TaxTMI 
TaxTMI 
2020 (11) TMI 311
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....ressing. During financial year 2011-12 (Assessment Year 2012- 13) a survey u/s 133A of the Act was conducted at the business premises of the assessee on 24.01.2012. Some discrepancies were noted and excess stock was found. During survey the assessee failed to give any explanation for the excess cash of Rs. 9,67,687/- and excess physical stock at Rs. 1,91,20,210/-. The assessee agreed to disclose undisclosed income of Rs. 2,00,87,897/- in the income tax return. Return of income was filed on 30.9.2012 at Rs. 76,96,446/-. Case selected for scrutiny under CASS followed by serving of notices u/s 143(2) and 142(1) of the Act. Various information were called for. Ld A.O after considering the written submission of the assessee made disallowance of interest at Rs. 5,58,623/- and disallowance of contract payment of Rs. 1,86,000/- was made. As regards the survey proceedings though the assessee had shown undisclosed income at Rs. 2,00,87,897/- in the Profit & Loss account under the head other income, Ld. A.O noticed some discrepancies in stock records, unaccounted sales and completed the assessment after making addition of Rs. 2,16,10,195/- on account of excess stock over and above the excess ....
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....y. It shows that balance 213 bales were available with the assessee but the same were placed somewhere else therefore the survey party could take physical stock of the same. The total quantity of such excess bales is approx 351 Qtl. The value of such bales is worked out at Rs. 47,37,447/-, which was to be included in physical stock." 5.That the above finding of the Id. AO is factually not correct. The cotton bales of lot No. 139, lot No. 144 and Lot No. 143 were issued out of stock on 24.01.2012 but the invoices were raised on 25.01.2012, because of ongoing survey. The following evidence have been filed as under:- Lot No 139 Particulars Paper Book Page No Invoice No 163 dt 25.01.2012 Page No 39 Gate Pass No 467 dated 24.01.2012 Page No 40 Toll Kanta of 24.01.2012 Page No 56, Sr. No. Form 49 of MP Commercial Tax Dept dated 25.01.2012 Page 57 & 58 Lot No 144 Particulars Paper Book Page No Invoice No 165 dt 25.01.2012 Page No 41 Gate Pass No 466 dated 24.01.2012 Page No 42 Toll Kanta of 24.01.2012 Page No 56, Sr. No. Form 49 of MP Commercial Tax Dept dated 25.01.2012 Page 59 & 60 Lot No 143....
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....k numbers appearing on above documents including Form 49 generated from web site of Government of Madhya Pradesh, Commercial Tax Department 15.That the apprehension raised by Ld. DR that the assessee has back dated the gate passes, is completely misplaced. On 24.01.2012 and 25.01.2012, the assessee could not have known that these dispatches would be subject matter of addition three years later. 16.That the original gate passes number 465,466 and 467 were seized by the Id. AO during the course of assessment and they are with the Income Tax Department. 17.That the Income Tax survey team was at factory premises till 06:00 a.m. on 25th January, 2012 and at Rishabh Agrotech Pvt Ltd., the other concern of the family till afternoon of 25th January, 2012. One may easily conclude that if the trucks were not in factory premises it was not practical that any dispatches on 25th January, 2012 could be made. 18.That the Id. AO has failed to appreciate the facts of above in correct perspective and has wrongly added Rs. 47,37,477/-, 19.That the Id. CIT(A) has rightly deleted the addition of Rs. 47,37,477 I-as discussed on Page No. 8 of his order. ....
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....he trading account as re-casted by the Id. AO at page 9 of his order is as under. Particulars Amount Particulars Amount Opening stock 3,52,09,433/- Sales account 40,85,12,881/- Purchase 45,44,65,265/- Sales to be entered in books 1,13,66,913/- Direct expenses 44,99,225/- Closing stock (balancing figure) 5,63,50,087/- Gross Loss 1,79,44,042/- Total 49,41,73,923/- Total 49,41,73,923/- 29.That the last five invoices appearing in Annexure A are of 25.01.2012 and have been wrongly included in Annexure A by the ld. AO. Invoices considered by ld. AO in Annexure A which are after the survey period are as under:- Date Party B. No Lot No. Type Qty Rate Amount (In Rs.) Correct Invoice No. Paper Book Page No. VAT and CST (In Rs.) 19.01.2012 Sri Ramdev Agencies 158 135 Sale 160.05 13328.88 21,33,287 164 43 1,06,664 20.01.2012 Sri Ramdev Agencies 159 136 Sale 159.60 13328.88 21,27,289 165 41 1,06,364 20.01.2012 Sri Ramdev Agencies 160 137 Sale 158.95 13328.88 21,18,625 166 53....
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....0,210/- was surrendered and shown as other income in the audited profit and loss account. Ld. A.O after examining the records came to a conclusion that further addition of excess stock of Rs. 2,16,10,195/- needs to be made on account of the following :- (a) Excess stock of cotton bales Kept at other place Rs. 47,37,447/- (b) Unaccounted stock available at Phulambari, Aurangabad Rs. 55,05,835/- (c) Addition for stock as per recasted Trading account Rs. 1,13,66,913/- Total Rs. 2,16,10,195/- 7. When the assessee aggrieved with this addition made by the Ld. A.O took up the matter with first appellate authority filing various documentary evidences, succeeded in satisfying Ld. CIT(A) that the Ld. A.O was not justified in making the alleged addition of excess stock. The relevant finding of Ld. CIT(A) deleting the addition of Rs. 2,16,10,195/- is mentioned below:- Ground No.3:- Through this ground of appeal the appellant has challenged the addition of Rs. 2,16,10,195/- on account of difference in stock. The AO has worked out the difference in stock amounting to Rs. 2,16.10,105/-. The AO made the addition that cotton bales amounting to ....
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....- as balancing figure. On this basis he has out the difference of Rs.l,l3,66,913/- in the closing stock. The department has carried out the survey at- the business premises of the appellant. All the documents and books and other incriminating paper found during the course of survey has been examined. There remains no scope of any estimation when all the papers has been verified by department during the course of survey. The AO is not justified in putting the balancing figure while evaluating the stock. When all the stock is physically examined there remains no scope for putting the balancing figure for valuation of the stock. The AO has not brought out any basis for adopting stock at Rs. 5,63,50,087/- as balancing figure. When the department has carried out of survey and verified each and every items, they remains no scope for drawing the recasted trading account by putting the balancing figure. The appellant is maintaining books of account and same has been audited u/s 44AB of the I.T. Act. The AO is not justified in recalculating the value of additional stock as on date of the survey again by preparing recasted trading account. Therefore, the addition m....
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.... parties at Tamil Nadu, sales tax returns filed by the assessee, we are satisfied with the details filed by the assessee that against the quantity of goods purchased from Pragati Cotton, Phulambari equivalent quantity of goods were sold to other parties at Tamil Nadu and Maharashtra, though at loss due to poor market conditions but the quantity of goods purchased matches the quantity of goods sold from Aurangabad. Since the revenue authorities failed to prove anything contrary to the fact that there is no mismatch of quantity of goods purchased and sold at Aurangabad, the action of Ld. A.O making addition for the alleged stock at Rs. 55,05,835/- lying at Aurangabad is not justified. Ld. CIT(A) has rightly appreciated the facts and deleted the addition, which thus needs no interference from our end. 11. As regards excess stock on account of recasted trading account at Rs. 1,13,66,913/- Ld. A.O has adopted the never heard before method for recasting the trading account computing the closing stock as balancing figure even when the revenue authorities have taken the physical stock at the time of survey on 24.01.2012. In the impugned assessment order trading account has been recas....