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2012 (9) TMI 391 - AT - Income TaxSurvey on 18.02.2009 followed by assessment u/s 143(3) – addition under head such as suppression of sales - investment in purchases corresponding to unaccounted sales – under valuation of closing stock - Bogus liability (existing sundry creditors) - bogus liability (non existing s/creditors) - dis-allowance u/s 40A(3) – CIT(A) deleted the addition except addition made for suppression of sales by applying GP at 12% - Revenue contesting deletion of various additions made whereas assessee contesting rate of GP – Held that:- It was the survey operation which resulted in finding by CIT(A) that the suppressed sales are not undisclosed income of the assessee. Sales were computed suppressed after a gap of 11 months by AO The technical accounting of the closing stock and the advances received from the prospective buyers whether could be shown in the closing stock when the period for purchase and sales exceeded one year was not accepted by the AO r. CIT(A) therefore thought it fit on the basis of facts brought on record in his order in pursuant to the survey operation carried out that the purported closing stock which may have been in the hands of the buyers already or were to be booked as sales to be shown against the purchases has already been part of the books of account would at best result into bringing into tax the purported margin on the gross in the sales when the main ingredient leading to computation of gross rate of margin is purchase, sales and stock. Therefore, addition on account of valuation of closing stock, bogus liabilities, dis-allowance u/s.40A(3) and investment in purchase corresponding to unaccounted sales are rightly deleted. The Books of account could not be changed as per the finding of the Assessing Officer. It is considered fair that the rate of gross profit margin at 13% on the purported suppressed sales as have been computed and confirmed by the CIT(A) to be restricted at 12% to meet the ends of justice – Decided partly in favor of assessee.
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