2018 (3) TMI 462 - AT - Income Tax

Addition on account of surrender during the course of survey - addition on the basis of statement given by the partner of the assessee firm during the course of survey towards unaccounted purchases - Held that - It is not disputed that there was no incriminating material found during the course of survey which could substantiate the basis of the alleged addition. We further find that during the course of assessment proceedings the assessee had fully explained the purchase of oil and lubricants. The Assessing Officer has not referred to any corroborative evidence to substantiate that there was in fact any unaccounted purchase of oil and lubricants. It has been consistently been held by Hon ble Courts that the statement recorded during the course of survey are not sacrosanct and cannot be relied against the assessee for making addition unless supported by corroborative evidence. Addition of ₹ 3.50 lakhs have no legs to stand as it is merely based on the statement given during the course of survey without any supporting incriminating material. - Decided in favour of assessee. Addition on account of difference in the account with Petroleum Service Centre, Sausar - Held that - Looking to the issue relating to alleged difference in the debit balance of ₹ 73,363/- and the contention of Learned counsel for the assessee for the alleged arithmetical mistake, find it justified to restore the issue raised in this ground to the file of the Assessing Officer to carry out necessary verification and also direct the assessee to produce necessary evidence including the confirmation account and the list of sundry debtors for necessary reconciliation so as to satisfy the AO. - Decided in favour for statistical purposes.

Summary

Issues:
1. Addition of ?3.50 lakhs on account of surrender during the survey.
2. Addition of ?5,732 as gross profit on shortage in stock.
3. Addition of ?76,363 due to difference in the account with Petroleum Service Centre.

Analysis:

Issue 1: Addition of ?3.50 lakhs on account of surrender during the survey
The appeal was against the addition of ?3.50 lakhs made by the Assessing Officer based on a statement by the partner during a survey. The assessee contended that there was no incriminating material supporting the surrender. The Tribunal noted that there was no corroborative evidence for the unaccounted purchases. It was highlighted that statements during surveys are not conclusive and need supporting evidence. Relying on previous court decisions, the Tribunal concluded that the addition lacked merit and deleted the amount.

Issue 2: Addition of ?5,732 as gross profit on shortage in stock
During the appeal hearing, the assessee did not press this ground, leading to its dismissal as not pressed.

Issue 3: Addition of ?76,363 due to difference in the account with Petroleum Service Centre
The Assessing Officer added ?76,363 due to a difference in the debtor balance with Petroleum Service Centre. The assessee argued an arithmetical mistake and agreed to provide necessary verification. The Tribunal decided to send the issue back to the Assessing Officer for verification and directed the assessee to produce evidence for reconciliation. Ground No. 3 was allowed for statistical purposes.

In conclusion, the Tribunal partly allowed the appeal for statistical purposes, deleting the addition of ?3.50 lakhs and sending the issue of the difference in debtor balance back for verification.