2023 (9) TMI 1033 - AT - Income Tax

Tribunal overturns tax assessment, ruling against excess stock addition based on survey discrepancy.

Shambhu Prasad Rastogi Prop. M/s. Rastogi Sarraf Versus ITO, Range-3 (4), Mirzapur

Shambhu Prasad Rastogi Prop. M/s. Rastogi Sarraf Versus ITO, Range-3 (4), Mirzapur - TMI Issues involved:The main grievance of the assessee is against the action of the Ld. CIT(A) confirming the addition of Rs. 1,84,080/- on account of alleged excess stock-in-trade on the date of survey (i.e. on 06.01.2012).Details of the Judgment:Issue 1: Alleged excess stock-in-trade- The survey conducted on 06.01.2012 at the business premises of the assessee revealed discrepancies in the stock of silver declared by the assessee during the survey and as per the books of account.- The AO added Rs. 1,84,080/- as undisclosed income based on the difference in the stock of silver declared during the survey (200 Kgs) and the stock reflected in the books (113.928 Kgs).- The assessee contended that the stock declaration during the survey was an estimation and made under mental pressure, and the stock contained both pure and impure silver.- The AO's action was challenged on the grounds that the statement made during the survey cannot be the sole basis for drawing adverse inferences and making additions.- The Ld. CIT(A) upheld the AO's decision, citing the voluntary nature of the statement made by the assessee during the survey.- The Tribunal, considering the explanations provided by the assessee and the lack of physical verification due to the disruption during the survey, held that the addition of excess stock was not warranted.- The Tribunal distinguished the case from precedents cited by the Revenue, as the assessee explained the discrepancy within 15 days and the statement during the survey was made under pressure and estimation.Conclusion:- The Tribunal allowed the appeal of the assessee, directing the deletion of the addition made by the AO.