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2016 (1) TMI 168 - ITAT KOLKATA

2016 (1) TMI 168 - ITAT KOLKATA - TMI - Under valuation of stock up to the date of survey by deducting 18.55% for gross profit - CIT(A) deleted the addition - Held that:- The assessee has prepared separate trading account for pre-survey period and post survey period. The assessee has also given gross profit rate and net profit rate in post survey period qua survey period as compared to pre-survey period. Ld. Counsel for the assessee drew our attention to the gross profit rate calculation made by .....

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books of account of the assessee at ₹ 4,30,93,290/- comprises of gold jewellery of ₹ 3,63,05,575/- and separate diamond stock of ₹ 67,87,715/-. Even otherwise, if we go by rate of gold on the date of survey taken by valuation officer at ₹ 11,965/- as against the rate of ₹ 9395/- the increase is almost 28%. In term of the above facts, we find that the CIT(A) has rightly applied the gross profit rate of 18.55% for reduction of the value of stock and we confirm the sam .....

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. Sr. DR from the bench, he could not answer whether there is only sales or purchase element is also there, if we take the transactions of sale as well as purchase then net profit is to be estimated and also some investments. If we apply net profit rate of 19.55% as declared by assessee to the sale of undisclosed transaction at ₹ 38,57,105/- the profit will come to ₹ 7,15,493/- and further we estimate some investments of ₹ 2 to 3 lacs the total will come at ₹ 10,15,943/-. .....

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e find that the assessee has received declaration in form No. 15G from the payee of the interest i.e. Smt. Narayani Devi Agarwal and once the assessee received form no. 15G he is not liable to deduct TDS and hence, no disallowance can be made u/s. 40(a)(ia) of the Act. - Decided against revenue - I.T.A No.1549/Kol/2011, C.O. No. 68/Kol/2011, In I.T.A No.1549/Kol/2011 - Dated:- 15-10-2015 - Shri Mahavir Singh, JM & Shri M. Balaganesh, AM For The Revenue: Shri Sanjay Mukherjee, JCIT For The As .....

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addition made by AO on account of under valuation of stock up to the date of survey by deducting 18.55% for gross profit. For this, revenue has raised following ground no.1: 1) (a) Under the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 1,52,68,732/- being under valuation of stock up to the date of survey by further deducting 18.55% for gross profit from the value of stock computed by the Assessing Officer and, thus, valuing the stock below .....

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Officer because the assessee had considered the wt. of diamond at 2880 carat and gold at 13552.367 gms. Whereas the diamonds including loose diamonds found during the course of survey as per valuation report of Departmental Valuer dated 1/2/2008 was 2269.85 carat and Total Net wt. of gold at 13122.47 gms. and the assessee admitted during the course of survey that no stock of his was lying any where with any other party, or the Karigars. 3. Briefly stated facts are that the assessee is a manufac .....

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stock of gold ornaments, diamonds and precious stones etc. were found, which were valued by the Departmental Valuer at ₹ 6,06,75,656/- and AO after giving deduction of 15% on account of stock valued by valuer on higher side at ₹ 91,01,348/- treated the value at ₹ 5,15,74,306/- The assessee as per books of account maintained stock as on 31.01.2008 (the date of survey) which was at (correct stock was at ₹ 4,30,93,230/-) ₹ 3,63,05,575/-. The AO accordingly determined .....

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the assessment record and the survey folder. It is an undisputed fact that no excess stock was found in course of the survey. The only dispute relates to the valuation of the stock of gold jewellery and diamond which was made at ₹ 6,06,75,656/- on the date of the survey. The AO allowed reduction @ 15% on account of higher valuation (which was objected by the appellant at the time of the survey); and, determined the value of the stock at ₹ 5,15,74,306/-. I find merit in the argument .....

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s ₹ 95,67,034/-). On the other hand, the appellant has recorded in its books of account, the value of stock as on the date of the survey at ₹ 4,30,93,290/- (in addition to the stock of ₹ 17,62,820/- lying with the karigars). The AO has taken the value of the stock as per the books of account at ₹ 3,63,05,575/- which is factually incorrect. I find that the relevant details of stock as on 31.01.2008 were filed in course of the assessment proceedings (available at page 485 o .....

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peal before Tribunal. 4. We have heard rival submissions and gone through facts and circumstances of the case. We find that the only dispute relates to valuation of stock as on the date of survey and no excess stock physically was found by the Income-tax department from the business premises of the assessee. As argued by Ld. Counsel for the assessee before us that the valuation in the course of survey was made at current market rate prevailing as on 31.08.2008 at the rate of purity of 24 carats. .....

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rams. This difference is more than 28%. Ld. Counsel for the assessee also stated that the AO during the assessment proceedings has allowed the rebate of 15% on account of higher valuation but has not allowed deduction on account of rate of stock prevailing as on the date of survey i.e. 31.01.2008. Even the AO has not reduced the gross profit from the value of the stock for determining the correct valuation of stock. Ld. Counsel for the assessee brought to our notice that even the survey party ha .....

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d by the assessee at ₹ 3,63,05,575/-. Ld. Counsel for the assessee brought to our notice the details of the value of stock that comprises of gold jewelleries at ₹ 3,63,05,575/- and diamonds of ₹ 57,87,715/- which comes to ₹ 4,30,93,290/-. We find from the above facts in totality that the assessee has prepared separate trading account for pre-survey period and post survey period. The assessee has also given gross profit rate and net profit rate in post survey period qua su .....

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books of account ₹ 4,30,93,290/- and in addition to the stock of ₹ 17,62,820/- was lying with the Karigars. This stock as per books of account of the assessee at ₹ 4,30,93,290/- comprises of gold jewellery of ₹ 3,63,05,575/- and separate diamond stock of ₹ 67,87,715/-. Even otherwise, if we go by rate of gold on the date of survey taken by valuation officer at ₹ 11,965/- as against the rate of ₹ 9395/- the increase is almost 28%. In term of the above fac .....

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-4 as sales and purchases. For this, revenue has raised following ground no.2: 2. Under the fact and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition of ₹ 25,07,105/-, being difference between the undisclosed income recorded in the impounded document MJ/4 and undisclosed income of ₹ 13,50,000/- shown by the assessee, treating the receipts noted in MJ/4, as sales & purchases, when in fact, the receipts also include earnings from commission & brok .....

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d in the books of accounts. The bunch also includes few papers for estimate/approval/alteration of jewelleries. Complete details & other evidences in respect of the same are not available with the assessee. However, it is reiterated that income from unaccounted transaction of ₹ 13,50,000/- as per return includes Income derived from such unaccounted purchase & sale transaction. The AO was not convinced by the reply of the assessee and he tabulated pages 1 to 54 of MJ/4 and noted tha .....

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ed the addition by observing at page 7 para 10 and the relevant portion of the para reads as under: …. I have considered the submission. I find from the assessment order that the appellant had explained at the assessment stage that undisclosed sales were recorded in MJ/4 which has not been disputed or disproved by the AO. I find merit in the argument that the entire sales cannot be treated as undisclosed income of the appellant. Even if the transactions recorded on pages 6, 7, 11 and 13 a .....

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nd no. 3 is allowed. Aggrieved, revenue came in second appeal before Tribunal. 7. We have heard rival submissions and gone through facts and circumstances of the case. We find that the assessee has analysed pages 1 to 54 being impounded papers marked as MJ-4 found during the course of survey and the assessee s proprietary concern M/s. Mukut Jewellers. According to ld. Counsel, the transactions recorded in these papers involving monetary value are the sales and purchases, which were not recorded .....

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ales and purchases. When a query was put to Ld. Sr. DR from the bench, he could not answer whether there is only sales or purchase element is also there, if we take the transactions of sale as well as purchase then net profit is to be estimated and also some investments. If we apply net profit rate of 19.55% as declared by assessee to the sale of undisclosed transaction at ₹ 38,57,105/- the profit will come to ₹ 7,15,493/- and further we estimate some investments of ₹ 2 to 3 la .....

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nses made by AO being interest payment without deduction of TDS by invoking the provisions of section 194 of the Act. For this, revenue has raised following ground no.3: 3. Under the fact and in the circumstances of the case, the Ld. CIT(A) was not justified in deleting the addition of ₹ 1,62,612/- u/s. 40(a)(ia) of the Income-tax Act, 1961 being interest of ₹ 1,62,612/- paid to Mrs. Narayani Devi Agarwal without deducting tax u/s 194A on the ground that the payee had submitted Form .....

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