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2017 (10) TMI 1142 - AT - Income TaxUnexplained investment in stock - determination of closing stock as on the date of survey - revenue has determined the closing stock which is higher than the value declared by the assessee - Held that:- The assessee has not maintained any stock register, therefore, the difference in the closing stock was arrived by applying the GP ratio as well as through physical verification. In the absences of stock register, the revenue had no option except to resort to determine the closing stock after applying the GP ratio. In the instant case, we find that the ld. CIT(A) has given the finding with regard to the GP ratio which comes to 12.81%, therefore, in our considered view, the closing stock, as determined by the AO at the rate of 13%, is correct and reasonable. The plea taken by the assessee that the goods worth of ₹ 3,37,288/-, was received prior to the date of survey but in this regard, we find that no such entry was recorded in the books of accounts. Had this been a genuine purchase, in our considered opinion, it must have entered in the accounting books of the assessee. Therefore, we are of the view that the claim of the assessee that the goods were purchased prior to the date of survey and these were subsequently returned back to these parties due to low quality material does not sound good. In view of the above discussion, we do not find any infirmity in the order of the lower authorities, hence this ground of appeal of the assessee is dismissed.
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