2022 (10) TMI 1096 - AT - Income Tax

Additions on account of difference in the closing stock of gold - gold found by the survey party in the course of survey action carried u/s 133A(1) - CIT-A deleted the addition - HELD THAT - Assessee had discharged primary onus lying upon it by explaining the difference of stock as noted by the survey team and stock as per the books of account maintained by the assessee. AO had not done anything to verify the veracity of explanation offered by the assessee. We note that the AO was of the opinion that the explanation offered by the assessee cannot be believed and proceeded to make addition the alleged difference worked out by the survey team. Further, it is not the case of AO that the assessee failed to discharge the primary onus lying upon it by filing full details in support of its claim, therefore, in our opinion, without making any enquiries involving explanation and documentary evidences filed by the assessee, the AO cannot make any addition based on conjectures and assumptions as well as without bringing any conclusive evidence on record. Therefore, we find the survey team committed an error in adopting the production date and also the closing stock date which was followed by the AO is contrary to the evidences brought on record by the assessee. Therefore, we find the reasons recorded by the CIT(A) in holding that the AO conducted the assessment proceedings in a casual manner, is justified and the order of CIT(A) is fair and reasonable based on appreciation of material facts concerning the case of the assessee. Assessee offered additional income voluntarily for taxation in respect of value of purchase of gold to an extent of 4210 gram, sale of gold to an extent of 4210 gram and excess stock of ornaments 917 gram totaling to Rs.2,19,48,940/- but we find no discussion whatsoever made by the AO regarding the said details offered by the assessee except proceeding to make addition on account of stock difference found by the survey team regarding gold an extent of 193.157 Kgs. We find force in the arguments of ld. AR the addition made by the AO in respect of stock different at 193.157 Kgs is not justified irrespective of having every details along with the submissions with clear evidences vide Schedule I to VIII on record, the AO without considering the same added the same to the total income of the assessee. Therefore, we find no infirmity in the order of CIT(A) and we agree with the final conclusion arrived by the CIT(A). We agree with the conclusion arrived by the CIT(A) in deleting the addition and in directing the AO to confirm the additional income voluntarily offered by the assessee - Thus, ground Nos. 1 to 3 covering the issue raised by the appellant-revenue are dismissed.

Summary

Issues Involved:
1. Deletion of additions on account of difference in closing stock of gold.
2. Acceptance of assessee's explanation regarding returned and re-melted gold.
3. Direction to accept voluntarily disclosed additional income without remand report.
4. General grounds and procedural issues.

Detailed Analysis:

1. Deletion of Additions on Account of Difference in Closing Stock of Gold:
The Revenue challenged the deletion of Rs.39,32,67,652/- added by the Assessing Officer (AO) due to a discrepancy in the closing stock of gold found during a survey under section 133A of the IT Act, 1961. The survey team noted a difference of 193.157 kg in gold stock, which was not explained by the company director during the survey. The CIT(A) found that the AO made the assessment in a casual manner without any cogent reason or evidence to demonstrate that the assessee had sold the stock out of the books of accounts. The CIT(A) directed to accept the voluntary disclosure of Rs.2,19,48,940/- as additional income and deleted the addition made by the AO.

2. Acceptance of Assessee's Explanation Regarding Returned and Re-melted Gold:
The CIT(A) accepted the assessee's explanation that 91,321 grams of gold were returned by local sarafs and 53,469 grams were re-melted. The AO argued that these explanations were afterthoughts created to escape tax liability. However, the CIT(A) found that the assessee had provided all necessary details and reconciliations, which were not properly considered by the AO. The CIT(A) examined the ledger extracts, confirmations, and other documentary evidence provided by the assessee and concluded that the AO did not verify these details adequately.

3. Direction to Accept Voluntarily Disclosed Additional Income Without Remand Report:
The AO contended that the CIT(A) directed to accept the additional income disclosed by the assessee without calling for a remand report. The CIT(A) had sought a remand report from the AO, which was provided. The CIT(A) found that the AO conducted the assessment proceedings in a casual manner and did not examine the evidences and reconciliations provided by the assessee. The CIT(A) concluded that the assessee had discharged the primary onus of explaining the stock difference with proper documentation.

4. General Grounds and Procedural Issues:
The Revenue raised general grounds to vacate the CIT(A)'s order and restore the AO's order, along with a request to add, amend, alter, or delete grounds during the appellate proceedings. These grounds were found to be general in nature and did not require specific adjudication.

Conclusion:
The Tribunal upheld the CIT(A)'s order, agreeing that the AO conducted the assessment in a casual manner without proper verification of the evidences provided by the assessee. The Tribunal found that the survey team mixed figures from different dates, leading to an incorrect calculation of the stock difference. The Tribunal dismissed the Revenue's appeal, confirming the deletion of the addition of Rs.39,32,67,652/- and the acceptance of the voluntarily disclosed additional income of Rs.2,19,48,940/-. The appeal of the Revenue was dismissed in its entirety.