9911796707
TMI Blog2023 (9) TMI 372X X X X Extracts X X X X X X X X Extracts X X X X ..... have any impact on the profitability so declared by the assessee for the reason that such expired stock would again form part of the closing stock at the end of the financial year. Similarly, whether such stock has been destroyed or returned will not have any impact on the profitability so declared and what efforts have been taken by the assessee or should have been taken by the assessee are not relevant consideration for the reason that the same doesn t affect the profitability so declared by the assessee as the assessee has not claimed any loss on account of writing off of such expired stock which otherwise it is entitled to. In light of aforesaid discussions and in the entirety of facts and circumstances of the case, there is no basis t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 750/- for the Financial Year 2011-12 relevant to the impugned assessment year 2012-13 whereas, the closing stock for the Financial Year 2010-11 relevant to assessment year 2011-12 has been shown at Rs. 61,26,900/- and therefore, a difference of Rs. 55,10,150/- in the opening stock for the year under consideration as compared to the closing stock for the previous Financial Year was noticed by the AO. The assessee was asked to explain the reasons for reducing the same alongwith the documentary evidence. In his submission, the assessee submitted that after filing of the return of income for the Financial Year 201011, the assessee undertook a stock audit and detected stock amounting to Rs. 55,10,150/- which were not in saleable condition as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 55,10,150/- has since not been returned to the manufacturer and same is not believable as a person who has stock of expired medicines worth Rs. 55,10,150/- has not sent the same to the manufacturer for replacement. In view of the same, the amount of expired stock of Rs. 55,10,150/- was treated as saleable stock and thereafter the AO has applied a GP rate of 14.99% as declared by the assessee and has worked out the gross profit amounting to Rs. 9,71,439/- which was brought to tax in the hands of the assessee. 4. Being aggrieved, the assessee carried the mater in appeal before ld. CIT(A). It was submitted that there was a clerical error on the part of the Accountant, lack of care on the part of the Chartered Accountant who carried out audi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clerical error on the part of the Accountant is not acceptable as it belies the test of human probability. It was further held that the opening stock for assessment year 2012-13 is not consistent with similar opening stock for assessment year 2011-12 and assessment year 2013-14. It was, accordingly, held that the AO has been fair enough in treating what was claimed as expired stock as saleable stock and making the addition based upon the GP rate so declared by the assessee. 6. Against the said findings and the directions of the ld. CIT(A), assessee is in appeal before us. 7. During the course of hearing, the ld. AR reiterated the submissions made before lower authorities. It was submitted that there is no basis to hold that the expired st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. There is nothing on record that such expired stock has been sold by the assessee. We therefore find that mere nonaccounting of the expired stock as part of the opening stock wouldn't have any impact on the profitability so declared by the assessee for the reason that such expired stock would again form part of the closing stock at the end of the financial year. Similarly, whether such stock has been destroyed or returned will not have any impact on the profitability so declared and what efforts have been taken by the assessee or should have been taken by the assessee are not relevant consideration for the reason that the same doesn't affect the profitability so declared by the assessee as the assessee has not claimed any loss on account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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