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2020 (7) TMI 284 - AT - Income TaxUndisclosed stock - relevant assessment year - survey proceedings u/s.133A - assessee was agreed to pay self-assessment tax on it by accepting that the stock discrepancy noted - HELD THAT - We observe from the order passed u/s.143(3) of the assessment year 2012-2013, there is no any single word found in regard to survey proceedings u/s.133A of the Act, whereas the documents were available with the same AO i.e. Ward-2(2), Balasore and the assessee accepted some discrepancy in stock and agreed to pay tax thereon. CIT(A) after taking into account of the two branches, enhanced/modified the assessment made by the AO but has given substantial relief after considering all the submissions and documents available before him. As gone through the statements recorded by the survey team of partners of the firm the total discrepancy in stock declared of ₹ 1,30,26,864/-. The total declaration made by them is ₹ 1,30,26,864/- only for the assessment year 2012-2013 in which they have undertaken payment of self-assessment tax of ₹ 40 lakhs in four installments. Except the above declaration, there are nowhere in the statements recorded during the course of search, any other declaration by the partners. As noted from the order of both the authorities below that they have made additions for the financial year 2012-2013 relevant to assessment year 2013-2014. Once the statements have been accepted by the survey team the tax should be calculated by them for the relevant years accepted by the assessee. In view of the above findings noted by us, it should be taxed in the assessment year 2012-2013. Accordingly, we quash the order of both the authorities below and delete the entire addition made by the AO. Cash balance found in the cash box - As decided the entire issue that declaration should be added in the assessment year 2012-2013, therefore, there is no question for deciding this issue again because the amount in question as stated in this ground is included in the entire amount of declaration made by the partners. Appeal of assessee is allowed.
Issues Involved:
1. Validity of the CIT(A)'s order. 2. Treatment of undisclosed stock discrepancy. 3. Relevance of the stock discrepancy to the assessment year 2013-14. 4. Verification of books of account and stock registers. 5. Cash balance found in the cash box. Detailed Analysis: 1. Validity of the CIT(A)'s Order: The assessee contested that the CIT(A)'s order was not just and proper and should be quashed. The CIT(A) had reduced the addition made by the AO from ?1,30,26,864 to ?47,19,960. The assessee argued that the entire addition should have been deleted as the findings were perverse and contrary to the facts on record. 2. Treatment of Undisclosed Stock Discrepancy: The AO added ?1,30,26,864 to the total income of the assessee for the financial year 2012-2013, relevant to the assessment year 2013-2014, under the head "stock discrepancy." This was based on a survey conducted on 26.04.2012, which detected stock discrepancy and unexplained cash. The assessee initially agreed to pay self-assessment tax but later retracted. The CIT(A) allowed relief of ?82,33,873 and sustained an addition of ?47,19,960. 3. Relevance of the Stock Discrepancy to the Assessment Year 2013-14: The assessee argued that the stock discrepancy related to the financial year 2011-2012 and should not be added to the assessment year 2013-2014. However, the AO treated it as income for the assessment year 2013-2014 because the survey was conducted on 26.04.2012. The Tribunal noted that the AO should have made additions in the assessment year 2012-2013 since the discrepancy was accepted by the assessee for that year. 4. Verification of Books of Account and Stock Registers: The assessee claimed that the stock registers were regularly maintained and sent to the Chartered Accountant for VAT return preparation, and thus were not available during the survey. The AO noted that the assessee did not produce stock registers or reconcile the stock discrepancy during the assessment proceedings. The Tribunal observed that the AO had taken two views and should have made additions for the assessment year 2012-2013, as the documents were available and the discrepancy was accepted for that year. 5. Cash Balance Found in the Cash Box: The CIT(A) dismissed the issue of unexplained cash of ?73,031 found during the survey, as the assessee did not make any representation regarding this. The Tribunal decided that since the entire issue should be taxed in the assessment year 2012-2013, there was no need to address this issue separately. Conclusion: The Tribunal quashed the orders of both the AO and the CIT(A), deleting the entire addition made by the AO. The Tribunal held that the discrepancy should be taxed in the assessment year 2012-2013, as initially accepted by the assessee. Consequently, the appeal of the assessee was allowed.
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