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TMI Blog2012 (12) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... wns belonging to the assessee-firm. It was stated that stock belonged to Ambica Trading Co. out of the total sales made. It has also been stated that goods were sold to Pinak Pani Traders and part of the bags were yet to be delivered - appellant’s claim of partial lifting of stock or partial delivery of stock was not contradicted by the AO - addition deleted – In favor of assessee Addition on account of excess tobacco dust of 68,638 KG, short kandi stock of 8905 KG and short pashari stock of 16,655 KG – Held that:- Reconciliation has been filed in respect of the shortage of stock and that reconciliation was confronted to the AO during the course of remand proceedings but that explanation was not controverted. The assessee has undisputedly maintained quantitative details of purchases and sales, as is evident from the correspondence placed on record addressed to the AO - assessee has furnished a reconciliation statement to the AO. The said reconciliation was duly considered by ld.CIT(A) and, therefore, held that the said apparent difference was duly reconciled. Since the Revenue Department has not expressed any reservation in respect of the reconciliation – addition deleted – In f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trading Co., on the premise that this party had changed its address from Sanhoula (Bhagalpur) to Dr. R.P. Road, Bhagalpur based on the address written on a letter dated 11-10-2006 on plain paper signed by one Mahesh Kumar without pointing out the fact of change in address, whereas the communication on the letterhead of this party dated 10-03-2003 was signed by Shri Manoj Kumar and on-the-spot inquiry at Sanhoula had proved that there was no such party in existence. 2(b) The ld. CIT(A) failed to appreciate that it was against normal business practice that the goods of this party purchased on 23-11-2002 were lying with the assessee on the date of survey on 07-03-2003, which made the assessee s explanation fall short of discharging its onus placed by section 106 and 110 of the Indian Evidence Act r.w.s. 69/69C of the Income-tax Act. 3(b) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the addition of Rs.68,638/- towards excess stock of dust, of Rs.2,65,369/- towards the shortage in the stock of Kandi and Rs.4,93,319/- towards the shortage in the stock of Pashari (total amounting to Rs.8,27,326/-), made on the basis of physical verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd relating to the relatives and friends of one of the partners who were mainly staying abroad. As regards the FDRs as per Page-29 of the documents, the facts are that this list was recovered at the time of the survey but no FDRs were recovered. At the time of survey, the statement of Shri Vithalbhai Ashabhai Patel, partner was recorded and with regard to the FDRs only one question No.16 was put to him. In response to the question, he replied whatever fixed deposits are found during the course of survey belong to my family members, out of which, some of them are staying outside India. I am managing their Fixed Deposits and as such the above FDRs are found from my office . Subsequently, during the course of assessment proceedings, a confirmation letter dated 31-3-2006 was placed on record from Smt. Kokilaben Vikrambhai Patel and her husband Shri Vikrambhai Madhavbhai Patel. They confirmed that the FDRs belonged to them and their family members and, that these had been made by them from their own income and that these FDRs had been renewed from time to time. They had been staying in USA and had, therefore, left the list of these FDRs with Smt.Kokilaben s brother i.e. Shri Vithalb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nami. It is also observed, in these circumstances, that the appellant has discharged the burden of explaining these FDRs. It is also observed that the Assessing Officer has failed to bring any material on record to even remotely suggest that these FDRs represents appellant s income / investment during the year under appeal. The appellant s arguments about the failure of the Assessing Officer in assessing these FDRs under any particular section assumes significance in view of the fact that he did not seem to doubt the genuineness of these FDRs till the last day of the assessment proceedings. It is seen from record that the Assessing Officer suddenly decided to make the addition. In view of these facts and circumstances, it is held that the addition made by the Assessing Officer on account of these FDRs of Rs.20,77,694/- is without any basis and without any application of mind. As a result, the addition of Rs.20,77,694/- is deleted. As regards the FDRs amounting to Rs.12,21,689/-, it is observed from the record that the details of these FDRs had been furnished before the Assessing Officer vide letter dated 21-4-2003 giving out names of the persons in whose name the FDRs existed. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ami, assumes significance and sounds convincing. It is established that the Assessing Officer has failed to bring any evidence on record that could even remotely doubt the genuineness of the ownership of these FDRs. It is also noted that the Assessing Officer has failed to mention the particular section under which he has assessed these FDRs as appellant s income in the year under appeal. Under the circumstances, it is held the appellant has discharged the onus of explaining these FDRs amounting to Rs.12,21,689/- satisfactorily. It is also held tht the Assessing Officer has failed to bring any material on record that could raise any doubt about the correctness or genuineness of the appellant s claim. As a result, the addition made by the Assessing Officer of Rs.12,21,689/- is deleted. As a result, this ground of appeal is accepted and the total addition of Rs.32,99,383/- on account of the FDRs is deleted. 4. Having heard the submissions of both the sides and in the light of the evidences placed on record in the compilation filed by the respondent-assessee, we find no fallacy in the view taken by the first appellate authority. During the course of survey, a list of fixed depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,32,228Kgs. of tobacco was found. The appellant had explained that tobacco consisting 1600 bags were partly lifted by one M/s. Ambica Trading Co. to whom the tobacco was sold on 23.11.2002. It is worth to mention at this juncture that the survey was conducted on 7.3.2003. The assessee has further explained that out of the said sale of tobacco the said party was yet to lift the balance 1087 bags of tobacco weighing 22,887Kgs. The allegation of the AO was that a summon was issued to the said party u/s.131 of the Act, however, not responded. Nevertheless, from the side of the assessee, a copy of confirmation was placed on record from the said party stating that balance 1087 bags were yet to be lifted. 5.1. Regarding another difference in the stock of tobacco, it was explained that 3915 bags containing 1,09,620 Kgs. of tobacco belonged to one M/s.Pinak Pani Traders and that firm was yet to lift the material. Due to the absence of a confirmation from the said party, the AO had rejected the explanation. The total quantity of the stock was 1,32,228Kgs.(1,09,620Kgs + 22,887Kgs.). Thus the total amount of Rs.39,40,395/- was taxed. The matter was carried before the first appellate author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments received in respect of these sales have not been doubted. The appellant s claim that similar facts of partial delivery or partial lifting of stock in the case of Pinak Pani Traders by the Assessing Officer in the remand report only confirm the existence of such practice in tobacco trade appears logical and reasonable. Under the circumstances, it is held that the addition on account of the stock difference of 1087 bags of tobacco in respect of Ambica Trading Co. is deleted. As regards the Pinak Pani Traders, it is observed that this party had confirmed the fact that part of the sold stock was still lying in the appellant s godown. It is further observed that this claim has not been re pudicated by the Assessing Officer. In fact, on the other hand, the Assessing Officer in the remand report has confirmed that the reply received from the party in response to notice u/s.133(6) after completion of assessment tallies with the assessee s statement. It is noted that the Assessing Officer has not brought on record any material that rebuts the claim made by the appellant in respect of the unsold stock lying in its godwn vis- -vis sales made to Pinak Pani Traders. Under the circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer in the assessment order in this regard. The appellant has strongly argued that no other defects have been pointed out by the Assessing Officer in respect of the entire items of stocks, purchases, sales etc. Under the circumstances, it has force in its argument that no addition can be made under any circumstances. I am in agreement with the arguments of the appellant. The addition made, therefore, on this count is held to be unfounded and, therefore, unreasonable and is deleted. 9. Having heard the submissions of both the sides, we are of the view that a reconciliation has been filed in respect of the shortage of stock and that reconciliation was confronted to the AO during the course of remand proceedings but that explanation was not controverted. The assessee has undisputedly maintained quantitative details of purchases and sales, as is evident from the correspondence placed on record addressed to the AO. The assessee has furnished a reconciliation statement to the AO. The said reconciliation was duly considered by ld.CIT(A) and, therefore, held that the said apparent difference was duly reconciled. Since the Revenue Department has not expressed any reservati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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