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TMI Blog2022 (12) TMI 1116X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,88,77,595. When the sale value of the cranes, which was considered for computation of WIP, has already included the profit component, the addition made by the AO, by firstly excluding the amount declared by the assessee and estimating the gross profit thereafter, results in double addition. Revenue has not brought anything on record to controvert the findings of the learned CIT(A) that the Sales Tax/VAT assessment order has accepted the assessee s books of account. Appeal by the Revenue is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... materials of Rs. 1,88,77,595, on the physical inventory of the stock during the survey, is unaccounted investment in stock of raw materials. The assessee also considered Rs. 3,59,68,280, as stock which was not yet been entered in the profit and loss account at the time of survey and declared a net profit of Rs 10,13,72,648 (i.e. Rs. 11,20,72,648 - Rs. 1,00,00,000). Accordingly, the assessee considered unaccounted stock in the final account of the firm and filed a return of income on 29/09/2013, declaring a total income of Rs. 10,29,73,830, and shown a gross profit of 27.38% and net profit of 23.36%. During the assessment proceedings, the assessee furnished a comparative chart of gross profit and non-profit for the assessment years 2011-12, 2012-13, and 2013-14. The Assessing Officer ('AO') vide order dated 30/03/2016 passed under section 143(3) of the Act held that as disclosure amount of Rs. 5,04,09,595 (i.e. Rs. 3,15,32,000 + Rs. 1,88,77,595) is unaccounted investment in stock, therefore, the same cannot be part of the regular income of the assessee firm. Accordingly, the AO computed the gross profit of the assessee at 16.86% after excluding the aforesaid disclosure amount. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Rail & DSL - Job 807 24,11,500 80% 19,29,200 MSM - Job 756C 42,00,000 80% 33,60,000 MSM - Job 756E 40,00,000 80% 32,00,000 Bhimeswari - Job 772A 42,00,000 80% 32,80,000 Bhimseswari - Job 772D 56,50,000 75% 42,42,500 MSM - Job 756A 41,00,000 75% 30,80,000 ARS - Job 801 19,00,000 70% 13,30,000 Hitech - Job 734B 51,67,500 75% 38,79,500 Hitech - Job 734D 41,34,000 75% 31,00,500 Western Ind. - Job 792A 67,00,000 75% 50,25,000 Dubai Manufacturing Co. - Job 806A 44,10,000 50% 22,10,000 Apex Industries - Job 808 31,27,000 50% 15,63,500 Sub-Total 5,03,00,000 B. Work in Progress _ Mahape Bhimeshwari - Job 722C 41,00,000 80% 32,80,000 MSM - Job 756F 28,00,000 70% 19,60,000 A"IA - Job 800 22,00,000 80% 17,60,000 Sub-Total 70,00,000 Grand Total 5,73,00,000 Q.10 It is noticed frees your reply to Q.6 above that you have valued your WIP at much lower at 257,68,000 thereby indicating that the % of Completion in respect of above cranes as mentioned to Reply to Q.7 is much higher as indicated above. Accordingly why WIP of Cranes as stated in Reply to Q.7 providing the aggregate value of the Cranes at Rs.73,00,000/ be adopted as y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use as per the Assessing Officer the other method would have been more preferable. The method of accounting cannot be substituted by the Assessing Officer merely because it is unsatisfactory. What is material for the purpose of Sec. 145 of the I.T. Act, 1961, is the method should be such that the real income, profits and gains can be properly deducted therefrom." The Hon'ble Delhi High Court in the case of CIT v/s Jas Jack Elegance Exports (2010) 324 ITR 95 (Del.) held that if the accounts are not defective, book results cannot be rejected merely because there is fall in gross profits. It is seen in the instant appeal that the Survey party had valued the Work in Progress at the Sale Value. The Sale Value definitely includes the profit. Hence again excluding the declaration and estimating the gross profit was unwarranted. Even rejection of book results u/s 145(3) is also uncalled for. Besides, the Delhi High Court in the case of CIT v. Bindals Appearels (2011) 332 ITR 410 (Delhi) held that "Non maintenance of Day to Day Stock Register is not a reason to reject books". The case is rather identical to the facts of the assessee's case. However, in the case of the assessee, Purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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