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2018 (5) TMI 512 - AT - Income TaxValuation of the closing stock - cost of market price adoption - Held that:- AO has gone ahead with arriving the value of closing stock by adopting the cost of market price whichever is lower by adopting the gross profit rate 15% which is incorrect. The assessee has furnished the reconciliation of stocks found at the time of survey and the actual stock difference was 0.036 gms in respect of gold and 0.027 gms. in respect of silver and with regard to the cloth business, it was ₹ 1,31,403/-. Considering the deficiencies found during the course of survey and the explanation offered by the assessee at the time of hearing and the fact that the AO did not make out a case for excess stock of ₹ 28.26 lakhs with the quantitative differences, we hold that the additional income admitted by the assessee amounting to ₹ 20,00,000/- in respect of stock difference is reasonable and accordingly we confirm the addition of ₹ 20,00,000/- and delete the balance. The appeal of the assessee on this ground is partly allowed. Addition of unsecured creditors - Held that:- We have verified the creditors confirmation letters received by the AO subsequently and the same required to be considered. Therefore, we are of the view that in the interest of justice, the issue should be remitted back to the file of the AO to decide the issue afresh on merits. We direct the AO to verify the confirmations and decide the issue afresh on merits. The assessee’s appeal on this ground is partly allowed.
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