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TMI Blog2016 (10) TMI 965X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be two additions on the same issue. Therefore, the addition made viz-a-viz the gross profit can be telescoped to the addition which was made on excess stock. Accordingly, AO is directed to telescope the income added as gross profit addition to the excess stock determined after the order of CIT(A). Thus, assessee gets partial relief. Grounds are accordingly allowed partially. - I.T.A. No. 1381/HYD/2013 - - - Dated:- 14-9-2016 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Shri S. Rama Rao, AR For The Revenue : Smt U. Minichandran, DR ORDER This is an appeal by Assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-VI, Hyderabad dated 23-08-2013. Assessee has raised the following grounds: 2. The learned Commissioner of Income-tax (appeals) erred in confirming the action of the Assessing Officer in rejecting the books of account and in estimating the gross profit at 10.41%. 3. The learned Commissioner of Income-tax (appeals) erred in confirming the action of the Assessing Officer in holding that there was difference in the closing stock. 4. The learned Commissioner of Income-tax (appeals) erred in holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gap between the tag prices and the actual sale price, which would be almost equal to 55% which was due to the discounts allowed to the customers. The appellant furnished the list/details of sales, under each category/items of trade such as sarees, chiffon sarees, fancy sarees etc., indicating the further details such as purchase date, purchase price, sale date, sale price, low tag price and high price etc., as applicable in each item/category. The analysis of the information shows that though there is a variation between the tag price (low tag price) and the sale price, the variation is not consistent and not as per a formula, as indicated by the appellant during the survey proceedings where in it was stated that the purchase price is increased by 20% to 25% and then doubled for the purpose of tag price. This can be evidenced from the sample analysis of few items under the categories of sarees, chiffon and fancy sarees, as under: A. Sarees: Ref. No./sale bill dtd. Purchase price Rs. Sale price Rs. Tage price Rs. % of difference between tag price and sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.55% 4465/26.3.05 300 370 480 22.91% 4646/29.4.05 320 375 460 18.47% 4783/9.5.05 175 215 240 10.41% 31042/5.4.05 290 350 395 11.40% C. Fancy Sarees: Ref. No. Purchase price Rs. Sale price Rs. Tage price Rs. % of difference between tag price and sale price 5275/6.6.05 450 600 700 14.28% 5346/16.6.05 350 400 500 20.00% 5520/29.7.05 400 450 530 15.09% 4/4.5.06 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the net unexplained closing stock for treating the same as unexplained investment. Accordingly, this ground of appeal is treated as partly allowed. 4. Ld. Counsel, referring to the details filed before the AO and CIT(A) reconciling the stock found to the purchase price and sale price, submitted that there is a general boost-up in the prices as mentioned in the price tags. Therefore, the same cannot be taken as value of closing stock on the date of survey. Referring to the statement recorded during the course of survey, it was explained that there will be two prices mentioned, a higher price and a lower price on the tag and generally, the sale person is empowered to sell at 50% of the higher tag price which is generally lower than the lower tag price but also covers reasonable profit margin. It was submitted that the inventory was not prepared with the higher tag price, but only with a lower tag price, which itself is boosted-up price. Referring to statement recorded wherein assessee has clearly stated that if the price tag is shown as 750/550, sales person can sell at a price higher than ₹ 375/- but not lower. He indicated that the lower price of ₹ 550/- is mor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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