2014 (2) TMI 939 - AT - Income Tax

Addition made u/s 69 of the Act Unexplained investment Held that - On the date of survey the stock found from the two business places i.e., at Nachinda Bazar and from Rasulpur Service Station and the item-wise details of stock found from the business premises during the course of survey - there is no stock found of HSD and lubricants at Nachinda Bazar and stock found in the business premises, at best can be added - The differences of closing stock as on 31st March, 2006 and stock found during the course of survey on 17-11-2005, the difference can be added to the returned income of the assessee - The value of petrol at Rasulpur Service Station i.e, closing stock and that of HSD (diesel) - the assessee has stock available as against stock found during the course of survey - the difference being at best can be treated as unexplained stock, which can be added to the returned income of the assessee - thus, the Assessing Officer is directed to restrict the addition at Rs.1,27,035 only Decided partly in favour of Assessee. Difference on the stock as on date of survey and the statement submitted Opportunity to adduce evidences Held that - The assessee stated that on the two issues the Assessing Officer made addition and CIT(A) also confirmed the action of AO and no proper opportunity of being heard was provided to the assessee and assessee also fails to explain the source of this deposit - the assessee requested that fresh opportunity of being heard to be provided revenue has not objected to set aside the two issues to the file of AO thus, the matter remitted back to the AO for fresh adjudication Decided partly in favour of Assessee.

Issues Involved:
1. Addition of unexplained investment of Rs.29,48,143/- on account of purchase of petro-product outside books of account.
2. Addition of unexplained investment of Rs.23.80 lakh based on difference in stock statements.
3. Addition of unexplained investment of Rs.17,622/- in Sahara India units and US-64.
4. Addition of Rs.1.50 lakh as undisclosed income in the bank account.

Detailed Analysis:

1. Addition of unexplained investment of Rs.29,48,143/- on account of purchase of petro-product outside books of account:

The assessee challenged the addition made by the Assessing Officer (AO) and confirmed by the Commissioner of Income-tax (Appeals) [CIT(A)] for unexplained investment in petro-products. The assessee argued that purchases were restricted to Indian Oil Corporation (IOC) as per their agreement, making it impractical to purchase petro-products outside the books. The stock statement submitted to the bank was inflated to secure higher cash credit facilities, and there was no actual unexplained investment. The tribunal noted that the stock found during the survey and the stock statement submitted to the bank were not significantly different. The tribunal concluded that the difference in stock should be reasonably estimated, and the addition should be restricted to Rs.1,27,035/- instead of Rs.29,48,143/-.

2. Addition of unexplained investment of Rs.23.80 lakh based on difference in stock statements:

The second issue involved the addition of Rs.23.80 lakh based on the difference between the stock found during the survey on 17-11-2005 and the stock statement submitted to the State Bank of India (SBI) on 31-10-2005. The assessee argued that the stock statement submitted to the bank was inflated to avail higher credit facilities, and there was no actual unexplained investment. The tribunal found that the stock found during the survey was Rs.6,51,422/-, and the closing stock as per Form-3CD report was Rs.5,23,886/-. The tribunal concluded that the difference of Rs.1,27,536/- should be treated as unexplained stock and added to the returned income, reducing the addition from Rs.23.80 lakh to Rs.1,27,035/-.

3. Addition of unexplained investment of Rs.17,622/- in Sahara India units and US-64:

The assessee contested the addition of Rs.17,622/- for investment in Sahara India units and US-64. The tribunal noted that the AO and CIT(A) had confirmed the addition without providing a proper opportunity for the assessee to explain the source of the investment. The tribunal decided to set aside the issue to the file of the AO to allow the assessee to prove the source of the investment.

4. Addition of Rs.1.50 lakh as undisclosed income in the bank account:

The assessee also contested the addition of Rs.1.50 lakh as undisclosed income in the bank account with Balageria Central Co-Operative Bank Ltd. The tribunal observed that the AO and CIT(A) had confirmed the addition without giving the assessee a proper opportunity to explain the source of the deposit. The tribunal decided to set aside the issue to the file of the AO to allow the assessee to provide an explanation for the deposit.

Conclusion:

The tribunal partly allowed the appeal for statistical purposes, directing the AO to restrict the addition for unexplained stock to Rs.1,27,035/- and setting aside the issues of unexplained investment in Sahara India units and the undisclosed income in the bank account to the file of the AO for fresh consideration. The order was pronounced in the open court on 27/01/2014.

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