M/s. Navbharat Marble Indsutries, RAJSAMAND V. ACIT, UDAIPUR

ITA 354/JODH/2014

• Counselvise Citation: 35423314 RSA 2014
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-09-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Loose papers; Opportunity of being heard
• Section: 133A; 145; 6; 12; 10; 11; 15

Judgement Text

1 IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 354 /JODH/2014 (A.Y. 200 8 - 09 ) M/S. NAVBHARAT MARBLE INDUSTRIES, NH 8, RAJNAGAR, RAJASMAND. VS. ACIT, CIRCLE - 2, UDAIPUR . PAN NO. AAAFN 8276 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : SHRI MAHESH KUMAR - D.R. DATE OF HEARING : 19 / 0 9 /201 4 . DATE OF PRONOUNCEMENT : 0 1 / 1 0/201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE D EPARTMENT AGAINST THE ORDER DATED 04 /03/2014 OF L D . CIT(A), UDAIPUR . THE ONLY EFFECTIVE GROUND RAISED IN THIS APPEAL RE A D S AS UNDER : 1. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION OF RS. 9,57,244/ - ON ACCOUNT OF VARIATION OF STOCK OF MARBLE BLOCKS, SLABS AND TILES TO THE RETURNED INCOME OF THE APPELLANT. 2 2. THE APPELLANT RESERVES THE RIGHT TO ADD TO THE ABOVE GROUNDS OF APPEAL AND/OR TO AMEND, MODIFY AND TO DELETE ANY OF THEM ON OR BEFORE THE HEARING OF APPEAL. 2 FACTS RELATING TO THIS CASE, IN BRIEF, ARE THAT THE ASSESSEE FILED ITS E - RETURN OF INCOME ON 29/09/2008 DECLARING TOTAL INCOME AT RS. NIL , WHICH WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) ON 24/04/2009. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY . THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MINING OF MARBLE AND MANUFACTURING AND TRADING OF MARBLE SLABS & TILES. DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 28 & 29/02/2008 . DUR ING THE COURSE OF SURVEY, THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT FOUND COMPLETE , THOSE WERE FOUND WRITTEN ONLY UPTO 31/01/2008 AND STOCK REGISTER WAS ALSO FOUND MAINTAINED TILL 31/01/2008 . DURING THE COURSE OF SURVEY VARIATION IN STOCK OF MARBLE B LOCKS SLABS & TILES WAS DETERMINED ON THE BASIS OF DETAILS OF STOCKS AS PER BOOKS FURNISHED BY THE ASSESSEE AS DETAILS BELOW AND VARIOUS INCRIMINATING DOCUMENTS WERE FOUND AND IMPOUNDED U/S. 133A (3)(IA) OF THE ACT. THE DIFFERENCE WAS AS UNDER: - 3 PARTICULARS AS PER BOOKS (IN SQ.M.) AS PER PROVISIONAL STOCK POSITION SUBMITTED BY THE ASSESSEE AS PER PHYSICAL VERIFICATION DIFFERENCE VALUE MARBLE SLABS 21231.78 23894.36 (+) 266 2 .58 393636 MARBLE SLABS 33 219 (+) 186 NOS 3348000 MARBLE SLABS 3630.24 3244.85 ( - ) 385.39 44800 AS THE ASSESSEE DID NOT DECLARE ANY INCOME IN ITS RETURN OF INCOME ON ACCOUNT OF VARIATION IN STOCK FOUND DURING THE COURSE OF SURVEY, THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED THE ASSESSEE TO EXPLAIN THE REASON FOR VARIATION. 3. THE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER AS UNDER: - SURVEY U/S 133A WAS CONDUCTED AT THE BUSINESS OF BAPU GROUP ON 28.02.2008. DURING THE COURSE OF SURVEY FOLLOWING DIFFERENCE IN STOCK W AS FOUND: * IN CLUDES THE STOCK TAKEN AT MINES OF 72 NOS. REGARDING THE DIFFERENCE IN THE STOCK POSITION, WE HAVE TO SUBMIT AS UNDER: PARTICULARS STOCK AS PER BOOKS (SQ MTRS) STOCK ALLEGED TO BE FOUND BY IT DEPARTMENT AT THE TIME OF SURVEY DIFFERENCE (SQ MTRS) RATE TAKEN BY IT DEPTT. (RS) VALUE OF EXCESS STOCK TAKEN BY IT DEPTT. (RS) MARBLE SLABS 21231.78 23894.36 (+) 2662.58 147.84 393636 MARBLE BLOCKS (NO) 33 219* (+) 186 NO 18000 3348000 MARBLE TILES 3630.24 3244.85 ( - )385.39 116.24 44800 4 1. THE IT DEPARTMENT HAS WRONGLY TAKEN THE FIGURES OF STOCK AS ON 30/01/2008 AND TREATED IT AS THE STOCK AS ON THE DATE OF SURVEY. IN THE ABOVE TABLE NO PROVISIONAL STOCK WAS SUBMITTED BY THE ASSESSEE AND THE DEPARTMENT ADOPTED THE FIGURES OF 31.01.2008 AS THAT OF 28.02.2008. 2. THE FIGURES OF STOCK AS ON 28.02.2008 AS PER BOOKS FOR MARBLE SLABS IS 18652.37 SQ. MTRS . I.E ALLEGED CLAIMED BY IT DEPARTMENT WILL THUS RAISE TO 5241.99 SQ MTRS. 3. THE ABOVE DIFFERENCE AROSE DUE TO ESTIMATED AND WRONG MET HOD OF MEASUREMENT ADOPTED BY THE DEPARTMENT. 4. THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND TRADING OF MARBLE SLABS AND TILES OF DIFFERENT SIZES. THE STOCK IS KEPT AT THE GODOWN AND IS STACKED IN THE YARD AS PER DIFFERENT SIZES AND QUALITY. 5. WHILE TAKING THE PHYSICAL STOCK OF SLABS THE DEPARTMENT TOOK CASUAL AND ESTIMATED APPROACH, EVEN SUCH SIZE OF SLABS HAVE BEEN SHOWN IN STOCK WHICH IS NEVER MANUFACTURES THE FIRM. 6. IN THE INVENTORY OF STOCK PREPARED BY THE DEPARTMENT AT THE TIME OF SURVEY, SIZES TAKEN BY THE IT DEPARTMENT ARE NEVER MANUFACTURED BY THE FIRM, SOME OF THE INSTANCES ARE AS SHOWN UNDER: S.N O SIZE OF SLABS TAKEN REFERENCE PAGE NO. OF INVENTORY SI.NO OF PAGE 1 39*68 79 4 OF ANNEX S - 1 2 37*94 82 4 OF ANNEX S - 1 3 38*112 91 4 OF ANNEX S - 1 4 42*82 103 4 OF ANNEX S - 1 5 82*73 104 4 OF ANNEX S - 1 6 43*112 65 5 OF ANNEX S - 1 7 34*87 66 5 OF ANNEX S - 1 8 51*76 74 5 OF ANNEX S - 1 9 91*70 138 6 OF ANNEX S - 1 10 28*80 145 6 OF ANNEX S - 1 11 80*62 - 13 OF ANNEX S - 1 12 28*88 - 14 OF ANNEX S - 1 13 55*83 - 16 OF ANNEX S - 1 14 98*67 - 16 OF ANNEX S - 1 THE HEIGHT OF THE SLABS MANUFACTURED/STOCK NEVER GOES BEYOND 60 INCHES AS THE MAXIMUM HEIGHT, THE GANGSAW MACHINE CAN CUTS IS OF 60 5 INCHES ONLY, IT CLEARLY SHOWS THE CASUAL APPROACH ADOPTED BY THE DEPARTMENT DURING THE STOCK TAKING. ABOVE SIZES ARE NEVER MANUFACTURED BY THE FIRM AND IS ALSO NOT AVAILABLE AT THE FACTORY OF THE ASSESSEE STILL THESE SIZES TAKEN IN MEASUREMENT WHICH IS NOT POSSIBLE. 7. FURTHER, WHILE TAKING THE MEASUREMENT THE DEPART MENT HAS NOT DEDUC TED THE SIZE FOR CRACKS, CHATKA, KHANDAT, LINING. ETC AND TAKEN THE MAXIMUM LENGTH AND BREADTH AVAILABLE. WHEREAS AS PER THE MARKET TREND ALL SUCH DEFECTS, CRACKS, KHANDAT, CHATKA, LINING, ETC ARE DEDUCTED FROM THE LENGTH AND BREADTH OF THE SLAB AND MEASUREMENT IS TAKEN ONLY AFTER THE DEDUCTION OF THE SAME. 8. AS PER THE MARKET TREND THE STOCK IS MEASURED AFTER DEDUCTING CRACKS, KHANDAT, CHATKA, LINING ETC.WHEREAS THE DEPARTMENT TOOK THE STOCK WITHOUT DEDUCTING CRACKS ETC., WHICH CONTRIBUTE D IN ARISING WITH A DIFFERENCE OF 5241.99 SQ MTRS IN SLABS. 9. FROM THE ABOVE IT IS CLEAR THAT THE EXCESS STOCK FOUND BY THE DEPARTMENT HAS NO RELEVANCE AND IS WRONGLY MEASURED, THE ACTUAL STOCK IS AS PER THE BOOKS MAINTAINED BY THE ASSESSEE AND THERE IS NO OVERALL DIFFERENCE IN THE STOCK OF MARBLE SLABS. B REGARDING DIFFERENCE IN MARBLE BLOCKS: 1. THE IT DEPARTMENT HAS WRONGLY TAKEN THE FIGURES OF STOCK OF MARBLE BLOCKS OF 31.01.2008 AND TREATED IT AS THE PROVISIONAL STOCK AS ON THE DATE OF SURVEY, NO PROVISIONAL STOCK WAS SUBMITTED BY THE ASSESSEE AND THE DEPARTMENT A DOPTED THE FIGURES OF 31.01.2008 AS THAT OF 29.02.2008 (FURTHER THE STOCK OF MINES HAS NOT BEEN INCLUDED IN THE STOCK OF MARBLE BLOCKS BY THE DEPARTMENT), ACTUAL STOCK OF MARBLE BLOCKS AS PER RECORDS OF THE FIRM AS ON 28.02.2008 WAS 68 NOS. AT FACTORY AND 12 NOS. AT MINES I.E. ALLEGED DIFFERENCE CLAIMED BY IT DEPARTMENT WILL THUS REDUCE TO ONLY 79 NOS . THE POSITION IS SUMMARIZED AS UNDER: - NOS. PARTICULARS BOOK STOCK AS ON 31/01/2008 (1) BOOK STOCK AS ON 29/02/2008 (2) STOCK ADOPTED BY DEPARTMENT AS ON DATE OF SURVEY (3) STOCK ALLEGED TO BE PHYSICALLY FOUND BY IT DEPARTMENT AT THE TIME OF SURVEY (4) DIFFERENCE ADOPTED BY DEPARTMENT (4 - 3) ACTUAL ALLEGED DIFFERENCE (4 - 2) BLOCK AT MINES 48 360 M.T. (72 NO.) NIL 72 ( - ) 72 NIL 6 BLOCKS AT FACTORY 33 68 33 147 ( - ) 114 ( - ) 79 TOTAL 81 428 33 219 ( - ) 186 ( - ) 79 2. TH E ABOVE DIFFERENCE AROSE DUE TO WRONG METHOD OF MEASUREMENT ADOPTED BY THE DEPARTMENT. 3. AS PER MINING RECORDS 360MT OF BLOCKS WERE IN STOCK AS ON THE DATE OF SURVEY AND THE SAME WERE 72 IN NOS. (IN THE MINING RECORDS QUANTITY IS MENTIONED IN MT ONLY, WHICH WAS 260MT EQUIVALENT TO 72 IN NOS.) AND HENCE THERE IS NO DIFFERENCE IN THE STOCK OF M ARBLE BLOCKS AT MINES. 4. REGARDING THE DIFFERENCE IN MARBLE BLOCKS STOCK AT FACTORY WE HAVE TO SUBMIT THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING/PRODUCTION OF MARBLE SLABS AND TILES AFTER CUTTING SIZING AND DRESSING OF UNEVEN MARBLE BLOCKS EXCAVATED FROM THE MINES. 5. THE ASSESSEE FIRM PRIMARILY PROCURES MARBLE BLOCKS FROM OWN MINES AND ALSO PURCHASES FROM OTHER MINE OWNERS. 6. THE NATURAL MARBLE BLOCKS ARE PROCURED IN UNEVEN SIZE AND ALSO HAVING VISIBLE AND HIDDEN CRACKS AND SPOTS IN IT OR SLIGHTLY BROKE N FROM ONE OR OTHER SIDE. 7. TO SQUARE THE UNEVEN MARBLE BLOCKS INTO DIMENSIONAL SIZE AND TO REMOVE THE VISIBLE AND HIDDEN CRACKS AND SPOTS IN THEM BEFORE MANUFACTURE OF SLABS AND TILES AND MAKING THEM VALUABLE MARKETABLE COMMODITY COMMERCIALLY USABLE, THEY ARE CUT INTO TWO OR MORE PIECES APPLYING THE PROCESS OF CUTTING, SIZING, DRESSING BY SINGLE BLADE/WIRE SAW MACHINE USING ADVANCED TECHNOLOGY. IN THIS PROCESS PART OF BLOCK (ONE SIDE ROUGH) CUT OUT FROM THE BLOCK REMAINS THERE AS A NEW PIECE OF BLOCK AND IT IS WASTAGE PART OF THE MARBLE BLOCK FOR THE ASSESSEE. 8. THUS ALL THESE PIECES OF MARBLE BLOCKS REPRESENT THE PART AND PARCEL OF THE SAME MARBLE BLOCK. 9. AT THE TIME OF SURVEY, THE SURVEY PARTY HAS CARRIED OUT THE PHYSICAL VERIFICATION OF THE MARBLE BLOCKS A T FACTORY. DURING THE COURSE OF PHYSICAL VERIFICATION OF STOCK, THE SURVEY PARTY HAS COUNTED ALL THE PART OF MARBLE BLOCKS AND TREATED EVERY PART AS SEPARATE UNIT. BASED ON THE ABOVE MEASUREMENT, THE SURVEY PART HAS FOUND/IDENTIFIED THE QUANTITY OF 147 NO. OF MARBLE BLOCKS. 10. THUS THE EXCESS QUANTITY OF STOCK AT FACTORY OF 79 NOS. OF BLOCKS ALLEGED TO BE FOUND IN THE STOCK ON PHYSICAL VERIFICATION DURING THE COURSE OF SURVEY. 7 11. IT IS VERY RESPECTFULLY SUBMITTED THAT THE QUANTITY OF BIG, MEDIUM AND SMALL PIECE S OF MARBLE BLOCKS (INCLUDING WASTAGE LAFFARS) FOUND DURING THE COURSE OF SURVEY ON PHYSICAL VERIFICATION ARE NOT NEWLY PURCHASED MARBLE BLOCKS, BUT THESE WERE THE ONLY MARBLE PIECES FORMING THE PART AND PARCEL OF 68 NO. OF BLOCKS IN THE STOCK AT FACTORY, WHICH HAVE BEEN CONVERTED INTO PIECES TO SQUARE/DRESS THE UNEVEN NATURAL MARBLES BLOCKS INTO DIMENSIONAL SIZE AND TO REMOVE THE VISIBLE AND HIDDEN CRACKS AND SPOTS IN THEM BEFORE MANUFACTURE OF SLABS AND TILES AND MAKING THEM VALUABLE MARKETABLE COMMODITY COMMERCIALLY USABLE APPLYING THE PROCESS OF CUTTING, SIZING, DRESSING BY SINGLE BLADE/WIRE SAW MACHINE USING ADVANCED TECHNOLOGY. 12. THUS ALL THE MARBLE PIECES FOUND ON THE PHYSICAL VERIFICATION AT FACTORY DURING THE COURSE OF SURVEY ARE THE PART AND PARCEL OF THE 68 MARBLE BLOCKS, WHICH WERE ALREADY RECORDED IN THE BOOKS OF THE ASSESSEE AND THERE WAS NO EXCESS QUANTITY OF STOCK OF MARBLE BLOCKS FOUND WITH THE ASSESSEE AT THE TIME OF SURVEY BUT ALL THE MARBLE BLOCK PIECES WERE THE PART AND PARCEL OF THE 68NO. OF MARBLE BLOCKS CONVERTED BEFORE MANUFACTURING OF MARBLE SLABS AND TILES. 13. FURTHER, THE RATE TAKEN PER BLOCK OF RS 18000/ - BY THE DEPARTMENT IS ALSO WRONG AND THE SAME COMES TO RS 5697.29 PER BLOCK ( DETAILS OF COSTING IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE PLEASE) C. REGARDING DIFFERENCE IN MARBLES TILES: 1. THE IT DEPARTMENT HAS WRONGLY TAKEN THE FIGURES OF STOCK AS ON 31.01.2008 AND TREATED IT AS THE STOCK OF TILES AS ON THE DATE OF SURVEY. NO PROVISIONAL STOCK WAS SUBMITTED BY THE ASSESSEE AND THE DEPARTMENT ADOPTED THE FIGURES OF 31/01/2008 OF 3630.24 SQ.MTRS. AS THAT OF 28.02.2008 AND THUS THE DEPARTMENT FOUND A SHORT STOCK OF 385.39 SQ.MTRS OF TILES. 2. THE ACTUAL FIGURES OF STOCK AS ON 28.02.2008 AS PER BOOKS FOR MARBLE TILES IS 3140.24 SQ MTR S I.E. ALLEGED DIFFERENCE CLAIMED BY IT DEPARTMENT WILL THUS CHANGE TO EXCESS STOCK OF 104.61 SQ MTRS. 3. THE ABOVE DIFFERENCE AROSE DUE TO WRONG METHOD OF MEASUREMENT ADOPTED BY THE DEPARTMENT. 4. WHILE TAKING THE PHYSICAL STOCK OF TILES THE DEPARTMENT TOOK C ASUAL AND ESTIMATED APPROACH EVEN SUCH SIZE OF TILES HAVE BEEN SHOWN IN STOCK WHICH IS NEVER PRODUCED BY THE FIRM. 8 5. SIMILARLY DIFFERENT WIDTH OF TILES COUNTED IN ONE SIZE AND ESTIMATED ON THE BASIS OF LENGTH AND HEIGHT OF THE THAPPI, PRACTICALLY TILES OF D IFFERENT SIZES KEPT ONE LOT AFTER OTHER LOT, ONE LOT ABOVE OTHER LOT AND IT IS NOT POSSIBLE TO TAKE ALL THE STOCK AT A STRETCH WITHOUT REMOVING THE STOCK LYING ABOVE AND IN FRONT OF OTHER STOCK ( TO MAKE IT CLEARLY VISIBLE FOR COUNTING PURPOSE). 6. IN INVENT ORY OF STOCK PREPARED BY THE DEPARTMENT, SIZES SHOWN ARE NEVER PRODUCED BY THE FIRM AS UNDER: - ABOVE CLEARLY SHOWS THE CASUAL APPROACH ADOPTED BY THE DEPARTMENT DURING THE STOCK TAKING. ABOVE SIZES ARE NEVER PRODUCED BY THE FIRM AND IS NOT AVAILABLE ANYWHERE IN THE MARKET STILL THESE SIZES TAKEN IN MEASUREMENT WHICH IS NOT POSSIBLE. 7. WHILE TAKIN G THE MEASUREMENT THE DEPARTMENT HAS NOT DEDUCTED THE SIZE FOR CRACKS, CHATKA, KHANDAT, LINING ETC. AND TAKEN THE MAXIMUM LENGTH AND BREADTH AVAILABLE. WHEREAS AS PER THE MARKET TREND ALL SUCH DEFECTS, CRACKS, KHANDAT, CHATKA, LINING ETC. ARE DEDUCTED FROM THE LENGTH AND BREADTH OF THE TILES AND MEASUREMENT IS TAKEN ONLY AFTER THE DEDUCTION OF THE SAME. 8. AS PER THE MARKET TREND, THE STOCK IS MEASURED AFTER DEDUCTING CRACKS, KHANDAT, CHATKA, LINING ETC. WHEREAS THE DEPARTMENT TOOK THE STOCK WITHOUT DEDUCTING CRACKS, ETC. WHICH CONTRIBUTED IN ARISING WITH A DIFFERENCE OF 104.61 SQ. MTRS. IN MARBLE TILES. 9. FROM THE ABOVE IT IS CLEAR THAT THE EXCESS STOCK FOUND BY THE DEPARTMENT HAS NO RELEVANCE AND IS WRONGLY MEASURED, THE ACTUAL IS SI. NO. SIZE OF TILES TAKEN REFEREN CE SR. NO. OF INVENTORY SI.NO. OF PAGES 1 11*18 - 4 OF ANNEX - S - 2 2 16*16 - 4 OF ANNEX - S - 2 3 16*15 - 4 OF ANNEX - S - 2 9 AS PER THE BOOKS MAINTAINED BY THE ASSESSEE AND THERE IS NO OVERALL DIFFERENCE IN THE STOCK OF MARBLE TILES. 4 . THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE AND AGAIN ASKED THE ASSESSEE TO EXPLAIN THE FOLLOWING ISSUES: - THAT AS ON DATE OF SURVEY THE BOOKS OF ACCOUNTS INCLUDING STOCK REGISTER WERE NOT COMPLETE, THOSE WERE FOUND WRITTEN ONLY UPTO 31.01,2008(REFER ANS.TO QUES. 24 OF SH. HASTIMAL CHAPLOT). THAT THE STOCK INVENTORY OF VARIOUS CONCERNS AT THE TIME OF SURVEY WERE PREPARED BY THE DEPARTMENTAL OFFICERS AFTER, MEASUREMENT AND COUNTING OF STOCK AS VERIFIED BY AND IN THE PRESENCE OF EMPLOYEES/PERSONS DEPUTED BY THE ASSESSEE FOR THIS VERY PURPOSE ON LY AND ALL THE INVENTORIES OF STOCK HAVE BEEN DULY SIGNED BY THE EMPLOYEES/PERSONS DEPUTED FOR THIS PURPOSE AND BY THE ASSESSEE HIMSELF AFTER CONFIRMATION AND VERIFICATION. IN THIS REGARD IT IS WORTH MENTION THAT DURING THE COURSE OF SURVEY INVENTORY OF ST OCK IS PREPARED NORMALLY AFTER MEASUREMENT AND COUNTING OF STOCK DONE BY THE PERSONS OF THE ASSESSEE AND AS REPORTED/STATED BY HIM TO THE DEPARTMENTAL OFFICIALS. THAT YOU HAVE POINTED OUT SOME OF THE INSTANCES OF DISCREPANCIES IN THE MEASUREMENT OF THE SL ABS REPORTED IN THE INVENTORY OF STOCK OF SLABS REGARDING HEIGHT OF THE MARBLE SLABS. IN THIS CONNECTION, IT IS WORTH MENTIONED THAT THE MEASUREMENT OF THE TILES/SLABS WERE REPORTED BY THE PERSONS DEPUTED BY THE ASSESSEE FOR THIS PURPOSE. IN THE PROCESS OF REPORTING MEASUREMENTS OF SLABS IT IS VERY POSSIBLE THAT SEQUENCE OF LENGTH X HEIGHT MAY VARY IN SOME CASES AS POINTED OUT BY YOU TO HEIGHT X LENGTH. HOWEVER THERE WILL BE NO EFFECT IN THE VOLUME OF THE LOT (THAPPI) OF MARBLE SLABS IN THIS CHANGE OF SEQUE NCE OF MEASUREMENT. THAT YOU CLAIMED THAT THE STOCK OF MARBLE IS MEASURED AFTER DEDUCTING CRACKS, KHANDAT, CHATKA ETC WHERE AS THE 10 DEPARTMENT TOOK THE STOCK WITHOUT DEDUCTING CRACKS ETC. IN THIS REGARD IT IS FOR YOUR KIND INFORMATION THAT PURPOSE OF TAKIN G OF STOCK DURING THE COURSE OF SURVEY IS TO DETERMINE THE COST OF INVESTMENT OR COST OF PURCHASE OF STOCK AS ON DATE OF SURVEY AND NOT TO DETERMINE THE AMOUNT OF SALES REALIZATION OF STOCK AS ON DATE OF SURVEY AGAINST WHICH THE REDUCTION OF CRACKS, KHANDA T AND CHATKA ETC. CAN BE ALLOWED. IN THIS REGARD IT IS ALSO WORTH MENTION THAT WHILE EXECUTING SALES OF MARBLE SLABS MAXIMUM LENGTH AND WIDTH OF THE SLAB IS TAKEN INTO CONSIDERATION FOR MEASURING THE VOLUME OF A PARTICULAR LOT OF MARBLE SLAB HOWEVER SELLIN G RATE OF A PARTICULAR LOT OF MARBLE SLAB IS DETERMINED AFTER NEGOTIATION ON THE BASIS OF RECOVERY OF USABLE MARBLE OUT OF THAT LOT MARBLE SLABS. THUS YOUR CLAIM THAT WHILE TAKING STOCK INVENTORY DEDUCTION ON ACCOUNT OF CRACK, KHANDAT AND CHATKAS SHOULD BE ALLOWED IS NOT TENABLE. THAT IN THE DETAILS OF BLOCKS FURNISHED BY YOU ON 12.11.2010, YOU HAVE CLAIMED CREDIT OF 145 BLOCKS AS BROKEN PIECES. IN THIS REGARD, ON PERUSAL OF MARBLE BLOCK INVENTORY PREPARED DURING THE COURSE OF SURVEY U/S 133A THE MEASUREMEN T OF BLOCKS FOUND IS MENTIONED FROM WHICH IT IS EVIDENT THAT NONE OF THE BLOCK APPEARS BROKEN. THEREFORE, YOU ARE CLAIMED THAT 145 PIECES OF BLOCKS WERE BROKEN AND WERE PART OF BLOCKS PURCHASED IS NOT TRUE TO THE FACTS OF THE CASE AND THEREFORE, NOT ACCEPT ABLE. HOWEVER, UNEXPLAINED INVESTMENT IN EXCESS STOCK OF BLOCKS WILL BE CALCULATED ON THE BASIS OF COST OF PURCHASE OF MARBLE BLOCKS BY YOU AFTER VERIFICATION. IN VIEW OF ABOVE FACTS YOUR EXPLANATION FOR VARIATION IN STOCK FOUND DURING THE COURSE OF SURVEY IS NOT ACCEPTABLE EXCEPT AS DISCUSSED ABOVE. 5 . IN RESPONSE TO THE ABOVE , THE ASSESSEE SUBMITTED TO THE ASSESSING OFFICER VIDE LETTER DATED 16/12/2010 , AS UNDER: - 11 1. IT IS NOT POSSIBLE FOR SMALL CONCERNS TO MAKE THE ACCOUNTS BOOKS COMPLETE UPTO DATE ON DAILY BASIS. ACCOUNTANT OF THE FIRM WAS ALSO ON LEAVE IN THOSE DAYS, HENCE BOOKS WERE INCOMPLETE AND ONLY REFLECTS THE ENTRIES UPTO THE PERIOD ENDED ON 31 ST JAN 2008. 2. IT IS NOT TRUE THAT COUNTING OF STOCK IS DONE BY THE PERSONS OF THE ASSESSEE, THE SAME IS COUNTED ONLY BY THE STAFF OF YOUR SURVEY TEAM, THE METHOD OF TAKING STOCK WAS ALSO OBJECTED BY THE ASSESSEE AT THE TIMES OF TAKING OF STOCK. 3. SOME OF TH E INSTANCES OF WRONG STOCK TAKING WERE SHOWN IN OUR LETTER DATED 24.11.2010 ONLY TO SHOW THE INDICATION OF CASUAL AND ESTIMATED APPROACH ADOPTED BY THE DEPARTMENT WHILE TAKING THE STOCK. WE HAVE SHOWN THE INSTANCES OF ESTIMATED MEASUREMENT, I.E. HEIGHT OF THAPPI TAKEN BY THE DEPARTMENT IS PRACTICALLY NOT POSSIBLE . YOU HAVE MENTIONED IN YOUR LETTER THAT SEQUENCE OF LENGTH X HEIGHT MAY VARY AND MAY BE TAKEN REVERSE OF IT I.E. HEIGHT X LENGTH. IN THIS CONNECTION, WE HAVE TO SUBMIT THAT IT IS NOT POSSIBLE WHILE TAKING LENGTH FIRST FOR ALL OTHER REMAINING THAPPIES SUDDE NLY CANNOT CHANGE TO TALKING HEIGHT FIRST. FURTHER, THERE ARE SOME INSTANCES WHERE BOTH LENGTH AND HEIGHT EXCEEDED THE LIMIT OF 60 INCHES (THE MAXIMUM HEIGHT MACHINE CAN CUT) REFER ENTRIES NO.5,9,11 AND 14 AT SR. NO. 6 OF PAGE NO.2 OF OUR REPLY DATED 24.11 .2010. HENCE YOUR OBJECTION AGAINST OUR FINDINGS ARE NOT ACCEPTABLE TO US. 4. REGARDING DEDUCTION OF CRACKS, KHANDAT, CHATKAS IN MEASUREMENT OF MARBLE, WE AGREE WITH YOUR SAYING THAT THE PURPOSE OF TAKING STOCK DURING THE COURSE OF STOCK AS ON DATE OF SURVEY . WE HAVE TO STATE THAT WHILE ENTERING THE STOCK IN OUR STOCK REGISTER, THE MEASUREMENT IS TAKEN ONLY AFTER DEDUCTING VARIOUS DEFECTS LIKE CRACKS, ETC STOCK IS RECORDED IN THE BOOKS WITH NET QUANTITY AFTER SUCH DEFECTS, I.E. CRACKS, KHANDAT, CHA TA KS, ETC. AND HENCE TO TAKE THE PROPER STOCK THE DEDUCTION ON ACCOUNT OF THESE DEFECT IS MUST AND IS TO BE PROVIDED FOR TAKING ACTUAL STOCK AND ITS VALUATION. 5. IN YOUR ABOVE REFERRED LETTER YOU HAVE MENTIONED THAT WE HAVE CLAIMED CREDIT OF 145 BLOCKS AS BROKEN PIECE S. IN THIS CONNECTION, WE INVITE YOUR KIND ATTENTION TO OUR LETTER DATED 12.11.2010 AND SUMMARY OF STOCK OF MARBLE BLOCKS, WHICH SHOWS MONTHLY PURCHASES, CONSUMPTION AND CLOSING STOCK. IN THIS SUMMARY 145 PIECES WERE SHOWN TO BE RECEIVED AS BROKEN TILL 31 / 03/2008 AND THE SAME WERE 134 12 TILL 28.02.2008. FROM THIS STATEMENT IT CANNOT BE PRESUMED THAT ALL THESE 134 PIECES WERE IN STOCK AS ON 28.02.2008, ACTUALLY THE SAME WERE CONSUMED AND WERE NOT IN STOCK AT THE TIME OF SURVEY. 6. REGARDING THE DIFFERENCE IN MAR BLE BLOCKS AT FACTORY WE HAVE ALREADY SUBMITTED VIDE OUR LETTER DATED 24.11.2010, THAT THERE IS NO EXCESS QUANTITY OF STOCK AT FACTORY (79 NOS. OF BLOCKS ALLEGED TO BE FOUND EXCESS IN THE STOCK ON PHYSICAL VERIFICATION DURING THE COURSE OF SURVEY). IT IS V ERY RESPECTFULLY FURTHER REITERATED THAT THE QUANTITY OF BIG, MEDIUM AND SMALL PIECES OF MARBLE BLOCKS (INCLUDING WASTAGE LAFFARS) FOUND DURING THE COURSE OF SURVEY ON PHYSICAL VERIFICATION ARE NOT NEWLY PURCHASED MARBLE BLOCKS, BUT THESE WERE THE ONLY MAR BLE PIECES FORMING THE PART AND PARCEL OF 68 NO. OF BLOCKS IN THE STOCK AT FACTORY, WHICH HAVE BEEN CONVERTED INTO PIECES TO SQUARE/DRESS THE UNEVEN HIDDEN CRACKS AND SPOTS IN THEM BEFORE MANUFACTURE OF SLABS AND TILES AND MAKING THEM VALUABLE MARKETABLE C OMMODITY COMMERCIALLY USABLE APPLYING THE PROCESS OF CUTTING, SIZING, DRESSING BY SINGLE BLADE/WIRE SAW MACHINE USING ADVANCED TECHNOLOGY. 7. THUS ALL THE MARBLE PIECES FOUND ON THE PHYSICAL VERIFICATION AT FACTORY DURING THE COURSE OF SURVEY ARE THE PART AN D PARCEL OF THE 68 MARBLE BLOCKS, WHICH WERE ALREADY RECORDED IN THE BOOKS OF THE ASSESSEE AND THERE WAS NO EXCESS QUANTITY OF STOCK OF MARBLE BLOCKS FOUND WITH THE ASSESSEE AT THE TIME OF SURVEY BUT ALL THE MARBLE BLOCKS CONVERTED BEFORE MANUFACTURING OF MARBLE SLABS AND TILES. 8. FROM THE ABOVE IT IS EVIDENT THAT THERE IS NO EXCESS STOCK AND YOUR FINDING OF EXCESS STOCK IS NOT ACCEPTABLE TO US. 6 . THE ASSESSING OFFICER, HOWEVER, WAS NOT SATISFIED FROM THE EXPLANATION OF THE ASSESSEE BY OBSERVING THAT THE ASSESSEE ONLY TRIED TO MODIFY THE PRESENT FACTS AS PER HIS CONVENIENCE. THE ASSESSING OFFICER MADE THE ADDITION OF RS. 11,31,98/ - ON ACCOUNT OF VARIATION IN STOCK FOUND DURING THE COURSE OF SURVEY . 13 7 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - A SURVEY U/S 133A WAS CONDUCTED AT THE BUSINESS PREMISES OF BAPU GROUP ON 28 - 02 - 2008. DURING THE COURSE OF SURVEY CERTAIN INCRIMINATING DOCUMENTS, ACCOUNT BOOKS AND LOOSE PAPERS WERE IMPOUNDED AND INVENTORISED. THE STATEMENTS OF SHRI HASTI MA L CHAPLOT, SHRI MITHA LA L BOHARA AND SHRI JAI SINGH CHARAN WERE ALSO RECORDED DURING THE COURSE OF SURVEY. THE SURVEY PARTY HAS CARRIED OUT THE PHYSICAL VERIFICATION OF THE STOCK OF MARBLE SLABS, TILES AND BLOCKS OF THE APPELLAN T AND FOUND THE FOLLOWING STOCK OF MARBLE SLABS, MARBLE TILES AND MARBLE BLOCKS AS COMPARED TO THE STOCK DECLARED BY THE APPELLANT IN HIS BOOKS OF ACCOUNTS: (QUANTITY IN SQ.MTS.) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE APPELLANT VIDE HIS LETTER DATED 24 - 11 - 2010 (COPY ENCLOSED) SUBMITTED THAT THE STOCK POSITION SUBMITTED BY HIM AT THE TIME OF SURVEY WAS AS OF 31 - 01 - 2008 AND NOT AS ON DATE OF SURVEY I.E. 29 - 02 - 2008 AND SUBMITTED THE STOCK POSITION AS PER BOOKS AS ON 29 - 02 - 2008 WHICH IS REPRODUCED AS UNDER: PARTICULARS STOCK AS PER PROV. STOCK POSITION SUBMITTED BY THE APPELLANT AT THE TIME OF SURVEY PHYS ICAL STOCK FOUND (RECTIFIED I N ASSESSMENT) SHORTAGE /EXCESS OF PHYSICAL STOCK TAKEN 3Y A.O. MARBLE SLABS 21,231.78 18,232.91 ( - ) 2,998.87 MARBLE TILES 3,630.24 3,244.85 ( - ) 385.39 MARBLE BLOCKS (NOS) AT FACTORY 33 147 (+) 79 MARBLE BLOCKS (NOS) AT MINES 48 72 (+) 24 PARTICULARS STOCK AS PER BOOKS AS ON DATE OF SURVEY AS ON 29 - 02 - 2008 (SQUARE METERS) MARBLE SLABS 18,652.37 MARBLE TILES 3,140.24 MARBLE BLOCKS (NOS) AT FACTORY 6 8 MARBLE BLOCKS (NOS) AT MINES 72 14 THE ASSESSING OFFICE R HAS NOT CORRECTLY ADOPTED THE FIGURES OF STOCK OF MARBLE SLABS AND MARBLE TILES IN HIS ASSESSMENT ORDER. DESPITE OF TAKING ACTUAL STOCK AS ON 29 - 02 - 2008, HE HAS WRONGLY TAKEN THE STOCK POSITION AS ON 31 - 01 - 2008. THE ACTUAL DIFFERENCE AFTER TAKING INTO ACC OUNT THE STOCK POSITION AS ON 29 - 02 - 2008, THUS COMES AS UNDER: PARTICULARS STOCK AS ON 31/01/2008 STOCK AS ON 29/02/2008 PHYSICAL STOCK FOUND (RECTIFIED IN ASSESSMENT) SHORTAGE/ EXCESS OF PHYSICAL STOCK MARBLE SLABS 21231.78 18,652.37 18,232.91 (+) 419.46 MARBLE TILES 3,630.24 3140.24 3244.85 ( - ) 104.61 MARBLE BLOCKS (NOS) AT FACTORY 33 68 147 (+) 79 MARBLE BLOCKS (NOS) AT MINES 48 72 72 NIL THE ABOVE DIFFERENCE AROSE DUE TO ESTIMATED AND WRONG METHOD OF MEASUREMENT ADOPTED BY THE SURVEY TEAM. MARBLE SLABS THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND TRADING OF MARBLE SLABS AND TILES OF DIFFERENT SIZES. THE STOCK ARE KEPT AT THE GODOWN AND IS STACKED IN THE YARD AS PER DIFFERENT SIZES AND QUALITY. WHILE TAKING THE PHYSICAL STOCK OF SLABS, THE SURVEY TEAM TOOK CASUAL AND ESTIMATED APPROACH. THE ABOVE FACTS ARE WELL SUPPORTED WITH THE REPLY TO QUESTION NUMBER 24 OF THE STATEMENT OF SHRI HASTIMAL CHAPLOT RECORDED ON DATED 28 - 02 - 2008 DURING THE COURSE OF SURVEY. THE COPY OF RELEVANT PAGES OF STATEMENT IS ENCLOSED. FROM THE ABOVE IT IS CLEAR THAT THE EXCESS STOCK OF 419.46 SQUARE METER AS CALCULATED ABOVE HAS NO RELEVANCE AND IS WRONGLY MEASURED, THE ACTUAL STOCK IS AS PER THE BOOKS MAINTAINED BY THE ASSESSEE AND THERE IS NO OVERALL DIFFERENCE IN THE STOCK OF MARBLE SLABS. 15 FURTHER, THE RATE TAKEN PER SQUARE METER OF MARBLE SLABS IN THE ASSESSMENT ORDER IS RS. 192.00 BY THE ASSESSING OFFICER IS ALSO WRONG AND THE SAME COMES NEAR ABOUT TO RS. 145.00 PER SQUARE METER. ANY OTHER OBSERVATIONS FIN DINGS AND/OR ALLEGATIONS MADE BY THE ASSESSING OFFICER ON THE APPELLANT IN HIS ORDER AND INFERENCES AND CONCLUSION DRAWN BY HIM ON THE BASIS OF SUCH FINDINGS ARE TOTALLY INCORRECT AND PATENTLY ERRONEOUS. IN VIEW OF THE FORGOING REASONS, THE APPELLANT VERY HUMBLY PREYS THAT THE ADDITION OF RS. 5,75,783/ - ON ACCOUNT OF EXCESS STOCK OF MARBLE SLABS MADE BY THE ASSESSING OFFICER IS TOTALLY INCORRECT AND THE SAME MAY KINDLY BE DELETED MARBLE BLOCKS: THE SURVEY TEAM HAS FOUND MARBLE BLOCKS AS 147 NOS. AGAINST THE BOOK STOCK OF 68 NOS., I.E. THE SURVEY TEAM HAS FOUND AN EXCESS STOCK OF MARBLE BLOCKS OF 79 NOS. ABOVE DIFFERENCE AROSE DUE TO WRONG METHOD OF MEASUREMENT ADOPTED BY THE DEPARTMENT. WE HAVE TO SUBMIT THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING/ PRODUCTION OF MARBLE SLABS AND TILES AFTER CUTTING, SIZING AND DRESSING OF UNEVEN MARBLE BLOCKS EXCAVATED FROM THE MINES. THE APPELLANT FIRM PRIMARILY PROCURES MARBLE BLOCKS FROM PURCHASES FROM OTHER MINE OWNERS. THE NATURAL MARBLE BLOCKS ARE PROCURED IN UNEVEN SIZE AND ALSO HAVING VISIBLE AND HIDDEN CRACKS AND SPOTS IN IT OR SLIGHTLY BROKEN FROM ONE OR OTHER SIDE. TO SQUARE THE UNEVEN MARBLE BLOCKS INTO DIMENSIONAL SIZE AND TO REMOVE THE VISIBLE AND HIDDEN CRACKS AND SPOTS IN THEM BEFORE MANUFACTURE OF SLABS, TO GET THE OPTIMUM UTILISATION OF THE MACHINE CAPACITY AND MAKING THEM VALUABLE MA RKETABLE COMMODITY COMMERCIALLY USABLE, THEY ARE CUT INTO TWO OR MORE PIECES APPLYING THE PROCESS OF CUTTING, SIZING, DRESSING BY SINGLE BLADE BLOCK DRESSING MACHINE U SING ADVANCED TECHNOLOGY. IN THIS PROCESS PART OF BLOCK CUT OUT FROM THE PARENT BLOCK REMAINS THERE AS A NEW PIECE OF BLOCK AND IT IS EITHER USABLE OR SOME TIMES WASTAGE PART OF THE MARBLE BLOCK FOR THE ASSESSEE. THUS ALL THESE PIECES OF MARBLE BLOCKS REP RESENT THE PART AND PARCEL OF THE SAME MARBLE BLOCK. AT THE TIME OF SURVEY, THE SURVEY PARTY HAS CARRIED OUT THE PHYSICAL VERIFICATION OF THE MARBLE BLOCKS 16 AT FACTORY. DURING THE COURSE OF PHYSICAL VERIFICATION OF STOCK, THE SURVEY PARTY HAS COUNTED ALL T HE PART OF MARBLE BLOCKS AND TREATED EVERY PART AS SEPARATE UNIT. BASED ON THE ABOVE MEASUREMENT, THE SURVEY PART Y HAS FOUND/IDENTIFIED THE QUANTITY OF 147 NO. OF MARBLE BLOCKS . THUS THE EXCESS QUANTITY OF STOCK AT FACTORY OF 79 NOS. OF BLOCKS ALLEGED TO BE FOUND IN THE STOCK ON PHYSICAL VERIFICATION DURING THE COURSE OF SURVEY. IT IS VERY RESPECTFULLY SUBMITTED THAT THE QUANTITY OF BIG, MEDIUM AND SMALL PIECES OF MARBLE BLOCKS (INCLUDING WASTAGE LAFFARS) FOUND DURING THE COURSE OF SURVEY ON PHYSICAL VERI FICATION ARE NOT NEWLY PURCHASED MARBLE BLOCKS, BUT THESE WERE THE ONLY MARBLE PIECES FORMING THE PART AND PARCEL OF 68 NO. OF BLOCKS IN THE STOCK AT FACTORY , WHICH HAVE BEEN CONVERTED INTO PIECES TO SQUARE/DRESS THE UNEVEN NATURAL MARBLE BLOCKS INTO DIME NSIONAL SIZE AND TO REMOVE THE VISIBLE AND HIDDEN CRACKS AND SPOTS IN THEM BEFORE MANUFACTURE OF SLABS AND TILES AND MAKING THEM VALUABLE MARKETABLE COMMODITY COMMERCIALLY USABLE APPLYING THE PROCESS OF CUTTING, SIZING, DRESSING BY SINGLE BLADE/WIRE SAW MA CHINE USING ADVANCED TECHNOLOGY. THUS ALL THE MARBLE PIECES FOUND ON THE PHYSICAL VERIFICATION AT FACTORY DURING THE COURSE OF SURVEY ARE THE PART AND PARCEL OF THE 68 MARBLE BLOCKS, WHICH WERE ALREADY RECORDED IN THE BOOKS OF THE ASSESSEE AND THERE WAS NO EXCESS QUANTITY OF STOCK OF MARBLE BLOCKS FOUND WITH THE ASSESSEE AT THE TIME OF SURVEY BUT ALL THE MARBLE BLOCK PIECES WERE THE PART AND PARCEL OF THE 68 NO. OF MARBLE BLOCKS CONVERTED BEFORE MANUFACTURING OF MARBLE SLABS AND TILES.LN VIEW OF THE FORGOIN G REASONS, THE APPELLANT VERY HUMBLY PREYS THAT THE ADDITION OF RS. 4,76,054/ - ON ACCOUNT OF EXCESS STOCK OF MARBLE SLABS BLOCKS BY THE ASSESSING OFFICER IS TOTALLY INCORRECT AND THE SAME MAY KINDLY BE DELETED. MARBLE TILES: THE ASSESSEE IS ENGAGED IN THE MANUFACTURING AND TRADING OF MARBLE SLABS AND TILES OF DIFFERENT SIZES. THE STOCK ARE KEPT AT THE GODOWN AND IS STACKED IN THE YARD AS PER DIFFERENT SIZES AND QUALITY. WHILE TAKING THE PHYSICAL STOCK OF SLABS, THE SURVEY TEAM TOOK CASUAL AND ESTIMATED APPROACH. THE ABOVE FACTS ARE WELL SUPPORTED WITH THE REPLY TO QUESTION NUMBER 24 OF THE STATEMENT OF SHRI HASTIMAL CHAPLOT RECORDED ON DATED 28 - 02 - 2008 DURING THE COURSE OF SURVEY. THE COPY OF RELEVANT PAGES OF STATMENT IS ENCLOSED. FROM THE ABOVE IT IS C LEAR THAT THE SHORT STOCK OF 104.61 SQUARE METER AS CALCULATED ABOVE HAS NO RELEVANCE AND IS WRONGLY MEASURED, THE ACTUAL STOCK IS AS PER THE BOOKS MAINTAINED BY THE ASSESSEE AND THERE IS NO OVERALL DIFFERENCE IN THE STOCK OF MARBLE TILES. FURTHER ONLY THE PROFIT ELEMENT CAN BE ADDED TO THE TOTAL INCOME IN CASE OF SHORTAGE OF STOCK. THE GROSS PROFIT RATE OF THE YEAR IS 23.68%. ANY OTHER OBSERVATIONS FINDINGS AND /OR ALLEGATIONS MADE BY THE ASSESSING OFFICER ON THE APPELLANT IN HIS ORDER AND INFERENCES AND C ONCLUSION DRAWN BY HIM ON THE BASIS OF SUCH FINDINGS ARE TOTALLY 17 INCORRECT AND PATENTLY ERRONEOUS. IN VIEW OF THE FORGOING REASONS, THE APPELLANT VERY HUMBLY PRAYS THAT THE ADDITION OF RS. 80,161/ - ON ACCOUNT OF EXCESS STOCK OF MARBLE TILES MADE BY THE ASS ESSING OFFICER IS TOTALLY INCORRECT AND THE S AME MAY KINDLY BE DELETED. 8 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSING OFFICER HAD MET OUT EACH AND EVERY OBJECTIONS/FACTS I.E. CASUAL AND ESTIMATED AP PROACH ADOPTED BY THE SURVEY TEAM WHILE TAKING THE PHYSICAL STOCK, POINTED OUT BY THE ASSESSEE IN THE INVENTORY OF CLOSING STOCK PREPARED BY THE SURVEY TEAM. THE LD. CIT(A) FURTHER OBSERVED THAT THE EXCESS STOCK OF MARBLE SLABS WORKED OUT BY THE SURVEY TE AM HAD BEEN WORKED OUT AS SHORTAGE AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE. 9 . AS REGARDS TO THIS SUBMISSIONS OF THE ASSESSEE THAT SURVEY TEAM WORKED OUT, THE EXCESS STOCK AFTER CONSIDERING THE STOCK REFLECTED IN THE BOOKS OF ACCOUNTS AS ON 31/01/2008 AND PHYSICALLY FOUND AT THE TIME OF SURVEY I.E. ON 29/02/2008 , T HE LD. CIT(A) OBSERVED THAT THE ASSESSEE HAD NOT PRODUCED ANY MATERIAL TO CONTRADICT THE MENTIONING OF THE SURVEY TEAM A ND SUCH PLEA WAS NOT TAKEN BEFORE THE SURVEY TEAM. AS REGARDS TO THE SUBMISSIONS OF THE ASSESSEE THAT SURVEY TEAM HAD NOT CONSIDERED CRACKS, KHANDA T , CHAT A K S , LINING ETC. WHILE TAKING THE PHYSICAL STOCK OF 18 MARBLE SLABS, THE LD. CIT(A) OBSERVED THAT THE ASSE SSING OFFICER HAD MADE THE ADDITION FOR MAKING SALES OF MARBLE SLABS OUT OF BOOKS OF ACCOUNTS AS THERE WAS A SHORTAGE OF MARBLES AND NOT FOR EXCESS STOCK AND SIMILARLY THE ASSESSING OFFICER MADE THE ADDITION OF RS. 80,161/ - FOR SHORTAGE OF STOCK OF 385.39 MARBLE TILES AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE. HE, THEREFORE, CONFIRMED THE ADDITION OF RS. 5,75,783/ - ON ACCOUNT OF SHORTAGE OF MARBLE SLABS AND RS. 80,161/ - ON ACCOUNT OF SHORTAGE OF MARBLE TILES. AS REGARDS TO THE ADDITION ON ACCOUNT OF EXCESS STOCK OF MARBLE BLOCKS, THE LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAD ADMITTED THAT THERE MAY BE SOME WASTAGE WHILE PROCESSING UNEVEN SIZE OF MARBLE BLOCK IN THE GANGSAW, BUT HE HAD NOT GIVEN ANY CONSIDERATION WHILE WORKING OUT THE EXCESS STOCK. LD. CIT(A) ALSO OBSERVED THAT IT MAY BE POSSIBLE THAT THE UNEVEN MARBLE BLOCKS BECAME PIECES DURING THE PROCESS OF DRESSING AND CONVERT INTO DIMENSIONAL SIZE AND THE ASSESSING OFFICER HAD NOT DENIED THIS FACT, BUT THE ASSESSEE HAD ALSO N O DETAILS ABOUT THE NUMBER OF PIECES OF DIMENSIONAL SIZE OF MARBLE CONVERTED FROM UNEVEN MARBLE BLOCKS , T HEREFORE, THE MARBLE BLOCKS ENTERED IN THE BOOKS OF ACCOUNTS COULD NOT BE ACCEPTED IN TOTO . THE LD. CIT(A) CONSIDERED IT FAIR AND REASONABLE IF THE E XCESS STOCK OF MARBLE BLOCKS WAS TO BE CONSIDERED 19 AT 50 AND ACCORDINGLY SUSTAINED THE ADDITION OF RS. 3,01,300/ - AND ALLOWED THE RELIEF OF RS. 1,74,754/ - . NOW THE ASSESSEE IS IN APPEAL. 10 . LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT SURVEY TOOK PLACE ON 28/02/2008 AND THE BOOKS WERE WRITTEN UPTO 31/01/2008, SO THERE WAS A DIFFERENCE IN THE DATES BUT PROPER ADJUSTME NTS ON ACCOUNT OF DIFFERENCE IN DATES WAS NOT DONE BY THE ASSESSING OFFICER . IT WAS FURTHER STATED THAT BENEFIT OF EXCESS STOCK WAS NOT GIVEN WHILE MAKING THE ADDITION ON ACCOUNT OF SHORTAGE OF STOCK. IT WAS ALSO STATED THAT SHORTAGE OF STOCK WAS ON ACC OUNT OF EXCESS STOCK AND TELESCOPIC EFFECT WAS TO BE GIVEN. IT WAS CONTENDED THAT THE SURVEY TEAM PREPARED THE INVENTORY ONLY IN ON E DAY, SO THERE WERE CHANCES FOR MISTAKE IN PREPARING THE DETAILS CONSIDERING THE HUGE QUANTITY OF THE STOCK. IT WAS SUBMITTED THAT POSSIBILITY OF UNEVEN MARBLE BLOCKS BEC A ME PIECES DURING THE PROCESS OF DRESSING AND WERE CONVERTED INTO DIMENSIONAL SIZE WAS ALSO CONSIDERED. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUS TIFIED. 1 1 . IN HIS RIVAL SUBMISSIONS, LEARNED D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 20 1 2 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADM ITTED FACT THAT THE SURVEY TEAM FOUND DIFFERENCE IN THE STOCK ON PHYSICAL VERIFICATION VIS - - VIS THE STOCK ENTERED IN THE BOOKS OF ACCOUNTS AND ON THAT BASIS, THE ASSESSING OFFICER MADE THE ADDITION. HOWEVER, THIS VITAL FACT WAS NOT CONSIDERED THAT THE BO OKS OF ACCOUNTS WERE MAINTAIN ED UPTO 31/01/2008 WHILE SURVEY TOOK PLACE ON 28 & 29/02/2008. THE LD. CIT(A) ALTHOUGH MENTIONED IN THE IMPUGNED ORDER THAT THOUGH THE ASSESSING OFFICER HAD ADMITTED THAT THERE MAY BE SOME WASTAGE WHILE PROCESSING THE UNEVEN S IZE OF MARBLE STOCKS IN THE GANGSAW, BUT HE HAD NOT GIVEN ANY CONSIDERATION WHILE WORKING OUT THE EXCESS STOCK. THE LD. CIT(A) ALSO MENTIONED THAT IT MAY BE POSSIBLE THAT UNEVEN MARBLE BLOCKS BECAME PIECES DURING THE PROCESS OF DRESSING AND CONVERTED INTO THE DIMENSIONAL SIZE AND THE ASSESSING OFFICER HAD NOT DENIED THIS FACT. AT THE SAME TIME, THE ASSESSEE DID NOT FURNISH ANY DETAIL WHAT WAS THE NUMBER OF PIECES OF THE DIMENSIONAL SIZE OF MARBLE BLOCKS CONVERTED FROM UNEVEN MARBLE BLOCKS. IN THE PRESENT CASE, IT WAS THE CONTENTION OF THE ASSESSEE THAT IN SOME ITEMS, EXCESS STOCK WAS THERE AND IN OTHERS THERE WAS SHORTAGE, THEREFORE, TELESCOPIC EFFECT WAS TO BE GIVEN. THE SAID CONTENTION OF THE ASSESSEE WAS NOT CONTROVERTED, BUT AT 21 THE SAME TIME, IT WAS ALSO NOT CONSIDERED EITHER BY THE ASSESSING OFFICER OR BY THE LD. CIT(A) . IN THE PRESENT CASE, THE ASSESSEE ALSO DID NOT BRING ON RECORD HOW MUCH STOCK WAS EXCESS AND HOW IT COMPENSATED THE STOCK FOUND SHORT. THEREFORE, THE FACTS OF THIS CASE ARE NOT CLE AR, SO WE ARE OF THE OPINION, IT IS TO BE DECIDED AFRESH BY THE ASSESSING OFFICER. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE I S REMANDED BACK TO THE ASSESSING OFFICER TO BE DECIDED AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING DUE AND REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 1 3 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ( ORDER PRONOUNCED IN THE COURT ON 0 1 S T OCTOBER , 201 4) . S D / - S D / - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 0 1 S T OCTOBER , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .