TMI Blog2021 (2) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... to the market value of stock determined by the authorities as on the date of survey to ₹ 27.08 lakh, a reduction in the value of stock would be warranted to the tune of ₹ 4,60,360/- for finding out its cost price to the assessee. This amount of ₹ 4.60 lakh is, therefore, directed to be excluded from the addition of ₹ 8,81,692/- made and confirmed by the authorities in this regard. Addition being difference in cash as per cash book and physical cash found at the time of survey - HELD THAT:- The survey team counted physical cash and tallied it with the cash in hand as per cash book. There was excess cash of ₹ 73,228/- which was accepted by the assessee as an additional income, but not offered for taxation in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 14,57,764/-. A return of income was filed in which excess stock of ₹ 5,76,072/- only was declared in the Trading account for the pre-survey period. The assessee was called upon to explain as to why the remaining excess stock offered at the time of survey was not declared. The assessee tendered an explanation to the effect that certain purchase bills were omitted to be recorded and after considering such purchase bills there was no excess stock other than that declared. The Assessing Officer (AO) did not agree with the assessee s contention. After reproducing question Nos. 14 to 17 from the statement of the assessee recorded at the time of survey, he opined that the excess stock with reference to the amounts surrendered ought to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee filed a letter with the AO sometime in May, 2010 claiming that certain purchase bills were omitted to be recorded in the books of account at the time of survey, against which the stock was inventorized. It was thus claimed that if such bills were considered, the difference remains only to the tune of ₹ 5.76 lakh which was offered for taxation. I have examined the statement of the assessee recorded at the time of survey, from which it is apparent that there is no mention anywhere about the incomplete books of account or certain purchases having not been recorded. Once the assessee itself furnished trading account as on the date of survey prepared on the strength of the books of account regularly maintained by him, there ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e excess stock of ₹ 14.57 lakh was computed. I have seen from the Auditor s report in Form no. 3CD that the assessee was valuing its stock at Cost price. This deciphers that the opening stock was also valued at Cost price. In that view of the matter, the difference in stock at the time of survey ought to have been calculated w.r.t. the Cost price and not its Market rate. I have examined the trading account of the assessee split in two parts, i.e. before survey and after survey. If the amount of surrender of ₹ 5.76 lakh is excluded, the rate of gross profit in both the periods comes to roughly 17% each. In order to bring down the value of closing stock as on the date of survey from market price to cost price, the amount of gross ..... X X X X Extracts X X X X X X X X Extracts X X X X
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