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TMI Blog2002 (9) TMI 266X X X X Extracts X X X X X X X X Extracts X X X X ..... without making enquiries and investigations. 1.2. That the learned CIT(A) further erred in confirming the impugned addition by observing that the closing stock figures as given in the P&L a/c and in the balance-sheet was made up figure arbitrarily and without properly appreciating the facts and circumstances of the case. 1.3. That the learned CIT(A) further erred in observing in para 8(b) at p. 5 of the assessment order as under: '(b) The marble blocks appearing in the opening stock were worth only Rs.55,000 and there are no marble blocks in the closing stock.' 1.4. That the learned CIT(A) was not justified in observing that the accounts of the assessee-company are not reliable as the assessee had not furnished stock statement to the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales at Rs. 10 lakhs as against declared receipts of Rs. 8,46,519. On the estimated gross receipts of Rs. 10 lakhs, the AO chose to apply a g.p. rate of 35 per cent as against the disclosed profit rate of 13.8 per cent. This has resulted into trading addition of Rs. 2,33,153. It was further stated that when the matter came before the learned CIT(A), he deviated from the main issue. The learned CIT(A) appears to be satisfied with the explanation of the assessee. In sum and substance, the assessee's submission before the learned CIT(A) was that the consumption of electricity is dependent upon the hardness of the stone and this cannot be a criteria for rejection of the accounts of the assessee. This claim was not at all disputed in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have travelled beyond that without there being any material in his possession. A prayer, therefore, was made to expunge the remarks made by the learned CIT(A) in para 12.1 to 12.4 besides accepting the results disclosed by the assessee in the light of the facts and circumstances of the case. It was also submitted by the authorised representative that error was committed by the learned CIT(A) in calculating the value of closing stock, etc., which was correctly calculated and details were placed before the Tribunal by the learned counsel for the assessee. 5. As per the guidelines of the ICAI filed by the learned counsel for the assessee, there is no responsibility of the auditors to report non-filing of stock statement with the bank. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO himself. 8. The parties have been heard with reference to material available on record and the case laws relied upon by them. The AO appears to have rejected the accounts of the assessee and invoked the provisions of s. 145 for the reason that the assessee could not establish the relationship between the expenditure on electricity and the job work receipts, besides, consumption of electricity was high. From the pleadings we find that the assessee is having main business of job work from which it has declared receipts of Rs. 7,74,048 during the year under appeal as compared to the receipts from job work of cutting marble slabs at Rs. 6,55,214 in the immediately preceding year. This fact alone reveals that there has been more job work ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e arena of scope of duties and responsibilities of the auditors which, in fact, would not have influenced the trading results of the assessee concern. The learned CIT(A) also found to have committed factual mistakes and did not consult the assessment records before coming to the conclusion that the auditors have not given their report under Maocaros (Manufacturing & Other Companies Auditors' Report Order, 1988) issued under s. 227(4A) of the Companies Act, 1956. This report we find from the assessee's paper book that it was available on assessment record. The auditors in their report have clearly reported vide para 3 as under: "the stock of finished goods, spare parts, and raw materials have been physically verified during the year by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red Accountants of India and we find the same to be correct. Thus, there remains no basis for the observations of learned CIT(A) in para 12.4 of his order that: "....the Chartered Accountant has not discharged his duty in a responsible manner. The accounts presented are not found to be true and are found to be unfair to the creditor, the bank and the Revenue." Under such circumstances, the remarks of the learned CIT(A) that the auditors have failed in his audit as CA by not making disclosure of non-filing of the stock statement with bank regarding cash credit and loan account and subsequent conclusions were unwarranted and uncalled for. We, therefore, expunge the remarks and observations of learned CIT(A) against auditors M/s Dhoot & Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X
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