AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2013 (11) TMI 1773
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce. 2. First we will deal with I.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 Rs. 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% appl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar i.e. A.Y. 2007-08, wherein it was 18.50% and also in the assessment year 2006-07 wherein it 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 ass....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d during the course of survey to be added back as income from other sources. Rs. 23,25,679 ------------------- Total income proposed to be assessed. Rs. 37,16,584 or Rs. 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 Rs. 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 w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ficer made two trading additions i.e. one by application of average GP rate of 15.46% on disclosed turnover of Rs. 1,44,33,511/- as against the GP rate declared 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 Rs. 65,93,094/- on the basis of undisclosed stock of finished goods amounting to Rs. 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 Rs. 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 surrender....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earned profit on such turnover, which had not been declared in the return. Learned CIT(A) further observed that the Assessing Officer admitted 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by considering the GP declared by the assessee at 5.40% instead of 19.11%, which was the actual GP rate after including the surrendered income in the gross profit. 11. Similarly, the Assessing Officer made another trading addition on the basis of estimated turnover of Rs. 54,14,905/-, which was worked out by keeping in view the undisclosed stock of finished goods of Rs. 10,44,032/- however, nothing was brought on record to substantiate that the assessee in fact had effected a turnover of Rs. 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, ....