TaxTMI 
TaxTMI 
2013 (11) TMI 1773
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.....T.A.No. 389/Jodh/2013. The only ground raised in this appeal reads as under:- "on the facts and in the present circumstances of the case, the learned CIT(A) has erred in deleting the trading addition of ₹ 23,02,170/- made by the AO by applying the provisions of section 145(3) of the I.T. Act despite the fact that Ld. CIT(A) has upheld the provisions of section 145(3) in the case of assessee and despite the fact that assessee has shown steep fall in recorded GP from 18.50% in preceding year to 5.40% in current (from usual business after excluding extraordinary items namely undisclosed investment in stock & cash) without any valid reasons and further erred in ignoring GP rate of 15.46% applied by the AO which is fully justified. Th....
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....was at 12.42%. The Assessing Officer also noticed certain other discrepancies and asked the assessee to explain the same. In response, the assessee reconciled the difference in purchase of raw materials and also explained the variation in ratio of per square meter cost of power charges. It was also stated that the closing stock did not include the value of stock surrendered in the income-tax survey because valuation on the stock was not considered for calculation of cost price of other closing stock. However, a reconciliation statement was furnished for the said discrepancies. The Assessing Officer was not satisfied with the explanation of the assessee and invoked the provisions of section 145(3) of the Act. The Assessing Officer was of the....
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....------ Total income proposed to be assessed. ₹ 37,16,584 or ₹ 37,16,580 ------------------- The above income is subject to allowance of deduction for depreciation and VAT and the final income proposed to be assessed is ₹ 39,56,150. 5. The assessee submitted that it had fully explained the reasons for variation between the ratios of expenses claimed to power charges per unit production, expenses on blades and segments consumed to production and ratio of freight to the costs of raw material purchases. It was also stated that the variation in rates were inherent in this business due to non-uniform quality of raw material being a natural product which varies from lot to lot. It was also stated that the goods purchased or....
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....d at 5.40% after excluding the income surrendered at the time of survey and the other trading addition was made by applying GP rate of 15.46% on undisclosed turnover estimated at ₹ 65,93,094/- on the basis of undisclosed stock of finished goods amounting to ₹ 10,44,032/- found during the course of survey. Learned CIT(A) was of the view that both the trading additions were not sustainable because the assessee had surrendered a sum of ₹ 23,25,036/-on account of excess marble blocks, excess stock of marble tiles and excess cash found during the course of survey and if the surrendered amount on account of excess marble stock and tiles was to be included in the GP declared, then the GP rate declared by the assessee came to 19.1....
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....itted and verified that the value of excess stock found during the course of survey had been surrendered and declared in the return by the assessee and tax on the same has been paid, therefore, the unexplained investment in the purchase of stock had been surrendered by the assessee, so, there was no reason for making any presumption that the assessee had effected turnover, out of the books of accounts and the profit had not been disclosed in the return. Accordingly, the said addition was also deleted. Now the department is in appeal. 8. Learned D.R. strongly supported the order of the Assessing Officer and reiterated the observations made in the assessment order dated 07/12/2010. 9. In his rival submissions, learned counsel for the assess....
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.... in the gross profit. 11. Similarly, the Assessing Officer made another trading addition on the basis of estimated turnover of ₹ 54,14,905/-, which was worked out by keeping in view the undisclosed stock of finished goods of ₹ 10,44,032/- however, nothing was brought on record to substantiate that the assessee in fact had effected a turnover of ₹ 54,94,905/- outside the books of accounts. In the present case, the Assessing Officer himself verified from the return of income that the value of excess stock found during the course of survey had been surrendered and due tax was paid on the same, therefore, investment made in the purchase of stock had already been surrendered by the assessee. In the instant case, no sale bill w....