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TMI Blog2011 (9) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for. 3. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well on facts in upholding the addition of ₹ 10,77,898/- on account of alleged difference in stock which is arbitrary and unjustified. 4. That the Ld. Commissioner of Income Tax (Appeals) has further erred in law as well on facts in upholding the addition of ₹ 27,16,001/- made on account of excess cash found at the time of survey without appreciating the explanation rendered in this regard which is arbitrary unjustified. 5. That the Ld. Commissioner of Income Tax (Appeals) has failed to consider the retraction of the assessee in the correct perspective in as much as each and every query put was duly replied to and it is a trite law that retraction is permissible. 6. That the Ld. Commissioner of Income Tax (Appeals) has further erred in upholding the charging interest under section 234A, 234B, 234C 234D which is not chargeable in the instant case. 3. The brief facts of the case are that survey u/s 133A of the Income Tax Act was conducted at the business premises of the assessee on 20.3.2007. During the course of survey certain discrepancies were found in the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter thought. The Assessing Officer placed reliance on the decision of the ITAT on the case of Hira Lal Maganlal Company Vs. DCIT (96 ITD 113) and on the judgment of Punjab Haryana High Court in M/s Shiv Shakti Steel Tubes Vs. Commissioner of Central Excise (2007) (C.E.A.No.18 of 2007). The Assessing Officer further observed as under : In this case the assessee made disclosure of ₹ 50 lacs and stopped the entire process investigation by the department. The department even did not impound the papers and the survey was concluded. But at the time of filing of return, the assessee has retraced from his declaration and out of ₹ 50 lacs declared only ₹ 12.84 lacs. The approach of the assessee, in essence tantamounts to his telling the department that now the survey is over, position should be restored as it was before making the declaration without restoring the department to the same position in which it would have been if the said declaration were not made or if it had not accepted the said declaration. 4. The Assessing Officer took note of the fact that the assessee was engaged in the business of trading of timber and had not maintained the books of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first objection was to the figures of opening stock and the second objection was to the sale and purchase figures. The plea of the assessee was that the said errors in recording the sales and purchases were reconciled by the Chartered Accountant during he tax audit and in fact, there was no excess stock at the time of survey, rather the stock was less as per the audited accounts presented now, which is certified by the Chartered Accountant. The Assessing Officer rejected the explanation of the assessee on the following grounds : a) The books of account of the assessee are not reliable. They are manipulated so these cannot be relied. b) On the date of survey print out of sales, purchase accounts were taken and the trading account was prepared on the basis of these papers. c) The assessee even after the survey proceeding and till the date of filing of return never ever raised the question that the trading account was wrong. 6. The Assessing Officer however, corrected the mistake in the opening stock as pointed out by the assessee and re-casted the trading account, as per which the closing stock came to ₹ 1.43 crores as against the stock found on physical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and found at the time of survey. 9. In the return of income, assessee declared ₹ 3,23,999/- and suppressed income of ₹ 27,16,001/-. The CIT (Appeals) rejecting the explanation of the assessee that as the books of account were not complete at the time of survey, exact cash was not determined in the books, held as under 17. Counting of daily cash is very important in running of any business. It does not appear logical that from 20.03.2007 (date of survey) till the date of audit in the month of September, 2007, the appellant failed to reconcile cash of his business by physical counting of cash. 18. It is a fact that cash was physically counted and verified by the assessee at the time of survey, from the regularly maintained books of accounts. In fact, the assessee had himself admitted to the difference of ₹ 30,40,000/-. Hence, the addition made of ₹ 27,16,001/- was upheld by the CIT (Appeals). 10. The assessee is in appeal against the above said addition made by the CIT (Appeals). Ground Nos. 1 and 2 raised by the assessee are against the addition of ₹ 14,74,016/- on account of under invoicing/under billing of the sale of timber. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... premises of the assessee was out of the aforesaid sales account. 11. The learned D.R. for the Revenue, in reply, pointed out that the survey was conducted on 20.3.2007 and till the filing of the return of income on 5.3.2008, there was no whisper of any of retraction of the surrender made during the survey proceedings. The learned D.R. for the Revenue placed reliance on the ratio laid down by the Hon'ble Punjab Haryana High Court in Bachittar Singh Vs. CIT 328 ITR 400 (P H) for the proposition that the burden was upon the assessee to establish that the admission was wrong and also that the retraction should be at the earliest point of time or within the reasonable time. The learned D.R. for the Revenue pointed out that the statement of the assessee was recorded in the present of Mr.D.S.Sandhu, the counsel for the assessee. It was further pointed out that the case laws relied upon by the assessee have been considered by the Hon'ble Punjab Haryana High Court in Bachittar Singh Vs. CIT (supra). The learned D.R. for the Revenue further stressed that the statement of not only the office Assistant but of the assessee himself was recorded during the survey proceedings and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e presence of Shri D.S. Sandhu, Advocate as is mentioned in the said statement itself. In the totality of the facts and circumstances of the case where the assessee had admitted to have not recorded the sales in its books of account and had made an offer of ₹ 80 lacs on account of sales outside the books of account, we are in conformity with the orders of the authorities below in rejecting the books of account and applying the provisions of the Act to estimate the income of the assessee. Merely because the assessee had offered the additional income of ₹ 9,60,000/- in addition to its book results, does not merit the acceptance of the book results. Admittedly, these books of account were not written up to the date of survey i.e. towards the close of the year on 20.3.2007. The printouts of sales and purchases account and also the back up of the accounts on CD were taken by the survey team. However copies of other documents were not taken by the survey team, in view of the surrender made by the assessee during the course of survey totaling ₹ 50 lacs. The letter surrendering ₹ 50 lacs during the survey operation dated 20.3.2007 is placed on record and the said su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discrepancies in the figures taken at the time of survey except pointing out that the books of account have since been reconciled and audited. The books of account cannot be relied upon as the sales itself are not recorded properly in the books of account. Further, the onus cast upon the assessee to pin point the discrepancies in the figures has not been discharged by the assessee and in view of the difference in stock at the time of survey the assessee had made surrender of ₹ 10 lacs on account of stock, which was later retracted by the assessee. We find no merit in the aforesaid retraction by the assessee and confirm the addition of ₹ 10,77,898/-. 15. The third plank of the surrender at the time of survey was the cash found from the premises of the assessee. The assessee failed to explain the source of cash of ₹ 33,40,950/- found during the course of survey and as he had no explanation to offer, sum of ₹ 30,40,000/- was surrendered by the assessee. The said surrender as pointed out in paras hereinabove was not on account of the total cash found but on account of the difference in cash as per the books and cash found at the time of survey. While fili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The assessee did not retract its statement though it had voluntarily offered a sum of ₹ 50 lacs as additional income. Thereafter, a gap of one year the assessee had furnished its return of income in which the surrendered income was reduced by the assessee and the claim of the assessee is that it had retracted its earlier offer of additional income. However the assessee has failed to clarify the discrepancies noted at the time of survey except to point out that the figures have been reconciled by the auditor and the present figures are based on the audit report. The books of account produced by the assessee during the assessment proceedings cannot be relied on as even after so-called reconciliation by the auditor there is gap in sales as the assessee had offered additional sales of ₹ 80 lacs being outside the books of account and the income on the said sales of ₹ 9,60,000/- has been surrendered as additional income by the assessee in the return of income, which was also earlier offered as part of surrender of ₹ 50 lacs. The statement recorded in the present case is an important piece of evidence and cannot be brushed aside as the assessee has failed to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se or illegal. 17. In the totality of the abovesaid facts and circumstances we hold that the difference in cash surrendered by the assessee of ₹ 30,40,000/-is to be included as additional income of the assessee for which the assessee has failed to bring on record any evidence vis- -vis its source of acquisition. The assessee had already offered sum of ₹ 3,23,999/- in its return of income as additional income and balance of ₹ 27,16,001/- is to be included as additional income in the hands of the assessee. 18. The next addition made in the present case is on account of under voicing/under billing of sale of timber. The Assessing Officer had recasted the sales of the assessee after rejecting the books of account. The total sale bills for the year under consideration were analyzed by the Assessing Officer and after compilation it was found that the assessee in all had sold 54621 cubic feet of timber at an average rate of ₹ 428.65 per cubic feet. The Assessing Officer had adopted the average rate of ₹ 800/- per cubic feet and recalculated the sale of the assessee for the year under appeal at ₹ 4.37 crores as against the gross sales of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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