TaxTMI 
TaxTMI 
2019 (9) TMI 374
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....me for the year under consideration was filed by the assessee on 29.09.2011 declaring total income of Rs. 6,92,511/-. During the course of survey, the stock of paddy, etc. was physically verified by the Survey Team and discrepancies noticed therein were reported as under:- Sl. No. Item As per statutory Registers Stock physically found Discrepancies A. Paddy 37,400 Qts. 53,602.80 Qts. 16202.80 Qts. B Rice 512 Qts. 1,000.00 Qts. 488.00 Qts. C. Broken Rice NIL 53.00 Qts. 53.00 Qts. D. Rice Bran NIL 50.00 Qts. 50.00 Qts. E. Gunny Bag NIL 18960 Pcs. 18960 Pcs Since the income on account of discrepancies in stock found during the course of survey representing excess stock was not offered by the assessee in the return of income filed for the year under consideration, the Assessing Officer required the assessee to offer its explanation in the matter. In reply, the method adopted by the Survey Team for physical verification of stock was challenged by the assessee by pointing out various deficiencies and anomalies. The average weight of paddy bags taken by the Survey Team while calculating the quantity of stock of paddy, as found during ....
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....were 42 Kg, 45 Kg & 50 Kg which are the outcome of the after-thought realising the consequence of the revenue. Assessee's statement were selfcontradictory denying the actual figure of the closing stock. Every time he was making a flip-flop statement without any proper documentation. Assessee had submitted a certificate from Mr. Tarak Nath Ghosh, Chartered Engineer who had signed on certificate on 18.03.2014 certifying the capacity of the godown at only 55,000 bags each of weight 60 kg. The report does not reflect the additional space between two godowns & the milling lawn. If we take as per assessee's contention of 45 kg average weight of each paddy bag the total weight becomes 55,000 x 45 kg i.e. 24,750 Qntls. But as per assessee's submission dated 18.03.2014 the rice mill has 36,000 Qntls of rice (i.e.8,000 bag x 45kg + 54,000 bag x 60kg.) so therefore capacity of 55,000 bags of rice of 60Kgs is again another fabrication. Moreover, the report of the chartered engineer signed on 18.03.2014 which is almost 3 years 1 month later from the date of survey and during the period who ascertain that there was no alteration of the size of godowns. Therefore, I decline to accept ....
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....stly, that the stock taking procedure, though not outlined or explained by the AO, appears to be unreliable and has not been validated by the AO; and secondly, the certificate provided by the appellant to establish the maximum storage capacity of the warehouses in question has not been rebutted by the AO and therefore does establish conclusively the maximum number of bags, each of 60kg that can be stored within the said warehouses. Thus, the figure suggested by the survey team seems to be completely unreliable and therefore to assess the true number of bags, within the premises at the time of survey, some other procedure has to be employed - discarding the results of the survey. The only other source that we find before us is lies in the books and papers impounded by the AO as well as those available with the appellant. During the appeal proceedings, the appellant has produced copies of the said registers to show the procurement of paddy. The procurement season of paddy has been shown to be from November to November and the registers reflect the procurement of paddy during the year. He has submitted the month-wise procurement of paddy figures along with figures showing the proces....
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.... of the appellant, making the difference on account of the survey unsustainable for the reasons discussed above. The addition, therefore, on account of difference in stock is unsustainable and is accordingly deleted". 6. The ld. D.R. submitted that the stocks lying in the godown of the assessee were physically verified by the Survey Team in the presence of one of the partners of the assessee-firm and there was no material objection raised on behalf of the assessee in respect of the method followed by the Survey Team for physical verification the stock. He contended that the stock on such physical verification was found to be excess as reported by the Survey Team and the explanation offered by the assessee in respect of such excess stock was not accepted by the Assessing Officer giving cogent reasons. He contended that the ld. CIT(Appeals), however, did not appreciate the findings and observations recorded by the Assessing Officer and deleted the addition made on account of excess stock found during the course of survey by simply accepting the submissions made on behalf of the assessee. 7. The ld. Counsel for the assessee, on the other hand, submitted that a letter was filed by ....
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....see. He also noted that no material defect was pointed out by the Assessing Officer either in the books of account of the assessee or the stock register regularly maintained by the assessee and held that in the absence of any such defect and without rejecting the book result of the assessee, the addition made by the Assessing Officer on account of the alleged excess stock found during the course of survey was not sustainable. Keeping in view all these facts and circumstances of the case, we do not find any infirmity in the impugned order of the ld. CIT(Appeals) giving relief to the assessee on this issue and upholding the same, we dismiss Grounds No. 1 to 6 of the Revenue's appeal. 9. In Ground No. 7, the Revenue has challenged the action of the ld. CIT(Appeals) in restricting the addition of Rs. 1,89,600/- made by the Assessing Officer on account of excess stock of gunny bags to Rs. 97,400/-. 10. During the course of survey, 18,960 gunny bags were found on physical verification. Since no stock record for the gunny bags was maintained by the assessee, the Assessing Officer treated the said gunny bags as undisclosed investment of the assessee and value thereof amounting to Rs. 1,8....
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....als) and the addition made by the Assessing Officer on this issue was restricted by the ld. CIT(Appeals) to Rs. 97,412/- calculated at the rate of Rs. 28/- per gunny bag. Keeping in view all these facts and figures given by the ld. CIT(Appeals), which have remained undisputed by the ld. D.R., we find no infirmity in the impugned order of the ld. CIT(Appeals) on this issue and upholding the same, we dismiss Ground No. 7 of the Revenue's appeal. 12. In Ground No. 8, the Revenue has challenged the action of the ld. CIT(Appeals) in restricting the addition of Rs. 23,89,500/- to Rs. 2,21,756/- on account of capital introduction by the partners of the assessee-firm. 13. During the year under consideration, the capital introduced by the partners of the assessee-firm was explained as gifts received by the partners from their respective mothers. The details of such gifts were furnished as under:- (i) Smt. Sipra Kesh (a) From mother Rs. 5,79,500/- (sale of old ornaments) (ii) Smt. Babli Kesh (a) From mother Rs. 5,91,000/- (sale of old ornaments (iii) Smt. Jayasri Kesh (a) From mother Rs. 5,93,000/- (iv) Smt. Ratna Kesh (a) From mother Rs. 6,26,000/- &nb....
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....rs actually did sell the said gold. This would prove the creditworthiness of the donors at the time of making the gift. Thereafter, since there is a close relationship between the donor and the done, the other aspects would be satisfied. It is with this object that the inquiries by the AO during assessment proceedings and under remand were conducted. After the inquiries, tile remand report submitted confirms the impugned transactions in all the cases, except in the cases of sales to: a. Nripendra Jewelers - where the shop was found to be closed; b. Paras Jewelers: In this case, even though the shop was located, no one knew when It would open; c. Hiralal And sons: Here the ownership of the shop had changed some two years back. d. AK Enterprises: No reply had been received at the time of sending the report, though the manager had promised to send the reply as soon as possible. e. S, Jewelers: Same as above. The appellant, in his rebuttal has stated as under: a. In the case of Nripendra Jewelers, even though the shop was closed on that particular day since it was the shop closing day on which the ITI had reached the shop, the purchaser, on learning from the locality and ....