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Appeal to the High Court - Valuation of stock, Tag price
November, 28th 2006

CIT vs Kashmiri Lal
Citation 194 Taxation 324
The AO had decoded the tags of sale price of certain cloth material found during a search at the assessees premises and determined their value. On appeal, the tribunal determined the price and deleted the additions made to the assessees income by holding that it was incorrect to decode the tag price. Similarly, the tribunal found that since the assessee received the invoice for certain stock found in search later, the stock could not be considered as unexplained. The questions decided by the tribunal were questions of fact not raising any substantial question of law.

S.145 and s.260A of the Income Tax Act 1961 

High Court of Delhi

CIT vs Kashmiri Lal

I.T.A. No. 570/2005

Mr. T.S. Thakur and Mr. Shiv Narayan Dhingra, JJ

4 May 2006

Ms. J.R. Goel and Mr. Subhash Sharma, Advs. for the Appellant
Mr. O.P. Sapra and Mr. Sandeep Sapra, A. for the Respondent


Shiv Narayan Dhingra, J.:

LA search and seizure operation was carried at the residence and business premises of the assessee and the stock at the business premises of the assessee was valued by, the search team decoding the tags found on the stock. The code used by the assessee was as under:

1 2 3 4 5 6 7 8 9 0

(words having corresponding numerals).

2. There is no dispute about the value of stock assessed except Lehnga Dupattas of two different qualities on the basis of code. The team decoded the value of each piece of Lehnga of one quality at Rs. 12,000 and Rs. 25,000 of another quality and the total value of thirty eight pieces (30 of first quality and eight of second quality) was assessed at Rs. 5,60,000. Assessee claimed that there was a mistake in calculation of the stock value of these two items and items were in fact of value Rs. 1200 and Rs. 2500 per piece and not Rs.12,000 and Rs. 25,000 per piece as calculated. Therefore, the total value of lehngas was only Rs. 56,000. The Tribunal upheld version of the assessee and considered that the decoding in respect of these two types of lehngas was not correctly done and the assessee was entitled to reduction of Value of excess calculation amounting to Rs. 5,04,000. The other amount allowed by the Tribunal is a deletion of Rs. 7,80,000 on the ground that the assessee had shown invoices in respect of these stock and Assessing Officer had not taken into consideration the invoices along with the supporting documents filed by the assessee since same were not found during the course of search. The Tribunal believed the version of the assessee that invoices were not received from the purchaser before the date of search and for this reason they were not entered in the books of accounts. After considering the documents and the fact that payments were made from the accounts of the assessee of the above bills, the addition of Rs. 7,80,788 was deleted. The Department has preferred an appeal against the order of ITAT for deletion of these two accounts.

3. We have perused all the records and heard the counsel for the parties. We find that no substantial question of law arises in this case. The total value of Lehnga Dupattas is a question of fact. Similarly disallowing of deduction of Rs. 7,80,788 on the basis of purchase invoice is also a question of fact.

4. We find no ground to admit the appeal. Appeal is hereby dismissed.

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