Delhi High Court
The Commissioner Of Income Tax ... vs P. P. Jewellers on 18 November, 2008
Author: Badar Durrez Ahmed
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 18.11.2008
+ ITA 1275/2008
THE COMMISSIONER OF INCOME TAX
CENTRAL - I ... Appellant
- versus -
P. P. JEWELLERS ... Respondent
Advocates who appeared in this case:
For the Appellant : Mr Sanjeev Sabharwal
For the Respondent : Mr Prakash Kumar
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE RAJIV SHAKDHER
1. Whether Reporters of local papers may be allowed to
see the judgment ?
2. To be referred to the Reporter or not ?
3. Whether the judgment should be reported in Digest ?
BADAR DURREZ AHMED, J (ORAL)
CM 15570/2008 in ITA 1275/2008
Allowed subject to all just exceptions.
ITA 1275/2008
1. This appeal under Section 260-A of the Income Tax Act,
1961 has been preferred by the revenue being aggrieved by the order
dated 04.01.2008 passed by the Income Tax Appellate Tribunal in ITA
314/Del/2004 pertaining to the block period 01.04.1996 to 08.08.2002.
2. The revenue had filed the appeal before the Tribunal on the
ground that the Commissioner of Income Tax (Appeals) had erred in
deleting the addition of Rs 10,08,597/- made on account of gross profit
on suppressed sales, which in turn, arose out of the unexplained
shortage of stock found on the date of the search. We note that the
Tribunal has examined the factual position in detail and has confirmed
the deletion made by the Commissioner of Income Tax (Appeals).
3. The Tribunal noted that the explanation offered by the
assessee with regard to the discrepancy in the weight of the gold and
diamond jewellery ought to have been accepted by the Assessing
Officer. This was because the weight of the jewellery items was taken
by the department in bulk which, according to the Tribunal, included
items like price tags, threads and studded items. Secondly, the Tribunal
was also impressed by the fact that difference in the weight was very
small.
4. The Tribunal noted that there was no dispute that the
department had adopted the bulk weighing method for weighing the
jewellery and thereafter compared the same with the stock register.
The Tribunal was of the view that this method suffered from various
imperfections inasmuch as it meant that the weighment was not done
item-wise and consequently, was not as per the stock registers
maintained by the assessee. The Tribunal concluded that the method of
valuation based on such weighment was not foolproof and was also not
free from doubt. The Tribunal held that in view of the likely errors
associated with such bulk weighing method and also in view of the
minor nature of discrepancy in the weights, the Assessing Officer ought
to have accepted the explanation of the assessee.
5. We do not find any difficulty in accepting the conclusions
arrived at by the Commissioner of Income Tax (Appeals) as well as the
Tribunal on this count. Consequently, we hold that the explanation
offered by the assessee had been rightly accepted by the Tribunal. We,
therefore, are not inclined to interfere with the impugned order and also
note that no substantial question of law arises for our consideration.
6. We have not expressed our opinion on the legal issue of
suppression of sale and undisclosed income which has been dealt with
by the Tribunal because we are of the view that going into that issue
would be unnecessary in view of the findings on facts.
The appeal is dismissed.
BADAR DURREZ AHMED, J
RAJIV SHAKDHER, J
November 18, 2008
SR
