TMI Blog2019 (2) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... ial questions of law are answered in the following terms, namely, when discovery of stock is based on physical verification then merely retraction of disclosure by the assessee is not sufficient to discard findings of physical verification and thus in the light of the law laid down in the case of Dialust (2002 (1) TMI 9 - BOMBAY HIGH COURT) information from survey may be used to justify addition, no illegality be attributed to such addition. Appellant's contention is that the tax Tribunal made addition of ₹ 10 Lacs resorting only to guess work. This too is not correct inasmuch as on physical verification excess stock was found and in fact the Tribunal accepted explanation given by the assessee that the supervisor present at the tim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the appellant that during such search appellant was forced to make a declaration to the tune of ₹ 24,50,200/- on account of difference in the stock along with ₹ 25,000/- on account of the expenses found recorded in the loose papers but not in the books of account, therefore a total surrender of ₹ 24,75,000/- has been recorded in the statement on 16.10.2006. 5- It is appellant's contention that since such declaration was obtained under coercion, he had subsequently retracted his statement of surrender vide communication dated 05.10.2007 and since such declaration is not on oath, therefore, is not binding on the dealer, as a result such income or any other notional income on the basis of such declaration could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the statement of disclosure but it was also based on the stock and as such taking book value of the stock partly allowed the appeal of Revenue restricting the addition to the tune of ₹ 10,00,000/-. 9- Learned counsel for the appellant submits that the law has already been settled by the Apex Court in case of Dhakeshwari Cotton Mills Ltd. V CIT 26 ITR 775 (S.C) , wherein Supreme Court has held that the gross profit rates on sales is not based on any material but when is based on pure guess and suspicion cannot be allowed. Placing reliance on such judgment of the Supreme Court, it is submitted that the addition made by the Appellate Tribunal to the tune of ₹ 10,00,000/- did not refer to any material which would hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on account of stock and the addition was made solely and wholly on the basis of statement recorded on 16.10.2006 and the surrender made there-under by the assessee. 11- This reveals that the value of the stock was worked out at the time of survey on the basis of physical verification and this is a finding of fact. The Appellate Tribunal has accepted the explanation of assessee that supervisor of the assessee was not having knowledge of the particulars of the stock so physically verified, and therefore, has taken value of the stock at ₹ 10 Lacs by way of estimate and preponderance of probability as against ₹ 24,09,475/- made by the A.O. 12- In case of Dialust v. Deputy Commissioner Of Income-Tax reported in (2003) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that the supervisor present at the time of survey was not knowing the value of the goods, and therefore, treating the book value of goods approximately at 40 percent of the MRP cannot be said to be an arbitrary guess work taking into consideration the traits of the industry, and therefore, there being no other material to prove to contrary, restriction of addition to a sum of ₹ 10 Lacs by way of estimate and preponderance of probability cannot be said to be arbitrary and illegal. 15- In fact ratio of the decision of the Supreme Court in case of Dhakeshwari Cotton Mills Ltd. (Supra) is not applicable because the gross profit rates were not based on any estimates or preponderance but were treated to be based on pure guess and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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