TaxTMI 
TaxTMI 
1982 (6) TMI 91
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....the assessee has declared sales of Rs. 6,29, 836 with a gross profit of Rs. 3,01,200. This gave GP rate of 47.8 per cent. 4. The assessee had shown the value of stock as on 31st March, 1974 at Rs. 5,65,701.36. The ITO required the assessee to give further details along with the value of the items in stock. The assessee filed accordingly another stock inventory for stock as on 31st March, 1974. In his impugned order, the ITO has marked the first inventory as 'A' and the second inventory as "B". On comparison of these two inventories, the ITO came to the conclusion that there was under-statement and under-valuation of the closing stock. According him, the total addition that was called for on account of under-statement and under-valuation of the closing stock was to the tune of Rs. 80,864. This has been worked out by him in the assessment order itself by recasting the trading account. This gave GP rate of 60 per cent which, according to him, was normal in the line of the assessee's business as compared tot he past history of the case. The assessee felt aggrieved, inter alia, on this account and went in appeal before the AAC. 5. The AAC heard the parties and considered the reaso....
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....l stage it had merely estimated the stock. Taking us through the order of the ITO the ld. Deptl. Rep. Endeavoured to show how the ITO had itemwise found out the under-valuation or under-statement in taking the value of the closing stock for the year under appeal. It was contended that 60 per cent GP rate was normal rate in the line of the business of the assessee and, therefore, the recast trading account brought out the factual position. The addition was, therefore, fully justified. It was contended that the assessee had merely shown GP rate of 47.8 per cent which should have fact been about 60 per cent. The addition was fully justified and the AAC erred in deleting the addition as he did. 7. In particular, the order of the AAC was questioned on account of reduction or deletion allowed by her by reference to the voluntary disclosure made by the assessee. The revenue contended that from papers 18 an d19 of its paper book, it would be clear that the assessee in his capital account had shown purchase of Govt. Securities on 22nd Jan., 1975 for an amount of Rs. 2,500 and has also credited a sum of Rs. 20,500 on 23rd December, 1975 with the result that the cash which the assessee had....
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.... of the assessee's paper book to arrive at the addition of Rs. 80,864. With reference to this working, he contended that the ITO could have admitted the valuation given in either inventory 'A' or 'B'. However, he could not have adopted both the inventories to pitch up the value of stock on arbitrary grounds. 10. The ld. counsel for the assessee also made a point that even in so doing the ITO erred in applying the sale rates to the items of stock. It was submitted that the sale rates were in fact higher than the rates actually applied by the assessee on unpolished stock. This basis was adopted by the assessee regularly from the earlier assessment years, in any case from 1971-72 assessment onward and there was no case for making a departure therefrom. The ld. Counsel for the assessee submitted that if the proper valuation on the method adopted by the assessee is done, the addition of Rs. 60,712 goes without any argument. 11. The ld. counsel for the assessee further submitted that the balance of the addition of Rs. 20,152 which is on account of understatement, can be said to be covered by the declaration made by the assessee on 23rd December, 1975. In this regard, he referred to....
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.... the rival submissions, we are not in a position to find any reason as a justification for an interference in the order of the AAC. The ITO worked out the addition of Rs. 80,864 as under: Name of items Quantity in gross Addn. Made by ITO Total As per inventory 'A' As per inventory 'B' adopted by the ITO Diffe-rence on a/c of under state-ment On a/c of under valuation . . (i) (ii) (iii) (iv) (i) (ii) (iii) Balance stock 19875 15875 19875 4000 8000 15875 23875 Keyless stems 17113 16113 (16113+1298) 17411 1298 5192 40283 (on the basis of sale rate in Jan.1974) 45475 Yoke Springs 1300 1050 1300 250 4125 1575 5700 S.L.S. 105 Nil 105 105 2835 — 2835 Click Springs 1050 1285 1285 235 — 1928 1928 Miscellaneous — — — — + 1051 1051 . . . . 20152 60172 80864 14. A glance at the tabulated data above, shows that what the learned counsel of the assessee contended that the ITO picked and chose items at will to enhance the value from either inven....