TaxTMI 
TaxTMI 
2018 (10) TMI 292
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....the aid of section 69C of the Income Tax Act, 1961. 3. Brief facts of the case are that the assessee at the relevant time was engaged in the business of manufacturing of cotton wool, cottonseeds, oil and allied products. A survey under section 133A of the Income Tax Act was carried out at the business premises of the assessee on 18.1.2012. The assessee has filed its return of income electronically for assessment year 2012-13 on 28.9.2012 declaring total income at Rs. 10,39,970/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued and served upon the assessee. On scrutiny of the accounts, it revealed to the AO that during the course of survey excess stock having value at Rs.....
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.... "6. Respectfully, considering the reply of the assessee, however the same is not and acceptable. In para 1 assessee is stated as under "It is categorically submitted that no evidence of whatsoever nature was found in the course of survey evidencing incurring of any expenditure to acquire alleged excess stock on the basis of which your assessee agreed and admitted additional income of Rs. 58,02,095/- in the course of survey." During the course of survey in the presence of representative of the assessee stock was taken and assessee has provided details of stock as per its Books of accounts. After ascertained variation in stock as per Books and stock found during the survey, assessee has given ample time to explain the va....
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....s assessee is failed to prove genuineness of stock holding on 18.01.2012, view taken by assessee for weight loss /increase is immaterial and not tenable and accepted. Therefore, the reply of the assessee is rejected on various issues. 7. Considering the above referred facts, value of excess stock of Rs. 58,02,095/-as determined during the course of survey proceedings and accepted by the Director of the company as unaccounted income in addition to its regular income and ready to pay and paid taxes thereon. However, assessee has declared income of Rs. 10,39790/- in its return of income without offering committed additional income of Rs. 58,02,,095/- during the course of survey. Therefore, an amount of Rs. 58,02,095/- is trea....
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....y the assessee on his second fold of submissions. Reply reads as under: "...After taking into account the above explanation, auditors both under the provisions of Companies Act, 1956 as well as Income-tax Act, 1961 were satisfied that assessee has not made any unaccounted investment in procuring stock items which were found to be excess on the date of survey by survey party. Accordingly no accounting effect was given in quantity records as well as in financial records for the said discrepancy. However, to honour the commitment of additional income admitted during the course of survey, the stock value was increased by the amount admitted in the course of survey, i.e. Rs. 58,02,095/- leading to reporting of higher income by this amou....
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....y inclusion of this stock in the value of the closing stock, the assessee has recognized income offered by it or not. The AO without looking into the reply of the assessee extracted (supra) separately made addition. Therefore, in the given facts and circumstances, we deem it appropriate to remit this issue to the file of the AO to consider the above reply of the assessee. It is to be ascertained that excess stock found at the time of survey valued at Rs. 58,02,095/- should suffer tax. If the assessee has already included this amount in the value of closing stock, then separate addition would result double addition. We further make it clear that the AO would verify the fact about the enhancement of closing stock by a sum of Rs. 58,02,095/-. ....