2014 (4) TMI 469

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....partners. The return of income was filed on 31.10.2006 declaring income at Rs.31,45,130/-. At the time of survey, the assessee has made a discloser of Rs.35 lacs. During the survey, the cash was found of Rs.4,67,075/- and the cash balance as per cash book on that day was 2 ITA No.54/Del/2010 only Rs.1,54,066/-. Thus, excess cash of Rs.3,13,009/- was found. The total stock inventory made at the time of survey valued at Rs.1,34,91,790/-. This inventory was made on tag price. The trading account of the assessee firm was drawn up to the date of survey and the closing stock as per books was worked out at Rs.71,00,000/-. Thus there was a variation in the value of stock found on the day of survey and the inventory was made on the basis of tag pric....

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....f 27%, as allowed by the survey party and as claimed by the appellant in valuing the closing stock, in the return of income was genuine as it, also included the amount towards Value Added Tax, which is chargeable @ 12.5%. As per their existing practice, the amount of VAT is not taken into the Profit and Loss account but is maintained separately in Ledger as VAT A/c. Therefore, out of the excess margin of 13%, which was added back to the income by the ld. AO due account need to be given for the VAT paid @ 12.5%. The ld. appellant counsel informed me that as per their Books of Accounts, which were accepted by the ld AO as well, the G.P. comes to 14.34% and not 14% as was allowed by the ld AO. Therefore, if the margin of 0.34% is also adjusted....