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2019 (12) TMI 1201 - AT - Income TaxAddition on account difference between stock declared land stock offered for taxation and treating the same as retraction from surrendered amount - Survey u/s 133A - HELD THAT:- No other incriminating material was found during the course of survey relating to unaccounted stock, excess physical stock was calculated by Revenue authority on estimative and presumptive basis. The stock statement prepared by the survey team on the date of survey itself seems to be on a loose wicket since the remarks column mentioning about the weighment of stock in trucks do not correlate with any actual weighment slip and also the alleged unrecorded stock is practical impossible to be stored on the available space with the assessee. Even after the retraction assessee had not retracted the total surrender but he prudently kept separate record of the sales of physical stock which was 250.03 MT whereas the book stock on the date of survey was 85.433 MT. The difference i.e. 165.27 MT is accepted as unrecorded stock which has been offered to tax by the assessee. CIT(A) erred in confirming the addition made by the AO for unrecorded stock of ₹ 84,00,000/- merely on the basis of recorded statement and without basis of any material evidence and there the same needs to be deleted. We, accordingly order so and allow ground no.1 raised by the assessee. Ad hoc addition for offering lower net profit stands confirmed by the CIT(A) - HELD THAT:- AO after taking average of last two years net profit rate applied the same on the turnover disclosed by the assessee and after comparing with the profits disclosed in the preceding year addition of ₹ 2,33,227/- made for lower net profit. We, observe that during the course of assessment proceedings itself it was submitted that the main reason for the lower net profit during the year was due to increase in the depreciation expenditure which increased by ₹ 2,54,512/- in comparison with the preceding year. This fact went unattended by both the lower authorities Had the AO had considered the increased amount if the depreciation expenses at ₹ 2,54,512/- then the net profit for the year under appeal would not have decreased very significantly from the preceding year and would have been consistent as per the past history. There is no justification with the Ld. AO of ignoring the material facts and making the addition for lower net profit of ₹ 2,33,227/- and the same deserves to be deleted. We, accordingly order so and delete the addition for ₹ 2,33,227/-. Ground No.2 of the assessee’s appeal is also allowed.
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