2022 (6) TMI 798 - AT - Income Tax

Admission of income pursuant to survey operation u/s 133A - Assessee voluntarily agreed to admit towards unaccounted sales - purchases of 10.3 Kgs of bullion from SVBV Gold and RK Gold -Double addition - HELD THAT - We note from the records available before us that there is no material evidence for the unaccounted purchases for effecting the sales of Rs. 3 Crores that was found during the time of survey. Further, the survey team has found a deficit stock of 696.787 grams at the time of survey which includes the unaccounted sales admitted by the assessee for 8786.872 grams. The assessee also admitted that this cash sales amount was deposited into the bank account and alongwith the balance available in the bank account, the assessee has utilized for the purchases of 10.3 Kgs of bullion from SVBV Gold and RK Gold. The explanation of the Ld. AR that the payments were made through bank account and the purchases were disclosed and included in the stock, in the books of account, cannot be denied. We also observe that these purchases were made before the date of survey i.e on 25.11.2016. Therefore, we are of the view that the purchases are already recorded in the books of account and also accounted for in the stock of gold at the time of survey, and we note that only the sale of 8786.872 grams amounting to Rs. 3,10,69,393/- remains unaccounted in the books of account at the time of survey. We disagree with the contention of the Ld. AO that there are unaccounted purchases for making these unaccounted sales based on the fact that if unaccounted purchases are included in the stock at the time of survey the deficit stock would have been far more higher than 696.787 grams at the time of survey. In view of the above findings, we are of the considered view that a separate addition of unaccounted sales is not required. If the assessee did not adhere to the surrender made during the survey, it was for the AO to bring on record cogent material or other evidence to support the additions rather than rely on the statements simpliciter. We do not find any cogent material or other evidence brought in by AO to support the admissions made during survey. In view of the above, we find that there is no infirmity in the order of the Ld. CIT(A) and no interference is required on this ground. Revised return u/s 139(5) - Admission of additional ground by the Ld. CIT(A) - AR submitted that since the due date of filing the revised return was time barred, the assessee could not file the revised return and hence raised the additional ground raised before the Ld. CIT(A) - DR submitted that the additional ground admitted by the Ld. CIT(A) is not in accordance with law - HELD THAT - We find from the arguments of Ld.AR, that the assessee on the inability to file the revised returns u/s 139(5) of the Act could not revise the original return where the income was wrongly admitted. We have heard the rival contentions and we find merit in the arguments of the Ld. AR that since the due date of filing the revised return of income U/s. 139(5) was time barred, the assessee has raised the additional ground before the Ld. CIT(A). The Ld.CIT(A) considering the merits has rightly allowed this additional ground of the assessee, and hence the ground raised by the Revenue is dismissed. Addition as per the income returned by the assessee at the time survey u/s. 133A - AR argued that this amounts to double taxation ie., once on the basis of unaccounted sales and again taxing the same amount based on the admission by the assessee during the survey proceedings is not valid in law - HELD THAT - We have considered the rival contentions and we disagree with the contention of the Ld. DR that there are unaccounted purchases for making these unaccounted sales. If unaccounted purchases are included in the stock at the time of survey the deficit stock would have been far more higher than 696.787 grams at the time of survey. Therefore we are of the considered view that this these grounds raised by the Revenue is not sustainable and since the issue have already been adjudicated in earlier para, needs no further adjudication.

Summary

Issues Involved:
1. Addition of Rs. 3,00,00,000 towards unaccounted sales.
2. Admission of additional ground by the Ld. CIT(A).
3. Double taxation of Rs. 3,10,00,000.
4. Double taxation of Rs. 37,50,000 as gross profit on unaccounted sales.

Issue-wise Detailed Analysis:

1. Addition of Rs. 3,00,00,000 towards unaccounted sales:
The assessee voluntarily admitted Rs. 3,00,00,000 towards unaccounted sales but omitted Rs. 3,10,69,693 being the sale of 8786.872 grams of gold during 6/11/2016 to 8/11/2016. The assessee argued that this sale was already included in the books, and adding Rs. 3,00,00,000 again amounts to double taxation. The Tribunal noted that there was no material evidence for unaccounted purchases to effect these sales. The deficit stock found during the survey included the unaccounted sales. The Tribunal concluded that the separate addition of unaccounted sales was not required as the purchases were already recorded in the books, and the sale of 8786.872 grams was the only unaccounted item. The Tribunal found no cogent material or evidence brought by the AO to support the additions and upheld the Ld. CIT(A)'s order.

2. Admission of additional ground by the Ld. CIT(A):
The assessee could not file a revised return due to the time-barred date under section 139(5) and thus raised an additional ground before the Ld. CIT(A). The Tribunal found merit in the assessee's argument, noting that the Ld. CIT(A) rightly allowed the additional ground considering the merits. The Tribunal dismissed the Revenue's contention against the admission of the additional ground.

3. Double taxation of Rs. 3,10,00,000:
The Revenue argued that the assessee made separate purchases for unaccounted sales, while the assessee contended that taxing Rs. 3,10,69,693 as unaccounted sales and again based on survey admission was double taxation. The Tribunal disagreed with the Revenue's contention, noting that if unaccounted purchases were included, the deficit stock would have been higher than 696.787 grams. The Tribunal concluded that the grounds raised by the Revenue were not sustainable and upheld the Ld. CIT(A)'s order.

4. Double taxation of Rs. 37,50,000 as gross profit on unaccounted sales:
The assessee argued that since Rs. 3,10,69,693 was already admitted as unaccounted sales, further adding Rs. 37,50,000 as gross profit on the same sales amounted to double taxation. The Tribunal found merit in the assessee's argument, noting that taxing the gross profit of already accounted unaccounted sales was double taxation. The Tribunal allowed the assessee's ground.

Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the Cross Objection raised by the assessee, concluding that there was no infirmity in the Ld. CIT(A)'s order, and no further interference was required. The judgment was pronounced on 15th June 2022.