TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 597
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....s loss of Rs. 1,45,08,970/-. The assessee could not explain the reasons for incurring the business loss claimed by the assessee. 4. On appeal, the CIT (A) held that the Assessing Officer had rejected the books of accounts mainly because of the fact that the assessee did not maintain qualitative details of neither stock of diamonds nor of the diamonds sold by it. He held that on the basis of the submissions of the assessee and the decision relied on by the assessee, he was of the view that books of accounts cannot be rejected on the ground taken by the Assessing Officer. 5. As regards the loss of Rs. 1,45,08,970/- CIT (A) observed that during the course of assessment proceedings neither any satisfactory explanation was given nor any documentary evidence was produced to justify for incurring of so much of loss. He observed that in assessee's own case in Assessment Year 2007-08 similar loss of Rs. 6,36,72,996/- on turnover of Rs. 11,72,77,128/- was disallowed and no appeal was filed against the said assessment order. He observed that in theassessment proceedings of A.Y. 2007-08 even the statement of one of the partners Shri Parsottambhai R. Dhami was also recorded. He was asked whet....
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....esent assessee has maintained the regular books of accounts which were duly audited. The sale and purchase of the assessee is vouched and verifiable. The assessee has also maintained quantitative details in respect of diamonds purchased and sold by it as well as for processing of diamond. There is no adverse comment from the auditor that the profit cannot be computed from the books of accounts maintained by the assessee. In our opinion, the qualitative detail of each piece of diamond is not necessary for computation of the income of the assessee. Income of the assessee can be very well computed on the basis of accounts already maintained by the assessee. In view of the above, we are unable to agree with the A.O. that there is defect in the system of method of accounting of the assessee which requires rejection of the book results under Section 145(2) of the Act and estimation of the G.P." 7. He further relied on the decision of this Bench of the Tribunal in the case of I.T.O. vs. M/s. B. Sureshkumar & Co., in ITA No.2632/Ahd/2003 for A.Y. 2000-01 order dt. 19-12-2007wherein the Tribunal has held as under:- "4. We have considered the rival submissions and the facts and circumstance....
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....n the return. It is an established position of law that even after rejecting the book result if the assessing authority add any income to the income declared by the assessee, then, the said addition has to be based on some material and the same cannot be added on the whims or caprice of the assessing authority. In the instant case t is observed that the trading result shown by the assessee compares favourably with the past accepted position in the case of the assessee itself. Therefore, merely rejecting the book result on the ground that quality-wise deals of diamonds has not been maintained will not empower the A.O. to add any income to the income shown by the assessee. We also observe that no material could be brought on record by the Revenue to show that the value of closing stock of diamonds shown by the assessee at Rs. 16,25,60,000/- was incorrect or the method of valuation consistently adopted and followed by the assessee was incorrect. In the absence of any material to show that the actual value of closing stock possessed by the assessee as on 31-3-2004, was more than the value swn by the assessee. In our considered opinion, the A.O. was not justified in making trading addit....
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....vailable on record. We find that in the year under appeal, the turnover of assessee exceeds Rs. 466 lacs. The assessee has processed more than 16000 carat of rough diamonds during the year and exported over 4500 carat of diamonds. It is admitted fact that in this line of business till the rough diamonds are processed, the quality of the diamonds manufactured is not known. Even after the diamondsare processed, the quality will depend upon various factors, such as, colour, clarity, cut and carat. Therefore, in terms of these factors, each diamond manufactured is different from the other. Considering the volume of business, it is impracticable to have qualitative as well as quantitative records of the total stock in possession of the assessee. Such stock has to be grouped together so as to find common value for the group of diamonds. As per the valuation report obtained from approved valuer, he has bifurcated the valuation in 31 groups having different rates. As contended this is the usual practice in the Industry and which the assessee follows. This contention is not found to be incorrect." 10. He further relied on the decision of this Bench of the Tribunal in the case of ACIT vs. M....
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....- was disallowed and the assessee did not file appeal there against. In that year also the assessee had sold only the sock lying with it and there was no manufacturing activity or trading. The assessee had shown the stock of polished diamond for the opening and closing stock. Hence he held that loss due to so-called lower realisation on sale of opening stock of polished demand claimed by the assessee is rejected. 15. On appeal, filed by the assessee the CIT (A) confirmed the action of the A.O. on the ground that no satisfactory explanation of loss incurred was given by the assessee and no documentary evidence in support of the loss was filed by the assessee. 16. We have heard the rival submissions and perused the orders of the lower authorities and material available on record. In the instant case the assessee sold diamond out of its opening stock broughtforward from earlier years costing Rs. 3,76,70,953/- for Rs. 2,40,08,065/- and claimed loss of Rs. 1,36,62,888/-. The A.O.observed that the assessee has not maintained quality-wise details of diamonds. The assessee could not explain the reasons for incurring of the loss on sale of diamonds. In the immediately preceeding Assessmen....
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....after examining the parties to whom the sales were made by the assessee to show that the assessee has under invoiced the sale of diamonds or that the sales invoiced do not reflect the correct sale-price of the diamond. In absence of any such material being brought on record in our considered view the A.O. as well as the CIT (A) were not justified in disallowing the loss of Rs. 1,36,62,888/- to the assessee. On a similar facts this Bench of the Tribunal in the case of Shri Asokkumar H. Kothari vs. ITO in ITA No.386/Ahd/2009 A.Y. 2005-06 order dated 16-1-2015 deleted the addition for the reason that the name and address of the parties to whom the diamonds in question were sold were made available to the A.O. by filing copy of the bills for sale of diamond and the Revenue did not bring any material on record to show that the rough diamonds of 1240.10 kts was not sold on 4-4-2005 for Rs. 18,40,177/- and the same in fact was sold at a higher value. We therefore, set aside the orders of the lower authorities and direct the A.O. to allow the loss of Rs. 1,36,62,888/- on sale of diamonds claimed by the assessee. GroundNo.2 of the appeal is that CIT (A) has erred in confirming the addition....