PRINCIPAL COMMISSIONER OF INCOME TAX vs. M/S JEWELS EMPORIUM

[2024:RJ-JP:41774-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 43/2021 Principal Commissioner Of Income Tax, Jaipur-I, Jaipur, New Central Revenue Building, Statue Circle, Jaipur (Raj.) ----Appellant Versus M/s Jewels Emporium, D-7, M.I. Road, Jaipur. ----Respondent For Appellant(s) : Mr. Anuroop Singhi with Mr. N.S. Bhati & Mr. Aditya Khandelwal For Respondent(s) : Mr. Javed Khan HON'BLE MR. JUSTICE AVNEESH JHINGAN HON'BLE MR. JUSTICE ASHUTOSH KUMAR Order 01/10/2024 AVNEESH JHINGAN,J:- 1. This appeal is filed against the order of Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short 'Tribunal') vide order dated 15.09.2020 pertaining to assessment year 2015-16. 2. The brief facts are that on 17.12.2014 search operation was carried out under Section 132 of Income Tax Act, 1961 (for short ‘the Act’) at the business premises of the firm as well as on the residential premises of the partner. The assessee filed a return declaring income of Rs.9,97,510/-. The assessment under Section 143(3) read with 153B(1) (b) of the Act was finalised on 23.12.2016, assessing the income at Rs.6,58,52,710/- by making an addition of Rs.6,14,97,858/- towards the excess stock. The CIT(A) vide order dated 12.12.2018 accepted the appeal of the assessee and deleted the addition made on the basis of

[2024:RJ-JP:41774-DB] (2 of 3) [ITA-43/2021] excess stock. The appeal of the department was dismissed by the Tribunal, hence the present appeal. 3. The following substantial question of law have been proposed:- “(i) Whether, on the facts and circumstances of the case and in law, the Learned ITAT was justified in deleting the addition of Rs.6,14,97,858/- made on account of excess stock found during search proceedings when the assessee itself had surrendered the same during course of search proceedings ? (ii) Whether, on the facts and circumstances of the case and in law, the Learned ITAT was justified in deleting the addition of Rs.6,14,97,858/- made by AO on account of excess stock found during search proceeding despite the fact that the assessee was not maintaining day to day stock register and the valuation of stock was done on net realizable value and not on sale price which was not disputed by the assesse during the course of search and even post search investigation, he was in full agreement with the valuation? (iii) Whether, on the facts and circumstances of the case, the finding of the Tribunal is perverse, contrary to the record and untenable in the eyes of law?" 4. Learned counsel for the appellant submits that partner of the firm in his statement had admitted the excess stock and retraction was after more than two years. There was no basis for the appellate authority for deleting the addition. 5. Learned counsel for the respondent submits that no substantial question of law is involved. The difference of the stock was due to adding of the profit element whereas books of accounts were maintained on cost price basis. 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.

[2024:RJ-JP:41774-DB] (3 of 3) [ITA-43/2021] (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 result of valuation being done on current market price and books being maintained on cost. 9. There is no question of law much less substantial question of law involved in the appeal. The addition was deleted on the basis of the factual findings recorded. 10. No case is made out for interference under Section 260(A) of the Act. 11. The appeal is dismissed.

(ASHUTOSH KUMAR),J (AVNEESH JHINGAN),J Mohita/Riya/17 Whether Reportable: Yes