TMI Blog2015 (6) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... st assessee. Addition made on account of undervaluation of closing stock - Held that:- From the bills of job charges issued to the assessee company by process houses, produced by the assessee company, it was seen that the average rate of job charges at the end of the year is ₹ 7.25/mtr. Thus the average value of finished goods per meter works out to ₹ 18.10. As such, the value of the closing stock of 16,847.90 mts of finished goods lying with the assessee as on 31.03.2007 works out to ₹ 3,04,947/- (16,847.90 mts x ₹ 18.10). As such, the total value of closing stock with the assessee works out to ₹ 26,67,345/- (Rs.23,62,398/- + ₹ 3,04,947), as against the value of ₹ 22,26,598/- disclosed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence in creditors account. 3. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer by disallowing depreciation of ₹ 1,679/-. 4. On the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax (Appeals) has erred in confirming the action of the Assessing Officer in making addition of ₹ 4,40,747/- on account of under valuation of closing stock. 5. Without prejudice to ground no.4, on the facts and circumstances of the case as well as law on the subject, the learned Commissioner of Income-tax(Appeals) should have given direction to increase the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. Ground Nos.1 2 are related to the confirmation of ₹ 2,50,289/- on account of difference in creditors account. The ld.counsel for the assessee submitted that the difference between balance in the books of account of the assessee and the confirmation of the various creditors. He submitted that there is no dispute about the confirmation of business transactions of the creditors and the genuineness of the creditors. He submitted that the accounts with the creditors were settled since the assessee was not informed about the discount and rate difference by the creditors during the year under consideration. The discount and the rate difference as communicated by the creditors was considered during the financial year relevant to AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent year. The A.O. s action in bringing the difference in closing balance of ledger account of certain creditors and ledger account of assessee totaling to ₹ 2,50,289/- is fully justified. The A.O. has added the amount to assessee s income after considering all the arguments put forward before him and also after granting reasonable opportunity to defend. 5.1. The above finding of the ld.CIT(A) is not controverted by the ld.counsel for the assessee. The admitted fact remains that the assessee has not recorded the transaction in its books of accounts in the year under consideration. The assessee has made alternative submission that a direction be issued to the CIT(A) to exclude the amount from the total income of the assessment y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the contrary, ld.Sr.DR supported the orders of the authorities below and submitted that the AO in para-7 of his order has given a finding that the assessee-company had a closing stock of 2,17,732.50 mts of grey fabric with its at the close of 31.3.2007. From the bills of purchase of grey fabric produced by the assessee-company, it was seen that the average rate of purchase of grey fabric at the end of the year was ₹ 11.30 per meter. It was also seen that the assessee-company was getting on average discount of 4% on these purchases. The average net cost of grey purchased by the assessee-company at the end of the year, thus works out to ₹ 10.85 per meter. Thus, the value of closing stock of grey fabric with the assessee-compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the AO has given a categorical finding as under:- .. that the assessee company had a closing stock of 2,17,732.50 mts of grey fabric with its at the close of 31.03.2007. From the bills of purchase of grey fabric produced by the assessee company, it was seen that the average rate of purchase of grey fabric at the end of the year was ₹ 11.30/mtr. It was also seen that the assessee company was getting on average discount of 4% on these purchases. The average net cost of grey purchased by the assessee company at the end of the year, thus works out to ₹ 10.85/mtr. Thus, the value of closing stock of grey fabric with the assessee company as on 31.03.2007 works out to ₹ 23,62,398/- (2,17,732.50 mts x ₹ 10.85). ..... X X X X Extracts X X X X X X X X Extracts X X X X
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