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2015 (9) TMI 60 - AT - Income TaxUnexplained investment in stock - CIT(A) deleted the addition - Held that:- The inventory was drawn by the income-tax authorities on the date of survey with the help of the assessee’s employees on 5.12.2003. The same was examined and verified by Shri S.K. Vasudevaji, the Chief General Manager of the assessee-firm who accepted the correctness of the statement so drawn and offered to surrender the excess stock to the tune of ₹ 31.85 lac on the basis of such statement. Not only that, Shri Sudhir Sekhri, a partner in the assessee-firm, attended the office of the AO after a week’s time on 12.12.2003. He also did not dispute the valuation of stock recorded in the statement and approved the contents of the statement made by Shri S.K. Vasudevaji. It is beyond our comprehension as to how the valuation of inventory which was made on 5.12.2003 with the help of employees of the assessee company, as approved firstly by its Chief General Manager on the date of survey and then by a partner after a week’s time, can be branded as wrong at a later date. It is more so because there is no corroboration of the rates given by the assessee in its later statement showing lower rates. There is no basis for checking the rates given by the assessee in its so-called inventory depicting difference in the rates of items. When the stock statement prepared by the Incometax authorities at the time of survey is pitted against a later one-sided statement with lower rates made by the assessee, we prefer to go with the former. The reason is obvious that it was drawn on the basis of actual verification done and as per the rates given by the employees of the assessee and as affirmed by the Chief General Manager and then the partner of the assessee firm. As such, we refuse to accept the veracity of the statement tendered during the course of assessment proceedings giving lower rates and go with the statement prepared at the time of survey. The impugned order is vacated on this issue and the addition made by the AO to the tune of ₹ 31.85 lac is restored - Decided against assessee. Addition on account of suppressed gross profit - rejection of books of accounts - CIT(A) deleted the addition - Held that:- AO categorically asked the assessee to give details about the break-up of closing stock, which the assessee failed to adduce. Once there is no authentication of the value of stock as shown by the assessee, how such valuation can be accepted, more so, when the gross profit rate has sharply declined. No accounts can be said to have been properly maintained unless the figures of opening and closing stock are subject to verification. As the assessee miserably failed to corroborate the value given for closing stock and, further, there was absence of details of accessories/raw materials, semi-finished and finished goods, wastage, etc., we overturn the impugned order upholding the proper maintenance of books of account. Accordingly, the action of the AO in rejecting the books of account is upheld. - Decided against assessee. Unless the facts and circumstances are shown to have undergone change, ordinarily, the gross profit of the immediately preceding year constitutes a good guide for adoption and implementation. When we advert to the facts of the instant case, we find that the AO was more than reasonable in applying GP rate of 20% as against the immediately preceding year’s GP rate of 27.84%. The impugned order is vacated and the addition so deleted in the first appeal is restored. This ground is allowed. - Decided against assessee. Disallowance of foreign travelling expenses - Held that:- it is seen that the foreign travel expenses were incurred by the assessee on its employees and no foreign travel was undertaken by the partners. In such circumstances, there can be no reason for making any ad hoc disallowance. We, therefore, approve the impugned order in deleting this addition - Decided in favour of assessee.
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