ITO, Jaipur V. M/S BIHARI LAL HOLA RAM, Jaipur

ITA 684/JPR/2012

• Counselvise Citation: 68423114 RSA 2012
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 24-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Keywords: Bogus purchase; Unexplained investment; Business income; Income from undisclosed sources; Loose papers
• Section: 133A; 147

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 684/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2004-05 THE INCOME TAX OFFICER, WARD 1(1), JAIPUR. CUKE VS. M/S BIHARI LAL HOLA RAM, 75, GOPAL JI KA RASTA, JOHARI BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAEFB 3499 A VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/11/2015 MN ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 16/12/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 08/05/2012 PASSED BY THE LEARNED CIT (A)-I, JAIPUR FOR A.Y. 2004-05. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- I NOT UPHOLDING THE DISALLOWANCE OF 25% OF THE UNVERIFIABLE PURCHASES MADE BY THE A.O., ESPECIALLY IN VIEW OF THE FACT THAT ASSESSEE HAD NOT LINKED ITS SA LES EITHER AS THE SALES OF THE YEAR OR TO THE CLOSING S TOCK DECLARED IN THE BOOKS OF ACCOUNT. ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 2 (II) REDUCING THE GROSS PROFIT TO 20% AS AGAINST 25 .58% WORKED OUT BY THE A.O. (III) REDUCING THE GROSS SALE PRICE TO RS. 53,71,95 7/- AS AGAINST RS. 2,78,03,137/- WORKED OUT BY THE A.O. IN RESPECT OF UNRECORDED SALES OF THE GOODS FOUND MENTIONED IN THE APPROVAL MEMOS I.E. ANNEXURES 22 T O 24 IMPOUNDED DURING THE COURSE OF SURVEY. (IV) UPHOLDING SALE PRICE WORKED OUT ON THE BASIS OF WEIGHTED AVERAGE PRICE BASED ON THE SALE INVOICES OF VERY LIMITED PERIOD OF THE YEAR, AS AGAINST THE RAT E ADOPTED BY THE A.O. AFTER CATEGORIZING AND LINKING THE QUALITY AND RTE OF EACH OF THE CORRESPONDENCE GOODS MENTIONED IN BOTH THE DOCUMENTS I.E. APPROVAL MEMOS (ANNEX 22 TO 24) AND SALES INVOICES (ANNEXURES 1,2, AND 16). (V) NOT APPRECIATING THE FACT THAT THE PRINCIPLE LA ID DOWN IN AS-2 WITH REFERENCE TO FIFO/WEIGHTED AVERAGE METHOD OF VALUATION OF INVENTORY IS NOT APPLICABLE FOR ASCERTAINING THE SALE PRICE OF GOODS ALREADY SOLD. (VI) IGNORING THE CRUCIAL FACT THAT FOR BORROWING TH E PRINCIPLE OF FIFO FOR THE PURPOSE OF VALUATION OF T HE INVENTORY, PROPER STOCK REGISTER BASED ON THE QUALI TY AND THE RATE OF EACH ITEM OF OPENING STOCK, PURCHAS ES, SALES AND CLOSING STOCK SHOULD HAVE BEEN PREPARED, WHICH IS MISSING IN THIS CASE. (VII) TELESCOPING THE PROFIT ARISING AND TAXABLE IN A.Y. 2004- 05 IN ACCORDANCE WITH MERCANTILE SYSTEM OF ACCOUNTING, WITH THE UNEXPLAINED INVESTMENT IN THE EXCESS STOCK SURRENDERED IN THE YEAR OF SURVEY I.E. A.Y. 2006-07, ESPECIALLY IN THE VIEW OF THE FACT THAT ONL Y THE UNEXPLAINED INVESTMENT PART COMPRISED IN THE GROSS UNRECORDED SALES PRICE IN EARLIER YEARS HAVE BEEN TAXED AS EXCESS UNEXPLAINED STOCK SURRENDERED IN A. Y. 2006-07. ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 3 2. THE 1 ST GROUND OF REVENUES APPEAL IS AGAINST DISALLOWANCE OF 25% OF UNVERIFIABLE PURCHASES. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS IN TRADING OF PRECIOUS AND SEMI PRECIOU S STONES. THE FIRM HAD FILED RETURN ON 01/11/2004 DECLARING TOTAL INCOME A T RS. 35,110/-. THE ASSESSMENT WAS COMPLETED U/S 148/143(3) OF THE INCOM E TAX ACT, 1961 (IN SHORT THE ACT). THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CLAIMED PURCHASES OF PRECIOUS AND SEMI PRECIOUS STO NES AGGREGATING TO RS. 45,32,888/- INCLUDING PURCHASES OF RS. 43,58,89 7/- MADE FROM VARIOUS LOCAL PARTIES. AS PER INFORMATION AVAILABLE WITH THE DEPARTMENT, THROUGH THE SURVEYS CONDUCTED BY THE DI (INV) WING AND OTHER AUTHORITIES OF THE DEPARTMENT, REPORTEDLY A LARGE N UMBER OF SO CALLED SUPPLIERS OF PRECIOUS AND SEMI PRECIOUS STONES ARE INDULGING IN ISSUE OF MERE BILLS WITHOUT TRANSFER OF THE CORRESPONDING GOO DS MENTIONED IN THE BILLS ISSUED BY THEM. IT IS FOUND THAT THE ASSESSEE HAS CLAIMED PURCHASES OF RS. 18,02,655/- FROM THE FOLLOWING PARTIES: S. NO. NAME OF SUPPLIER ADDRESS OF SUPPLIER AS FURNISHED AMOUNT REMARK OF POSTAL AUTHORITY 1 ADINATH GEMS 3613, MSB KA RASTA, JOHARI BAZAR, JAIPUR. 1,24,409 NOT EXISTING 2 D J IMPEX 1477, JADIYON KA RASTA, CBHAURA RASTA, JAIPUR. 4,89,260 NO FIRM EXIST 3 ESDIRE INTERNATIONAL 2305, CHANDRAWAT HOUSE, JOHARI BAZAR, JAIPUR 1,51,131 NOT KNOWN ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 4 4 GOVINDAM JEWELLERS 1307, KEDIA BUILDING, JOHARI BAZAR, JAIPUR. 1,42,300 NOT EXISTING 5 NIKI ENTERPRISES 3338, JAILAL MUNSHI KA RASTA, CHANDPOLE BAZAR, JAIPUR. 2,62,887 NOT KNOWN 6 RAHUL EXPORTS 2353, GEEWALON KA RASTA, JOHARI BAZAR, JAIPUR 24,012 NOT EXISTING 7 RIDHI SIDHI GEMS 62/415, SHIPRA PATH, MANSAROVAR 2,73,995 ADDRESSEE MOVED 8 S.V. ENTERPRISES 1253, JAT KE KUWE KA RASTA, CHANDPOLE BAZAR, JAIPUR 3,34,661 INCOMPLETE ADDRESS TOTAL VALUE 18,02,655 THEREFORE, HE DISALLOWED 25% OF THE TOTAL UNVERIFIABL E PURCHASED AMOUNT OF RS. 18,02,655 AND MADE ADDITION OF RS. 4,50,663/ - AND ADDED BACK IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A), WHO HA D DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE TOTAL SALE OF THE ASSESSEE DURING THE ASSESSMENT YEAR IS DETER MINED AT RS. 1,16.85,007 ( 63,13,050 + 53,71,957) BY HOLDING THA T THE CONSISTENT STAND OF THE HONBLE ITAT, JAIPUR BENCH REGARDING TH E PAST HISTORY OF THE ASSESSEE BEING THE BEST GUIDE FOR ESTIMATING THE GP INCOME OF THE ASSESSEE, A GP RATE OF 20% APPEARS TO BE REASONABLE . THE ASSESSEE HAD ACCEPTED THE G.P. RATE OF 19% ESTIMATED BY THE LD C IT(A) IN THE SUBSEQUENT ASSESSMENT YEAR I.E. A.Y. 2005-06 AS REA SONABLE. THOUGH IT IS ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 5 HIGHER THAN WHAT HAS BEEN REFLECTED IN THE PAST YEAR BY THE APPELLANT AND ESTIMATED BY LD CIT(A) IN THE SUBSEQUENT ASSESSMENT YEAR. HE FURTHER HELD THAT REASONABLE IN ORDER TO COVER ANY EXTRA PR OFIT THAT MAY HAVE BEEN MADE BY THE APPELLANT ON ACCOUNT OF THE CLARIT Y AND COLOUR OF THE GEM STONES NOT MENTIONED IN THE APPROVAL MEMOS. THIS GIVES A G.P. OF RS. 23,37,001/- AFTER GIVING A SET OFF OF THE G.P. ALREADY SHOWN AT RS. 11,64,162/-. IT RESULTS IN CONFIRMATION OF A TOTAL NET ADDITION TO THE INCOME OF THE ASSESSEE OF RS. 11,72,840/- INSTEAD O F THE TOTAL G.P. ADDITION MADE BY THE A.O. OF RS. 75,62,705/- COMPRI SING OF RS. 4,50,663/- (ON ACCOUNT OF UNVERIFIABLE PURCHASES) A ND RS 71,12,042/- (AS G.P. ON UNRECORDED SALES). 4. THE LD. DR IS HEARD WHO RELIED ON THE ORDERS OF TH E LOWER AUTHORITIES. 5. LD. COUNSEL OF THE ASSESSEE RELIED ON THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ISSUE UNDER CONSIDERATION RELATES TO TAXABILITY OF UNVERIFIABLE PURCHASES OF PRECIOUS AND SEMI PRECIOUS STONES USED IN JEWELLERY MANUFACTURING. THE COORDINATE BENCH OF ITAT IN A BUNCH OF APPEALS, ON SIMILAR ISSUE, BY CONSOLIDATED ORDER IN THE CASE OF ANUJ KUMAR VARSHNEY & OTHERS VS. ITO (I TA NO. 187/JP/2012 ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 6 DATED 22-10-2014) HAS HELD THAT 15% OF UNVERIFIABLE PURCHASES SHALL BE HELD TO BE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES IN THE RELEVANT YEARS. IT IS ALSO BROUGHT TO OUR NOTICE TH AT BOTH REVENUE AND ASSESSEE HAVE GONE IN APPEAL BEFORE HONBLE RAJASTH AN HIGH COURT AGAINST THIS BUNCH OF ORDERS. IN SIMILAR CASES, TO AVOID MULTIPLICITY OF APPEALS, THIS BENCH HAS SET ASIDE THE IMPUGNED ISSU ES RAISED IN SUCH APPEALS, TO THE FILE OF THE AO TO DECIDE THE SAME A FRESH AFTER THE JUDGMENT OF HONBLE RAJASTHAN HIGH COURT IN THE CAS E OF ANUJ KUMAR VARSHNEY & OTHERS (SUPRA) IS DELIVERED. THEREFORE, FOLLOWING OUR EARLIER ORDERS ON THE SAME LINES, THE ISSUE RAISED IN SUBJE CT APPEAL IS ALSO ACCORDINGLY SET ASIDE TO THE FILE OF THE AO TO DECI DE AFRESH AFTER THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF ANUJ KUMAR VARSHNEY & OTHERS VS. ITO (SUPRA) AFTER GIVING ADEQUATE OPPO RTUNITY OF BEING HEARD TO THE PARTIES. THUS THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 7. GROUNDS NO. (II) TO (VII) OF THE APPEAL ARE AGAI NST REDUCING THE G.P. RATE ON REDUCED SALE BY GIVING WEIGHTED AVERAGE PRIC E, NOT FOLLOWING AS-2 AND GIVING TELESCOPING BENEFIT TO THE ASSESSEE. THE LD ASSESSING OFFICER OBSERVED THAT A SURVEY U/S 133A OF THE ACT WAS CARRI ED ON 18/8/2005. DURING THE COURSE OF SURVEY, THE BOOKS OF ACCOUNT A ND LOOSE PAPERS ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 7 IMPOUNDED AS PER ANNEXURE-22 TO 24, WHICH ARE APPROV AL MEMOS BEARING SERIAL NO. 605 TO 779. THE LD ASSESSING OFFICER OBSE RVED THAT AT THE TIME OF ISSUE OF NOTICE U/S 148, THE INVENTORY OF GOODS REFLECTED ON APPROVAL MEMOS WAS PREPARED. FURTHER, SALE PRICE OF FEW OF THE SE GOODS WERE ESTIMATED, ON PROVISIONAL BASIS BASED ON THE INFORM ATION AVAILABLE ON RECORDS FOR THE LIMITED PURPOSE OF QUANTIFYING THE INCOME THAT MAY HAVE ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 . ACCORDING TO THIS PRELIMINARY PROVISIONAL ESTIMATION, THE VALUE OF TH E GOODS REFLECTED ON THE APPROVAL MEMOS WAS ESTIMATED AT RS. 26,23,520/- IN R ESPECT OF THE ITEMS WHICH COULD BE VALUED ON PROVISIONAL BASIS. THE ASSES SEE WAS GIVEN A REASONABLE OPPORTUNITY TO FURNISH THE VALUATION OF SALE PRICE OF GOODS REFLECTED ON APPROVAL MEMOS. THE ASSESSEE HAD SUBMIT TED VALUATION VIDE LETTER DATED 24/11/2011 WHO HAD VALUED THE GOODS RE FLECTED IN APPROVAL MEMOS AT RS. 11,78,674/-. THE LD ASSESSING OFFICER H AD EXERCISED TO ASCERTAIN THE SALE PRICE ON THE BASIS OF IMPOUNDED DOCUMENTS. AS PER IMPOUNDED DOCUMENTS ANNEX.- 1,2 AND 16 WHICH ARE THE INVOICES ISSUED BY THE ASSESSEE TO VARIOUS PARTIES IN RESPECT OF TH E GOODS ACTUALLY SOLD TO THEM. ALL THE ITEMS AND ITS RATES REFLECTED ON ANNE X-1, 2 AND 16 WERE INVENTORISED. VARIOUS TYPES OF COLOURED STONES SOLD BY THE ASSESSEE WAS IDENTIFIED. IT WAS FOUND THAT THEN RATES ARE NOT UNI FORM, FOR THE APPARENT ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 8 REASONS THAT THE RATES OF COLOURED STONES DEPEND ON COLOUR, SIZE, TRANSPARENCY, DESIGNS ETC.. THE ASSESSING OFFICER AP PLIED SIMPLE AVERAGE PRICE, WHICH IS BASED ON THE TOTAL OF THE RATE OF EA CH STONE DIVIDED BY TOTAL NUMBER OF STONES, WAS WORKED OUT AS PER CHART-1 . THE SIMPLE AVERAGE RATE OF STONE SO WORKED OUT WAS ASSIGNED TO T HE GOODS COVERED BY THE APPROVAL MEMOS. THE TOTAL SALE PRICE OF THE G OODS REFLECTED ON THE APPROVAL MEMOS WAS ACCORDINGLY ARRIVED AT RS. 3,58,8 3,753/- AS PER ANNEXURE-2. THE ASSESSEE WAS PROVIDED COPY OF CHART- 1 AND CHART-2 FOR COMMENT DURING THE ASSESSMENT PROCEEDINGS. THE AR OF THE ASSESSEE VIDE LETTER DATED 19/12/2011 HAS SUBMITTED THAT THE ASSESSING OFFICER ALSO MADE HIS COMMENT AS UNDER:- (I) THE ASSESSEE HAS ARGUED THAT THE APPROVAL MEMOS ARE NOTHING BUT THE GOODS CARRIED BY THE ASSESSEE FOR D ISPLAYING AS WELL AS ISSUED TO CUSTOMER ON APPROVAL BASIS, WHIC H HAS BEEN RECEIVED BACK OR SALES INVOICES HAS BEEN RAISE D. THUS NO COGNIZANCE IS TO BE GIVEN TO THESE APPROVAL MEMO S. IN THIS REGARD IT MAY BE MENTIONED HERE THAT THE ASSESSEE HAS NOT ADDUCED ANY DOCUMENTS BEFORE WHEREF ROM IT COULD BE INFERRED THAT THE GOODS MENTIONED IN TH E APPROVAL MEMOS HAVE BEEN EITHER INCLUDED IN THE SALES OF AS SESSEE OR IT HAS BEEN RECEIVED BACK IN THE STOCK OF THE ASSES SEE. FURTHER, THERE IS NO LEDGER ACCOUNT TO ACCOUNT FOR THE TRANSACTIONS TOOK PLACE THROUGH THE APPROVAL MEMOS. ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 9 ASSESSEES ARGUMENT IS BASELESS AND MIS-LEADING AND HENCE REJECTED. (2) THE ASSESSEES 2 ND ARGUMENT IS THAT THERE IS NO EXPLANATION FOR THE DIFFERENCE BETWEEN THE VALUATION OF THE GOOD S COVERED BY THE APPROVAL MEMO AS DONE AT THE TIME OF INITIATION OF PROCEEDINGS U/S 147 AT RS. 26 LAKHS A ND THE VALUATION DONE NOW AT RS. 3.38 CRORES. IN THIS REGARD IT MAY BE MENTIONED THAT THE VALUE MENTIONED IN THE REASONS RECORDED U/S 147 DO NOT RE PRESENT THE FINAL VALUATION OF THE GOODS COVERED BY THE APP ROVAL MEMOS. ON THE BASIS OF THE PRIMA FACIE VALUATION OF FEW GOODS, IT WAS FOUND THAT THE VALUE COMES TO RS. 26,2 3,520/-. IT WAS ALSO MENTIONED ON THE REASONS RECORDED U/S 14 7 THAT THERE ARE OTHER ITEMS FOR WHICH THE RATE IS TO BE AS CERTAINED FROM THE PURCHASE/SALE BILLS OF THE ASSESSEE. THEREF ORE, THE FIGURE OF RS. 26,23,250/- GAVE THE A.O. TO FORM A B ELIEF THAT INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT. EX ACT QUANTUM OF INCOME ESCAPED IS TO BE WORKED OUT ON THE BASIS OF EXAMINATION OF THE DOCUMENTS IN THE LIGHT OF THE EXPLANATIONS THAT MAY BE PROVIDED BY THE ASSESSEE. ASSESSEES ARGUMENT IN THIS REGARD ALSO DO NOT CARR Y ANY WEIGHT. (3) FOR ARRIVING AT THE SIMPLE AVERAGE RATE, THE A.O. HAS RELIED ON ANNEXURE 1,2, AND 16 ONLY, WHICH CONTAIN ONLY LIM ITED INVOICES PERTAINING TO A.Y. 2004-05. ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 10 IN THIS REGARD, THE ASSESSEE WAS PROVIDED WITH THE CHART CONTAINING THE ENTRIES OF SALES REFLECTED IN ANNEXURE-1, ANNEXURE-2 AND ANNEXURE-16, WHICH WERE IMPOUNDED DURI NG THE SURVEY PROCEEDINGS. HE WAS REQUIRED TO EXAMINE T HE SAME AND TO FILE OBJECTIONS WITH DOCUMENTARY EVIDENC E. ASSESSEE COULD HAVE PREPARED A PARALLEL CHART INCOR PORATING ENTRIES OF ALL INVOICES PERTAINING TO THE PERIOD FR OM 01/4/2004 TO 31/3/2004 SO AS TO SUBSTANTIATE ITS CL AIM. IN THE ABSENCE OF ANY DOCUMENTARY SUPPORT TO SUBSTANTI ATE ITS CLAIM, OBJECTION IN THIS REGARD IS REJECTED. (4) WEIGHTED AVERAGE RATE SHOULD BE CONSIDERED INST EAD OF SIMPLE AVERAGE RATES APPLIED BY THE A.O. FOR WORKI NG OUT THE SALE PRICE OF THE GOODS COVERED BY APPROVAL MEM OS (ANNEXURES 22 TO 24). ASSESSEES ARGUMENT IN THIS REGARD HAS NO LEGAL SANCTITY/SUPPORT AND SUPPORT OF ACCOUNTING PRINCIPLES/GUIDELINES. IN THE CASE OF VALUATION OF STOCK/CLOSING STOCK, ASSESSEES ARGUMENT MAY CARRY WEIGHT. IN THAT CASE IT WILL HAVE NO IMPACT ON THE TOTAL INCOME THAT MAY ACC RUE TO THE ASSESSEE ON SALES OF SUCH STOCK. IF CLOSING STO CK IS VALUED BY ADOPTING THE WEIGHTED AVERAGED, THEN THE CLOSING STOCK WILL REFLECT THE SAME VALUE. BUT WHILE EFFECTING SAL ES, THE REAL PRICE REALIZED WOULD BE ACCOUNTED FOR. BUT, IN THE CASE OF DETERMINING THE SALE PRICE, T HE WEIGHTED AVERAGE METHOD HAS NO ACCEPTABILITY. THE GOO DS ADMITTEDLY SOLD THROUGH APPROVAL MEMO ARE IDENTIFIA BLE. ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 11 CONSIDERING ASSESSEES OBJECTION WITH REGARD TO THE SALE PRICE OF BEADS/DROPS/LINES, WHICH WERE INCLUDED FOR WORKING OUT THE AVERAGE PRICE HAS BEEN ISOLATED AND EXCLUDED F ROM THE QUANTITY OF CUT AND POLISHED STONES AND BOTH THE CA TEGORIES HAVE BEEN VALUED SEPARATELY. THE VALUE SO ARRIVED I S VERY CLOSER TO THE VALUE OF THESE ITEMS. THE VALUATION A DOPTING THE WEIGHTED AVERAGE METHOD GIVES A VERY ABSURD RESU LT AS IS APPARENT FROM THE TOTAL SALES PRICE WORKED OUT BY THE ASSESSEE. FURTHER, THE ASSESSEE IS IN POSSESSION OF THE BIL LS THROUGH WHICH IT HAS PURCHASED THESE GOODS. IT COULD HAVE LINKED THE SALES TO THE PURCHASE AND THEN ESTABLISH ED COST PRICE OF EACH ITEM TO ASCERTAIN THE SALE PRICE. THE ASSESSEE HAS AVOIDED THE SAME. INSTEAD OF COMING OUT WITH THE TRUTH THE ASSESSEE IS SIMPLY DOING LIP SERVICE TO THWART THE EFFORT OF VAL UING THE GOODS PROPERLY. THE OBJECTION OF THE ASSESSEE IS REJ ECTED. (5) NO DIFFERENTIATION BETWEEN THE CUT/POLISHED STON ES AND OTHER DROPS/BEADS/LINES. SAME AVERAGE RATES HAS BEEN ADOP TED FOR VALUING REGULAR QUALITY/SIZE OF THE PRECIOUS/SEMI P RECIOUS STONES AND ITS BEADS/DROPS/LINES. HE HAS ARGUED THA T BEADS/DROPS/LINES ARE OF INFERIOR QUALITY AND IT HA S VERY NOMINAL VALUE AS COMPARED TO THE REGULAR QUALITY OF PRECIOUS/SEMI PRECIOUS STONES. THIS OBJECTION APPEARS TO CARRY WEIGHT AND HENCE I T IS CONSIDERED IN THE FOLLOWING PARAGRAPH. ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 12 (6) IF THE GOODS REFLECTED IN THE APPROVAL MEMOS AR E VALUED, THE EFFECT TO THE ABOVE DISCREPANCY SHOULD BE GIVEN, IN STEAD OF PREPARING FRESH SHEET EACH TIME. SALE PRICE OF THE GOODS COVERED BY APPROVAL MEMOS HAVE BEEN RECOMPUTED BY SEGREGATING THE GOODS INTO TWO CATEGORY I.E. CATEGORY-1 COVERING THE BEADS/DROPS/L INES AND CATEGORY-2 COVERING THE REGULAR CUT AND POLISHED ST ONES. THIS WORKING WAS NECESSITATED AS THE ASSESSEE HAS NOT GIVE N THE PROPER WORKING ON THE BASIS OF ITS OBJECTION IN THIS REGARD. THESE WORKINGS ARE ATTACHED TO HIS ASSESSMENT ORDER A S MENTIONED IN THE FOLLOWING PARAGRAPHS. (7) G.P. ALONE SHOULD BE APPLIED FOR COMPUTING THE INCOME ARISING FROM THE APPROVAL MEMO AND THEN SET OFF OF SUCH GROSS PROFIT ARRIVED SHOULD BE ALLOWED AGAINST THE E XCESS STOCK FOUND DURING THE COURSE OF SURVEY; THIS OBJECTION OF ASSESSEE HAS ALSO BEEN CONSIDERE D AND EFFECT IS GIVEN IN WORKING OUT THE GROSS PROFIT ARISING FROM THE SALE OF GOODS COVERED BY APPROVAL MEMO. AFTER CONSIDERING THE ASSESSEES REPLY THE LD ASSES SING OFFICER HELD THAT ARGUMENT WITH REGARD TO VALUATION OF THE BEADS/DROPS /LINES ETC. CARRIED OUT WEIGHT. IT WAS GATHERED THAT BEADS/DROPS/LINES WE RE INFERIOR IN QUALITY AS COMPARED TO THE CUT AND POLISHED COLOUR STONES. THEREFORE, THE SALE OF THE GOODS REFLECTED ON THE APPROVAL MEMOS WA S WORKED OUT BY THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSE ES ARGUMENT THAT ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 13 BEADS/DROPS/LINES COLOURED STONES HAD BEEN SEGREGAT ED/ISOLATED AND VALUED SEPARATELY AS PER CHART CATEGORY-1, WHICH WAS AS PER ANNEXURE- R/1 TO THE ORDER OF THE ASSESSING OFFICER, WHICH HAS BEEN REPRODUCED ON PAGE 10 OF THE ASSESSMENT ORDER. THE LD ASSESSING OF FICER WORKED OUT SALE PRICE OF THE GOODS REFLECTED ON THE APPROVAL M EMO. HE FURTHER OBSERVED THAT THE BEADS/DROPS/LINES OF RESPECTIVE C OLOURED STONES HAD BEEN SEGREGATED AND ISOLATED FROM THE LIST OF GOODS COVERED BY THE APPROVAL MEMOS IN A CHART WHICH WAS ATTACHED WITH THE ASSESSMENT ORDER BY HIM AS ANNEXURE M/1. THE SALE PRICE WAS COMP UTED BY ADOPTING A SIMPLE AVERAGE RATE WORKED OUT IN ANNEXURE R/1. BY ADOPTING THE SIMPLE AVERAGE RATE, THE SALE PRICE OF THE BEADS/DR OPS/LINES REFLECTED IN THE APPROVAL MEMOS, IDENTIFIED AS ANNEXURE- 22 TO 2 4 IN SURVEY PROCEEDINGS COMES TO RS. 10,93,554/-. IN THE SIMILA R MANNER, THE REGULAR CUT/POLISHED COLOUR STONES HAD ALSO BEEN SEGREGATED /ISOLATED IN A CHART WHICH WAS ATTACHED TO THE ASSESSMENT ORDER AS ANNEXUR E M/2. ITS SALES PRICE HAD BEEN COMPUTED BY ADOPTING THE SIMPLE AVER AGE RATE WORKED OUT IN ANNEXURE R/2. BY ADOPTING THE SIMPLE AVERAGE RATE, THE SALE PRICE OF THE CUT/POLISHED COLOUR STONES REFLECTED IN THE APPROVAL MEMOS IDENTIFIED AS ANNEXURE-22 TO 24 IN SURVEY PROCEEDIN GS COMES TO RS. 2,62,54,218/-. THE THIRD CATEGORY OF GOODS WERE NOT IDENTIFIABLE WITH THE ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 14 GOODS IN ANY OF THE SALE INVOICES IMPOUNDED, ITS VA LUE HAS BEEN ADOPTED AT RS. 4,55,365/- AS COMMUNICATED BY THE ASSESSEE V IDE ITS LETTER DATED 12/12/2011. IN THIS WAY THE TOTAL VALUE OF GOODS REF LECTED IN THE APPROVAL MEMO WAS RS. 2,78,03,137/- IS AGAINST RS. 3.58 CRORE S WORKED OUT AND COMMUNICATED TO THE ASSESSEE VIDE NOTESHEET ENTRY D ATED 12/12/2011. THE ASSESSEES OBJECTION HAS DULY CONSIDERED BY THE ASSESSING OFFICER WITH REFERENCE TO WEIGHT, COLOUR, CUT AND DIFFERENT I TEMS BY THE ASSESSING OFFICER. THE LD ASSESSING OFFICER FOUND CURRENT G.P. RATE AFTER MAKING DISALLOWANCE ON ACCOUNT OF UNPROVED PURCHASE @ 25.58% . THE SAME WAS APPLIED ON THE SALE MADE THROUGH APPROVAL MEMOS, WHI CH WAS WORKED OUT AT RS. 71,12,042. THE LD ASSESSING OFFICER HAD N OT ALLOWED SET OFF OF EXCESS STOCK DISCLOSED BY THE ASSESSEE DURING THE C OURSE OF SURVEY IN SUBSEQUENT YEAR AGAINST THIS PROFIT ON THE GROUND T HAT THE ASSESSEE HAS MONEY IN ROTATION IN UNACCOUNTED PURCHASING AND SEL LING THE SAME WHICH HAS BEEN FOUND IN FORM OF EXCESS STOCK DURING THE C OURSE OF SURVEY. ACCORDINGLY HE MADE TRADING ADDITION OF RS. 71,12,0 42/-. 8. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD DELE TED THE ADDITION AS THE SAME WAS CONSIDERED AGAINST THE PROFIT ESTIMATED ON ACCOUNT OF SALES ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 15 MADE THROUGH APPROVAL MEMOS. THE FINDINGS OF THE LD CIT(A) ARE AS UNDER:- 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO A ND THE SUBMISSIONS OF THE AR. IT IS SEEN THAT THE ASSESSEE WAS UNABLE TO REBUT THE ONUS OF PROVING THE GENUINENESS OF THE TRANSACTIONS OF PURCHASES IN THE CASES WHERE SUFFIC IENT EVIDENCE HAD BEEN GATHERED AND PLACED ON RECORD BY THE DEPARTMENT. IT HAS BEEN THE CONSISTENT STAND OF THE HONBLE ITAT, JAIPUR BENCH TO CONSIDER THE BOGUS PURCHASES T O BE SUFFICIENT DEFECT FOR INVOKING PROVISIONS OF SECTI ON 145(3) IN THE CASE OF JEWELLERS. GIVEN THE FACT OF THE CASE OF THE ASSESSEE, EVIDENCE GATHERED BY THE DEPARTMENT AND T HE DECISIONS OF THE HONBLE ITAT, JAIPUR BENCH ON SIMIL AR FACTS, THE DECISION OF THE AO TO REJECT THE BOOKS OF ACCO UNT OF THE ASSESSEE U/S 145(3) IS UPHELD. 4.4 REGARDING ESTIMATION OF G.P. BY DISALLOWING 25% OF THE BOGUS PURCHASES IT IS SEEN THAT THE A.O. HAS NOT BR OUGHT ON RECORD ANY EVIDENCE TO SHOW THAT THE PURCHASE BILLS WERE INFLATED BY 25%. IT HAS CONSISTENTLY BEEN HELD BY T HE HONBLE ITAT, JAIPUR BENCH THAT THE PAST HISTORY OF THE CASE OF THE ASSESSEE IS THE BEST GUIDE FOR ESTIMATION OF THE G.P. OF THE ASSESSEE AS THEY HAVE PLACED RELIANCE ON JUD ICIAL PRONOUNCEMENT OF THE JURISDICTIONAL HIGH COURT IN T HE CASE OF GOTAN KHANIJ UDYOG VS. CIT 256 ITR 243. AS PER THE G.P. CHART SUBMITTED BY THE ASSESSEE IT IS SEEN THAT THE ASSESSEE ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 16 HAD SHOWN A G.P. RATE OF 18.35% ON TOTAL SALES OF R S. 56,71,300/-. DURING THIS A.Y. THE SALES AS REFLECTE D IN THE BOOKS OF ACCOUNTS HAVE INCREASED TO RS. 63,13,050/- AND A G.P. RATE OF 18.44% IS DECLARED. THE FINDING REGARDI NG THE ESTIMATION OF THE G.P. RATE IS GIVEN WHILE DECIDING THE SECOND GROUND OF APPEAL 8.1 REGARDING PROFIT ESTIMATED BY THE ASSESSING OFF ICER ON UNACCOUNTED SALE THROUGH APPROVAL MEMOS, THE LD CIT (A) HAS HELD AS UNDER:- 5.4 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO A ND THE SUBMISSIONS OF THE AR ALONGWITH THE PAPER BOOK FILED . THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SUR VEY OPERATIONS AT THE PREMISES OF THE ASSESSEE CERTAIN DOCUMENTS WERE FOUND ON WHICH IN WAS WRITTEN APPROVAL MEMOS. THESE WERE COMPLIED AS ANNEXURES 22,23 AND 24 . 1) THE CONTENTION OF THE AR IS THAT THESE ARE NOTHI NG BUT GOODS CARRIED BY THE ASSESSEE AS WELL AS GIVEN TO CUSTOMERS ON APPROVAL BASIS WHICH HAVE EITHER BEEN RECEIVED BACK OR SALES INVOICES HAVE BEEN RAISED. TH IS SUBMISSION OF THE AR IS NOT ACCEPTABLE BECAUSE HE H AS NOT BEEN ABLE TO GET THE SUBMISSION VERIFIED EITHER AT THE ASSESSMENT STAGE OR DURING APPELLATE PROCEEDINGS. I F THESE APPROVAL MEMOS WERE MERELY SENT FOR EXHIBITION THE N THE OUTGOING SHOULD HAVE BEEN REFLECTED IN THE STOCK RE GISTER AND SO ALSO WHEN THEY CAME BACK IN THE STOCK OF THE ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 17 ASSESSEE THEY SHOULD HAVE BEEN SHOWN IN THE STOCK REGISTER OF THE APPELLANT AND SO WOULD HAVE BEEN SUB JECT TO VERIFICATION. SIMILARLY, THE APPELLANT HAS CONSI STENTLY FAILED TO CORRELATE THE APPROVAL MEMOS WITH THE SP ECIFIC SALE BILLS RAISED AS MENTIONED BY HIM. IN ABSENCE O F ANY PROPER RECORDS TO SUBSTANTIATE HIS SUBMISSION IT IS NOT POSSIBLE TO ACCEPT THIS SUBMISSION OF THE AR. 2) THE HONBLE ITAT, JAIPUR BENCH IN THE CASE OF THE ASSESSEE FOR A.Y. 2006-07 ITA NO. 827/JP/2010 ORDER DATED 16/09/2011 HAS ALSO ENDORSED THIS VIEW IN PARA 3.14 ON PAGE 24 OF ITS ORDER. WHEREIN IT HAS BEEN SPECIF ICALLY MENTIONED THAT ANNEXURES 22 TO 24 CONTAINED APPROV AL MEMOS WITH SERIAL NUMBERS. THE HONBLE BENCH HAS GIV EN A SPECIFIC FINDING AS FOLLOWS:- THERE IS NO EVIDENCE THAT SUCH APPROVAL MEMOS ARE FOR THE ITE MS TAKEN FOR EXHIBITION. NO EVIDENCES FILED. ONE HAS TO APPRECIA TE THE EVIDENCE ON THE BASIS OF HUMAN PROBABILITY. APPROVA L MEMOS FRONT 601 TO 614 ARE FOR 04/01/2003 TO 17/08/2003. APPROVAL MEMOS NOT CO-RELATED TO SPECIFIC EXHIBITION. THE FINDING OF FACT OF THE HONBLE ITAT AS REPRODUCE D ABOVE CLEARLY SUPPORTS THE FINDING THAT THESE APPR OVAL MEMOS WERE SALES MADE OUT OF COURSE BY THE APPELLAN T AS THERE IS NO EVIDENCE AVAILABLE ON RECORD TO PROVE OTHERWISE. 3) THE NEXT CONTENTION OF THE APPELLANT IS THAT THE APPROVAL MEMOS ISSUED IN FAVOUR OF CUSTOMERS MAY BE TAKEN AS SALES AND THE APPROVAL MEMOS WHERE THE NA ME ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 18 OF THE PARTNER OF THE CONCERN OR THE NAME OF THE ST AFF IS MENTIONED MAY NOT BE PRESUMED TO HAVE BEEN SOLD BECAUSE THESE GOODS WERE TAKEN FOR DISPLAY IN EXHIBI TIONS OR FOR MARKETING AT OTHER STATIONS. IF ANY SALES MA TERIALIZED THE SAME WAS DULY RECORDED IN THE BOOKS. ONCE AGAIN THE APPELLANT HAS FAILED TO GET THE REQUISITE VERIFICAT ION DONE VIS A VIS THE STOCK TAKEN AS PER THESE APPROVAL ME MOS BY THE PARTNER OF THE FIRM OR STAFF. THE SALE BILLS OR ENTRIES IN THE BOOKS OF ACCOUNTS COULD NOT BE CORRELATED EITHE R. IT IS UNLIKELY THAT NO SALES WERE EFFECTED DURING EXHIBITI ONS. IN THE ABSENCE OF ANY RECORDS FOR VERIFICATION OF THE ACTUAL SALES THERE APPEARS TO BE NO REASON TO GIVE BENEFIT OF DOUBT TO THE APPELLANT IN VIEW OF THE OBSERVATIONS O F THE HONBLE ITAT AS MENTIONED ABOVE. THEREFORE, THE ENTIR E AMOUNT OF GOODS PERTAINING TO THIS A.Y. MENTIONED I N THE APPROVAL MEMOS ARE HELD TO BE SALES MADE OUT OF T HE BOOKS OF ACCOUNTS BY THE ASSESSEE. 4) THE NEXT POINT OF CONTENTION IS REGARDING THE VA LUATION OF THESE GOODS SOLD. THE A.O. HAS TAKEN THE NUMERICA L AVERAGE THAT IS THE TOTAL AMOUNT MENTIONED ON THE APPROVAL MEMOS DIVIDED BY THE NUMBER OF ITEMS SOL D. IT IS THE CONTENTION OF THE AR THAT WEIGHTED AVERAGE RA TE SHOULD HAVE BEEN TAKEN BECAUSE IN THE BUSINESS OF G EMS AND PRECIOUS AND SEMI PRECIOUS STONES THE VALUE OF ITEMS IS DEPENDENT UPON THE SIZE, QUALITY AND PURITY OF T HE STONE. IT HAS FURTHER BEEN SUBMITTED THAT WEIGHTED ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 19 AVERAGE SHOULD BE TAKEN FOR DETERMINING THE SALE PR ICE. THIS AVERAGE HAS BEEN WORKED OUT AT RS. 53,71,957/-. I CONCUR WITH THIS SUBMISSION OF THE AR SINCE THE VALU E OF GEMS DEPENDS ON CARATS (WEIGHT), CLARITY AND COLOUR. IN THE CASE OF THE ASSESSEE THE APPROVAL MEMOS DO NO T CONTAIN DETAILS REGARDING COLOUR OR CLARITY PROBABL Y BECAUSE IT DOES NOT HAVE QUANTIFIABLE, MEASURABLE UNIT. HOWE VER, THE WEIGHT HAS BEEN MENTIONED. THEREFORE THE WORKING O F THE SALE PRICE OF THE APPELLANT BY TAKING THE WEIGHT ED AVERAGE IS ACCEPTED AND THE TOTAL SALES OUT OF BOOK S ON THE BASIS OF THESE APPROVAL MEMOS IS HELD TO BE R S. 53,71,957/-. 9. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND AR GUED THAT THE LD CIT(A) HAD ADOPTED WEIGHTED AVERAGE METHOD TO EVALUA TE THE SALE MADE THROUGH APPROVAL MEMOS IN PLACE OF SIMPLE AVERAGE M ETHOD ADOPTED BY THE LD ASSESSING OFFICER, WHICH IS REASONABLE AND A CCEPTED IN THE LINE OF BUSINESS, THEREFORE, ORDER OF THE LD ASSESSING OFFI CER MAY BE CONFIRMED. 10. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS RE ITERATED THE ARGUMENTS MADE BEFORE THE LD CIT(A) AND FURTHER ARGU ED THAT THE APPROVAL MEMO WERE NOTHING BUT THE GOODS CARRIED BY THE ASSESSEE FOR DISPLAYING SALES TO CUSTOMER ON APPROVAL BASIS WHIC H HAS BEEN RECEIVED BACK OF SALES INVOICES HAD BEEN RAISED. THUS NO COG NIZANCE IS TO BE GIVEN ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 20 TO THIS APPROVAL MEMOS. HE FURTHER ARGUED THAT AT T HE TIME OF REOPENING, THE LD ASSESSING OFFICER VALUED THIS SALE ON UNAPPR OVED MEMO AT RS. 26 LACS WHEREAS IN ASSESSMENT HE HAS TAKEN VALUE AT RS. 3.38 CRORES. THE LD ASSESSING OFFICER HAD ADOPTED SIMPLE AVERAGE RATE O N THE BASIS OF ANNEXURE-1, 2 AND 16, WHICH CONTAINED ONLY INVOICES FOR A.Y. 2004-05. THE ASSESSEE HAD CARRIED OUT THE VALUATION OF SALE M ADE THROUGH APPROVAL MEMOS BY APPLYING THE WEIGHTED AVERAGE RATE AND WORKED OUT THE SALE AT RS. 53,71,557/- AS AGAINST WORKED OUT BY THE ASSESSING OFFICER AT RS. 2,78,03,137/-. HE DIFFERENTIATED THE VALUATION MADE BY THE ASSESSING OFFICER AND THE ASSESSEE AS UNDER:- CATEGORY VALUE AS PER A.O. ON THE BASIS OF SIMPLE AVERAGE VALUE AS PER ASSESSEE ON THE BASIS OF WEIGHTED AVERAGE I 10,93,554/- 8,14,997/- II 2,62,54,218/- 41,01,595/- III 4,55,365/- 4,55,365/- TOTAL 2,78,03,137/- 53,71,957/- HE HAS DRAWN OUR ATTENTION ON PAGE NO. 93 TO 102 OF THE PAPER BOOK AND ARGUED THAT THE ASSESSEE HAS MADE VALUATION ITE MWISE AGAINST THE VALUATION MADE BY THE ASSESSING OFFICER, WHICH IS MO RE NEAR TO ACCEPTED PRINCIPLE IN THE LINE OF GEMS AND JEWELLERY BUSINES S WHEREIN ENTIRE AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE, WHICH HAS BEEN DELETED BY THE LD CIT(A) VIDE ORDER DATED 15/11/2011 . HE HAS FURTHER ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 21 DRAWN OUR ATTENTION ON HONBLE ITAT DECISION IN ASSES SEES OWN CASE IN ITA NO. 827/JP/2010 A.Y. 2006-07 ORDER DATED 16/09/ 2011 AND PRAYED TO CONFIRM THE ORDER OF THE LD CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. REGARDING THE NET PROFIT DECIDED BY THE ASSESSING OFFICER AND PARTLY CONFIRM ED BY THE LD CIT(A), THE LD ASSESSING OFFICER MADE VALUATION OF SALE ON APPROVAL MEMOS ON THE BASIS OF AVERAGE METHOD. HOWEVER, THE ASSESSEE C HOSE TO APPLY WEIGHTED AVERAGE PRICE METHOD, IT IS A FACT THAT IN JEWELLERY BUSINESS, PARTICULARLY DIAMONDS ARE SOLD ON THE BASIS OF COLO UR, CUT, CLARITY AND CARAT, THEREFORE, THE LD ASSESSING OFFICER WAS NOT R IGHT TO APPLY SIMPLE AVERAGE METHOD OF VALUATION OF SALE MADE ON APPROVA L MEMOS. THE ASSESSEES CALCULATION OF SALE ON THE BASIS OF APPR OVAL MEMOS IS MORE SCIENTIFIC THAN THE ASSESSING OFFICER. THE LD CIT(A) HAD APPLIED G.P. RATE @ 20%. THE ASSESSEE HAS SHOWN G.P. RATE ON THE BASIS O F REGULAR BOOKS OF ACCOUNT @ 18.44% AS MENTIONED BY THE ASSESSING O FFICER ON PAGE 2 OF THE ASSESSMENT ORDER. THEREFORE, THE GP APPLIED B Y THE LD CIT(A) IS ALSO REASONABLE. FURTHER THE LD CIT(A) HAS ALLOWED T HE SET OFF AGAINST THE EXCESS STOCK FOUND DURING THE COURSE OF SEARCH, WHIC H IS ALSO REASONABLE ON THE GROUND THAT THERE IS NO EVIDENCE FOUND DURIN G THE COURSE OF ITA 684/JP/2012_ ITO VS. M/S BIHARI LAL HOLA RAM 22 SURVEY THAT EITHER FIRM OR PARTNER OF THE FIRM HAS TAKEN OUT THE INCOME UPON UNACCOUNTED SALE AND MADE EXPENDITURE OR MADE INVESTMENT OUTSIDE THE BOOK. THEREFORE, SHE RIGHTLY ALLOWED THE SET OFF UNACCOUNTED INCOME ESTIMATED BY APPLYING G.P. RATE ON SALE MADE THROUGH APPROVAL MEMO. 12. IN THE RESULT, THE REVENUES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/12/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 16 TH DECEMBER, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO, WARD 1(1), JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S BIHARI LAL HOLA RAM, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 684/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR