The Tax Publishers2020 TaxPub(DT) 2624 (Jp-Trib)

INCOME TAX ACT, 1961

Section 145(1) Section 69

Where assessee admitted that excess stock was sold and included in sales was not believable merely on statement of assessee and for sales out of shortage of stock GP rate @ of 10% as affirmed by CIT(A) was justfied and proper.

Accounting method - Undisclosed stock - Estimation of GP rate on excess/short stock -

On going through the return of income filed for assessment year 2009-10 it was seen that no income on account of excess stock or short stock surrendered had been declared by the assessee. Assessee had replied in its submission that the excess stock found during the course of survey operation had been sold during the normal course of business and the total sales consideration was included in the sales reflected in the books of account in the company. AO held that in the absence of proper documentary evidence mere statement that the excess stock had been sold during the normal course of business and sales have been properly accounted for does not explain that the excess stock had been included in the income of assessee. in view of it, an addition of Rs. 11,00,469 was made to the income of the assessee. As regards addition of Rs. 44,800 on account of short stock the AO's case was that such short stock or Rs. 4,48,005 indicated that the stock has been sold in unaccounted manner and the AO accordingly applied GP rate of 10%. CIT(A) confirmed order of AO.Held: Admittedly and undisputedly, the excess stock amounting to Rs. 11,00,469 not recorded in the books of accounts was found as on date of survey and surrendered by the assessee company. Therefore, the undisclosed income by way of investment in such excess stock was to be offered to tax in the return of income which the assessee had failed to do so. In the result, the findings of the lower authorities in this regard was affirmed. Regarding short stock which had been sold out of books, the AO had estimated gross profit rate of 10% and the AR had contended that 1.25% by the assessee may be applied in the instant case. Before the AO and the CIT(A), the assessee had not contested the rate of gross profit rate on such out of books sale and hence, Tribunal was not inclined to examine the fresh plea raised before it and the findings of the lower authorities was not interfered and the same was hereby confirmed. In the result, the ground of appeal was dismissed.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 143(3)

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