Kathir Kaman Jewels Pvt. Ltd. Vs DCIT (ITAT Chennai)
6% or 169%? – Unrealistic Margins Exposed: Tribunal remands additions on Jewellery Trader’s Seized Data- Additions on Unaccounted Sales Without Stock adjustment Not Sustainable – ITAT Chennai
The appeals arose out of assessments framed u/s 143(3) r.w.s. 153C pursuant to a search on 23.11.2016 at the premises of Shri B. Ayyappan, shareholder of the Assessee-company. During the search, incriminating documents & electronic data were seized, & in a sworn statement u/s 132(4), Shri Ayyappan admitted undisclosed income of ₹11.51 crores spread across four years. Based on this, AO concluded that the Assessee had unaccounted sales & purchases & determined undisclosed income of ₹4.97 crore for AY 2011-12, assessing total income at ₹5.15 crore. Similar additions were made for other years.
CIT(A) confirmed the additions noting that Assessee failed to furnish evidence despite repeated opportunities.
Before Tribunal, Assessee argued that the revised P&L prepared by Shri Ayyappan during search did not consider opening & closing stock of accounted & unaccounted inventory, resulting in inflated profits. It was further highlighted that there were contradictions: in November 2016 Ayyappan admitted suppressed gross profit of 6% (about ₹6.16 crore across six years), whereas in January 2017 he furnished a higher revised net profit, without reconciling the inconsistency.
