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M/s Shree Mukt Jewellers Versus Asstt. Commissioner of Income Tax

2015 (7) TMI 401 - ITAT AHMEDABAD

Disallowance of labour expenses - Held that:- No specific error in the order of the CIT(A) could be pointed out by the AR of the assessee. The AR of the assessee could not explain the discrepancy pointed out by the CIT(A) in the confirmation and statement of Shri Ajitbhai and Shri Harishbhai. No material was brought before us by the AR to show how much labour charge expenses was accepted in the case of the assessee in earlier years. In the circumstances, we do not find any good reason to interfe .....

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intained books of accounts cannot be rejected by the Revenue without pointing out any specific error in the entries in the books of accounts, merely on the basis of a statement made by the assessee to a third party. Possibility of mistake in the stock statement furnished to the bank cannot be ruled out. No material was brought before us by the Revenue to show that the statement furnished by the assessee himself to the bank was sacrosanct and the statement furnished by the very same assessee in t .....

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ssessee against order of the CIT(A)-V, Baroda dated 29.4.2010 for Asstt.Year 2007-08. 2. The first issue involved in this appeal is that the CIT(A) erred in confirming the disallowance to the extent of ₹ 2,82,689/- out of labour expenses. 3. Brief facts of the case are that the assessee has debited an amount of ₹ 39,94,519/- as labour charges in profit & loss account. In order to verify the labour charges, three labourers were presented before the AO and their statements were rec .....

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erefore, made disallowance of 20% of the labour charges amounting to ₹ 7,98,904/- and added to the income of the assessee. 4. Before the CIT(A), the assessee argued that the labour payments were made for manufacturing of gold ornaments and that the statements were general in nature and the labourers have confirmed receiving the payments and that TDS was deducted on such payments and PAN numbers were also quoted in the certificates and that there was no basis for ad hoc disallowance. 5. The .....

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cts that the expenses were inflated. 6. A perusal of the statement of Shri Ajithbhai revealed that he claimed to have annual income of ₹ 1.5 lakhs whereas he received labour charges of ₹ 2,27,262/- from the assessee. Shri Harishbhai stated that he had received an amount of ₹ 3,00,000/- whereas the books of the assessee showed payment of ₹ 5,49,791/-. Therefore, the CIT(A) observed that he was in partial agreement with the AO that subsequent confirmations were in the natur .....

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fore us, the AR of the assessee reiterated the submissions made before the CIT(A) whereas the DR supported the order of the CIT(A). 8. We have considered rival submissions and perused the orders of the lower authorities and material available on record. We find no specific error in the order of the CIT(A) could be pointed out by the AR of the assessee. The AR of the assessee could not explain the discrepancy pointed out by the CIT(A) in the confirmation and statement of Shri Ajitbhai and Shri Ha .....

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closing stock. 10. Brief facts of the case are that the AO observed that the assessee has availed cash credit facility from Baroda City Co-operative Bank Ltd. to whom stock-in-trade was offered as collateral security. The bank reported that the valuation of stock as per statement of stock given by the assessee was of ₹ 1,87,77,070.90/- as on 31.3.2007, whereas per the profit & loss account submitted by the assessee the closing stock was shown at ₹ 1,81,95,439/-. The assessee exp .....

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different purposes and to arrive at true and fair result of the business the assessee should make valuation of stock in true and fair manner, and therefore, disallowed ₹ 5,81,631/- on account of difference in closing stock and added to the income of the assessee. 11. Before the CIT(A), the assessee pointed out that no defects in the books of accounts of the assessee has been pointed by the AO, and that a consistent accounting method is followed for valuation of inventory. The assessee has .....

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the bank about the stock statement and the examination of the stock details indicated that there were differences in quantity as well as rates in regard to only in 22 carat gold as under: Description Qty as per books (gms) Qty as per bank (gms) Rate per gram as per books Rate per gram as per bank 22ct gold 22060.672 23035.672 773.19 765.71 13. There was no different in quantity and rates in respect of diamond, 18 carat gold, silver and fine silver items. Therefore, it was difficult to believe th .....

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At the time of furnishing of the stock statement an arthematical calculation mistake occurred, because of which, inadvertently mistaken stock of 22 carat gold was reported to the bank. Later on when the accounts were completed the correct stock was reported in the return of income and audited accounts. That, no mistake in the stock regularly maintained by the assessee could be pointed out by AO. Simply because a bona fide mistake took place in the statement given by the assessee to the bank, no .....

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