TaxTMI 
TaxTMI 
2015 (6) TMI 888
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....n this appeal reads as under:- The Ld. CIT(A) has erred in law and on facts and circumstances of the case by restricting the G.P. addition made by the A.O. of Rs. 35,91,400/- to the extent of Rs. 11,63,394/- on account of unaccounted sale of stock of Rs. 1,16,33,944/-. 3. The facts of the case are that there was search at the assessee's business premises on 11.02.2009. During the course of search, certain documents were found and seized. On the basis of those seized documents, the Assessing Officer was of the opinion that the opening stock as per books should have been Rs. 3,18,99,819/-, but the stock disclosed by the assessee in the books of accounts was Rs. 2,02,68,825/-. Therefore, the Assessing Officer presumed that the assess....
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....ck of raw material, it is seen that the assessing officer has applied the gross profit rate of the relevant year under consideration. Such gross profit rate is in respect of the finished products, in the case of the appellant, such product is electrical transformers. Therefore, the assessing officer has adopted the gross profit rate as per the books of account of the appellant which relates to the sale of finished products i.e. electrical transformers whereas the shortage in stock is of raw material only. The presumption on the part of the AO that the shortage in stock of raw material has, in fact, been converted into finished products and then sold outside the books of account is quite far fetched. There is no evidence on record to this ef....
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.... be applied on the sale of stock presumed to have been made outside the books. The Assessing Officer has applied the GP rate of 30.87% on the basis of GP in the books of accounts. However, the CIT(A) found that the assessee derives income from manufacturing and sale of electrical transformers. The GP of 30.87% disclosed in the books of accounts is on account of sale of finished goods i.e. electrical transformers; whereas, the shortage in stock is of raw material only. He was of the opinion that if there would have been shortage in the finished goods, then the Assessing Officer would have been justified in applying the GP rate of 30.87%. Since there is a shortage of raw material and there is no evidence that the same have been converted into....
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.... the G.P. addition made by the A.O. of Rs. 7,88,880/- to the extent of Rs. 90,000/- for AY 2008-09 on account of unaccounted sale of stock of Rs. 39,00,000/-. 7. The facts of the year under consideration are identical to the facts in Assessment Year 2004-05. We, therefore, hold that the CIT(A) was justified in applying the GP rate of 10% on the unaccounted sale of stock of raw material of Rs. 39,00,000. However, the CIT(A) has further noticed that the assessee had already disclosed the sum of Rs. 3,00,000/- as profit from sale of stock outside the books; therefore, after giving the credit of Rs. 3,00,000/- from the GP of Rs. 3,90,000/- (10% of Rs. 39,00,000/-), the CIT(A) rightly sustained the GP addition at Rs. 90,000/-. Accordingly, hi....