ITO, Ward-3(1), Gaya vs. Shri Gauri Textile Industries, Gaya

Parties Involved

Facts Summary

A survey was conducted on 07.02.2017 in the case of Shri Gauri Textile Industries, a partnership firm engaged in trading business of cotton yarn and hosiery yarn. During the survey, it was observed that the assessee had made substantial deposits in various bank accounts linked with the firm. However, the assessee disclosed significantly lower net profit compared to the turnover despite earning a high income. The cash book was maintained up to 30.01.2017 with a closing balance of Rs.6,67,503/-. Similarly, the stock register was updated till 31.01.2017 reflecting a closing balance of Rs.1,22,96,170/-. However, the stock value determined at the time of survey was at Rs.56,37,481/-. The assessee filed a return of income for the assessment year 2017-18 by declaring a total income of Rs.13,78,254/-. The case was selected for complete scrutiny, and notices under sections 143(2) and 142(1) of the Act were issued. The Assessing Officer observed a difference of Rs.1,13,01,271/- in the stock value recorded in the books and the provisional trading account. The Assessing Officer added Rs.95,98,868/- as alleged excess stock and Rs.17,27,924/- as additional income based on an enhanced GP rate of 3.51%.…

Legal Issues

• 1. Whether the addition of Rs.95,98,868/- as alleged excess stock is justified.
• 2. Whether the enhancement of GP rate to 3.51% is justified.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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