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2018 (12) TMI 624 - ITAT KOLKATAAddition made towards gross profit - undisclosed sales of the assessee - Held that:- Admittedly, the taxes paid thereon were out of inflated stocks. It is not the case of the revenue that the assessee had maintained two sets of accounts i.e. one for bank loan purposes and one for the purpose of income tax. Hence it could be safely concluded that the stocks were shown at a higher figure in the earlier years which were the same as submitted to the bank on a periodical basis. The assessee on realizing the shortage of 3093 MT of stock value at ₹ 16,10,67,387/- , had no other option but to recast the opening stock value as on 01.04.2011 or alternatively could have claimed the same as loss of stock which would be allowable as a regular trading loss u/s 28. AR has made an alternative submissions before us stating that from the profit & loss account of the assessee, it could be seen that the assessee had credited a sum of ₹ 3,53,50,000/- in his trading account towards sundry balances written off. This sundry balance written off obviously cannot be part of trading results of the assessee and accordingly the same requires to be ignored while computing gross profit. According to the ld. AR, the said sum of ₹ 3,53,50,000/-, if ignored, would only result in a gross loss of ₹ 2,04,00,547/-. Hence there cannot be any adoption of gross profit percentage thereon on the alleged undisclosed sales of the assessee for the year. We find lot of force in this argument of the AR and hold that in any case there cannot be any addition towards gross profit during the year by adopting the average gross profit rate of 6.48%. Accordingly, grounds raised by the assessee are allowed.
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