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2018 (4) TMI 566 - AT - Income TaxUnaccounted excess stock of raw materials - stock found during the course of the survey action for tax - Held that:- Once the assessee had came forth with a disclosure of additional income in respect of unaccounted excess stock of raw material of ₹ 51,25,042/-, thereupon it was incumbent on its part to have credited the amount of such additional income in its profit and loss account for the year under consideration. However, we find that the assessee had credited the corresponding value of the unaccounted excess stock of raw material in the capital accounts of the partners in their respective profit sharing ratios. We are unable to persuade ourselves to subscribe to the aforesaid methodology adopted by the assessee Basis of showing the net profit of ₹ 53,98,134/- by the assessee during the year under consideration and the fact as to whether the disclosure of additional income of ₹ 51,25,042/- made in respect of the unaccounted excess stock of raw material during the course of the survey proceedings was offered for tax by the assessee, or not, requires thorough verification, therefore, in all fairness restore the matter to the file of the A.O. Before parting, we may further observe that the A.O while adjudicating afresh the issue under consideration shall take cognizance of the proviso of Sec. 69C which debars allowability of deduction of any unexplained expenditure which is deemed to be the income of the assessee - Decided in favour of revenue for statistical purpose.
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