Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 1138 - AT - Income TaxAddition on account of under valuation of stock - addition made by the AO by increasing the cost of closing stock - the sale price declared by the assessee was determined after considering the DEPB effect whereas the assessee has not considered the DEPB effect while calculating the closing stock - AO made the addition which was subsequently deleted by the CIT(A), on the reasoning that there was no nexus between the valuation of closing stock vis-à-vis the benefit received by the assessee in the DEPB - HELD THAT:- It is the established practice that the closing stock of one year becomes the opening stock of the subsequent year. Accordingly if the AO increases the value of closing stock for the year under consideration then it is the duty to give the corresponding effect in the opening value of the closing stock. Thus there will not be any impact on the income declared by the assessee except the increase in the amount of income in one year and decrease in the amount of income in the subsequent year. On this reasoning as well, we are also not convinced with the findings of the AO - we are not inclined to interfere in the order of the Ld.CIT(A). Hence the ground of appeal of the Revenue is dismissed. Addition on account of lower gross profit - HELD THAT:- AO has increased the amount of gross profit by 0.15% on the reasoning that the assessee was not maintaining the record with respect to the wastage generated in the processing of materials. The gross profit depends on various facts such as sales price, cost of purchase and other direct expenses. In the given case the AO has not doubted either on the sales price or the purchases vis-à-vis stock maintained by the assessee. Therefore, in our considered view the amount of gross profit cannot be disturbed merely on the reasoning that there was a decline in the gross profit ratio in the year under consideration in comparison to the earlier year. Accordingly, we do not find any infirmity in the order passed by the Ld. CIT(A) and we, therefore, confirm the same. Hence, the ground of appeal of the Revenue is hereby dismissed.
|