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TMI Blog2018 (5) TMI 512X X X X Extracts X X X X X X X X Extracts X X X X ..... did not make out a case for excess stock of ₹ 28.26 lakhs with the quantitative differences, we hold that the additional income admitted by the assessee amounting to ₹ 20,00,000/- in respect of stock difference is reasonable and accordingly we confirm the addition of ₹ 20,00,000/- and delete the balance. The appeal of the assessee on this ground is partly allowed. Addition of unsecured creditors - Held that:- We have verified the creditors confirmation letters received by the AO subsequently and the same required to be considered. Therefore, we are of the view that in the interest of justice, the issue should be remitted back to the file of the AO to decide the issue afresh on merits. We direct the AO to verify the conf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for making gold ornaments etc. which are not recorded in the books of accounts, the total value of the excess stock worked out to ₹ 28,26,294/- and the same was brought to tax. In addition to the excess stock, the AO also made the addition of ₹ 4,44,169/- on account of sundry creditors. 4. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the additions made by the AO. Aggrieved by the order of the CIT(A), the assessee is in appeal before us. 5. During the appeal hearing, the Ld.AR argued that a survey was conducted u/s 133A in this case. During the course of survey, Physical inventory was taken and the physical stock available was 9.142 Kgs and silver was 116.127 K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 380.800 Ornaments received from Smiths (against gold given and which were duly entered in the impounded stock register at the time of handing over to the smith which were also entered in smith stock register we are herewith producing the smith stock register for your kind perusal, which was duly verified and initialed by your officials at the time of survey 56.10 9362.886 Less : Sales made from 13.02.2009 to 18.02.2009 220.560 9142.326 Difference 0.036 Quantitative Reconciliation of Silv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, the AO should arrive at the stock difference as per the books of accounts and the physical stock available as on the date of survey and difference if any found should be valued as per the method of accounting followed by the assessee. The assessee further stated that the entire sales bills, purchase bills were made available to the AO to arrive at the physical stock. However, the AO chose to arrive at the value of closing stock difference by adopting the gross profit method which is incorrect approach for arriving the difference in stock. Though the AO raised the issue with regard to Sri Geetha Silver Works, the same was accounted in the stock books which can be verified from the books of accounts. The AO found that the said bill was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of survey, the AO has taken physical stock and the assessee also maintained stock record on computer which is evident from the assessment order. Except not making the entry of bill relating to Sri Geetha Silver Works, the AO did not pin point any difference in physical stock or any of the discrepancy. Though Sri Geetha Silver Works bill No.14 was not entered in the stock record the purchase bill is available at the time of survey and assessee stated the reason for not making the entry was late receipt of the bill. Since the receipt is available same can be considered for arriving at the stock. And there is no problem. Further though AO raised the issue of not making the entry in respect of Sri Geetha Silver Works, the AO d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 1,31,403/-. Considering the deficiencies found during the course of survey and the explanation offered by the assessee at the time of hearing and the fact that the AO did not make out a case for excess stock of ₹ 28.26 lakhs with the quantitative differences, we hold that the additional income admitted by the assessee amounting to ₹ 20,00,000/- in respect of stock difference is reasonable and accordingly we confirm the addition of ₹ 20,00,000/- and delete the balance. The appeal of the assessee on this ground is partly allowed. 8. Ground No. 5 and 6 are related to the addition of ₹ 4,44,169/- representing unsecured creditors. During the assessment proceedings, the assessee failed to submit the confirmation le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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