Brief about the case
The assessee was a partnership firm manufacturing & exporting gold jewellery. Being located in Noida Special Economic Zone (NSEZ) it claimed exemption of income under section 10A of the Act. The assessee was selected for scrutiny wherein the AO verified and allowed the claim of the assessee for exemption u/s 10A. During the year under consideration a survey u/s 133A of the Act was carried out and physical stock of gold 12kg and some loose leaflets of papers were found which did not reconcile with the books.
The assessee surrendered Rs.11 lakhs to cover up the irregularities of the business and short coming found during the course of survey. The AO made the addition of Rs.1,31,00,000/- on account of suppression of 12kg stock manufacturing charges and other discrepancies.
The issue went to CIT (A) which further affirmed AO’s order.
Thereafter, the assessee appealed to ITAT (Delhi) which partly allowed the appeal considering the fact that The gold recovered by the assessee from the wastage was in its regular course of business of manufacturing and export of gold jewellery and there was no local sale therefore it was eligible for exemption u/s 10A.
Facts of the case:
