9911796707
TMI Blog2006 (3) TMI 242X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition of Rs. 1.50 lakhs by the learned CIT(A). 3. The brief facts of the case are that the assessee-company continues to derive income from manufacturing and sale of cattle feed. Survey under s. 133A was carried out at the registered office and factory of the assessee on 30th Dec., 1999, and the survey team observed that the assessee had not made entries in the stock register for the last 15 days. The cash in hand as per books of account written upto 29th Dec., 1999, and after accounting for the receipts and payments cash in hand as per books of account of the assessee was Rs. 58,638.24 and whereas cash in hand found physically as belonging to the assessee was Rs. 14,230. Thus, there was a shortage of cash of Rs. 44.408.24, i.e. cash in hand as per books was more by Rs. 44,408.24 as compared to cash found at the time of survey. The AO, therefore, did not make any addition on this account. As regards stock found at the time of survey, it was 8,20,574 kgs. and value of which works out at Rs. 43.45,580. Besides this, there was stock of raw materials and finished goods, 29,600 old gunny bags, 5,450 new gunny bags and Sutli approx. 50 kgs. including the value of these Bardana amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compelled to agree for excess stock of Rs. 15 lakhs. From the comparative statement of physical stock counted at the time of survey and stock as per stock register, there is a difference of only 11 bags and that too is not excess at the time of physical verification but in fact 11 bags were found short. Value of 11 bags is hardly Rs. 5 to 6 thousands only and immaterial. The mistake in physical counting is for following reasons. (i) Stock was not counted in the presence of any director or responsible person, who could have explained various varieties and categories. (ii) The bags of various raw materials and finished products of various kinds were not segregated but only bags were counted on the basis of 'Dheri' which could mean that bag containing a particular raw material or brand of finished product was counted with another. One 'Dheri' may have 20 bags while another may have 19 or 21 bags: (iii) Loose goods were counted approximately in terms of bags. (iv) Various kinds of raw materials and finished goods were intermixed. Under these circumstances, it is submitted that there is no excess stock as alleged." 4. The AO was not justified with the explanation of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The appellant has mentioned rice polish in the stock register and the survey team has taken rice Bhushi but the item is same and hence the allegation of the AO is baseless. With reference to the GP rate as adopted by the AO, the learned counsel has stated that the statements of various items were submitted before the AO in which details of cost of manufacturing, cost of raw material and sale price were mentioned for all the 12 months of the previous year. But, the AO has selected the month in which there was. the higher margin of profit. The learned counsel has further mentioned that while applying the GP at 4.5 per cent, the AO did not confront the appellant with a single case dealing in similar business in the same area in which GP has been shown by the other person at more than the percentage declared by the appellant. It is further mentioned by the learned counsel that the copy of the bank's statement of stock was filed before the AO and there was no variance in the stock between stock register and bank's stock statement. The AO has accepted the closing stock as on 31st March, 2000, as per the stock shown in the accounts. It is further mentioned that the AO has ignored the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c., 1999, the survey team mainly pointed out two defects. The first defect pointed out by the Department was that cash in hand as per books of account of the assessee was Rs. 58,638.24 and . whereas cash found belonging to the assessee on the date of survey was Rs. 14,230, i.e., cash found was lesser than as declared by the assessee. The AO did not take any view on this account. As regards stock, the AO pointed out that the stock register was not complete for 15 days, whereas the assessee has stated that stock register was complete upto 29th Dec., 1999, i.e., upto gate entry No. 6135 which was impounded by the survey team and stock from gate entry Nos. 6136 to 6139, i.e., only four entries which pertained to the date of survey were not entered in the stock register. These four entry receipts were also impounded by the survey authority. The survey authority had signed the sales invoice upto No. 7572, dt. 29th Dec., 1999. The survey team had also signed the purchase register which was in two volumes and the same were also impounded. The stock register which was impounded was incomplete at the time of survey which was completed on the basis of purchase and sales, at the time of survey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly difference found out was of 11 bags valuing not more than Rs. 6,000 which can be ignored since the kind of products, the assessee is dealing cannot be counted exactly in 2 to 3 hours as pointed out by the learned counsel for the assessee. With the above discussions, we are of the view that the assessee has made the explanations of each and every defects pointed out by the survey team and by the AO. Therefore, the surrender made by the assessee at the time of survey has no relevance. The admission by the assessee in the present case, at the time of survey, is not conclusive evidence, since the assessee's books of account were found to have been completed at the time of survey upto 29th Dec., 1999, and four entries were made before the survey team, which pertained to 30th Dec., 1999, the date of survey, and stock register was completed. No defect has been found out in the details submitted by the assessee as per AO's order pp. 3 to 6. The learned counsel for the assessee has relied upon various decisions which have been considered and mainly the learned counsel for the assessee has relied upon the decision of Hon'ble jurisdictional High Court in the case of CIT vs. Gotan Lime Kha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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