THE GANPATI GEMS & ARTS, Jaipur V. ACIT, Jaipur

ITA 196/JPR/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74889 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 28-10-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Keywords: Rejection of books of accounts; Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JAIPUR BENCH : JAIPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 196/JP/2011 (A.Y. 2005-06) M/S. THE GANPATI GEMS & ARTS, VS. ACIT, CENTRAL C IRCLE-1, LS-1, GANPATI PLAZA, JAIPUR. M.I. ROAD, JAIPUR. PAN NO. AAAFT 7577 K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANISH AGARWAL DEPARTMENT BY : SHRI D.C. SHARMA - D.R. DATE OF HEARING : 23/01/2014. DATE OF PRONOUNCEMENT : 13/03/2014. O R D E R PER N.K. SAINI, A.M THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDE R DATED 03/02/2012 OF LD. CIT (A) CENTRAL, JAIPUR. THE FOL LOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE APPLICATION OF PROVI SIONS OF SECTION 145(3) BY REJECTING THE BOOKS OF ACCOUNTS MAINTAINE D IN THE REGULAR COURSE OF BUSINESS WITHOUT APPRECIATING THE FACT OF CONSISTENCY IN METHOD OF ACCOUNTING FOLLOWED REGULARLY AND WITHOUT APPRECIATING THE 2 SUBMISSION MADE AND RECORDS PRODUCED, THUS THE ACTI ON OF LD. CIT(A) DESERVES TO BE HOLD BAD IN LAW AND TRADING RESULTS DECLARED DESERVES TO BE ACCEPTED. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN APPLYING THE GROSS PROFIT RATE OF 29.36% A RBITRARILY AND THEREBY MAKING ADDITION OF RS. 3,32,806/- ON ASSUMPTIONS AN D PRESUMPTIONS THUS THE TRADING ADDITION OF RS. 3,32,806/- AS UPHO LD BY LD. CIT(A) DESERVES TO BE DELETED. 2.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN UPHOL DING THE ADDITION THOUGH HE HIMSELF IN PARA 5.0 HAS ADMITTED THAT THE ACTION OF LD. AO OF TAKING AVERAGE COST OF DIFFERENT QUALITY OF GOLD ORNAMENTS IS WRONG, THUS THE RESULTANT ADDITION OF RS. 3,32,806/- BASED ON WRONG APPLICATION OF FACTS DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT(A) HAS ERRED IN ADOPTING G.P. @ 32.54% FOR GOLD ORNAMENTS MANUFACTURED ARBITRARILY AND ACCORDINGLY WORKED OUT THE ADDITION AT RS. 3,21,257/- (THOUGH NO SEPARATE ADDITION IS MADE) WITHOUT APPRE CIATED THE SUBMISSIONS MADE, THUS THE RESULTANT ADDITION OF RS . 3,21,257/- DESERVES TO BE DELETED. 3.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN TAKI NG CONTRARY APPROACH AS HE HIMSELF ADMITTED THAT THE BASIS TAKEN BY LD. AO IS INCORRECT HOWEVER, HAS UPHOLD THE ADDITION OF RS. 3,21,257/-, THUS TH E SAME DESERVES TO BE DELETED. 4. THAT THE APPELLANT CRAVES THE RIGHT TO ADD, DELETE, AMEND OR ABANDON ANY OF THE GROUNDS OF THIS APPEAL AT THE TIME OR BE FORE THE ACTUAL HEARING OF THE CASE. 2 THE ONLY GRIEVANCE OF THE ASSESSEE IN THIS APPEAL RELATES TO THE REJECTION OF BOOKS OF ACCOUNTS BY INVOKING THE PROV ISIONS OF SECTION 145(3) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) AND 3 MAKING THE TRADING ADDITION OF RS. 3,32,806/- BY AP PLYING GP RATE OF 29.36%. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE DEALS IN GOLD ORNAMENTS, GEMS AND JEWELLERY HAVING EXPORT AS WELL AS LOCAL SALES. THE ASSESSEE FILED RETURN OF INCOME ON 07/10/2005 DECLA RING AN INCOME OF RS. 4,77,108/-. LATER ON, CASE WAS SELECTED FOR SC RUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTICED VARIOUS DISCREPANCIES IN THE MAINTENANCE OF BOOKS OF ACCOUN TS AND ALSO NOTED THAT IN THE SALES VOUCHERS, THERE WAS NO MENTION OF QUALITY OF ITEMS. ON THE BASIS OF DETAILS FURNISHED BY THE ASSESSEE REGA RDING OPENING STOCK, PURCHASE, SALES AND CLOSING STOCK OF 18CT., 22CT., 23CT. AND 24CT. GOLD ORNAMENTS SEPARATELY, THE ASSESSING OFFICER NOTICED THAT AVERAGE RATE TAKEN IN THE CLOSING STOCK IN RESPECT OF 18CT. 22CT . &23CT. GOLD ORNAMENTS WAS LESS THAN THE AVERAGE RATE TAKEN IN T HE OPENING STOCK, AS PER THE CHART GIVEN BY THE ASSESSING OFFICER AT PAG E 4 OF THE ASSESSMENT ORDER. THE ASSESSEE CLAIMED THAT IT WAS VALUING TH E STOCK ON APPROXIMATE COST PRICE, BUT THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE BY OBSERVING THAT THE PURCHASE PRICE OF TH E VARIOUS GOLD ORNAMENTS AVAILABLE IN THE CLOSING STOCK WAS NOT ME NTIONED. ON THE BASIS 4 OF AVERAGE COST METHOD, THE ASSESSING OFFICER OPINE D THE UNDER VALUATION OF CLOSING STOCK OF 18CT. 22CT. AND 23CT. GOLD JEWE LLERY. THE ASSESSING OFFICER REJECTED THE BOOKS RESULTS AND THEREAFTER P ROCEEDED TO WORK OUT THE INCOME OF THE ASSESSEE. THE ASSESSING OFFICER FIRSTLY DETERMINED THE COST OF JEWELLERY OTHER THAN THE JEWELLERY PURCHASE D AS FOLLOWS:- 1. TOTAL VALUE OF OPENING STOCK + PURCHASE + WAGES RS. 2,07,08,202/- 2. LESS: VALUE OF JEWELLERY PURCHASED RS. 19 ,18,009/- RS. 1,87,90,193/- 3. LESS: CLOSING STOCK RS. 1,42,50,076/- COST OF OTHER THAN PURCHASED JEWELLERY RS. 45 ,40,117/- THE ASSESSING OFFICER OBSERVED THAT WHILE CONVERTIN G PURE GOLD INTO 18CT. GOLD JEWELLERY, 100 GMS PURE GOLD WOULD YIELD 133.33 GMS 18CT. GOLD BY ADDING THE ALLOY AND THE SAID JEWELLERY WAS SOLD AT THE PREVAILING RATE OF THE GOLD JEWELLERY, THUS THERE WOULD BE GROSS PR OFIT AT THE RATE OF 33.33%. THE ASSESSING OFFICER FURTHER OBSERVED THA T STUDDED PRECIOUS AND SEMI PRECIOUS STONES FURTHER ADD TO THE WEIGHT AND THE STUDDED JEWELLERY WAS COSTLIER THAN THE OTHER JEWELLERY. THE ASSESSI NG OFFICER, ACCORDINGLY, INCREASED HIS ESTIMATION OF G.P. TO 43% IN RESPECT OF 18CT. GOLD ORNAMENTS, BUT CONSIDERING THAT JEWELLERY OF OTHER PURITY WAS ALSO SOLD BY THE ASSESSEE. HE FINALLY APPLIED G.P. RATE OF 37% ON ENTIRE MANUFACTURED JEWELLERY AND WORKED OUT THE ADDITION IN THE FOLLOW ING MANNER:- 5 SALE OF JEWELLERY OTHER THAN THE PURCHASED JEWELL ERY SALES = 4500117 X 100 = 7206534/- 100 37 SALES RECORDED IN THE BOOKS OF ACCOUNTS TOTAL SALES RS. 88,75,419/- LESS :- SALE VALUE OF PURCHASED JEWELLERY RS. 24,60,577/- SALE VALUE OF JEWELLERY OF OTHER THAN PURCHASED JEWELLERY RS. 64,04,842/- EXTRA SALES IN RESPECT OF JEWELLERY OTHER THAN PURC HASED JEWELLERY ARE EXTRA SALES = RS. 72,06,534/- - RS. 64,04,482/- = RS. 8,01,692/- THE ASSESSING OFFICER AGAIN REWORKED THE VALUE OF CLOSING STOCK BY TAKING AVERAGE COST PRICE AT RS. 526.51 PER GM. WHI CH INCLUDED GOLD AS WELL AS GOLD ORNAMENT IN THE FOLLOWING MANNER:- THIS AMOUNT OF EXTRA SALES IS ADDED TO THE INCOME OF THE ASSESSEE. IT TAKES CARE OF UNDER VALUATION OF CLOSING STOCK WORKOUT AT RS. 704950/- AFTER REDUCING THE PURCHASE AND SALE VALUE OF PURCHASED J EWELLERY FROM RESPECTIVE TOTAL OPENING STOCK WEIGHT VALUE 36870.908 20708202 LESS PURCHASE 1183.240 1918009 35687.668 18790193 AVERAGE COST PRICE @ RS. 526.51 PER GM. AT THIS RATE VALUE OF CLOSING STOCK WOULD BE 6 1. 28403.648 X 526.51 = 14955026 2. VALUE OF CLOSING STOCK AS PER BOOKS OF A/C = 14 250076 704950 FINALLY, THE ASSESSING OFFICER AFTER CONSIDERING T HE EXTRA SALES, OBSERVED THAT THE G.P. RATE OF 33.26% WAS MOST APPR OPRIATE AND REASONABLE. THE RELEVANT OBSERVATIONS OF THE ASSES SING OFFICER AT PAGE 10 OF THE ASSESSMENT ORDER WAS AS UNDER:- IN THIS WAY ON TOTAL SALES OF RS. 96,77,111/- (SA LES AS PER BOOKS RS. 8875419/- + 801692/- EXTRA SALES GROSS PROFIT SO AR RIVED AT RS. 3218985/- (RS. 2417293/- - G.P. AS PER TRADING A/C + RS. 8016 92/-) I.E. 33.26% IS CONSIDERED THE MOST APPROPRIATE AND REASONABLE. ACCORDINGLY, ADDITION OF RS. 8,01,692/- WAS MADE. 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) AND SUBMITTED THAT THE BOOKS OF ACCOUNTS WERE DULY AUDITED AND NO ADVERSE COMMENTS WAS MADE BY THE AUDITORS. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER HIMSELF MENTIONED THAT MOST O F THE SALES RELATING TO JEWELLERY OF 18CT. GOLD STUDDED WITH PRECIOUS AND S EMI PRECIOUS STONES WHEREAS THE ASSESSING OFFICER HAD APPLIED FINALLY, G.P. OF 37% ON ALL THE MANUFACTURED JEWELLERY AND EVEN AS PER THE ASSESSIN G OFFICERS VERSION, THE G.P. RATE OF 37% IF APPLIED TO 18CT. GOLD JEWEL LERY, THE EXTRA SALES WOULD COME TO RS. 2,31,208/- AND NOT AT RS. 8,01,69 2/- TAKEN BY THE ASSESSING OFFICER. AS REGARDS UNDER VALUATION OF C LOSING STOCK, IT WAS 7 STATED THAT THE ASSESSING OFFICER FAILED TO APPRECI ATE THE VERY BASIC AND GLARING FACT THAT THE STOCK IS DIPPING WHICH WOULD MEAN THAT THE AVERAGE RATE OF CLOSING STOCK WOULD BE LESS THAN THE AVERAG E RATE OF OPENING STOCK. IT WAS FURTHER STATED THAT THE ASSESSEE WAS VALUING HIS STOCK AT APPROXIMATE COST METHOD WHICH COULD NOT BE DIRECTLY EQUATED WITH AVERAGE RATE. IT WAS FURTHER STATED THAT THE DIFFE RENT ORNAMENTS ARE HAVING DIFFERENT DESIGNS & PATTERNS AND THE SALE OF THOSE ORNAMENTS DEPENDS ON CHOICE OF THE CUSTOMER, THE SAME WAS NOT AT ALL IN THE HANDS OF ASSESSEE. THEREFORE, NO STRICT METHOD EITHER FI FO OR LIFO COULD BE APPLIED AND THERE WAS NO UNDER VALUATION OF THE STO CK. IT WAS FURTHER STATED THAT THE ASSESSING OFFICER WHILE TAKING AVER AGE COST PRICE, HAD CLUBBED THE GOLD ALONG WITH THE GOLD ORNAMENTS AND THESE TWO ITEMS ARE HAVING WIDELY DIFFERENT RATES. THEREFORE, THERE WA S NO UNDER VALUATION OF THE STOCK. IT WAS ALSO STATED THAT THE ASSESSMENT FOR THE A.YS. 2003-04 & 2004-05 WERE COMPLETED UNDER SECTION 143(3) OF THE ACT AND FINALLY AFTER THE ORDER OF THE ITAT, THE TRADING RESULT OF THE AS SESSEE AND CONSEQUENT INCOME WAS ACCEPTED. 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSI ONS OF THE ASSESSEE, OBSERVED THAT THE UNDER VALUATION OF THE CLOSING STOCK DETERMINED BY THE ASSESSING OFFICER AT RS. 7,04,950 /- WAS SUFFERING FROM 8 BASIC DEFECT THAT WHILE WORKING OUT THE AVERAGE COS T PRICE, GOLD AS WELL AS GOLD JEWELLERY HAD BEEN TAKEN TOGETHER, WHICH AR E HAVING WIDE VARIATION IN THE RATE. THE LD. CIT(A) POINTED OUT THAT AT PAGE NOS. 6 & 7 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER TRIE D TO WORK OUT THE UNDER VALUATION OF CLOSING STOCK IN DIFFERENT CATEGORY OF GOLD JEWELLERY I.E. 18CT. 22CT. AND 23CT. WHICH COMES TO DIFFERENT FIGURE OF RS. 5,99,268/-. THE LD. CIT(A) AGREED WITH THE ARGUMENTS OF THE ASSESSE E THAT THE SAID FIGURE OF UNDER VALUATION WAS NOT CORRECT BECAUSE IT HAD B EEN TAKEN ON INCORRECTLY ESTIMATED AVERAGE COST OF DIFFERENT QUA LITY OF GOLD ORNAMENTS. AT THE SAME TIME, THE LD. CIT(A) OBSERVED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE SUFFERED FROM DEFECTS, THEREFORE, THE TRADING RESULTS SHOWN BY THE ASSESSEE BEING NOT SUBJECT TO VERIFICATION A ND BEING FULL OF DEFICIENCY AND DEFECTS HAD BEEN RIGHTLY REJECTED BY THE ASSESSING OFFICER. AS REGARDS WORKING OF EXTRA SALES DONE BY THE ASSES SING OFFICER, THE LD. CIT(A) OBSERVED THAT THE ARGUMENT OF THE ASSESSEE T HAT THE ASSESSING OFFICER HAD WORKED OUT THE G.P. RATE OF 37% FOR 18C T MANUFACTURED GOLD ORNAMENT AND BY TAKING THE SAME BASIS, THE ADDITION WOULD GET AUTOMATICALLY REDUCED TO RS. 2,31,208/-, WAS INCORR ECT. HE POINTED OUT THAT WHILE ESTIMATING THE G.P. RATE, THE ASSESSING OFFICER FIRST STARTED WITH 18CT. GOLD ORNAMENT BY TAKING 33.3% AND CONSID ERING THE STUDDED 9 JEWELLERY BEING COSTLIER AND WEIGHT OF PRECIOUS AND SEMI PRECIOUS STONES BEING COUNTED ALONG WITH GOLD, THE ASSESSING OFFICE R ESTIMATED THE G.P. FOR 18CT. MANUFACTURED GOLD ORNAMENT AT 43%. HOWEV ER, CONSIDERING THAT JEWELLERY OF OTHER PURITY WAS ALSO SOLD BY THE ASSE SSEE, HE FINALLY REDUCED THE G.P. RATE @ 37% FOR ALL MANUFACTURED GOLD ORNAM ENTS OF DIFFERENT PURITIES. THE LD. CIT(A) OBSERVED THAT THE ASSESSI NG OFFICER HAD TAKEN INCORRECT BASIS FOR ESTIMATING THE G.P. FOR MANUFAC TURED GOODS, HE ALSO POINTED OUT THAT THE 18CT. GOLD ORNAMENT SURELY WAS NOT SOLD AT THE RATE OF 24CT. GOLD. THEREFORE, THE ASSESSING OFFICERS BASIS OF 18CT. GOLD JEWELLERY DIRECTLY GIVEN G.P. OF 33.33% WAS NOT COR RECT AND WILL CERTAINLY BE LOWER. LD. CIT(A) CONSIDERED IT FAIR AND REASON ABLE TO TAKE G.P. RATE AT 32.5% INSTEAD OF 37% TAKEN BY THE ASSESSING OFFI CER AND WORKED OUT NET ADDITION ON THE BASIS OF SALE VALUE OF MANUFACTURED JEWELLERY HAVING COST AT RS. 45,40,117/- TAKEN BY THE ASSESSING OFFICER A S UNDER:- RS. 45,40,117/- X 100 = RS. 67,26,099/- 100-32.5 SALE VALUE OF THE JEWELLERY AS PER BOOKS AS TAKEN BY THE A.O. AT RS. 64,04,842/- NET ADDITION RS. 3,21,257/- THE LD. CIT(A) POINTED OUT THAT THE COMPARATIVE CH ART OF THE G.P OF THE OVERALL BUSINESS OF THE ASSESSEE GIVEN IN THE A .Y. 2003-04 REVEALED 10 THAT THE GROSS PROFIT RATE WAS AT 29.36% ON THE TUR NOVER OF RS. 83,77,606/- WHEREAS IN THE YEAR UNDER CONSIDERA TION, THE G.P. RATE WAS SHOWN AT 26.12% ON THE TURNOVER OF RS. 1,02,86, 319/-. HE ALSO POINTED OUT THAT THE ITAT HAS UPHELD THE REJECTION OF BOOK RESULTS IN THE ASSESSEES CASE FOR THE A.Y. 2004-05, THEREFORE, TH E G.P. RATE OF 27.91% FOR THE A.Y. 2004-05 COULD NOT BE TAKEN AS BASIS. THE LD. CIT(A) OBSERVED THAT BY APPLYING THE G.P. RATE OF 29.36% DURING THE YEAR, THE GROSS PROFIT WOULD COME TO RS. 30,20,063/- AND ADDITION WOULD CO ME TO RS. 3,32,806/- WHICH WAS MORE THAN THE NET ADDITION SO SUSTAINED AT RS. 3,21,257/-. THE LD. CIT(A), THEREFORE, FINALLY SUS TAINED THE ADDITION OF RS. 3,32,806/-. NOW THE ASSESSEE IS IN APPEAL. 6 . THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMI TTED THAT THE ASSESSEE MAINTAINED COMPLETE BOOKS OF ACCOUNTS AND THE SALE RATES WERE CHARGED ON THE BASIS OF THE PURITY. IT WAS FURTHER STATED THAT THE G.P. RATE SHOWN BY THE ASSESSEE FOR THE YEAR UNDER CONSI DERATION AT 26.12% BY CONSIDERING THE OVERALL INCREASE IN THE TURNOVER WA S COMPARABLE WITH THE EARLIER YEARS, WHEREIN THE G.P. RATE WAS AT 27.91%. IT WAS FURTHER SUBMITTED THAT IN THE PRECEDING YEARS, NO SUCH ADDI TION HAS BEEN MADE 11 EVEN WHEN THE MATTER TRAVELLED UPTO ITAT. IT WAS F URTHER STATED THAT THE ASSESSEE SUBMITTED THE QUANTITATIVE DETAILS OF ORNA MENTS, STOCKS, PURCHASE, SALES AND CLOSING STOCK, WHICH WERE DULY AUDITED AND VERIFIED BY THE TAX AUDITOR AND THE SIMILAR DETAILS OF STOCK AND VALUATION THEREON WERE NEVER DOUBTED BY THE DEPARTMENT IN THE PRECEDI NG YEARS WHERE THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF TH E ACT AFTER DEEP SCRUTINY. THEREFORE, THE ADDITION SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. 7 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. STRONGLY S UPPORTED THE ORDER OF THE ASSESSING OFFICER. 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE ASSESSEE MAIN TAINED PROPER BOOKS OF ACCOUNTS WHICH WERE DULY AUDITED AND NO SPECIFIC DE FECT WAS POINTED OUT IN THE SAID BOOKS OF ACCOUNTS. THE ASSESSING OFFIC ER REJECTED THE BOOKS OF ACCOUNTS BY STATING THAT THE ASSESSEE HAD NEITHE R APPLIED FIFO OR LIFO METHOD WHILE VALUING THE CLOSING STOCK. THE ASSESS EE EXPLAINED THAT IN SUCH TYPE OF TRADING, IT IS NOT POSSIBLE TO FOLLOW EITHER FIFO OR LIFO 12 METHOD BECAUSE DIFFERENT ORNAMENTS HAVING DIFFERENT DESIGNS AND PATTERNS ARE SOLD ON THE CHOICE OF THE CUSTOMERS, S O, IT WAS NOT IN THE HANDS OF THE ASSESSEE. THE SAID EXPLANATION HAS NO T BEEN REBUTTED AT ANY STAGE. IN THE PRESENT CASE, THE ASSESSING OFFICER NEITHER DISCOVERED ANY SUPPRESSED SALES OR FOUND INFLATED PURCHASES AND TH E G.P. RATE DECLARED AT 26.12% ALTHOUGH WAS SLIGHTLY LESS THAN THE G.P. RATE 27.91% DECLARED IN THE EARLIER YEAR, BUT SAID EXPLANATION OF THE ASSES SEE THAT THE TURNOVER IN THIS YEAR INCREASES IN COMPARISON TO THE EARLIER YE AR, WHICH WAS THE MAIN REASON FOR SLIGHT DECREASE IN THE G.P APPEARS TO BE PLAUSIBLE. IN THE PRESENT CASE, THE ASSESSING OFFICER WORKED OUT THE VALUATION OF THE STOCK BY CONSIDERING THE CONVERSION OF PURE GOLD INTO 18C T. GOLD. HOWEVER, NOTHING WAS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE SALE RATE CHARGED BY THE ASSESSEE FOR 18CT. GOLD JEWELLERY WAS THE SA ME AS WAS OF PURE GOLD JEWELLERY. THEREFORE, THE ADDITION MADE BY THE ASS ESSING OFFICER WAS ONLY ON THE BASIS OF PRESUMPTION WHICH IS NOT TENAB LE IN THE EYES OF LAW. IN THE PRESENT CASE, THE ASSESSING OFFICER NEITHER POINTED OUT ANY INSTANCE OF INFLATED PURCHASE NOR SUPPRESSED SALES OR ANY EXPENDITURE WHICH WAS NOT INCURRED FOR THE PURPOSE OF BUSINESS. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINE D BY THE LD. CIT(A) BY ESTIMATING THE G.P. RATE WAS NOT JUSTIFIED PARTICUL ARLY WHEN SIMILAR TYPE 13 OF ADDITION MADE IN THE PRECEDING YEARS HAS BEEN DE LETED BY THE ITAT VIDE ORDER DATED 30/05/2008 FOR THE A.Y. 2003-04 AN D ORDER DATED 31/03/2009 FOR THE A.Y. 2004-05. WE, THEREFORE, CO NSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE, DELETE THE A DDITION OF RS. 3,32,806/- SUSTAINED BY THE LD. CIT(A). 9 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE COURT ON 13 TH MARCH, 2014). SD/- SD/- (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH MARCH, 2014. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JAIPUR.