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.
