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2012 (12) TMI 517 - ITAT HYDERABADUndisclosed cash credit - Held that:- It is revealed from the ledger account submitted with the paper book that the assessee has disclosed the addresses and telephone numbers of the members in the ledger account, therefore, the allegation of the AO that the details have not been furnished, cannot be accepted - no infirmity in the accounting methodology as the appellant debits the cash account on receipt of monthly instalment and credits the ledger account of the customer & when the jewellery is given, at that point the credits are converted into sales - in favour of assessee. Addition on account of deficit stock of Diamonds - survey under section 133A - Held that:- The AO treated the deficit in stock as unaccounted sales and added an amount of Rs.5,74,394/- but when the assessee has produced certain evidences, the same cannot be discarded on doubts and presumptions without bringing sufficient material to disprove them. It appears from the assessment order that there is no out-right denial from Sri Satish Kumar Shah regarding receipt of diamonds for assortment, AO is not precluded from making any enquiry to find correctness of the claim made out by the assessee. However, principles of natural justice demands the assessee must be informed about the result of such enquiry and may be given a fair chance of rebutting it - set aside this issue to the file of AO who shall make proper enquiry and come to a conclusion after affording an opportunity of being heard to the assessee in this regard. Disallowance of notional interest received on loan advances - Held that:- It is seen from the balance-sheet of the assessee having enough capital to advance the loan amount of Rs.30 lakhs, and the unsecured loans were all taken in the earlier years and no fresh loan has been taken in the current assessment year hence there is no nexus between the borrowed capital and loan advanced by the assessee - addition towards notional interest cannot be sustained - in favour of assessee. Monies collected as a part of the assessee’s monthly gold scheme lucky draw - Held that:- It is seen from the terms and conditions of the scheme that under no circumstances, cash will be refunded to the member and only gold ornaments will be issued. Therefore, the inference to be made is as soon as the member participates in the scheme and pays installment money, there is accrual of income to the assessee since the money is not going to be refunded to the member. Therefore, it cannot be said that the income has not accrued to the assessee - The assessee is showing it as a liability, will not change the character of receipt which always remains as a trading receipt - against assessee. Addition on account of valuation of closing stock - Held that:- As the assessee has been consistently adopting the same FIFO method of valuation of closing stock from the past years without being doubted or questioned by the department and is sought to be changed by the department, it has to be backed by sound reasoning which is lacking in the present case - set aside this issue to the file of the AO who shall take a decision after affording a reasonable opportunity of being heard to the assessee.
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