TMI Blog2010 (4) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... ssesee: 1. That the CIT(A) has erred in upholding in principle the addition on account of alleged unexplained fall in gross profit and giving relief only to the extent of 1% directing A.O. to calculate G.P. at the rate of 5% in place of addition made by A.O. at Rs. 30,19,767 taking G.P. rate at 6%. 2. That the CIT(A) has further erred in confirming the addition of Rs. 9,00,000 u/s. 68 of I.T. Act, 1961 being the amount received on sale of jewellery. 3. The appellant craves leave to add, to amend, or withdraw all or any of the above grounds on or before the hearing of appeal. 2. Ground No. 2 in the appeal filed by the Revenue and ground No. 3 in the appeal filed by the assessee are general in nature and hence, needs no specific adjudication. 3. Ground No. 1 taken by the Department and Ground No. 1 taken by the assessee relates to common issue i.e., addition made on account of low Gross profit and therefore, both the grounds are taken up together. 4. The facts relevant are that during the AY under consideration the assessee carried on business in trading (Export Domestic) of various commodities. The assessee disclosed export turnover to the tune of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority. 5. The learned CIT(A) called for remand report from the Assessing Officer. After considering the submissions of the assessee and also the remand report of the Assessing Officer, directed the Assessing Officer to adopt the GP at 5% as against 6% and thus allowed partial relief on this ground, on the following observation, vide paragraph 4.5 of his order. 4.5 Observations and Decision: Because of short fall in rate of gross profit in comparison to immediately preceding three years, the A.O proceeded to scrutinize the accounts of the appellant. The A.O issued notices u/s 133(6) at random to some parties in respect of sales/purchases. Wherever satisfactory replies were received the A.O accepted the transactions. In some cases notices could be served but no reply was received. In some other cases notices came back unserved . Again in some other cases notices could not be sent in the absence of proper addresses and even relevant bills/vouchers could not be produced by the appellant. In some cases bills were having hand written, serially numbered and several bills have been issued on a single day by the same party. Individual bills for payment were kept below Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ANR. (2008) 214 CTR (SC) 457 and submitted that merely because some of the parties did not appear, no adverse inference could be drawn against the assessee. The learned AR of the assessee further submitted that the remand report sought by the learned CIT(A) was vague and did not contain all the details. He submitted that the GP disclosed by the assessee should be accepted. 7. On the other hand, the learned DR supported the order of the Assessing Officer. The learned DR submitted that the Assessing Officer found defect in the books of account. She submitted that the letters issued by the Assessing Officer could not be served on all parties. She further submitted that the assessee could not furnish all bills to substantiate purchases and the Assessing Officer has specifically mentioned in the assessment order that the assessee could not establish the purchases with the supporting bills. The learned DR further submitted that the valuation of closing stock was not proper. She submitted that the Assessing Officer was reasonable to estimate GP at 6% considering the GP in the preceding three AYs 2002-03 to 2004-05 at 8%, 7.16% and 7.8% respectively. The learned DR submitted that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 34,68,900 but disclosed gold jewellery of Rs. 25,68,9000 in the asset side of his personal balance sheet. It was explained that the assessee sold out jewellery valued at Rs. 9,00,000 out of the total value of jewellery introduced in his capital account amounting to Rs. 34,68,900. The Assessing Officer asked the assessee to furnish the details supporting the claim of sales of jewellery. The assessee stated that the jewellery were sold to M/s. Bhoothnath Jewellery (P) Ltd of 305, Neel Gagan Apartment, 3rd Floor (Opp. Ananth Awas), Sangrampura, Surat through their agent in Kolkata. The assessee produced to cheques issued by Bhoothnath Jewellers (P) ltd amounting to Rs. 5,00,000 and Rs. 4,00,000 vide cheques dt.17.1.2005 and 4.2.2005 respectively on SBI, Burrabazar Branch, Kolkata. Then the Assessing Officer issued letter dt. 10.12.2007 to M/s. Bhioothnath Jewellers (P) Ltd., to submit the details and confirming the transactions furnishing copies of bills file No. etc. But the letter was returned back with postal remarks No such persons . From enquiry from State Bank of India, Burraabazar it was ascertained that the account being No. 10461496292 was opened and operated by one Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t justified. 13. The learned DR, on the other hand, contended that the assessee has stated that the jewellery was sold to M/s. Bhootnath Jewellers Private Limited of Surat through an agent of Kolkata, but the assessee has failed to furnish the names and address of the said agent. The learned DR further submitted that the Assessing Officer has verified the bank details and he found that the address given by the bank was at 22/1, Armenian Street, Kolkata but on verification it was found that there was no business activities at the above address in the name of Bhothnath Jewellers Pvt. Ltd., nor there was any persona named Arvind Misra. The assessee thus having not established the sales of jewellery, the impugned addition of Rs. 9 lakhs made u/s.68 of the Act is justified. 14. We have considered the rival submissions of both the parties. There is no dispute to the fact that the assessee has received gift of jewellery. The assessee claims that he sold jewellery worth about Rs. 9 lakhs out of the said jewellery received on gift and introduced in the share capital. While explaining the said sale, the assessee claimed that jewellery were sold to M/s. Bhootnath Jewellers Private Limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
