M/s Kundan Mal Roop Chand Jewellers Pvt Ltd. & Ors. vs Deputy Commissioner Of Income Tax

PER SATBEER SINGH GODARA, JM:

The instant batch of five appeals involves the three assessees, namely, M/s Kundan Mal Roop Chand Jewellers Pvt Ltd., M/s Shri Krishna Jewells Pvt Ltd. & M/s Priya Diamonds Pvt Ltd. arise against Commissioner of Income Tax (Appeals)-29 [in short, the “CIT(A)”], New Delhi’s as many orders dated 07.10.2025, involving proceedings u/s 143(3) of the Income Tax Act, 1961; hereinafter referred to as, “the Act”; respectively.

All other relevant details thereof, tax-payer wise read as under:

Heard both the parties at length. Case files perused.

It transpires during the course of hearing that all these five cases emanate from the Reve nue’ s common survey operation u/s 133A of the Act conducted at the business premises of these three assessees on 21.12.2016 at Karol Bagh, New Delhi. There is further no issue between the parties that all these three assesses are engaged in jewellery business in diamonds etc who were found to have deposited varying cash amounts in the relevant previous year including the demonetization perio d. We further wish to emphasize here that the learned Assessing Officer’s all three assessments forming subject matter of our adjudicatio n preferred to apply GP @ 25% at uniform rate than having tre ate d the said cash deposits as unexplained per se which resulted in the corresponding additio ns invo lving sums in their respective loans. We next notice that all what the learned CIT(A) has done is to re duce the said GP estimation o nce again at a uniform rate of 10 % each which leaves the assesses as well as the department aggrieved.

That being the case, both the parties vehemently re iterate their respective stands. All these three assessee’s more particularly seek to buttre ss the point that once the learned lower authorities have estimated the foregoing gross pro fit rates ranging between 10 to 25%, the impugned additions are not sustainable in entirety. The Reve nue’s case on the other hand is that the learned Assessing Officer had alre ady e xtended the best possible approach whilst applying GP @ 25% w hich co uldn’t have been distributed in the lower appellate proceedings.

We have give n our thoughtful co nsideration to the assessee’s and the Revenue’s foregoing stands. We are o f the considered view that neither of their arguments deserves to be accepted in entirety. T his is for the precise reason that the learned Assessing Officer on the one hand accepted the assessees’ turnover shown in books in principle , the fact however remains that they could not get the entire book entries of sales and receipts etc. reconcile d and ve rified to his entire satisfaction as well. We deem it appropriate in these peculiar facts that instead of the assessees’ already declar ed G P @ 3.04%, 1.66% & 2.05% respective ly, a fur ther estimation thereof @ 5%, 3.5% and 5% of the impugned additions (inclusive of the G P already disclosed) would mee t the end o f justice with a rider that the same shall not be treated as a precedent. We are of the considered view that the same shall cover the assesses all shortfalls in explaining the ir respective credit entr ies as well. Learned Assessing Officer(s) shall accordingly finalise consequential computation in their respective cases as per law in very terms.

We make it clear before parting that hon’ble Madras High Court in S.M.I.L.E. Microfinance Ltd. Vs. ACIT, W.P. (MD) No.2078 of 2020 & 1742 of 2020, dated 19.11.2024 (Madras) wherein their lordships has settled the issue that the impugned statutory provision of section 115BBE would come into effect on the transaction done on or after 01.04.2017 only. Necessary computation shall be finalized under normal provisions.

No other ground or argument has been raised or pressed before us.

These three assessees’ appeals ITA Nos. 8155, 8161 & 8177/Del/2025 are partly allowed and the Revenue’s cross appeals ITA Nos. 1667 & 1668/Del/2026 are dismissed in foregoing terms. A copy of this common order be placed in the respective case files.