TaxTMI 
TaxTMI 
2011 (2) TMI 11
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....he owners of different portions of this property which was purchased by separate sale deed. During the survey, the assessee firm offered an amount of Rs. 25 lacs on account of unexplained investment in building at 47, Bungalow Road, Delhi for taxation. Shri R.D. Gupta, its partner, also offered a sum of Rs. 9.8 lacs being excess cash found at the time of survey for which he could not offer any explanation at that time. Difference in the stock to the tune of Rs. 48,000 was also found, which was again offered for taxation. 2. The facts pertain to the Assessment Year 1999-2000 corresponding to the Financial Year 1998-99. In that year, a survey was conducted under Section 133A of the Income Tax Act (hereinafter referred to as „the Act‟), i.e., on 21.01.1999. For the year in question, return of income was filed by the assessee on 25.11.1999 declaring a total income of Rs. 27,04,313.50. In this return, Rs. 25 lacs which were offered for taxation at the time of survey were included. The Assessing Officer (AO) framed the assessment under Section 143(3) of the Act and in the assessment order dated 28.03.2003 passed by him, he made four additions. It is not necessary to mentio....
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....ication, was found to be incorrect from which the AO deduced that the assessee had not maintained the accounts in the manner that real profits could be calculated therefrom. (4) The explanation of the assessee that it was not maintaining stock register because it was not feasible due to multiplicity of items in which the assessee was dealing, was not found convincing by the AO. In addition, following discrepancies were pointed out by the AO in the inventories: "a) There was no change in the value of stock of jewellery and silk plants as on 1-4-98 and 31-3-99. b) The rates of gents shorts, pajamas and Bermudas were taken to the same as on 1-4-98 and 31-3-99 i.e. there was no change in the rates of these items in the course of the whole year as per the assessee's working of inventory. c) Assessee was asked to relate every item in the opening and closing stock with the purchase bill of that item so as to justify its valuation. d) Last but not the least the value of every item of a given type e.g. shirts, shorts etc. was taken to be the same at the beginning and close of the year irrespective of the brand, size, quality, style etc. Whereas the assessee is dealing in items of diff....
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....th the corresponding purchase of an item. (f) The assessee was asked how it keeps track of all the items in the absence of stock register or stock tally. The assessee replied vide letter dated 26.03.2002:- "In respect of relation of purchase bills to closing stock while physical stock taking is done, it is submitted that the same is done on the basis of style, size, brand of items in the absence of stock register. Similarly, it is done for the purchase returns from time to time. It is further submitted that as items are different from time to time they are related to the purchase bills for date and prices on the basis of style, size and brand. In this regard, it is further submitted that every vendor has got its own brand and by referring the brand etc. it is known as to whom purchaser bills belong and on the basis rate and prices and date of the items being returned are known and fully described in the debit notes issued to the relevant vendors. It is all done physically and manually." (g) No cash memos for sales made during the financial year could be produced and letter was filed by the assessee‟s counsel on the last day of hearing that certain records of the assesse....
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....he AO's estimate of Rs. 46,95,347 could not be said to be devoid of merit. 6. The Income Tax Appellate Tribunal („Tribunal‟ for brevity) has allowed the appeal thereby deleting the said addition and holding that GP rate of 14.40% declared by the assessee was proper and reasonable. We find from the impugned order of the Tribunal that the Tribunal has stated that there was no reason to disregard the books of accounts inasmuch as: (a) At the time of survey in the stock inventory, difference of only Rs. 48,000 was found and looked at the volume of business and list of inventories, it was a negligible difference. Moreso, the assessee had demonstrated that it was attributable to packing material which had been mistakably debited to Profit and Loss Accounts. Therefore virtually, no discrepancies were found in the trading operations and stock. No doubt, day to day stock register is an important record, which was not maintained. However, the books of accounts could not be rejected merely because of its absence, moreso when there was no adverse comments whatsoever about the posting of entries and maintenance of accounts. No incriminating document of whatsoever was found by ....