Tribunal adjusts excess stock addition, upholds cash variance, post-survey explanations deemed unacceptable. Decision on 27th Jan, 2021.

The Tribunal partially allowed the appeal, reducing the excess stock addition by adjusting for cost price valuation discrepancies and confirming the difference in cash addition. The Tribunal upheld the addition of Rs. 73,228 for the cash variance, emphasizing the appellant's post-survey explanations were not acceptable. The decision was rendered on 27th January, 2021.

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Issues:
1. Addition of excess stock amounting to Rs. 8,81,692.
2. Difference in cash as per cash book and physical cash found at the time of survey.

Analysis:
1. Addition of Excess Stock:
The appellant, engaged in the business of gold and silver ornaments, declared excess stock of Rs. 5,76,072 in the trading account pre-survey. However, during a survey, excess stock of Rs. 14,57,764 was found, leading to an addition of Rs. 8,81,692 by the Assessing Officer (AO). The appellant claimed certain purchase bills were omitted, reducing excess stock to Rs. 5.76 lakh. The CIT(A) upheld the AO's decision, noting the alleged purchase bills were below Rs. 20,000 and not part of regular transactions. The Tribunal observed discrepancies in valuing stock at market price instead of cost price. Adjusting for gross profit, the excess stock addition was reduced by Rs. 4,60,360, partially allowing this ground.

2. Difference in Cash:
Another issue was the Rs. 73,228 difference in cash as per the cash book and physical cash found during the survey. The appellant accepted this as additional income but did not offer it for taxation. The Tribunal confirmed this addition, emphasizing that post-survey explanations about incomplete records were not acceptable. The appellant's attempt to reconcile the cash book later was disregarded, and the addition of Rs. 73,228 was upheld.

In conclusion, the appeal was partly allowed, with the excess stock addition reduced by adjusting for cost price valuation and the difference in cash addition confirmed. The Tribunal's decision was pronounced on 27th January, 2021.

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