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TMI Blog2015 (9) TMI 172X X X X Extracts X X X X X X X X Extracts X X X X ..... he year under consideration the assessee has prepared the closing stock on estimated basis which cannot be verified as no quantitative and qualitative stock was maintained by the assessee. The GP rate has increased compared to preceding year on enhanced turnover. However, the defects pointed out by the AO required to be confirmed certain addition, therefore, we reverse the order of ld. CIT (A) and in the interest of justice, addition to the tune of ₹ 1,00,000/- is confirmed against addition made by the AO at ₹ 3,00,000/-. Decided partly in favour of assessee. - ITA No. 165/JP/2013, C. O. No. 17/JP/2013 - - - Dated:- 11-8-2015 - SHRI R.P. TOLANI AND SHRI T.R. MEENA, JJ. For The Revenue : Shri Kailash Mangal (JCIT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave reasonable opportunity of being heard on this issue to the assessee to provide quantitative and qualitative details of opening and closing stock along with basis and method of valuation. The assessee had submitted the closing stock, list of Furniture Division and that of Raw Material and Semi Final goods of Textile Division. However, the assessee expressed its inability to submit the details of Textile Division s finished goods and consumable stores. It was also submitted before her that closing stocks had been physically verified by the partners and had been valued at cost or market value whichever is less and that as items run into numbers of varieties, colours, prints, designs and it was not possible to maintain stock register. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made which was confirmed by ld. CIT (A). It was further held that in A.Y. 2008-09 the GP rate disclosed by the assessee was @ 15.95% in furniture division and @ 28.61% in textile division. In the year under consideration the assessee has shown GP rate @ 19.83% in furniture division and @ 36.24% in textile division on enhanced turnover. The AO had not given any case for making addition of ₹ 3,00,000/-. Therefore, he deleted the addition of ₹ 3,00,000/-. 4. Now the revenue is in appeal against the deletion of trading addition of ₹ 3,00,000/- and the assessee is in cross objection for upholding the rejection of books of accounts invoking provisions of section 145(3) of the IT Act. 5 The ld. D/R supported the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submission and the reason for decline in GP, we are of the view that the addition made and sustained is on hire side. Stock inventory is prepared on estimated basis as stock register is not maintained though assessee explained decline in GP rate. We are of the view that certain addition is to be made as there are so many discrepancies are found. We are of the view that if a lump sum addition of ₹ 2.5 lacs is sustained instead of ₹ 10 lacs that will made the ends of justice. We order accordingly. The facts and circumstances of the case are identical to A.Y. 2008-09. During the year under consideration the assessee has prepared the closing stock on estimated basis which cannot be verified as no quantitative and qualitative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that on one hand the assessee borrowing the funds and paying the interest and on the other hand simultaneously the assessee is withdrawing the money from the firm without any interest charged on it. The assessee, thus diverting its interest bearing funds for advancing interest free loans to partners. Therefore, ld. AO gave reasonable opportunity of being heard and proposed as to why 12% interest should not be charged on loans given to the partners amounting to ₹ 29,09,278/-. The assessee replied vide letter dated 30.11.2011 and submitted that two partners of the firm i.e. Shri Sandeep Mundra and Shri Ravi Kant Ladha had debit balances on which no interest has been charged but other partners were having credit balances in their acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stricted to ₹ 4,91,054/-. The ground is partly allowed. 10. Now both the parties are before us. The ld. D/R supported the order of AO and argued that interest bearing funds had been diverted to the partners by debiting the capital account. The firm had not charged any interest on debit balance from the two partners. 11. At the outset, the ld. A/R of the assessee submitted that interest payable on the capital account of the partners is governed by the Partnership Deed. As per the Partnership Deed, the firm will pay interest to partner on fixed capital account only. No interest is payable or recoverable on the balance in current account. Therefore, assessee has neither paid the interest nor charged the interest from the partners ..... X X X X Extracts X X X X X X X X Extracts X X X X
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