SUMERMAL PUKHRAJ SHANKLESHA,KALYAN vs. ITO 3(4), MUMBAI

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ITA 7563/MUM/2016Status: DisposedITAT Mumbai29 August 2017AY 2011-123 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the matter to the file of the Assessing Officer to decide the issue afresh. This was based on the assessee's submission that the issue was covered by a previous tribunal decision and the revenue's no objection.

What were the facts?

The assessee, a dealer in gold and silver ornaments, had their income assessed under section 143(3) read with section 147. The Assessing Officer made an addition of Rs. 28,07,892/- on account of undervaluation of closing stock.

What were the issues?

The primary issue was the correctness of the addition made by the Assessing Officer on account of the undervaluation of closing stock. The assessee argued for a fresh assessment based on a precedent.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI D.T. GARASIA

For Appellant: Shri Ajay R. Singh, A.R
Hearing: 31.07.2017Pronounced: 29.08.2017

Per D.T. Garasia, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 21.09.2016 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2011-12.

2.

The short facts of the case are that assessee is in business of gold and silver ornaments. The assessee is doing business of sales and purchase of gold and silver and from the information filed not a single bill of sales and purchases are from any bogus dealer or from any non genuine dealer. The Assessing Officer (hereinafter referred to as the AO) has verified the books of accounts and found that return of income was filed on 28.09.2012. The AO has processed the return under section 143(3) read with section 147 and made the addition on account of recasting trade of Rs.28,07,892/-. The AO has 2 M/s. Sumermal Pukhraj Shanklesha verified the closing and opening stock of the assessee and AO has made the addition on account of undervaluation of closing stock by observing as under: “14. In view of these facts the AO re-computed the value of closing stock as under – Description Quantity of gold in Value in Rs. Average rate per grams gram of gold Opening stock 8643.000 95,93,730 Rs. 1100 Purchase during 7515.200 1,31,11,310 Rs. 1745 the year Total 16158.200 2,27,05,040 Rs. 1405.17 Quantity sold 7056.600 99,15,732 Rs. 1405.17 Closing Stock 9101.600 1,27,89,308 Rs. 1405.17

15.

The AO thereafter re-casted the Trading and Profit & Loss account of the appellant and made the addition of Rs.28,07,892/- to the appellant's income as under- Value I cost Particular Quantity Value / Particular Quantity in grams cost in grams Opening 8643.000 95,93,730 Sales 7056.600 1,48,17,896

Purchase 7515.200 1,31,11,310 Closing Stock 9101.600 1,27,89,308

Gross 16158.200 49,02,164 16158.200 Profit

The actual profit as per re-casted valuation of closing stock Rs. 49,02,164 Less: The assessee has shown profit at Rs. 20,94,272

Difference in gross profit shown Rs.28,07,892”

3.

The show cause notice was given and after reworking of opening and closing stock the Ld. CIT(A) has reworked the addition by calculating the same as under: Particulars Rs. Particulars Rs. To Opening 95,93,730/- By Sales 1,48,17,896/- Stock To Purchases 1,31,11,310/- By Closing Stock 1,13,22,390/- To Gross Profit 34,35,246/- 2,61,40,286/- 2,61,40,286/- According to the appellant even by this method the addition works out to Rs.14,66,378/- only.”

3 M/s. Sumermal Pukhraj Shanklesha 4. The assessee is in appeal before me. During the course of hearing, the Ld. A.R. submitted that the issue in controversy is covered by the decision of Tribunal in the case of ITO vs. Kasturi Construction (2012) 54 SOT 384. The Ld. A.R. submitted that issue may be restored to the file of AO to decide it afresh.

5.

Ld. D.R. has no objection.

6.

I, therefore, restore the matter back to the file of AO to decide it afresh as per the decision.

7.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 29.08.2017.

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