brief facts are that, during the course of search operation total stock found at the business premises of assessee firm situated at D-7, M.I. Road, Jaipur and shop titled as Boutique, Hotel
Rambagh Palace, Jaipur was quantified and valued by departmental valuer at Rs.
26,62,93,376/-. The search team based on incomplete books of accounts worked out the cost of stock as per books as on the date of search i.e. on 18.12.2014 at Rs.
20,47,95,518/- and the differential amount of Rs. 6,14,97,858/- was alleged as excess unexplained stock and based on this working an admission of Shri Anup
Bohra, one of the partners of assessee’s firm, was obtained in his statements recorded during the course of search as stated above. On the date of search books of the assessee were not complete and certain entries pertaining to cash sales made on 16.12.2014 remained to be incorporated therein, which fact is established from the copy of cash book print outs seized during the course of search where the cash balance as on 16.12.2014 is appearing in the Balance Sheet marked as Anx-1
page 22 from where the value of stock of Rs. 20,47,95,518.00 is taken by the search team. The other most important factor which is ignored by the department is that while valuing the stock found, the departmental valuer took the value of precious metal and other precious and semi-precious stones at prevailing market price as on the date of search (18.12.2014) whereas in accordance with the specified norms and accounting standards, the stock recorded in the books is at the cost price and or market value whichever is lower and since cost price is lower, same has been recorded at cost price in the books. It is relevant to state that there is no dispute in quantity measured by the departmental valuer. It was thus contended that since the stock found at the time of search was valued at prevailing market value and to compare the stock as per books of accounts which had always been recorded on cost price, the profit element embedded in value estimated by DVO to bring both the values in parity and make them comparable and thereafter the AO is required to find out any excess or any shortage of stock. It was also found that after giving effect to the cash sales made on 16.12.2014, entry of which were remained to be made in the books as on the date of search and further reducing the profit element from the gross value determined by departmental valuer, the total value of stock found as on the date of search was equal to the value of stock recorded in the books of the assessee and therefore no addition is warranted. However, the AO without appreciating the same and simply for the reason that one of the partners had admitted the same as unexplained in the statement recorded during the search, had made the addition. When all these facts alongwith the same evidences which were submitted before the AO during course of assessment proceedings were produced before the ld. CIT(A) in appellate proceedings, ld. CIT(A) after appreciating the same had deleted the addition made in this regard. Findings recorded by the ld. CIT(A) in this regard are as under:
“9.1 9.2 I have perused the written submissions submitted by the Ld. A/R and the order of AO. I have also gone through various judgments cited by the Ld. A/R and those contained in the order of AO. Briefly the facts related to the issue under consideration are that during the search operation stock found at the business premises of the appellant firm situated at D-7, M.I. Road, Jaipur and shop titled as "Boutique", Hotel Rambagh Palace, Jaipur was inventoried and valued by the departmental valuer at t 26,62,93,376/-, as against the above, the cost price of the stock as per books of accounts of the firm as on the date of search was worked out by considering opening stock, purchases and sales till the date of search and gross profit related to these sales, which came to 20,47,95,518/-. The AO has considered the difference between the two amounting to 6,14,97,858/- as excess unexplained stock found during the course of search, as the same was also admitted by Shri
Anup Bohra in his statement recorded during the course of search u/s 132(4) of I.T.
Act.

The said decision of the co-ordinate bench of ITAT has been upheld in appeal by our Hon’ble Juri ictional High Court in DBITA No.
43/2021 while dismissing the revenue’s appeal wherein court further held that:

“6. Heard learned counsel for the parties and perused the pleadings.
7. The admitted facts are:
(i) that at the time of the search the books of accounts were incomplete and certain entries pertaining to cash were to be made.
(ii) the excess stock was result of difference in value as per valuation report compared with books of account.
(iii) that the valuation was done on the basis of the current price and not on the cost price.
(iv) the books were being maintained at cost price.
(v) there was no quantitative difference either in the jewels or of the precious metal
(vi) lastly no incriminating documents were found during the search to support the alleged excess stock.
8. The CIT(A) held that the statement of a partner recorded at the end of forty five hours long search cannot be the sole basis for making addition for excess stocks.
Moreso, when there was no quantitative difference found, and difference was Amrapali Jewels Pvt. Ltd. vs. ACIT result of valuation being done on current market price and books being maintained on cost”
39. Also, it is apposite to refer to the decision of our Hon’ble Juri ictional
High Court in the case of Smt. Amar Kumari Surana v. Commissioner of Income-tax [89 TAXMAN 544 (RAJ.)] wherein it has been held as under:
5. In second appeal before the Tribunal, after considering the material on record, it gave a finding of fact that the correct value of the plot of land and sale consideration have not been shown by the assessee in her account-books and in any case the investment cannot be less than Rs. 68,400. Therefore, the Tribunal upheld the addition sustained by the AAC under section 69B.
6. The aforesaid questions have been referred in the statement of case under section 256(2) by the Tribunal. The learned counsel for the assessee has not disputed the fact that the petitioner has shown Rs. 45,000 as cost of the plot purchased by her in C-scheme and that has been shown in sale- deed also. As per the valuation report comparable cases referred in valuation report were considered but no explanation has been given by the assessee or her husband before the ITO as to why the plot has been sold roughly at half of the rate, prevalent in area to the assessee by Vinaychand Praveenchand, Jaipur.
7. Mr. Ranka submits that no addition can be made under section 69B only on the basis of fair market value of the asset. The burden is on the department to prove that value of the asset has been shown less than the fair market value and also to prove that real consideration is exceeding the consideration shown in account books by the assessee.
8. Mr. Ranka has placed reliance on the decisions of their Lordships in cases of New Excelsior Theatre (P.) Ltd. v. M.B. Naik, ITO [1990] 185 ITR 158 (All.), Dinesh
Kumar Mittal v. ITO [1992] 193 ITR 770 (Bom.), CIT v. Raja Narendra [1994] 210
ITR 250/74 Taxman 157 (Raj.), CIT v. Smt. Prem Kumari Surana [1994] 206 ITR
715 (Raj.), CIT v. Pratap Singh Amrosingh Rajendra Singh Deepak Kumar [1993]
200 ITR 788 (Raj.), CIT v. Godavari Corpn. Ltd. [1993] 200 ITR 567/68 Taxman
344 (SC), CIT v. H.H. Maharao Bhim Singhji [1988]173 ITR 79/36 Taxman 270
(Raj.), Abdul Qayume v. CIT [1990] 184 ITR 404/50 Taxman 171 (All.), M.D.
Jewellers v. CIT [1994] 208 ITR 196/73 Taxman 493 (Raj.), CIT v. Daulat Ram
Rawatmull [1973] 87 ITR 349 (SC), CIT v. Pradyuman Kumar Kachhawa [1985]
156 ITR 105/23 Taxman 568 (Raj.) and K.P. Varghese v. ITO [1981] 131 ITR
597/7 Taxman 13 (SC). In the above referred cases mainly the question was involved under section 52(2) for reopening the case under section 147A/147B of the Act and the decision in the case of K.P. Varghese (supra)is a leading case.
9. The main emphasis of Mr. Ranka is on the decision of their Lordships in the case of K.P. Varghese (supra)which is the leading authority on the issue, whether on the basis of fair market value any addition can be made in the hands of purchaser/seller, invoking the provisions of sub-section (2) of section 52. 10. Section 69B reads as under :
"Amount of investments etc., not fully disclosed in books of account - Where in any financial year the assessee has made investments or is found to be the owner of any bullion jewellery, or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year."
11. It is true that merely on the basis of fair market value no addition can be made under section 69B but on the basis of sufficient material on record some reasonable inference can be drawn that the petitioner has invested more amount than the one shown in account books, then only the addition under section 69B can be made. The burden is on the revenue to prove that real investment exceeds the investment shown in account books of the assessee.
12. Their Lordships of the Supreme Court in the case of K.P. Varghese
(supra)have observed as under : ". . . This burden may be discharged by the revenue by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is an understatement or concealment of the consideration in respect of the transfer. Sub-section (2) has no application in the case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him, and there is no concealment or suppression of the consideration. We find that in the present case, it was not the contention of the revenue that the property was sold by the assessee to his daughter-in-law and five of his children for a consideration which was more than the sum of Rs. 16,500 shown to be the consideration for the property in the instrument of transfer and there was an understatement or concealment of the consideration in respect of the transfer. It was common ground between the parties and that was a finding of fact reached by the income-tax authorities that the transfer of the property by the assessee was a perfectly honest and bona fide transaction where the full value of consideration received by the assessee was correctly disclosed at the figure of Rs. 16,500 ..." (p. 618)
13. The consistent finding of the ITO, the AAC and the Tribunal is that the petitioner has not shown the correct value of the property in her account books and thereby concealed the investment made for purchase of the plot of land in C- scheme, Jaipur. The Tribunal has considered the valuation report of the Valuer in Amrapali Jewels Pvt. Ltd. vs. ACIT respect of the plot in question and also the fact that notice was given to the assessee as to why the value of the plot should not be taken as has been valued by the Valuer. The assessee failed to give any reason, as to why the value, valued by the valuer should not be accepted. The Tribunal has also considered the size of the plot, location and potential use of the plot of land. It is also noticed by the Tribunal that the assessee has failed to show that in area of C-scheme the value of plots is lesser than the rate which has been shown in valuation report.
14. In the valuation report, the costs have also been given of the neighbouring plots which were sold during the relevant period in C- scheme. One plot was purchased by Smt. Prem Kumari in that area at the rate of Rs. 75 per sq. yd. Smt.
Padam Kumari had purchased the plot of land in that area at the rate of Rs. 60 per sq. yd. Smt. Shobha Kumari has purchased plot of land at the rate of Rs. 60 per sq. yds. As such the plot in question which was purchased by the assessee was measuring 1799.99 sq. yds. The value has been estimated by the Tribunal as Rs.
68,400. The cost of the land which has been shown by the assessee comes to Rs.
36 per sq. yd., that is, roughly half of the rate prevalent in C-scheme.
15. It is true that merely on the basis of valuation report and fair market value no addition can be made. But in the case in hand after obtaining the valuation report of plot of land notice has been given to the assessee to show cause as to why the value of plot of land in question may not be taken as per valuation report and on the basis of comparable cases.
16. Admittedly in account-books of the assessee the investment of Rs. 45,000 has been shown to purchase the plot of land measuring 1799.99 sq. yds. which comes roughly at the rate of Rs. 36 per sq. yd. Mr. Ranka has not seriously disputed the value of the plot of land as has been estimated by the income-tax authorities but his main emphasis is on the question that under section 69B the department should establish the fact that more consideration has been passed than the consideration shown in account- books/sale-deed. Therefore, considering the report of valuer and com parable cases cited above and also the fact that sufficient opportunity was given to the assessee to show cause as to why the value of plot of land should not be taken on the basis of the rate prevalent in the area, we find no justification to interfere in the value finally estimated by the Tribunal.
17. Now, it brings us to see whether the revenue has established the fact that some more consideration has been passed by the assessee to Vinaychand
Praveenchand than that shown in sale deed.
18. There is no direct evidence that the assessee has paid more than Rs. 45,000
to Vinaychand Praveenchand for purchase of plot of land, but at the same time it cannot be ignored that no evidence has been adduced by the assessee before the ITO as to why the plot of land has been sold to the assessee for roughly at half of the rate than the prevalent market rate.
19. In the case of K.P. Varghese (supra)their Lordships of the Supreme Court have observed that even if market value is more than the value/consideration
Amrapali Jewels Pvt. Ltd. vs. ACIT received in respect of the transfer, it would amount to gift under the Gift-tax Act,
1958. The Income-tax Act and the Gift-tax Act are parts of an integrated scheme of taxation and the same amount which is chargeable as gift could not be intended to be charged also as capital gains.
20. In the case of K.P. Varghese (supra), the house property was sold to daughter- in-law and five of her children. Therefore, the case of K.P. Varghese (supra)is covered under the provisions of section 4 and the differencebetween market value and consideration paid would amount to gift under section 4(1)(a)of Gift-tax Act, but that should be born out from the record that the particular case is of deeming gift. In that case certainly, no capital gain tax can be charged. But in the case on hand, there is no material on record which shows that property has been sold for less consideration and the difference between market value of property and consideration shown in account books can be a case of deemed gift under section 4(1)(a). Neither the assessee is a relation of seller nor of any reason has been advanced before the ITO as to why less consideration has been paid than the prevalent market rate. Not even a single reason has been given as to why the property has been sold to the assessee for roughly half of the prevalent market rate. In absence of that the only inference that can be drawn is that the petitioner has, in fact, concealed the actual consideration paid to seller.
21. It is true that the burden is on the department to establish the fact that the property has been sold for lesser consideration that the market value. It is also to be established that actual consideration is more than the consideration shown in account books/sale deed. In the case of K.P. Varghese (supra)their Lordships have observed that before invoking the powers under sub-section (2) of section 52
of the Act, the burden is on the revenue to prove that the actual consideration was more than that disclosed by the assessee. But their Lordships have further observed that this burden may be discharged by establishing the facts and circumstances, from which reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received or paid by him.
As stated above, in the locality of C scheme the adjoining plots were sold at the rate of Rs. 60 or 75 per sq. yd. and if we take the estimated rate taken by the AAC and the Tribunal, the rate of plot in question comes to Rs. 36 per sq. yd. that is, roughly half of the rate than the prevalent market rate in the area. Admittedly, no reason has been shown by the assessee as to why the plot of land has been sold to her half of rate of market rate. Nor any other reason has been shown to the ITO at the time of assessment. Even, in spite of specific query, the assessee failed to point out any mistake/lacuna in ascertaining the value of plot of land by the valuer.
In these circumstances, the only reasonable inference that can be drawn is that the assessee has shown less amount in the account books and sale-deed that the actual consideration paid. Considering, the comparable cases and the facts of the case we find no ground to interfere in the addition made under section 69B.
41. We have also verified that there is an error committed by AO for deriving the value of stock as per books of accounts as on date of survey at Rs. 1,26,08,60,402/-. Ld. AO has wrongly taken opening stock at Rs.
120,17,89,418/- instead of Rs. 126,90,17,876/- as per audited financials at Page no. 28 of PB Vol. I. Similarly, GP rate was assumed at 30% as against the declared GP rate of 34.32% for year under consideration, which is higher than GP rate of earlier years and considered by the ld. AO.
42. We also note that AO has derived the value of stock as on the date of survey for branches like Delhi, Mumbai and Bangalore without there being any physical verification. Therefore, in the absence of physical verification and actual counting of stock at such locations, there cannot be cases of excess stock. This view is supported by judgment in case of Chawla
Brothers Pvt. Ltd. v. ACIT, CC 10, Mumbai [2011] 43 SOT 651 (Mumbai –
Trib.), to support the proposition that in the absence of physical verification, no addition u/s 69B of the Act is justified as in such case, it would be case of notional valuation or excess valuation only without there being any finding of any quantity of stock found in excess. The excerpt of said judgment is given as under:
6.11.The physical stock inventory taken partly by physical counting and partly on the basis of details given by the branches could not be said to be a correct method of taking physical stock during the survey. Under the circumstances, though the assessee had not disputed inventory physical stock found for Rs.
21.91 crores but certainly the reconciliation furnished by the assessee was required to be considered in the light of the fact that the stock of branches were taken on the basis of statement given by the assessee from branches. Under the circumstances, it could be held that it was a case of survey where the normal procedure was adopted for taking physical inventory of all items of stock though the assessee was not disputing that method adopted and to compare with the stock register i.e. RG-1. If there is a difference and the same could not be explained by the assessee, then only, the addition is warranted but in the case under consideration, as stated above, the physical stock of branches taken itself on the basis of statement submitted by the assessee, which could not be said to be a physical stock as per the procedure. Therefore, the comparison itself was incorrect. However, the assessee had explained each and every item of difference by reconciliation. The Assessing Officer and Commissioner
(Appeals) both had failed to point out how the reconciliation submitted by the assessee was incorrect. It could not be the matter of arguments that such differences itself could not represent the income of the assessee unless it was correlated how this difference of raw material and finished stock became the income of the assessee.

Loose sheets of papers are wholly irrelevant as evidence being not admissible under section 34 so as to constitute evidence with respect to the transactions mentioned therein being of no evidentiary value. The entire prosecution based upon such entries which led to the investigation was quashed by this Court. [Para
20]

Sant Lal v. Commissioner of Income-tax [2020] 118 taxmann.com 432 (Delhi)

In view of the aforesaid facts and the concurrent findings given by the CIT (A) and ITAT, it is evident that the Revenue has not been able to produce any cogent material which could fasten the liability on the respondent. The CIT(A) has also examined the assessment record and has observed that the AO did not make any further inquiry/investigation on the information passed on by the DCIT, Central
Circle-19, New Delhi. No attempt or effort was made to gather or corroborate evidence in this relation.

CIT v. Shadiram Ganga Prasad, 2010 UPTC 840 (Allahabad)
Court held that the loose parchas found during search at the most could lead to a presumption, but the department cannot draw inference unless the entries made in the documents, so found are corroborated by evidence.

Ajay Gupta v. CIT [2020] 114 taxmann.com 577 (Allahabad)
No addition could be made on account of undisclosed income only on basis of presumptions under section 132(4A) without recording any findings as to how loose sheets found during search were linked to assesse.

CIT v. Maulikkumar K. Shah [2008] 307 ITR 137 (Guj.)
The decision of Commissioner of Income-tax (Appeals) and the Tribunal were upheld holding that no addition was justified on the basis of these loose papers. In this case, nothings in the seized diary found from the premises were the only material on the basis of which the A.O. had made the impugned additions. The A.O. had not brought any corroborative material on record to prove that such sales were made and ‘on-money’ was received by the assessee outside the books of account. The A.O. had not examined any purchaser to whom the sales of shops were effected. Onus heavily lay on the revenue to prove with corroborative evidence that the entries in the seized diary actually represented the sales made by the assessee. Such onus had not been discharged by the revenue. Mere entries in the seized material were not sufficient to prove that the assessee had indulged in such a transaction.
Layer Exports Pvt. Ltd. v. ACIT, CC-21, Mumbai [2017] 88 taxmann.com 620
(Mumbai-Trib.)
While making an assessment, additions are required to be supported by tangible evidence and not by what Assessing Officer believes to be a prevalent practice. No inference can be drawn on the basis of market gossips unless backed by corroborating evidence.
Smt. Harmohinder Kaur v. Deputy Commissioner of Income tax, CC-II,
Jalandar [2021] 124 taxmann.com 68 (Amritsar – Trib.
We are of the view, diary seized during the survey/search operation, without corroboration, have no authenticity and therefore, cannot be relied upon.
Even entry recorded in the diary qua amount of sale was not confirmed from the buyers of the property and without confirmation, question of any assumption or belief that the entry belongs to the assessee did not arise and hence entry found in diary without any corroborative evidence, cannot be made basis of addition. The authorities below in the instant case, made the addition only on the basis of surmises, suspicion and guess work. Hence, respectively following the judgments referred above we are unable to sustain the addition made by the Assessing
Officer and affirmed by the Ld. CIT(A). Consequently we are inclined to delete the same, resultantly the appeal of the assessee is liable to be allowed.

S.P. Goyal v. Dy. CIT [2002] 82 ITD 85 (Mum.) ™
Amarjit Singh Bakshi (HUF) v. Asstt. CIT [2003] 86 ITD 13 (Delhi) ™
Held that any noting in the loose sheet is no evidence by itself. An entry in the books of account maintained in the regular course of business is relevant for purposes of considering the nature and impact of a transaction, but nothings on slips of paper or loose sheets of paper cannot fall in this category. Nothings on loose sheets of paper are required to be supported/corroborated by other evidence which may include the statement of a person, who admittedly is a party to the nothings. It was further observed in that case that the provisions of the Indian
Evidence Act are not strictly applicable to the proceedings under the IT Act, but the broad principles of law of evidence do apply to such proceedings.
ACIT v. Sharad Chaudhary [2015] 55 taxmann.com 324 (Delhi –Trib.)
Held that a loose paper found during search standalone could not be used as a basis for making impugned addition without the company of any other 276upport- tive material and evidence more so when contents of main three parts of the notings were not interlinked and the Assessing Officer had deleted decimal from noting of the figure of Rs. 4,47,000.00 for reading and accepting the same as Rs.
4,47,00,000 which was not permissible in absence of other supportive evidence.
The addition was, therefore, deleted.
D.A. Patel v. Dy. CIT [2000] 72 ITD 340 (Mum.)
There was no evidence connecting the appellant to this seized paper. Simply because a sheet of paper was found during the search at the premises of an assessee, he could not be saddled with a tax liability unless it could conceivably be related to the assessee in some reasonable manner.

ITO vs. Kranti Impex Pvt Ltd ITA No. 1229/Mum/2013, Mr. Abdul Khader Kodi,
Kasargod vs. DCIT Central Circle-2, Mangaluru ITA No. 636-638/Bang/2023

Hence, the finding of the Tribunal that only the gross profit on the said amount can be brought to tax does not call for any interference
19. Jyotichand
Bhaichand Saraf &
Sons
(P.)
Ltd.
v.
Deputy
Commissioner of Income-tax,
Circle
11(1)
[2012]
26
taxmann.com
239
(Pune)
The Assessing
Officer has made addition of entire unaccounted/suppressed sales without appreciating the fact that the entire sales could not be added as the income of the assessee but the addition could be made only to the extent of gross profit earned on the unaccounted/suppressed sales. [Para 15]
20. Shri Nawal Kishore
Central Circle - 3
Jaipur, ITA No. 1256,
1257,
&
1258/JP/2019, dated
15.09.2020

Based on these observations, ground no. 16 raised by the assessee is allowed in part.
61. Now coming to ground no. 17 and 18 raised by the assessee, the brief facts related to the issue are that ld. AO made addition of Rs. 11.40
Crore vide para no. 5 of the Assessment Order on account of unrecorded sales in respect of 41 high value items, which according to Ld. AO were found short during survey. The list of such items with column heading
Amrapali Jewels Pvt. Ltd. vs. ACIT selling price is mentioned in Assessment Order at page no. 134 and the same reproduced herein below for the sake of convenience :
62. As is evident that in the first appellate proceeding, the Assessee adduced affidavits of the parties to whom these items were explained to be sent for repairs, however this evidence so submitted were not accepted u/r
46A of the IT rules by the CIT(A). In Para No. 12.2 of his order vide which he rejected the additional evidence.
63. The Ld. Senior counsel submitted that the Assessee during post survey proceeding on 05.04.2021 submitted an explanation that out of 41
items, some items were shown during survey itself to departmental authorities, and remaining items were sent for repairs, with list of all items with pictures submitted to department. A letter dated 05.04.2021 to that effect was available in paper book page no. 905-908 of PB Vol. 5. Ld. AR of the assessee vehemently argued that it is routine practice to send items for repairs/rework in this industry and items sent for repair are miniscule as compared to the total items in the inventory and entire addition has been made on mere suspicion. It has been further argued that the value of item at Sr. No. 1 of the said list has been incorrectly taken and was explained to be typing mistake by Mr. Rajesh Ajmera in his statement recorded during survey. The net gms of such an item is about 478.5 gms only and even applying gold rate prevailing at the time of the survey, the explanation of Mr. Rajesh Ajmera in his statement deserves to be accepted. The ld. AR of Amrapali Jewels Pvt. Ltd. vs. ACIT the assessee further submitted that Mr. Rajesh Ajmera in his statement recorded during the survey itself stated that items have been sent for repairs. No adverse view is called for merely for difference in the items claimed to be sent for repair. A Letter dated 5.04.2021 clarifying in this regard was sent to the department and the same is reproduced herein below:
65. In the rejoinder filed by the Assessee, the assessee has submitted its counter submission against departmental arguments as follows:

Arguments of department
Rejoinder/Counter Arguments of the Assessee
4. There are no invoice/challan/bills of whatsoever nature, and no supporting documents submitted.
•
In support of the fact that the items were sent for repair, the Appellant submitted affidavits from the concerned parties. However, the Ld. AO did not conduct any independent inquiry from the parties during remand proceedings before rejecting their affidavits.

•
Merely because it was submitted before Ld. CIT(A) only does not absolve the AO from performing its duty to check the veracity of the affidavits.

•
There is no inquiry or verification if there were some doubts or suspicion. It is clarified that there was no previous occasion for submission of these affidavits as Ld. AO during the assessment proceedings did not confront the Appellant for any shortcomings in the supporting documents supplied during assessment proceedings.

•
The Appellant clarified the position before the DDIT(Inv) on 05.04.2021 itself regarding various items sent for repairs and in the statement of Mr.
Rajesh Ajmera, the fact of items sent for repairs was establishes and photos of items shown.

•
The details of the parties were duly given on 5.04.21
before the investigation wing. Refer page 905- 908
PB VOL 5. •
Delay in submission of additional evidence, is not a valid ground for rejecting them, especially without conducting an independent inquiry from the parties whose affidavits were submitted. In this context, the Appellant places its reliance in case of Mehta
Parikh & Co. v. CIT [1956] 30 ITR 181 wherein
Hon’ble Apex Court has held that unless the person making the statement in the affidavit is cross- examined by the revenue, it is not open to the revenue to challenge the correctness of the statement made by the deponent in the affidavit.
Further
Reference
Deputy
Commissioner of Income-tax v. Smt. Jayita Bose, [2004] 3 SOT 525
(KOL.) (Refer S. No. 21 of the case compilation)

•
It is humbly submitted that in the jewellery industry, it is a common practice for items to be sent for repair based on mutual trust between the parties involved as items are sent to known person/parties with huge trust and primary artisan with low- income level but very high trust in them. The repair
•
Furthermore, it is important to note that only few items, which is very small fraction out of the total inventory of more than three thousand items of gold and more than 14 thousand items of silver, were found deficient and reasonably explained to be sent for repair by the Appellant.

•
This itself proves that vast majority of the stock remained present at time of impugned valuation by department.

•
Therefore, there is no ground to reject the explanation of the Appellant which is reasonable and justified.

•
No contrary evidence has been brought on record to negate the explanation of the Appellant, mere doubts or insufficiency of trails are being argued, which is not justified.

•
Based on the stance taken by the Ld. AO, the inference is that no item could have been sent for repair, which is an unreasonable and flawed conclusion. Such an assumption disregards the customary practices in the jewellery industry, where repair activities often occur, especially when dealing with trusted parties.

•
The Ld. DR has simply disapproved the affidavits without even seeing them and blindly placed reliance on one liner general comments of Ld.
CIT(A) in its impugned order.

•
From the face of the affidavits placed on records, the identity, purpose, details of the movement and other particulars are duly established, which supports the details submitted during post survey proceedings itself. Kindly refer to page no. page
905- 908 PB VOL 5. duly supported by affidavits at page no. 1745-1754 of Vol. 9. •
The nature of work done and fact of items were sent for repair/refurbishing etc, is very much evident from affidavits of parties placed on record.
66. We have considered the rival submission and material placed on record, written submission and affidavit and other supporting documents placed by Assessee to justify its explanation submitted during survey as well as in post survey proceeding. We find that factual position of 41 high value items was duly clarified to investigation wing on 05.04.2021 itself vide letter dated 05.04.2021 Page No. 905- 908 PB Vol 5 and nothing on record to show that department has ever controverted the same. The names of the parties to whom items were sent for repair and received back were also given to investigation wing post survey at the available time considering
COVID-19 situation/restriction. The department has not conducted any further verification from the parties. There is also force in the argument of the Ld. Senior counsel that considering the value of gold content in items appearing at Sr. No. 1, the typing error explained by Mr. Rajesh Ajmera in his statement in answer to Q. No. 40 (Page No. 142-143 of Vol. I) deserves to be accepted. Thus, the documentary evidence in form of affidavits placed on record, were in furtherance to the substantiates the explanation of the assessee regarding these items of jewellery that it were sent for repairs. The explanation of the Assessee is plausible that in the jewellery industry, the Artisens are individuals or person of unorganized sector who are trustworthy person, similarly repair work has been done through sister items were not found during the survey. The Assessee has shown repair/job work charges in his audited financial statements, for which relevant nature of work performed has also been shown to us during hearing on sample basis. No evidence of sale of such items has been found during the survey. Needless to say burden to prove is on the department. Hence, in the absence of any corroborative material, no inference that items were sold outside the books can be drawn. These affidavits cannot be rejected at threshold without any inquiry or cross examination, the AO as well as CIT(A) has not made any inquiry or cross examined these persons. Thus, unless the parties are cross examined, it is not open to the department to simply discard these affidavits Our view is supported by judgment of Hon’ble Apex Court in the case of Mehta Parikh
& Co. v. CIT [1956] 30 ITR 181 wherein Hon’ble Apex Court has held that unless the person making the statement in the affidavit is cross-examined by the revenue, it is not open to the revenue to challenge the correctness of the statement made by the deponent in the affidavit. The bench also noted that for the impugned addition of Rs. 11.40 crores made on account of non availability of high value 41 items of jewellery the proof that 30 items were sent on repairs and 11 items were traced on the same day and shown as to Amrapali Jewels Pvt. Ltd. vs. ACIT search team and the ld. DR did not dispute that primary information placed on record by the assessee vide letter dated 05.04.2021. This letter was filed by the assessee at page No. 905 volume (v) of the paper book placed on record and therefore, that amount cannot be considered as unaccounted sales because the revenue did not deal with the contention of the assessee which was duly supported by the evidence placed on record and supported by the affidavit placed on record. In the light of this observation ground no. 17 raised by the assessee stands allowed.
67. Ground no. 18 deals with the addition referred to in ground no. 16 &
17 raising the ground that the whole amount of sales cannot be added but only the profit embedded to it can be taxed. Since we have while dealing with ground no. 16 accepted these arguments and addition was deleted vide ground no. 17 this ground no. 18 raised by the assessee stands allowed.
68. Ground no. 19 raised by the assessee asking the telescoping benefit of the excess stock with that of the amount considered as unaccounted sales by the ld. AO. Since we have deleted the excess stock amount added by the lower authority therefore, this ground raised by the assessee becomes adjudicative in nature.
69. Ground no. 20 & 22 raised by the assessee for levy of tax as per provision of section 115BBE of the Act and Charge of interest as per provision of section 234A/B/C of the Act, being consequential in nature does not require our specific finding.

Page no.

Amount recorded

115 of Exhibit 3 of Annexure AS Rs. 2,00,000/-

119 of Exhibit 3 of Annexure AS Rs. 2,10,000/-

120 of Exhibit 3 of Annexure AS Rs. 2,00,000/-

122 of Exhibit 3 of Annexure AS Rs. 5,55,000/-
Rs. 11,65,000/-

Tk;iqj@Jaipur fnukad@Dated:- 19/02/2025
*Ganesh Kumar, Sr. PS
आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू
1. The Appellant- Amrapali Jewels Pvt. Ltd., Jaipur/DCIT, Jaipur
2. izR;FkhZ@ The Respondent- ACIT, Central Circle-01, Jaipur
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 Nos. 740 & 750/JP/2024) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत