YOGESH VITHALBHAI ZAVERI,,AURANGABAD vs. ADDITIONAL COMMISSIONER OF INCOME-TAX,,

The assessee has raised the following ground of appeal:- On the facts and in the circumstances of the case the Learned Commissioner of Income Tax (Appeals) (Ld CIT(A))-2 has erred in confirming the addition of Rs.23,22,760/- on account of investment in anamat gold treating it as unexplained investment u/s 69A of the Income Tax Act, 1961 without considering the evidences produced before Assessing Officer and before Ld. CIT(A)-2.

The issue raised in the present appeal is against addition of ₹ 23,22,760/-.

Briefly, in the facts of the case, the assessee was the proprietor of M/s. V.B. Jewellers and M/s. V.B. Zaveri and Sons, Aurangabad. Both the concerns were engaged in sale of jewellery. The assessee also disclosed income from other sources and capital gains. Survey action under section 133A of the Act was conducted at the business premises of assessee on 11.03.2002. During the course of survey, statement of assessee was recorded on oath. Certain discrepancies were found during the course of survey, which were confronted to the assessee. One such discrepancy was in cash as per books of account and as per trail balance; inventory of stock found was also prepared and the difference in stock worked out to ₹ 7,98,102/-. The assessee was confronted with the said difference and the assessee pointed out that he will reconcile the differences. Another statement of assessee was recorded under section 131 of the Act on 22.03.2002. In the statement recorded during the course of survey, the assessee had stated that gold ornaments weighing 5 to 6 kg belonging to M/s. Vitthaldas Zaveri & Sons, IRLA Ville – Parle, West Mumbai, were lying with him. During the course of second statement recorded under section 131 of the Act, the assessee was mainly questioned regarding the said jewellery. The assessee claimed that the said jewellery available with him was anamat. Another statement was recorded under section 131 of the Act on 21.03.2005.

The CIT(A) did not accept the theory of anamat gold propounded by the assessee. The CIT(A) vide order dated 28.12.2005 allowed the claim of assessee. The Revenue filed an appeal against the order of CIT(A) and the Tribunal vide order in ITA No.363/PN/2006 remitted the issue back to the file of CIT(A) to assess correct and complete facts of the case.

The CIT(A) in the second round noted that the assessee had filed copies of vouchers issued by M/s. Vithaldas Zaveri and Sons Pvt. Ltd. showing the dates of transfer and the weight of gold that was transferred. These documents were filed before the Assessing Officer, who also acknowledged the same but did not give any observation on the said transfer vouchers in the assessment order. However, in the remand report in the first proceedings, the Assessing Officer had stated that the details of ornaments were not given on the transfer vouchers. The CIT(A) noted that in the initial appellate order dated 28.12.2005, the CIT(A) had stated that the stock of anamat gold was reflected in stock register maintained in computer and copy of stock register was filed. However, before the Assessing Officer, it was explained that the said stock of anamat was not included in closing stock as it did not belong to the assessee and also purchase value was not recorded in purchases register of assessee. However, the assessee had maintained record of anamat gold in the quantitative stock register maintained by him in computer. The recording of stock was weight received and weight issued. The Commissioner on perusal of stock quantitative register of anamat gold noted that there were various entries and the assessee had received the gold during financial year 2000-01 and had issued the same quantity of gold and hence, nothing was lying with the assessee as anamat gold. It was noted that on 31.03.2001, the assessee had issued quantity of 5805.910 grams of gold to M/s. Vithaldas Zaveri and Sons

The assessee is in appeal against the order of CIT(A).

The learned Authorized Representative for the assessee pointed out that this was the second round of proceedings before the Tribunal. He took us through the facts of case i.e. survey on 11.03.2002, statement recorded and the reply of assessee in initial stages that part of stock belonged to M/s. Vithaldas Zaveri and Sons Pvt. Ltd. Attention was drawn to first statement placed at page 4 of the Paper Book with special reference to question No.20. He then referred to second statement recorded under section 131 of the Act, which is placed at pages 9 and 10 of the Paper Book and it was pointed out that many queries were raised with regard to the said gold lying with the assessee. He then referred to the order of ITAT at pages 32 to 37 of Paper Book. The learned Authorized Representative for the assessee pointed out that confirmation from M/s. Vithaldas Zaveri and Sons Pvt. Ltd. was filed before the Assessing Officer and CIT(A) in the first round of proceedings itself. However, the same was missing before the ITAT and matter was remitted back to the file of CIT(A). He further pointed out that the said stock was not shown in the closing stock of assessee but was duly reflected in the stock register. He further referred to entry on 31.03.2001 when it was shown to have been

The learned Departmental Representative for the Revenue however, stressed that it was difficult to understand how the gold belonging to a concern at Mumbai was lying with the assessee, who was operating at Aurangabad. He further stressed that the gold was received in 2001 and till date of survey it was lying with the assessee. In the absence of any transfer memo, the plea of assessee could not be accepted.

The learned Authorized Representative for the assessee in rejoinder pointed out that explanation which had been given by the assessee during survey proceedings had been again relied upon during the course of assessment proceedings and even before the appellate authority. It was not an afterthought and where the assessee had maintained the entries in the stock register in this regard, the same merits to be accepted.

On perusal of record and after hearing both the learned Authorized Representatives, the issue which arises in the present appeal is in respect of anamat gold found from the assessee; where the case of Revenue is that gold found from the assessee belongs to the assessee and in the absence of same being shown as stock in the hands of assessee, unexplained investment in the said stock of gold is to be added under section 69A of the Act. Survey under section 133A of the Act was conducted on 11.03.2002 at the business premises of assessee. In respect of gold weighing 5805.910 grams, the assessee in the initial statement recorded during the course of survey stated that the said gold does not belong to the assessee but belongs to its sister concern M/s.

The perusal of details filed by the assessee and the assessment order and appellate order reflects that the assessee from the first stage of recording of statement during survey till the date of passing of appellate order had maintained its stand and had filed even the confirmations in this regard before the Assessing Officer and CIT(A). The claim of assessee was that as above stated gold ornaments of M/s. Vithaldas Zaveri and Sons Pvt. Ltd. were lying in his shop since their shop was under renovation. The assessee had also produced vouchers of transfer of gold from M/s.Vithaldas Zaveri and Sons Pvt. Ltd. to the assessee and their entry in the stock register maintained by the assessee on computer. In the totality of the above said facts and circumstances and the stand of assessee, I find no merit in the orders of authorities below in holding that purchase value of aforesaid amanat gold was to be added as unexplained investment in the hands of assessee, since the assessee has failed to establish that the said gold does not belonged to it. I find no merit in the stand of Revenue authorities in this regard, wherein the assessee had not only filed the corresponding vouchers transferring the ornaments to the assessee but also filed confirmations from the third party and had also shown entries in stock register in this regard, then in the absence of any evidence found to the contrary that the said gold does not belong to M/s.

In the result, appeal of assessee is allowed.