1995 (5) TMI 80

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....nufacturing of precious and semi-precious stones. For the year under consideration, the assessee returned an income of Rs. 2,58,320 on 21st July, 1986. Subsequently the same was revised to Rs. 3,38,320 on 31st March, 1987, declaring additional income of Rs. 80,000 under Amnesty Scheme. The books of account of the assessee were seized in the course of search operations conducted at the business and residential premises of the assessee on 22nd Sept., 1987. However, photo copies of the relevant documents/vouchers etc. were given to the assessee in order to enable it to explain its position in the course of assessment proceedings. 3. In the rough emerald account the assessee had shown total sales of Rs. 38,64,311 as against Rs. 18,13,700 in ....

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....ticularly when no discrepancy in the quantitative tally has been pointed out. A discrepancy in the quantitative tally maintained by the assessee in this case would have certainly entitled the AO to conclude that there is suppression of sales. In certain businesses, absence of quality-wise details may also lead us to the conclusion of suppressed sales, say, in the case of ball bearings where the sales value will depend on the make of the ball bearing. In case of precious stones also, the sales value will undoubtedly differ from quality to quality, but in such cases, each stone is of different quality and its value is so subjective that it may be valued differently by different valuers. Hence, in such cases, unless there are strong evidence t....

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....tion. He has not discussed as to what was the explanation of the assessee in this regard. In fact no basis has been given. Just as low gross profit cannot be a ground for addition, so also low yield by itself cannot be a ground for addition. For these reasons as also for the reasons given by us in case of rough diamonds, we direct for the deletion of the amount sustained by the learned CIT(A) who had directed to adopt the G.P. rate at 19% in place of 20% adopted by the AO. 11. The last ground pertains to the disallowance of Rs. 2,671 out of telephone expenses. In this regard the AO had disallowed Rs. 7,000 considering personal use as well as expenses on residential telephone. The learned CIT(A), however, restricted the disallowance only ....