9911796707
TMI Blog2019 (11) TMI 912X X X X Extracts X X X X X X X X Extracts X X X X ..... s, separate addition on account of income, as profit or as seed capital or for any other related factor, is clearly unwarranted. Addition on account of low GP - assessee has given detailed explanations for the fall in the gross profit rate, on 12.9.2013 22.11.2013, 9.1.2014 and 20.1.2014. The copies of all these submissions are placed before us in the paper-book. The Assessing Officer has referred to, in the impugned assessment order, the submissions dated 12.9.2013 and has not even referred to, or apparently looked at, the other submissions. Without dealing with these submissions, it was not open to reject the stated reasons for fall in the GP rate. In any case, the variation is only 1.04% - we hold that there are no legally sustainable reasons to disturb the GP rate of 18.96% as show by the assessee. This plea is also, therefore, upheld. Addition on account of Gold Jangad Stock - HELD THAT:- Jangad gold jewellery of 402 .56 gms received from Kalindi jewellers were later on purchased by Invoice No . 114 dated 1 .12 .2010 and entire amount of the said bill was paid through banking channel. The said purchase of gold is duly reflected on 17 .12 .2010 in the purchase regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(3) of the Income Tax Act, 1961, for the assessment year 2011-12. 2. In ground nos. 1, 2, 3, 6, 7 and 8, which we will take up together and which challenge the addition of ₹ 55, 00.016 (i.e. 62, 95, 108 addition made by the Assessing Officer minus relief of ₹ 7, 95, 092 given by the first appellate authority) on account of estimation of the GP, the assessee has raised the following grievances: 1. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in confirming the action of the Ld. AO in rejecting the books of accounts under section 145(3) of the Income Tax Act, 1961. 2. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in partially confirming the action of the Ld. AO in estimating the sales by ₹ 2, 51, 13, 019/- on account of unaccounted credit sales. 3. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in confirming the gross profit rate of 20% instead of actual gross profit rate of 18.96% as shown by the assessee on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er were a number of additions on different counts. One such addition was addition on account of estimated gross profit on estimated sales. The Assessing Officer noted that the assessee had disclosed a total sales of ₹ 4, 59, 11, 519 on which gross profit of ₹ 87, 04, 892 was shown. This gross profit which worked out to18.96% was much lower than last year s gross profit rate of 23.20%. The Assessing Officer also noted that when unaccounted credit sale of ₹ 2, 51, 13, 019 is discovered, there must be unaccounted cash sales as well. As against sales of ₹ 4, 59, 11, 519, he estimated the sales at ₹ 7, 50, 00, 000 and applied the gross profit rate of 20% on entire sales. It was thus estimated that the actual gross profit should have been of ₹ 1, 50, 00, 000 as against disclosed gross profit of ₹ 87, 04, 892. The balance amount of ₹ 62, 95, 108 was added to the income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without much success. While learned CIT(A) did delete the gross profit in respect of estimated cash sales of ₹ 39, 75, 462, which worked out to ₹ 7, 95, 092, he confirmed the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted sales of ₹ 1.33 crores actually found recorded in impounded material 1.07 The outstanding debtors as recorded in various impounded material and as increased by the interest and other differential amounts recovered from them 0.43 Total addition as per income theory 1.83 Total additional income offered as per application theory 2.19 6. When we pointed out the above position to the learned Departmental Representative, he did not have much to say except to place his reliance on the stand of the authorities below. Learned Departmental Representative could not also point out the basis on which the unaccounted sales is taken by the Assessing Officer at ₹ 2, 51, 13, 019. He, nevertheless, dutifully relied upon the stand of the authorities below. We have also noted that the learned CIT(A), despite specific submissions on this issue by the assessee, has been simply dismissive of these submissions and did not deal with the specifics. He has also, rather mechanically, approved the stand of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the GP offered by the assessee. The business situations can never be so static so as allow such arithmetical precision in its computation. We have also noted that the assessee has given detailed explanations for the fall in the gross profit rate, on 12.9.2013 22.11.2013, 9.1.2014 and 20.1.2014. The copies of all these submissions are placed before us in the paper-book. The Assessing Officer has referred to, in the impugned assessment order, the submissions dated 12.9.2013 and has not even referred to, or apparently looked at, the other submissions. Without dealing with these submissions, it was not open to reject the stated reasons for fall in the GP rate. In any case, the variation is only 1.04%. In view of these discussions, as also bearing in mind entirety of the case, we hold that there are no legally sustainable reasons to disturb the GP rate of 18.96% as show by the assessee. This plea is also, therefore, upheld. 9. Ground nos. 1, 2, 3, 6, and 8 7 are thus allowed in the terms indicated above. 10. In ground no. 4, the assessee has raised the following grievance: 4 . On the facts and circumstances of the appellant's case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted that the said jewellery was duly disclosed in the returns filed by the assessee s wife, he declined to accept the explanation of the assessee apparently for want of inward vouchers. As regards the receipt of jangad stock of 402.56 gms received from Kalindi Jewellers on 5.10.2010, he rejected the explanation of the assessee that this claim was not made during the survey and in the absence of the supporting voucher having been found in survey. The confirmatory statements were rejected. Rejecting the explanations of the assessee with respect to these claims of jangad stock, the Assessing Officer proceeded to make additions aggregating to ₹ 1, 90, 21, 318 for 10, 738.06 gms of jangad stock. 12. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) confirmed the action of the Assessing Officer and declined to interfere in the matter. The assessee is not satisfied and is in further appeal before us. 13. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position 14. We find that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anlal Vanmalidas Co. The Assessing Officer cannot remain passive on all these evidences produced before him and yet reject the same. In view of these discussions, as bearing in mind entirety of the case, we are of the considered view that the explanation of the assessee, with respect to jangad stock of 7240.500 gms. in the name of Mohanlal Vanmalial Cpo ought to have been accepted. We accept the same and direct the Assessing Officer to delete the related addition. Similarly, as regards the explanation of jewellery of 3, 140 gms belonging to the assessee, we have noted that it was duly disclosed to the tax authorities and for obvious security reasons the jewellery being kept in business premises, which is under constant security, cannot be rejected as improbable. The Assessing Officer was not really justified in rejecting it only on the ground that there was no inward voucher for the same. That is too far fetched and theoretical an objection to suggest that inward stock vouchers are required to be made even for personal jewellery belonging to wife of the assessee. The addition in respect of 3, 1490 gms jewellery belonging to the assessee s wife must also, therefore, stand delete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee carried the matter in appeal, learned CIT(A) simply confirmed the action of the Assessing Officer. The assessee is not satisfied and is in further appeal before us. 18. We have heard the rival submissions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 19. We find that there is no dispute that Chopra Brothers had issued bill no 151 dated 25.10.2010 and bill no. 152 dated 27.10.2010, which suitably explain the purchase transaction, but the assessee s explanation that as the updation in the stock registers are done at the month end, these two entries could be made therein, cannot be disregarded. In any case, in the cross enquiries conducted by the Assessing Officer with Chopra Brothers, this aspect has been confirmed and the said confirmation is placed on record. One such an exercise is carried out by the Assessing Officer, it has to be taken to the logical conclusion and it cannot be ignored by the Assessing Officer because the conclusion of the enquiry does not favour his stand. All the material in respect to this transaction were duly before the Assessing Officer and he did not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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