Stock discrepancy addition to taxable turnover was reduced where inspection defects were only trivial and unsupported by the record.

Stock and account discrepancies noticed during inspection did not justify an addition of 5 per cent to taxable turnover where the defects were treated as trivial on the facts. The books could be rejected technically, but the material on record did not support the higher addition, especially after the appellate authority had already reduced it. The addition was therefore found unsustainable at 5 per cent and reduced to 1 per cent in favour of the assessee.

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Issues: Whether the addition of 5 per cent to the taxable turnover could be sustained on the basis of the stock and account discrepancies noticed during inspection.

Analysis: The accounts were not posted up to date and certain discrepancies were noticed in stock verification, but the discrepancies were treated as trivial on the facts. The appellate authority had already reduced the addition to 3 per cent, and no serious error was shown to justify restoring the higher addition. The book version could be rejected technically, but the material on record did not support an addition at the rate of 5 per cent.

Conclusion: The addition of 5 per cent was not sustainable and was reduced to 1 per cent on the taxable turnover, in favour of the assessee.

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