Begani Jewels Vs ACIT (ITAT Mumbai)
Tag Price Is Not Sale Price: ITAT Deletes Entire GP Addition Based on Cascade Software in Jewellery Search Case
Mumbai ITAT “B” Bench allowed the appeals of Begani Jewels for AYs 2020-21 to 2023-24 & dismissed the cross-appeals of the Revenue, holding that additions made u/s 28 on account of alleged suppression of sales by comparing Cascade software “tag prices” with actual sales recorded in Tally were unsustainable. The Tribunal held that tag prices recorded in Cascade software were merely reference / display prices used for inventory management & marketing purposes in the high-end jewellery business & could not be equated with actual sale consideration.
ITAT accepted the Assessee’s explanation that final sale price is commercially negotiated with customers & duly recorded in Tally, while Cascade only tracks outward movement of inventory at inflated reference prices. Tribunal noted that the Department’s own Registered Valuer had valued the jewellery stock at amounts far below the aggregate tag prices, conclusively demonstrating that Cascade prices were not realisable sale values. AO’s method of assuming 50% discount on tag price & treating the balance as suppressed sales was held to be arbitrary, leading to absurd & unrealistic GP margins of over 40% on sales & 68% on cost.
