M/S Bhavani Jewellers, Hyderabad vs Assessee

These are cross appeals by assessee and Revenue against the order of the Commissioner of Income Tax (Appeals)-III, Hyderabad dated 29-05-2012. Assessee is aggrieved on part-confirmation of the addition made by the Assessing Officer (AO), whereas Revenue is aggrieved on deletion of various additions.

I.T.A. Nos. 1136/Hyd/12 & :- 2 -: 1003/Hyd/13 M/s. Bhavani Jewellers

2. Briefly stated, assessee is in the business of jewellery and filed its return of income declaring total income of Rs. 49,98,490/-. There was a survey of operation u/s. 133A of the Income Tax Act [Act] conducted on 06-02-2008, during which the AO found some excess stock and took declaration from the partner. Assessee-partner admitted excess stock of Rs. 25,44,565/- in Charminar Branch and Rs. 26,59,316/- against Panjagutta Branch. However, at the time of filing of returns, assessee admitted the amount of Rs. 44,90,295/- as additional income and filed a return accordingly. In the course of assessment, AO after giving show cause notice to assessee made various additions as under:

i. Excess stock determined Rs. 26,43,435/-; ii. Income on chits Rs. 1 Lakh; iii. Income on Gold Scheme Rs. 1,44,000/-; iv. Income on another Gold Scheme Rs. 1,44,000/- v. Outstanding Sundry Creditors as unexplained Rs. 87,06,851/-.

3. Assessee contested before the Ld.CIT(A), who confirmed part of excess stock at Rs. 7,13,580/- as against Rs. 26,43,435/- and deleted other additions. Assessee is aggrieved on the part-confirmation of the excess stock. Revenue is aggrieved on the deleted amounts.

Assessee's appeal in ITA No. 1003/Hyd/2013:

4. The only issue contested by assessee is with reference to confirmation of amount of Rs. 7,13,580/- out of the addition made by the AO. AO has issued show cause notice quantifying the excess stock in survey at Rs. 62,13,730/-, whereas assessee declared Rs. 44,90,295/.

I.T.A. Nos. 1136/Hyd/12 & :- 3 -: 1003/Hyd/13 M/s. Bhavani Jewellers

The difference of Rs. 17,23,435/- was added as excess stock. In

addition, there was gold valued at Rs. 9,20,000/- which assessee in the course of survey itself admitted that it belongs to third parties and would furnish the necessary details. Since, AO is not satisfied with the explanation given by assessee, he added the above amount of Rs. 9,20,000/- also, thus, making addition of Rs. 26,43,435/-.

4.1 Before the Ld.CIT(A), assessee contested that AO arrived at the excess stock taking the value of gold at Rs. 1,150 Per Gram, whereas assessee's price of gold as per cost or market price was only Rs. 870/- Per Gram, thereby the difference arose. Assessee filed necessary reconciliations before the Ld.CIT(A) which are extracted in para 5.2 and 5.3 of impugned order. However, Ld.CIT(A) did not agree with assessee's contentions and after extracting the statements of partner, confirmed partly as under:

"5.9 From the above, the partner has stated that at Panjagutta Branch closing stock arrived at Rs. 17,90,959/-. As per the approved valuer repot, the value of the closing stock was arrived at Rs. 52,95,275/-. Therefore, there is excess of Rs. 35,79,315/- which includes customers stock of Rs. 9,20,000/-. Further, on the balance of Rs. 26,59,315/-, the partner accepted to pay the tax. Therefore, the total stock difference as per the statement of the partner is Rs. 25,44,565/- Charminar Branch and Panjagutta Branch exclusively Rs. 26,59,315/- including Rs. 9,20,000/- of customers stock. Therefore, the appellant has to disclose stock of Rs. 25,44,560/- + Rs. 26,59,315 = Rs. 52,03,875/-. But as per the computation statement, the appellant disclosed Rs. 44,90,295/-, still there is a difference of Rs. 7,13,580/-. Therefore, the AO added Rs. 26,43,435/- which is not correct. With regard to customer stock of Rs. 9,20,000/- the appellant itself stated in the statement above it belongs to customer stock and as per the details furnished that the vouchers and bills were before survey date also. Therefore, this amount is to be treated as customers stock. Thus, finally, there is a difference of Rs. 7,13,580/- should be added in place of Rs. 26,43,435/-".

I.T.A. Nos. 1136/Hyd/12 & :- 4 -: 1003/Hyd/13 M/s. Bhavani Jewellers

Assessee is aggrieved on the above confirmed amount.

5. Ld. Counsel referring to various reconciliations filed, submitted that the survey party quantified the excess gold at Rs. 19,03,250/-, whereas assessee valued the same quantity at Rs. 14,39,850/-, thereby giving difference to Rs. 4,63,400/- at Charminar Branch. At Panjagutta Branch, the survey party arrived at excess value of Rs. 26,59,316/-, whereas the same was valued at Rs. 14,09,130/- based on the valuation as on 31-03-2008. This give raise to a difference of Rs. 12,50,186/-. The total difference thus arrived at was Rs. 17,13,586/- which was the amount AO considered for addition on the basis of the disclosure. It was submitted that Ld.CIT(A) wrongly considered the amounts and when assessee offered the amount of Rs. 10 Lakhs for various omissions and commissions, credit to that extent was given and amount of Rs. 7,13,580/- was confirmed. It was submitted that there is no quantitative difference but only valuation difference and as per the value on 31-03-08, the closing stock was valued including the excess stock found. It was further submitted that statute, during the 133A does not empower any officer to examine any person on oath and so statement recorded u/s. 133A has no evidentiary value and any admission made during such statement cannot be made as the basis of addition. He referred to the judgments of the Hon'ble Supreme Court of India in the case of CIT Vs. S. Khader Khan and Sons 254 CTR 228(SC) for the above proposition. Ld. AR also relied on various co-ordinate bench decisions and particularly in the case of M/s. Panna Lal Roshan Lal Jewellers P. Ltd., Vs. DCIT in ITA No. 1262/Del/2011 dt. 17-06-2011 for the proposition that excess stock cannot be arrived at in a middle of the year when Books of Accounts were closed at the end of the year.

I.T.A. Nos. 1136/Hyd/12 & :- 5 -: 1003/Hyd/13 M/s. Bhavani Jewellers

6. Ld. DR however, submitted that AO made the addition on examination of facts found during the survey and CIT(A) was wrong in deleting the amounts on which Revenue is also in appeal. He supported the order of AO.

7. We have considered the issue and examined the record. We are of the opinion that both AO and CIT(A) were not correct in as making the addition or deleting only partly. First of all, as seen from the statements on record, the excess stock was arrived at on the day of survey based on GP calculations. Be that as it may, the quantity of the gold has tallied but the difference arose only in the context of rate adopted for valuing the excess stock. It was the submission that gold was valued at Rs. 1,150 Per Gram during survey, where as the book value/ market value was at Rs. 870 Per Gram which was adopted by assessee at the end of the year. Accordingly, instead of Rs. 52,03,881/- stock excess including silver ornaments, diamonds and pearls, assessee offered Rs. 34,90,295/- which gave rise to the difference of Rs. 17,13,586/-. This contention of assessee has to be accepted as AO accepted the closing stock valuation as shown in books. Further as seen from the order of assessment passed by the AO, he determines the concealed amount at Rs. 62,13,730/-. There is no justification how this figure was arrived at and in the show cause notice issued only this amount was shown as value of excess stock. The stock as per the statements was only Rs. 52,03,881/-. Thus, there is difference of amount, may be the voluntary disclosed amount of Rs. 10 Lakhs was also included as excess stock. This indicates that AO without any application of mind has simply taken the amounts. Difference of the amount was as a result of valuation of closing stock, including excess stock found on the date of survey. On the basis of principles of valuation of closing stock i.e., cost or market price whichever is less, we I.T.A. Nos. 1136/Hyd/12 & :- 6 -: 1003/Hyd/13 M/s. Bhavani Jewellers

do not see any reason to uphold the addition confirmed by the CIT(A) at Rs. 7,13,580/-. Since, assessee's explanation is valid explanation and further the entire excess quantity as arrived on the date of survey was taken to the Books of Accounts and valued, we do not see any reason to make any further addition to the amounts on presumptions. We also notice that the value of silver ornaments and diamonds and pearls accepted in the course of survey itself was offered without any variation. As there is justification in reducing the valuation, we do not see any reason to uphold the order of CIT(A). Not only that, statement recorded during the survey itself cannot be a basis for making the addition, unless supported by evidence. Assessee justified the valuation of amounts and as Books of Accounts were not rejected and book results were accepted, we agree with assessee's contentions and delete the addition confirmed by the CIT(A) at Rs. 7,13,580/-. Assessee's grounds on this are accordingly allowed.

8. In the result, assessee's appeal is allowed.

Revenue's appeal in ITA No. 1136/Hyd/2012:

9. As briefly stated, Revenue is aggrieved on the deletion of amounts added by the AO. Ld.CIT(A) deleted the amount to an extent of Rs. 19,29,855/- out of excess stock arrived at by AO. Revenue has raised two grounds on the above amount which included the excess stock discussed above in assessee's appeal and further an amount of Rs. 9,20,000/- stated to be belonging to customers. We have adjudicated the excess stock issue in assessee's appeal. For the reasons stated therein, the CIT(A) deletion of the amount partly is to be justified. Even the amount confirmed by the CIT(A) was also deleted in assessee's I.T.A. Nos. 1136/Hyd/12 & :- 7 -: 1003/Hyd/13 M/s. Bhavani Jewellers

appeal. There is no merit in Revenue's contentions on the above amount deleted by the CIT(A).

10. Coming to the issue of addition of Rs. 9,20,000/-, assessee's in the statement itself admitted that the stock pertains to third parties to an extent of 807.07 Grams. Assessee furnished necessary details reconciling with the available record. On the reason that assessee did not furnish the identities of the persons, AO did not accept. Ld.CIT(A) accepting the statement and also noticing that assessee furnished necessary details, vouchers and bills which were before the survey date also, the amount was deleted.

11. After considering the rival contentions, we do not see any merit in Revenue's contentions. First of all, it was admitted that stock valued at Rs. 9,20,000/- belongs to third party customers in the survey itself. In fact in question No.13 extracted by the Ld.CIT(A), in para 5.8 of the order, assessee admitted net of the amount at Rs. 26,59,315/- from Punjagutta Branch after excluding the amount of Rs. 9,20,000/-. This itself indicate that the survey party was satisfied about the contention that stock to that extent does not belong to assessee and belong to third parties. On what basis the present AO brought it to tax as assessee's stock could not be understood. The Ld.CIT(A) has rightly considered the issue and in our opinion, deleted the same based on facts. Accordingly, the order of CIT(A) is upheld and Revenue's contentions on this are rejected. Ground Nos. 2, 3 and 4 are accordingly dismissed.

12. Ground No.5 pertains to addition made by AO towards unaccounted dividend of Rs. 1 Lakh. In order to understand this issue, it is better to extract the AO's show cause notice which speaks for itself.

I.T.A. Nos. 1136/Hyd/12 & :- 8 -: 1003/Hyd/13 M/s. Bhavani Jewellers

"2. As per the annexure-A/24 you have chit with M/s. Rushi Chit Funds and the same was ended with 30.09.2007 as it was started on 28.08.2005 for the period of 25 months for total sum of Rs. 5,00,000/- as per the book it is found that for each month you got dividend of rs. 5,000/- on as average and after reducing first month and final month and the A.O. is taking for 20 months after considering all commission and omissions the estimated amount is Rs. 1,00,000/- please explain why it should not be treated as unaccounted dividend amount and added to your income Addition of Rs. 1,00,000/-".

12.1 Against the above show cause notice given by the AO, assessee submitted as under:

"2. We submit that, the Dividend of Rs. 5,000/- estimated for 20 months was incorrect, the dividend will not be the same for all the months, moreover we had lifted the chit amount in the previous year on 20.02.2007 for Rs. 4,75,000/- for the day to day business purpose.

Hence, we request that the estimation of Rs. 1,00,000/- should not be treated as unaccounted dividend income for the assessment year 2008-09 since, the dividend will not be the same for all the months and the dividend will decrease month at the end of the chit period and also the firm has lifted the chit and has loss on chit value".

12.2 AO made the addition stating as under:

"2. In respect of addition of Rs. 1,00,000 proposed towards chit dividend. The assessee has requested to drop the addition stating that the chit was lifted on 20.02.2007 without furnishing the documentary evidence such as Bank account through account the amount was received and how much received. Under these circumstances the assessee's explanation cannot be accepted. Hence the amount of Rs. 1,00,000 is added to the income of the assessee".

12.3 Ld.CIT(A) deleted the addition stating as under:

I.T.A. Nos. 1136/Hyd/12 & :- 9 -: 1003/Hyd/13 M/s. Bhavani Jewellers

"6.3 I have carefully gone through the facts of this issue. The appellant firm had chit with M/s. Rushi Chit Funds started on 28.08.2005 and ended with 30.09.2007 for the period of 25 months for total sum of Rs. 5,00,000/- with a dividend of Rs. 5,000/- on average. The assessing officer estimated the dividend for 20 months @ Rs. 5,000/- and added Rs. 1,00,000/- as income. As per the appellant submissions this estimation of Rs. 5,000/- per member for 25 months is not correct and the firm had lifted the chit amount in the previous year on 20.02.2007 for Rs. 4,75,000/- for the day to day business purpose (which may please be seen from the page No. 42 of the paper book submitted on 19.03.2012). The appellant further submits that both chit dividend and chit loss in the P&L a/c, or the amount invested and amount availed in chit auction as loan without taking into the profit and loss account. The appellant maintained the chit fund account as per the books of accounts. Therefore, estimation of the dividend by the Assessing Officer is not justified. After considering the appellant's submissions, the estimation of the addition made by the AO is deleted. Hence, grounds of appeal on this issue is allowed".

12.4 On perusing the above, we do not see any valid reason in the Revenue's contentions. First of all, there is no basis for bringing the amount to tax on assumptions and presumptions as was done by the AO. We are unable to understand the Revenue's grounds also. The Revenue's ground says "The CIT(A) should not have accepted the argument of the assessee, the chit dividend has been offered and chit loss has been claimed in the P&L A/c. The CIT(A) should have verified the P&L A/c wherein, no chit dividend has been offered neither the loss has been debited". This ground is not based on the CIT(A)'s order. Even though CIT(A) did mention that assessee submitted that both chit dividend and chit loss in the P&L A/c, further statement shows that they are not taken in to P&L A/c. As facts indicate, the chit has started as early as 28-08-2005 and ended in 30-09-2007. Assessee did maintain the chit account in the Books of Accounts but neither the loss nor dividend was been taken to P&L A/c, the fact of which was admitted by the Revenue as well. In these circumstances, AO has to examine whether at the end of the chit, assessee earned any surplus or loss. Nothing was done I.T.A. Nos. 1136/Hyd/12 & :- 10 -: 1003/Hyd/13 M/s. Bhavani Jewellers

except presuming an amount of Rs. 1 Lakh addition without any basis.

Assessee has submitted relevant details before CIT(A) who after examination, deleted the amount. Since factual verification was done by the CIT(A), we uphold the same and dismiss the ground raised by the Revenue.

13. Ground No.6 pertains to addition on account of Members Gold Scheme at Rs. 1,44,000/- each, on two gold schemes. This is an interesting addition made by the AO for which one has to extract the show cause notice issued by the AO to assessee:

"3. And as per the annexure-13/A you have introduced one gold scheme and from 167 members you are collecting Rs. 1,000/- from each. That means Rs. 1,67,000/- per month but you have not admitted any income on that and for one year 12 x Rs. 1,67,000 = Rs. 20,04,000/- and as per the local enquiry you might you have paid certain amount and it may be Rs. 16,000/- per candidate who is a successor of bighting. Hence after taking all commission and omissions you might you have deposited Rs. 1,00,000/- minimum either in bank or in business. So I am adopting at the rate of 12% on Rs. 12,00,000/- and arrived an amount of Rs. 1,44,000/- interested and added under the head of income from other sources. You are also requested to explain the scheme and nature of business Addition of Rs. 1,44,000/-.

4. And as per the annexure - 14/A you have introduced one gold scheme and from 104 members you are collecting Rs. 1,000/- from each. That means Rs. 1,04,000/- per month but you have not admitted any income on that and for one year 12 x Rs. 1,04,000 = Rs. 12,48,000/- and as per the local enquiry you might you have paid certain amount and it may be Rs. 16,000/- per candidate who is a successor of bighting. Hence after taking all commission and omissions you might you have deposited Rs. 1,00,000/- minimum either in bank or in business. So I am adopting at the rate of 12% on Rs. 12,00,000/- and arrived an amount of Rs. 1,44,000/- interest and added under the head of income from other sources. You are also requested to explain the scheme and nature of business. Addition of Rs. 1,44,000/-".

I.T.A. Nos. 1136/Hyd/12 & :- 11 -: 1003/Hyd/13 M/s. Bhavani Jewellers

13.1 Assessee explained that it has introduced gold schemes to the Members by collecting Rs. 1,000/- per month from each member for 16 months. If the members pay 16 months regularly, member would be entitled for gold ornaments worth Rs. 17,000/- as per prevailing rates at the end of the scheme. Many members may not continue and if they drop out, the gold was settled to the extent of amount deposited by them in the scheme. It was further submitted that all the sales accounted under the scheme are accounted for and furnished the details to the AO. It was stated that an amount of Rs. 1.64 Crores during the year includes the sales on gold scheme. Therefore a separate addition was not required.

13.2. AO however, did not agree and proposed to add Rs. 1,44,000/- to each scheme, thus making Rs. 2,88,000/- addition. Ld.CIT(A) after considering the submission of assessee accepted the same and deleted the addition made by the AO. Hence, Revenue is in appeal.

13.3 After considering the contentions of the DR and explanation of the AR, we do not see any reason to interfere with the order of the CIT(A). First of all we are unable to understand how the AO can make the addition and arrive at a profit of Rs. 1 Lakh minimum in the year per month, when assessee submits that only at the end of the scheme, he will pay Rs. 1,000/- to them in addition to amount deposited. As and when amount was withdrawn or taken by the party, gold was given to the party / member and the same was shown in the gold sales account. Since it is a business proposition and all the transactions having been accounted in the books of account, further addition on assumptions and presumptions does not arise. If AO was of the opinion that assessee is depositing Rs. 1 Lakh per month in the bank either Rs. 1 Lakh should I.T.A. Nos. 1136/Hyd/12 & :- 12 -: 1003/Hyd/13 M/s. Bhavani Jewellers

be income but the same was taken for estimation of 12% on Rs. 12 Lakhs at Rs. 1,44,000/-. There is no rhyme or reason for AOs addition. It does not have any justification. First of all, the calculation itself is wrong. Even if one were to presume a rate of 12% of interest on the above amount, AO himself accepts that there will be deposit of Rs. 1 Lakh per month. How 12% interest can be worked out on Rs. 1 Lakh deposited in the last month can only be explained by the AO. The calculation itself is wrong and the basis for such calculation is devoid of any merit. Ld.CIT(A) has done the correct thing in deleting the addition. We are unable to understand how AO can come in appeal on this issue when there is no basis for making the addition itself. There is no application of mind by the AO at the time of making addition and also at the time of making second appeal. We levy cost on AO which would be dealt with at the end of the order. Grounds are accordingly dismissed.

14. Ground No. 7 raised by Revenue is on the deletion of the outstanding creditor's addition made by the AO at Rs. 87,06,851/-. The show cause issued to assessee by the AO is as under:

"5. As per the balance sheet sundry creditors and others for an amount of Rs. 87,06,851/- when questioned the same to explain the AR has furnished details of persons and in some of the cases addresses. To all the addresses the assessing officer has issued notices to reply some of them have sent letters stating that they have given but on verification it is found all the letters are prepared by the assessee and sent through same color cover. Hence please explain why the above amount should be treated as fictitious credits u/s. 68 and added to your income. Addition of Rs. 87,06,851/-.

6. If you have any objection and if you are not satisfied with the above proposal please furnish the details of Bank accounts standing in the name of you and statements of bank accounts for the period from 01.04.2007 - 31.03.2008 without fail".

I.T.A. Nos. 1136/Hyd/12 & :- 13 -: 1003/Hyd/13 M/s. Bhavani Jewellers

14.1 Assessee explained the same as under:

"4. We had submitted and details of sundry creditors and others along with addresses for Rs. 87,06,851/-.

The sundry creditors and other consisting of the scheme creditors, creditors for suppliers, Loan creditors, chit rents and sales advances.

As per your letter we came to know that, some of the creditors have replied to the letter received from the departments.

It is in correct to mention that we have prepared the letter and send through the same over.

As per the details submitted it can be verifiable that there are different creditors, and also we had deducted the TDS on Loan Creditors for the year 2007-08.

Hence, the same cannot be treated as fictitious credits for the firm".

14.2 AO without accepting assessee's contentions made the addition by stating as under:

"5. In respect of loan creditors for an amount of Rs. 87,06,851/- as the assessee has not produced them and no full addresses provided to the assessing officer and in some of the case in which addresses given by the assessee firm the assessing officer has sent letters requesting them to furnish the information. In reply they have sent some confirmations but verification of the same revealed that all the letters are prepared and printed by one person and at one place and in same colour of covers and addresses flags are also same. Under these circumstances the amount of loan creditors are nothing but the money of the assessee firm and the assessee has not discharged the responsibility of the proving the onus lies on the assessee and no full particulars were furnished and whatever particulars furnished the same are placed on record. Hence the entire amount is treated as unexplained credits u/s. 68 and added to the income of the assessee".

I.T.A. Nos. 1136/Hyd/12 & :- 14 -: 1003/Hyd/13 M/s. Bhavani Jewellers

14.3 Ld.CIT(A) after considering assessee's submissions deleted the same stating as under:

"8.4 I have carefully gone through this issue. From the above, Rs. 87,06,851/- includes sundry creditors for scheme members, loans, suppliers, chits, rents and sales advances. The details furnished for other than sundry creditors were verified and found genuine. With regard to sundry creditors Rs. 69,26,541/-, the appellant submitted that their full address and ledger copies, list of the parties along with full address of account copies which were also filed before the AO. From this ledger a/c, it was found that these were the opening balance and interest were debited and TDS also deducted and shown in the regular accounts. Therefore, they are running account of the day to day business of the appellant and the AO has simply made addition u/s. 68 of the Act by stating that even though confirmation letters received but on verification the letters were prepared and printed by one person at one place is not justified. The AO should have verified the journal entries of ledger account given by the parties and evidence to be gathered to prove these creditors were bogus. Therefore, there is no strength to make these credits as addition by the AO. Therefore, after considering the appellant submissions, I am of the view that these are sundry creditors and running account of the day to day business purpose of the appellant. Hence, addition made on this account is deleted".

14.4 After considering the rival contentions and perusing the Paper Book and also the Balance Sheets of earlier year filed at our instance by Ld. Counsel, We do not see any reason to consider the Revenue's contentions. First of all, AO has verified the creditors and got the confirmation letters on his enquiry. The same cannot be rejected simply on the reason that those parties have replied on the same colour of covers and address flags. This cannot be a reason for rejecting the replies received from the parties. Moreover, these are all outstanding balances and without rejecting the purchases or expenditure, the outstanding balances cannot become unaccounted, just because, AO did not accept the confirmations received. It was also explained that these were amounts carried out from earlier year and that the interest I.T.A. Nos. 1136/Hyd/12 & :- 15 -: 1003/Hyd/13 M/s. Bhavani Jewellers

payments and TDS on that was also made. These contentions were never considered/rejected by the AO. We are of the opinion that Ld.CIT(A) has rightly deleted the same, as the very basis of the addition is not justifiable. Accordingly, order of CIT(A) is upheld. Ground is rejected.

15. Before parting with the appeals, we observe that AO unnecessarily made various additions and raised demands. Instead of summarizing the action of AO, we have extracted the show cause issued and replies received above only to high light the way AO passed order. As can be seen from the show cause notice issued and also the final order of the AO, one can easily come to the conclusion that AO is neither comprehending the issues nor making any justification for the additions made. These are not only arbitrary, but also mindless. When Ld.CIT(A) deleted the additions, Revenue should have accepted these but these were contested without any basis. There is no application of mind either by the AO or by the Ld.CIT who approves the second appeal. This forum time and again is advising the Revenue not to burden with unnecessary appeals, mostly on facts. Despite that, we come across this sort of mind less additions and mindless appeals. We need not reiterate the importance of preferring only the deserving appeals. The CBDT vide letter dt. 3rd July 2015, noted that despite several instructions on the subject, necessary due diligence and caution is not being exercised while granting authorization for filing of appeals. The Member, CBDT further notes that besides financial costs, litigation also entails tarnishing the image of the department and straining its resources. On the facts of this case, we are constrained to levy a token cost of Rs. 1,000/- on the AO who passed the assessment order and further cost of Rs. 500/- on the AO who preferred second appeal. These should be collected from their salary and deposited in to treasury as per the rules. An entry in their I.T.A. Nos. 1136/Hyd/12 & :- 16 -: 1003/Hyd/13 M/s. Bhavani Jewellers

personal record should also be made by the superior authority so that AO would not repeat the same in future. We are not levying any cost on the CIT, even though, there is no application of mind at his level while approving the second appeal. We make it clear that we will not hesitate to levy cost on the CIT (Admin) who approves this sort of second appeal without applying their mind.

16. In the result, assessee's appeal is allowed and Revenue's appeal is dismissed with cost on AO.

Order pronounced in the open Court on 15th July, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 15th July, 2015

TNMM

Copy to :

1. Income Tax Officer, Ward-8(2), 8th Floor, D-Block, I.T. Towers, Hyderabad.

2. M/s. Bhavani Jewellers, 21-2-149, Charkaman, Hyderabad. C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad.

3. CIT(Appeals)-III, Hyderabad.

4. CIT-II, Hyderabad.

5. D.R. ITAT, Hyderabad.

6. Guard File.