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2024 (2) TMI 1044 - ITAT CHENNAIAddition made towards excess physical stock during the survey - unexplained investment u/s 69 taxable at rates prescribed u/s 115BBE - CIT(A) deleted addition and directing to assess only Gross profit on stock difference as per the working given by the assessee during the assessment proceedings - assessee submitted that physical inventory was valued at selling price which would require adjustment of GST component as well as adjustment of Gross Profit component to bring the stock at cost price which was the basis of valuation of closing stock in the books maintained in the software - as argued AO should not have merely relied upon sworn statement but should have made additional efforts in proving that the findings of survey were right. HELD THAT:- From the facts, it emerges that physical stock was taken at selling price whereas the stock in the books of accounts was being reflected at cost price. Therefore, the physical stock was required to be adjusted for GST component as well as for Gross Profit component to make the two items comparable. The assessee furnished necessary workings in this regard during the course of assessment proceedings which could not be controverted by Ld. AO. No defect has been pointed out by Ld. AO in assessee’s workings. No quantitative differences have been noted. The Ld. AO has merely raised an objection that the assessee did not object to the valuation at the time of survey. As in the statement recorded during survey, the assessee demanded more time to reconcile the two components. The same was done at the time of assessment proceedings. Obviously, the onus was on Ld. AO to controvert the working of the assessee which was not done. CIT(A), in our considered opinion, clinched the issue in correct perspective. The deficit in stock could be termed as sales effected but not recorded in the books of account. CIT(A) has already estimated gross profit against the same and sustained the addition to that extent which is quite appropriate on the facts and circumstances of the case. The same has rightly been held to be business income - Decided against revenue.
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