2014 (10) TMI 845

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..... ITO. Not only that assessee also admitted additional income of ₹ 10 lakhs which factor was also accepted by the A.O. by making only addition of ₹ 40 lakhs. Since, entire deficit stock cannot be considered as income of assessee, Ld. CIT(A) is correct in deleting the addition made by A.O. as assessee has already admitted gross profit at 25% which is in tune with the gross profit earned during the year on other turnovers. In fact, A.O. himself has recorded the facts that turnover for the year is increased by 31.13% and gross profit by 50%. Since A.O. accepted the book results and nothing was brought on record other than the so-called statement of the partner admitting additional income, we uphold the order of Ld. CIT(A) and dismiss .....

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..... k to an extent of ₹ 40.83 lakhs and also admitted ₹ 10 lakhs as additional income. Therefore, total income declared is about ₹ 50.83 lakhs. Therefore, addition of ₹ 40 lakhs resulted in double addition. It was also contended that there were no unaccounted purchases and assessee has valued closing stock at the end of the year correctly and the gross profit declared was also more than earlier years. Considering these submissions of assessee and also on the reason that there are deficit stock cannot be considered as income, Ld. CIT(A) deleted the same by stating as under : 5.6. As could be seen from the facts of the case, it was only deficit in the stock, but not excess of stock, that could have invited the treatmen .....

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..... cannot be treated as income. Further, it appears, the stock taking was done at the cost or market price, and by taking the entire deficit stock as sales, the embedded gross profit therein was also deemed to have brought to tax. Further, the appellant has shown the additional income of ₹ 10,00,000/- in the Profit Loss Account on account of survey. As such it is held that there is no basis for making the further addition of ₹ 40,00,000/- solely on the basis of statement given by the partner of the firm, based on the deficit stock. This view was endorsed by the Hon'ble Supreme Court in the case of CIT Vs. Khader Khan ( 352 ITR 480). Further, in this case, the statement given by the partner of the firm was conditional and not .....

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