noticed by the Income-tax Officer that the assessee had undervalued the closing stock. The Income-tax Officer required the assessee to furnish the basis ... concealment of income so as to attract penalties. In a case involving undervaluation of stocks, there is never any attempt to avoid tax. The only
authorities at assessee's premise which revealed that assessee had
undervalued the import of marbles from foreign exporters named M/s
Henrauxx ... unsecured loans.
6.1. For deleting the addition of undervaluation of import of marbles,
ld. CIT(A) while allowing the ground raised by the assessee observed
account of alleged
2
I.T.A. No. 733/Mum/2026
'Undervaluation of sale price' and not on account of non accounting ... case initiated by the excise dept. pertained to alleged
Undervaluation' of 6 invoices with total quantity of 96000 Kg. of Sugam
part of the
assessee to reflect in the closing stock and thus undervalued the closing stock. He has
stated that the assessee ... repurchase price of the five flats in
the closing stock led to undervaluation of the closing stock and suppression of profit
and thus
other big companies have also started resorting to the same method of undervaluation of stocks as described above. In the case of Goodlass Nerolac Paints ... undervaluation of closing stock in this manner was Rs. 43,10,907 in 1979. The relevant extract from the annual report of the company
reflected in the purchase agreement was undervalued to the extent of
Rs.9,39,61,200/-.
5. The stand of the assessee, which has been ... upheld by the CIT(A), was
that there was no undervaluation of investment and further that in the
absence of any incriminating material to suggest
disclosed. This leads to two presumptions.
(a) Either the stock is grossly undervalued to
reduce profits.
(b) Or the production and sales quantities
are suppressed ... justified? Give industry comparison from published data.
6 How CS valuation UNDERVALUATION 4839840.8
is less than OS (53.9-48)x820312=
and
purchase rate
Accordingly, the assessee was asked to show cause
why the addition for undervaluation of the closing stock should not be made.
In response, the assessee ... addition of Rs. 1,36,55,830/- on account of undervaluation of the closing stock
by the assessee.
6. The learned CIT(A), vide impugned
following issues :-
(i) Addition of ` 17.70 lakhs on account of undervaluation of stock.
(ii) Rejection of claim for deduction u/s. 80IB ... sale of
yarn. The first issue relates to addition made towards undervaluation of
closing stock of finished goods. During the course of assessment proceedings
basis of which
the initial suspicion with regard to the undervaluation had been
raised were vague and could not be relied upon as it appeared ... understatement in the document not that the goods were sold at
undervalue. Understatement of a value is a mis-statement of value.
Selling goods
