TaxTMI 
TaxTMI 
TaxTMI 
2013 (10) TMI 828
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....uality of diamond. Therefore, it is not possible to valuate the closing stock as well as sale price correctly. In absence of particulars in terms of qualitative details of production of diamond from each lot, it is not ascertainable as to which type of diamond was produced from a particular lot. Lot to lot correlation had not been furnished by the assessee. Thus, he held that the valuation of stock is not verifiable. This was the reason for fall of GP as compared to other traders/manufacturers in the same line of business, details of which are as under: Sr. Name of Assessed & PAN No. Turnover G.P. Ratio NP Ratio 1 Tapti Diamond Pvt. Ltd. AAACT8776L 7800195 16.83% 2.18% 2 Kabir Jewels Pvt. Ltd. AAACT8776L 227982200 12.52% 1.85% 3 P. Ashish Brothers AADFP2761Q36749187 165978668 16.18% 0.70% 4 D. N. Jewels AADFD5878Q 36749187 17.96% 1.56% 5 Dhara Exports AAEFD3800B 17.3% 6 Cosmos Jewels AADFC9126G 34568576 17.78% 2.34% The A.O. analyzed the manufacture process and differentiated the diamond valuation from other articles and things on page no. 3 & 4 of the assessment order. The assessee was given reasonable opportunity of being heard on....
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....n of business, it is the duty of the Assessing Officer to determine the taxable income by making such computation. Thus, he did not accept the assessee's contention that he was not maintaining qualitative details of furnished diamonds. He further relied in case of Mumbai ITAT's decision in the case of DCIT vs. Samir Diamonds Export Pvt. Ltd. reported in 71 ITD 75. Thus, he rejected the books of account u/s. 145(3) of the IT Act. Income from sales/export of polished and rejection diamonds had been shown at Rs.22,79,82,200/-. He estimated the GP @ 15% on total sales and made addition of Rs.56,53,959/-. 3. Being aggrieved by the order of the A.O., the assessee carried the matter before CIT(A) who had deleted the addition by observing as under: "2.3.1 1 have considered the submission made by the appellant and the observation of the A.O. From the above, it is clear that no specific defects have been pointed out by the A.O. The only reason for rejection of the books of account is that the A.O. has not produced quality-wise details in the opening stock and closing stock for purchase, sales etc. The A.O. has agreed that quantitative details have been made and produced but in absence of q....
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....ted that the assessee has shown a turnover of Rs.47.97 crore and G.P. rate at 8.12% in which the assessee had maintained only quantity- wise details and not quality-wise details. The A.O. rejected the books of account saying that the details are not in quantity-wise that plaid major role in fixing the price. The A.O. rejected the books of account and made an addition of Rs. 6l,84,485/- by adopting G.P. rate at 8.37%. The CIT(A) deleted the addition saying that the A.O. has not pointed out any defects in the books of account and for rejecting the book results by him without that was arbitrary in nature is acceptable in the eyes of law as the various decisions relied on by him, i.e. the decision of the Hon'ble ITAT, Ahmedabad in the case of Rajesh Tea Co. Vs. ITO (35-TTJ-350), Pushpanjali Dyg. & Ptg. Mills Vs. Jt. CIT (72-TTJ-886), Surekha Binding Works Vs. ITO (38-TTJ- 350) and also the decision of the Hon'ble Gujarat High Court in the case of Vikram Plastics Vs. CIT (239-ITR-161) to hold that the G.P. addition was illegal without pointing out any specific defects in it. On similar facts similar decision was given by the ClT(A) in the case of Jodhani Exports for A.Y. 2005-06. In vie....
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....o. 13 of the CIT(A)'s order and argued that Revenue had not controverted the finding of the ld. CIT(A). The findings given by the ld. CIT(A) on page no. 14 had not been challenged by the Revenue. The A.O. estimated income on the basis of 15% GP but all the comparable cases are actually not comparable with the assessee as it can be seen from the chart on page no.3 of the assessment order that assessee's sale is much more than other parties mentioned for comparison in the assessment order. It is evident from the CIT(A) order that GP as well as sales in the case of assessee during year are higher than immediate preceding year. On page no.1 of the paper book, the assessee enclosed the copy of assessment in its case for A.Y. 04- 05, wherein no addition on account of GP was made by the A.O. and book result has been accepted by the A.O. He further has drawn our attention on page nos. 34 & 35 and argued that M/s.D. Nition & Co., Surat, is in the trading of gold-diamond jewellery whereas the assessee has importing and exporting/ manufacturing of diamond for which assessee has infrastructure referred on page 50 of the paper book. The assessee has disclosed the opening as well as closing stoc....
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.... of qualitywise stock register for purchase and sale of the diamond would not be a ground for rejecting the books of account of the assessee is unreliable. In case of CIT vs. M/s. D. Nitin & Co. in Tax Appeal No. 1917 of 2010, Hon'ble Gujarat High Court found no question of law arises appeal on the basis of without specific defect pointed out by the A.O. and rejected the books result. Therefore, he requested to confirm the order of the CIT(A). 5. We have heard the rival contentions and perused the material on record. The appellant had shown GP rate at 12.52% in the year under consideration as compared to 11.76% in preceding year, which was 10.7% in A.Y. 04-05. The turnover of the assessee has gone up from Rs. 15.3 Crore to Rs. 22.79 core in the year under consideration compared to preceding year. The appellant had shown increase in the turnover as well as in GP. The comparable case cited by the A.O. are having lesser turnover and also were dealing in the different items i.e. assessee is importing and exporting and trading of the diamond as well as the gold jewellery. The case cited by the A.O. are not comparable further he only made the ground for rejection of book result i.e. not....