Value Attributed to as Non-updated Stock Amounts to Taxation: ITAT partly sustains Order of AO [Read Order]

The Chennai bench of the Income Tax Appellate Tribunal (ITAT) held that the value attributed to non-updated stocks amounts to taxation.

The Assessee, MRS Jewellery is a partnership firm having two partners and is engaged in the retail business of gold and silver jewellery. The assessee submitted its income tax return in accordance with section 139(1) of the Income Tax Act, declaring a total income of Rs. 1,19,25,480/-. Subsequently, a survey operation was conducted under Section 133A of the Income Tax Act at the assessee's business premises.

During the course of the survey operation, excess stock of gold jewellery weighing 11138.89 grams. and silver articles weighing 52815 grams. was found by the survey team against the book stock of gold of 6448.356 grams. and 21715.88 grams. of silver articles. Thereafter, the case of the assessee was selected for scrutiny.

The assessee made the submission before the Assessing officer (AO) that they had purchased old gold and silver through bought notes and the same were valued by adopting the market price. The said bought note purchases of gold and silver have more impurities and that is why it was bought at a lower price than the prevailing market rate.

The assessee computed the value of the excess stock of gold at Rs. 1,14,86,414/- and silver at Rs. 8,91,202/- totalling in all Rs. 1,23,77,613/- and was offered the same in the income tax return filed.

The assessing officer did not accept the submission of the assessee and brought to tax the value of excess gold jewellery at Rs. 1,50,65,130/- and the difference amount of Rs. 26,87,517/- has been added to the total income of the assessee.

The assessee by a written submission claimed that the only issue involved is the alleged value attributed to actual book stock admitted as non-updated stock and offered to tax on the date of the survey.

Manjunatha G (Accountant Member) and Manmohan Das (Judicial Member), who form the two-member bench, believed that providing 50% relief to the assessee would serve the purpose of justice, and both parties involved have no objections to this proposal.

The relief was raised from 25% to 50% and the assessing officer was directed to reduce the addition by Rs. 13,43,700/- from the addition made of Rs. 26,87,517/-. The addition to the extent of Rs. 13,43,517/- is sustained. Thus, the appeal of the assessee is partly allowed.

To Read the full text of the Order CLICK HERE

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