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2014 (1) TMI 929 - ITAT HYDERABADStock in transit not included under closing stock – Escapement of income - Held that:- There was no infirmity in the above reasoning given by the CIT(A) for deleting the addition made by the Assessing Officer - In the absence of any justification for disturbing the method of accounting regularly followed by the assessee with regard to non-inclusion of the stock in transit in the closing stock, the Assessing Officer is not justified in concluding in the first place that income chargeable to tax has escaped assessment. There is no case for the Revenue to make the addition on account of under-valuation of closing stock, by the cost of stock in transit only in the year under appeal, having found no fault in the method of accounting followed by the assessee, and consequently not made any such addition in the earlier years - addition made by including the stock in transit in the closing stock, without making corresponding adjustments in the stock figures of earlier years, the accounts of the assessee would reflect for the year under appeal a distorted picture - any adjustment to the closing stock would have its corresponding impact in the opening stock of the succeeding year - such an adjustment to the closing stock in the first place is of no significance – Decided against Revenue.
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