2012 (7) TMI 928

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.... A.Y. 05-06 was passed by the A.O. on15.12.2009 at total income of Rs. 2,12,530/-.The CIT-VI, Ahmedabad, issued show cause notice on 05.01.2010 which is reproduced in the order at page no.2 of 263 order as under: "2. It is noticed that the City Police, Bhavnagar carried out raid at the business premises of the Group cases on 21.10.2004 and 26.04.2004. As per the information received from the Police Department the "assessee was authorized to keep and maintain stock of explosive items upto 3300 kgs, However, during the course of raid, the police department found physical stock of explosive Items of 149244,990 kgs. The stock found was much in excess to the quantity authorized to be kept by the assessee. On receipt of information from the p....

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....t. Year 2005-06 that there was a deficit in stock of Rs. 10,40,661/-, he has made a lump sum addition of only Rs. 25,000/-. The AO should have examined whether taking into account the facts and circumstances of the case, the entire shortage represented the undisclosed income of the assessee or only the profit embedded in the stock sold outside the book was required to be taxed. No such inquiries have apparently been carried out by the AO while completing the said assessment." The assessee also replied vide his letter dated 05.01.2010. There was a raid conducted on 21.10.2004 by the police department i.e. 'C' Division and 'B' Division and criminal complaints were separately lodged by the two divisions. The appellant submitted during the co....

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....ucted survey u/s 133A of the IT Act on 05.11.2004 and detailed stock inventory was prepared by the IT authority which has been considered by the A.O. while passing the order u/s 143(3) of the IT Act. Therefore, he argued that the order u/s 263 passed by the CIT may be set aside. Ld. A.R. of the assessee relied upon the following decisions: i) CIT vs. Honda City Power Product Ltd. [2010] 194 Taxman 175 (Delhi) ii) CIT vs. Sunbeam Auto Ltd. [2010] 189 Taxman 436 (Delhi) iii) CIT, Delhi-2 v. Leisure wear Exports Ltd. [2011] Taxman.Com 54(Delhi) 4. The ld. D.R. vehemently argued that CIT-VI, Ahmedabad, has rightly passed the order u/s 263 of the IT Act with detailed reasoning and same may be confirmed. He also relied upon following decis....