2022 (5) TMI 1373 - AT - Income Tax

Excess stock found during the course of survey - Retraction of statement - HELD THAT - AR failed to lead any evidence to the effect that the goods against such invoices were received before the date of survey but the invoices were not entered as these were received later on. Given the fact that the actual stock was counted at the time of survey, and the tentative Trading, Profit and loss account was drawn which indicated excess stock of Rs. 8.46 lakh; the assessee admitted such excess stock without raising any issue at that time; later on issued a retraction letter after more than two months but still without furnishing any detail of the alleged late receipt of invoices; taking a contention after two years that 23 invoices were received later on and still failing to lead any evidence to demonstrate that such invoices were received after the date of survey but the goods were received before the date of survey, entire case made by the assessee for the relief gets demolished. The contention seeking relief is based solely on the premise that certain goods were received in stock but the corresponding invoices were received after the date of survey. However, no evidence to corroborate such a version has been provided. It goes without saying that the onus to prove that the earlier admission at the time of survey was wrongly made, was on the assessee because it was he who was retracting. If this contention, not backed by any evidence, is removed from reckoning, there is nothing to justify the retraction.Therefore, satisfied that the authorities below were justified in making and sustaining the addition of excess stock found at the time of survey. - Decided against assessee.

Summary

Issues:
1. Addition of Rs. 8,43,230/- on account of excess stock
2. Addition of Rs. 4,00,100/- on account of excess cash - found during the course of survey

Analysis:

Issue 1: Addition of Rs. 8,43,230/- on account of excess stock
The appeal was against the order by the CIT (Appeals) regarding excess stock detected during a survey. The partner of the assessee firm admitted to the excess stock during the survey but did not disclose it in the return filed later. The AO rejected the explanation provided by the assessee regarding the late receipt of purchase bills. The partner admitted to the excess stock during the survey but later retracted the statement, claiming some purchase bills were not considered. However, no evidence was provided to support this claim. The assessee failed to demonstrate that the invoices were received after the survey but the goods were received before. The tribunal held that the assessee's contention lacked evidence and upheld the addition of excess stock. The onus was on the assessee to prove the retraction, which was not fulfilled, leading to the dismissal of the appeal.

Issue 2: Addition of Rs. 4,00,100/- on account of excess cash
The addition of excess cash was not pressed by the assessee during the appeal, leading to its dismissal as 'not pressed.' Therefore, no detailed analysis or decision was provided regarding this issue in the judgment.

In conclusion, the appeal was dismissed concerning the addition of excess stock due to the lack of evidence supporting the assessee's claims. The tribunal upheld the decision of the authorities below, emphasizing the importance of providing substantial evidence to justify any retractions or claims made during tax assessments.