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2017 (12) TMI 577 - AT - Income TaxAddition towards suppression of gross profit - stock valuation - Held that:- In the instant case, the assessee filed monthly VAT returns based on the same books of accounts and the same was accepted without making any additions. Neither the bank authorities nor the A.O. made any effort to verify the actual stock to prove that there is existence of unaccounted stock under these circumstances and consistent with the view taken by the ITAT and various High Courts, we hold that the A.O. has not made out a case for making an addition referable to unaccounted stock as well as determining the profit on the alleged sale of such unaccounted stock. Under the circumstances, we uphold the order passed by the Ld. CIT(A). Similarly, with regard to the estimate of gross profit, there cannot be any uniform basis for estimating gross profit. There is no dispute with regard to the fact that there were deficiencies in the maintenance of books of accounts. When the A.O. as well as CIT(A) agreed on this issue, it may not be proper to substitute the case of the A.O. by an Appellate Authority, without any cogent reasons. Since the A.O. followed an acceptable basis such as averaging the 3 years profit rate, we are of the view that the order of the Ld. CIT(A) on this aspect deserves to be modified and we uphold the order of the A.O. of estimating the average rate of 36.85%. - Decided partly in favour of revenue.
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