PER B.R. JAIN, AM:-

1. Cross appeals in ITA No. 12/JP/2012 and 106/JP/2012 arise from the order dated 3/11/2011 of Ld. CIT(A)-1, Jaipur whereas cross appeals in ITA No. 11/JP/2012 and 2 107/JP/2012 arise from the order dated 4/11/2011 of Ld. CIT(A)-1, Jaipur. Grounds raised in respective appeals are as under:- Grounds in ITA No. 12/JP/2012 of the assessee.

1. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the addition of Rs. 19,56,695/- u/s 69C on account of alleged excess stock found in survey.

2. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the addition of Rs. 53,226/- by presuming that such stock was on approval with third party on the date of survey and not available at the business premises. Grounds in ITA No. 106/JP/2012 of the department. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) is justified in :-

1. reducing the excess stock to the extent of Rs. 32,24,965/- as against addition of Rs. 53,81,659/- made by the A.O. on account of amount already surrendered by the assessee.

2. deleting the addition of Rs. 12,13,995/- made by the A.O. on account of unaccounted sales. Grounds in ITA No. 11/JP/2012 of the assessee.

1. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the addition of Rs. 28,95,607/- u/s 69C on account of alleged excess stock found in survey.

2. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the addition of Rs. 26,401/- u/s 69C on account of alleged excess cash found in survey.

3. The Ld. Commissioner of Income Tax (Appeals) has erred on facts and in law in confirming the addition of Rs. 1,24,901/-by presuming that such stock was on approval with third party on the date of survey and not available at the business premises. Grounds in ITA No. 107/JP/2012 of the department. Whether on the facts and in the circumstances of the case and in law the Ld. CIT(A) is justified in :-

1. reducing the excess stock to the extent of Rs. 29,22,008/- as against of Rs. 62,92,173/- made by the A.O. on account of amount already surrendered by the assessee. 3

2. deleting the addition of Rs. 7,05,506/- made by the A.O. on account of unaccounted sales.

2. Briefly the facts in ITA No. 12/JP/2012 are that the assessee derives income from business of jewellery and returned income of Rs. 87,19,860/- on 26/9/2008 after considering the surrender made during the course of survey carried at its business premises on 11/9/2007. During the course of survey, the stock of jewellery was valued by the departmental valuer, who estimated total value of jewellery at Rs. 1,88,06,363/- as against book stock of Rs. 36,62,637/- deduced after applying gross profit rate. The survey party, however, adjusted the value of stock valuation due to impurity further by 10% and thus adopted the value of jewellery found as a result of survey at Rs. 1,69,25,763 and worked out excess stock of Rs. 1,32,63,126/-. The survey also resulted into an excess cash of Rs. 3,19,210. The assessee, therefore, made surrender of such excess stock as well as cash found from him. While filing return of income, the assessee however, did not return income on the basis of such surrender agreed to have been made in its statement recorded during the course of survey for the reason that the survey party did not adopt correct valuation of stock. There were further impurities in the items of jewellery as were stated in his separate letter filed on 17/3/2008 much prior to the close of the relevant previous year. The valuation was not done at cost. Accordingly, in his return filed, the assessee offered for taxation excesss stock of Rs. 79,21,316/- as against the admitted surrender of Rs. 1,32,63,116/- and against the cash, it made a surrender of Rs. 2,79,361/- only as against surrender of excess cash of Rs. 3,19,210/- admitted in his statement recorded during the course of survey.

3. During the course of assessment proceedings, the Assessing Officer being not satisfied with the retraction made by the assessee, proceeded to add the difference of amount of Rs. 53,81,659/- on account of excess stock and excess cash to the income of the assessee as undisclosed income surrendered during the course of survey by the assessee but not found declared in his return filed after the date of survey. He thus, completed the assessment at a total income of Rs. 1,54,06,680/- as against the returned income of Rs. 87,19,860/- only. 4

4. In appeal before the Ld. CIT(A), the assessee reiterated his stand as was taken before the Assessing Officer. It was contended that the departmental valuer has taken purity in all the gold ornaments at 92.30%, which was not agreed by the assessee. The survey party itself corrected the valuation by adopting purity of gold in the ornaments to the extent of 83%. The assessee however, had contested that the purity of gold has to be taken at 80% in all items except items appearing at serial Nos. 9, 19 and 27 to 31 of the valuation report where the purity of gold was claimed to be at 50 to 68%. This claim was evidenced by the vouchers of karigar, who had manufactured the jewellery for the assessee indicating purity of gold ornaments at 80%. Likewise the assessee had filed a certificate of the jewellers association and tounch certificate in respect of items appearing at serial No. 9,19 and 27 to 31 indicating purity of gold contained in such gold ornaments namely nose pin, small tops, mixed ornaments etc. between 50 to 68%.

5. The appellant also contested the valuation of stock adopted at market price as against its valuation at cost made on consistent basis. The Ld. CIT(A) adjusted the value to bring it down to the cost, as the basis adopted by the assessee for valuing its closing stock consistently were at cost. He accordingly gave relief of Rs. 33,85,152/-. He however, on the ground of impurity, claimed by the assessee, did not allow any relief to the appellant and thus sustained addition. That apart Ld. CIT(A) did not accept book stock difference of Rs. 3,10,111/- between the book stock worked out at the time of survey with book stock accounted for by the assessee in returning the income. Explanation about difference in cash, however, stood accepted.

6. The assessee in his written submissions dated 17/4/2013 laid on record has summarized the difference in market value of stock due to impurity by Rs. 20,58,184/- narrating facts as under:- The assessee has filed the statement of valuation of jewellery as per AO and as per assessee alongwith supporting evidences on 17/3/2008 (P.B. Page 44). After filing this letter, the AO has not raised any query. In assessment proceedings, the assessee again vide letter dated 2/8/2010 (P.B. Page 57-59) explained the item wise difference which is summaised as under:- (i) The AO/survey party has taken the purity of the gold ornaments in all the cases (except one item) at 92.30% and thereafter allowed deduction of 10%. 5 This resulted in considering the purity of gold in ornaments at 83.06%. It is ignored that generally the purity of gold ornaments is only 80%. This is evident from the receipt vouchers given to kaarigars who make the jewellery, which shows that the purity of the gold ornaments is 80% only (P.B. Page 48-51). These receipt vouchers are found in Annexure A-19. Even in course of survey, assessee disputed the purity taken by registered valuer at 92% but the survey team only accepted a reduction of 10%. However, in view of evidence furnished the purity needs to be taken at 80% only. (ii) In respect of gold tops at S. No. 9, the purity was taken by the valuer at 92.30/- whereas these small tops have a purity of 68% only. Certificate of Sarafa Traders Committee is filed. (P.B. Page 56). (iii) In respect of gold Mangal Sutra at S.No. 15 against the gross weight of

485.320 gms, the registered valuer took the net weight at 309 gms. Similar is the position in respect of gold Mangal Sutra at S.No. 6. It is to be noted that in Mangal Sutra the gold content is hardly 55% of the gross weight as it contains black beeds. The gods beeds in its is made of Chapari and contain only a thin layer of gold. The valuer has taken net weight of gold in S.No. 6 at 74% and at S.No. 15 at 64% whereas it is not more than 55%. Hence, appropriate reduction from the gross weight to arrive at the net weight is required to be given. (iv) In respect of Kundan Stone Jadau items at S.No. 18 against gross weight of

772.510 gms, the registered valuer has taken the net weight at 583 gms i.e gold content at 75%. This is incorrect since the kundan jadau set hardly contains 25% gold of the gross weight. Certificate of Kaarigar and Sarafa Traders Committee in this connection is filed. (P.B. Page 55). (v) In respect of gold beeds at Serial No. 24 against gross weight of 56 gms net weight of gold is taken at 51%. This is incorrectly taken since the net weight of gold in beeds is hardly 10%. (vi) In respect of items at serial No. 19,27,28,29 and 31 purity of mix ornaments is taken at 91.30% whereas purity of such mixed items on an average is only 68%. This is evident from the purity testing report where purity of items like nath, ring, chain etc. varies between 48.55% to 77.82%. (P.B. Page 52-54). (vii) In respect of item No. 30 i.e. nose pin purity is taken at 92.3%. This is incorrect since nose pin is generally made in 12 carrot gold. Thus, gold content in nose pin is 50%. This is evident from the copy of bills placed at PB 67-78 & also the certificate of Sarafa Trade Committee placed at PB 56. After giving effect to the above, the value of the stock on the date of survey at market rate works out to Rs. 1,48,67,579/- as against 1,88,06,363/- determined by the registered valuer and Rs. 1,69,25,726/- determined by the survey party. The 6 lower authorities have not pointed out any mistake/defect in the above contention of the assessee. They have simply relied on the surrender made by the assessee ignoring the fact that in the same statement assessee has stated that he will give necessary evidence about the purity of the gold contents in the gold ornaments. The observation of CIT(A) that selling rate of gold articles as per sale bill is same as determined by the registered valuer is incorrect and has no relevance when assessee has established with evidence that the content of gold in the jewellery for various items varies. In these circumstances, reduction of Rs. 20,58,184/- as claimed by the assessee on account of excess valuation made by the survey team on account of purity/content of the gold in the gold ornaments/other mixed items be directed to be allowed to the assessee.

7. As regards the difference in stock as per books Rs. 3,10,111/-, it is contended that the survey party took the book stock at the time of survey at Rs. 36,62,600/- whereas the correct book stock is Rs. 39,72,748/- as per calculation filed vide letter dated 10/3/2008 (P.B. Page 46). The AO has not pointed out any defect therein. CIT(A) has not accepted the same only on the ground that assessee has not reconciled the difference in the closing stock as per books determined at the time of survey ignoring that how such stock is determined is not confronted to the assessee. Hence, the AO be directed to take the correct book stock at Rs. 39,72,748/-. It has, therefore, been contended that after considering the above reduction, the excess stock found at the time of survey works out to Rs. 79,21,316/- as against Rs. 1,32,63,126/- worked out by the AO and Rs. 98,78,010/- worked out by the CIT(A). The excess stock so determined by the assessee is offered for tax and, therefore, entire addition of Rs. 53,41,810/- made by the AO on account of excess stock be deleted by dismissing the ground of the department.

8. The Ld. counsel for the appellant further states that that Ld. assessing officer made the addition on erroneous assumption that it has retracted the statement made during the course of survey. Even though, the statements elicited during the course of survey do not have any evidentiary value yet the assessee has only corrected the wrong committed by the survey party in adopting the correct value of stock found during the course of survey as well as worked out as per books of account. The Ld. CIT(A) gave only part relief but rejected the assessees explanation with respect to book stock on purity of gold on 7 irrelevant considerations. The error committed by the Ld. CIT(A), therefore, requires to be corrected.

9. On the other hand, the Ld. departmental representative contends that the valuation of the jewellery found was made by an expert. The survey party, however, adjusted the market value of stocks so found to lower amount due to impurity contained therein. The value so arrived at after making such adjustment was taken as value of stock found as a result of survey. When this value was compared to the book stock drawn by application of gross profit rate, the excess stock was worked out. The assessee admitted of such excess, made statement and agreed to surrender the same as his income in the return be filed for the year under consideration. He, however, did not act upon the surrender so made. It, therefore, compelled the assessing officer to make assessment on the basis of the surrender made by the assessee. The Ld. CIT(A) however, committed error in scaling down the market value to the cost price despite the assessee has admitted the valuation during course of survey proceedings. In so far as the other items are concerned, for which the Ld. CIT(A) did not accept the assessees claim the issue relates to the factual matrix. As the jewellery was neither impounded nor seized but was left with the assessee, the claim of impurity in such items is merely an after thought. The same does not require any further correction. It, therefore, has been contended that the ground in departments appeal on this count needs to be allowed and the assessees ground requires to be dismissed.

10. In rejoinder, the assessees counsel contends that the assessee made a bonafide claim of impurity contained in the jewellery found at the time of survey team itself and again by his letter dated 10/3/2008 filed before the Assessing Officer on 17/3/2008 which was much before the close of the previous year under consideration. Neither the survey team nor the assessing officer rejected the claim by getting the second valuation of the jewellery. The addition sustained is an arbitrary exercise of the revenue authorities. In so far as the revenue ground for valuation of stock is concerned, the assessee continued business. The stock has been valued at cost consistently. (-) There is thus no infirmity in the order of the Ld. CIT(A) in scaling down the jewellery found at the time of survey from market price to the cost price. (The assessing officer has no jurisdiction to change the 8 method of valuation). Books of account have also not been rejected in this case. No additions are warranted on any count.

11. We have heard parties with reference to material on record. The jewellery stock found as a result of survey admittedly was valued at market price as is evidenced by the valuation of jewellery made by the departmental valuation officer laid at assessees PB 32 and 33. This valuation has been made by placing the values of jewellery as on 11 th September, 2007 i.e. the date of survey on assessees premises. The assessee is continuing the business and had valued the stock at cost or market price whichever is lower. This method has been accepted in past and followed consistently for last several years. No change in method of valuation of stock has been reported. The Ld. CIT(A) having regard to the method of valuation of stock adopted by the assessee scaled down the market value of stock to the cost and thus allowed relief of Rs. 33,85,152/-. We do not find any infirmity in correcting such valuation by the Ld. CIT(A). The ground in appeal raised by the revenue being devoid of any merit on this count, stands rejected.

12. In so far as the assessees claim that there were impurities of 20% in the gold ornaments except in items contained at Sl. No. 9, 19 and 27 to 29 and 30 at 32% and in tiem No. 30 of the valuation report at 50%. The survey team accepted the claim partially to the extent of impurity in all items by 18% only. This has so been done without taking second opinion from the expert even though jewellery found was available before the survey party at the time when the appellant disputed such valuation made by the departmental valuation officer. He was not even allowed to bring his own registered valuer, though protests are claimed to have been made by him. In any event, the adjustment made on account of impurity by the survey team itself, reveals that they have disbelieved the valuation made by their own valuer. The appellant did not rest his claim before the survey team only but pursued the matter further before the assessing officer and filed a letter on dated 17/3/2008 in that regard. The assessing officer also remained passive on the face of it though it called for further enquiries. Essentially, therefore, the valuation adopted by the survey team can neither be taken as correct not conclusive. Statements elicited during survey have no evidentiary value as has also been affirmed by the Honble Honble Apex 9 Court in the case of S. Khader Khan Sons reported in 79 DTR 184 (SC). Essentially, therefore, the assessment could not have been made only on the basis of statement elicited during the course of survey. The assessee had a right to correct the valuation on the basis of actual gold content in such stock of jewellery found as a result of survey. The appellant made bonafide surrender of additional business income on account of investment in excess stock of jewellery found as a result of survey from him by showing 80% gold content as against 83% admitted by the survey team in respect of all items except items at Sl. No. 9, 10 and 27 to 31 of the valuation report. In respect of items at Sl. No. 9 being gold tops weighing 2035 gms, mixed jewellery from item No. 19, 27 to 29 and 31 weighing 3437gms. at 68% and for item No. 30 being nose pin weighing 1953 gms at 50% the appellant had supported his claim with the tounch test report and certificate of the jewellers association and also with making bill from the karigar. The authorities below embarked no enquiry to disprove such claim of the appellant. For the remissness on the part of the assessing officer, the assessee cannot be made to suffer. Under the peculiar facts of the case, we do not find any infirmity in the assessees decision to correct the valuation further on the basis of purity of gold content in such jewellery and working out the excess stock of jewellery found as a result of survey as such. Thus the corrected cost of jewellery has been worked out at Rs. 1,18,94,064/- as against Rs. 1,69,25,763/- adopted by the assessing officer and corrected by the Ld. CIT(A) to Rs. 1,35,40,611/-. The assessee gets relief of Rs. 16,46,547/-.

13. The Ld. CIT(A), however, sustained addition of Rs. 3,10,111/- in the trading account on account of difference in book stock as accepted by the assessee on the date of survey at Rs. 36,62,600/- but later claimed at Rs. 39,72,748/- for working out the additional income on account of excess stock as on date of survey on the basis of account found at the time of survey. The reasons for sustaining the addition on account of this difference is that the assessee himself has admitted the book stock at Rs. 36,62,600/- by application of gross profit rate on the book result, but did not furnish any basis to show as to how he admitted Rs. 36,62,600/- in place of book stock of Rs. 39,72,748/- later adopted in calculating his additional income disclosed in the return of income. 10

14. We have heard parties with reference to material on record. Essentially the books of account have not been rejected. Survey team itself has worked out book stock of Rs. 36,62,600/- by application of gross profit rate. Burden lay upon income tax department to show that as to how the book stock at Rs. 36,62,600/- was worked out for reaching the unexplained stock found as a result of survey. The appellant has claimed book stock of Rs. 39,72,748/- on the basis of books of account found in survey by applying the same method as was adopted by the survey party. Since the books of account have not been rejected, the veracity of appellant cannot be disbelieved. We, therefore, do not find any justification in sustenance of addition of Rs. 3,10,111/- forming part of the total addition of Rs. 19,56,695/- in ground No. 1 in appeal hereinbefore and allow the same.

15. In so far as revenues ground No. 2 in appeal regarding deletion of addition of Rs. 12,13,995/- deleted by Ld. CIT(A) on account of unaccounted sales made by the assessing officer, we find that the Ld. CIT(A) had reached satisfaction that such sales effected prior to the date of survey have formed into the stock that stood surrendered as additional income of the period prior to the date of survey. The decision so taken by the Ld. CIT(A) has a rational relevant to the facts on record. The ground raised in appeal by the revenue therefore is devoid of any merit. The same stands rejected.

16. In so far as the ground No. 2 in assessees appeal is concerned, the Ld. CIT(A) sustained addition of Rs. 53,226/- by presuming that on the date of survey such stock was sent on approval with the third party and was not available at business premises of the assessee.

17. We have heard parties with reference to material on record. The reply to the question No. 23 of assessees statement recorded in the survey placed at assessees PB page 19 has also been perused. Since the assessee was not able to provide the exact date of receipt of the goods back, which were sent on approval, the same were treated as goods held by third parties on the date of survey. The assessee, however, in assessment proceeding denied that any such goods remained with third parties for approval and claimed that any such goods have already taken part of the sales disclosed by him or 11 entered into the stock that came to be surrendered as a result of survey on him. We find force in the explanation tendered by the assessee as the assessing officer himself has accepted the books of account to be correct and complete. The revenue has also admitted the correctness of sales effected by the assessee subsequent to the date of survey to 31/3/2008. The closing stock held by the assessee and its valuation as on 31/3/2008 has also been accepted. These sales and stock have been taken into account while deducing the profits from the books of account maintained by the assessee for assessment of his income for the entire financial year. In this view of the matter, all the stock whether held by the assessee in his own premises or held by third parties on approval stand accounted for with no further scope of any other addition as excess stock on any basis whatsoever. The ground raised by the assessee, therefore, is directed to be allowed.

18. Before we part, we may say that the entire controversy raised in the cross appeals can also be understood from the trading account drawn hereunder on the basis of material on record for the period from 1/4/2007 to 11/9/2007 i.e. up to the date of the survey, from the assessees PB page 46 and for the period from 12/9/2007 to 31/3/2008 after considering the trading account for the entire year placed at assessees PB page 5 with reference to the trading account up to the date of survey at assessees PB page 46. Trading account 1/4/2007 to 11/9/2007 (APB 46) (Rs.) Opening Stock 32,81,744/- Sales 25,59,671/- Purchases 27,38,741/- Closing stock at Cost 1,18,94,064/- Excess stock Surrendered 79,21,316/- Gross Profit 5,11,934/- 1,44,53,735 Rs. 1,44,53,735 ================= Trading account for 12/9/2007 to 31/3/2008 (APB 5) (Rs.) Opening Stock 1,18,94,064/- Total Sales Rs. 86,77,240/- Total Purchases 41,34,632/- Less Sales up to 11/9/07 Rs. 25,59,671 61,17,569/ Less purchases Up to 11/9/2007 27,38,741/- 13,95,891/- Closing stock at Cost 83,11,111/ Gross Profit Rs. 16,50,659/- Less Gross Profit Up to 11/9/2007 Rs. 5,11,934/- 11,38,725/- 1,44,28,680/- 1,44,28,680/- ============== 12

19. The appellant had filed regular return of income and had disclosed sales as well as closing stock. The closing stock held by the appellant as on 31/3/2008 as well as the sales effected by the appellant after the date of survey as are reflected in the above trading account have duly been accepted. Books of accounts were not rejected. The profit disclosed from such books were also admitted while considering the assessment of the income of the entire financial year.. Since the appellant has already accounted for the excess stock, the same has already entered into trading account for the period from 12/9/2007 to 31/3/2008 as part of the stock held by him as on 12/9/2007. Having accepted he trading account for this period to be correct, there remains no further scope of making any addition on account of any stock held by third party on approval basis or on any other account what so ever, be it be due to impurity contents or the valuation factor. Since the sales effected and stock held at the end of the year have considered and admitted in compelling the income of the entire financial year, no further addition on that coun4t can be made. The disclosure of additional income by the assessee by the appellant is thus bonafide requiring no variation therein.

20. As a result, grounds No. 1 and 2 in appeal by the assessee stands allowed and grounds No. 1 and 2 in appeal by revenue stand rejected.

21. ITA Nos. 11 and 106/JP/2012. These appeals also came to be heard alongwith ITA Nos. 12/JP/2012 and 106/JP/2012 with the case of Shri Prabhu Dayal Jhalani, who is father of the assessee Shri Ramesh Jhalani. Survey in the case of Shri Ramesh Jhalani was also carried on the same date on 11/9/2007. Shri Ramesh Jhalani carried on the similar business as by his father Shri Prabhu Dayal Jhalani. In the similar manner as was done in the case of his father, the departmental valuation officer valued the stock of jewellery at market price of Rs. 1,87,23,490/-. The assessee disputed the said valuation but survey team agreed to adopt purity of gold contained in such jewellery to the extent of 83% and adjusted the valuation to Rs. 1,68,51,141/-. The assessees plea that the stock of jewellery found also contains the jewellery received for repair and valued at Rs. 8,63,300/- was not accepted. The book stock by applying gross profit rate was worked out by survey party at Rs. 39,26,420/- and thus excess stock of jewellery has been worked out at Rs. 1,29,24,720/-. The survey team also 13 worked out excess cash of Rs. 2,50,000/-. The assessee admitted to make surrender of an additional income of Rs. 1,29,24,720/- on account of such excess stock and Rs. 2,50,000/- on account of excess cash worked out by the survey party.

22. The assessee however, worked out the excess stock at Rs. 66,58,886/- by adopting valuation of stock at cost, taking the gold contents as was actually contained in various items inventoried at the time of survey including the items of silver and diamond etc. by working out the cost thereof on the same basis at Rs. 1,05,83,886/-. In this valuation, the assessee did not include the value of jewellery that it had received for job work/repair work from its customers. The excess stock thus stood offered as additional income by Rs. 66,58,886/- for the assessment year 2008-09 in his return of income filed after the date of survey.

23. In respect of cash, the assessee surrendered additional income of Rs. 2,23,599/- as against Rs. 2,50,000/- found excess at the time of survey. Such adjustment was carried after completing the cash book by accounting cash sales of the date of survey.

24. The total surrender made on account of excess stock of jewellery and excess cash amounted to Rs. 68,82,485/-. The assessing officer, however, completed the assessment on the basis of surrender of Rs. 1,29,24,720/- on account of excess stock and Rs. 2,50,000/- on account of excess cash admitted by the assessee in his statement recorded during the course of survey. The income thus, stood assessed at Rs. 1,44,03,640/- as against the returned income of Rs. 72,58,670/-.

25. The Ld. CIT(A) accepted the basis of valuation of stock at cost and thus the adjustment made by the assessee in the stock found at the time of survey was taken as correct by the amount of Rs. 33,70,228/-. All other claims of the assessee were not accepted.

26. Having heard parties with reference to material on record, we find that the assessee had been valuing its stock at cost or market price whichever is lower. This method has been 14 followed consistently. No change in method of valuation is reported. The business of the assessee is continuing. The Ld. CIT(A) having regard to the method of valuation of stock adopted by the assessee, found justification in scaling down the market value of stock adopted by the survey party to the cost by application of gross profit rate. No infirmity is found in his decision in allowing relief of Rs. 33,70,228/-. The ground No. 1 in appeal by revenue, therefore, is devoid of any merit. The same stands rejected.

27. In ground No. 2 in appeal by revenue also, we do not find any merit as the Ld. CIT(A) deleted the addition of Rs. 7,05,506/- on account of sales effected outside the books as the amount thereof had formed into the excess stock surrendered as additional income by the assessee. This ground also stands rejected.

28. In so far as the assessees claim regarding jewellery received from its customers for repairing purposes, the same was inventoried separately by the survey team. The appellant had maintained a separate register for jewellery received from its customers for repairs/job work. This is so found stated before the survey team in reply to question No. 5 and question No. 17 in his statement recorded during the course of survey. The Ld. CIT(A) disregarded the claim of the assessee without assigning any justifiable reason, whereas this jewellery was found separately received and kept for the purpose of repairs. It was not the jewellery. The department also prepared a separate valuation report, clearly indicating therein that the jewellery is for repairs. It, therefore, cannot be taken as stock of the assessee. The addition so sustained is therefore directed to be deleted.

29. In ground No. 1, the dispute for rest of the amount of Rs. 30,03,479/- (38,66,779 - 8,63,300), relates to gross weight, net weight, purity of the gold content, cost of loose diamond purchased on 7/10/2006 and held in stock , besides purity of the silver items. The assessee has raised a dispute on the valuation on account of aforesaid factors before the survey team who itself did not accept the valuers report to be correct and accepted the claim of the assessee partially only. There being a dispute in valuation raised at the time of survey itself, the assessee was neither allowed to bring his own registered valuer for valuing the aforesaid jewellery nor the survey team took second opinion from any other 15 expert. The appellant, therefore, being not satisfied with such valuation filed a letter dated 10/3/2008 on 17/3/2008 before the assessing officer. A copy of this letter has been laid at assessees PB page 27 to 47 alongwith purchase voucher of loose diamond, certificate from the jewellers association and copy of purchase bills of silver items, karigar bills of making ornaments and tounch certificate for establishing the gold content in such jewellery. The assessing officer remained passive on the face of this letter and embarked no enquiry thereon. He did not bring any material on record to prove that the assessees claim is not correct. For the remissness on the part of the assessing officer, the assessee cannot be made to suffer. Having laid reliable evidence in assessment proceedings, he is found to have made a bonafide correction in the value of stock inventory and scaled down to the cost thereof to Rs. 1,29,84,362/- as against Rs. 1,68,51,141 adopted by the survey party. That apart, the assessing officer itself has accepted the closing stock held by the assessee as well as its valuation as on 31/3/2008 to be correct. The sales effected by the assessee subsequent to the date of its survey have also been admitted. All these sales and stocks have duly been taken into account while deducing the profits from the books of account maintained by the assessee for assessment of his income for the entire financial year. In this view of the matter, whole of the stock held by the assessee is found to have duly accounted for with no further scope for any further addition on account of excess stock on any basis whatsoever in a case like this where the accounts maintained by the assessee have been found to be correct and complete and assessment made on that basis by the assessing officer. The disclosure of the additional income made on account of the excess stock by the assessee, therefore, required no variation therein. The Ld. CIT(A), however, on irrelevant considerations, sustained the addition, which we hereby direct to delete. As a result ground No. 1 and 2 in assessees appeal stands allowed.

30. In ground No. 2 in appeal by the assessee, we find that the assessee has completed the cash book up to the date of survey and on that basis drawn the accounts for the entire financial year. These accounts have not been rejected by the assessing officer. When the assessee completed its accounts up to the date of survey, the actual cash striked to Rs. 54,861/- as against actual cash found at Rs. 2,78,460/- there remained excess cash of Rs. 2,23,599/- only which stood offered for tax. The cash thus available to the extent of Rs. 16 26,401/-, which was not considered by the survey party, but was available as per books could not be a subject mater of addition u/s 69C of the Act. We therefore, direct deletion thereof and allow ground No. 2 raised in appeal by assessee.

31. In the result, appeal by both the assessees stand allowed and those by revenue stand dismissed. Order pronounced in the open Court on 25/04/2013. Sd/- Sd/- (V. DURGA RAO) (B.R. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, Dated 25/04/2013 *Ranjan Copy forwarded to:-

1. Shri Prabhu Dayal Jhalani, Jaipur.

2. Shri Ramesh Jhalani, Jaipur

3. The ACIT, Circle-1, Jaipur.

4. The CIT(A)

5. The CIT

6. The D.R. Guard file (ITA Nos.12/JP/2012, 106/JP/2012 and ITA Nos. 11/JP/2012 and 107/JP/2012). By Order, AR ITAT Jaipur.