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TMI Blog2014 (11) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... d by bills and Quantity wise details were also reflected in the trading accounts. Therefore, addition may please be deleted. 2. On the facts and in the prevailing circumstances of the case, the learned CIT(A) has grossly erred in confirming the G.P addition of Rs.l6,04,408/-,as there is no dispute in respect of, quantity and value of Opening Stock, Purchases, sales, and closing stock too, as shown by the appellant and duly certified by C A, and hence, G.P &N.P arrived at as per the books of accounts, cannot be rejected. Therefore, addition may please be deleted. 3. On the facts and in the prevailing circumstances of the case, the learned CIT(A) has grossly erred in confirming the disallowance of Interest of Rs. 12,996/-, without appreciating correct fact in this regards, as expenses of Interest is incurred wholly and exclusively for the purposes of business only and hence the additions are not justified. Therefore, addition may please be deleted. 4. The Appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of the appeal, if deemed necessary at the time of hearing of the appeal. 4. The Revenue in ITA No.905/PN/2013 has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas, as per the books of account, the value of the stock was Rs. 1,03,68,712/-. The assessee was show caused to explain as to why the difference of Rs. 22,46,288/- should not be treated as unexplained investment made outside the books of account. In reply, the assessee stated that the difference in value was due to the valuation method adopted and the stock was valued on higher side in the statement submitted to the bank for sole purpose of continuing the cash credit facilities. The assessee also explained that the quantitative value of the stock was same in both the statements and only the valuation of the stock differed. The Assessing Officer rejecting the explanation of the assessee made an addition of Rs. 22,46,288/- on account of unrecorded investment in stock. 6. Another addition was made by the Assessing Officer on account of trading loss claimed by the assessee. The assessee had incurred trading loss of Rs. 2,88,500/- in transactions of Urid and Moth. The Assessing Officer noted that all the purchases were from assessee's sister concern Sitaram Trading Company and the assessee had claimed to have sold the said goods at less rates and incurred the loss. The explanation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t noted by the CIT(A) was the trading loss of Rs. 2,88,500/- claimed by the assessee on account of transactions with its sister concern in respect of Urid and Moth account. In the totality of the facts and circumstances, vide para 6.3 at page 14 to the appellate order, the CIT(A) held that the assessee's books of account do not depict true and fair trading results. The CIT(A) further observed that the assessee had failed to provide any convincing reason for the steep fall in GP from 3.88% to 1.58% in the year under appeal. Further, it has been noted by the CIT(A) that "No proper details of closing stock are maintained by the assessee". In view thereof, the CIT(A) held that the Assessing Officer was justified in rejecting the books of account under section 145(3) of the Act and thereafter, estimating the profits in the hands of the assessee. Vide para 6.4 of the appellate order, the CIT(A) observed that the Assessing Officer was not justified in making separate additions of Rs. 22,46,288/- on account of difference in the valuation stock statement given to the bank vis-à-vis valuation of stock shown in the books of account. The observation of the CIT(A) was that Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticular sale was not available to the assessee during the year under consideration. Our attention was drawn to the separate trading accounts of each division placed at page 56, 73 and 68 of the Paper Book and it was pointed out that the quantity of the stock is mentioned in trading account itself against which, the assessee is maintaining proper stock registers. The learned Authorized Representative for the assessee stressed that there was major fall in GP rate in trading of food grains. However, there was minor fall in GP in other items and there was no merit in the said addition. In respect of the addition made on account of disallowance of interest, the learned Authorized Representative pointed out that the Assessing Officer failed to bring on record any nexus to prove that the interest bearing funds have been utilized for making the aforesaid advances and further, the assessee had sufficient capital and there was no merit in the said addition. 11. The learned Authorized Representative for the assessee placed reliance on series of case laws for the proposition that even in cases if there was fall in GP, there was no merit in any trading addition. 12. The learned Departmental R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because of the variation in the markets, there may be variations in the GP rate and no trader in food grains items can declare the same GP rate from year to year as the items dealt in by the assessee are market dependent. Another reason for fall in GP rate during the year was the non-receipt of the government Tender which was approximately sales of Rs. 10.16 crores during the preceding year. In the other division of Sony, the GP rate declared by the assessee during the year was 6.69% as against 7.32% declared in the preceding year. Further, in the ITC trading account, the GP rate was 1.25% as against 1.55% declared in the preceding year. The marginal fall in GP rate in the other two concerns i.e. trading of Sony products and trading of ITC products was too marginal and merits to be accepted being fall in market trend especially, in the facts and circumstances of the present case, where the assessee has maintained complete stock records vis-à-vis purchases, sales, opening stock and closing stock. In the absence of any evidence found to establish that the assessee had made any sales outside the books of account and the stock being completely tallied, we find no merit in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed stock of Rs. 1,03,68,712/- in its books of account and had declared the value of stock submitted to the bank at Rs. 1,26,15,000/-. The explanation of the assessee in this regard was that the items declared both in the books of accounts and for the bank stock list were identical and the quantities of the various items were identical. However, the difference in valuation of stock was on account of higher valuation submitted to the bank in order to retain the CC facility allowed to the assessee by the bank. The explanation of the assessee in this regard was that there was difference in the valuation method adopted for the declaration to the bank and there was no difference in the quantity of the stock. The CIT(A) has given a finding that the Assessing Officer had not controverted the valuation of the stock shown in the books of account which was valued on the basis of the last purchase price. Further, no evidence of out of books investment in stock-in-trade had been brought on record by the Assessing Officer. Further, the valuation given to the bank was on estimate basis. The learned Departmental Representative for the Revenue has failed to controvert the said findings of the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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