9911796707
TMI Blog2018 (12) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 2012-13. 2. The only issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in upholding the addition made towards gross profit in the sum of Rs. 1,04,37,167/-, in the facts and circumstances of the case. 3. The brief facts of this issue is that the assessee is an individual carrying on business in trading of Iron & Steel materials i.e. C.R. Oils, G. C. Sheets & H.R. Sheets etc. under the trade name M/s East India Steel Corporation. The return of income for the assessment year 2012-13 was filed by the assessee on 01.10.2012 declaring total income of Rs. 7,12,980/-. The assessee is an authorized dealer of Steel Authority of India Ltd. (SAIL). He was maintaining three godowns for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of granting of fresh loans/renewal of overdraft limits to the assessee, the assessee engaged his auditor for physical verification of stock before the stock audit was mandated by the bank. On physical verification of such stocks, the assessee found that the physically stocks were available only to the extent of 1034 MT valued at Rs. 4,96,87,367/- as against quantity of 4126.874 MT valued at Rs. 21,07,54,755/- as on 31.03.2011. The assessee found that the closing stock as on 31.03.2011 was inflated by Rs. 16,10,67,388/-. 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 Rs. 4,96,87,367/- in respect of Rs. 21,07,54,755 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and proceeded to treat the difference in value of opening stock of Rs. 16,10,67,387/- as sales made by the assessee in the market outside the books and accordingly taxed average gross profit at 6.48% thereon and made an addition of Rs. 1,04,37,167/- to the returned income. This action of the ld. AO was upheld by the ld. CIT(A). Aggrieved the assessee is in appeal before us. 5. We have heard rival submissions. At the outset we find that the following facts are not disputed before us: 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 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of income tax. Hence it could be safely concluded that the stocks were shown at a higher figure in the earlier years which were the same as submitted to the bank on a periodical basis. The assessee on realizing the shortage of 3093 MT of stock value at Rs. 16,10,67,387/- , had no other option but to recast the opening stock value as on 01.04.2011 or alternatively could have claimed the same as loss of stock which would be allowable as a regular trading loss u/s 28 of 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 Rs. 3,53,50,000/- in his trading account towards sundry balances written off. This ..... X X X X Extracts X X X X X X X X Extracts X X X X
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