ACIT Vs Hirapanna Jewellers (ITAT Visakhapatnam)
The Revenue appealed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for Assessment Year 2016-17, while the assessee filed cross objections.
Addition relating to excess gold stock
A survey under Section 133A was conducted on 24.11.2015 in the assessee’s business premises during search and seizure operations in the SVBC group. Excess stock of 4,247.486 grams of gold jewellery was initially found. The Assessing Officer accepted a purchase bill from M/s B.G. Jewellers, Mumbai for 1,521.744 grams and reduced the excess stock accordingly. Subsequently, the assessee produced a labour bill dated 21.11.2015 issued by M/s Jai Mata Di Jewellers for manufacture of 2,717.400 grams of gold jewellery, explaining that the bill had remained with another partner who was away on tour during the survey.
The assessee stated that 3,100 grams of gold bars purchased from M/s SVBC Gold, Visakhapatnam had been issued to M/s Jai Mata Di Jewellers for conversion into 916 KDM ornaments. The Assessing Officer rejected the explanation, citing absence of contemporaneous evidence regarding issue of gold, discrepancies in dates, absence of particulars in the labour bill and non-production of the relevant documents during the survey. Consequently, jewellery weighing 2,717.400 grams, valued at ₹64,96,471, was treated as unexplained investment under Section 69B of the Income-tax Act.
