TMI Blog2022 (12) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... has already included the profit component, the addition made by the AO, by firstly excluding the amount declared by the assessee and estimating the gross profit thereafter, results in double addition. Revenue has not brought anything on record to controvert the findings of the learned CIT(A) that the Sales Tax/VAT assessment order has accepted the assessee s books of account. Appeal by the Revenue is dismissed. - ITA No. 2266/Mum./2019 - - - Dated:- 2-12-2022 - SHRI PRASHANT MAHARISHI , ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL , JUDICIAL MEMBER Assessee by : Shri P. Daniel Revenue by : Shri Ajay Singh ORDER PER SANDEEP SINGH KARHAIL , J. M. The present appeal has been filed by the Revenue challenging the impugned order dated 21/01/2019, passed under section 250, of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals) 40, Mumbai, [ learned CIT(A) ], for the assessment year 2013 14. 2. In its appeal, the Revenue has raised the following grounds: 1. On the fact and circumstances of the case the Ld. CIT(A) erred in holding that the books of account of the assessee were not required to be rejected on the gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8,77,595, on the physical inventory of the stock during the survey, is unaccounted investment in stock of raw materials. The assessee also considered Rs. 3,59,68,280, as stock which was not yet been entered in the profit and loss account at the time of survey and declared a net profit of Rs 10,13,72,648 (i.e. Rs. 11,20,72,648 Rs. 1,00,00,000). Accordingly, the assessee considered unaccounted stock in the final account of the firm and filed a return of income on 29/09/2013, declaring a total income of Rs. 10,29,73,830, and shown a gross profit of 27.38% and net profit of 23.36%. During the assessment proceedings, the assessee furnished a comparative chart of gross profit and non-profit for the assessment years 2011 12, 2012 13, and 2013 14. The Assessing Officer ( AO ) vide order dated 30/03/2016 passed under section 143(3) of the Act held that as disclosure amount of Rs. 5,04,09,595 (i.e. Rs. 3,15,32,000 + Rs. 1,88,77,595) is unaccounted investment in stock, therefore, the same cannot be part of the regular income of the assessee firm. Accordingly, the AO computed the gross profit of the assessee at 16.86% after excluding the aforesaid disclosure amount. The AO also rejected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... % of Com pletion Total (Rs.) A. Work in Progress Ambernath Steefo Job 774 68,15,000 75% 51,11,250 Excel Job 785 29,00,000 80% 23,20,000 GD Ferro Job 798A 34,00,000 75% 25,50,000 GD Ferro Job 798B 26,50,000 75% 19,92,500 GD Ferro Job 798C 26,50,000 80% 21,26,000 Universal Rail DSL Job 807 24,11,500 80% 19,29,200 MSM Job 756C 42,00,000 80% 33,60,000 MSM Job 756E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned to Reply to Q.7 is much higher as indicated above. Accordingly why WIP of Cranes as stated in Reply to Q.7 providing the aggregate value of the Cranes at Rs.73,00,000/ be adopted as your WIP on 13/02/2013 and the difference of Rs. 315,32,000/- not be treated as your unaccounted investments in stock of WIP of cranes. Ans: Sir, I understand that the value of WIP of the Cranes has been understated by me. However, I am aware that the Cranes are almost complete and as such the value should have been adopted at their actually completed WIP. However, I don't have much to say in this regard and wish to offer the difference of Rs.3,15,32,000/- as my unaccounted investment in stock of WIP of cranes. 9. Thus, from the above, it is evident that the unaccounted investment in stock of WIP of cranes amounting to Rs. 3,15,32,000, is nothing but a difference of aggregated WIP of Rs. 5,73,00,000, based on sales value, and Rs. 2,57,68,000, i.e. the WIP as per the statement of stock submitted during the survey. Further, the amount of Rs. 5,04,09,595, wherein the WIP was computed on sales value, was offered to tax by the assessee in its return of income. The other component in the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 410 (Delhi) held that Non maintenance of Day to Day Stock Register is not a reason to reject books . The case is rather identical to the facts of the assessee s case. However, in the case of the assessee, Purchase Register, Sales Registers and Stock Registers were impounded by the A.O. The A.O. s statement that these registers are not maintained appears to be wrong. The Sales tax / VAT Assessment order is produced int eh paper book at Page 145 to 148 for the above period. The Dy. Commissioner of Sales Tax who carried out the assessment states that The assessee produced books of accounts closed and adjusted. (at p. 147 of the paper book). In view of the above said facts, I am of the opinion that the rejection of Bank results are unwarranted and the estimation additional gross profits are also uncalled for. Hence, the addition of Rs.2,09,64,740/ results in adding gross profit twice a component which has already been included int eh sale value of the work in progress which has been admitted by the appellant and accordingly honour the disclosure made during the course of survey and accordingly filed the return of income and paid entire amount of taxes thereon. Therefore, the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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