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2024 (2) TMI 214 - ITAT DELHIExcess stock u/s 69A - GP estimation - basis of calculating G.P. - difference in closing stock as per the trading account and stock statement taken from SAP Software - survey team had taken G.P of previous year - CIT(A) allowing the appeal of the assessee stating that basis of calculating G.P. was not mentioned by the survey team - HELD THAT:- Now without making any efforts to verify the stock in physical form by making any inventory or other mode and without finding any incriminating evidences showing that the stock reflected was manipulated and not accounted in due course of business, the Survey Team on the basis of applying gross profit of 25.74% recomputed the trading account and arrived at a closing stock figure. Learned CIT(A) has duly appreciated this arbitrary manner of valuing the stock. CIT(A) has duly appreciated that at one hand the G.P. rate of 24.16% has been accepted as per the return of income and without any reasonable basis for the purpose of revaluation of stock trading account, the G.P. of 25.74% has been adopted. Thus, there is no error in the finding of learned CIT(A). Even otherwise, the addition was made by learned AO u/s 69A of the Act, which is a deeming income provision, for which there should be specific evidence of ownership of something in the nature of money, bullion and jewellery or other valuable article. Certainly, the AO intended to make addition covering the excess stock under the phrase “other valuable article” and for which without any physical verification and identification of the stock in physical form, apart from the business of the assessee and attributing ownership of the same to the assessee, recourse to section 69A could not have been taken. To make such an addition u/s 69A, for such excess stock, if any, same should be separately identifiable and there should be specific allegation and evidence that this stock has no nexus with the stock otherwise found at the assessee’s business. Same is not the case here. The appeal of the Revenue is dismissed.
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