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TMI Blog2025 (2) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... f the view that, for computing the stocks position as per the books of accounts as on the date of survey, the AO should have taken into consideration the stocks as per the books of accounts as on 31.01.2015, as against the stocks as per the statement submitted before the bank. Value of the stock - Physical valuation is reduced, and difference which is less than 10% of the stock physically found and valued by survey authorities. This difference could be for the reason that the valuation at the time of survey was based on an estimate value stated / informed by the assessee without referring to the bills and vouchers, in this regard. Therefore, such difference is nothing but due to such estimation.We find that the stock of the assessee as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both in the eye of law and on facts. 2(i) On the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming the action of AO who made addition amounting to Rs. 43,88,755/- on account of difference of stock valuation given to bank for credit facility. (ii) That the Ld. CIT(A) has erred both on facts and in law in rejecting the explanation and evidences brought on record by the assessee 3(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the 10% adhoc disallowance on account of i. Telephone expenses. ii. Staff welfare expenses, iii. Office maintenance expenses, iv. IV. Diwali expenses, and v. V Business promotion expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en stock position as on date of survey as computed by AO and the value of stock physically found. 3.2 During the course of survey, the stock of the physically verified which was valued at Rs. 60,87,362/-. The Ld. AR submitted that the stock statement submitted to the bank should not be taken as sacrosanct, as normally the stock value provided to the bank shows inflated prices of stocks in order to avail larger bank limits. The assessee has maintained regular books of account, including stocks register, and therefore, the stock valuation as per the books of account need to be considered as against the stock valuation given to the bank. It was further submitted that the managing partner, during the course of survey, admitted in his statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he stock physically verified was valued at Rs. 60,87,362/-, as against which the stocks statement submitted to the bank contained the corresponding value as on 31.01.2015 at Rs. 1,47,96,000/- and corresponding value of stock value as per books of account was Rs. 1,08,29,830/-. He further submitted that the AO, while computing the stock as on the date of survey, has been fair enough in allowing the adjustments with regard to the purchases as well as the cost of goods sold during the period from 01.02.2015 to 17.03.2015 and assessee has not been able to controvert such findings of AO. Therefore, the addition made by the AO is correct, and he prayed accordingly. 5. We have heard the rival submissions and perused the material available on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tements submitted to the bank. Therefore, we are of the view that, for computing the stocks position as per the books of accounts as on the date of survey, the AO should have taken into consideration the stocks as per the books of accounts as on 31.01.2015, as against the stocks as per the statement submitted before the bank. 6. Now, coming to the amount of addition, if the value of the stock as per the books of account as on 31.01.2015 is replaced, and further adjustments for purchases and the cost of goods sold during the period from 01.02.2015 and 17.03.2015 are made, the stock as on 17.03.2015 would be of Rs. 6509947/-, which is calculated as under: Value of stock as per books as on 31.01.2015 10829830/- Add: Purchases during 01.02. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Ld. CIT(A) concurred with the findings of the AO without going into the merits. After going through the orders of the lower authorities, we find that no single instant of personal use were pointed out by the AO and only on whims and fancies, the disallowance were made. Looking to these facts, we are of the view that no disallowance can be made in the present case of the assessee, more particularly, when there was a survey carried out in the case of the assessee, and revenue has failed to bring any evidence of personal use gathered as a result of survey. As the result, ground of assessee's appeal is allowed.
9. In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 21.02.2025 X X X X Extracts X X X X X X X X Extracts X X X X
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