TaxTMI 
TaxTMI 
2019 (4) TMI 1218
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.... of income on 29th September, 2008 declaring the total income at Rs. 8,71,588/-. The Assessing Officer, during the course of assessment proceedings, observed that the assessee has declared the turnover at Rs. 5,18,67,911/- for the year under consideration as against Rs. 7,02,57,563/- in the preceding year. The net profit declared in the current year was Rs. 7,03,871/- as against Rs. 6,97,550/- in the preceding year. He noted that a survey u/s 133A of the Act was conducted in the premises of the assessee on 17th May, 2007. During the survey, the inventory of stock and cash was made in which the discrepancies were found in the case of stock at Rs. 83,75,000/- and in case of cash at Rs. 7,24,967/-. In view of the above discrepancies, the as....
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....ng stock. The assessee furnished the details of stock for fabrics as on 17th May, 2007 showing the quantity, rate and amount. It also filed the movement of stock during the period between 01.04.2007 and 17.05.2007. 4. However, the Assessing Officer was not satisfied with the arguments advanced by the assessee. He referred to the statement recorded during the course of survey of one of the partners, namely, Shri Vishal Bhasin wherein he could not explain the differences. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs. 90,99,967/- being the difference in cash and difference in the valuation of the stock on the date of survey. He accordingly determined the total income of the assessee at ....
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....the production side. He submitted that the survey team had adopted imaginary figures for the quantity as well as the rate without considering the exact quantity and exact rate which should have been applied for computation of closing stock on the date of survey. He submitted that the statement of the partner was forcibly taken and he was made to sign the cheque for the payment of tax liability on account of additional income surrendered by him under coercion. He submitted that the various discrepancies regarding the difference in cash and difference in valuation of closing stock was filed before the lower authorities. However, instead of going through the same, the lower authorities merely relied on the statement of the partner which was....
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....e rejected. 7.1 Referring to the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Avinash Kumar Setia reported in 395 ITR 235, she submitted that the Hon'ble High Court in the said decision has held that where the assessee surrendered certain income by way of declaration and withdrew the same after two years without any satisfactory explanation, it could not be treated as bona fide and hence, the addition would sustain. Referring to the Hon'ble Delhi High Court decision in the case of Raj Hans Towers (P) Ltd. vs. CIT reported in 373 ITR 9, she submitted that the Hon'ble High Court in the said decision has held that where the assessee has not offered any satisfactory explanation regarding the surrendered....
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....ng the discrepancy in cash. We find the ld.CIT(A) upheld the action of the Assessing Officer. It is the submission of the ld. counsel for the assessee that the assessee had given reconciliation statement regarding the discrepancy in cash and discrepancy in the closing stock. It is his submission that the various withdrawals from the bank on different dates were not entered in the cash book for which all these discrepancies arose. According to him, since the withdrawals from the bank are undisputed therefore, if the same are taken into account, then, there will be no discrepancy at all so far as the cash is concerned. So far as the discrepancy in the valuation of closing stock is concerned, it is the submission of the ld. counsel for the ass....
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....f the partners regarding the discrepancy in cash and the discrepancy in the valuation of closing stock. However, the same, in our opinion, cannot be conclusive and binding on the assessee once the assessee is able to substantiate with evidence to the satisfaction of the A.O. regarding the discrepancies. The lower authorities in the instant case appears to have made the addition solely on the basis of the statement recorded during the course of survey instead of examining thoroughly the reconciliation statement filed by the assessee during the course of assessment proceedings regarding the difference in the cash found and the difference in the valuation of closing stock. Considering the totality of the facts of the case and in the interest o....