The Income Tax Appellate Tribunal (ITAT), Bangalore approved addition on Gross Profit (GP) at 2.5% on non-explanation regarding closing stock.
The assessee, Nandini V. Kalgutkar preferred appeal against the order of Commissioner of Income Tax (Appeals). The ground of appeal is with regard to estimation of GP of 2.5% of the closing stock on the reason that the stock was not available with the assessee for sale.
The assessee has raised that the CIT has erred in confirming the addition of Rs.2,58,839 towards Gross profit at 2.5% of closing stock as the same was not available for sale made by AO. The real fact was that the closing stock was stolen and actually the appellant should have shown it as loss of business. This aspect has not been properly analysed by the Assessing Officer (AO).
The assessee explained that the stock has been stolen as it is lying at Bilikere as the goods cannot be stored in locked premises. However, the Assessing Officer not believed the contention of the assessee and hence made addition of 2.5% GP on it. Against this, the assessee is in appeal before the Tribunal.
The Bench consisting of Chandra Poojari, Accountant Member and Beena Pillai, Judicial Member observed that “The assessee not able to explain what happened to the closing stock stored at Bilikere near Ankola. No FIR registered with police authorities. In our opinion, assessee has not explained the true facts of this issue and it is reasonably presumed that assessee has sold these goods out of books and shown Nil stock. Being so, estimation of GP on this stock at 2.5% at Rs.2,58,839/- is justified. The addition is sustained.”
Srinivas Kammath Appeared for the assessee and Sankar Ganesh K, appeared for the Revenue.
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