TaxTMI 
TaxTMI 
TaxTMI 
2021 (5) TMI 19
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....otes that the case was selected for scrutiny manually under compulsory category as per guideline of the CBDT. The AO notes that during the relevant assessment year, the assessee was engaged in the business of trading in fabrics, lace, borders and sarees. The AO notes that a survey u/s 133A of the Income Tax Act, 1961 (hereinafter referred to as the Act) was conducted in the office premises as well as godown of the assessee company on 12.10.2015. And in the course of survey, according to AO, physical stock of sarees were inventorised and stock aggregating to Rs. 3,59,51,307/- was found. However the AO notes that the computerized books of account of the assessee reflected stock only at Rs. 1,10,80,923/- on the said date. Thus, according to AO, undisclosed stock of sarees amounting to Rs. 2,48,70,384/- was found [Rs. 3,59,51,307/- - Rs. 1,10,80,923/-]. According to AO the assessee's director failed to reconcile the said stock on the day of survey and then, offered the same as its undisclosed stock for the purpose of taxation by making payments of additional advance tax amounting to Rs. 75 Lacs. Thereafter according to AO, during the assessment proceedings, it was found that neither th....
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....om the details of inventories recorded at page 76 that the value of each fancy sarees has been duly recorded which ranges between Rs. 3,200/- to Rs. 6,500/- and that the quantity of each saree in stock has also been recorded. And according to AO, the value of the sarees recorded in other pages is more or less same as that recorded in this page i.e. page 76. Thereafter the AO reproduced at page 6 and 7 of the assessment order few statements given by the Director of assessee company Shri Gopal Singrodia i.e. question and answer of question no. 8, 9 and 10 which is reproduced as under: "Q.8. In course of survey u/s 133A of the I.T. Act, 1961 stock found and inventorised aggregated to Rs. 3,59,51,307/- whereas the books of a/c shown the stock at Rs. 1,10,80,923/- as on date. Please explain the discrepancy? Ans: At the present moment I am not in a position to explain the discrepancy without going through the books of a/c. It may also be noted that the stock inventorised by you contains some dead stock. However, in order to by peace of mind I am disclosing the difference in stock of Rs. 2,50,00,000/- as my unexplained stock. Q.9. Do you agree with the method of stock taking. Ans:....
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....ofit @ 8.49% of its turnover. The AO justified the addition of entire stock of sarees by reasoning out that the assessee might have already claimed all the expenses to its profit and loss account for the relevant assessment year, so the undisclosed stock is nothing but the undisclosed investment of the assessee. Further the AO observed that the assessee has not reflected the undisclosed stock in its books, which fact, according to AO, signifies that the assessee did not include the undisclosed stock in its closing stock, so according to AO, the assessee must have sold the said excess stock during relevant assessment year. While calculating the gross profit of the undisclosed stock which was supposed to have been sold, the AO excluded the dead stock of Rs. 8,79,415/- and thereafter the AO calculated the gross profit of the assessee @ 8.49% of Rs. 2,39,67,969/- [Rs. 2,48,47,384/- - Rs. 8,79,415/-] and thus made another addition of G.P of Rs. 20,34,881/-. 4. Aggrieved by the aforesaid action of AO, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to give partial relief to the assessee and confirm Rs. 27,84,000/- in place of Rs. 2,47,24,399/- made by the AO, ther....
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.... has description showing item, brand, quantity, selling price per unit, cost price per unit and total cost price. This is a detailed inventory showing the length and breadth of fancy fabrics. Pages 44 to 45 are not found in the inventory report. Part 4 comprising of Pages 46 to 48 is the inventory of printed fabrics, dupian fabrics, saree borders, chinki fabrics etc. Each Page of the said inventory has description showing item, brand, quantity, selling price per unit, cost price per unit and total cost price. This is a detailed inventory showing the length and breadth of different kinds of fabrics. Pages 49 to 60 are not found in the inventory report Part 5 comprising of Pages 61 to 70 is the inventory of embroidery sarees which is described as 'fresh stock - finished goods'. Each Page from 61 to 69 of the said inventory has description showing Item, brand, code, quantity, selling price per unit. This is a detailed inventory showing the code of embroidery sarees. Page 70 contains the sum total of the value of embroidery sarees found at Pages 61 to 69 and also the value of fabrics found at Pages 71 to 77. It is to be noted the total number of embroidery sarees from Pages....
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....ery sarees found from each rack on the 2nd row of the showroom. Page 81 is the inventory of embroidery sarees, taken from the 3rd row of the show mom. The said inventory has description showing item, quantity, cost price per unit and total cost price. This is a detailed inventory showing the description of embroidery sarees found from each rack on the 3rd row of the showroom. Page 82 is the inventory of embroidery sarees, taken from the 4th row of the show room. The said inventory has description showing item, quantity, cost price per unit and total cost price. This is a detailed inventory showing the description of embroidery sarees found front each rack oh the 4th row of the showroom. Pages 83 to 84 is the inventory of satin, viscose, different nets etc. taken from raw material room, Each Page of the said inventory has description showing item, quantity, cost price per unit and total cost price. This is a detailed inventory showing the description of different of satin, viscose and nets. Page 85 is the inventory of velvet, tissue, traders etc. taken from the kitchen room. Part 7 comprising of Page 86 is the inventory of dupian fabrics, cut piece, lace and net. The said ....
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....shall be offered on this account at the time of tiling of return of income for the period 1st April, 2015 to 31st March 2016." The appellant therefore in a sworn statement submitted that the contents of Page No, 76 were false and hence required to be ignored, it was therefore argued that other than the items inventoried on Page No. 76, the physical stock actually found during survey stood reconciled and matched with the stock as per the books on the date of survey. Accordingly while filing the return of income for AY 2016-17, the appellant did not take into consideration the value of alleged stock difference. The AO did not take any cognizance of the retraction letter filed by the appellant. No verification or enquiry was made to ascertain the veracity of the retraction statement In feet fee crux of the retraction statement was that it would impossible to store 7038 embroidery sarees, in total, at the premises of the appellant. In the course of assessment the AO asked the appellant to explain as to why the difference between the physical stock of sarees as per inventory report prepared in the course of survey and the book stock on the date of survey, should not be assessed as its....
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....lant argued that the inventory was erroneous because it was physically impossible to store 7038 sarees in the appellant's premises surveyed by the AO, In order to verify this contention, the following details/documents were called from the assessee along with the architect's plan of the premises. - Layout plan of the shop and store room area covered during survey, - Diagrams of the rack sizes and the layout showing capacity and storage volume. - Photographs of the different sections of the shop and storage area to show how much sarees can be stored therein. - Closing stock of sarees and other fabrics for the last three years, - Monthly stock as per books in last thirty six months, and - Month- wise details of embroidery sarees sold in last three years. The appellant vide submission dated 30.10.2019 has submitted the schematic drawing of the showroom prepared by M/s Vikash Furniture which showed that the business premise of the appellant is divided into three sections namely, show room and two store rooms. The said drawing also contained the detailed description of the internal storage spaces along with rack sizes where the sarees are regularly stored. The A/R of the....
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....al 1053 28,98,050/- From the said summary it is noted that on each Page the quantity of sarees found did not exceed maximum of 218 sarees and the value of sarees found was maximum at Rs. 4,42,000/-.The aggregate value of sarees noted on nine pages totalled Rs. 28,98,050/-. Similarly Page Nos. 80 to 82 of the inventory report contained details of sarees found on 2nd , 3rd & 4th rack in the showroom. While preparing the inventory report, the survey party also noted the number of sarees in each rack. The maximum number of sarees inventoried in one particular rack is 16 sarees i.e. in Rack No. 6 of 2nd row of the showroom. From these Pages it was noted that the number of sarees stored in each rack ranged between 3-16 and the total number of sarees stored in showroom was only 425 having value of Rs. 7,98,500/-, Except for the items inventoried in the Pages 61 to 70, 76, 77 & 78 and 80 to 82, the remaining Pages contained details of stock of fabrics, laces, borders etc. The total number of sarees noted on these Pages was 7083 sarees and corresponding value thereof was Rs. 2,76,93,550/-. As opposed to 1487 number of sarees recorded on 16 Pages (61 to 70, 77 & 78 and 80 to 82) and to....
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.... where the stock of sarees and fabrics was stored. On examination of the schematic drawings of the showroom and the photographs, it is observed that the number of racks located in the showroom & storerooms did not have adequate capacity to store 7083 embroidered sarees which is also been corroborated by the architect. In fact it is noted that on Page Nos. 61 to 70 and 76 to 82 where the survey party noted stock of other embroidered sarees, the average numbers of sarees stored per rack was in the range of 2-16 sarees. However on Page No. 76 the survey party has noted sarees in the range of 390 to 526 sarees per rack. The architect after having personally visited the premises has prepared an architectural diagram of the storage area. According to him the maximum storage capacity of the appellant's premises was 2460 embroidery sarees. The appellant also vehement;, argued that the premises of the appellant in no way could accommodate or store more than 2500 embroidery sarees. Therefore to verify the explanation put forward by the assessee which was supported by the schematic drawings of the showroom and store rooms as prepared by the architect, the A/R of the appellant was asked to sub....
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....ion as to why the inventory is not correct, particularly with, regard to Page No. 76 of the inventory report. The AO however has not made any enquiry or investigation in the context of the retraction statement filed. Except relying on the statement u/s 133A, the AO did not bring on record any further material to negate the appellant's contention or to corroborate the addition. In this background therefore, the material question to be answered is whether based solely on the statement recorded in the course of survey (which was subsequently retracted) any addition can be made. This very issue was considered by the Hon'ble Madras Court in the case of CIT Vs S Khader Khan (300 ITR 157) wherein the Court recorded following findings: "In the instant case, there was a survey operation conducted under section 133A of the Act in the assessee's premises and a statement was recorded from one of the partners. Assuming there-were discrepancies and irregularities in the books of account maintained by the assessee, an offer of additional income for the respective assessment years was made by the partner of the firm. But, such statement, in view of the scope and ambit of the materials co....
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....2620 of2006 (between CIT v. S Ajit Kumar [2008] 300 ITR 152 (Mad) (v) Finally, the word "may" used in section !33A(3)(iii) of the Act. viz., "record the statement of any person which may be useful for, or relevant to, any proceeding under this Act", as already extracted above, makes it clear that the materials collected and the statement recorded during the survey under section !33A are not conclusive piece of evidence by itself. The above judgment of the Hon'ble Madras Court was upheld by the Hon'ble Supreme Court in 352 ITR 480. Similar view was expressed by the Hon'ble Delhi High Court in its judgment in the case of Dhigra Metal Works Vs CIT (196 Taxman 488). The facts of the said case are that a survey action was conducted at the premises of the assesses and discrepancies in the physical stock, vis-a-vis book stock were found. One of the partners of the assessee firm could not explain the said difference at that particular point of time and, therefore, to buy peace of mind, certain additional income was offered for assessment. Subsequently, the assessee firm submitted that the statement of partner about stock was incorrect; and that the impugned discrepancy had been reconci....
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....ement which alone has evidentiary value as contemplated under law. Therefore, there is much force in the argument of learned counsel for the appellant that the statement elicited during the survey operation has no evidentiary value and the Income-tax Officer was well aware of this," 14. Moreover, the word 'may' used in section 133A(3)(iii) of the Act clarifies beyond doubt that the material collected and the statement recorded during, the survey is not a conclusive piece of evidence by itself. 15. In any event, it is settled law that though an admission is extremely important piece of evidence, it cannot be said to be conclusive and it is open to the person who has made the admission to show that it is incorrect. 16. Since in the present case, the respondent-assessee has been able to explain the discrepancy in the stock found during the course of survey by production of relevant record including the excise register of its associate company, namely, M/s. D.M.W.P. Ltd., we are of the opinion that the Assessing Officer could not have made the aforesaid addition solely on the basis of the statement made on behalf of the respondent-assessee during the course of survey. " ....
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....ees. As per the appellant's books for the relevant year, the average cost of embroidered sarees was approximately Rs. 3000/- and therefore 1 hold that at the time of survey the value of excess stock of 928 sarees was Rs. 27,84,000/- (928 X 3000) I thus uphold the addition of Rs. 27,84,000/- being value of excess stock of 928 sarees and the remaining sum o1 Rs. 2,19,40,399/- (2,47,24,399 - 27,84,000) stands deleted. Since the said stock did not reflect in the appellant's books for the relevant financial year, I agree with the AO's proposition that such excess stock was sold outside the books and thereby gross profit at the rate of 8.49% was required to be further added as appellant's income. Accordingly the addition of Rs. 2,36,362/- (8.49% of Rs. 27,84,000) is retained and the remaining sum of Rs. 17,98,519/- (20,34,881- 2,36,362) is deleted. Overall, addition made by the AO is restricted to Rs. 30,20,362/-. Therefore these grounds in appeal are partly allowed. IV. In view of the above the appeal of the assessee treated as partly allowed. 5. Assailing the action of Ld. CIT(A), the Additional CIT D.R Shri Supriyo Paul submitted that Ld. CIT(A) has erred in giving relief to th....
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..... CIT(A), these documents were produced before him. According to Ld. AR, the Ld. CIT(A) while exercising his appellate powers u/s 250 of the Act has power even to suo-motto pass orders and this power can be seen located under subsection (4) of Section 250 of the Act and, therefore, according to Ld. AR, there was no necessity for the Ld. CIT(A) to confront the AO or call for the remand report from the AO as contended by the Ld D.R. Therefore according to Ld. A.R., the grounds of appeal of the department alleging violation of Rule 46A is without merits and for this proposition he relied on the decision of this Tribunal in DCIT vs. Century Plyboards (I) Ltd. in ITA NO. 2149/kol/2019 for AY 2014-15 dated 04.11.2020 wherein similar issue had come up for adjudication, and the Tribunal in that case held as under: "29. ............................ We note that it was with a view to further verify the averments of the assessee and in exercise of his co-terminus powers that the ld. CIT(A)had issued enhancement notice u/s 251 of the Act and, thereafter made suo moto enquiries in exercise of the powers vested in him u/s 250(4) of the Act. Hence, it was a clear case of exercise of overriding ....
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....ng to him, the conditional offer disclosing the difference of stock as unexplained stock cannot be the basis for addition of entire stock. And thereafter according to Ld. A.R, the assessee had moved an application before the AO to give a copy of the inventories prepared by the survey team; and pursuant to same, the assessee received the copy of inventory prepared by the survey team only in the month of December, 2015; and after going through the contents of the inventory report made by the survey team to their astonishment found glaring discrepancies especially in page 76 of survey report, on the basis of which the assessee's director had retracted the statement in respect of undisclosed stock by filing a letter dated 20.01.2016 and drew our attention to page 104 to 106 of PB wherein an Affidavit sworn by Shri Gopal Singrodia, director of assessee company is found placed. And from a perusal of the same, it reveals that Shri Gopal Singrodia admits about the survey u/s 133A which was conducted on the business premises of the assessee on 12.10.2015 wherein his statement was recorded by ITO, Ward-9(4), Kolkata during the wee hours/mid night on 12.10.2015. According to Director, at the....
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....e seen that all other pages of the inventory found placed from page 44 to 99 (Pg 1 to 86) have been written in an illegible manner, in hurry and it included the code numbers of designer sarees which fact can be specifically seen. However, according to Ld. AR, a perusal of page 76 would reveal that it has been written legibly and in good hand writing and the total quantity of sarees in that page 76 alone is more than 5,596 pieces of sarees in numbers whereas in all other inventories/sarees recorded from 43 to 99 of paper book does not cross in a page more than 110 to 200 sarees and all the sarees recorded from page 1 to 85 (except page 76) the total piece of sarees is only 1487 and total cost of sarees was only Rs. 38,05,550/-. The Ld. A.R thereafter drew our attention to the fact the survey team had inventoried sarees at page nos. 61 to 65 of the stock report where different category and designs and different serial numbers had been clearly jotted down. In contra distinction at page no. 76 (page 89 of PB) the Ld. AR pointed out to us that no reference has been made to the specific category or design or serial number of the alleged embroidery sarees found therein by the survey team.....
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....ether the Appellate Tribunal could have disregarded the value of the unaccounted purchases made by the assessee and required additional tax to be imposed by taking into account notional sales when no corresponding sales had taken place during the relevant assessment year. In course of survey operations conducted on March 24, 2010 at the rice mill of the assessee, it was discovered that there were large quantities of undisclosed stocks. The assessing officer did not weigh the additional stocks but went by the number of bags since the bags, presumably, were of uniform or standard weight. The assessing officer discovered the undisclosed quantum of paddy to be to the extent of 37647 quintal. The excess stock of rice was to the extent of 581 quintal and the excess stock of bran was to the extent of 45 quintal. It also appears that the undisclosed, excess stocks were corroborated by the entries in certain registers maintained at the relevant point of time at the rice mill and certain confessional statements were made by or on behalf of the assessee. On the basis of the additional stocks found, the assessing officer assessed the total taxable income to be to the extent of Rs. 3.92 cro....
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....ng Officer. Further, the area of the godown as indicated in the FCI certificate was of no consequence since the Assessing Officer found stocks piled outside the godown at the time of the survey. Accordingly, to the extent that the Appellate Tribunal accepted the quantum of additional stocks on the basis of the certificate issued by the concerned FCI official, such order is unacceptable and is set aside. The order of the Commissioner (Appeals) in such regard is restored. The additional quantum as discovered during the course of the survey operation will fasten to the assessee. However, the other aspect of the matter was dealt with by the Appellate Tribunal on a point of principle and such matter does not call for any interference. According to the Appellate Tribunal the value of the entire quantity of additional stocks that were discovered in course of the survey operation could not be regarded as the additional income of the assessee and amenable to tax. There was a specific ground taken before the Appellate Tribunal, which was a legal question, as to whether the undisclosed purchase could be taken as the additional income without reference to the possible sale of the paddy w....
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.... during survey, the assessee was confronted with the difference of stock which was discovered, but the director of assessee Shri Gopal Singrodia failed to reconcile or give satisfactory explanation regarding the undisclosed stock and in fact in his statement the director of assessee Shri Gopal Singrodia has admitted the fact of undisclosed stock and agreed to remit the advance tax on it and gave post dated cheque amounting to Rs. 75 Lakhs. However, later during the scrutiny assessment, the AO noticed that the assessee while filing the return of income (ROI) did not disclose the undisclosed stock which was admitted by its' director during the survey; and when confronted by him, the assessee turned 360 degrees and took a stand that there was no undisclosed stock by pointing out some discrepancy about page 76 of the inventory made by the survey team which is found placed at page 89 of PB. However, the AO brushed aside the objections/discrepancies pointed out by the assessee and did not accept the post survey stand of the assessee and made an addition of undisclosed investment in stock of sarees at Rs. 2,47,24,399/-; and further according to AO, since the assessee has not shown the un....
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....blank pages (27-40, 44-45 & 49-60) among page 1to 86 were not given to assessee by AO and the Ld CIT(A) has noted about this fact at page 10 of the impugned order supra]. The chart is given below: 10. We note that after receipt of the stock taking report in December 2015, and other impounded documents, the assessee noticed that the quantitative details as well as the corresponding values allegedly reported by the department on physical stock taken team was incorrect and erroneous. According to assessee, on a detailed scrutiny of the inventory report it was found that there were discrepancies in particular at Page No. 76 of the stock report (corresponding to page 89 of PB) which was completely different and the stock supposed to be reflected therein therefore did not belong to the assessee. The Ld. A.R pointed out that the details of the inventories, the value assigned, quantity, and the nature of product were significantly different from the business and functional profile of the assessee company. Accordingly, the assessee brought these glaring discrepancies immediately to the notice of the AO by way of retraction statement filed on 22.01.2016 wherein the contents of Page No.76 (P....
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....ges abbreviations have been used and the sign '-do-" have been used wherever same items were found and repeated in the stock report. However in Page No.76 it can be seen that each of the 13 line item although being of the exact same nature has been written and repeated every time which normally during survey etc. officers don't have the luxury to sit and write patiently each and every such details again and again. These facts apart, the most glaring fact which is discernible from this single Page No. 76 (Page 89 of PB) is regarding the total quantities of sarees i.e. 5,596 pieces of embroidery sarees have been listed, whereas sarees in all the other 85 pages taken together total comes to only 1487. Moreover, it is noted that the value of sarees at Page No.76 is the convenient approximation of the alleged difference found by the Department in the stock record i.e. Rs. 2.5 crores and which was the undisclosed figure confronted to the director of the assessee to explain. The Ld. A.R drew our attention to the fact the survey team had inventorized embroidery sarees at page nos. 61 to 65 of the stock report where different category and designs and different serial numbers had been clear....
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....e's premises when it was practically impossible to maintain stock of such stock of sarees in such little space; and according to Ld AR, the Ld. CIT(A) in order to examine this factual claim of assessee along with the other infirmities pointed out at page 76, exercised his power u/s 250(4) of the Act calling for photos, drawing etc. 11. Be that as it may let us examine whether the action of Ld. CIT(A) to call for photos, drawing etc. of assessee's premises and thereafter discarding the survey report and go for estimation to restrict the addition is warranted in the facts and circumstances of the case. For appreciating these aforesaid facts in the light of the infirmities alleged against the contents of page 76, we need to reproduce by scanning page 75 (Page 88 of PB) as well as for sample another page 76 (Page 89 of PB) to appreciate the aforesaid discussion on how page 76 (Page 89 of PB) is different/stand-alone from the other pages. And please note that the first page scanned and placed herein below is scanned page 75 (Page 88 of PB) which page and hand writing is found to resemble with the handwriting of the survey report (1-86) placed before us (44-99 of PB) and the next page s....
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....ut at page 76, the Ld. AR brought to our notice certain interesting facts/coincidence which can be seen at page 101 of paper book and on a perusal of it (which is not part of the inventory report of survey team, but it is the working sheet which was provided to the assessee along with inventory report in December 2015) we note that there are writing /calculation by hand written which is as under: 1,46,00,000 - 3,00,000 _________________ 1,43,00,000 +2,38,89,000 ________________________________________ 3,81,89,000 x 100/106.74 =Rs. 3,59,51,307/- (C.P.) 4200 x 437 = 18,35,400/- 3200 x 512 = 16,38,400/- 3500 x 498 = 17,43,000/- 4000 x 456 =18,24,000/- 4200 x 420 = 17,64,000/- 4500 x 390 = 17,55,000/- 5000 x 390 = 19,50,000/- 6500 x 412 = 26,78,000/- 4200 x 401 = 16,84,200/- 3500 x 380 = 13,30,000/- 4400 x 422 = 18,56,800/- 5200 x 352 = 18,30,400/- 3800 x 526 = 19,98,800/- __________ 2,38,89,000/- 14. When we asked the Ld. AR to explain this page 101 of paper book, he pointed out that this working sheet would reveal that the inventory report prepared by the survey team was only at Rs. 1,43,00,000/-. However since the survey team extracted an admission illegally a....
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....2,38,89,000/-, which the survey team had to add to the inventory report so as to justify the extracted disclosure of Rs. 2.5 crs. He further pointed out that this figure of Rs. 2,38,89,000/- was further broken up and divided by the survey team into 13 line items with the corresponding selling value and number of sarees, and the same was jotted down just below these notings on the bottom half of the same sheet. The Ld. AR submitted that it was only when the calculations made on this working sheet reconciled so as to justify the extracted disclosure that the survey team drew up Page 76 of the inventory report. The Ld. AR pointed out that the 13 line items noted on this sheet exactly matched with the 13 line items noted on Page No. 76 of the inventory report (Pg 89 of the PB). He specifically pointed out that the number of sarees on each line item, the selling value on each line item and the total value of each line item fully tallied. This according to him goes on to prove/corroborate the assessee's contention that the Page 76 of the report prepared by the survey team was an after-thought to justify the disclosure of Rs. 2.5 crs extracted from the Director at midnight of 12th Octobe....
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.... the true details of stock found in the course of survey, and so he rightly discarded it. And for the following reasons, we also concur with the Ld CIT(A) to discard page 76 of survey report. We note that even though at the earliest of point of time the assessee has pointed out the infirmities the AO has brushed aside the same by merely saying firstly that the contents of page 76 (89 of PB) is correct because on the date of survey, the assessee's (director) has put his initial on page 76 (89 of PB) of the survey report, and secondly, during survey the director of assessee admitted about the un-disclosed stock of Rs. 2.5cr and his subsequent conduct on the same day of issuing post-dated cheques as advance tax goes on to show that he accepted the undisclosed stock; and thirdly it is evident from of perusal of page 76 that the cost of sarees has been recorded between Rs. 3,200- 6,500 which according to AO is more or less the same as in other pages; and fourthly at page 76 the number of sarees have been recorded; and fifthly since the survey operation was carried out by team of several officers, the handwriting on the inventory prepared cannot be the same and so it would be different a....
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....ned that after the survey was over after the midnight, the assessee's director who was an elderly person was exhausted & tired and when pages were shown to him, he mechanically without looking into the contents of pages kept on initialing it so that he will be left free from the survey operation going on from morning; and according to Ld AR, merely because the director has initialed on all pages, (including the blank sheets i.e. pages 27-40, 44-45 & 49-60 in the survey Report) cannot be the basis to believe that the contents of all pages of the survey report (1-86) are true. Therefore, according to Ld. AR merely because initial of assessee's director is seen under page 76 (89 of PB) cannot be the main reason for concluding that the contents of page 76 is true. We find force in the contention of Ld. A.R., and note that Ld. CIT(A) has noted that some of the pages in survey Report (i.e. 27-40, 44-45 & 49-60) stated to be in page 1-86 were blank sheets i.e, 26 pages out of 86 pages were blank sheets, and therefore AO did not give copies of it to assessee along with the other pages of Survey Report wherein the inventory of goods are recorded. So when there were blank sheets of 26 pages ....
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....acted the conditional admission after going through its books and infirmities inter alia about page 76 of survey report . And it should be borne in mind that if an admission is based on mistake of fact (not mistake of law) then the maker of the admission can validly retract it. So, from any angle we look, we are of the opinion that there was no admission by the director of undisclosed stock during survey as wrongly assumed by AO. 20. Coming to the other observations of AO to justify page 76 cannot be accepted i.e, AO observes that survey team has written down the number of sarees at page 76, so it is correct. We don't agree, for the reason that it is highly improbable to have recorded so many number of sarees at page 76 which itself makes it a suspect. The number of embroidery sarees at page 76 alone is 5596 pcs, whereas sarees figuring in 8 pages (pages61-68) in a page are between 82 sarees to 145 sarees(max) and the total sarees are only 1487 sarees which are found recorded on 16 pages (61-70, 77 &78, and 80-82). And the total cost of sarees at page 76 alone is Rs. 2,38,89,000/- whereas, the total cost of total 1487 sarees recorded on 16 pages (61-70, 77 &78, and 80-82) is only ....
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....he glaring infirmities discussed supra which cast serious doubt about the veracity of the contents of page 76. Therefore we cannot accept the aforesaid reasons given by AO to justify page 76 of the inventory prepared by survey team. And during the appellate proceedings the Ld. CIT(A) in order to appreciate whether there is merit in the infirmities pointed out supra and in the exceptional circumstances pointed out (supra) and also to find out the truth of the allegation/infirmities in page 76 (89 of PB) directed the assessee to prove the same by adducing additional evidence in the form of architectural drawing, photos etc. which in the facts of the case as discussed (supra) was necessary to find out/unravel the truth and we do not find any illegality or irrationality in his action. According to us, page 76, with the infirmities pointed out does not inspire confidence to rely on it, therefore, the Ld. CIT(A) rightly discarded it being unsafe to rely on the contents of page 76, since it is irreconcilable by the AO/Revenue. And since we concur with the reasoning given by the Ld CIT(A) to discard page 76 of the survey report, we are not repeating the reasons for the sake of brevity 23.....