TaxTMI 
TaxTMI 
2004 (12) TMI 21
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....facts giving rise to the present reference are as follows: The present reference relates to the assessment year 1983-84. The respondent is a firm and derives income from sale of silver ornaments and silver bullion. It had filed the return of income of Rs. 93,960. The Assessing Officer scrutinized the trading account, which disclosed sales of Rs. 27,11,614 with a gross profit of Rs. 2,53,842, which worked out to 9.36 per cent., as against that of the last year of 10.6 per cent, on sales of Rs. 29,83,638. The Income-tax Officer noticed that both the sales and the rate of gross profit had gone down and required the respondent-assessee to explain it. The respondent-assessee explained that the purchase of silver bullion was less but the sale of....
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....d that the valuation of the closing stock had not properly been made, and, that though the assessee had purchased substantial quantity of old jewellery and got it melted and got new jewellery made out of that which was sold the cost of old jewellery was none the less included in the closing stock as the value of new jewellery which according to the learned Commissioner of Income-tax (Appeals) resulted in a gross undervaluation of closing stock and was not justified. He, therefore, issued a notice of enhancement under section 251(2) of th4 Act to the respondent. The respondent submitted his explanation raising various objections. Amongst other things, it was urged that the assessee did not maintain any detailed itemwise account of the jewel....