IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “F”, MUMBAI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER I.T.A No.5397/Mum/2024 (Assessment Year: 2022-23)

Assistant Commissioner of vs Master Chain Pvt Ltd Income-tax-7(1)(1), Mumbai Ground Floor, 96/98 Sonawala Room No.126, 1^st Floor, Building, Dhanji Street, Zaveri Aayakar Bhavan, M.K. Road, Bazar, Mumbai-400 003 Churchgate, Mumbai-400 020 PAN: AACCM3570C APPELLANT RESPONDENT Assessee by : Shri Salil Kapoor a/w Ms. Soumya Singh Respondent by : Ms. Kavitha Kaushik (SR DR)

Date of hearing : 09/10/2025 Date of pronouncement : 13/10/2025 O R D E R Per Anikesh Banerjee (JM):

The instant appeal of the revenue was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [for brevity, ‘Ld.CIT(A)’], order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) on dated 21/08/2024 for AY 2022-23. The impugned order was emanated from the order of the Assessment Unit, Income-tax department (in short, ‘the Ld.AO’) passed u/s 143(3)

r.w.s. 144B of the Act, date of order 20/03/2024.

2. The revenue has taken the following grounds of appeal: -

“1. "Whether on the facts and the circumstances of the case and in law, the Ld.CITA) was right in holding that non grant of cross examination of the witnesses render the income tax assessment proceedings as invalid, without appreciating the correct legal provision on this issue".

2. "Whether on the facts and the circumstances of the case and in law, the Ld.CIT(A) was right in deleting an addition of Rs. 4,63,40,539/-, holding that the Rules of Evidence and Indian Evidence Act contemplating grant of cross examination of the witnesses shall strictly apply to the facts of the present case". 3. "Whether on the facts and the circumstances of the case and in law, the Ld.CIT(A) was right in deleting an addition of Rs. 4,63,40,539/-, disregarding the factual findings made by the Assessing Officer, in the Assessment order".”

3. The brief facts of the case are that the assessee is a private limited company engaged in the business of manufacturing and wholesale trading of gold jewellery and ornaments. The assessee filed its return of income under section 139(1) of the Act, declaring a total income of Rs.15,04,83,700/-. The case of the assessee was selected for scrutiny under CASS. During the course of assessment proceedings, the Ld. AO noted that a search and seizure operation had been conducted on M/s Mohinder Singh Jewellers, Amritsar on 02/02/2022. The Ld. AO presumed that the assessee had entered into undisclosed transactions with the said searched person which were not recorded in the books of accounts. Based on a WhatsApp Excel sheet recovered during the course of search, the Ld. AO observed that the assessee had allegedly transacted a total of 9,380.676 grams of jewellery with the searched entity. Relying on the Investigation Report received, the Ld. AO concluded that unaccounted transactions had taken place between the assessee and M/s Mohinder Singh Jewellers & M/s Mohinder Singh Jewellers Pvt. Ltd. Further, on the basis of the statement recorded during the search of one of the employees, Shri Sunil, the Ld. AO treated the entire transaction as an undisclosed sale of the assessee. He adopted a rate of Rs.4,940/- per gram on 9,380.676 grams, thereby determining unaccounted sales of Rs.4,63,40,539/- allegedly made by the assessee to M/s Mohinder Singh Jewellers. In response, the assessee furnished detailed explanations along with supporting documents such as transaction records, bank statements, ledgers, and invoices. With respect to the difference in weight, the assessee submitted a tabular reconciliation, reproduced below:

The assessee explained that the variation in weight was due to the fact that the actual sales were made on a gross weight basis, amounting to 12,533.92 grams. The difference arose on account of labour charges, approximately 2% of the gross weight, resul