TaxTMI 
TaxTMI 
2014 (12) TMI 972
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....urvey operation, a complete list of stock lying at the two premises of the assessee were prepared and it was valued with the help of assessee. Value of stocks as on the date of survey on the basis of books of accounts was also calculated by applying gross profit ratio of the earlier year. The survey team found that there was difference of Rs. 83,06,867/- between physical stock and stock as per books. Therefore, assessee was asked to explain the difference. The assessee was unable to explain the difference and, therefore, it offered the amount of difference of Rs. 83,06,867/- as income during the previous year. The survey team also found the difference in physical cash and cash as per books of accounts and it being unexplained, the assessee offered for taxation the difference of cash amounting to Rs. 17,62,608/-. However, in the return of income filed by assessee, the assessee declared additional income of Rs. 46,19,039/- only consisting of cash surrender of Rs. 17,62,608/- and rest of Rs. 28,45,443/- on account of difference in stock. The A.O. observed that the assessee had surrendered an amount of Rs. 83,06,867/- on account of difference in stock, therefore, the assessee was show ....
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.... As per cash book Rs. 6,33,792/- Difference being excess cash found Rs. 1762608/- The above excess stock and excess cash was surrendered vide statement dt 1.10.2008 2. That now, in the end of March 2009, the books and stock register etc. has been reconciled for the purpose of calculating the payment of last due installment of advance tax of A. Y 2009-2010. During the course of reconciliation, certain errors have been noticed. On correction of such errors, the stock position as on date of survey i.e. 01.10.2008 stands recalculated as under: Correct Stock position as on 01.10.2008: Physical Stock Rs. 1,61,66,131/- Stock as per books/stock register Rs. 1,33,09,700/- Difference being excess stock Rs. 28, 56,431/- A chart showing the details of the stock position as taken at the time of the survey vis-a-vis as corrected is attached. The difference in quantity and the valuation at the time of survey vis-avis as corrected are given in succeeding paragraphs. 3. Details. Explanations and evidences of differences. a. The quantity of physical stock found at the time of the survey vis-a-vis as per corrected details is the same. Thus it need no explanation. b. I....
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....s been explained with evidences that there was certain clerical feeding errors in the stock register which existed at the time of survey. These errors now stand corrected, as explained above, on account of which, the actual stock as per the books at time of survey also stand marginally changed, as per chart and detailed attached. Now on correcting these errors, apart from correction in stock figures as per books, changed, marginally the cost price of the item also. This change in the rates is consequential and obvious and is manifest from the corrected stock register also which is available for your verification. Further, the changes are very apparent and fully verifiable with reference to the stock register as maintained at the time of the survey, as it stands after correction and with reference to relevant sales ,purchase bills etc. 4. Thus in substance the change in the stock position can be summarized as under: - Physical Quantity of the stock found at the time of survey remain unchanged. - The quantity noticed as per stock register undergoes minor changes on account of some wrong feeding errors in the computerized stock register. On correcting these errors, cons....
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....ue to rectification in day to day stock register, the appellant submitted before the Assessing Officer that the correct amount of additional income required to be added would be only Rs. 46,19,038/- and not Rs. 1,00,69,415/-. It was also stated that the amount of Rs. 46, 19,038/- included the amount of Rs. 28,56,431/- being the difference in stock and Rs. 17,64,607/- being excess cash found at the time of survey. These submissions were made on the last day of the immediate preceding year much before the return of income was due to be filed by the appellant. Even during the assessment proceedings, the Assessing Officer has not pointed out to any discrepancy or incorrectfigures from the books of accounts contrary to what the appellant submitted vide his letter dated 31.3.2009. 6.1 In the present case, the appellant relied on the decision of the Hon'ble Delhi Court in the case of CIT vs. Dhingra Metal Works (2010) 328 ITR 384 and the decision of the Hon'ble ITAT, Mumbai Bench '0' in the case of ACIT vs. Chawla Bros. (P) Ltd., Central Circle-X, Mumbai. In the case of Dhingra Metal Works, the Hon'ble Delhi High Court has held that the material collected and the statem....
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....rble and super marble was placed and in this respect, Ld. D.R. submitted that the value of opening stock does not reflect, that, the same was also valued on FIFO basis. Arguing further, the Ld. D.R. submitted that the cash was also found excess for which assessee has not contested and has not explained the source which itself implies that cash must have been generated from the business operation and therefore, there was definitely difference in stock as otherwise, without difference in stock, there cannot be any difference in cash. In view of above argument, Ld. D.R. submitted that this case needs to be readjudicated by Ld. CIT(A) as Ld. CIT(A) has only recorded submissions of the assessee and has allowed relief without giving any specific findings. 5. Ld. A.R. on the other hand submitted that though the assessee had stated that the amount was surrendered without coercion or pressure, yet, it cannot be denied that under the circumstances of survey, one definitely makes any statement under pressure and moreover, it was submitted that it was not retraction but a reworking of stock found at the time of survey on the basis of actual purchase rates and on the basis of certain rectifi....
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....n of income the exact position was sent to A.O. vide letter dated 31.03.2009 placed at paper book page 67 to 108 wherein full explanation was provided to A.O. along with all documentary evidence. It was submitted that again during assessment proceedings, the assessee had furnished the same explanation vide letter dated 19.12.2011 placed at paper book pages 109-134 and A.O. without making any comments on these submissions, made the addition which was not justified and, therefore, Ld. CIT(A) after considering all explanation of the assessee, had given relief to the assessee. He submitted that the A.O. did not reject the books of accounts and therefore without rejection of books of accounts, addition was not legal. 6. We have heard rival parties and have gone through the material placed on record. We find that though assessee had surrendered for the difference in stock as per physical stock and stock as per books of account but later on while finalizing its accounts, the assessee noted certain mistakes in the recording of certain transactions, therefore, he prepared a reconciliation statement and submitted the reconciled statement along with the explanation and all documentary evid....