TaxTMI 
TaxTMI 
TaxTMI 
2018 (1) TMI 1107
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....809/Ahd/2013: 1. On facts and in law and in the circumstances of the appellant's case, the CIT(Appeals) has erred in confirming the addition to the extent of Rs. 35,23,941/- on account of difference in stock found as on the date of search and stock as per books of accounts as unaccounted income in the case of appellant when no such addition is called for. 2. On facts and in law and in the circumstances of the appellant's case, the CIT(Appeals) has erred in sustaining the addition of Rs. 8,04,163/-applying gross profit @ 22.82% on difference in stock found as on the date of search and stock as per books of accounts as unaccounted income in the case of appellant when no such addition is called for. The appellant craves leave to ad....
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.... that Rs. 60,91,883/-, being the value of unaccounted stock found during the course of search as income of the appellant u/s.69 of the Act. In view of excess stock, the AO also rejected the books of accounts of the appellant and made another addition of Rs. 15,83,890/- i.e. Gross profit earned @ 26% on the sales made out of unaccounted stock of Rs. 60,91,883/-. 4.1 The relevant portions of various submissions furnished by the appellant are reproduced as under: "At the outset, the appellant vehemently objects the addition made by the assessing officer. It is submitted that the entire addition has been made without appreciating the facts of the present case. The entire addition has been on the basis of statement of Shri Arvindbhai Patel (....
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....,639 Adjusted stock (B-C) D 66,09,141 69,60,953 1,35,70,094 Difference in stock (A-D) E 1,38,907 0 1,38,907 Apart from above no discrepancy has been pointed out by the assessing officer in the books of accounts maintained by the Appellant when assessing officer has not pointed out a single deviation in the books of accounts, wherein entries of such purchases have been duly recorded, it is not justified in considering the stock as unexplained when the same is supported by books of accounts. The foremost argument for making addition by the assessing officer was that Shri Arvindbhai Patel has accepted the difference in stock in his statement recorded u/s.132(4) as on 10.09.2009, Here it is most pertinent to mention that....
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....led; no further addition is called for. (i) Commissioner of Income-tax v. Dhingra Metal Works [2011] 196 TAXMAN 488 (Delhi) where it has been held that the statement during the course of survey is not binding as evidence. Further it was also observed by Hon'ble High Court that when the respondent is registered under various laws including excise and maintain statutory record of excise, stock registers; books of account are duly audited addition cannot be made ignoring the reconciliation and evidence filed by assesses and relying only on a statement which was given due to non-availability of ready explanation. (ii) Ankur Chem Food Products (Guj) ltd vs Dy.CIT I.T.A. No.133/Rjt/2006, where it had been held that if there is substantial....
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.... assessment order regarding the same. Taking his cue, the CIT(A) has also ignored the quantitative reconciliation. Moreover, he has made the following remarks, which are reproduced hereunder: "4.3.1 ............ The appellant could not give any explanation/reconciliation for this excess stock at the time of search and that is why Shri Arvindbhai Patel the partner of the firm accepted Rs. 60 lakhs as unaccounted income of the appellant........." 8. The ld. AO has observed that stock found during the course of search of Rs. 60,91,883/- as per book is Nil, which cannot be accepted as any entity cannot have zero stock and that to at the mid of the financial year when the business activities are at its peak. This stock of Rs. 60,91,883/- was ....
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....avit to that effect but lower authorities failed to consider his contention. After hearing both the parties, we set aside this issue to the file of the AO to examine the reconciliation statement filed before the lower authorities and will decide the matter as per law. In the result, this ground of appeal is allowed. 11. So far as ground no. 2 in sustaining the addition of Rs. 8,04,163/- applying gross profit @ 22.82% on difference in stock found as on the date of search is concerned. Assessee submitted a comparative chart at page no.12 of Paper Book, the same is reproduced here as under: Production Sales GP 20% Stock of SF 01/04/2009 7893131.00 20% Net S.F. April'09 ....