Deputy Commissioner Of Income Tax v. Mitesh Export....opponent(S

O/TAXAP/401/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 401 of 2006 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER =========================================================== 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ DEPUTY COMMISSIONER OF INCOME TAX....Appellant(s) Versus MITESH EXPORT....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI andHONOURABLE MR.JUSTICE K.J.THAKERDate : 14/11/2014ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1.By way of this appeal, the revenue has challenged the order dated 19.8.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad [for short “the ITAT”] in IT(SS)A No.13/Ahd/1999. 2.It appears that the present appeal has not been admitted till date and no any steps to get matter heard are taken after 2006. 3.The facts in brief are that the assessee is a registered partnership firm and engaged in the business of diamonds. On 21[st] January, 1997, a search and seizure operation was carried out at the business as well as residential premises of the assessee. Thereafter, a notice was issued under Section 158BC of the Act to the assessee to file return of undisclosed income. In response to the said notice, the assessee filed return of undisclosed income of Rs.2,61,862/-. 3.1.Thereafter, the assessing Officer started assessment proceedings and by order dated 30[th ]November, 1998 determined total income at Rs.1,34,22,419/-. Against the said order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals)-IV, Baroda. The CIT(A) allowed the appeal of the assessee. Being aggrieved by the same, the Revenue filed an appeal before the ITAT. The Tribunal vide order dated 19.8.2005 dismissed the appeal of the Revenue. Hence, this appeal has been filed by the revenue. 4.Learned advocate for the appellant has submitted that the Tribunal has committed error in passing the impugned order. He further submitted that the Tribunal has not appreciated the materials available on record in its true spirit. 5.We have heard learned advocates for both the parties and perused the material on record. The Tribunal while deciding the appeal in paragraph Nos.9.1,11, 11.1 & 11.2 has observed as under:- “9.1. At the time of hearing before us, it is submitted by the learned DR that during the course of search of the assessee’s premises excess rough diamonds weighing 12240.46 carats were found and seized. The valuer has valued the same at Rs.34,90,310/-. The assessee has offered the value of such excess rough diamonds at Rs.10 lacs and disclosed the same as income of the block period. That when the value of the seized diamonds was Rs.34,90,310/-, there was no justification for the assessee to offer its value at Res.10 lacs. He, therefore, submitted that order of the CIT(A) should be reversed and that of AO may be restored. 11.Ground No.2 of the Revenue’s appeal reads as under:- “9.1. At the time of hearing before us, it is submitted by the learned DR that during the course of search of the assessee’s premises excess rough diamonds weighing 12240.46 carats were found and seized. The valuer has valued the same at Rs.34,90,310/-. The assessee has offered the value of such excess rough diamonds at Rs.10 lacs and disclosed the same as income of the block period. That when the value of the seized diamonds was Rs.34,90,310/-, there was no justification for the assessee to offer its value at Res.10 lacs. He, therefore, submitted that order of the CIT(A) should be reversed and that of AO may be restored. 11.Ground No.2 of the Revenue’s appeal reads as under:- “The learned CIT(A) has erred in deleting the addition on account of excess polished diamond not shonw in books of accounts wt. 1701.87 cts valued at Rs.13,91,040/-.” 11.1.During the course of search the stock of polished diamonds found with the assessee and as disclosed in the books of account was as under:- I]stock lying with M/s M. Suresh & Less: Stock shown in books of accounts1241.84 carat Excess stock:-1701.87 carat The assessee has already admitted the above excess stock of 1701.87 carats and offered an income of Rs.20 lakhs as unexplained investment in the above excess stock of polished diamonds. The AO held that the stock found at Surat office at 1267.78 carats was unexplained stock and therefore, he valued the excess stock of polished diamonds at Rs.33,91,040/- as against the sum of Rs.20 Lakhs offered by the assessee. On apopeal, the CIT(A) deleted the addition of Rs.13,91,040/- 33,91,040 – 20,00,000 disclosed by the assessee)with the following observations: “3.2 The contention of the appellant and the AO and the facts on record are considered carefully. It is seen that the AO has taken the value of unaccounted diamonds at the same value which were seized by the department ignoring the relevant facts. From the records, it is seen that the facts stated by the appellant as mentioned above are correct. The diamonds of 1675.93 carats which were sent through jangads to Bombay were not recorded in 1267.78 carats were found at Surat as against 1241.84 carats shown in the stock register and the authorized officer seized the difference of 25.94 carats as unaccounted polished diamonds on that the stock of 1241.84 carats found at Surat was as per stock register and explained. The diamonds weighing 1675.93 sent to Mumbai throguh jangads slips were not recorded in the stock register. Thus, the polished diamonds sent through these slips are unexplained unless there is evidence or material to show otherwise. In the statement also, the partner Shri Champaklal Sanghvi stated that the diamonds sent through jangad from October, 1996 to December, 1996 wee not recorded in the books of account and were unexplained. He further stated that in lieu of unexplained diamonds found in Bombay he is offering diamonds found at Surat of 1241.19 carats also for seizure. After considering 27.1.97 but seized on 1.2.97 were explained diamonds. Further, the polished diamonds of 25.94 carats which were found at Surat and seized and polished diamonds of 1675.93 carats which were found at Bombay office and partially seized are unexplained diamonds. Thus, the value of unexplained diamonds will be Rs.19,41,244/- (Rs.19,26,184 +Rs.15,060). Against this value, the assessee made a disclosure of Rs.20 Lakhs which is more than the value of unaccounted diamonds. Therefore, the addition of Rs.13,91,040/0 is deleted.” deleted.” 11.2.After considering the facts of the case and the arguments of both sides, we entirely agree with the above finding of the CIT(A). The assessee’s business premises is at Surat where the stock of polished bonds weighing 1267.78 carats were found while in the stock register stock of polished diamonds was 1241.84 carats. The assessee had sent diamonds weighing 1675.93 carats to Mumbai through Jangad. The stock sent to Mumbai through jangad wa not recorded in the books of account. Therefore, obviously the stock sent to Mumbai was unrecorded stock. During the course of search also in the statement partner Shri Champaklal Sanghvi stated that the diamonds sent through jangad were not recorded in the books of account. The above finding of fact has not been controverted before us. We therefore, hold that the CIT(A) rightly held that the value of excess stock of polished diamonds disclosed by the assessee at Rs.20 lakhs was more than the correct value of unaccounted polished diamonds the assessee at Rs.20 lakhs was more than the and further addition of Rs.13,91,040/- in the value of unaccounted polished diamonds was not called for. We uphold the order of the CIT(A) in this regard and reject Ground No.2 of the Revenue’s appeal.” 6.Learned advocate for the appellant is not in a position to show how the findings of the Tribunal is bad in law and on facts. 7. In view of the aforesaid, we are of the opinion that the Tribunal has given cogent and convincing reasons in arriving at the conclusion and we are in complete agreement with the view taken by the Tribunal. Hence, the present appeal is dismissed. No substantial question of law arises for our consideration. (K.S.JHAVERI, J.) (K.J.THAKER, J) Pawan