TaxTMI 
TaxTMI 
2019 (5) TMI 1392
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....justify the separate addition for the value of the excess stock despite inclusion of such excess stock by posting necessary entries in the stock register and further despite the undisputed reporting of the sales effected in relation thereto in its entirety by the Appellant? ii) Whether the Appellate Tribunal is correct in ignoring the principles governing avoidance of double taxation on the issue of correctness of making separate addition for the value of the excess stock despite the appropriate book entries made by way of entry in stock register along with corresponding income offered in the form of sales made to give effect to the admission made during the course of survey by the Appellant? iii) Whether the Appellate Tribunal was justified in law in sustaining the addition of stock and its purported findings were arrived at by ignoring the relevant materials placed on record and were arbitrary, unreasonable and perverse?" 2. All the three Authorities below have given the finding of facts against the Assessee and on the admission of the Assessee during the statements recorded under Section 131 of the Act during the course of Survey under Section 133A of the Ac....
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....1. In the said statement he has made a disclosure of Rs. 2,50,31,815/- on account of excess stock. The value of the stock as per books of accounts was Rs. 24,79,65,928/- whereas the value of stock as per physical verification was Rs. 27,29,97,742/-. Thus, there was a difference of Rs. 2,50,31,815/-. In this regard, he stated in answer No.12 of the statement that he was unable to give the details for the above mentioned excess stock of Rs. 2,50,31,815/- and requested that the above mentioned amount may be treated as the unaccounted income of the M/s.S.V.S.Mills for the F.Y.2013-14. In addition to the above, he also declared an amount of Rs. 20,95,821/- on account of excess cash. Thus there was a total disclosure of Rs. 2,71,27,635/-. 4. However, on examination of the ITR and final accounts submitted by the AR of the assessee during the course of scrutiny assessment proceedings, it was noticed that there is no reference to this amount. Hence, the AR of the assessee was requested vide order sheet entry dated 12/08/2016, inter alia, to furnish the clarification as to how the amount declared as income during the course of survey under Section 133A of the Income Tax Act, 1961 co....
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....is is missing. Therefore, we do not find any merit in the first fold of contention. The assessee is having excess stock of Rs. 58,02,095/-. This value of excess stock should suffer tax. Second question is, whether by 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/- There should not be any corresponding expenditure debited by the assessee. In other words, the assessee will not be entitled for corresponding expenses because this must have already been debited in the regular course of business. It if....
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....been more appropriate Section to be indicated in the orders passed by the Authorities below rather than Section 69C-Unexplained Expenditure. Nonetheless, we are of the clear opinion that mentioning of wrong section would not upset the Additions made by the Assessing Authorities below in the present case. All these 5 provisions enumerated above have been enacted with a view to bring to tax the unexplained debit balances in the Balance Sheet of the Assessee either in the form of Unexplained Investments, Expenses or Stocks, etc., or unexplained Assets, Money, Bullion, Jewellery, etc., and therefore, such unexplained investments and expenses intended to be brought to tax as Undisclosed Income, these provisions are not only clearly worded but also indicated to plug the loopholes and check the menace of black money. Likewise, unexplained credits in the Balance Sheet are also brought to tax under Section 68 of the Act. 9. In the light of the above, the contention raised by the learned counsel for the Assessee has essentially emanated from a misconception that the Additions made under Section 69B/69C have to be reduced to some extent by giving leverage to the Assessee to claim some dedu....