ORDER SHEET ITA 59 of 2012 IN HIGH COURT AT CALCUTTA Civil Appellate Jurisdiction ORIGINAL SIDE ANAND SILVER PVT. LTD. Versus COMMISSIONER OF INCOME TAX, KOL-III. BEFORE: Hon'ble JUSTICE GIRISH CHANDRA GUPTA Hon'ble JUSTICE ARINDAM SINHA Date : 17th March, 2015. Appearance : Mr.Rahul Modi and Mr.Nand Kishore Modi in person. for appellant. Md.Nizamuddin,Advocate ..for respondent. Court : subject matter of challenge, in this appeal, is judgement and order dated 20th January, 2012 by which learned Tribunal dismissed appeal preferred by assessee challenging order of CIT (Appeal) who on his part had concurred with views expressed by assessing officer. relevant assessment year is 2005- 06. facts and circumstances of case, briefly stated, are as follows. assessment for assessment year 2005-06 was completed under section 143(3) on 13th November, 2007 determining loss of sum of Rs.1,34,720/- notice under section 148 was issued and reassessment under section 143(3)/147 was completed on 23rd December, 2009. quantitative details of purchase and sale of gold appearing from Audit report (P52) dated 15th June 2005 under Section 44 AB in Form No. 3CD were as follows : Gold (In gms) Opening stock nil Purchase during previous year 22,09,402.07 Sales during previous year 22,09,337.315 Closing stock nil Net loss/shortage 64.755 As per Auditor s report dated 15th June 2005 purchase of gold and silver (P42) during relevant year was for sum of Rs.1,91,97,99,908/-. But details of purchase produced party- wise and quantity wise indicated total purchase of sum of Rs.1,90,46,90,248/-. There was, thus, difference of sum of Rs.1,51,09,660/-. purchase appeared to have been overstated by aforesaid sum. explanation offered (P157) by assessee was as follows: In case of purchases from M/s. J.J.Gold House of 11/1, S.C.Bose Road, Kolkata-20, purchase was mentioned erroneously as Rs.3,51,58,008/- instead of Rs.4,94,64,263/- thus difference of Rs.1,43,06,255/-, balance Rs.803405/- was directly credited and disclosed as income in P/L a/c of said year under head other income & adjustment Profit on Unfixed deal Schedule 12 . Thus difference as above is fully explainable. above error was typographical error which was done unintentionally and escaped notice of Ld.A/R & assessee. It was also stated by A/R during hearings that assessee-company had received 20 kg gold bars on 30/12/2003 & 5 kg gold bars on 03/01/2004 from J.J.Gold House. These gold bars were claimed to be shown in stock on same date and lying as closing stock as on 31/03/2004. These gold bars were also shown as opening stock. Since rate was not fixed at time of receipt of gold, assessee did not show it in purchase for F/Y 2003-04. After fixing rate on 06/07/2004, gold bars were shown as purchase for F/Y 2004-05. said gold bars were sold in f/y 2004-05. assessing officer did not accept explanation and proceeded to hold that there was bogus purchase of sum of Rs.1,51,09,660/-. assessee preferred appeal. Appellate Authority remanded matter before Assessing Officer. During remand contention of assessee that 20 kilograms of gold received on 30th December, 2003 and 5 kilograms of gold received on 3rd January, 2004 from J.J. Gold House which was shown as purchased on 6th July, 2004 could not be substantiated by assessee because gold purchased from J.J. Gold House contained brand HERAEUS but as per copy of extract of Stock Register submitted before Assessing Officer it transpired that assessee allegedly had in its stock 25 kilograms of gold of different brands viz FINE 9950 PERTH MINT, AUSTRALIA and FINE 9950 CREDIT SUISSE . explanation offered by Assessee did not as such impress Assessing Officer and he held in his remand report that:- Actually alleged gold bars of brand ARGOR, HERAEUS Switzerland were purchased & sold by assessee-company in financial year 2003-04 relevant to assessment year 2004-05. There was no relation of these gold bars in next financial year i.e., 2004-05. Accordingly, bogus purchase to tune of Rs. 1,51,09,660/- in f/yr 2004- 05 relevant to assessment year 2005-06 is established. In reply to query of Appellate Authority at hearing of appeal against order dated 23rd December 2009 passed by Assessing Officer u/s 143(3)/147 after remand report had been received, assessee disclosed that total purchase of Gold from M/s. J.J. House was 83,402.07 Gms as against 58402.070 declared during course of assessment and appellate proceeding . Considering reply of assessee CIT (Appeals) held that if this is taken into consideration total purchase during year comes to 2234402.070 Gms. as against 2209402.070 declared by assessee. assessee has shown sale of 220,337.315 Gms and wastage of 64.755 Gms. Since there is no closing stock, only conclusion can be drawn that there was unaccounted sale of 25000 Gms of gold . assessee was given further chance to explain. assessee explained that by mistake quantity of purchase of Gold has been shown from M/s. Jindal Dychem Industries (P) Ltd. at 455,000 Gms as against actual purchase of only 430,000 gms. . assessee however could not substantiate aforesaid allegation that purchase from M/s. Jindal Dychem Industries (P) Ltd. had been overstated by 25 kilograms. CIT (Appeals), therefore, held that assessee had failed to account for sale of gold of 25 kilograms. In circumstances addition made by Assessing Officer was confirmed. appeal preferred by assessee before learned Tribunal has also failed on 20th January, 2012 which is under challenge in this appeal. following questions of law were formulated at time of admission of appeal. ( I) Whether on correct interpretation of provisions contained in section 147 read with section 148 of Income Tax Act, 1961, Tribunal misdirected itself in law in upholding validity of initiation of impugned reassessment in instant case of appellant assessee company for assessment year 2005-06 based on impugned notice dated 15th September 2008 issued under section 148 of said Act even when no fresh material whatsoever had come in possession of Assessing Officer after completion of regular assessment vide order dated 13th November, 2007 passed under section 143(3) of said Act ? (II) Whether findings recorded by Tribunal in upholding addition of Rs. 1,51,09,660/- in paragraphs 6.2 and 6.3 of its th impugned order dated 20 January 2012 are wholly erroneous in law against facts and evidence on record, wholly baseless, unreasonable and/or otherwise perverse ? appeal was presented through M/s. J.P. Tibrewal & Co., Advocates. appellant has taken change from M/s J.P. Tibrewal Co. and authorized one of its Directors Sri Nand Kishore Modi and his son Sri Rahul Modi to appear and argue on behalf of appellant at time of hearing. Affidavit of Competency has also been filed. Mr. Modi submitted that order of learned Tribunal is perverse in that it was never case of assessee that gold purchased from M/s. Jindal Diechem Industries (P).Ltd. was 430,000 gms. According to him case of assessee always was that gold purchased was 455,000 gms. This submission does not appear to be correct because assessee in that case should have voiced aforesaid grievance before learned Tribunal which does not appear to have been done nor do grounds of appeal contain any such grievance. In absence of any evidence we have to rely upon presumption under Section 114 of Evidence Act that all judicial and official acts were regularly performed. From records there can be no dispute as regards fact that case of assessee was that there was no opening balance during financial year nor there was any closing balance. gold purchased during year was fully sold as would appear from figures quoted above. There is also no dispute as regards fact that total purchase during year was shown at sum of Rs.1,91,97,99,908/- whereas detail of purchase revealed that total purchase was for sum of Rs. 1,90,46,90,248/-. Therefore, purchase figure was inflated by sum of Rs. 1,51,09,660/-. In circumstances re-assessment proceeding was initiated and assessee was called upon to explain. explanation of assessee was that during financial year 2003-04, to be precise, on 30th December, 2003 assessee had received 20 kilograms of gold from M/s. J.J. Gold House. Similarly another 5 kilograms of gold was received from same J.J. Gold House on 3rd January, 2004. aforesaid gold received on 30th December, 2003 and 3rd January, 2004 was shown purchased by assessee in its books of accounts on 6th July, 2004 at sum of Rs. 1,43,06,255/-. It was contended that sum of Rs. 8,03,405/- was credited to P & L Account by way of other income. Thus difference of sum of Rs. 1,51,09,660/- was explained. explanation offered by assessee did not explain discrepancy pointed out and relied upon by Assessing Officer during reassessment proceeding. Even assuming contention of assessee to be correct, for purchase of Rs. 1,43,06,255/-, purchase account could not have been debited by sum of Rs.1,51,09,660/- as was admittedly done. alleged credit to P/L A/c by sum of Rs.8,03,405/- does not also match with contention of assessee which is as follows:- 7th July 2003 Fixed deposit of sum of Rs.1,50,00,000/- was created by assessee for purpose of pledging same. (Page 196) 30th December, 2003 20 Kilograms of gold vide Challan No.2 was received by assessee. (Page 196) 3rd January, 2004 5 Kilograms of gold vide Challan No.3 was received by assessee. (Page 196) 6th July, 2004 M/s. J. J. Gold House issued bills for Rs.1,14,42,680/- and for Rs.28,63,575/- aggregating to sum of Rs.1,43,06,255/- (Page 197) 6th July, 2004 fixed deposit of sum of Rs.1.5 crore was encashed at sum of Rs.1,57,15,924.72 paisa and directly credited to account of seller M/s. J. J. Gold House (Page 197) M/s. J. J. Gold House refunded sum of Rs.14,09,669.72 paisa. It is alleged that income generated from transaction amounting to Rs.8,03,405/- was shown as other income. There was no occasion in any case for income of sum of Rs.8,03,405/- because amount of interest could not have been more than Rs.7,15,924.72 paisa. This is clear pointer to show that explanation did not match with actual state of affairs. During remand proceedings, it transpired that case of assessee that it had unaccounted opening stock of 25 Kgs of gold, which was indicated in Notes on Accounts for financial year 2003-04, was also not correct. Notes on Accounts for financial year 2003- 04 reflect following :- D uring year Company has taken 25 Kgs of Gold as loan from Bank of Nova Scotia Ltd. and same is lying in stock as on 31st March, 2004. Further as per Company s explanation to us, same has not been reflected in books of accounts as rate of Gold taken on has not been decided by said Bank From papers furnished by assessee, it transpired that goods shown to have been purchased on 6th July, 2004 and received by assessee, according to him, on 30th December, 2003 and 3rd January, 2004 contained HERAEUS mark, whereas goods allegedly lying in unaccounted opening balance as on 1st April, 2004 was FINE 9950 (CREDIT SUISSE) etc. as more fully quoted above. Therefore, finding of authorities that goods allegedly purchased on 6th July, 2004 and actually received on 30th December, 2003 and 3rd January, 2004 was, in fact, sold during financial year 2003-04, appears to be possible view. Mr. Modi submitted that it is true that goods were sold during financial year 2003-04, but they were replaced by goods which contained mark FINE 9950 PERTH MINT, AUSTRALIA . This explanation was not shown to us to have been advanced before any of authorities below. However from letter dated 7th June, 2010 addressed to assessee by its auditors appearing at page 179 of Paper Book following paragraph was brought to our notice. T he quantity and value of sales during financial st year ending 31 March, 2005 do include 25 Kgs. of Gold Bars bearing Identification Nos. 916303 to 916306, 916308 to 916310, 916312 to 916317, 916288, 916289, 916291, 916292, AC054151 to AC054153, AC 54154 to AC54158 sold to various parties, as per details given in List Y annexed hereto. Identification Nos. of these Gold Bars, weighing about 25 Kgs., are those, which had been purchased from M/s. Jindal Dyechem Industries Pvt. Ltd. in financial year st ending 31 march, 2004; and which replaced borrowed Gold Bars from M/s. J. J. Gold House already sold in st financial year ending 31 March, 2004. Nothing was shown to us to indicate that even this letter was brought to notice of any of authorities below. What has dealt deadly blow to case of assessee is fact that assessee took stand before CIT (Appeal) that Gold purchased from JJ Gold House was not 58402.07 Gms, but it was, in fact, 83402 Gms. Naturally, CIT (Appeal) asked assessee to account for, in that case, closing balance of 25Kgs of Gold. If assessee had got 25 Kgs of Gold more than declared weight for same amount of purchase money, then 25 Kgs of Gold should be in his closing stock, which was sought to be countered by assessee by alleging that purchase from Jindal Dychem Industries (P) Ltd. was overstated by 25 Kgs and there was, as such, no question of any closing stock. It is now alleged before us that aforesaid submission was never made which we are unable to believe for reasons already indicted. CIT (Appeal), in circumstances, held that there had been suppression of sale of 25 Kgs of gold. Mr. Modi contended that purchase and sale was incorrectly shown originally. According to him quantity of gold purchased was 22,35,127.070 grams and quantity of gold sold was 22,35,062.315 as would appear from aforesaid letter dated 7th June, 2010 appearing at page 179 of paper book. aforesaid figures are admittedly contrary to Auditor's report dated 15th June, 2005 which has been quoted above. Mr. Modi contended that assessee has been victimized due to mistake of auditor. Whether assessee has been victimized or assessee is trying to improve his case, after his explanation failed on merits, is question which does not really arise for determination in appeal. Our attention was not drawn to any document to show that aforesaid letter dated 7th June, 2010 was ever brought to notice of authorities below. contents of letter dated 7th June 2010 are admittedly contrary to Auditor s report dated 15th June 2005 discussed at page 2 above. Mr. Modi further contended that re-assessment proceedings under section 147 were initiated on ground that there was excess debit of Rs.1,51,09,660/- to purchase account, whereas CIT (Appeal) has accepted contention of assessee and held that there was suppression of sale of 25 Gms. of Gold. He submitted that new case was made out for which there is no foundation in recorded reasons and therefore entire proceeding was bad. We have not been impressed by submission of assessee. case remains same. audited accounts coupled with records submitted by assessee go to establish that purchase account was debited by excess sum of Rs.1,51,09,660/-. In seeking to explain, assessee came out with disclosure that it had purchased from J.J. Gold House 83 Kgs. of Gold and not 58 Kgs. of Gold. total cost of gold purchased by assessee furnished at initial stage has remained unchanged. If case of assessee is that he purchased 25 Kgs of gold in addition than what was shown originally from J. J. Gold House, then total quantity purchased in year has to be increased by 25 Kgs of Gold and that 25 Kgs of Gold should consequently be in closing stock. Since closing stock is nil view could certainly be taken that assessee had suppressed sale of 25 Kgs of Gold. But that does not change original position. original position remains same. It transpired from fact that purchase account was inflated by sum of Rs.1,51,09,660/-. It is only on basis of case run by assessee during hearing of appeal that Commissioner of Income Tax held that if case of assessee in appeal is true, then there should have been 25 Kgs of gold in closing balance. Since closing balance is nil there is suppression of sale of 25 Kgs Gold. Since learned Tribunal was agreeing with views of CIT (Appeal), it was not incumbent upon them to write out elaborate judgment or to reiterate what had already been indicated in judgment of CIT (Appeal). For aforesaid reasons, contention that view taken is perverse is altogether unmeritorious according to us. view taken by Assessing Officer, CIT (Appeal) and learned Tribunal are all possible views in facts and circumstances of case. Therefore, second question formulated at time of appeal is answered in negative and against assessee. first question was not argued before us and therefore need not be answered. After judgment was dictated Mr. Modi submitted that matter should be remanded for ends of justice. We are not satisfied that such course is open to us. issue was whether purchase was overstated. assessee was given opportunities repeatedly to adduce evidence to rebut proof adduced by revenue in support of aforesaid issue. assessee failed to discharge its burden. It has not been shown to us that any question of fact essential to right decision was left undetermined. case sought to be built upon on basis of letter dated 7th June 2010 is new case which authorities below had no occasion to consider. case run by assessee before them has been falsified. We do not think for ends of justice remand is permissible in facts of case. In result, appeal fails and is dismissed. (GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) ssaha/anc/km ARs(CR) Anand Silver Pvt Ltd v. Commissioner of Income-tax, Kolkata - III