TaxTMI 
TaxTMI 
2011 (6) TMI 846
X X X X Extracts X X X X
X X X X Extracts X X X X
....und that the appellant did not maintain qualitative details with regard to diamonds when that is an impossibility. II. The ld.CIT(A) was not justified in sustaining addition in valuation of closing stock polished diamonds to the extent of ₹ 4,00,000/- III. The ld.CIT(A) erred in sustaining addition of estimate of GP at 11.22% from 10.97% shown. 3. At the time of hearing before us, it is stated by the learned counsel that the assessee derives income from purchase, processing and selling of diamonds. The AO rejected the assessee's books of accounts and allowed GP rate of 11.22% as against GP disclosed by the assessee at 10.97% which resulted in addition of ₹ 6,68,813/-. He also made addition of ₹ 5,38,980/- for under v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ference. There was no question of reduction of the exchange difference from the sales. He also stated that if the AO was to determine the value of the closing stock at cost price, he should have simply worked out the value of the closing stock at the average of the opening stock and production. If this method would have been adopted, the value of the closing stock disclosed by the assessee is more. 4. The learned DR relied upon the orders of the authorities. 5. We have considered the arguments of the both the sides and perused the material placed before us. We find that ITAT, Ahmedabad 'C' Bench has considered identical issue in the case of M/s.Dhami Brothers (supra) wherein the ITAT held as under: "8. From the above, it is evident that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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 details 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 AO that there is defect in the system of method of accounting of the assessee which requires rejection of the book results under Section 145(3) of the Act and estimation of the GP. 9. Now we come....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,32,75,007 Rs.77,56,18,168 Less: Cost of sale (net of GP) (6.85%) Rs.72,24,88,323 Therefore closing Stock 44,299.10 ₹ 54,69,97,301 Closing Stock as per book 44,299.10 ₹ 54,23,81,050 Therefore suppression of closing stock ₹ 46,16,251 10. At the time of hearing before us, the learned counsel for the assessee could not point out any mistake in the above working of the valuation of the closing stock by the AO. A specific question was also asked to him that in the absence of details of the valuation of the closing stock by the assessee, how the value shown by the assessee can be verified? The learned counsel for the assessee was unable to reply to such question, and made an alternate request that if the value of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....entical with the above decision of the ITAT. We therefore, respectfully following the above decision of the ITAT delete the addition of ₹ 6,68,813/- to the trading result. However, the addition of ₹ 4 lakhs to the closing stock is sustained and the AO is directed that the value of the opening stock of the next year would be modified accordingly. 7. Next ground of the assessee is against the disallowance of ₹ 32,000/- out of foreign travel expenses. It was stated by the learned counsel that the assessee is a processor and exporter of the diamonds whose turnover is more than ₹ 26 crores. During the year under consideration, the assessee incurred total travelling expenditure of ₹ 32,000/- which is fully vouched a....