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Income Tax Appellate Tribunal, KOLKATA BENCH (SMC
Before: Shri P.M. Jagtap, AM]
order : September 26, 2018 ORDER This appeal filed by the assessee is directed against the order of Ld. CIT (Appeals) – 13, Kolkata dated 08.08.2017.
Ground No. 1 and 2 raised by the assessee in this appeal is general in nature which do not call for any specific adjudication.
The issue raised in ground no 3 relates to the addition of Rs. 10,47,196/- made by the AO and confirmed by the Ld. CIT(A) on account of excess silver found during the course of survey by treating the same as unexplained.
The assessee in the present case is an individual who was trading in gold and silver. The return of income for the year under consideration was filed by the assessee on 31.03.2012 declaring a Smt. Indira Rai total income of Rs. 14,04,646/-. A survey u/s 133A of the Act was carried out at the assessee’s business premises on 21.01.2011. During the course of survey, silver weighing 60,027 gms. was found on physical verification. As per the stock record, the stock of silver as on that date of survey was only 23,700 gms. showing a difference of 38,327 gms. representing excess stock of silver. In this regard, it was explained by the assessee that silver weighing 22,991 gms. belonging to himself in his personal capacity and 8,000 gms. belonging to his daughter were kept in his business premises. He also stated that the stock of silver belonging to himself and his daughter were 15 to 20 years old. This explanation was not found acceptable by the AO. According to him, the entire stock of silver was found in the form of slabs and rods which were very shining and fresh looking. He also did not find merit in the submission of the assessee that the old silver was melted and remolded in the form of slabs and rods in the absence of proper and sufficient documentary evidence to support and substantiate the same. He accordingly treated the excess stock of sliver found during the course of survey to the extent of 30,991 gms. as unexplained and added the value of the same amounting to Rs. 10,47,496/- to the total income of the assessee.
The addition of Rs. 10,47,496/- made by the AO on account of excess stock found during the course was challenged by the assessee in the appeal filed before the Ld. CIT(A) and since the submission made on behalf of the assessee in support of his case on this issue was not found acceptable by the Ld. CIT(A), he confirmed the addition made by the AO on account of excess stock of silver for the following reasons given in his impugned order:
Smt. Indira Rai “I have perused the ground of the appellant and observation of the AO. The appellant has explained the additional silver stock with the explanation that personal silvers were converted into stock in trade. The appellant has not been able to explain as to why the relevant entry in the books of accounts was not made as the silvers were not in the shape of ornaments. Nothing was preventing the appellant to credit the capital account by bringing stock into his book when the entire stock as stated was lying in the stock that too was converted in the form of bars. Even for practical purpose control over the precious and valuable items records are kept, but there was nothing on record to support the claim of the appellant that the silver jewellery was brought into stock in trade. The melting bills of silver produced by the appellant only denotes that some article of silver has been mentioned which can be purchased of old ornaments from the clients also. It is also seen from the Wealth Tax Return of Sri Prahalad Rai that silver of 23 kg. has shown in the declaration of W.T. return in the assessment year 1997- 98. Similarly, in case of his daughter the silver has been declared of 8 kgs. in the assessment year 1990-91. As no record was found during the course of survey which could reflect any light regarding conversion of personal silver asset into stock in trade and even in the books of accounts no such record was made and why no such record was made was not explained. Keeping in view all the facts it is clear cut case where appellant tried to explain the excess silver found in the stock with the help of declaration made in W.T. return. It is nothing but an alibi of the appellant. Therefore, the addition made by the A.O. is hereby upheld and the ground of appeal is dismissed.”
The learned counsel for the assessee submitted that the alleged excess stock of silver weighing 30,991 gms. found during the course of survey was explained by the assessee as belonging to him and his daughter. He contended that this explanation of the assessee however was not found acceptable either by the AO or by the Ld. CIT(A) in spite of the fact that the same was duly supported by the documentary evidence. He invited my attention to the balance sheet of the assessee as on 31.03.1990 placed at page 35 of the Paper Book to show that 23 kgs. of silver was duly shown by the assessee in the Smt. Indira Rai said balance sheet. He also pointed out from the balance sheet of daughter of the assessee as on 31.03.1990 placed at page 36 of the Paper Book that silver of 6 kgs. was duly shown therein. He submitted that the said silver was duly reflected in the balance sheet of the assessee as well as his daughter even for the subsequent years and the explanation of the assessee that these old silver ornaments were lying in the business premises was not accepted by the authorities below as the silver found during the course of survey was in the form of slabs and rods which were looking shining fresh. He contended that it was explained by the assessee in this regard that the old silver ornaments were got melted and converted into slabs and rods, but this explanation of the assessee which was duly supported by the documentary evidence was also not accepted by the authorities below as the said documents were in the name of the proprietary concern of the assessee M/s. B.K. Bullion. He contended that the melting services are available for bullion dealers only and therefore, the old silver ornaments were converted into slabs and rods through M/s B.K. Bullion, a bullion merchant and commission agent.
The learned DR, on the other hand, relied strongly on the impugned order of the Ld. CIT(A) in support of the revenue’s case on this issue and submitted that all the submissions made on behalf of the assessee now before the Tribunal have already been considered by the Ld. CIT(A) before confirming the addition made by the AO on this issue.
I have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that excess
Smt. Indira Rai stock of silver to the extent of 30,991 gms. found during the course of survey has been treated by the authorities below as unexplained after rejecting the explanation of the assessee that the same was belonging to himself in his personal capacity as well as to his daughter. As pointed out by the learned counsel for the assessee from the balance sheet of the assessee as well as his daughter as on 31.03.1990, silver ornaments of 23 kgs. and 6 kgs. were duly reflected in the balance sheets of the concerned persons right from the year 1990. The authorities below however doubted this position which was duly supported by the relevant balance sheets on the ground that the excess silver found during the course of survey was in the form of slabs and rods which were looking shining fresh. In this regard, it was explained by the assessee that the old silver ornaments were converted into slabs and rods in January, 2011 by melting process and the documentary evidence in the form of delivery challan and bills for melting charges was also produced by the assessee to support and substantiate the same. The authorities below however rejected this explanation of the assessee on the ground that the said documentary evidence was in the name of proprietary concern of the assessee and not in the individual names of the assessee and his daughter. As contended by the learned counsel for the assessee by relying on the additional evidence filed in the form of a certificate dated 28.05.2018 issued by the West Bengal Bullion Refineryes & Assayes Association, the melting service are provided only to bullion business owners and jewellers and not to the individual customers. This documentary evidence filed by the learned counsel for the assessee, which is admitted by me being relevant to support and substantiate the assessee’s case, is sufficient to show that their silver
Smt. Indira Rai ornaments were converted by the assessee and his daughter into slabs and rods by the process of melting through the assessee’s proprietary concern M/s. B.K. Bullion, a bullion merchant and commission agent under the compelling circumstances and there was no justifiable reason for the authorities below to doubt or dispute the explanation offered by the assessee as regards the excess stock of silver found during the course of survey which was duly supported by the relevant documentary evidence. We, therefore, accept the said explanation and delete the addition made by the AO and confirmed by the Ld. CIT(A) on this issue. Ground No. 3 of the assessee’s appeal is accordingly allowed.
The issue raised in Ground No. 4 relates to the addition of Rs. 2,51,000/-made by the AO and confirmed by the Ld. CIT(A) on account of excess cash found during the course of survey.
During the course of survey, excess cash of Rs. 3,59,745/- was found in the possession of the assessee of the assessee. In this regard, the explanation offered by the assessee that the said cash to the extent of Rs. 78,000/- belonged to another person Shri Dharmendra Seth and to the extent of Rs. 42,965/- represented rent collected from various tenants in his personal capacity was found acceptable by the AO. However, the explanation of the assessee as regards the balance excess cash of Rs. 2,51,000/- representing advance money received from one Shri R.K. Khemka on account of sale of a property was not found acceptable by the AO. He noted that the agreement produced by the assessee in this regard indicated the date of execution as on 08.01.2011, but the same was signed by a notary only on 04.02.2011
Smt. Indira Rai i.e. after the date of survey. He also noted that the concerned property was held jointly by the assessee with his wife but there was no mention of the name of the assessee’s wife in the agreement dated 08.01.2011. He accordingly rejected the explanation of the assessee as regards the excess cash found during the course of survey to the extent of Rs. 2,51,000/- and added the said amount to the total income of the assessee. On appeal, the Ld. CIT(A) confirmed the said addition made by the AO for the same reasons as given by the AO.
I have heard the arguments of both the sides on this issue and also perused the relevant material available on record. Although the learned counsel for the assessee has contended that the property in question has been finally sold by the assessee and his wife proving the genuineness of the transaction and the date of notarisation of agreement is not relevant, I find that the specific defects pointed out by the AO in the agreement dated 08.01.2011 produced by the assessee in support of his explanation as regards the cash advance received clearly create doubts about genuineness of the said documentary evidence. As held by the authorities below, it appears to be a case of anti-dating the agreement in order to explain the excess cash found during the course of survey and this position was further corroborated by the fact that the said document claimed to be executed on 08.01.2011 was signed by the notary only on 04.02.2011 i.e. after the date of survey. I, therefore, find no justifiable reason to interfere with the impugned order of the Ld. CIT(A) confirming the addition made by the AO on this issue and upholding the same, I dismiss ground no 4 of the assessee’s appeal.