TMI Blog2016 (5) TMI 1089X X X X Extracts X X X X X X X X Extracts X X X X ..... toto without ignoring any part of the impounded documents. This is what held by the CIT(A). However, after considering the alternative contention of the assessee, the CIT(A) found that peak credit needs to be calculated. Accordingly, he directed the Assessing Officer to calculate the peak credit for the purpose of making addition. As rightly found by the CIT(A), the payment made by the assessee needs to be set off against the receipts and taxable income needs to be computed only after giving set off. Addition of deficit stock - Held that:- The assessee itself filed working of deficit stock before the CIT(A). The CIT(A) after considering the working made by the assessee, found that the actual deficiency in stock is only at ₹ 71,61,652/-. The deficit stock was computed by the Assessing Officer by adding the manufacturing cost at 31% and gross profit at 16% to the opening stock. The Assessing Officer has also reduced the sales. The CIT(A) found that the method adopted by the Assessing Officer for computing the deficit stock is not correct. Accordingly, by accepting the working filed by the assessee, he restricted the deficit stock to ₹ 71,61,652/-. As rightly observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey operation, the Revenue Authorities found unaccounted cash transactions. Shri M. Ramamurthy, Managing Director of the assessee-company was examined on 13.3.2009. In response to Question Nos.51, 52 53, the said Shri M. Ramamurthy clarified that the cash receipt found in the seized documents relates to the period 1.4.2008 to 13.3.2009 which represent the advance received by various concerns for purchase from M/s JK Packages P. Ltd . Shri Ramamurthy has also clarified that the said receipt of advance is not reflected in the books of account. One Shri Muthukumar, the Accounts Manager of the assessee-company has also clarified that the advances received from the customers were not reflected in the books of account. Therefore, it is obvious that what was received by the assessee outside the books of account is unaccounted cash transactions. Hence, the Assessing Officer found that the same was the assessee s income. However, the CIT(A) found that the payments made by the assessee were to be set off against the receipts. The CIT(A) further found that the impounded material discloses the receipts and payments made by the assessee. Therefore, the CIT(A) found that the unaccounted transac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n toto. In the case before us, the Assessing Officer has taken the payment made by the assessee in the impounded document, however, ignored the receipts totally. The Assessing Officer cannot choose one part of the impounded document for the purpose of assessment. The entire payment and receipt has to be taken into consideration in toto without ignoring any part of the impounded documents. This is what held by the CIT(A). However, after considering the alternative contention of the assessee, the CIT(A) found that peak credit needs to be calculated. Accordingly, he directed the Assessing Officer to calculate the peak credit for the purpose of making addition. As rightly found by the CIT(A), the payment made by the assessee needs to be set off against the receipts and taxable income needs to be computed only after giving set off. In view of the above, this Tribunal do not find any reason to interfere with the order of the CIT(A). Accordingly, the same is confirmed. 6. The next ground of appeal is with regard to deficit stock. 7. Shri MSVM Prasad, ld. Departmental Representative submitted that during the course of survey operation, initially the Assessing Officer computed the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns on either side and also perused the material available on record. The assessee itself filed working of deficit stock before the CIT(A). The CIT(A) after considering the working made by the assessee, found that the actual deficiency in stock is only at ₹ 71,61,652/-. The deficit stock was computed by the Assessing Officer by adding the manufacturing cost at 31% and gross profit at 16% to the opening stock. The Assessing Officer has also reduced the sales. The CIT(A) found that the method adopted by the Assessing Officer for computing the deficit stock is not correct. Accordingly, by accepting the working filed by the assessee, he restricted the deficit stock to ₹ 71,61,652/-. As rightly observed by the CIT(A), gross profit cannot be added to the closing stock. The gross profit may be taken as income on the presumption that the deficit stock was sold outside the books of account. Since the deficit stock was worked out on the basis of the working filed by the assessee, the CIT(A) has rightly restricted the deficit stock to ₹ 71,61,652/-. The profit element embedded on the sale of deficit stock alone can be considered for addition and not the deficit stock. This Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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