2022 (3) TMI 1342 - AT - Income Tax

Validity of Survey proceedings u/s 133A conducted in absence of assessee - Manner of conducting survey u/s 133A - excess stock containing the ornaments given by the customer for repairs/re-modelling available at the stock at the time of the survey - additional income in the hands of the assessee who happens to be the proprietor of the business - HELD THAT - It is also not in dispute that the summons, u/s 131 of the Act were issued to the assessee on 7.11.2012 itself requiring her presence on 8.11.2012 before the Income Tax Authorities. Assessee did not present herself as required in the summons but on the other hand, the husband of the assessee was present on 8.11.2012 before the authorities and he submitted before the authorities that in part performance of his promise, he paid a sum of ₹ 5.00 lakhs for the A.Y 2013-14 towards advance tax and produced the copy of challan. Subsequently on 18.12.2014, though the assessee challenged the authority of her husband to give any statement binding her, did not dispute the fact of survey or the findings of any excess stock during that survey worth - Even at that time also, the assessee did not plead about the errors, if any, in the valuation of jewellery or that part of excess stock contains the gold ornaments received from or being given by certain customers for repairs/re-modelling available in the shop. Even during the appeal before us also, no details of such customers or the gold ornaments attributable to them are produced. There was a time gap of more than 3 years between the survey operation and the assessee giving her statement before the Income Tax Authorities. If the plea taken by the assessee is correct, the assessee should have brought it to the notice of the authorities her grievance in respect of the manner of conducting the survey or manner of valuing the excess stock or the details about the gold ornaments that were given for repairs/re-modelling by the customers. It could be seen from the record that even during the stage of first appellate proceedings, the assessee did not mince many words nor had she took any such plea on those aspects. The assessee is taking several pleas at several stages and they did not fit in the conduct of an ordinary prudent person. We are therefore, not inclined to accept the plea taken by the assessee before us and the learned CIT (A) considered these aspects in a proper way while granting relief and declining to delete the addition to the extent - We, therefore, do not propose to interfere with the findings of the learned CIT (A). The appeal of the assessee is accordingly found to be devoid of merits and dismissed. Appeal of the assessee is dismissed.

Summary

Issues:
1. Disputed excess stock of gold and diamond jewelry found during survey operation.
2. Discrepancy in statements between the assessee and her husband regarding additional income.
3. Challenge to the assessment by the Assessing Officer.
4. Dispute over the authenticity of bills produced by the husband of the assessee.
5. Allegations of lack of proper opportunity during survey operation.
6. Appeal against the CIT (A) order confirming addition to the income of the assessee.
7. Validity of the husband's statement in the absence of the assessee's acceptance.
8. Delay in raising grievances regarding survey operation and valuation of excess stock.

Analysis:
1. The case involved a dispute over excess stock of gold and diamond jewelry found during a survey operation at the business premises of the assessee. The husband of the assessee initially admitted to the excess stock, but the assessee later disowned his statement, leading to a conflict in accounts.

2. The Assessing Officer made an addition to the income of the assessee based on the excess stock value, despite the assessee disputing the authenticity of the statement given by her husband. The CIT (A) considered the evidence, including bills produced by the husband, but declined to delete the addition entirely.

3. The dispute also revolved around the lack of proper opportunity during the survey operation, with the assessee claiming she was not aware of the survey initially. However, the Revenue argued that the presence of the husband during the survey was sufficient as per the law.

4. The authenticity of the bills produced by the husband of the assessee was a point of contention. The CIT (A) found that the bills were genuine as they were paid through banking channels and cleared before the survey, leading to a partial relief for the assessee.

5. The delay in raising grievances regarding the survey operation and the valuation of excess stock was highlighted. The Tribunal noted that the assessee did not challenge the survey operation or the valuation methods promptly, which weakened her case.

6. Ultimately, the Tribunal dismissed the appeal of the assessee, upholding the CIT (A) order that partially allowed relief but confirmed the addition to the income of the assessee. The delay in raising critical issues and inconsistencies in the assessee's claims worked against her in the final judgment.