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2010 (8) TMI 17 - HC - Income TaxUnexplained Investment - surrender of excess stock and excess scrap amounting to Rs. 75, 00,000/- during survey operation u/s 133A - This amount was added by the AO as unexplained investment in stock under Section 68 of the Act 1961 as this amount was neither added as the surrendered amount to the total income nor was mentioned in the audit report. However, the respondent assessee contended that at the time of survey operation under Section 133A, administrative, financial and other expenses were not considered and excess stock and scrap was eventually duly recorded in the books of accounts. Respondent-assessee further contended that sale of such stock and scrap was also recorded during the regular course of business after the survey operation. – Held that: - as the assessee had produced each and every invoice in respect of goods sold and produced quantity wise details of unsold stock as well as surrendered stock vis-a-vis stock sold before the end of the year duly supported by documents, it is not correct to allege that stock surrendered was not reflected in the books of account. In our opinion, the stock sold after the date of survey and the sales proceeds were duly credited in the accounts without claiming set off of its cost resulting in higher profits. Consequently the addition made by the AO cannot be retained.
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