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2022 (11) TMI 525 - AT - Income TaxUnexplained excess stock - Addition on difference in the stock found during the course of survey - HELD THAT:- We find that Revenue has erred in comparing two accounting statements, which are un-comparable to each other because Revenue has taken book stock on the basis of Tally Software, whereas physical stock on the basis of ORIEL Software. It is also observed that AO failed to appreciate the explanation of the assessee in right perspective. The assessee with the help of audited accounts explained to the ld. AO that taxable income is being computed on the basis of ORIEL POS Software details. Excess stock has been worked out by AO on the basis of an erroneous mathematical exercise. This stock has been worked out not on account of particular items, rather on account of valuation difference, which has been worked out by appreciating two different Softwares for the purpose of book stock, vis-a-vis actual stock and if some exercise is being carried out in this manner, then difference is bound to happen. AO failed to appreciate this aspect during the assessment proceedings, when it was duly explained by the assessee. We have made reference to Closing Stock for A.Y. 2012-13 simply for the reason that these details are not being put up before us as a consequence to the survey, rather these details were put up before the Revenue prior to the survey. Therefore, in our opinion, addition is not sustainable. We allow this ground of appeal and delete the addition made to the income of the assessee on account of unexplained excess stock. Appeal of the assessee is allowed.
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