TaxTMI 
TaxTMI 
2019 (11) TMI 912
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....1. 2. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in partially confirming the action of the Ld. AO in estimating the sales by Rs. 2, 51, 13, 019/- on account of unaccounted credit sales. 3. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in confirming the gross profit rate of 20% instead of actual gross profit rate of 18.96% as shown by the assessee on the total sales declared by the assessee and also on unaccounted credit sales added by the Ld. AO totalling to Rs. 7, 10, 24, 538/-. 6. On the facts and circumstances of the appellant's case and under the law, the Ld. CIT(A) has erred in confirming the addition of Rs. 50, 00, 000/- on account of "Seed Capital". 7. On the facts and circumstances of the appellant's case and under the law, the Ld. AO and Ld. CIT(A) has erred in making addition of unaccounted sales, gross profit and seed capital by completely ignoring the fact that income of Rs. 2, 19, 47, 722/- was offered for tax in computation of total income in pursuant to survey, that resulting into double taxation. 8. On the facts and circumstance....
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.... 892. The balance amount of Rs. 62, 95, 108 was added to the income of the assessee. Aggrieved, assessee carried the matter in appeal before the CIT(A) but without much success. While learned CIT(A) did delete the gross profit in respect of estimated cash sales of Rs. 39, 75, 462, which worked out to Rs. 7, 95, 092, he confirmed the remaining addition. Learned CIT(A) also observed that "the contention of the appellant that he has already offered Rs. 2, 19, 47, 722 as un disclosed income, and, therefore, the GP addition is not warranted as it will amount to addition on both account, i.e. application of funds and income, is not tenable". It was observed that "the AO has made GP addition on unaccounted sales only however addition on account of investment in corresponding purchase has not been made" Learned CIT(A) further observed that "the appellant has given disclosure in application of money which has not accounted for investment and GP element, and, therefore, the AO is justified in making addition on account of undisclosed GP". The main plea of the assessee thus stood rejected. The assessee is not satisfied and is in further appeal before us. 4. We have heard the rival contentio....
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....r his observations, as extracted earlier in this order, to the effect that "the AO has made GP addition on unaccounted sales only however addition on account of investment in corresponding purchase has not been made" and that "the appellant has given disclosure in application of money which has not accounted for investment and GP element, and, therefore, the AO is justified in making addition on account of undisclosed GP", overlooks the fact that overall addition made on account of profit in unaccounted sales and seed capital in unaccounted sales is much more than the unaccounted sales itself. As demonstrated in the chart above, the amount offered to tax by the assessee on the basis of application theory is far in excess of amounts on the basis of income theory. Given this factual scenario, in our considered view, the stand of the CIT(A) was clearly unsustainable in law. 7. We find that the addition made in the present case is in respect of the unaccounted sales are far in excess of the actual sales made by the assessee. In the working shown above, the profit is estimated at 25% and yet the seed capital is taken at 80%. Obviously, when the profit rate is 25%, the cost of goods, a....
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.... Jangad Stock 11. So far as this ground of appeal is concerned, the relevant material facts are like this. The assessee had offered excess stock of gold of 9, 442.147 gms having value of Rs. 1, 66, 55, 947. On verification of the details, however, the Assessing Officer noted that the assessee had claimed gold of 8, 740 gms as opening stock of 'jangad' basis and jangad inward of 402.56 gms from Kalindi Jewellers on 5.10.2010. It was also noted that the assessee had claimed that personal jewellery of assessee's wife, weighing 3, 140 gms, was also included in the jewellery found at business premises. In response to the questions from the Assessing Officer, the assessee explained at length the justification for these items. The Assessing Officer, however, rejected the claim of 8, 740 gms of jangad stock received from Mohanlal Vanmalidas on the ground that the related inward vouchers for the jangad stock were not found during the course of the survey and that confirmatory letters, in respect of the same, were also rejected as they were not noticed during the survey. As regards the explanation of the assessee that the jangad stock was all along shown in the stocks even in earlier years....
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....book. These documents were duly filed before the Assessing Officer as well. We have also noted that the stand of the assessee that the Jangad Stock Register, supported by the confirmatory letters, was available at the time of survey but obviously it cannot be for the assessee to decided as to which records should be impounded by the survey team. In any case, the jangad stock was duly reflected in the tax audit reports. The Assessing Officer's objection that this audit report cannot be accepted as it does not deal with similar observations on the opening stock, overlooks the elementary position that the comments are required only with respect to the closing stock and the opening stock, for that purpose, is wholly irrelevant. In any event, opening stock pertains to what has been shown as closing stock of the preceding year and the audit examination is done at that stage. Once there is a specific disclosure in the audit report, that audit report cannot be rejected on the ground that it does not deal with the opening stock. The fact that the report was unsigned does indeed seem to be an inadvertent error and the same chartered accountant was the authorised representative of the assesse....
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....wellers for Jangad jewellery of 402.56 gms was available at the time of survey. The inward of such jewellery was also recorded in the Jangad stock register. Yet, the Assessing Officer has not accepted the same. As he did so, he did not call for further enquiries either We have also noted that the jangad gold jewellery of 402 .56 gms received from Kalindi jewellers were later on purchased by Invoice No . 114 dated 1 .12 .2010 and entire amount of the said bill was paid through banking channel. The said purchase of gold is duly reflected on 17 .12 .2010 in the purchase register at Page No .173 of PB. However, the Assessing Officer has, without verifying purchase register available on record and invoices thereof produced during the assessment proceedings, has made addition of the value of 402.56 gms on account of jangad jewellery in the name of Kalindi Jewellers. In the light of these discussions, the addition in respect of 402.56 gms of jangad stock received from Kalaindi Jewellers cannot be sustained either. In view of these discussions, as also bearing in mind entirety of the case, the entire addition of Rs. 1, 90, 21, 318 in respect of jangad stock must stand deleted. We, therefor....