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TMI Blog2004 (6) TMI 297X X X X Extracts X X X X X X X X Extracts X X X X ..... 3-2000 18,98,515 33,49,776 Position of sales Sales 35,59,922 Less: G.P. @ 38.26% 13,62,026 21,97,896 11,51,880 Less: Stock lying with foreign buyers 15,24,912 Less: G.P. 5,79,467 9,45,445 Closing stock as per books as on 10-3-2000 41,64,764 2,06,435 Stock found on physical verification 6,65,403 Excess stock found 4,58,968 4. The investigating team has prepared the stock inventory and valued the stock at Rs. 6,65,403. The stock of Rs. 2,06,435 as calculated above by the investing team by applying gross profit achieved in the immediately preceding year, i.e., 38.26 per cent and made the addition accordingly. The learned CIT(A) has deleted this addition made on account of excess stock on the ground that the average purchase price of Agate beads is 442.68 per kg. Thus, taking into account the stock of Rs. 400 per kg., the learned CIT(A) observed that there was excess valuation of the Agate beads by more than Rs. 82,386. The overall valuation of the stock was reduced by this amount and the calculation of stock found was reduced from Rs. 6,65,403 to Rs. 5,87,694. The learned CIT(A) also opined that assessee is 100 per cent exporter of precious and semi-precious ston ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is not required by the assessee in order to reduce the incidence of tax. The assessee will be entitled to 100 per cent deduction on the profits computed as per provisions of law and even on the addition made on account of excess stock. Therefore, we find no infirmity in the order of the CIT(A). We decline to interfere with his order. 7. Ground No. 2 is regarding addition of Rs. 81,379 on account of bogus purchases made by the AO. 8. This addition has been deleted by the learned CIT(A) for the detailed reasons given in the case of M/s Lunawat Gems Corporation, Jaipur. This ground will be decided while deciding the appeal of M/s Lunawat Gems Corporation subsequently through this order. 9. CO No. 20/Jp/2003 is supportive of the order of the learned CIT(A). The CO is also being decided accordingly. Now, we shall take up IT(SS)A No. 14/Jp/2003 and CO No. 21/Jp/2003. 10. Ground No. 1 of Revenue is regarding deletion of addition of Rs. 43,38,522 on account of excess stock of goods found during the course of search. 11. The brief facts of the case are that the assessee is dealing in previous and semi-precious stones as an exporter. In this case, the closing stock as per books as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. The trading results for asst. yr. 2000-01 and earlier years were totally accepted. The quantitative tally for three different periods, i.e., as on 31st March, 1999, as on 10th March, 2000, the day of search and as on 31st March, 2000 was submitted in detail. There were three volumes but while acknowledging it at p. 10 of the assessment order, the same was avoided when the AO has thoroughly checked it with the books of account and other records. The learned CIT(A) has also discussed it at para 5, p. 3 and at para 8, p. 5 of his order dt. 10th Jan., 2003. The AO did not consider the statement dt. 16th March, 2000 recorded under s. 132(4) of the partner of the firm for his expected higher GP rate during the year. No incriminating documents or other material was found during search proceedings. The assessee is 100 per cent export unit. The total export profit is exempt under s. 80HHC. Under such circumstances, no addition could be made. He relied on the decision in the following cases: (a) CIT vs. Bindal Jewellers (2002) 257 ITR 777 (Raj) (b) CIT vs. Hindustan Mills & Electricals Stores (1997) 140 CTR (MP) 581 : (1998) 232 ITR 421 (MP). 14. We heard the rival submissions and al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h were required to be submitted in a prescribed proforma and the details of purchases and sales could not link with the export. He did not even consider the plea of the assessee that the payments were made by account payee cheques. The learned CIT(A) has deleted this addition for the reason that Shri Subhash Daga clearly stated that whenever he was not in possession of goods, the same were arranged by him from unregistered dealers and supplied to the assessee. Shri Subhash Daga has changed his stand in the affidavit and stated that whenever he did not have the stock then the material was supplied by unregistered dealer and bill was issued by him. The CIT(A) held at p. 7 of his order that the purchases of Rs. 44,07,287 are not accepted, then it will result into higher profit of the export business by this amount. Deduction under s. 80HHC is allowed on the profits and gains as computed under the provisions of the Act. Since the assessee is 100 per cent exporter of goods, therefore, increase in export profit by Rs. 44,07,287 will result into increase in the claim of deduction under s. 80HHC of the equal amount. Therefore, he deleted this addition. 19. The learned Departmental Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found or noticed by the AO in stock tally. (6) The total purchases of Rs. 8,65,28,216 had already been considered, accepted and admitted by the investigating team as genuine and considered it in calculating the stock as per the books and these figures were taken in calculating stock position on the day of search, how the part of total purchases could be considered as bogus at other place. (7) No evidence that the assessee-firm had received back the money for any of so-called bogus bills was noticed or found on examining bank account of Mr. Daga and his sister concerns or the accounts of assessee-firm. (8) No showroom is maintained by the assessee. Only office is maintained. No foreign office is maintained. Hence, no money laundering is possible from foreign office. (9) Mr. Daga had no direct link with assessee-firm. He had link with the assessee-firm only through brokers. The learned Authorised Representative also contended that no addition in a block assessment can be made without detecting any evidence in search. He relied upon the following cases: (a) Dy. CIT vs. Late Sohan Lal Sahu (2003) 29 Tax World 9 (Jp) (b) Dy. CIT vs. Adinath Industries (2001) 170 CTR (Guj) 262 : ..... X X X X Extracts X X X X X X X X Extracts X X X X
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