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2019 (2) TMI 173 - MADHYA PRADESH HIGH COURTEstimation of income - Undisclosed stock - addition based on statement taken in search - disclosure made by an employee of assessee - Held that:- When there is a finding of fact that on the basis of physical verification, a difference was found in the goods with the assessee, and therefore, addition was made, then it cannot be said that the Tribunal erred in law while holding the additions to be valid because such additions were not solely based on the disclosure made by an employee of assessee which was later on retracted, but on the basis of stock verification, therefore, first and second proposed substantial questions of law are answered in the following terms, namely, when discovery of stock is based on physical verification then merely retraction of disclosure by the assessee is not sufficient to discard findings of physical verification and thus in the light of the law laid down in the case of Dialust (2002 (1) TMI 9 - BOMBAY HIGH COURT) information from survey may be used to justify addition, no illegality be attributed to such addition. Appellant's contention is that the tax Tribunal made addition of ₹ 10 Lacs resorting only to guess work. This too is not correct inasmuch as on physical verification excess stock was found and in fact the Tribunal accepted explanation given by the assessee that the supervisor present at the time of survey was not knowing the value of the goods, and therefore, treating the book value of goods approximately at 40 percent of the MRP cannot be said to be an arbitrary guess work taking into consideration the traits of the industry, and therefore, there being no other material to prove to contrary, restriction of addition to a sum of ₹ 10 Lacs by way of estimate and preponderance of probability cannot be said to be arbitrary and illegal. In the present case addition is not based on guess but on the basis of estimates and preponderance which could not be refuted by the assessee, and therefore, addition cannot be faulted with. The view taken by the Tribunal is a possible view and is not based on any wild guess or suspicion. - Decided against assessee
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