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2024 (4) TMI 91 - ITAT AHMEDABADEstimation of income - Excess stock found during the survey operation - assessee has declared profit at the rate of 1.87% from AY 2007-08 to AY 2013-14 which can be considered a yardstick to work out the profit out of such unaccounted stock - whether the gross value of the unaccounted stock is liable to be added to the income of the assessee or some percentage of profit embedded in such unaccounted stock should only be brought to tax? - HELD THAT:- Unaccounted purchase in itself does not give any rise to the income to the assessee until it is sold out. Though the assessee has claimed before us that such unaccounted stock has either been sold in the year under consideration or has shown as part of closing stock or the same has been sold in the subsequent assessment year. AR appearing before us has not brought anything on record demonstrating from the financial statements that such unaccounted purchases have either been shown as part of the closing stock or sold out in the current/ subsequent year. Thus, in the absence of such details and to render equitable justice to the assessee and the revenue, we are of the view that some percentage of profit on such unaccounted purchases/stock is required to be added. The assessee before us has suggested vide letter dated 10-01-2022, such percentage of profit at the rate of 2% of the value of unaccounted stock. The above submission of the assessee has nowhere been countered by the revenue. However, we note that the above percentage of the net profit shown by the assessee is from disclosed business whereas the issue before us is of unaccounted stock found in the course of the survey. Therefore, we are of the view that the percentage of net profit of such unaccounted purchases/ stock should be higher than the profit already shown by the assessee from accounted/disclosed transaction. Hence, for the sake of justice and fair play, we hold that profit element embedded in such unaccounted/excess stock shall be brought to tax @ 5% - Decided partly in favour of assessee.
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