TaxTMI 
TaxTMI 
2018 (5) TMI 512
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....und Nos. 2 to 4 are related to the addition made by the Assessing Officer(AO) on account of valuation of the closing stock. The assessee filed return of income on 30.09.2009 admitting taxable income of Rs. 2,03,960/-. A survey u/s 133A was conducted in this case on 18.02.2009 and the case was converted to scrutiny. During the course of survey, the assessee has accepted the additional income of Rs. 20,00,000/-. The AO not being satisfied with the additional income offered by the assessee worked out the difference in book stock as well as physical stock as on the date of survey and arrived at the difference of Rs. 16,10,560/- in the case of gold ornaments, Rs. 10,33,607/- in the case of silver and Rs. 1,31,403/- in the case of cloth business.....
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....ken at the time of survey on 18.2.2099 9142.290 Stock as per the stock records as on 12.2.2009 since 8848.336 records are updated upto 12.2.2009 Add : Purchases J.R. Jewellers, Vza(Inv.No.:1192 dt.2.2.09, payment made on 28.01.2009 through Ch.No.126223 drawn on HDFC Bank, Tanuku 77.650 J.R.Jewellers, Vza (Inv.No.1217 dt.14.2.09, payment made on 16.02.2009 through Ch.No.126224 drawn on HDFC Bank, Tanuku 380.800 Ornaments received from Smiths (against gold given and which were duly entered in the impounded stock register at the time of handing over to the smith which were also entered in 'smith stock register' we are herewith producin....
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....nts and the physical stock available as on the date of survey and difference if any found should be valued as per the method of accounting followed by the assessee. The assessee further stated that the entire sales bills, purchase bills were made available to the AO to arrive at the physical stock. However, the AO chose to arrive at the value of closing stock difference by adopting the gross profit method which is incorrect approach for arriving the difference in stock. Though the AO raised the issue with regard to Sri Geetha Silver Works, the same was accounted in the stock books which can be verified from the books of accounts. The AO found that the said bill was not recorded on 01.12.2008. The AR explained that in this case the stocks we....
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.... also maintained stock record on computer which is evident from the assessment order. Except not making the entry of bill relating to Sri Geetha Silver Works, the AO did not pin point any difference in physical stock or any of the discrepancy. Though Sri Geetha Silver Works bill No.14 was not entered in the stock record the purchase bill is available at the time of survey and assessee stated the reason for not making the entry was late receipt of the bill. Since the receipt is available same can be considered for arriving at the stock. And there is no problem. Further though AO raised the issue of not making the entry in respect of Sri Geetha Silver Works, the AO did not make any addition and also no enquiry was conducted with Sri Geetha Si....
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....nd the explanation offered by the assessee at the time of hearing and the fact that the AO did not make out a case for excess stock of Rs. 28.26 lakhs with the quantitative differences, we hold that the additional income admitted by the assessee amounting to Rs. 20,00,000/- in respect of stock difference is reasonable and accordingly we confirm the addition of Rs. 20,00,000/- and delete the balance. The appeal of the assessee on this ground is partly allowed. 8. Ground No. 5 and 6 are related to the addition of Rs. 4,44,169/- representing unsecured creditors. During the assessment proceedings, the assessee failed to submit the confirmation letters from the sundry creditors for an amount of Rs. 4,44,169/-. Therefore, the AO made the addit....