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2015 (1) TMI 912 - ITAT AHMEDABADAddition on account of under valuation of closing stock - Held that:- As find from the sale bill that the rough diamonds of 1240.08 carat was sold on 04.04.2005 for ₹ 18,39,039/-. Thus, as the consistent method of valuation of closing stock was cost or market value whichever is less, the assessee valued 1240.08 carat of diamonds at its market value of ₹ 18,36,660/-. We find that no material was brought on record by the Revenue to show that the rough diamonds of 1240.08 carat was not sold on 04.04.2005 for ₹ 18,39,039/- and the same in fact was sold at a higher value. We find that it is not stated by the Departmental Representative that the name and address of the parties to whom diamonds in question were sold was not submitted before the lower authorities. In the above circumstances, in our considered view, the addition of ₹ 18,40,177/- made on account of undervaluation of closing stock is not sustainable. We, therefore, delete the addition of ₹ 18,40,177/- - Decided in favour of assessee. Addition on account of low Gross Profit - Held that:- in working out the gross profit at 0.023%, the foreign exchange difference is not considered by the assessee. Therefore, we do not find any infirmity in the orders of the lower authorities in estimating Gross Profit of the assessee @ 0.21% at ₹ 27,43,564/-. We have, while deciding the Ground No.1 of the appeal above, held that the addition made in respect of undervaluation of closing stock is not sustainable. Thus, the assessee is not entitled for benefit of telescoping and consequentially, the addition of ₹ 27,43,564/- on account of low Gross Profit is sustained. Thus Assessing Officer is directed to withdraw the benefit of telescoping. - Decided against assessee. Disallowance of 20% foreign travelling, conveyance and telephone expenses - Held that:- As the facts and circumstances of the year under consideration are similar to the facts and circumstances of the immediately preceding year, and the disallowance made in the year is in tune with the amount of disallowance confirmed by the Tribunal in the immediately preceding year; therefore, we do not find any good reason to interfere with the orders of the lower authorities.- Decided against assessee. Disallowance of brokerage expenses u/s 40(a)(ia) - Held that:- Where payments were made to sub-contractors for the period from April 2004-February 2005 on which TDS has been paid on 24.05.2005, no disallowance of the expenditure claimed could be made u/s 40(a)(ia) of the Act as the payments were made by the assessee before the due date of filing of return of income u/s 139(1) of the Act, as the amendment made by Finance Act, 2010 with effect from 1st April 2010 was retrospective in operation.” Therefore, we delete the disallowance of ₹ 2,74,787/- - Decided in favour of assessee. Penalty u/s 271(1)(c) deleted by CIT(A) - Held that:- We find that no specific error in the finding of the CIT(A) could be pointed out by the Revenue. In the instant case, the addition was made because of the inability of the assessee to substantiate its claim by producing the seller and purchaser. We find that no positive material could be brought on record by the Revenue to show that any particular of income furnished in the Return was incorrect or any income actually earned was undisclosed. In the above facts, we find no good reason to interfere with the conclusion as arrived at by the CIT(A) in deleting penalty. - Decided against revenue.
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