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2011 (2) TMI 1445
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.... of purchasing/importing rough diamonds which is sold after processing/polishing in the national and international market; that as per the method of accounting consistently followed by the assessee it valued closing stock at "cost or market value whichever is less"; that on the last date of every year, the assessee takes detailed physical quality-wise stock of diamonds and then the market value of such stock is worked out. The assessee has taken the market value where the market value is lesser than the cost and in the case of remaining diamonds it has taken the cost. The complete quality wise inventory of the closing stock of diamond is at page nos.30 and 31 of the paper book; that to support the assessee's contention that market value of the part of the stock of the diamond was less than the cost, the assessee has given sale value of such diamond in the subsequent year. Complete details of sale of each and every diamond are given at page no.36 and 37 of the assessee's paper book. He therefore submitted that valuation made by the assessee is duly supported by the documentary evidences in the form of sale bill of such diamonds in the immediately subsequently year; that the AO adopt....
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....If the details of the closing stock as given at page no.30 and 31 is compared with the details of the sale at page no.36 & 37, not a single item tallies with the each other. Therefore, the contention of the assessee that the market value of the closing stock was less than the cost has not been established; that the value of diamond depends upon the quality of the diamond. Lower quality of the diamond is purchased at the lower rate and therefore the same is sold at a lower rate after processing. The assessee has sold various lots of diamonds for much higher rate than the cost price. The details of which is given at page no.11 and 12 of the assessment order which proves that various pieces of the diamonds were sold by the assessee at as high as Rs. 36941/- per carrat as against the average cost of Rs. 9,943/- per carrat; that in fact the assessee selected certain sale instances where the diamond was of inferior quality and the same was sold at lower rate and attached those sale bills to claim that the market value of the diamond was lower than the cost; that the assessee has not given item-wise cost and market value of each lot. Moreover, the assessee has not given the market value o....
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....is reproduced below for ready reference: Sr. No. Description of diamonds Cts. 1 Cut & Polished Diamond 185.99 2 D/Cut Tilc + 9 Vs 1 167.93 3 D/Cut Tilc -9 Vs 1 167.14 4 D/Cut Tilc-6.5 Vs 1 110.11 5 F Cut White Vs 1 20.29 6 F Cut White Vs 1 20.55 7 F Cut White Vs 1 20.28 8 Cut & Polished Diamond 277.56 9 Cut & Polished Diamond 923.63 10 Cut & Polished Diamond 660.33 11 Cut & Polished Diamond 259.12 12 Cut & Polished Diamond 452.21 13 Cut & Polished Diamond 401.51 14 Cut & Polished Diamond 49.20 15 Cut & Polished Diamond 102.06 16 Cut & Polished Diamond 74.22 17 White D/C ND PK2 52.35 18 White D/C ND PK3 11.52 19 White Prince PK1 33.05 20 F/C White VS1 48.60 21 F/C White S11 20.44 22 F/C White VS1 113.04 23 F/C White S11 35.71 24 Cut & Polished Diamond 1072.85 25 White Tappers S1 100.00 26 White Tappers PK 4 78.00 27 White Buggets PK 4 116.00 28 White BuggetsS1 3 48.00 29 Cut & Polished Diamond 187.36....
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....LOWER THAN COST OF Rs. 9,943/- PER CARAT. Sr. No. Description Supporting Sale Bill No. Market Value Per Carat as on 31-03-07 Quantity (In Carats) Amount (Rs.) 1 CUT & POLISHED DIAMONDS 2 9,000.00 277.56 2,498,041 2 CUT & POLISIIED DIAMONDS 4 5,100.00 660.33 3,367,683 3 CUT & POLISHED DIAMONDS 7 3,950.00 401.51 1,585,965 4 WHITE TAPPERS SI 4 7,821.00 100.00 782,100 5 WHITE TAPPERS PK - 4 4 3,910.50 78.00 305 6 WHITE BUDGGETS PK -4 4 3,910.50 116.00 453,618 7 WHITE BUDGGETS SI. 3 4 8,690.00 48.00 417,120 8 CUT & POLISHED DIAMONDS 12 8,480.00 187.36 1,588,813 9 CUT & POLISHED DIAMONDS 12 7,700.00 45.89 353,353 10 CUT & POLISHED DIAMONDS 1 7,594.19 250.15 1,899,687 11 WHITE BGTS PK -2 (PL) 8 9,029.05 185.55 1,675,340 12 WHITE BGTS PK - 2 (PL) 8 9,029.05 11.96 107,987 13 D/C TL8 NTS SI- I (PL) 8 9,119.00 2.03 18,512 14 D/C TLB NTS PK- 1 (PL) 8 8,704.05 0.54 4,700 15 CUT & POLISHED DIAMONDS ....
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.... 1,297,706 51 F/C WHITE PK -1 28 7,517.55 154.28 1,159,608 52 WHITE TAPP SI 3 1 1 29 7,619.00 137.12 282,817 53 F/C BLACK DIA 31 3,007.50 155.67 167,428 54 F/C BLACK DIA 31 2,606.50 161.52 160,352 55 F/C BLACK DIA 31 2,406.00 65.76 158,219 56 F/C BLACK DIA 31 2,205.50 35.94 79,266 57 F/C BLACK DIA 31 2,205.50 51.98 114,642 58 F/C BLACK DIA 31 2,005.00 66.19 132,711 59 F/C BLACK DIA 31 1,604.00 88.00 141,152 60 BUG WH PK -3 31 2,406.00 50.90 122,465 61 BUG WH PK - 2 31 2,807.00 60.00 168,420 62 CUT & POLISHED DIAMONDS 44 9,600.00 528.27 5,071,392 63 F CUT TTLC VS 2 33 8,621.50 32.35 278,906 64 CUT& POLISHED DIAMONDS 48 9,001.00 250.09 2,251,060 65 P/C WHITE 13 40 3,609.00 303.60 1,095,892 TOTAL [A] 9,405.61 63,917,981 For remaining stock of 3940.26 carrat, the assessee adopted cost price and accordingly determined the value of the closing stock at Rs. 10,30,98,508/- as und....
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....le bills are for five months in the next year. The details of these sale bills are given by the assessee and are reproduced by us above in para no.7. When we compared the details of the closing stock, which is given in para no.6, with the details of sales bill, which is given in para-7, we do not find even a single lot comparable with each other. In the details of the closing stock, first item is of cut and polished diamond of 185.99 carrat. However, there is no sale bill for the sale of 185.99 carrat of cut and polished diamond. Similar is the position with regard to each and every lot of stock of diamond. Not a single lot given in the stock of polished diamonds compares with the sale bill submitted by the assessee in support of his contention that market value of the diamond was lower. Moreover, the AO at page no.11 and 12 of his order has given the various sales instances during April to August, 2007 where the sale value of the diamond was as high as Rs. 44,076/- per carrat. These details are reproduced below: DATE BILL NO. Rate per carat In Indian Rs. 05.04.07 1 12810.68 16.04.07 2 12735.89 17.04.07 3 32108.06 10.05.07 5 12416.43 ....
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....bsence of such co-relation the contention of the assessee that the market value of the part of the diamond was lower than the cost cannot be accepted. Except some sale bills, no other evidences was produced by the assessee to establish that the market value of the diamond was lower than the cost. When any assessee claims that the market value of the closing stock was lower than the cost, burden would be upon the assessee to establish so by producing the documentary evidences. If the closing stock is of diamond, this burden would be even heavier because the assessee is claiming that the market value of 9405.61 carrat of the closing stock of diamond out of the total closing stock of 13,345.87 carrat was lower than the cost. No evidence is produced by the assessee to establish this contention. The sale bills produced by the assessee in respect of sale of diamonds from April, 2007 onwards cannot be said to be the evidences for lower market value of the part of the closing stock as on 31-3-07 as neither description nor quantity of lot-wise stock tallies with the sale bills. The assessee has not kept quality-wise or lot-wise stock register so as to correlate sale instance with particular....