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TMI Blog2024 (2) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2021 u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred as the "Act"), passed by the ACIT, Central Circle-32, New Delhi, hereinafter referred to as the "AO"). 2. The assessee is engaged in the business of distribution of technology products i.e. sale of software, IT products and also provides software support services. The original return of the assessee, declaring total income at Rs. 14,75,91,670/-, was processed u/s 143(1) of the Act. However, based on the survey operations carried out in the premises of the assessee on 18.02.2019, notice u/s 143(2) of the Act was issued on 29.09.2020 and detailed questionnaire dated 16.09.2021 was issued u/s 142(1) of the Act. Learned AO had questioned the difference in closing stock as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion no.37, it is noticed that the trading account quoted in the said question was prepared by the Survey team wherein closing stock was worked out at Rs. 13,50,90,186/-, however, the exact basis of calculating the same has not been mentioned. It is further noticed that gross profit rate is being mentioned at 25.74% is the said trading account which the appellant in its written submissions have demonstrated that the same was worked out on the basis of preceding year financial statement. From the assessment order it is noticed that the appellant had submitted before the AO that the closing stock derived by the Survey team was based on the GP of the preceding financial year and the actual value of the closing stock appearing in the books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of Survey and the Director of the appellant company had duly given the location of the godowns/offices where the stock was lying along with the amount/value of stock. The details of stock given by the Director of the appellant company have not been doubted by the Survey team in the rest of the statement and there is no mention of any discrepancy with respect to valuation/physical verification of the stock. Even during the course of assessment proceedings the AO has not pointed out any discrepancy/error in the value of the closing stock as on the Date of Survey at Rs.8,26,96,940/- appearing in the books of accounts of the appellant company. There is also no allegation of non-existence of the physical stock lying at different premises of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of Rs.5,23,93,246/- made on said account is hereby deleted. 4. Revenue is in appeal, raising following grounds: "1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in allowing the appeal of the assessee stating that basis of calculating G.P. was not mentioned by the survey team without appreciating the fact that the assessee company was fully aware of it? 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was correct in allowing the assessee's appeal without commenting on the fact that the assessee company during the survey proceedings never questioned the correctness of trading account and never put forth the explanation itself before the AO? 3. Whether on the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as worked out by the survey team, was also duly explained by submitting that the trading account worked out by the survey team only depicted provisional figures. It was submitted that in response to the notice u/s 142(1), all relevant information were given about the nature of business activities, addresses of the office and godown where stock was kept, computation of total income and book profit and the comparative figures of G.P. and N.P. rate for last three years. It was submitted that addition of excess stock was erroneous and rightly deleted by the learned CIT(A) in the absence of any physical verification of stock statement given at the time of survey. It was submitted that even otherwise no addition could have been made for alleged e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nipulated and not accounted in due course of business, the Survey Team on the basis of applying gross profit of 25.74% recomputed the trading account and arrived at a closing stock figure. Learned CIT(A) has duly appreciated this arbitrary manner of valuing the stock. Learned CIT(A) has duly appreciated that at one hand the G.P. rate of 24.16% has been accepted as per the return of income and without any reasonable basis for the purpose of revaluation of stock trading account, the G.P. of 25.74% has been adopted. Thus, there is no error in the finding of learned CIT(A). 8.2 Even otherwise, the addition was made by learned AO u/s 69A of the Act, which is a deeming income provision, for which there should be specific evidence of ownership of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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