Per Shri T.V.K Natarajachandran, Accountant Member - This is an appeal by the revenue which is directed against the order of the CIT(A), Nasik dated 31-3-1987 wherein he deleted the addition of Rs. 45,454 made by the ITO under section 69A of the Income-tax Act, 1961. Revenue has taken ground to urge that the CIT (A) erred in deleting the amount and therefore, the order of the CIT (A) be vacated and that of the ITO be confirmed.

2. The assessee is a registered firm carrying on business in purchase and sale of gold and silver. The assessment year involved is 1977-78 for which the previous year is S.Y. 2032. On 5-5-1976, the Central Excise authorities searched the business premises of the assessee and seized, gold ornaments weighing 933 gms. Based on the explanation given by the assessee and the decision of the Central Excise authorities, the Assessing Officer concluded that the excess stock found represented unaccounted stock of the assessee for which the source of investment was not explained satisfactorily. Therefore, the value of excess gold jewellery found was assessed as concealed income.

3. On appeal, the CIT (A) noted the fact that the addition was made heavily relying on the statements given by various persons claiming ownership of the ornaments as recorded by the Gold Control authorities and he has not given separate opportunity to the assessee or to the various persons before acting upon the findings given by the Deputy Collector of Central Excise & Customs. Pune. He also noted the fact that the proceedings of the Deputy Collector of Central Excise & Customs. Pune have been subsequently set aside by the Collector of Customs (Appeals) and remanded back for de novo consideration by his order dated 30-3-1981. He has further noted the fact that the fresh order has been passed by the Dy. Collector on 5-12-1986 wherein the explanation offered by the assessee was not accepted by him and pointed out various breaches of regulations under the Gold Control Act mentioned in para 12 of the appellate order. Therefore, the CIT (A) in para 13 of his order observed that the Gold Control authorities passed the order on account of various procedural irregularities and not based entirely on the question as to whether 933 gms. of gold ornaments found in the premises belonged to M/s Rajmal Lakhichand or not. He pointed out-that for the purpose of Income-tax assessment, It was essential to determine whether the alleged excess gold ornaments and articles belonged to the assessee or not. He observed that all the said gold ornaments and articles pertain to Items which were entered in the artisan register or G.S. 13 register of certified goldsmith or the repairs register. Since the registers were not produced at the time of search, the Gold Control authorities treated as interpolations which, according to the CIT (A), was incorrect and based on suspicion and conjecture. He also pointed out that as on 18th May, 1976, the Gold authorities did not doubt that the entire stock of gold ornaments was found recorded in the books or registers of the assessee. In other words. the case of the Gold Control authorities was that the entries were not made earlier because registers were not produced earlier, but there was manipulation in the registers produced on 18-5-1976 to explain the excess stock found on 5-5-1976. The case of the CIT (A) was that before the end of the previous year S.Y. 2032 the excess stocks were already recorded in the books and records of the assessee. Therefore, he held that this is not a case where the bullion or jewellery is not recorded in the books of account maintained by the assessee and therefore, provisions of section 69A has no application.

4. Coming to the individual items, the CIT (A) in para 15(i) of his order has pointed out that irrespective of the amount issued to Shri Gangaram Maganlal Soni, the amount received from him is not doubted and there are vouchers supporting the receipt of 129.450 gms. and 4 theces of primar