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Income Tax Appellate Tribunal, BENCH ‘B’ KOLKATA
Before: Hon’ble Shri J.Sudhakar Reddy, AM & Shri S.S.Viswanethra Ravi, JM ]
ORDER PER J.SUDHAKAR REDDY, AM:
This is an appeal by the Revenue directed against the order of the Commissioner of Income Tax-(A)-12, Kolkata relating to A.Y.2011-12 on the following grounds :- “1. That on the facts & the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the additions U/s 69 of the I.T. Act,1961 made under the head 'Purchase of Broken Gold for Rs.l,56,13,456/-', 'Unaccounted Broken Gold found in the premises for Rs.7,08,351/-', 'Unaccounted stones found in the premises for Rs.1,19,035/-' and totaling to Rs.l,64,40,842/-.
2. That on the facts & the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the Assessing Officers observations that the assessee had failed to produce the books of account in which the Purchased Broken Gold and the Broken Gold & stones found in the premises were accounted.
3. The appellant craves leave to amend, modify and alter any grounds of appeal during the course of hearing of this case.”
There is a delay of 19 days in filing the revenue’s appeal. We condone the same.
M/s. Eastern Dimension A.Y.2011-12 2
The assesee is a partnership firm and is a sales agent on behalf of M/s P.C.Chandra Jewellers Apex Pvt. Ltd.. The assessee filed return of income on 29.09.2011 declaring total income of Rs.17,59,385/-. The AO completed the assessment on 21.03.2014 determining the total income of Rs.1,82,00,230/- inter-alia making the addition of the gold purchase and broken gold found as unaccounted as per the ld. AO. The assessee carried the matter to the appeal. The ld. CIT(A) deleted the addition. Aggrieved the revenue is in appeal before us.
After hearing the rival contentions and perused the papers on record and the orders of the authorities below as well as case law cited, we find that the assessee is a sale agent appointed for the purpose of managing Berhampur branch of M/s P.C.Chandra Jewellers Apex Pvt. Ltd.. and for selling the products at the branch.
Both the parties have entered into agreement and a copy of the same is furnished before us by way of paper book.
Clause 1.2. of the agreement states as follows :-
“1.2. The Principal shall at all times be the absolute owner of the said products delivered to the Sales Agent, for the purpose of custody of the said products and selling through the Branch Outlet. Clause 5.9 of the agreement states as follows :-
“5.9. The Sales Agent shall prominently display at a conspicuous place a board and within the Branch Outlet as under :
“PRODUCTS IN THE BRANCH OUTLET ARE OIWNED BY AND ARE ABSOLUTE PROPERTY OF P.C. CHANDRA JEWELLERY APEX PRIVATE LIMITED.” Clause 6.1 and 6.7 state s follows :-
“6.1 It is specifically understood and agreed by and between the parties that at all time the Principal shall be the sole and exclusive owner of the Products kept in custody of the Sales Agent under this Agreement and for in the possession of the Sales Agent or in transit. Nothing herein contained shall be deemed or intended to create any proprietary rights in the Products in favour of the Sales Agent. The Products shall always belong to and remain in the judicial custody of the Principal.
M/s. Eastern Dimension A.Y.2011-12 3
6.7. The Principal shall be entitled to conduct physical stock verification of the Products and/or the books of accounts maintained by the Sales Agent either by its own employees or by the auditors or through any other person, periodically or at any time as may be convenient during a working day. In the event of there being any difference between the physical stock and the stock as per the books of the Principal, then the value of such stocks shall be compensated to the Principal by the Sales Agent immediately, failing which the amount involved shall be recovered from the commission payable to the Sales Agent by the Principal.”
A perusal of this agreement demonstrates that the assessee was never the owner of the gold ornaments and the gold found in its premises. The AO in this case has invoked the provision of section 69A of the Act. The ld. CIT(A) has deleted the addition based on this agreement holding that the assessee is not the owner of this broken gold and jewellery and hence the addition cannot be made u/s 69A of the Act. The ld. CIT(A) held that the assessee was holding the said gold on behalf of M/s P.C.Chandra Jewellers Apex Pvt. Ltd.., to which it is an agent. We find no infirmity in the same. The AO has not made any enquiries whatsoever with M/s P.C.Chandra Jewellers Apex Pvt. Ltd.. on the claims of the assessee. The assessee submits that M/s P.C.Chandra Jewellers Apex Pvt. Ltd.. has deducted tax at source for the commission paid to the assessee and that the details were before the AO and this demonstrates the nature of relationship between the assessee and M/s P.C.Chandra Jewellers Apex Pvt. Ltd..
In view of the above discussion we uphold the order of the First Appellate Authority and dismiss the appeal of the revenue.
In the result the appeal of the revenue is dismissed.
Order pronounced in the Court 14.03.2018.