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2022 (2) TMI 607 - AT - Income TaxAdhoc disallowance @ 15% of conveyance and vehicle expenses and miscellaneous expenses by the AO - HELD THAT:- We considering the turnover, nature of business operations and activities are of the opinion that such addition is without identifying the particular transaction and also the assessee could not substantiate the claims with the proper evidence and are not verifiable. We find the addition made by the AO @ 15% is on higher side and restrict the addition to the extent of 5% and this percentage is applicable for this assessment year only. Accordingly,we restrict the addition to the extent of 5% of the expenses discussed and modify the CIT(A) order sustaining the addition @ 5% and partly allow the grounds of appeal of the assessee. Unexplained Sales/investment - AO has treated the book stock and physical stock of the precious metals as out of book sale - with respect to the pearls, the AO has made the addition as excess stock and was confirmed by the CIT(A) by treating the difference between the book stock and physical stock of the pearls as unexplained investment in the course of stock valuation - HELD THAT:- AR submitted a chart reconciling the difference between the physical stock and stock as per the books of account for each precious metal with the documentary evidence and the minor difference arise due to weighing difference. Further the A. O. has not considered sales and sales return effected prior to the date of search. We considering the ratio of the decision of M/S. MAHENDRA BROTHERS EXPORTS PVT. LTD. AND (VICE-VERSA) [2021 (12) TMI 302 - ITAT MUMBAI] find that there is difference is stock which could not be reconciled completely in respect of the precious metals and supported with material evidence. Accordingly, we direct the Assessing officer to consider only gross profit in respect of said sale transactions difference after adjusting above said sales returns and partly allow the grounds of appeal of the Assessee.
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