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TMI Blog2018 (12) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... alternatively could have claimed the same as loss of stock which would be allowable as a regular trading loss u/s 28. AR has made an alternative submissions before us stating that from the profit & loss account of the assessee, it could be seen that the assessee had credited a sum of ₹ 3,53,50,000/- in his trading account towards sundry balances written off. This sundry balance written off obviously cannot be part of trading results of the assessee and accordingly the same requires to be ignored while computing gross profit. According to the ld. AR, the said sum of ₹ 3,53,50,000/-, if ignored, would only result in a gross loss of ₹ 2,04,00,547/-. Hence there cannot be any adoption of gross profit percentage thereon on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee on 01.10.2012 declaring total income of ₹ 7,12,980/-. The assessee is an authorized dealer of Steel Authority of India Ltd. (SAIL). He was maintaining three godowns for the purpose of storing his stock-in-trade i.e. two godowns were located at 21, Maharshi Devendra Road, Kolkata and one godown at 1, Riverside Road, Shalimer, Howrah. He was valuing his stock-in-trade year after year as per records and without conducting physical verification of the closing stock. The assessee carried on business after obtaining overdraft from Bank of Baroda, Burrobazar Branch on hypothecation of his stock. The bank loans were in subsistence for almost 40 years. Even Bank of Baroda had not conducted any physical verification of his stock but th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8/-. Accordingly, he had recasted the financial accounts for the financial year 2011-12 relevant to assessment year 2012-13 by replacing the actual opening stock figure of ₹ 4,96,87,367/- in respect of ₹ 21,07,54,755/-. This was done by the assessee for the reason of recognizing the actual loans of stock in the books of accounts to the tune of ₹ 16,10,67,388/- (3093 MT of quantity) and also for the reason that the bank auditor would not found any discrepancy in his stock. The assessee also felt the need of presenting the true picture of his books of account which also warranted him to make this adjustment in the value of opening stock. The assessee pleaded before the ld. AO to accept the value of opening stock by him and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) The assessee had availed overdraft facilities from Bank of Baroda against the hypothecation of his stocks. ii) The assessee has been submitting the stock statement to the bank on a periodical basis. iii) Physical verification of stocks was not carried out by the bank in the last four decades prior to the year under appeal. iv) The assessee carried out the physical verification of stock during the year and found shortage of 3093 MT of quantity valued at ₹ 16,10,67,387/-. We find that the assessee had given a plausible explanation that pursuant to physical verification carried out by his auditor, prior to the visit of stock auditor of the bank, shortage of 3093 MT were found and assessee in order to show true picture of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. The ld. AR has made an alternative submissions before us stating that from the profit loss account of the assessee, it could be seen that the assessee had credited a sum of ₹ 3,53,50,000/- in his trading account towards sundry balances written off. This sundry balance written off obviously cannot be part of trading results of the assessee and accordingly the same requires to be ignored while computing gross profit. According to the ld. AR, the said sum of ₹ 3,53,50,000/-, if ignored, would only result in a gross loss of ₹ 2,04,00,547/-. Hence there cannot be any adoption of gross profit percentage thereon on the alleged undisclosed sales of the assessee for the year. We find lot of force in this argument of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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