DCIT Vs Sakthivel Murugan (ITAT Chennai)
Gold Sent for Job Work Is Not an Undisclosed Purchase Merely Because the Sender Once Called It a Sale: Chennai ITAT Deletes ₹9.65 Crore Addition
Summary: A courier record showed that 33,257 grams of gold, valued in the accompanying invoices at ₹9,65,61,992, had travelled from Delhi to a Coimbatore jeweller. The sender initially described the consignments as undisclosed sales. The recipient maintained that the gold had come for job work and that the finished ornaments had been returned. Could the entire invoice value be taxed in the recipient’s hands as unexplained expenditure under section 69C?
The Chennai Tribunal answered no. It upheld the deletion of the ₹9.65 crore addition, finding that the Assessing Officer had relied on an untested third-party statement while overlooking the job-work records, bank receipt and the sender’s subsequent reply to the AO’s own enquiry.
A courier survey led to the reassessment
The assessee, Sakthivel Murugan, carried on business as proprietor of Ramvel Jewel Traders, Coimbatore. His work involved receiving raw gold or old jewellery from jewellers, converting it into finished 18K and 22K ornaments, and earning job-work charges. For AY 2019–20, he filed a return declaring income of ₹85,26,060.
The enquiry began elsewhere. During a survey of Ambe Logistic Pvt. Ltd., a courier concern, the Department found records of 22 parcels sent between December 2018 and February 2019 by Mahavir Jewellers, Delhi, to the assessee. The parcels weighed 33,257 grams and carried an aggregate invoice value of ₹9,65,61,992.
In a statement recorded under section 131(1A), Mahavir Jewellers’ proprietor, Anjay Jain, initially said that the parcels represented undisclosed sales to the assessee. Based on this information, the AO reopened the assessee’s case. Despite the assessee’s explanation that the gold was received for job work, the AO treated the full invoice value as undisclosed purchases under section 69C, taxable with reference to section 115BBE.
What did the assessee’s records show?
The assessee maintained that the incoming gold was entered date-wise in the job-work register and converted into ornaments, which were returned to Mahavir Jewellers. He had accounted for ₹9,63,834 as job-work charges; the amount payable with tax was ₹10,12,925, of which ₹10 lakh was received through the bank in March 2019. That bank receipt preceded the courier survey on 1 April 2019.
The payment trail mattered. The CIT(A) found that the assessee’s ledger reflected receipts from Mahavir Jewellers, but no payment to it of the kind expected if the assessee had bought gold worth ₹9.65 crore. No corresponding unaccounted stock was found with the assessee either.
There was further evidence from an enquiry conducted by the AO himself. In response to a notice under section 133(6), Anjay Jain stated on 20 November 2023 that he had not sold gold worth ₹9.65 crore to the assessee. He confirmed that the assessee had performed job work for him and said that his undisclosed sales were to other retail traders. The AO nevertheless preferred Jain’s earlier statement.
CIT(A) deleted the addition; Revenue alleged a Rule 46A violation
The CIT(A) examined the ledger, job-work register, bank receipt and movement of the consignments. Finding no corroboration for an unaccounted purchase, the CIT(A) deleted the ₹9,65,61,992 addition.
The Revenue appealed, arguing, among other things, that the CIT(A) had considered additional evidence without a remand report, contrary to Rule 46A. The Tribunal found that the CIT(A) had forwarded the material to the AO on 7 August 2025 and sent a reminder on 9 September 2025. The AO had not furnished a report before the appellate order was passed.
To address the Revenue’s grievance fully, the Tribunal itself called for reports from the AO. Those reports were placed on record, the assessee filed a rejoinder, and both sides were heard. The Tribunal therefore rejected the Rule 46A ground. It also found that the AO’s later objections to the challans and invoices did not dislodge the evidence supporting the job-work explanation.
An untested third-party statement could not sustain the addition
On merits, the Tribunal stressed that the addition rested on Anjay Jain’s initial statement, recorded during enquiry following a survey of the courier concern. There had been no search or survey of the assessee. Jain’s statement was also contradicted by his later reply to the AO’s section 133(6) notice.
The assessee had repeatedly requested cross-examination of Jain, but the AO did not provide it. Relying on the principles in S. Khader Khan Son, Pullangode Rubber Produce Co. Ltd., Andaman Timber Industries and Kishinchand Chellaram, the Tribunal held that an untested third-party statement, without independent corroboration and without an effective opportunity to challenge it, could not support this addition.
The Tribunal also distinguished Bannalal Jat Constructions, cited by the AO. That case concerned an assessee’s own admission during a search. Here, the statement was made by someone else, in proceedings arising from a survey of another concern, and was being used against a person who had not made it.
No TDS deduction did not turn job work into a purchase
The AO had also pointed out that other jewellers deducted TDS on payments to the assessee, while Mahavir Jewellers had not deducted TDS on this payment. The Tribunal rejected the inference. The duty to deduct tax rests with the payer; a payer’s possible default under section 194C does not, by itself, change the character of the recipient’s income.
Indeed, the assessee had disclosed approximately ₹7.84 crore of job-work receipts from more than 30 jewellers during the year. That regular business activity supported, rather than undermined, his explanation of the Mahavir Jewellers transaction.
Author’s comments
The decision turns on the whole evidentiary trail, not merely on the later retraction of a statement. The job-work register, challans, invoices, return of finished ornaments, bank receipt and counterparty’s reply all had to be weighed against the initial allegation. The AO could not rely on the answer from one enquiry while disregarding the favourable answer from another enquiry that he had initiated himself.
The Revenue’s appeal was dismissed, and the deletion of the ₹9.65 crore section 69C addition was upheld. The assessee’s cross-objection, which also raised challenges to the reopening and related procedure, was dismissed as infructuous because the assessee had obtained full relief on merits. Those jurisdictional questions were left open; they were not decided in this order.
Cases Discussed
- CIT v. S. Khader Khan Son (2008) 300 ITR 157 (Mad.), affirmed in CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC) — Relied upon; material collected and a statement recorded during survey under section 133A are not by themselves conclusive evidence.
- Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) — Relied upon; an admission is important evidence but is not conclusive, and its maker may show that it is incorrect.
- Bannalal Jat Constructions (P.) Ltd. v. ACIT [2019] 106 taxmann.com 128 (SC) — Distinguished; the admission there was made by the assessee through its director during a search under section 132(4), unlike the third-party statement relied upon in the present case.
- Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3 (SC) — Relied upon; denial of an opportunity to cross-examine witnesses whose statements form the basis of an adverse order constitutes a serious violation of natural justice.
- Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) — Relied upon; material sought to be used against an assessee must be confronted and an effective opportunity to rebut it must be afforded.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal by the Revenue and the cross objection by the assessee are directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “the CIT(A)”] dated 13.10.2025 passed u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2019-20, arising out of the order of re-assessment dated 08.03.2024 passed u/s.147 r.w.s.144B of the Act. As the appeal and the cross objection arise out of the same order and turn upon a common set of facts, they were heard together and are disposed of by this common order.
2. The Revenue has raised the following grounds of appeal:
“(1) Whether in facts and circumstances of the case, the CIT(A) is justified in admitting additional evidence and allowing the appeal of the assessee in the absence of any remand report in violation of Rule 46A of the Income Tax Rules, 1962.
(2) Whether in facts and circumstances of the case, the CIT(A) is justified in approving the retraction of statement by the third party, even though such retraction was not supported by any admissible evidence even though no evidence is available on record that such retraction has been filed with the concerned authority.
(3) Whether in facts and circumstances of the case, the CIT(A) is justified in not considering the fact that no TDS was deducted from the assessee for Job Work as claimed by the assessee while in the case of other job work executed by him, TDS has been deducted from the assessee as evident from Form 26AS.”
3. The brief facts of the case emanating from the records are that the assessee is an individual and the proprietor of M/s.Ramvel Jewel Traders, Coimbatore engaged in the business of job worker in the bullion trade and he runs a factory in which raw gold and old jewellery received from jewellers is converted into finished ornaments of 18K and 22K to the specification of the customer, for which he receives job work charges. For the assessment year 2019-20 he filed his return of income on 27.09.2019 by admitting a total income of Rs.85,26,060/-. The accounts were audited and the Audit report in Form No.3CB – 3CD dated 25.09.2019 were also filed.
4. A survey u/s.133A of the Act was conducted on 01.04.2019 upon M/s.Ambe Logistic Pvt. Ltd., a courier concern. On the basis of material impounded in the course of that survey, enquiry proceedings u/s.131(1A) were taken up in the case of the parties who had sent or received gold through that courier. It was found that, between 01.12.2018 and 16.02.2019, twenty-two parcels of gold weighing aggregate of 33,257 grams and an aggregate invoice value of Rs.9,65,61,992/- had been despatched from Delhi by M/s.Mahavir Jewellers (Proprietor, Shri Anjay Jain) to M/s.Ramvell Jewel Traders, Coimbatore. In a statement recorded on oath u/s.131(1A) of the Act, Shri Anjay Jain stated that these parcels represented undisclosed sales of Rs.9,65,61,992/- made by him to the assessee.
5. On that footing, a show cause notice u/s.148A(b) of the Act was issued on 22.03.2023, to which the assessee replied on 24.03.2023; an order u/s.148A(d) of the Act was passed and a notice u/s.148 of the Act were issued on 31.03.2023; and the assessee filed his return in response thereto on 27.04.2023, again admitting the same amount of Rs.85,26,060/- as his total income. Notices u/s.142(1) and 143(2) of the Act were followed on 25.08.2023 and 01.09.2023, a show cause notice was issued on 29.12.2023, and the assessee filed replies on 03.01.2024, 06.01.2024 and 31.01.2024.
6. The assessee had consistently contended that the disputed parcels were not purchases but consignments received for job work; the finished ornaments were returned to M/s.Mahavir Jewellers; and the job coolie of Rs.9,63,834/- earned thereon was accounted on 01.03.2019 in his books, the amount payable with tax being Rs.10,12,925/- of which Rs.10,00,000/- was received through banking channel in March 2019, that is, before the date of the survey on the courier.
7. During the assessment proceedings the AO himself caused a third party enquiry to be made. Notice(s) u/s.133(6) of the Act were issued to Shri Anjay Jain which is placed at page 583 of the paperbook. By his reply dated 20.11.2023 (paperbook, pages 585 to 588) Shri Anjay Jain stated that he had made no sale of Rs.9,65,61,992/- to the assessee; that the assessee had been carrying out job work for him, namely the conversion of gold into gold jewellery, for the last five years; and that his undisclosed sales had been made to various retail traders and not to the assessee, on which he had offered the gross profit in his own return of income. An affidavit of Shri Anjay Jain dated 02.01.2024 (paperbook, page 494), a clarification letter dated 03.04.2023 (page 439) and his return of income filed on 31.10.2019 (page 441) together with his GSTR–9C (page 447) were also placed on record.
8. The AO rejected the plea of the Assessee by not accepting the reply / explanation offered during the assessment proceedings. The AO reasoned that no tax had been deducted at source by M/s.Mahavir Jewellers on the job coolie whereas tax had been deducted by other jewellers u/s.194C of the Act, and that this indicated that the receipt was not job work. He accordingly brought the disputed sum of Rs.9,65,61,992/- to tax u/s.69C r.w.s 115BBE as undisclosed purchases.
9. In the first appeal, the ld.CIT(A) forwarded the submissions and the material filed by the assessee to the AO on 07.08.2025 for verification and issued a reminder on 09.09.2025. No remand report was received. The ld.CIT(A) thereafter proceeded to decide the appeal on the material before him.
10. The ld.CIT(A) held that the only indicator of an unaccounted transaction was the statement recorded u/s.133A which had later been retracted; that the statement was not voluntary inasmuch as it contained factual inaccuracies; that, following CIT v. S. Khader Khan Son (2008) 300 ITR 157 (Mad.), the material collected and the statement recorded in a survey u/s.133A are not by themselves a conclusive piece of evidence; and that, following Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC), an admission, though an extremely important piece of evidence, is not conclusive and it is open to the maker to show that it is incorrect. On the facts, he found that the ledger accounts showed that throughout the year the assessee had only received payment(s) from M/s.Mahavir Jewellers and never made any payment to that party as would be the case in a purchase; that Rs.10,12,925/- was shown as job work charges and Rs.10,00,000/- was paid through the bank before the date of the survey; that the twenty-two consignments weighing 33,257 grams had been received and recorded date-wise in the job work register; that the corresponding finished ornaments were returned to M/s.Mahavir Jewellers through authorised staff; and that no corresponding unaccounted stock was found with the assessee. He concluded that there was nothing on record to show that these consignments were unaccounted purchases or that the assessee had paid for or was in a position to pay for such purchases, and held the rejection of books u/s.145(3) and the addition u/s.69C of the Act to be unwarranted for want of corroborative evidence. The addition of Rs.9,65,61,992/- was deleted and the appeal was allowed.
11. When the appeal came up before us, the first ground urged by the Revenue was that the ld.CIT(A) had admitted additional evidence and allowed the appeal without a remand report, in violation of Rule 46A of the Income Tax Rules, 1962. In order to meet that very grievance, and so that the Revenue should not be heard to say that it had had no opportunity of examining the material, this Bench directed the AO to furnish a report. The entire paperbook comprising of documents available before AO during the assessment proceedings as well as the documents before the ld.CIT(A) during the first appellate proceedings were directed to be filed before the Jurisdictional Assessing Officer to be examined for furnishing the report. The direction, as communicated, was in the following terms:
“In order to address the issue of violation of Rule 46A, we direct the AO to give a report as to
1. whether the AO had issued notice under section 133(6) to Shri Anjay Jain on 13.11.2023 and received reply from him on 20.11.2023 as discernible from page no. 583 to 588 of paper book (copy is already in your file).
2. and the AO to verify delivery challan and invoices filed by the assessee, which is found placed in page number 572 to 579 of paper book and give his report on it;
3. and the AO to give his report on the assertion made by the assessee that no other document was filed by the assessee as additional evidence before the CIT(A).”
12. In response, the Deputy Commissioner of Income Tax, Non-Corporate Circle – 4, Coimbatore has furnished a remand report dated 16.07.2026 and a further report dated 21.07.2026 in F.No.NCC-4/CBE/BCCPS1908Q/A.Y.2019-20. In substance the reports state (i) that two notices u/s.133(6) dated 25.10.2023 and 01.11.2023 were issued to Shri Anjay Jain and that he responded on 20.11.2023 stating that he had made no transaction of Rs.9,65,61,992/- with M/s.Ramvel Jewel Traders, and that an affidavit was also furnished; (ii) that the retraction ought to be rejected as belated and uncorroborated, relying again upon Bannalal Jat Constructions (supra); (iii) that the only additional material admitted by the ld.CIT(A) was the delivery challans and invoices at pages 572 to 579 of the paperbook together with the job work order received register, and that their admission offends Rule 46A; and (iv) that those documents are not acceptable by reason of six “inaccuracies” lettered (a) to (f), which include, for the first time, an assertion that thirty per cent of Rs.10,00,000/- is disallowable u/s.40(a)(ia) of the Act. Paragraph 9 of the report of 16.07.2026 records that “the ld.CIT(A) had called for a remand report and this Office had collected the required details … However, before submission of the remand report, the present order of the ld.CIT(A) is received.”
13. The reports were furnished to the assessee, who has filed a detailed rejoinder. In the said rejoinder, the assessee had objected to the findings of the AO by factually rebutting to the inaccuracies pointed out.
14. We have heard the ld.DR and the ld.AR for the assessee, and have perused the material on record. The first preliminary issue raised before us is on the violation of Rule 46A of the Income Tax Rules, 1962. Ground No. 1 rests upon a single premise that the ld.CIT(A) admitted additional evidence and allowed the appeal “in the absence of any remand report”.
15. The impugned order before us clearly records that the submissions made in the appellate proceedings were forwarded to the AO on 07.08.2025 for verification and that a reminder was issued on 09.09.2025. Further, the AO has himself admitted, in paragraph 9 of his remand report dated 16.07.2026, that the ld.CIT(A) had called for a remand report and that “this Office had collected the required details”, but that the report was not submitted before the order of the ld.CIT(A) came to be received. Hence, there is no violation of Rule 46A of the Income Tax Rules, 1962.
16, Having said so, considering the principles of natural justice, this Tribunal granted another opportunity to the AO to furnish report on the documents filed before the lower authorities and the AO also had examined the said documents and furnished his objections at considerable length in two reports dated 16.07.2026 and 21.07.2026. Those reports have been taken on record; the assessee has filed a rejoinder to them; and both sides have been heard upon them. Hence, in our considered view the said ground no longer survives. Accordingly, the Ground No.1 rejected.
17. On merits, the entire addition of Rs.9,65,61,992/- rests upon a single piece of material i.e. the statement of Shri Anjay Jain. The AO had relied upon the statement of a third party for justifying the additions made in the original assessment proceedings. It was not recorded u/s.132(4) in the course of a search; it was recorded u/s.131(1A) in the course of enquiry proceedings consequent upon a survey u/s. 133A conducted not upon the another company, M/s.Ambe Logistic Pvt. Ltd. It is an admitted fact that there is no survey, no search and no proceeding of any kind was conducted upon the assessee.
18. The entire premise of the addition solely depends on the statement recorded from the third party and there is no corroborative evidence / materials brought on record by the AO justifying the said addition. In this regard, it is important to note that it has been held by the jurisdictional High Court in CIT v. S. Khader Khan Son (2008) 300 ITR 157 (Mad.), affirmed by the Hon’ble Supreme Court in CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC), that the word “may” in Section 133A(3)(iii) empowering the authority to record the statement of any person “which may be useful for, or relevant to, any proceeding under this Act” is merely enabling, and that the material collected and the statement recorded during a survey u/s.133A are not by themselves a conclusive piece of evidence. In Pullangode Rubber Produce Co. Ltd. v. State of Kerala (1973) 91 ITR 18 (SC) the Hon’ble Supreme Court held that an admission, though an extremely important piece of evidence, is not conclusive, and that it is open to the person who made the admission to show that it is incorrect. The ld.CIT(A) applied precisely these authorities. It is instructive that the remand report does not distinguish them; it merely asserts that their “application … will not be justifiable in this instant case”.
19. Further, we find that the reliance placed by the AO, both in the assessment order and in the remand report, on the decision of the Hon’ble Supreme Court in Bannalal Jat Constructions (P.) Ltd. v. ACIT [2019] 106 taxmann.com 128 (SC), is misplaced and distinguishable on facts. In Bannalal Jat Constructions (P.) Ltd., the admission was made by the assessee itself through its director; the statement was recorded u/s.132(4) of the Act during the course of a search in the presence of independent witnesses; and the said admission was sought to be used against the very person who had made the statement, in his own assessment proceedings, with the subsequent retraction having been made after a considerable delay. The factual matrix in the present case is materially different. Here, the statement relied upon by the AO is not that of the assessee but of a third party; the same was recorded u/s.131(1A) of the Act pursuant to a survey conducted u/s.133A in the case of another person; and, more importantly, the statement is sought to be relied upon against the assessee, who was neither the maker of the statement nor a party to the proceedings in which it was recorded. Therefore, the principle that an admission binds its maker and that the person making such admission must establish that the same was incorrect cannot be mechanically extended to a third party who neither made the statement nor was afforded an effective opportunity to confront or test the same. In our considered view, the ratio of Bannalal Jat Constructions (P.) Ltd. cannot be invoked to sustain an addition of Rs.9.65 crores in the hands of the assessee solely on the basis of a third-party statement, without any independent and corroborative material establishing the assessee’s involvement in the alleged transaction.
20. Further, we note that the assessee, in its reply dated 03.01.2024 to the show-cause notice, specifically sought an opportunity to cross-examine the person whose statement was being relied upon by the AO, as recorded at page 481 of the paper book. The said request for cross-examination was reiterated at pages 483 and 484 of the paper book and was also specifically pressed before the ld.CIT(A) in the written submissions placed at page 552 of the paper book. However, the said request was neither considered nor acceded to by the AO. Significantly, although a remand report was called for in connection with the very issue arising from the enquiry conducted u/s.133(6) of the Act, the remand report is conspicuously silent on the assessee’s specific request for cross-examination. In this regard, the law laid down by the Hon’ble Supreme Court in Andaman Timber Industries v. CCE [2015] 62 taxmann.com 3 (SC) assumes considerable significance, wherein it was held that where the statements of witnesses constitute the basis of the adverse order, denial of an opportunity to cross-examine such witnesses constitutes a serious violation of the principles of natural justice and vitiates the order. The Hon’ble Supreme Court in Kishinchand Chellaram v. CIT (1980) 125 ITR 713 (SC) has also emphasised that material sought to be relied upon against an assessee must be confronted to him and an effective opportunity to rebut the same must be afforded. Applying the above principles to the facts of the present case, we find that the impugned addition is founded upon a third-party statement, the maker of which was never made available for cross-examination despite the assessee’s specific and repeated requests. Such untested third-party material, in the absence of independent corroborative evidence and without affording the assessee an effective opportunity to confront the maker of the statement, cannot constitute a legally sustainable basis for making the impugned addition.
The AO, having himself undertaken an enquiry u/s.133(6) of the Act, cannot selectively disregard the outcome of such enquiry merely because the result is favourable to the assessee. Once the statutory enquiry conducted by the AO yields material supporting the assessee’s explanation, such material forms part of the evidentiary record and is required to be considered in its proper perspective. It cannot be treated as inconsequential or ignored merely because it does not support the case of the Revenue. In the present case, the response furnished by Shri Anjay Jain in the course of the enquiry specifically stated that the alleged unaccounted sales were made to various other retail traders and not to the assessee. He had further stated that the corresponding profit arising from such sales had been offered by him in his own return of income, which was subsequently accepted by the Revenue. If the Revenue intended to disbelieve or displace the said categorical response, it was incumbent upon the AO to undertake further verification, particularly by calling for the particulars of the retail traders to whom such sales were allegedly made and examining the corresponding transactions. However, no such further enquiry or verification was undertaken either during the assessment proceedings or during the remand proceedings. In these circumstances, the favourable result of the enquiry conducted u/s.133(6) cannot be brushed aside and, in our considered view, constitutes material in support of the assessee’s case, particularly when no contrary evidence has been brought on record by the Revenue.
21. Ground No. 3 proceeds on the reasoning that tax was deducted at source u/s.194C of the Act by other jewellers on the job work executed for them, but no tax was deducted by M/s.Mahavir Jewellers on the sum of Rs.10,00,000/-, and that this indicates that the receipt from M/s.Mahavir Jewellers was not for job work at all. We are unable to accept this reasoning.
22. The obligation to deduct tax at source u/s.194C of the Act rests upon the person responsible for making the payment. Any failure on the part of such person to discharge the statutory obligation to deduct or deposit tax at source gives rise to consequences in the hands of the payer, including those contemplated u/s.201 and, where applicable, section 40(a)(ia) of the Act. Such default, by itself, cannot alter or determine the true character of the corresponding receipt in the hands of the recipient. More particularly, where the recipient has itself confirmed the nature and genuineness of the transaction in response to the enquiry conducted by the AO u/s.133(6) of the Act, the payer’s alleged failure to deduct tax at source cannot be used as a basis to disbelieve the transaction or to draw an adverse inference against the assessee. The consequences, if any, arising from non-compliance with section 194C are required to be examined in the hands of the person responsible for making the payment and cannot, merely on that account, be converted into an adverse finding against the recipient in respect of the underlying transaction.
23. Furthermore, we note that the “Party-wise Details of Job Work Receipts” placed at page 564 of the paper book demonstrate that, during the relevant previous year, the assessee had earned and duly disclosed job work receipts from more than thirty identified jewellers, aggregating to Rs.7,83,84,795/-. Significantly, Form 26AS placed at page 425 of the paper book, which has itself been relied upon by the Revenue, also reflects the assessee as the recipient of job work charges from various parties. Thus, the Revenue’s own material corroborates the assessee’s consistent claim that he was engaged in the business of undertaking job work for jewellers. Viewed in this factual background, the receipt from M/s.Mahavir Jewellers cannot be treated as an isolated or unexplained transaction; rather, it forms part of the assessee’s regular stream of job work receipts and has been duly accounted for in the same manner as the other job work receipts disclosed by the assessee during the year. Accordingly, the material relied upon by the Revenue, instead of discrediting the assessee’s explanation, lends support to the nature and treatment of the impugned receipt as a genuine job work receipt. Accordingly, the Ground No.3 fails and is rejected.
24. Since we called for the report, we consider it right to record our findings upon it. On the first issue, the AO has confirmed the fact of the enquiry u/s.133(6) of the Act and of the reply dated 20.11.2023 by which Shri Anjay Jain denied the transaction of Rs.9,65,61,992/- with the assessee. Further, he has confirmed the assessee’s assertion that the only material filed by way of additional evidence before the ld.CIT(A) was the delivery challans and invoices at pages 572 to 579 together with the job work order received register.
25. On the second issue on verification of the delivery challans and invoices at pages 572 to 579, the AO has not examined them while however had sought to reject them by listing certain alleged inaccuracies, in paragraph 10(iii) of the report. We have examined each against the record:
(a) “The challans and invoices were not furnished during the assessment and no ledger account was maintained for job work.” The purpose of the remand report being called for as stated in the earlier paragraphs is to grant another opportunity to the AO to examine the said details which examination was not carried out by him. Moreover, the Sales Register, Purchase Register and Stock Register, the month-wise and consolidated GSTR-2A at pages 143 to 268 are reproduced and discussed in the assessment order itself.
(b) “No written contract with M/s.Mahavir Jewellers, and no other job coolie receipts declared from any other jeweller.” The second limb is demonstrably contrary to the record and is, to our mind, the clearest illustration of the want of application of mind in the report: page 564 of the paperbook shows job work receipts of Rs.7,83,84,795/- declared from over thirty identified jewellers. As to the first limb, the absence of a formal written contract is immaterial in a trade conducted upon the strength of delivery challans, tax invoices and ledger entries, all of which are on record especially in view of the fact that the transaction was confirmed by the counter party in the enquiry conducted u/s.133(6) of the Act.
(c) “Rs. 10,00,000/- was shown as receivable although it had been received on 29.03.2019 through the bank.” It is admitted by the AO himself stated that the amounts were received by the Assessee thereby negating the presumption of any unaccounted purchases from the said party.
(d) “Non-deduction of TDS by M/s.Mahavir Jewellers and consequent disallowance of thirty per cent u/s.40(a)(ia).” The said objection is also dealt by us separately in the preceding paragraphs.
(e) “Contradictory claims regarding transportation M/s.Ambe Logistic Pvt. Ltd. during the assessment, and authorised staff during the appeal.” The report conflates the inward and outward legs of a single transaction. The inward movement of the raw gold from Delhi was routed through M/s.Ambe Logistic Pvt. Ltd. which is precisely how the survey upon the courier came to capture these consignments whereas the finished ornaments were returned to M/s.Mahavir Jewellers through the assessee’s authorised staff.
(f) “The delivery of the finished ornaments cannot be verified.” The delivery is evidenced by the very documents which the AO was directed to verify the delivery challans and tax invoices at pages 572 to 579 and the consolidated details of delivery of job work stock to M/s.Mahavir Jewellers at page 580 and is independently confirmed by Shri Anjay Jain in his reply u/s.133(6) of the Act at pages 585 to 588 and in his affidavit at page 494. To say that the delivery cannot be verified is to decline to look at the documents which was asked to examine.
26. The remand report, therefore, neither dislodges any finding recorded in the impugned order nor furnishes any material capable of sustaining the addition.
27. In the present facts and circumstances and the reasons recorded above, we hold that the ld.CIT(A) was right in deleting the addition of Rs.9,65,61,992/- and we find no reason to interfere with the impugned order. Hence, the ground Nos.1 to 3 of the Revenue are rejected.
The Cross Objection by the Assessee:
28. The cross-objection filed by the assessee in CO No.7/Chny/2026 is primarily in support of the impugned order and, in addition, raises various legal grounds challenging the assumption of jurisdiction u/s.147 of the Act, the validity of the order passed u/s.148A(d), and the issuance of notice u/s.148 by the Jurisdictional Assessing Officer instead of the Faceless Assessing Officer. The assessee has also raised grounds relating to the adequacy of opportunity afforded during the first appellate proceedings. However, since we have, while adjudicating the Revenue’s appeal, upheld the order of the ld. CIT(A) deleting the entire addition of Rs.9,65,61,992/- on merits, the relief sought by the assessee stands fully allowed. Consequently, the adjudication of the aforesaid jurisdictional and procedural grounds would be academic in nature and would not have any further bearing on the outcome of the appeal. We, therefore, refrain from adjudicating the grounds raised in the cross-objection on merits and dismiss the cross-objection as infructuous, leaving all the questions raised therein open.
29. In the result, the appeal of the Revenue is dismissed and the Cross objection of the assessee is dismissed as infructuous.
Order pronounced in the open court on 22nd September, 2026 at Chennai.
