CIT & ANR. Vs. SRI LAKSHMI CLOTH STORES

JUDGEMENT

(1.) SRI S. Parthasarathi takes notice to the respondent. Four weeks time granted to file Vakalath.

(2.) THE Tribunal after hearing both the parties held that the computation of value of stock by reducing the gross profit to 12 per cent was not proper. The accounts of the assessee are audited. The gross profit cannot remain constant during the whole year. The books of accounts maintained by the assessee were not rejected by the AO. Therefore, the Tribunal held that it did not find any specific reason for not accepting the gross profit @ 17.51 per cent as shown by the assessee. The issue of gross profit arrived at by the learned CIT(A) at 21.5 per cent is not supported by any material, while the books of accounts were not rejected. The aforesaid addition of Rs. 10,80,487 made on the basis of calculation of the gross profit at 21.5 per cent, if it is reduced to 17.51 per cent as claimed by the assessee, the amount of addition sustained by the CIT(A) requires to be deleted and accordingly, the Tribunal has allowed the appeal of the assessee and dismissed the Revenues appeal. Aggrieved by this order, the Revenue has preferred these two appeals. It Appeal No. 979 of 2006 was admitted on 9th Aug., 2009 to consider the following substantial questions of law:

(3.) THE learned counsel for the Revenue assailing the impugned order contends that the assessee himself has admitted the excess stock at the time of survey. The AO was justified in treating the value -of the undisclosed income under s. 69B of the Act and bringing the same to tax. The CIT(A) though not accepted the case of the Department, was in total error in holding that the addition is only to the extent of Rs. 10,80,487. Therefore, he submits the impugned order requires to be set aside.