TMI Blog2021 (7) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... n be made in the trading account. Here the addition is not based on undervaluation of closing stock but undisclosed investment in closing stock. Simply because there is a difference in the valuation made by the valuer and the value stated by the assessee during the survey in his statement as an approximate estimate of the stock available with him, addition cannot be made as undisclosed investment. Had it been case where there is excess quantity of stock found not recorded in the books or not explained, then perhaps addition on account of undisclosed investment could have been made.No reason to sustain the addition; therefore, the same is directed to be deleted. - Decided in favour of assessee. Disallowance of interest on the advance - HELD THAT:- Assessee had interest free unsecured loan from friends and relatives and this fact has also been noted by the Ld. CIT(A). Simply because the assessee has secured loan from Standard Chartered Bank that does not mean that same interest bearing fund have been given for interest free loan to other party. If assessee has interest free funds which far exceed the advance given, then there cannot be any presumption that such advance has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s premises were prepared and the same were verified from the regular books of accounts as on 13.09.2011. The valuation and jewellery/stock was also made by the approved valuer wherein following discrepancy was noticed:- Variation in Stock Heads Amount in Rs. Actual stock fond on physical verification 1,68,97,325 Stock entry recorded in the books/documents 1,23,00,000 Excess/unaccounted stock 45,97,325 3. In reply to the query raised by the Assessing Officer to explain the discrepancy, it was submitted that the variation in the stock is purely due to gold rate fluctuation in the market. The ld. Assessing Officer after giving his reasoning has made the addition on account of difference at ₹ 45,97,325/-. 4. Further, on perusal of the balance-sheet, the Assessing Officer noted that assessee has given advance of ₹ 9 lacs to M/s. Akash Hi Tech on which no interest has been received, whereas the assessee has availed loan of ₹ 1,51,70,715/- from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 469420.16 197.72 2374.166296 Sep, 2011 490210 200.85 2440.677122 Oct, 2011 4891483.52 1959.71 2496.024167 Oct, 2011 2654556 1135.59 2346.405714 Nov, 2011 3866755.02 1489.58 2595.869319 Nov, 2011 5618429 2002.83 2805.245078 Dec, 2011 3005072.4 1148.814 2615.804125 Dec, 2011 1317440 489.97 2688.817683 Jan, 2012 7616220.18 2979.857 2555.901233 Jan, 2012 11006948 4289.85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the month of April, 2011. Whereas on the other hand, if it is assumed that the appellant has valued its opening stock at market price even then the price per gm shown by the appellant are less than the prevalent market price by Rs, 347/- per gm. It is very hard to believe that the rate of gold per gm would have dipped by ₹ 347/- in a span of just 30 days i.e. from valuation of the opening stock as on 01.04.2011 till the end of the month of April, 2011. One more analysis, which has been done on the basis of the data provided by the appellant, is important and the same is tabulated as under: Description Price Quantity Weighted price/gm Cost price Including opening stock as on 01.04.2011 till the date of survey i,e 13.09.2011 3,37,98,592/- 17471.88 gm ₹ 1941,23/- Cost price excluding opening stock as on 01.04.2011 till the date of survey i.e. 13.09.2011 2,53,25,527/- 13657,38 gm ₹ 1854.34/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he difference in stock in itself is a good indicator that the appellant didn't know the exact reasons for the variation in the stock and was not sure what to say about the difference in stock and merely making organic/general observations to cover up the issue. As regards to the fluctuation in the price of gold during the relevant period is concerned, I find that the rates which has been shown by the appellant in its purchase register are not in sync with the prevalent market rates in the country. To get the prevalent market rates of that period, I have made a basic search over the internet and found that there is a variation of 6,7 to 8% in the rates shown by the appellant as compared to the prevalent market rates. The below mentioned table depicts the variation in rates shown by the appellant to that of the market rates:- Sr. No. Month Average rate/ gram (including direct expenses) shown by the appellant in its purchase register from 01.04.2011 to 31.03.2012 Average rate/ gram of the gold in the Indian Market (source: www.bullionrates . com/gold/INR/2011-12-history.htm) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2491/* 11 Feb., 2011 2935/- 2750/- 2475/- 2823/- 2541/- 12 March, 2011 2484/- 2714/- 2442/- 2788/- 2509/- There is variation of 1.1% between the prices of two different sources which Is acceptable en the size of the gold market in India. This analysis makes one thing dear that figures shown by the appellant can't be relied upon. Hence the appellant's calculation of stock at ₹ 1,28,20,859/- as on the date of survey I.e. 13/09/2011 by taking the average oust of sale per gram at ₹ 1992/- is not acceptable. Moreover, as per the quantitative detail of the gold provided by the appellant, it had 8814.180 gm of gold available with it as on the date of survey I.e. 13.09.2011. Whereas perusal of the valuation report of the valuer reveals that the valuation of 4892 gm of gold had been done only. It means 3922.18 gm of gold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at ₹ 1,23,00,000/- which was stated to be estimate value of the stock with the assessee in his statement during the course of survey. This was an approximate estimate given by the assessee at that time. Now the addition is on account of difference between estimated values declared in statement at the time of survey at ₹ 1,23,00,000/- and the valuation done by the valuer. 8. Admittedly, there is no difference in the quantitative tally or any discrepancy in purchase and sales or any excess quantity of jewellery was found so as to draw any adverse inference. Albeit the addition is based on the statement given by the assessee in respect of stock value at the time of survey and even in the statement there is no reference of excess quantitiy. Before the Ld. CIT (A), the assessee has relied upon the judgment of Hon ble Delhi High Court in the case of CIT vs. Dhingra Metal Works in ITA No. 1111/2010, that Assessing Officer could not make the addition solely on the basis of statement during the course of survey. Here, we find from the statement as recorded by the Ld. CIT (A) in his order that; Firstly , there is neither any dispute regarding sale and purchase b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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