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TMI Blog2015 (3) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... d was convinced that there is no basis for AO to presume sales suppression. That being the case, it would have been fair and reasonable on the part of ld. CIT(A) to delete the addition made by AO entirely instead of sustaining the amount of ₹ 3 lakhs. There being no evidence on record brought by AO to even remotely established the fact that assessee has indulged in sales suppression, even part of the addition made by AO cannot be sustained. Thus we delete the addition of ₹ 3 lakhs sustained by ld. CIT(A). - Decided in favour of assessee. - ITA No. 1343/Hyd/2014, C.O. No. 61/Hyd/2014 - - - Dated:- 10-12-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Shri Rajat Mitra For the Respondent : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der, found that assessee had admitted ₹ 1,44,540 and ₹ 66,82,316 towards closing stock of 2628 sqft. of finished granite slab and sales of 1,34,595 sqft. of finished granite slab respectively. According to AO, assessee thus, has shown value of granite at ₹ 49.64 per sqft. Whereas per sqft. value of closing stock was shown at ₹ 55 per sqft. He further observed that in the audit report it is mentioned that finished goods are valued at lower of cost or realizable value. AO, therefore, concluded that the correct sale value is definitely more than ₹ 55/- per sqft. AO opined that by considering the cost price at ₹ 55 per sqft., correct sale value must be ₹ 63.25 per sqft. (Rs. 55+ 8.25 being GP @ 15%). Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant failed to produce stock register despite being specifically asked to do so. Valuation of opening and closing stock is an important aspect of ascertainment of true profit and improper valuation of stock can be a ground for rejection of books - Murugappa Chettiar vs. CIT (1986) 174 ITR 245 (Ker.). Moreover, in the case of J K Chemicals vs. CIT (1966) 62 ITR 34 (Bom.), it has been held that the presence or absence of a stock register is one of the relevant aspects to be taken into account in considering the acceptability of the book results and in certain businesses, absence of a stock register can be a material ground for rejection of books. Hence, the Assessing Officer is within his powers in rejecting the book results. However, Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld. However, his determination of aggregate sales during the year is found to be arbitrary and erroneous and the addition of ₹ 18,30,818 is being restricted to a lump sum addition of ₹ 3,00,000/-. 5. The ld. DR submitted before us that when ld. CIT(A) has upheld the action of AO in rejecting the book results and estimating the sales, there is no reason why he could have restricted the addition to ₹ 3 lakhs. 6. The ld. AR, on the other hand, submitted before us that there is no material before AO to show that assessee has suppressed its sales. Therefore, only by assumptions and presumptions, AO cannot infer suppression of sales and thereby reject the books of account. Ld. AR referring to the manufacturing and tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of sales suppression. As is evident from the assessment order as well as the order of first appellate authority, there is absolutely no basis for AO to form an opinion that assessee has suppressed sales. Only because assessee could not produce stock register, for whatever may be the reason, sales suppression cannot be inferred by adopting the value of stock at ₹ 55 per sft. when absolutely no defect or deficiency was found in the books of acocunt. Moreover, on perusal of the observations made by ld. CIT(A) extracted hereinabove, it is evident that ld. CIT(A) on the basis of facts and materials on record was convinced that there is no basis for AO to presume sales suppression. That being the case, it would have been fair and re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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