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2014 (12) TMI 972 - AT - Income TaxAddition on surrender made by assessee deleted – Difference in physical stock found at the time of survey and stock as per books of accounts – Held that:- CIT(A) was rightly of the view that the assessee explained the variation in stock supported by its stock register, purchase bills, sale register and reconciliation in respect of each and every item of stock inventory drawn at the time of survey - Though assessee had surrendered for the difference in stock as per physical stock and stock as per books of account but later on while finalizing its accounts, the assessee noted certain mistakes in the recording of certain transactions, therefore, he prepared a reconciliation statement and submitted the reconciled statement along with the explanation and all documentary evidences to the AO - AO did not comment upon such explanations. Again during assessment proceedings, the assessee had submitted the same explanation to which also AO failed to offer any comments - it was the duty of AO to verify the explanations given by assessee and should have found fault in the reconciliation before making addition - there was no change in the quantitative stock as on date of survey and as per books of accounts on the date of survey - the difference in quantities had occurred only due to wrong recording of certain transactions and the reconciliation was supported by documentary evidences - The submission of correct calculation of stock on the basis of documentary evidence and explanation cannot be termed as retraction as it is in the common knowledge that during survey operations in a limited period of time, exact stock cannot be calculated specifically in a case like this where different qualities and different products were dealt by the assessee - the action of assessee in submitting rectified position of stock was justified and therefore, action of Ld. CIT(A) in giving relief to the assessee is justified specifically in view of the fact that AO instead of verifying the claim just ignored it – thus, the order of the CIT(A) is upheld – Decided against revenue.
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