Meena Jewellers Exclusive Private ... vs Department Of Income Tax

Asstt. Commissioner of Income- V/s. M/s. Meena Jewellers Exclusive Pvt. tax, Circle 16(2), Hyderabad Ltd., Hyderabad

(PAN - AAGCM 2967 H ) (Appellant) (Respondent)

Appellant by : Shri Rajat Mitra, DR

Respondent by : Shri P.Murali Mohan Rao

Date of Hearing 25.2.2015 Date of Pronouncement 26.2.2015

ORDER

Per P.M.Jagtap, Accountant Member :

This appeal is preferred by the Revenue against the order of the learned CIT(A) V, Hyderabad dated 26.5.2014 and in the solitary substantive ground raised therein, the Department has challenged the action of the learned CIT(A) in deleting the addition of Rs.15,60,761 made by the Assessing Officer on account of profit allegedly earned from unaccounted sales.

2. The assessee in the present case is a company, which is engaged in the business of trading in diamonds, gold ornaments and diamond ornaments, etc. The return of income for the year under consideration was filed by it on 30.09.2011, declaring total income of Rs.32,42,917. A survey under S.133A was conducted on 2.8.2011 in the business premises of M/s. Meeena Jewellers group, including the assessee company. During the course of survey, large number of sale bills were found, which, according to the Assessing Officer, were not accounted by the assessee company in its regular 2 ITA No.1595/Hyd/2014 M/s.Meena Jewellers Exclusive Pvt. Ltd., Hyderabad

books of account. In this regard, it was contended on behalf of the assessee before the Assessing Officer that the said bills were cancelled bills and therefore, there was no question of accounting the same in the regular books of account. It was also explained that it is a normal practice to cancel the sale bills if they have some error. This explanation of the assessee was not found acceptable by the Assessing Officer, and applying a gross profit rate of 2.01% on the alleged unaccounted sales of Rs.7,76,49,804, an addition of Rs.15,60,761 was made by him to the total income of the assessee in the assessment completed vide order dated 20.3.2014 passed under S.143(3) of the Act.

3. Against the order passed by the Assessing Officer under S.143(3), an appeal was preferred by the assessee before the learned CIT(A), disputing therein the addition made by the Assessing Officer on account of profit earned on alleged unaccounted sales. After considering the submissions made by the assessee and the material available on record, the learned CIT(A) accepted the stand of the assessee that the bills found during the course of survey were nothing but the cancelled bills and the addition made by the Assessing Officer on account of profit earned from such alleged unaccounted sales was not sustainable. He therefore, deleted the addition made by the Assessing Officer on this issue. Aggrieved by the order of the learned CIT(A), the Revenue has preferred this appeal before the Tribunal.

4. We have heard the arguments of both the sides and also perused the relevant material on record. Learned representatives of both the sides have agreed that the issue involved in this appeal of the Revenue is squarely covered in favour of the assessee by the decision of the coordinate bench of this Tribunal in the case of other group concern, viz. M/s. Meena Jewellers P. Ltd. rendered vide its order dated 10.12.2014 passed in 3 ITA No.1595/Hyd/2014 M/s.Meena Jewellers Exclusive Pvt. Ltd., Hyderabad

ITA No.260/Hyd/2014, wherein the order of the learned CIT(A) deleting a similar addition made by the Assessing Officer on account of profit earned on alleged unaccounted sales, was upheld by the Tribunal for the following reasons given in paragraphs 20 to 24 of its order-

"20. We have heard both the parties. We note the following:

a) The internal control system in the bills do not permit any corrections and the only way is to cancel and enter again.

b) The bills have to be cancelled in case the bills which are entered in one firm's name are going to another concern's name due to technical snag.

c) Sometimes, the quantities were entered wrongly and the invoices have to be prepared again reflecting the correct quantities.

d) Name of the dealer/customer if entered wrongly is to be rectified for preparing the invoice in the correct name.

21. We also note from the statement made by Sri N.B. Gopinath in reply to question No. 5 that certain changes in the data base were made as per the direction of his employer Sri Umesh Jethwani. Further the extract of statement of Sri Umesh Jethwani has been reproduced, from which we find that the statement of Giritech Technology was put as question to Sri Umesh Jethwani. We note that Giritech Technology were developing various software and it was stated by them that they were not preparing software which would suppress the gross receipts on the request of the assessee. The statement of Giritech Technology was obviously misunderstood by the Department inasmuch as to answer to question No. 13 it has been stated that they have no intention to suppress the sales and they have also stated that may be the difference is because of inter transaction between the firm and branches. It is the case of the assessee 4 ITA No.1595/Hyd/2014 M/s.Meena Jewellers Exclusive Pvt. Ltd., Hyderabad

that the assessee has not been confronted with the statement of N.B. Gopinath and the statement was recorded on the back of the assessee.

22. Further the conclusions made by the AO are incorrect with respect to the statements made by Giritech Technology and Umesh Jethwani. The Department has not brought in any material to prove that the assessee has demanded for a particular type of software which would suppress gross receipts.

23. In these circumstances, in the absence of any evidence to prove that the assessee had tampered the bills to suppress gross sales the contentions of Revenue cannot be accepted. Further, the assessee has prepared the reconciliation and table the CIT(A) has stated as follows:

" ... Further, the appellant had also produced before the AO, copies-of individual cancelled bills along with copies of sales bills in support of the reconciliation statement. The very same reconciliation statement along with party-wise break up for cancelled bills which are filed before me are verified. The AO's rejection of appellant's explanation in this regard is not based on sound footing."

24. Hence, we confirm order of the CIT(A) and dismiss the ground raised by the Department on this issue. "

As the issue involved in the present case as well as all the material facts relating thereto are similar to the case of M/s. Meena Jewellers (P) Ltd, we respectfully follow the decision rendered by the coordinate bench of this Tribunal in the said case and uphold the impugned order of the learned CIT(A), deleting the addition made by the Assessing Officer on account of profit earned by the assessee on alleged unaccounted sales and dismiss the grounds of the Revenue in this appeal.

5 ITA No.1595/Hyd/2014 M/s.Meena Jewellers Exclusive Pvt. Ltd., Hyderabad

5. In the result, appeal of the Revenue is dismissed.

Order pronounced in the court on 26th February, 2015

Sd/- Sd/- (Asha Vijayaraghavan) (P.M.Jagtap) Judicial Member Accountant Member

Dt/- 26th February, 2015

Copy forwarded to:

1. M/s. Meena Jewellers Exclusive Pvt. Ltd., 5-90-58/1-15, Shop No.201/A, Babukhan Estate, Basheerbagh, Hyderabad

2. Asstt Commissioner of Income-tax Circle 16(2), Hyderabad

3. Commissioner of Income-tax(Appeals) V Hyderabad

4. Commissioner of Income-tax IV , Hyderabad

5. Departmental Representative, ITAT, Hyderabad. B.V.S