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2012 (9) TMI 34 - ITAT, MUMBAIAddition made during assessment u/s 143(3) of amount surrendered by assessee in respect of unexplained stock and cash during the survey - Revenue contended that assessee must honour his surrender - Held that:- It is assessee’s contention that closing stock mentioned in Trading A/c includes the stock surrendered at the time of survey. It is AO’s contention that the surrender is over and above this closing stock. It is observed that there is a big variance in the valuation of stock by both sides and both sides have failed to substantiate their respective claims, hence there is need to estimate profit. We find that the net profit shown by the assessee is 548570.47 after depreciation and interest which is about 2.54 % of gross sales. As discussed above the book results cannot be accepted as the valuation of stock shown by the assessee is not based on any sound accounting principle and AO’s version cannot be accepted for want of any independent findings, considering the facts in totality and in the interest of justice and fair play, we direct the AO to take net profit rate at 5 % When profit is estimated than all the related expenses are deemed to be allowed and further independent additions of expenses is not called for. W.r.t deduction u/s 80G, it is observed that receipt is given by organisation, registered and eligible for grant of 80G deduction, hence AO is directed to allow deduction u/s 80G.
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