2015 (6) TMI 886

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.... of Rs. 23,38,317/- made on account of stock discrepancy. 3. In the Cross Objection, the ground taken by the assessee is that the CIT(A) should have uphold the plea of the assessee that the alleged discrepancies and difference in the stock had been reasonably explained by the assessee, and hence no addition was warranted in respect of any of them even on merits. 4. Brief facts of the case are that the during the course of search, under section 132 of the Act, the difference in the physical stock at the factory premises and stock as per books of accounts was found. The AO made addition of Rs. 23,38,317/- as under: Particulars as per Assessing Officer Amount (Rs.) Value of raw material stock found in lesser in search and added ....

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...., in fact it was shortage. Further, in assessment order, the AO has wrongly taken the value of stock of Rs. 50,908/- as the shortage, whereas, in fact this was excess stock found. Further, the figure of Rs. 1,85,550/- was wrongly taken by the AO as excess stock of finished goods as against shortage. It was submitted that bill dated 6.10.2008 for Rs. 1,06,602/- was produced before the CIT(A) in respect of the samples. Thus, in respect of the same quantity of the stock, the assessee has accounted for the samples vide bill dated 6.10.2008 at Rs. 1,06,602/- by crediting the purchase account and debiting the sales account. Therefore, it was contended that the AO was not justified in making the addition of Rs. 5,28,872/-. It was also submitted th....

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....that even if there was some discrepancy on account of stock, the same is covered by the disclosure of Rs. 35 lakhs as the assessee has not claimed any benefit of this disclosure in the return of income. Therefore, the CIT(A) held that in his view, since total addition of Rs. 23,38,317/- was less than the additional income of Rs. 35 lakhs disclosed by the assessee in the return of income, and the assessee has not taken any credit of the additional income of Rs. 35 lakhs, the addition made to the extent of Rs. 35 lakhs gets explained by disclosure of Rs. 35 lakhs, and deleted the addition made by the AO of Rs. 23,38,317/-. 8. Before us, the DR supported the order of the AO, whereas, the AR supported the order of the CIT(A). 9. We have c....