DILIP KUMAR JAIN,RAMGANJMANDI vs. ASSISTANT COMMISSIONER , KOTA

per the Production Register (Stock Register) maintained by the assessee,

total stocks of Kota Stone comes to 11,78,109 Sq. Feet. Thus, the stock of

kota Stone measuring 1,07,427 Sq. Feet (1178109-1070682) was found

short in comparison to the production register maintained by the assessee

13 ITA No. 180/JP/2024 Dilip Kumar Jain vs. Assistant Commissioner as on 16.11.2017. Meanwhile, the assessee was asked to explain the

reason of short stock found in comparison of stock as per books, vide Q.

No. 14 of the statement recorded by the assessee on 07.03.2018. In reply,

thereto, the assessee had stated that after correcting some

clerical/mathematical error in both of stocks, the difference of stocks, which

found short in comparison to production register maintained by the

assessee comes to 45,930 Sq. Feet instead of 1,07,427 Sq. Feet.

Considering the average sale price of the material ld. AO made the addition

of Rs. 4,59,300 [ 45,930 * 10 ] as unaccounted sales of the assessee. The

assessee challenged the finding of the ld. AO before the ld. CIT(A). The ld.

CIT(A) has dismissed this ground on ground that the assessee could not

explain the difference of stock, when the stock has been carried out with

the presence of the assessee and also there is no mistake pointed out in

the method of measuring the stock. Before us the ld. AR of the assessee

submitted that the stock found in this case is short and not excess. Had it

been excess the amount can be added as unaccounted stock but herein

this case the same is found in short and therefore, only the profit portion

can be added based on the various decisions cited by the ld. AR of the

assessee wherein several courts taken a view that unaccounted sales

cannot be treated as income in total but only the the profit element on such

14 ITA No. 180/JP/2024 Dilip Kumar Jain vs. Assistant Commissioner unaccounted sales requires to be taxed. It is not under dispute that the

stock was found short against stock as per book position. In other words,

the stock was short out of accounted stock. This means that the accounted

purchases were affected as unaccounted sales. In such circumstances, it is

the element of profit on such sales which requires to be taxed and not the

entire sales. As it is evident that the sale price of the kota stone adopted

for valuation @ Rs. 10 and the profit in this type of business ranges

between 8 – 10%. In such circumstances, the net profit in the case of the

assessee at the best be added at Rs. 45,930/-, which alone could have

been brought to tax and not the entire sales of Rs. 4,59,300/-. We get

support of this view from the decision of Commissioner of Income Tax Vs.

Williamson Financial Services & Ors (SLP(C) 2275/2007 (Hon’ble Supreme

Court), Commissioner of Income Tax Vs. Balchand Ajitkumar 263 ITR 610

(2003) Hon’ble MP High Court, Commissioner of Income Tax Vs.

President Industries (2002) 258 ITR 0654 – Hon’ble Gujrat High Court and

others. The ld. AR of the assesses submitted in the written submission that

the learned Assessing Officer had also made addition of Rs. 69,575/- with

reference to sales found noted in certain loose papers. This addition has

been reduced to Rs. 30,876/- by the Learned CIT(A) as per para 4.6 of the

appellate order. The addition is also on account of and with reference to

15 ITA No. 180/JP/2024 Dilip Kumar Jain vs. Assistant Commissioner sales found noted on slips which were not accounted for. In fact, while

passing the assessment order, it was incumbent up on the Learned

Assessing Officer to have given set-off of this unaccounted sales against

stock found short. Both these are co-related. The stock was found short as

the same was sold unaccounted. In other words, unaccounted sales as

upheld by the Learned CIT(A) to the extent of Rs. 30,876/- are relatable to

shortage of stock on account of which addition of Rs. 45,930/- worked out

as discussed above. Considering the addition already sustained on

account of unaccounted sales of Rs. 30,876/- by the ld. CIT(A) the net

addition now requires to be upheld works out to Rs.15054/- (45930 –

30876). In the light of this discussion addition sustained by the Learned

CIT(A) for an addition of Rs. 4,59,300/- requires to be reduced to Rs.

15054/-. In the light of the discussion so recorded the ground no. 1 raised

by the assessee is allowed.

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

Order pronounced in the open court on 22/04/2024.

16 ITA No. 180/JP/2024 Dilip Kumar Jain vs. Assistant Commissioner Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 22/04/2024 *Ganesh Kumar, PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Dilip Kumar Jain, Ramganjmandi izR;FkhZ@ The Respondent- Assistant Commissioner, Kota 2. vk;dj vk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 180/JP/2024) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत