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TMI Blog2024 (12) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of doubt to the assessee to the extent of 50% of the above value. Therefore, we direct the AO to reduce the same from the amount sustained by the CIT(A) i.e. Rs. 36,82,978/-. Short quantity found during the survey - CIT(A) has adopted gross profit at 25%, which, in our considered view, is excessive. We may have to determine the gross profit relevant to the assessee for the year under consideration. On careful consideration we observe from the Balance-Sheet submitted by the assessee wherein assessee has achieved Rs. 2,34,96,286/- over the sales of Rs. 18,46,56,857/- gross profit @ 12.72%. Since the AO has accepted the result furnished by the assessee and we are aware that the gross profit may differ from item to item, however, it is difficult to determine at this stage. Therefore, we are inclined to direct the AO to adopt the gross profit rate at 12.72% of the value of short stock determined by the CIT(A) i.e. at Rs. 9,19,350/-. With the above observation we are inclined to partly allow the grounds raised by the assessee. Appeal filed by the assessee is partly allowed. - Shri Mahavir Singh, Vice President And Shri S. Rifaur Rahman, Accountant Member For the Assessee : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also reproduced the same in its order, as under: (a) there were purchase bills for Rs 94,46,816/- which were not entered in the purchase account but were part of physical stock. (b) Valuation by the Valuer has been done on the basis of current gold/jewellery rates. But stock as per trading account is on the basis of purchase price which is lower thn the valuation rates taken by the valuer, copy of some sample purchase bills are enclosed in support of the purchase price. This the accepted accounting principle that stock is valued at cost or market whichever is less. Therefore, the valuation taken by the valuer is not justified. (c) Physically closing stock also includes stock of old gold, jewellery kept by the karigars for repair work but his stock is not part of books as the same is not entered in the books of accounts as mentioned in reply to annexure A17 to A19 below. The assessee has further furnished the detail of name address of persons who have given their old jewellery for repair to Karigar. 4. After considering the above submissions, the Assessing Officer reviewed the above said reasons and has rejected the same by observing as under: The all above replies of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e time of survey conducted on the business premises of assessee. Now the assessee has given simply a reply by giving details of two persons who have given their old jewellery for repair to Karigar. But neither the Karigar nor the said persons produced the verification. The onus is lies upon the assessee to prove the genuineness of stock lying at his premises pertain of his concern or otherwise, which the assessee failed to do so. Further, during the course of survey proceedings the assessee himself admitted to his statement recorded u/s 133A of the Income Tax Act. 1961 on dated 03.05.2018 that neither any stock of this concern lying any other place nor any other concern's stock was lying at his business premises. The assessee did not produce any vouchers or persons name and address from whom it is related to. Thus, it is clear that no stock of other concerns/persons on the date of survey i.e. 03.05.2018 was lying at the business premises of the assessee. Thus, the reply of the assessee on this point is hereby rejected. Accordingly, he proceeded to make the addition of Rs. 2,44,58,090/-. 5. Aggrieved with the above order assessee preferred appeal before the learned CIT(A)-30, Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Items 6,508.90 carats 6,508.90 carats 9.4 It is further noted that the appellant had excess stock in the category of 22 carat gold ornaments , 14 carat gold ornaments and colour stones - misc items whereas there was shortage of stock in the categories of diamonds and silver. The contention of the appellant that the excess stock shall be valued at the purchase price is not considered acceptable as the appellant have not been able to identify the item-wise date of purchase of the excess stock. Therefore, the excess stocks shall be considered as the investment of current year and be valued at the market value determined by the registered valuer on the date of survey. The excess quantity of stock found during the survey is thus valued as under: - Particulars of Jewellery Excess Quantity of stock found during survey Value per gram (As per Department Valuer) Value of excess jewellery stock Gold ornaments (22K) 635.06 grams/ 3.075 19,52.810 Gold ornaments (14K) 367.61 grams 2,377 8,73,809 Colour stones-Misc. Items 6,508.90 carats NA 11,83,785 Total value of excess jewellery stock 40,10,403 In view of the above facts, I hold that the appellant has made unexplained investment amounting to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular books of accounts and there being no infirmity found in quantitative records of silver and diamond items, the estimation of gross profit on account of alleged excess stock recorded in the books of the Appellant is merely on the basis of surmises and presumptions. (iii) That in the absence of any finding or material regarding unrecorded sales, there is no case for invoking provisions of section 69 of the Income Tax Act, 1961. 3 That the assessment order is not sustainable on facts and same is bad in law. 4 That the appellant craves leaves to add, alter, amend, forgot any of the grounds of appeal at the time of hearing. 7. At the time of hearing learned AR brought to our notice relevant facts and submitted that during survey proceedings the Department had found some difference of stock maintained by the assessee. He submitted that at the time of survey the books of account were not complete and based on the Department s valuation, the difference valued and found during the survey was added by the Assessing Officer. However, in the appellate proceedings assessee had submitted that there were 4 invoices which could not be recorded in the closing stock. Learned CIT(A) considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t s Valuer being excessive and he prayed that if at all the Hon ble Bench found correct they may adopt actual rate of gross profit earned by the assessee which is at 12.72%. 10. On the other hand, learned DR relied upon the findings of the lower authorities and he submitted that learned CIT(A) has given substantial relief to the assessee and considering the different items of stock learned CIT(A) has adopted the value determined by the Department s Valuer which is justified. 11. Considered the rival submissions and material placed on record. We observe that a survey operation was conducted at the business premises of the assessee and physical stock was verified and found that the physical items and the stock record maintained by the assessee are not matching and found the difference in the stock maintained for Diamond 336 carats; gold ornaments 22K, gold 14K, silver and color stones misc. items. Subsequently, the assessee found that there are 4 invoices which assessee has failed to record on the date of survey and based on the above submissions learned CIT(A) considered the above facts on record and found that assessee has excess stock in gold ornaments 22K of 635.06 gms.; 14K of 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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