Joint Commissioner of Income Tax (OSD) Vs Rajmal Lakhichand (ITAT Pune)
Income Tax Appellate Tribunal (ITAT) Pune Bench has dismissed an appeal filed by the Joint Commissioner of Income Tax (OSD) against Rajmal Lakhichand, a firm engaged in the manufacturing and trading of gold and silver ornaments. The dispute centered on an addition of Rs. 3,26,20,982/- made by the Assessing Officer (AO) to the assessee’s income for the Assessment Year (AY) 2017-18, citing low melting gains.
The case, heard by the ITAT Pune, revolved around the percentage of gold melting gain reported by M/s. Rajmal Lakhichand. For AY 2017-18, the assessee reported a melting gain of 0.59%. This figure was significantly lower than the melting gains reported in previous financial years, which were 9.07% for 2010-11, 8.53% for 2011-12, 6.83% for 2012-13, and 0.59% for 2013-14. The AO, observing this discrepancy and noting an average market melting gain of 4-6%, adopted a 6% melting gain, leading to the substantial addition to the assessee’s income.
Aggrieved by the AO’s assessment order, Rajmal Lakhichand appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], NFAC, Delhi. The CIT(A) ruled in favor of the assessee, deleting the addition. This decision was based on a precedent set by the ITAT Pune’s own order in the assessee’s case for AY 2009-10.
