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TMI Blog2024 (2) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... stock trading account, the G.P. of 25.74% has been adopted. Thus, there is no error in the finding of learned CIT(A). Even otherwise, the addition was made by learned AO u/s 69A of the Act, which is a deeming income provision, for which there should be specific evidence of ownership of something in the nature of money, bullion and jewellery or other valuable article. Certainly, the AO intended to make addition covering the excess stock under the phrase other valuable article and for which without any physical verification and identification of the stock in physical form, apart from the business of the assessee and attributing ownership of the same to the assessee, recourse to section 69A could not have been taken. To make such an addition u/s 69A, for such excess stock, if any, same should be separately identifiable and there should be specific allegation and evidence that this stock has no nexus with the stock otherwise found at the assessee s business. Same is not the case here. The appeal of the Revenue is dismissed. - SHRI G.S. PANNU, VICE PRESIDENT AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER For the Assessee : Sh. Ved Jain, Adv. Ms. Uma Upadhyay, CA For t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de addition on account of difference in closing stock mainly on the basis of working done by the Survey team at the time of Survey which was confronted to the Director of the appellant company in his statement recorded on oath at question no.37. On perusal of the question no.37, it is noticed that the trading account quoted in the said question was prepared by the Survey team wherein closing stock was worked out at Rs. 13,50,90,186/-, however, the exact basis of calculating the same has not been mentioned. It is further noticed that gross profit rate is being mentioned at 25.74% is the said trading account which the appellant in its written submissions have demonstrated that the same was worked out on the basis of preceding year financial statement. From the assessment order it is noticed that the appellant had submitted before the AO that the closing stock derived by the Survey team was based on the GP of the preceding financial year and the actual value of the closing stock appearing in the books of accounts as on the Date of Survey i.e. Rs.8,26,96,940/- was simply ignored by the Survey team without assigning any reasons. The said facts submitted by the appellant to the AO during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on Date of Survey. Further, it is also noticed that AO has quoted the GP declared by the appellant in the return of income at 24.16%, however, he has not rejected the same and has also not given any reasoning for relying on the estimated GP rate of 25.74% adopted by the Survey team at the time of Survey to work out the notional figure of closing stock at Rs. 13,50,90,186/-. On perusal of the tax audit report it is noticed that the appellant is valuing inventories at cost, or net realizable value, whichever is lower as per Income Computation and Disclosure Standards-II which has also not been doubted by the AO in the assessment order nor any discrepancy being pointed out in this regard. It is also not a case of the AO where the books of accounts maintained by the appellant were found to be unreliable and the same were rejected while making the assessment. Accordingly, in absence any material defect being pointed out by the AO the books of accounts of the appellant or the stock records regularly maintained by the appellant, the addition made by the AO on account of alleged excess stock found during the course of Survey is not justified and hence the addition of Rs.5,23,93,246/- m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visional figures. It was submitted that in response to the notice u/s 142(1), all relevant information were given about the nature of business activities, addresses of the office and godown where stock was kept, computation of total income and book profit and the comparative figures of G.P. and N.P. rate for last three years. It was submitted that addition of excess stock was erroneous and rightly deleted by the learned CIT(A) in the absence of any physical verification of stock statement given at the time of survey. It was submitted that even otherwise no addition could have been made for alleged excess stock u/s 69A. 8. The Bench has given thoughtful consideration to the material on record and the submissions. What immediately strikes, is the fact that at the time of recording of statement of Shri Rishi Khemka, vide question no. 17, for the verification of trial balance stock, specific query was raised and it was clearly answered by Shri Rishi Khemka. It will be appropriate to reproduce the same herein below: Q.17. On verifying the Trial balance as taken out on 18.02.2019, it is noticed that closing stock of Stock IT of Rs.7,55,96,908/-, Stock account software of Rs. 36,2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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