TaxTMI 
TaxTMI 
2011 (2) TMI 11
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....dal Attained majority, a fresh partnership deed was executed. The assessee is engaged in the business of trading of garments and other items like artificial jewellery, artificial garments plants, purses, etc. The assessee carried on its business from 47, Bungalow Road, Delhi. This property does not belong to the assessee firm but was purchased by its four partners from one Shri P.C. Jain. Four partners are the owners of different portions of this property which was purchased by separate sale deed. During the survey, the assessee firm offered an amount of Rs. 25 lacs on account of unexplained investment in building at 47, Bungalow Road, Delhi for taxation. Shri R.D. Gupta, its partner, also offered a sum of Rs. 9.8 lacs being excess cash fou....
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....aforesaid disparity, moreso when these were available at the time of survey. Though the assessee had given the explanation stating that there was a typographical error in the trading account prepared at the time of survey and actual trading accounts were shown, the AO still found that there was wide variation in the GP rate on the assessee for different periods falling in the same financial year and for the complete financial year. It was found that where GP rates were worked out at 19.59% upto 21.01.1999, it was worked out at 4.10% for the latter part of the financial year and 14.40% for the whole year. For this reason as well as various other reasons discussed in the order, the AO rejected the books of account. These reasons given by him ....
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.... value of stock of jewellery and silk plants as on 1-4-98 and 31-3-99. b) The rates of gents shorts, pajamas and Bermudas were taken to the same as on 1-4-98 and 31-3-99 i.e. there was no change in the rates of these items in the course of the whole year as per the assessee's working of inventory. c) Assessee was asked to relate every item in the opening and closing stock with the purchase bill of that item so as to justify its valuation. d) Last but not the least the value of every item of a given type e.g. shirts, shorts etc. was taken to be the same at the beginning and close of the year irrespective of the brand, size, quality, style etc. Whereas the assessee is dealing in items of different brands and the value of a given item of two o....
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.... item without taking into account size, brand, style, etc. In the inventory prepared at the time of survey, it has been found that the rate of any items varies according to brand, size, quality etc. It is, therefore, obvious that the inventory of opening and closing stock filed by the assessee during the course of assessment proceedings, is cooked up and does not give a true picture of the actual stock available either at the beginning or end of the financial year. (d) The assessee contended that it had returned some of the purchases made by it from various parties. Three such purchases returned were taken up on test check basis and the assessee was asked to relate them with the corresponding purchase bills. The assessee failed to do so in....
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....ove. 3. In view of the aforesaid discrepancies, as per the AO, he rejected the books of accounts in view of the following decisions of the Supreme Court and the other High Courts: (i) Orissa Fishers Development Corpn. Ltd. Vs. CIT [111 ITR 923 (ORI)]; (ii) S.N. Namasivayam Chettiar Vs. CIT [38 ITR 579 (SC)]; (iii) Amiya Kumar Roi & Bros. Vs. CIT [2006 ITR 306 (Calcutta); and (iv) Awadesh Pratap Singh Abdul Rehman & Bros. Vs. CIT [210 ITR 406 (Allahabad)]. 4. After rejecting the books of accounts, the AO opined that under the given circumstances GP rate of 21% of sales of Rs. 6 would meet the end of justice. The assessee had declared the sale of shares at Rs. 5,48,90,910 for the financial year relevant to the Assessment Year 1999-2000. Go....
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....e Income Tax Appellate Tribunal („Tribunal‟ for brevity) has allowed the appeal thereby deleting the said addition and holding that GP rate of 14.40% declared by the assessee was proper and reasonable. We find from the impugned order of the Tribunal that the Tribunal has stated that there was no reason to disregard the books of accounts inasmuch as: (a) At the time of survey in the stock inventory, difference of only Rs. 48,000 was found and looked at the volume of business and list of inventories, it was a negligible difference. Moreso, the assessee had demonstrated that it was attributable to packing material which had been mistakably debited to Profit and Loss Accounts. Therefore virtually, no discrepancies were found in the....