TaxTMI 
TaxTMI 
2018 (8) TMI 1252
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....f evidence and probabilities of the case. 2. The Ld. CIT(A) should have allowed the entire making charges paid to the local gold smiths. 3. The Ld CIT(A) erred in adopting rate of gold ornament making charges at Rs. 140 per gram against the payment made at an average rate of Rs. 166.66 per gram. 4. The LdCIT(A) should have seen that the AO proceeded on the basis of presumptions and surmises in disallowing the amount actually incurred. 5. The LdCIT(A) erred in sustaining the addition of the purchases of Rs. 80,91,947 made from Veer Jewellers as unexplained cash credit u/s.68. 6. The LdCIT(A) ought to have accepted the confirmation furnished by Veer Jewelers to the AO which was received by the AO after the completion of Assessment. 7. The Ld.CIT(A) failed to see that it was the supplier who had not recorded the sale in his books of account and hence the appellant is at no fault. 8. The Ld.CIT(A) ought to have allowed the business expenditure met through City Bank and ICICI Bank credit cards in full. 9. The Ld.CIT(A) should have seen that agricultural operations were actually conducted by the appellant and should have accepted the income derived. 10. For these and ot....
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....he AO has given notice u/s 142(2) with proposal to make the disallowance under the head making charges. The assessee furnished the explanation stating that the he is dealing in gold ornaments of various designs, sizes, shapes and weights from nose pin to waist belt which includes nose screws, rings, ear studs, bangles, necklaces with various types of designs, shapes etc.. The amount paid for making charges for gold ornaments depend upon the nature of item, design, shape and skill required for making the item and time taken for making different varieties of gold ornaments. Most of the ornaments require skill for making the intricate designs, the number and size of precious stones studded in the ornaments as per the choice of the customer. Thus, the assessee has submitted that the making charges paid to different goldsmiths for different items cannot be compared and it depends on the variety of items and argued that the assessee has incurred the making charges, maintained the books of accounts which was supported by the vouchers and there is no case for making the addition or disallowing the expenditure incurred. However, the AO analysed the vouchers on random basis and found that ev....
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....ued that the disallowance made by the AO is without any basis and unsustainable. The Ld.AR further argued before the Ld.CIT(A) that there were some vouchers which were negligible in number without the signature of the goldsmiths and the AO's observation that non production of vouchers was incorrect and far from the truth. Production of local goldsmiths for verification is impossible due to the fact that they are very small people in terms of their working and earning. Non production of goldsmiths cannot be a sole basis for the disallowance of the expenditure. The Ld.CIT(A) observed that the assessee had failed to furnish the complete information with regard to the items manufactured gold smith wise, and identity of all the karigars. Non production of goldsmiths and unsigned vouchers gave the impression in the mind of the AO to hold that the expenditure was not verifiable and may not be genuine. The CIT(A) verified the details filed by the assessee and found that there are 5 grades of rates for making the gold ornaments . They are Rs. 82/- to Rs. 100/- for Grade-1, Rs. 120/- to Rs. 125/- for Grade-2, Rs. 125/- to Rs. 130/- for Grade-3, Rs. 130/- to Rs. 137/- for Grade4, Rs. 140/- to....
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....in sales and offered the same as income. Therefore, there is no case for any disallowance, hence requested to set aside the order of the Ld.CIT(A) and allow entire expenditure claimed by the assessee. 6. Per contra, the Ld.DR argued that revenue has established that the assessee is making the payment of Rs. 82/- per gram towards making charges in the case of non locals and the AO has discussed in detail regarding deficiencies in the vouchers maintained and brought on record the inconsistencies to substantiate the disallowance. The assessee failed to produce the evidence to establish the genuineness of expenditure and the assessee also has not maintained stock register separately therefore argued that the Ld.CIT(A) order be set aside and restore the assessment order. 7. We have heard both the sides and perused the material placed on record. It is undisputed fact that the assessee is engaged in the manufacture and sale of gold ornaments of different sizes, shapes and models with different designs. The assessee is engaged in the sale of nose screw to waist belt, such as nose pins, ear studs, ear rings, chains, necklaces, waist belt etc. Each item consists of different models and des....
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....alysed the information with regard to the cost of the gold and the making charges collected by the assessee from the sale bills. In case, the AO found some defective vouchers, the amount involved on the said vouchers should be disallowed, but not make universal application of minimum price of making charges to the entire gold ornaments manufactured and sold by the assessee. Though assessee did not accept for the disallowance of expenditure, requested the Ld. CIT(A) to adopt reasonable rate, in view of the facts and circumstances of the case and their inability to produce the local goldsmiths. The ld.AR submitted that production of gold smith is an herculean task since they loose their daily earning and their customers also effected for timely delivery of the ornaments. The CIT(A) adopted the rate of Rs. 140/- per gram against the average price paid to local smiths at Rs. 166/- per gram. While giving direction to AO, the Ld.CIT(A) did not consider the fact that the assessee is also collecting the making charges from customers and offered the same as income. Hence, considering the facts and merits of the case we are of the considered opinion that adopting the rate of Rs. 150/- per gr....
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....inadvertently. The Ld.AR further argued that the assessee is dealing in varieties of items and having huge turnover, only after reconciliation, the necessary entries of debit and credit were made in the ledger on 30.03.2015 and no payment was made to Veer Jewellers. Since the liability as well as the stock is declared in the assessee's books, there was no under assessment, and no bogus credit, hence, requested delete the addition and allow the appeal of the assessee. 11. On the other hand, the Ld.DR supported the orders of the lower authorities. 12. We have heard both the parties and perused the material placed on record. As per the assessment order, from the account copy of M/s Veer Jewellers, the AO found that the outstanding balance was at Rs. 1,46,292/- against the balance shown by the assessee amounting at Rs. 82,39,717/ and the difference was added to income. It was the case of the assessee that he had received the jewellery and made the entries in the books of accounts regarding the purchase of jewellery and taken to the stock. On return of jewellery, the assessee failed to make necessary entries immediately in the stock book as well as the creditors ledger hence there was....
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....ome. The AO found that the assessee has admitted agricultural income of Rs. 6,23,005/- and claimed the same as exempt. The assessee produced vouchers in respect of sale of tobacco which were self made vouchers. In the absence of evidence like adangal, expenses incurred for cultivation and the details of sales made, the AO rejected the exemption claimed by the assessee and taxed the entire agricultural income. 16. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) treated 50% of the receipts as agricultural income and directed the AO to tax the balance amount. 17. We have heard both the parties and perused the material placed on record. As per the Ld.CIT(A) order, the assessee owns 23.33 acres of agricultural land used for cultivation of tobacco. The assessee also produced VRO certificate and there is no dispute that the assessee has been using the land for agricultural purposes and cultivating tobacco. As per the order of the Ld.CIT(A), the income declared by the assessee for 23.33 acres was Rs. 6,23,005/- which works out to Rs. 26,704/- per acre which was on higher side. The CIT(A) held that the agricultural income may be reasonably....
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....n overdraft account @ 9.96% against the interest charged by the assessee @6%. Thus, the Ld.CIT(A) directed the AO to restrict the disallowance @4% of interest. Thereby, the Ld.CIT(A) scaled down disallowance of interest. 23. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. During the appeal hearing, the Ld.AR argued that the assessee is having substantial interest free funds from which the assessee had advanced the funds to M/s Usha Pictures and Financiers due to business exigencies and there is no case for disallowing the proportionate interest. Since the amounts are funded from interest free loans, the interest cannot be equated with the interest of unsecured loans. The Ld.AR further argued that the Ld.CIT(A) deleted the addition in the subsequent year on the similar facts, hence argued that there is no case for making the addition. 24. On the other hand, the Ld.DR relied on the order of the Ld.CIT(A). 25. We have heard both the parties and perused the material on record. The assessee has taken unsecured loan of Rs. 7,62,50,650/- and advanced an amount of Rs. 1.00crore to M/s Usha Pictures and Financiers and charged interest @6%. The assessee submitte....