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2021 (1) TMI 642 - AT - Income TaxAddition on account of under valuation of closing stock - AO exclusively relied on the stock valuation made by the survey team on the date of survey - HELD THAT:- Assessee is engaged in the business of manufacturing and trading in bricks. Action u/s. 133A of the Act was conducted in the business premises of the assessee on 20th January, 2015. The survey team has adopted rough method through guess work, to estimate virtually the closing stock of the assessee, as on the date of survey. The quantity of kachha and pucca bricks cannot be physically counted, when there is no such expertise in the members of the survey team and when there is no required manpower. The exact quantum of earth and coal was not available. Above all the stock valuation was done by the survey team on 20.01.2015 and this is extrapolated to value stock as on 31.03.2010. Such an exercise is arbitrary and erroneous. When the assessee is maintaining proper books of account and when the AO has not pointed out any defects in these books and when he did not reject them, it is not open for the AO to ignore these books of account and adopt the value of stock as estimated by the survey team. Such an addition cannot be upheld. Thus we delete the same. Eligible jurisdiction of AO - whether such an assessment order is valid in the eyes of law when the jurisdictional assessing officer has not issued a notice u/s. 143(2)? - HELD THAT:- This issue is no more res integra. The Lucknow Bench of the Tribunal in the case of Arti Securities & Services Ltd. [2020 (11) TMI 310 - ITAT LUCKNOW] and K.A. Wires Ltd. [2020 (3) TMI 418 - ITAT KOLKATA] have adjudicated, a similar issue, in favour of the assessee. Respectfully follow the same we hold that the assessment order is bad in law.
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