9911796707
TMI Blog2015 (7) TMI 401X X X X Extracts X X X X X X X X Extracts X X X X ..... hat:- Assessee maintained day-to-day stock register and after examination of the same no mistake could be pointed out by the Revenue in the same. The auditor of the assessee has also not made any adverse observation in respect of stock disclosed by the assessee in its books of accounts. In our considered view, the book result reflected by regularly maintained books of accounts cannot be rejected by the Revenue without pointing out any specific error in the entries in the books of accounts, merely on the basis of a statement made by the assessee to a third party. Possibility of mistake in the stock statement furnished to the bank cannot be ruled out. No material was brought before us by the Revenue to show that the statement furnished by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmation on the ground that it was after thought and the vouchers did not contain signatures and labour expenses were inflated. He, therefore, made disallowance of 20% of the labour charges amounting to ₹ 7,98,904/- and added to the income of the assessee. 4. Before the CIT(A), the assessee argued that the labour payments were made for manufacturing of gold ornaments and that the statements were general in nature and the labourers have confirmed receiving the payments and that TDS was deducted on such payments and PAN numbers were also quoted in the certificates and that there was no basis for ad hoc disallowance. 5. The CIT(A) after considering the submissions, observed that out of total expenses for labour expenses of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the order of the CIT(A). 8. We have considered rival submissions and perused the orders of the lower authorities and material available on record. We find no specific error in the order of the CIT(A) could be pointed out by the AR of the assessee. The AR of the assessee could not explain the discrepancy pointed out by the CIT(A) in the confirmation and statement of Shri Ajitbhai and Shri Harishbhai. No material was brought before us by the AR to show how much labour charge expenses was accepted in the case of the assessee in earlier years. In the circumstances, we do not find any good reason to interfere with the order of the CIT(A), which is confirmed and the ground of appeal of the assessee is dismissed. 9. The second issue invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of accounts of the assessee has been pointed by the AO, and that a consistent accounting method is followed for valuation of inventory. The assessee has relied upon the decision of Hon ble Madras High Court in the case of CIT Vs. N.Swamy, 241 ITR 363 (Mad) wherein it was held that mere fact that the assessee had made a statement to the third party that by itself cannot be treated as having resulted in irrebuttable presumption against the assessee and the burden of showing that the assessee had undisclosed income was on the Revenue. 12. In appeal, the CIT(A) after considering the submissions of the assessee observed that the AO had enquired from the bank about the stock statement and the examination of the stock details indicated that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y because a bona fide mistake took place in the statement given by the assessee to the bank, no advantage thereof can be taken by the Revenue. 15. It is not a case where the stock was under the lock and key of the bank or the bank official verified the physical stock as on 31.3.2007. He relied on the decision of the Hon ble Madras High Court in the case of CIT Vs. N.Swamy (supra) wherein it was held that where the assessee made a declaration of stock to the bank for getting overdraft which was at a higher figure than that in the books of the assessee for getting overdraft, burden was on the Revenue to show that difference between the value as recorded in the books and that found in the declaration to the bank was the undisclosed income o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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