2024 (1) TMI 362 - HC - Income Tax

Admission of income made by the assessee at the time of survey - suppression of value of closing stock - unaccounted stock of gold and silver ornaments - HELD THAT - It is not in dispute that the assessee did not include the difference in the return of income filed by the assessee and merely declared the gold and silver ornaments in survey proceedings in subsequent assessment year was rightly not held that there was no excess stock or unaccounted stock available during the assessment year under consideration. Even the Tribunal perused the document shown on the time of hearing on 11.04.2022 and observed that the assessee could not give any bifurcation as to how much was the quantity sold on the particular period related to the gold ornaments and silver ornaments which shows that the assessee deliberately not bifurcated the unaccounted stock and the regular stock during the period from the date of survey till 31st March, 2015 and accordingly, the Tribunal upheld the finding arrived at by the CIT (Appeals). No infirmity in the concurrent findings of fact arrived at by the CIT (Appeals) as well as the Tribunal while upholding the order passed by the Assessing Officer for making addition on account of the admission made by the assessee at the time of survey with regard to the unaccounted stock of gold and silver ornaments and therefore - no substantial question of law - Asessee appeal is dismissed.

Summary

Issues involved:
The issues involved in this case are:
1. Whether the Income Tax Appellate Tribunal was justified in upholding the finding that the appellant had suppressed the value of closing stock for Assessment Year 2015-16?
2. Whether the Tribunal was justified in upholding that the Appellant had not produced all the relevant necessary documents?
3. Whether the Tribunal was justified in dismissing the appeal of the assessee without considering the fact that the issue involved?
4. Whether the Tribunal was justified in dismissing the Miscellaneous Application for review filed by the appellant against the order dated 06.05.2022?

Issue 1:
The appellant, engaged in trading of gold and silver ornaments, was surveyed under Section 133A of the Income Tax Act. During the survey, excess stock of gold and silver ornaments was found. The appellant admitted the value of the excess stock but failed to include the entire amount in the return of income. The Assessing Officer made an addition of the unaccounted income based on the difference between the admitted value and the declared value in the return.

Issue 2:
The CIT (Appeals) dismissed the appeal filed by the assessee, stating that the appellant did not provide necessary documents to support their contentions. The AO found discrepancies in the GP shown in the pre-survey period compared to the post-survey period. The appellant failed to provide trial balance and provisional balance sheet as promised during the survey, which could have explained the matter and avoided excess tax liability. The AO's addition was upheld due to lack of supporting evidence and failure to explain the valuation of closing stock.

Issue 3:
The Tribunal confirmed the findings of the CIT (Appeals) that the appellant did not file supporting evidence regarding the valuation of closing stock. The appellant admitted to excess unaccounted stock during the survey, reflecting their investment on that date. The Tribunal observed that the appellant did not include the difference in the return of income and failed to provide a clear bifurcation between accounted and unaccounted stock, leading to the dismissal of the appeal.

Issue 4:
The Tribunal upheld the addition made by the Assessing Officer based on the appellant's admission during the survey. The concurrent findings of fact by the CIT (Appeals) and the Tribunal supported the addition of unaccounted income. As no substantial question of law arose from the impugned order, the appeal was dismissed.

Conclusion:
The High Court upheld the decisions of the lower authorities, dismissing the appellant's appeal. The appellant's failure to provide necessary documents, lack of supporting evidence, and admission of unaccounted stock during the survey led to the addition of unaccounted income. The Tribunal's decision was deemed justified, and no substantial question of law was found to challenge the order.