Royal Chains Pvt Ltd Vs DCIT (ITAT Mumbai)
Gold Stock Additions Collapse: ITAT Says Reconciliation + Confirmations = No 69A- Survey Statements Not Gospel—Documentary Evidence Saves Assessee from Rs.6.67 Cr Additions
In these cross-appeals, Tribunal dealt with CSR donation u/s 80G, additions u/s 69A on alleged excess gold stock & Assessee’s claim of short-term capital loss on sale of a factory building. Tribunal noted that CSR expenditure is disallowed u/s 37 Explanation 2 while computing business income, but this does not bar deduction u/s 80G while computing total income, subject to conditions of s.80G. Since authorities below had not verified eligibility, Tribunal restored the matter to AO for quantification & directed that deduction be allowed to the extent permitted.
On the major issue of additions u/s 69A aggregating approx Rs.6.67 crore for alleged unexplained stock of 24KT, 22KT & 18KT gold found during survey u/s 133A, Tribunal approved CIT(A)’s detailed factual findings. CIT(A), after examining survey statements, invoices, job-work records, purchase registers, export dispatch details & confirmations received u/s 133(6), held that stock differences arose only because invoices & entries were pending at the time of survey & all transactions were later fully reconciled. Documents placed on record showed that suppliers (including Abhushan Creations Pvt Ltd) confirmed sales, payments were through banking channels & the gold was duly recorded in audited books & GST filings. Tribunal held that AO ignored crucial third-party confirmations, misread survey statements & made additions solely on assumptions. CIT(A)’s deletion of additions of Rs.2,12,52,000 & Rs.4,53,63,627 was therefore upheld.
