TMI Blog2012 (9) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... profit shown by the assessee is 548570.47 after depreciation and interest which is about 2.54 % of gross sales. As discussed above the book results cannot be accepted as the valuation of stock shown by the assessee is not based on any sound accounting principle and AO’s version cannot be accepted for want of any independent findings, considering the facts in totality and in the interest of justice and fair play, we direct the AO to take net profit rate at 5 % When profit is estimated than all the related expenses are deemed to be allowed and further independent additions of expenses is not called for. W.r.t deduction u/s 80G, it is observed that receipt is given by organisation, registered and eligible for grant of 80G deduction, hence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 277200.00 which should be 66465.00 and there fore for all purposes the value of stock at the time of survey shall be taken as Rs. 3715214.00. 4. The assessee drew a tentative trading account on the date of survey and the stock in hand was shown at Rs. 2585768.00, which resulted in a difference of Rs. 14 lacs. The difference, after giving effect to the aforementioned arithmetical error shall be taken as 1129447.00. Cash amounting to Rs. 30000.00 was also found. Assessee was asked to justify the difference in stock and the cash so found. In his statement the assessee offered the difference in stock and cash for taxation. 5. The assessee filed return of income for the year under consideration declaring total income at Rs. 541411.00 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 31.03.2002 as given in the audited statement of accounts. This trading account is abridged for the sake of convenience. TRADING ACCOUNT Particulars Particulars Opening stock 2963062 Sales 21596309 Purchases 19106053 Cl.stock 4575273 Direct Expenses 1659664 Gross profit 2442802 10. It is assessee s contention that this closing stock of Rs.4575273 includes the stock surrendered at the time of survey. It is AO s contention that the surrender is over and above this closing stock. In case, AO s contention is accepted and closing stock is increased by the value of stock surrendered at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per annexure : 1. 125 /- per kg Range is from 45 /- to 175 /- per kg 2. 24 /- per kg Range is from 16/- to 28 /- per kg 3. 45 /- per kg Range is from 30 /- to 45 /- per kg 4. 6 /- per kg Range is from 3/- to 8 /- per kg 5. No mention of this item in the inventory list 6. No mention of this item in the inventory list 12. It is ovserved that there is a big variance in the valuation of stock by both sides . The contention of the assessee is that his method of valuation is cost price and the Survey party has valued the stock at average purchase price. Even if assessee s contention is accepted than also assessee has not given the basis of purchase price whether it is first purchase or last purchase price, as the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the facts in issue for the year under consideration. 15. We accordingly reverse the findings of the CIT [ A ] and partly allow revenue s appeal. 16. This appeal by the assessee shows his grievance against the order of the CIT [A] who confirmed the disallowances of expenses under various heads. 17. Ground Numbers 1 to 3 taken up together. We have estimated net profit @ 5 % of gross sales in Revenues appeal in ITA 4396/M/08, which means that when profit is estimate than all the related expenses are deemed to be allowed and further independent additions of expenses is not called for, there fore we allow ground numbers 1 to 3 taken together on the above finding. 18. Ground No. 4 relates to sustaining the disallowance of Rs.3500/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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