TaxTMI 
TaxTMI 
2015 (7) TMI 683
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....owever, at the time of filing of returns, assessee admitted the amount of Rs. 44,90,295/- as additional income and filed a return accordingly. In the course of assessment, AO after giving show cause notice to assessee made various additions as under: i. Excess stock determined Rs. 26,43,435/-; ii. Income on chits Rs. 1 Lakh; iii. Income on Gold Scheme Rs. 1,44,000/-; iv. Income on another Gold Scheme Rs. 1,44,000/- v. Outstanding Sundry Creditors as unexplained Rs. 87,06,851/-. 3. Assessee contested before the Ld.CIT(A), who confirmed part of excess stock at Rs. 7,13,580/- as against Rs. 26,43,435/- and deleted other additions. Assessee is aggrieved on the part-confirmation of the excess stock. Revenue is aggrieved on the deleted amounts. Assessee's appeal in ITA No. 1003/Hyd/2013: 4. The only issue contested by assessee is with reference to confirmation of amount of Rs. 7,13,580/- out of the addition made by the AO. AO has issued show cause notice quantifying the excess stock in survey at Rs. 62,13,730/-, whereas assessee declared Rs. 44,90,295/. The difference of Rs. 17,23,435/- was added as excess stock. In addition, there was gold value....
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....nch. At Panjagutta Branch, the survey party arrived at excess value of Rs. 26,59,316/-, whereas the same was valued at Rs. 14,09,130/- based on the valuation as on 31-03-2008. This give raise to a difference of Rs. 12,50,186/-. The total difference thus arrived at was Rs. 17,13,586/- which was the amount AO considered for addition on the basis of the disclosure. It was submitted that Ld.CIT(A) wrongly considered the amounts and when assessee offered the amount of Rs. 10 Lakhs for various omissions and commissions, credit to that extent was given and amount of Rs. 7,13,580/- was confirmed. It was submitted that there is no quantitative difference but only valuation difference and as per the value on 31-03-08, the closing stock was valued including the excess stock found. It was further submitted that statute, during the 133A does not empower any officer to examine any person on oath and so statement recorded u/s. 133A has no evidentiary value and any admission made during such statement cannot be made as the basis of addition. He referred to the judgments of the Hon'ble Supreme Court of India in the case of CIT Vs. S. Khader Khan and Sons 254 CTR 228(SC) for the above propositio....
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....urther the entire excess quantity as arrived on the date of survey was taken to the Books of Accounts and valued, we do not see any reason to make any further addition to the amounts on presumptions. We also notice that the value of silver ornaments and diamonds and pearls accepted in the course of survey itself was offered without any variation. As there is justification in reducing the valuation, we do not see any reason to uphold the order of CIT(A). Not only that, statement recorded during the survey itself cannot be a basis for making the addition, unless supported by evidence. Assessee justified the valuation of amounts and as Books of Accounts were not rejected and book results were accepted, we agree with assessee's contentions and delete the addition confirmed by the CIT(A) at Rs. 7,13,580/-. Assessee's grounds on this are accordingly allowed. 8. In the result, assessee's appeal is allowed. Revenue's appeal in ITA No. 1136/Hyd/2012: 9. As briefly stated, Revenue is aggrieved on the deletion of amounts added by the AO. Ld.CIT(A) deleted the amount to an extent of Rs. 19,29,855/- out of excess stock arrived at by AO. Revenue has raised two grounds on the ....
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....month you got dividend of Rs. 5,000/- on as average and after reducing first month and final month and the A.O. is taking for 20 months after considering all commission and omissions the estimated amount is Rs. 1,00,000/- please explain why it should not be treated as unaccounted dividend amount and added to your income Addition of Rs. 1,00,000/-". 12.1 Against the above show cause notice given by the AO, assessee submitted as under: "2. We submit that, the Dividend of Rs. 5,000/- estimated for 20 months was incorrect, the dividend will not be the same for all the months, moreover we had lifted the chit amount in the previous year on 20.02.2007 for Rs. 4,75,000/- for the day to day business purpose. Hence, we request that the estimation of Rs. 1,00,000/- should not be treated as unaccounted dividend income for the assessment year 2008-09 since, the dividend will not be the same for all the months and the dividend will decrease month at the end of the chit period and also the firm has lifted the chit and has loss on chit value". 12.2 AO made the addition stating as under: "2. In respect of addition of Rs. 1,00,000 proposed towards chit dividend. The assessee has requested to....
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....ken in to P&L A/c. As facts indicate, the chit has started as early as 28-08-2005 and ended in 30-09-2007. Assessee did maintain the chit account in the Books of Accounts but neither the loss nor dividend was been taken to P&L A/c, the fact of which was admitted by the Revenue as well. In these circumstances, AO has to examine whether at the end of the chit, assessee earned any surplus or loss. Nothing was done except presuming an amount of Rs. 1 Lakh addition without any basis. Assessee has submitted relevant details before CIT(A) who after examination, deleted the amount. Since factual verification was done by the CIT(A), we uphold the same and dismiss the ground raised by the Revenue. 13. Ground No.6 pertains to addition on account of Members Gold Scheme at Rs. 1,44,000/- each, on two gold schemes. This is an interesting addition made by the AO for which one has to extract the show cause notice issued by the AO to assessee: "3. And as per the annexure-13/A you have introduced one gold scheme and from 167 members you are collecting Rs. 1,000/- from each. That means Rs. 1,67,000/- per month but you have not admitted any income on that and for one year 12 x Rs. 1,67,000 = Rs. 20,....
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....on to interfere with the order of the CIT(A). First of all we are unable to understand how the AO can make the addition and arrive at a profit of Rs. 1 Lakh minimum in the year per month, when assessee submits that only at the end of the scheme, he will pay Rs. 1,000/- to them in addition to amount deposited. As and when amount was withdrawn or taken by the party, gold was given to the party / member and the same was shown in the gold sales account. Since it is a business proposition and all the transactions having been accounted in the books of account, further addition on assumptions and presumptions does not arise. If AO was of the opinion that assessee is depositing Rs. 1 Lakh per month in the bank either Rs. 1 Lakh should be income but the same was taken for estimation of 12% on Rs. 12 Lakhs at Rs. 1,44,000/-. There is no rhyme or reason for AOs addition. It does not have any justification. First of all, the calculation itself is wrong. Even if one were to presume a rate of 12% of interest on the above amount, AO himself accepts that there will be deposit of Rs. 1 Lakh per month. How 12% interest can be worked out on Rs. 1 Lakh deposited in the last month can only be explained....
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....creditors for an amount of Rs. 87,06,851/- as the assessee has not produced them and no full addresses provided to the assessing officer and in some of the case in which addresses given by the assessee firm the assessing officer has sent letters requesting them to furnish the information. In reply they have sent some confirmations but verification of the same revealed that all the letters are prepared and printed by one person and at one place and in same colour of covers and addresses flags are also same. Under these circumstances the amount of loan creditors are nothing but the money of the assessee firm and the assessee has not discharged the responsibility of the proving the onus lies on the assessee and no full particulars were furnished and whatever particulars furnished the same are placed on record. Hence the entire amount is treated as unexplained credits u/s. 68 and added to the income of the assessee". 14.3 Ld.CIT(A) after considering assessee's submissions deleted the same stating as under: "8.4 I have carefully gone through this issue. From the above, Rs. 87,06,851/- includes sundry creditors for scheme members, loans, suppliers, chits, rents and sales advances.....