2016 (3) TMI 447

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....acts and in the circumstances of the case, the order of Ld. CIT(A) is bad in law and not in consonance with facts of the case. 2. On the facts and in the circumstance of the case, the Ld. CIT(A) had erred in law by deleting the addition of Rs. 39,20,490/- in respect of suppressed sales and inflated closing stock in his P&L a/c. 3. On the facts and in the circumstance of the case, the Ld. CIT(A) has ignored the observation/recalculation of closing stock at Rs. 1,63,14,265/- against declared value of closing stock by the assessee at Rs. 2,04,85,000/-. 4. On the facts and in the circumstance of the case, the Ld. CIT(A) has ignored the observation of the A.O. for applying Net Profit @ 6% against @ 5.35% shown by the appellant. 5. The ap....

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....ed closing stock and suppressed sales. Accordingly, the AO worked out the profit on these suppressed sales at Rs. 39,20,490/- by applying the rate of 94% and added the same to the income of the assessee. 8. Aggrieved, the assessee went in appeal before the ld. CIT (A) who deleted the addition by observing as under :- "7. I have carefully considered the submissions of the appellant, the facts of the case and the points made by the AO in the assessment order. The observation of the AO with regard to the addition of Rs. 39,20,490/- are as under.- "He has sold flats valued at Rs. 2,02,02,0001- out of opening stock of Rs. 2,38,41,000/-. The net profit worked out by the auditor is @ 5.35%, if this is taken @6% on expenditure involved etc. th....

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....alue of the closing stock at Rs. 1,63,14,265/- by - - applying a net profit of 6% as against the NP rate of 5.35% shown by the appellant resulting into a difference of Rs.(-) 1,31,313/- (65% on sales of Rs. 2,02,02,000/- ) - by ignoring the P&L expenses except for construction expenses resulting in the difference of Rs. 45,45,351/- - by ignoring two credit side amounts of Rs. (-) 2,43,585/- i.e. Rs. 1,35,000/- shown on account of renovation / customization receipts and Rs. 1,08,585/- on account of interest income. 10. By thus applying his own calculations the AO arrived at the value of the closing stock at Rs. 1,63,14,265/- resulting in a difference of Rs. 41,70,735/- between the closing stock shown by the appellant and as worked ou....

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.... sales is deleted." 9. The ld. DR relied on the order of the AO and submitted that the AO has rightly made the addition, which has been deleted by the CIT (A), so he wants us to reverse the order of CIT (A) and uphold the order of the AO. 10. On the other hand, the ld. AR for the assessee reiterated the submissions made before the ld. CIT (A) and submitted that the AO had not provided any reason for adopting the net profit rate of 6% and the method adopted by the AO for working out the value of closing stock at Rs. 1,63,14,265/- was incomprehensible and was not based on any recognized accounting principle. He submitted that while working out the value of the closing stock, the AO had ignored the expenses debited by the assessee in the P&L....