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M/s. TBZ Nirmal Zaveri Versus ACIT 16 (2) , Mumbai and Vice-Versa

2017 (2) TMI 545 - ITAT MUMBAI

Revision u/s 263 - valuation of unexplained sale of gold - Held that:- What is required to be proved by the assessee is that it has included 40950.66 grams of gold at NIL value in the manufactured items of jewellery also. If the assessee is able to show the same to the satisfaction of the AO, in our view, no addition is called for as presumed by the AO. Since this fact requires verification, we are of the view that the same needs to be set aside to the file of the AO. Accordingly we set aside th .....

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w. The assessee is also directed to furnish necessary details to the AO in this regard. - Unaccounted purchase of finished goods - Held that:- We notice that the assessing officer has made his own computation on the basis of statement of stock given to the bank and accordingly came to the conclusion that there is unaccounted purchase of finished goods. We notice that the assessing officer did not examine the quantity details of raw materials and finished goods furnished by the assessee by re .....

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CIT(A) was justified in coming to the conclusion that the AO has computed the value of undisclosed purchases on surmises and conjectures and justified in deleting the impugned addition relating to undisclosed purchases and accordingly we uphold the same. - I.T.A. No. 3676/Mum/2014, I.T.A. No. 4161/Mum/2014, I.T.A. No. 1252/Mum/2014 - Dated:- 8-2-2017 - Shri B.R. Baskaran (AM)& Ramlal Negi (JM) For The Assessee by Shri Sanjay Sanghvi For The Department by Shri Senthil Kumar ORDER Per B.R. Bas .....

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revised the assessment order, vide its order dated 29.3.2012 passed u/s 263 of the Act, wherein he directed the Assessing Officer to make a fresh assessment. Consequent to the same, the Assessing Officer passed a fresh assessment order u/s. 143(3) read with section 263 of the Act on 28.3.2013. The assessee challenged the assessment order so passed by filing the appeal before the learned CIT(A) and the same was allowed in part. Aggrieved by the order passed by the learned CIT(A), both the partie .....

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id not advice on filing the appeal and only when a new legal consultant was pointed, he advised the assessee to file appeal challenging the revision order. The above said reason is not convincing to us and accordingly we decline to condone the delay. Accordingly, the appeal of the assessee in ITA No. 1252/Mum/2014 is dismissed in limine. 4. In the appeal filed by the assessee challenging the order passed by the learned CIT(A), the assessee is aggrieved by the learned CIT(A) in not admitting the .....

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ellery. Present assessment order was passed by the Assessing Officer to give effect to the revision order passed by the learned CIT u/s. 263 of the Act. From the quantity details of raw materials furnished by the assessee, it was noticed that consumption of gold was shown at 172782.86 grams. However, the actual quantity of finished goods manufactured out of the above said gold worked out to 142578.36 grams only and the same resulted in difference of 30240.50 grams (172782.86 - 142578.36). The As .....

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shed correct version of stone studded jewellery as given below : Item Opening stock Purchase Manufactured Sales Closing stock Shortage/excess 18 kt (in cts) (in gms) 3011.49 30738.27 1444.28 7892.66 1783.10 42055.76 3465.93 60598.95 2772.94 20087.74 0.00 0.00 The Assessing Officer did not examine the details so furnished by the assessee and instead he proceeded to compute the ratio of stones to gold in respect of opening stock, purchase manufacture etc. as detailed below: Item Opening stock Purc .....

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, the Assessing Officer took the view that the assessee has manipulated the details to suit its convenience. The Assessing Officer particularly referred to following statement relating to sales furnished by the assessee: Particulars Gross weight of gold (in gms) Net weight of gold (in gms) Diamond (in carats) Color stone (in carats) Net amount (in Rs.) Gross amount (in Rs.) Sale to various parties 22390.89 19648.29 3007.54 10607.44 11.93 crores 12.03 crores Issue to karigar/breaking/remaking/ me .....

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of jewellery, the Assessing Officer took the view that corresponding gold should be approximately 12000 grams only. Since the assessee has shown consumption of gold of 42055.76 grams, the Assessing Officer took the view that the assessee has shown unexplained sales of approx. 30,000 grams. In the revision order passed u/s 263 of the Act, the Ld CIT had quantified the unexplained sales at 30,204.50 grams and hence the AO adopted the same for the purpose of assessment also. Accordingly, he compute .....

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d that the assessee has declared purchases at Rs. 24.10 crores in the profit and loss account. In the quantity statement, the assessee had also shown purchase of finished goods. Since the value of purchases shown in the profit and loss account was equivalent to the value of purchase of raw materials worked out by the Assessing Officer as discussed above, the Assessing Officer took the view that the assessee has suppressed purchases of finished goods. Accordingly, the Assessing Officer worked out .....

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roceedings, the learned CIT(A) deleted the additions relating to undisclosed sales and undisclosed purchases. The learned CIT(A), however, declined to admit the additional evidence with regard to legal expenses and accordingly confirmed the addition made by the Assessing Officer. Aggrieved by the order passed by the learned CIT(A), both the parties have filed the appeal challenging the order passed by the learned CIT(A) on the issues decided against each of them. 10. We shall first take up the a .....

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d to obtain those details from the above said party. Hence, in the interest of natural justice, we are of the view that the additional evidences should be admitted and this issue needs to be re-examined. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore the same to the file of the AO with the direction to examine this issue afresh by duly considering the additional evidences and such other information and explanations that may be furnished by the assessee before h .....

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- From the aforesaid details submitted by the assessee, it is clear that the actual sales of assessee are just 19648.29 grams of 18Kt Gold, which gives a multiple of 6.53 times to the weight of diamond at 3007.54 cts, hence within the range of 5 to 10 times as discussed above. However, the assessee has included 40950.66 grams of 18Kt Gold in its sales quantity in the nature of Issue to karigar/breaking/remaking/melting/ setting without assigning any value thereto, which quantity is completely un .....

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essee, the actual weight of 18K gold in the diamond jewellery with diamond weight of 1783.10 gms should be approx. 12000 kt (within the multiple of 5 to 10 times) and accordingly the assessee has shown unexplained manufacturing/sales of approx 30000 gms. Incidentally, the said quantity is similar to the unexplained sales of 30,204.50 gms, reported in the order of Hon ble CIT-16 at 30204.50 gms. Hence, I have no doubts to conclude that there is unexplained sales of 30,204.50 gms of 18Kt Gold, val .....

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ion. 12. Hence, in our view, what is required to be explained by the assessee is the details relating to 40950.66 gms of gold issued to Karigars etc, which was shown at Zero value. In the quantity details relating to finished goods, the sales quantity is shown at 60598.95 grams, which consist of following items:- Sales made to various parties 19648.29 gms Issued to Karigars etc. 40950.66 gms 60598.95 gms Before Ld CIT(A), the assessee has offered following explanations:- The appellant submits th .....

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he break-up details of manufactured jewellery to substantiate its contentions that the 40950.66 grams of gold was included in manufactured item at NIL value. 13. Hence, what is required to be proved by the assessee is that it has included 40950.66 grams of gold at NIL value in the manufactured items of jewellery also. If the assessee is able to show the same to the satisfaction of the AO, in our view, no addition is called for as presumed by the AO. Since this fact requires verification, we are .....

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