PARESHBHAI M AHENDRABHAI, PM JEWELWX P LTD,MEDABAD vs. ACIT .CEN . CIR-2, , RAJKOT

Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld.CIT(A), who has confirmed the action of the AO by observing as follows: “Since, the appellant has failed to prove with evidences, the onus cast upon him to prove that the gold ornaments allegedly sent to him by M/s. Akarsh Gold, Ludhiana for job work had been considered by the AO in that case; the action of the AO in treating the fine gold/gold bar valued at Rs.10,54,212/- as unaccounted investment and adding it to the total income of the appellant U/s.69A of the Act on protective basis is hereby confirmed.”

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

Ground Nos. 1 & 2 are not pressed by the Ld. AR.

During the course of hearing, the Ld. Counsel for the assessee has submitted that in this case the substantive addition has not been made in the hands of the true owner and only protective addition was made in the hands of the assessee. The Ld. Counsel pointed out that the true owner in whose hands the substantive addition was to be made is Smt. Ritu Verma who is the proprietor of M/s. Akarsh Gold. As no assessment was framed in the hands of M/s. Akarsh Gold, that is, no substantive addition was made in the hands of M/s. Akarsh Gold, therefore, protective addition should not be made in the hands of the assessee. Ld. Counsel submitted that this protective addition was made in the hands of the assessee u/s.69 A of the Act, which was not required as Page 4 of 9 P.M. Jewelex P Ltd. the substantive addition has not been made by the Department in the hands of true owner, then no protective addition should be made in the hands of the assessee under consideration, under the wrong section of the Income Tax Act, 1961.

The Ld. Counsel for the assessee submitted that during the assessment proceedings as well as appellate proceedings, the assessee submitted relevant documents and evidences as and when called by the authorities. The documents which were submitted before the AO were already placed in the paper-book of the assessee and there is no new evidence in the paper-book.

On the other hand, the Ld. DR for the Revenue relied on the findings of the authorities below and stated that since no substantive addition has been framed by AO, therefore, the protective addition should be sustained in the hands of the assessee, to protect the revenue.

We have heard the both the parties and perused the materials available on record. We note that AO had made an addition of Rs.10,54,212/- u/s 69A of the Act on protective basis. The ADIT, Investigation, Rajkot had intercepted two persons namely Shri Sureshkumar and Shri Jagdish Prasad of Bright Courier on 27.10.2017 at Rajkot Airport who were carrying Delhi weighing 348.54 gms gold to the assessee through Jet Airways. The parcels allegedly were to be delivered to the assessee containing total Fine Gold weighing 348.54 gms. The said Gold was finally seized by the ADIT, Rajkot and on not being satisfied with the supporting documents provided or produced regarding the ownership of above stated Gold during post interception interrogation/investigation. Subsequently, proceedings u/s 153C was initiated in the case of the assessee P M Jewelex P. Ltd. and AO has also sent the information/his satisfaction note for Page 5 of 9 P.M. Jewelex P Ltd. initiation of proceedings u/s 153C to the jurisdictional AO of the supplier M/s. Akarsh Gold, Ludhiana. The AO in the assessment order, held that the Fine Gold received by the assessee was belonging to M/s. Akarsh Gold, Ludhiana, weighing 348.54 gms, but it was not known whether it is explained one or unexplained. Therefore, in order to protect the interest of revenue, he made addition of Rs.10,54,212/- being the value of Fine Gold weighing 348.54 grams in the hand of the appellant on protective basis as substantive assessment is to be made in the cases of M/s. Akarsh Gold, Ludhiana.

The appellant has contended that the supplier M/s. Akarsh Gold, Ludhiana is the owner of the gold and they had sent parcel to the appellant for the job-work purposes and had submitted all the details during the post-search proceedings. It is also stated that the supplier had furnished the stock register as well as his purchase bills evidencing that he had enough stock on hand from which the gold has been sent to the appellant for job-work. All these facts have already been verified by the AO during the assessment proceedings and no new evidences have been filed during the appellate proceedings before CIT(A). It is also stated that the copy of assessment order in the case of Om Jewellers is not available with the appellant and that as per knowledge of the appellant, the assessment was not reopened for the A.Y. 2018-19. However, the appellant has not submitted any evidence(s) to this claim nor could explain the fate of thegold, claimed to have been sent by M/s. Akarsh Gold, Ludhiana for job-work purpose despite giving various opportunities. Since, the appellant has failed to prove with evidences, the onus cast upon him to prove that the gold ornaments sent to him by M/s. Akarsh Gold, Ludhiana for job-work had been considered by the AO in that case, the action of the AO in treating the fine gold valued at Page 6 of 9 P.M. Jewelex P Ltd. Rs.10,54,212/- as unaccounted investment and adding it to the total income of the appellant U/s. 69A of the Act on protective basis was confirmed by CIT(A).

We note that no substantive addition has been made in the hands of M/s. Akarsh Gold and the aim of protective addition is made to protect the interest of Revenue. The Revenue did not make the substantive addition in the hands of the true owner. Therefore, protective addition made in the assessee’s case should not be sustained. We note that assessee has furnished the following documents and evidences before the Assessing Officer. (1) Copy of self-certified stock ledger from the books of M/s. Akarsh Gold. (2) Copy of issue voucher no1 from the books of M/s. Akarsh Gold,. (3) Page print of the e-proceedings from the Income tax login of M/s. Akarsh Gold Proprietor Smt. Ritu Verma depicting that no assessment has been carried out for the A.Y 2018-19 in the hands of true owner. (4) Page print from the Income tax login of M/s. Akarsh Gold Proprietor Smt. Ritu Verma depicting depicting Nil outstanding demand.

That the Ld. DR during the course of hearing confirmed this fact that no substantive addition has been made in the hands of M/s. Akarsh Gold, who was the true owner of the gold. The Protective addition was merely made in the hands of the assessee to protect the revenue. The AO made protective addition only in the hands of the assessee on the presumption that if substantive addition is made in the hands of M/s. Akarsh Gold and till M/s. Akarsh Gold accepted, its responsibility as a true owner, the protective addition may be made in the hands of the assessee and, therefore, it was imperative to protect the interest of revenue to avoid the possibility of leakage of revenue and to deal with the Page 7 of 9 P.M. Jewelex P Ltd.

In the result, the appeal of the assessee is allowed.