2017 (9) TMI 1525 - AT - Income Tax

Addition made on account of excess stock - Held that - It is noticed that the assessee has submitted updated copy of day-wise stock register of gold ornaments. During the course of assessment proceedings, the Assessing Officer could not found any discrepancy in the purchases which were not entered in the books of accounts at the time of survey. The only discrepancy found was only 110.6 grams in the quantum of gold ornaments. There was the difference in the value of the stock of the gold ornaments. On that basis, the difference worked out at ₹ 8,96,921/-. CIT(A) has sustained addition to that extent. In the case of silver ornaments the difference was of ₹ 866 grams and CIT(A) has sustained addition of ₹ 2,42,648/-. With regard to the precious stones weighing 60 carats valued at ₹ 80,000, no proper explanation was submitted before the authorities below and also before us also, therefore after considering all the aspects, the order of CIT(A) on this issue is sustained. In the result appeal of revenue as well as by the assessee are dismissed. Addition under the head of unrecorded debtors - Held that - We noticed that CIT(A) has estimated the gross profit @15% on the sales ₹ 12,51,327/- and estimated the profit. CIT(A) also reduced gross profit rate of 9.19% which was declared by the assessee. Before us, both the sides are not able to controvert the findings recorded by the CIT(A). Therefore, we are sustaining the order of CIT(A) on this issue. Thus ground No. 2 of the assesses and ground of the revenue stand dismissed. Addition on account of investments in based on impounded - Held that - We found that assessee was not able to explain the investments of ₹ 4,00,000/- in tehu while other notings figures and in the paper were considered while working out account. The unaccounted sundry debtors as per the annexure A-6.After considering all relevant facts, we find that CIT(A) has rightly appreciated the facts on the issue. Therefore, we sustain the order of CIT(A). Addition on account of alleged excess cash - Held that - Since both sides are not able to controvert the finding recorded by CIT(A) with respect to cash balance available with assessee s on the day of survey, therefore, we sustain the findings recorded by CIT(A). In the result ground No. 7 of the revenue ground No. 4 of this appeal stand dismissed. Unexplained investment in the lottery - Held that - As this investments has made by Shri Deepak Garg and has been disclosed in his personal investment. Therefore, CIT(A) has rightly deleted this addition. Therefore, we find no merit in this ground of revenue s appeal.

Issues Involved:
1. Addition on account of excess stock.
2. Addition on account of unrecorded debtors.
3. Addition on account of investment in immovable property.
4. Addition on account of excess cash.
5. Addition on account of unexplained investment in lottery.

Detailed Analysis:

1. Addition on Account of Excess Stock
Assessee's Argument: The assessee contended that the addition of ?80,17,040/- based on excess stock was erroneous as it was derived from incomplete books during the survey. The statement by Shri Deepak Garg was invalid, and the updated books showed no discrepancy.

CIT(A) Findings: The CIT(A) reduced the addition to ?12,19,569/- after considering the updated books and purchase vouchers. The remaining addition was due to differences in the valuation of gold and silver ornaments and unexplained precious stones.

Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, noting that the updated stock register and audited books showed no significant discrepancies. The addition of ?12,19,569/- was sustained.

2. Addition on Account of Unrecorded Debtors
Assessee's Argument: The assessee argued that the addition of ?15,01,327/- was incorrect as the debtors were recorded in the updated books, and the lump sum addition of ?2,50,000/- was baseless.

CIT(A) Findings: The CIT(A) reduced the addition to ?72,702/-, calculating the unaccounted profit on unrecorded sales based on a gross profit rate of 15%, adjusted for the declared rate of 9.19%.

Tribunal's Decision: The Tribunal agreed with the CIT(A)'s method of estimating the profit and sustained the addition of ?72,702/-.

3. Addition on Account of Investment in Immovable Property
Assessee's Argument: The assessee claimed that the addition of ?7,13,000/- was based on an invalid statement and unsupported by material evidence.

CIT(A) Findings: The CIT(A) reduced the addition to ?4,00,000/-, considering only the unexplained investment noted in the survey documents.

Tribunal's Decision: The Tribunal upheld the CIT(A)'s decision, finding that the assessee failed to explain the investment of ?4,00,000/-.

4. Addition on Account of Excess Cash
Assessee's Argument: The assessee argued that the addition of ?48,700/- was incorrect as the books were incomplete during the survey, and the updated books showed a cash balance close to the surveyed amount.

CIT(A) Findings: The CIT(A) reduced the addition to ?876/-, aligning the cash balance with the updated books.

Tribunal's Decision: The Tribunal sustained the CIT(A)'s finding, noting no significant discrepancy in the cash balance.

5. Addition on Account of Unexplained Investment in Lottery
Assessee's Argument: The assessee contended that the addition of ?1,00,000/- was incorrect as the investment was declared by Shri Deepak Garg in his individual capacity.

CIT(A) Findings: The CIT(A) deleted the addition, accepting that the income from the lottery was declared by Shri Deepak Garg.

Tribunal's Decision: The Tribunal upheld the deletion, agreeing that the investment was disclosed by Shri Deepak Garg.

Conclusion:
The Tribunal dismissed the appeals from both sides, sustaining the CIT(A)'s partial reliefs and deletions. The detailed analysis of each issue showed that the CIT(A)'s decisions were based on thorough examination and proper application of legal principles. The Tribunal found no merit in the grounds raised by either party against the CIT(A)'s findings.

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