Panchratna Jewellers v. Asstt.commissioner Of Income Tax....opponent(S

O/TAXAP/478/2006 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 478 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 ? ================================================================ PANCHRATNA JEWELLERS....Appellant(s) Versus ASSTT.COMMISSIONER OF INCOME TAX....Opponent(s) ================================================================ Appearance: MR BS SOPARKAR, ADVOCATE WITH MRS SWATI SOPARKAR, ADVOCATE for the Appellant(s) No. 1 MR PRANAV G DESAI, ADVOCATE for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Date : 22/12/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. Being aggrieved and dissatisfied with the impugned order passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘A’ (hereinafter referred to as ITAT) dated 31.07.2006 in ITA No. 2618/Ahd/2004 for the Assessment Year 2000-01, the revenue has preferred the present Tax Appeal. 2.This appeal was admitted on 10.12.2007 for consideration of the following substantial question of law: This appeal was admitted on 10.12.2007 for Whether in the facts and the circumstances of the case, the Tribunal was justified in not remitting the matter back to the Assessing Officer in case of Shri Mirazbhai Bangali as in case of Shri Mirazbhai Bangali stands of better footing than that of M/s. Sanjaykumar Manubhai Soni and M/s. Lodhia Art Jewellers, whose case has been restored to the Assessing Officer? 3.A search under section 132 of the Act was conducted at the business premises of the assessee and during the course of search, jewellery weighing 6479.55 gms was found out of which jewellery weighing 2735.50 gms was seized. The assessee filed block return on 31.01.2002 declaring undisclosed income of Rs. NIL in response to notice u/s 158 of the Act. The Assessing Officer being dissatisfied with the explanation of the assessee treated the excess stock found during the course of search at Rs. 13,06,000 as undisclosed income of the assessee for the block period under Section 158BC of the Act. 3.1On appeal before the CIT(A) filed by the assessee, the CIT(A) confirmed the action of Assessing Officer and dismissed the appeal. Being aggrieved by the same, the assessee filed further appeal before the ITAT. The ITAT vide impugned order partly allowed the appeal. 4.Mr. Soparkar, learned advocate appearing for the assessee contended that the ITAT has erred in upholding a part of the order in adding 1977.190 grams of alleged stock of gold when complete reconciliation of the stock of gold as per the books of accounts and physical stock was placed on record. He submitted that while considering the case of the assessee , the CIT(A) has drawn the attention of this Court to para 4 of the order passed by CIT(A) which reads as under: 158BC of the Act. 3.1On appeal before the CIT(A) filed by the assessee, the CIT(A) confirmed the action of Assessing Officer and dismissed the appeal. Being aggrieved by the same, the assessee filed further appeal before the ITAT. The ITAT vide impugned order partly allowed the appeal. 4.Mr. Soparkar, learned advocate appearing for the assessee contended that the ITAT has erred in upholding a part of the order in adding 1977.190 grams of alleged stock of gold when complete reconciliation of the stock of gold as per the books of accounts and physical stock was placed on record. He submitted that while considering the case of the assessee , the CIT(A) has drawn the attention of this Court to para 4 of the order passed by CIT(A) which reads as under: “... I have perused the vouchers as well as statement of one of the partners. The Assessing Officer has carefully examined all these documents and categorically observed that the appellant could not satisfactorily explain the excess stock of jewellery during search operation nor the appellant produced necessary evidence or concerned persons. In my opinion also the appellant’s explanation is only an afterthought and evidence in whatsoever form is self-serving, totally fabricated and concocted just to evade due taxes. In view of these facts, addition of Rs. 13,06,000/- made by the Assessing Officer as undisclosed income of the block period is upheld.” 4.1Mr. Soparkar contended that the ITAT has not considered the fact that the CIT(A) has not given cogent reasons for coming to the said conclusion. He submitted that the ITAT while remitting the matter of workers (karigars) namely M/s. Sanjaykumar Manubhai Soni and M/s. Lodhia Art Jewellers ought to have remitted the case of Mr. Mirazbhai Bangali also. He submitted that at the time when search was carried out details were given and cash was accepted but only jewellery was not in custody and therefore the case of the Mr. Mirazbhai Bangali also be remitted to the file of the Assessing Officer. 5.Mr. Pranav Desai, learned Standing Counsel appearing for the Revenue submitted that this appeal does not call for any interference by this Court. 6. We have heard learned counsel for the revenue and have perused the record of the case. The ITAT in para 5 and 5.1 has observed as under: 5.Rival contentions have been considered. From the record, we found that while explaining the availability of gold ornaments at shop, the assessee has submitted that it had received gold ornaments by way of purchase as per the details given below: that he has not given any of his comments with regard to these purchases. However, the other excess stock as confirmed by the Assessing Officer does not require any interference. In the interest of justice, we are restoring the issue with respect to 1031.01 gms of gold ornaments received through purchases, as discussed above, to the file of the Assessing Officer. The Assessing Officer is directed to verify the genuineness of these purchases and decide the issue afresh.” 6.1The ITAT has failed to appreciate the fact that as per the statement dated 30.10.2002 there was 299.960 gms of gold with karigar Mirazbhai Bangali which was not already accounted in the gold balance sheet stock register. Considering the totality of the case, we think it fit to remand the issue with regard to stock of gold with karigar Miraz Bengali to the Assessing Officer. 6.1The ITAT has failed to appreciate the fact that as per the statement dated 30.10.2002 there was 299.960 gms of gold with karigar Mirazbhai Bangali which was not already accounted in the gold balance sheet stock register. Considering the totality of the case, we think it fit to remand the issue with regard to stock of gold with karigar Miraz Bengali to the Assessing Officer. 7.In the premises aforesaid, we hold that the ITAT was not justified in not remitting the matter back to the Assessing Officer in case of Shri Mirazbhai Bangali when the cases of M/s. Sanjaykumar Manubhai Soni and M/s. Lodhia Art Jewellers, have been restored to the Assessing Officer. The question of law raised in the present appeal is therefore answered in the negative i.e. against the revenue and in favour of assessee. The impugned order passed by the ITAT is modified accordingly. Appeal is allowed accordingly. (K.S.JHAVERI, J.) divya O/TAXAP/478/2006 JUDGMENT (K.J.THAKER, J)