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TMI Blog2017 (10) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, we are of the view that the claim of the assessee that the goods were purchased prior to the date of survey and these were subsequently returned back to these parties due to low quality material does not sound good. In view of the above discussion, we do not find any infirmity in the order of the lower authorities, hence this ground of appeal of the assessee is dismissed. - I.T.A. No. 256/Kol/2012 - - - Dated:- 30-8-2017 - Sri N.V. Vasudevan, JudicialMember And Sri Waseem Ahmed, AccountantMember For The Assessee : Shri Anikesh Banerjee, Advocate For The Revenue : Shri Amitava Bhattacharya, Additional CIT, Sr. DR ORDER Per Waseem Ahmed :- This appeal by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals)-XXXII, Kolkata (hereinafter the ld. CIT(A) ), dt. 12/08/2011, passed u/s 250 of the Income Tax Act, 1961 (the Act ), for the Assessment Year 2005-06, on the following grounds:- 1. For that on the facts and circumstances and the law applicable to it, the CIT(Appeals) order dated 12.08.2011 is arbitrary, illegal and void ab-initio. 2. For that on the facts and circumstances of the case and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was determined on the basis of trading account which was prepared as on 12thOctober 2004. As the assessee was not maintaining the stock register, therefore, a trading account as on the date of survey was prepared. Thus, a difference in stock between books of account and physical verification was computed at ₹ 30,09,301/- only. 4. Subsequently, the assessee submitted the bills of purchases amounting to ₹ 24,98,187/-, which were made by the assessee prior to the date of survey. The assessee claimed to have made these purchases from 54 parties which were not recorded in the books of accounts. The necessary details of the purchases were duly submitted before the assessing officer at the time of assessment. Accordingly the assessing officer reduced the amount of purchases from the amount of difference as discussed above, however, still there was a discrepancy in stocks for ₹ 5,11,114/- [(Rs.30,09,301/-) (- ₹ 24,98,187/-)]. Besides the above, the assessee further submitted that the goods were received from certain parties prior to the date of survey but these goods were returned after the date of survey. The details of such goods are given below:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss: Gross profit as per modified percentage margin (Rs.) 14,00,000/- Cost of Goods sold (Rs.) 85,05,564/- Opening Stock as on 01/04/2003 (Rs.) 21,58,262/- Total Purchases from 01/04/03 to 12/10/04 (Rs.)83,05,937/- Total Stock (Rs.) 1,04,64,199/- Less: Cost of Goods Sold (Rs.) 85,05,564/- Closing Stock arrived at on approximation basis (Rs.) 19,58,635/- Taking the above figure of Closing Stock, and including the subsequent figures for purchase of goods as produced before the Department and the ld. I.T.O. from time to time, the total Stock valuation as on the date of survey is worked out as hereunder: Closing Stock as per calculations as above (Rs.) 19,58,635/- Further purchase Bills produced on 24/10/2004 (Rs.) 24,98, 187/- Purchase Beals for goods returned subsequently (Rs.) 3, 37, 288/- Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of assessment which was supposed to be accepted by the assessing officer. 5.1 The assessee also submitted that the provisions of section 68 of the, are not applicable to the instant case as there is no cash credit entry found in the books of account. However, the ld. CIT(A) disregarded the contention of the assessing officer by observing as under: As regards the mention of section 68 by the A.O. while making the impugned addition I agree with the A.R. that the said addition does not fall within the ambit of section 68. The A.O. has made the addition of ₹ 5,11,114/- on account of unexplained investment in the stock. Such an addition will fall within the ambit of section 69 and not of section 68 of the Act. In substance, the A.O. has made the addition on account of unexplained investment. Mere wrong mention of section will not vitiate the otherwise valid addition. As will be discussed in subsequent paras, the addition of ₹ 5,11,114/- is found to have been validly made by the A.O., therefore, the addition made by the A.O. is stated to have been made by invoking section 69 of the Act and not section 68. As regards the merit of the addition, the A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ree with the contention of the A.R. that there is nothing in law to prevent the production of evidence even at a later date during the assessment proceedings but the evidence shall be cogent and reliable. The A.O. has recorded in the assessment order that the assessee had produced only photocopies of cash memos/bills regarding such goods but no transport bills/receipts were submitted to support its claim that those goods had been returned to the concerned parties, after the date of survey. He has also noted that the partner of the assessee-firm did not raise the claim of having received goods worth ₹ 3,37,288/- even in his subsequent statement recorded after the date of survey when the claim of additional purchases worth ₹ 24,98,187/- was raised stating that bills relating to those purchases had remained to be produced at the time of survey nor during the assessment proceedings till the time when the assessment proceedings were being completed. Therefore, the A.O. did not accept the assessee's claim of goods worth ₹ 3,37,288/- to be part of stock as on the date of survey. It is observed that the assessee had not produced any confirmations from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne of the case, the assessee has mentioned about the goods returned subsequent to the date of survey. The actual amount of GP is 12.81%, therefore, the argument of the ld. AR that the actual GP rate is 14% is not based on any material. The ld. DR vehemently supported the orders of the authorities below. 7. We have heard the rival contentions of both the parties and perused the material available on record. The issue in the instant case revolves with regard to the determination of closing stock as on the date of survey. The revenue has determined the closing stock which is higher than the value declared by the assessee in its books of accounts by ₹ 511,114/-, therefore, the excess value of closing stock is treated as unexplained investment of the assessee. The view taken by the AO was subsequently confirmed by the ld. CIT (A). From the foregoing discussion, we find that that the assessee has not maintained any stock register, therefore, the difference in the closing stock was arrived by applying the GP ratio as well as through physical verification. In the absences of stock register, the revenue had no option except to resort to determine the closing stock after applying ..... 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