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TMI Blog2015 (9) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in its later statement showing lower rates. There is no basis for checking the rates given by the assessee in its so-called inventory depicting difference in the rates of items. When the stock statement prepared by the Incometax authorities at the time of survey is pitted against a later one-sided statement with lower rates made by the assessee, we prefer to go with the former. The reason is obvious that it was drawn on the basis of actual verification done and as per the rates given by the employees of the assessee and as affirmed by the Chief General Manager and then the partner of the assessee firm. As such, we refuse to accept the veracity of the statement tendered during the course of assessment proceedings giving lower rates and go with the statement prepared at the time of survey. The impugned order is vacated on this issue and the addition made by the AO to the tune of ₹ 31.85 lac is restored - Decided against assessee. Addition on account of suppressed gross profit - rejection of books of accounts - CIT(A) deleted the addition - Held that:- AO categorically asked the assessee to give details about the break-up of closing stock, which the assessee failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was carried out of the stock available on that date with the help of the assessee s employees. As per such verification, the stock of the assessee came to ₹ 1,16,39,952/-. This disclosed excess stock to the tune of ₹ 31,85,652/-. Statement of Shri S.K. Vasudevaji, Chief General Manager of the assessee-firm was recorded at the time of survey, in which he was asked to explain the difference in stock amounting to ₹ 31.85 lac. He had no explanation to offer in respect of the discrepancy and, accordingly, agreed for taxation of the amount of excess stock to the tune of ₹ 31.85 lac. A partner of the assessee-firm, namely, Shri Sudhir Sekhri, who was out of Delhi at the time of survey, attended the office of the AO on 12.12.2003. After going through the statement of Shri Vasudevaji and other records, he approved the contents of the statement and agreed for the surrender of ₹ 31.85 lac. However, at the time of filing the return, the assessee did not include the surrendered amount in its total income. On being called upon to explain as to why the amount surrendered at the time of survey was not offered for taxation, the assessee came out with an explanation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on that the inventory was drawn by the income-tax authorities on the date of survey with the help of the assessee s employees on 5.12.2003. The same was examined and verified by Shri S.K. Vasudevaji, the Chief General Manager of the assessee-firm who accepted the correctness of the statement so drawn and offered to surrender the excess stock to the tune of ₹ 31.85 lac on the basis of such statement. Not only that, Shri Sudhir Sekhri, a partner in the assessee-firm, attended the office of the AO after a week s time on 12.12.2003. He also did not dispute the valuation of stock recorded in the statement and approved the contents of the statement made by Shri S.K. Vasudevaji. It is beyond our comprehension as to how the valuation of inventory which was made on 5.12.2003 with the help of employees of the assessee company, as approved firstly by its Chief General Manager on the date of survey and then by a partner after a week s time, can be branded as wrong at a later date. It is more so because there is no corroboration of the rates given by the assessee in its later statement showing lower rates. There is no basis for checking the rates given by the assessee in its so-called inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not give the details of accessories/other raw materials; various types of garments manufactured; details of semi-finished and finished goods and wastage, etc. He, therefore, refused to give any credence to the quantitative statement given by the assessee. The books of account were rejected u/s 145(3). Considering the fact that in the preceding year, the gross profit rate was 27.84% as against shown at 11.3% for the year in question, the AO applied GP rate of 20%, which resulted into an addition of ₹ 49.76 lac. The ld. CIT(A) concurred with the submissions advanced on behalf of the assessee that the books were properly maintained and were not liable to rejection. Accordingly, he deleted the addition. 5. After considering the rival submissions and perusing the relevant record, it is observed that the AO categorically asked the assessee to give details about the break-up of closing stock, which the assessee failed to adduce. Once there is no authentication of the value of stock as shown by the assessee, how such valuation can be accepted, more so, when the gross profit rate has sharply declined. No accounts can be said to have been properly maintained unless the figures of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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