Loading judgment…
Facts
A search action under Section 132 of the Income Tax Act was conducted on the assessee's jewellery business, revealing discrepancies in stock valuation (specifically diamond jewellery) and unexplained cash. The Assessing Officer made additions based on these discrepancies, which were partly confirmed by the CIT(A) on appeal.
Held
The Tribunal found merit in the assessee's revised valuation for diamond jewellery, noting that the assessee had already offered income covering the discrepancy, and directed the AO to delete this addition. Regarding the unexplained cash, the Tribunal accepted the assessee's claim that ₹3,50,000 belonged to Ghanshyam Prasad Gupta (HUF), citing the HUF's legitimate income from rental and lichi sales, despite not filing tax returns, and directed the AO to delete this addition as well.
Key Issues
Valuation discrepancy of diamond jewellery found during search proceedings; Addition for unexplained cash found during search, claimed to belong to HUF.
Sections Cited
132, 132(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA
Before: SHRI DUVVURU RL REDDY, VP & SHRI RAJESH KUMAR, AM
This is an appeal preferred by the assessee against the order of the Commissioner of Income-tax (Appeals)-3, Patna(hereinafter referred to as the “Ld. CIT(A)”] dated 20.03.2019 for the AY 2013-14.
The issue raised in ground no.1 is general in nature and need no specific adjudication.
The issue raised in ground no.2 is part confirmation of addition to the extent of ₹2,41,392/- by the learned CIT (A) as against the addition made by the learned AO of ₹11,07,340/-
Items Stock Value Stock as per Value Difference Physically books found Gold 5809.860 ₹1,50,62,062/- 1603.09 gms ₹47,90,948/- ₹1,02,71,114 Silver 56557 gms ₹20,98,264/- 10915.412 gms ₹8,32,432/- ₹12,65,831 Diamond - ₹27,93,775/- ₹7,23,380/- ₹20,70,395 3.2. As so far as the valuation of gold, diamond and silver is concerned, there is no difference between the gold, ornaments and silver ornaments valuation and difference arose in respect of diamond jewellery valuation which was initially valued at ₹27,93,775/- and was also accepted by the department Valuer. However, the assessee later on realized that there was wrong valuation and thereafter the correct valuation was furnished.
3.3. In the appellate proceedings, the learned CIT (A) relied on the statement as mentioned in the oath about the value of diamond and jewellery, which is available at page no.45 of the Paper Book and accordingly, the addition of ₹2,41,392/- sustained by partly allowing the appeal of the assessee.
3.4. After hearing the rival contentions and perusing the materials available on record, we find that the assessee has initially calculated the value of diamond, jewellery at ₹27,93,02,000/- which was found
Particulars Amount Amount Value of Sl. No.1,2,3 & 5 as per valuer’s report 15,40,175 Add: Value of Sl. No.4-62.680 gm of 18 carat of gold 1,91,174 - valued @ ₹3,050/- per gram (as per valuer -page 40 of Paper Book)=1,91,174 3.5. We note that if the jewellery valuation of ₹19,11,349/- is taken then the valuation of total jewellery comes to 1,20,79,572/- against which the assessee has already offered income of ₹1,25,00,000/- and thus, there is no addition called for. We find merit in the contention of the assessee and accordingly, modified the order of learned CIT (A) and direct the learned AO to delete the addition. The ground no. 2 is allowed.
The second issue raised by the assessee in ground no.3 is against the part confirmation of addition at ₹3,50,000/- by the learned CIT (A) as made by the learned AO of ₹9,08,405/-.
4.1. After hearing the rival contentions and perusing the materials available on record, we find that the learned AO has made an addition of ₹9,08,405/- on account of cash found during the course of search. The learned CIT (A) reduce the addition to ₹3,50,000/- by partly allowing the appeal of the assessee.
4.2. After hearing the rival contentions and perusing the materials available on record, we find that the learned CIT (A) did not accept the contention of the assessee that the said cash belonging to Ghanshyam Prasad Gupta (HUF), only on the ground that the HUF was not assessed to tax. Before us the assessee furnished computation of income, balance sheet, capital account ,agreement of sale of lichi from A.Y.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 09.12.2025.