Mohanlal Jewellers Pvt Ltd Vs DCIT (ITAT Chennai)
Inventory Software Not Equal to Unaccounted Income: ITAT Relief to Jewellers- Profit on Unaccounted Sales Restricted to 2.5%
Assessee is engaged in manufacture & wholesale trading of gold bullion & jewellery, besides providing making/job-work services. Pursuant to a search u/s 132, electronic data was seized from a customised software named “J-Pack”, which allegedly recorded both accounted & unaccounted transactions. AO treated the entire data as undisclosed & made huge additions on account of ‘Ghat’ ledger, ‘MC Khata’, ‘Byaj’, ‘Vatav’, unaccounted sales, excess stock & other items.
CIT(A), on detailed examination of reconciliations & a remand report from AO, found that most of the entries were mere inventory movement records & not actual income. It was observed that ‘Ghat’ ledger reflected alloy addition in ornaments & not retention of wastage gold, ‘MC Khata’ represented making charges duly reconciled, while ‘Byaj’ & ‘Vatav’ had already been offered in the hands of the key individual. The addition on these counts was deleted in entirety.
On unaccounted cash sales traced from J-Pack, CIT(A) found infirmities in AO’s quantification & restricted the estimation of profit from 8% to 2.5% only. Both parties carried the matter to Tribunal.
