INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Difference in valuation of stock as given to the bank and as compared with assessee's books of account -

AO compared stock statement supplied by assessee to the bank with stock statement as per books of account and noticed that there was a shortage of Rs. 1,81,57,649 in the stock as shown in books of account. AO made addition on this count.Held: Assessee has duly explained difference in valuation of stock as given to the bank and as compared with assessee's books of account. From the statement of Bank Manager it was apparent that stock was not physically verified by bank at the spot. Assessee had duly explained through the charts that if adjustment of shortage usually booked on the last date of financial year as per the regular accounting policy followed by assessee was considered, there remained no/negligible difference between stock statement given to the bank. Further, method of accounting followed for valuation of closing stock should have been applied in respect of valuation of the opening stock also. Further, stock statement given to the bank was on estimation basis and minor difference in this respect was required to be ignored. Accordingly, addition was not sustainable.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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