9911796707
TMI Blog2014 (6) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... and has taken following grounds of appeal: 1. "On the facts and on the circumstances of the case the ld. CIT(A) has erred on facts and in law in not appreciating that the purchase made on 31.03.2008 of Rs. 3,17,570/- should have been shown as closing stock to ascertain the true and correct profit of the business; 2. On the facts and on the circumstances of the case the ld. CIT(A) has erred on facts and in law in holding that payment of Rs. 12,20,634/- made to Ms. Ratna Vyas for specific tailoring/alteration charge was not liable to be subjected to TDS u/s 194C; 3. On the facts and on the circumstances of the case the ld. CIT(A) has erred on facts and in law in not appreciating that Rs. 30,000/- was in sufficient drawing for the assessee." 4. Brief facts apropos ground no. 1 are that in course of assessment proceedings, the AO examined the details of sales and purchase carried out by the assessee during the F.Y. 2007-08. He noted that on the last date of the F.Y. i.e. 31/03/2008, the assessee had shown following purchases: Delhi purchase Rs. 1,76,981 Delhi Purchase Rs. 65,650 Mumbai Purchase Rs. 1,43,325 Rs. 3,85,956 4.1 He further noted that the total sales as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee) and M/s Rabani. This shows the close relationship between M/s Rabani and the assessee on the basis of which the assessee has not identified and segregated her stock from that of M/s Rabani. However, it is beyond doubt that even as per the assessee's method of accounting the difference between the purchases and cost on sales as on 31.03.2008 has to be taken as the closing stock in the hands of the assessee. It is trite law that only when closing stock is brought into trading account, profits can be correctly ascertained. (Chainrup Sampatram Vs. CIT (SC) 24 ITR 481). This is arrived at as follows: Purchases as on 31.03.2008 Rs. 3,85,956 (A) Sales as on 31.3.08 Rs. 1,01,001 Taking G.P. as declared by the assessee Cost of sales as on 31.3.08 is Rs. 68,386 (B) Closing stock as on 31.3.08 (A) - (B) Rs. 3,17,570/- 6. Before ld. CIT(A), after elaborating the modus operandi of the assessee's business as noted earlier, the assessee further pointed out that addition had been made despite the AO having failed to point out any quantitative discrepancy in the sales and purchases or any defect in the books of account and had made hypothetical addition on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntained to demonstrate that assessee had no opening or closing stock. 8.1 We have considered the rival submissions and have perused the record of the case. 9. The main objection of AO was that as per assessee's own method of accounting, the difference between the purchases and cost of sales as on 31/03/2008 had to be taken as the closing stock in the hands of the assessee. The assessee's contention was that after sale of goods, the assessee requested the supplier to send the purchase bill. Therefore, as per assesse's method of accounting itself the sale took place before the purchases were booked. The assessee was receiving the goods on approval basis and once the item was sold it requested supplier to issue the purchase bill. Thus, sales preceded purchases and not vice versa. 9.1 Under such circumstances, this method being regularly followed by the assessee the purchases of 31st March could not be matched with the sales of 31st March. Apart from this, the AO did not point out any defect/discrepancy in books of account. Further, it is not disputed that there was no difference in the quantitative tally of purchases and sales. 9.2 Under such circumstances, we do not find any reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the bills of M/s RV & Company signed by the Accountant of the assessee, it had been explained that Ms. Ratna Vyas did not have Accounting Assistant, had a very low turnover, and the bills were prepared by the Accountant of the assessee only for the convenience of Ms. Ratna Vyas and not for the benefit of M/s Studio RGS; f) Entire payments to M/s RV & Company and Ms. Ratna Vyas had been made by cheque; g) Garments purchased from these concerns had been sold during the year. 13. Ld. DR submitted that the AO had doubted the nature of transaction considering the business carried on by the assessee. He submitted that ld. CIT(A) did not give any finding with respect to the objections raised by the AO treating the nature of transaction as job work. 14. Ld. Counsel for the assessee relied on CIT(A)'s finding and submitted that during first six months only purchases were made from these two parties which are confirmed by the fabricator in the statement recorded by the AO. Subsequently, the job work was done by the concerns on which TDS was duly made. Therefore, there was no reason to treat the transactions of purchases as the transaction of job work. 14.1 We have considered the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X
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