TaxTMI 
TaxTMI 
2006 (3) TMI 242
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.... The assessee's objections in all the seven grounds are related to retention of addition of Rs. 1.50 lakhs by the learned CIT(A). 3. The brief facts of the case are that the assessee-company continues to derive income from manufacturing and sale of cattle feed. Survey under s. 133A was carried out at the registered office and factory of the assessee on 30th Dec., 1999, and the survey team observed that the assessee had not made entries in the stock register for the last 15 days. The cash in hand as per books of account written upto 29th Dec., 1999, and after accounting for the receipts and payments cash in hand as per books of account of the assessee was Rs. 58,638.24 and whereas cash in hand found physically as belonging to the assessee was Rs. 14,230. Thus, there was a shortage of cash of Rs. 44.408.24, i.e. cash in hand as per books was more by Rs. 44,408.24 as compared to cash found at the time of survey. The AO, therefore, did not make any addition on this account. As regards stock found at the time of survey, it was 8,20,574 kgs. and value of which works out at Rs. 43.45,580. Besides this, there was stock of raw materials and finished goods, 29,600 old gunny bags, 5,450 ne....
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....bsp; 236 bags ------------ 3.2 Thus, there is difference of 11 bags only which is a minor difference and can be attributed to counting errors. 3.3 From the submissions above, you will please find that there is no excess stock as alleged by the Department. Please refer to statements of Shri Ravi Kant at page No. 6, question No. 19, where the questioning authority has stated that stock worth Rs. 30 lakhs approx. is in excess and the director was compelled to agree for excess stock of Rs. 15 lakhs. From the comparative statement of physical stock counted at the time of survey and stock as per stock register, there is a difference of only 11 bags and that too is not excess at the time of physical verification but in fact 11 bags were found short. Value of 11 bags is hardly Rs. 5 to 6 thousands only and immaterial. The mistake in physical counting is for following reasons. (i) Stock was not counted in the presence of any director or responsible person, who could have explained various varieties an....
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.... the learned counsel that the stock register can be posted later on if the supporting documents such as gate pass, sale and purchase registers are written upto date. 4.3 Shri R.C. Shah, learned counsel of the appellant-assessee, has mentioned in his written arguments that there is no item like Imli Chhilka in the list of raw materials consumed by the assessee, whereas the AO has treated Rajma Kachari, etc. as Imli Chhilka. The other difference in nomenclature pointed out by the assessing authority is relating to rice polish and rice Bhushi. This will not be out of place to mention that rice polish and rice Bhushi are the same commodity. The appellant has mentioned rice polish in the stock register and the survey team has taken rice Bhushi but the item is same and hence the allegation of the AO is baseless. With reference to the GP rate as adopted by the AO, the learned counsel has stated that the statements of various items were submitted before the AO in which details of cost of manufacturing, cost of raw material and sale price were mentioned for all the 12 months of the previous year. But, the AO has selected the month in which there was. the higher margin of profit. The lear....
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....erence of 11 bags and, therefore, the AO has rightly applied the provisions of s. 145(3) of the Act. The learned CIT(A) was of the view that the trading additions as made by the AO cannot be upheld in toto but, on the other hand, it is admitted that there are certain defects in maintaining books of account as discussed. Therefore, there is a possibility of leakage of revenue. Considering the above facts, the learned CIT(A) sustained the trading addition of Rs. 1.50 lakhs and deleted the balance of addition of Rs. 16,84,483. 7. We have heard the parties and perused the material on record. During the course of survey carried out on 30th Dec., 1999, the survey team mainly pointed out two defects. The first defect pointed out by the Department was that cash in hand as per books of account of the assessee was Rs. 58,638.24 and . whereas cash found belonging to the assessee on the date of survey was Rs. 14,230, i.e., cash found was lesser than as declared by the assessee. The AO did not take any view on this account. As regards stock, the AO pointed out that the stock register was not complete for 15 days, whereas the assessee has stated that stock register was complete upto 29th Dec.....
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....47,37,730, i.e., books of account have recorded more stock of Rs. 4,65,485 as compared to the stock found by the survey team, i.e., the AO has not pointed out any excess stock found during the course of survey which could be said as undisclosed stock/undisclosed investment and which could be treated as undisclosed income of the assessee. It is other way round that books of account are showing excess stock and the AO while making estimation of sales calculated 9 per cent excess stock found at the time of survey. At the same time, the AO failed to point out any defect in the purchase, sales, opening stock or any items of trading account. The only difference found out was of 11 bags valuing not more than Rs. 6,000 which can be ignored since the kind of products, the assessee is dealing cannot be counted exactly in 2 to 3 hours as pointed out by the learned counsel for the assessee. With the above discussions, we are of the view that the assessee has made the explanations of each and every defects pointed out by the survey team and by the AO. Therefore, the surrender made by the assessee at the time of survey has no relevance. The admission by the assessee in the present case, at the t....