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TMI Blog2018 (5) TMI 1642X X X X Extracts X X X X X X X X Extracts X X X X ..... the computerized statement in the instant case cannot be relied upon as it contained deficiencies due to system getting corrupted. Assessee had also given the statement on oath at the time of survey that the total income for the whole year would be approximately 35 lacs for which due taxes would be paid by him. The returned profit by the assessee was 34,63,940/-. Hence there is no much variation in the approximation done by the assessee on the date of survey vis a vis the actual profit. We also find from the Gross Profit and Net Profit Chart of earlier years that assessee had reported higher GP and NP during the year under appeal despite the huge reduction in turnover. The ld CITA had rightly sustained the addition only towards difference in closing stock and the same does not require any interference.- Decided against revenue X X X X Extracts X X X X X X X X Extracts X X X X ..... luded interest and rental income of ₹ 97,266/-. He observed that the assessee had offered business income of ₹ 33,66,674/- as against income derived above in the sum of ₹ 1,53,26,690/-. He observed that the assessee had claimed huge expenditure under the following heads in the remaining period of the financial year i.e 1 day after the date of survey and the same are compared as under:- Expenditure claimed 1.4.2009-30.3.2010 31.3.2010- 31.3.2010 1.4.2009-31.3.2010 Freight charges NIL Rs.133591/- Rs.133591/- Travelling NIL Rs.1339331/- Rs.1339331/- Salary & Bonus Rs.852473/- Rs.791445/- Rs.1643918/- Total of the above Rs.852473/- Rs.2264367/- Rs.3116840/- % of total expenditure 27.35% 72.64% 100% Total turnover Rs.81389785/- (98%) Rs.1164422/- (2%) Rs.82554207/- (100%) The ld AO observed that as on the date of survey, profit of the firm was 26.84% as against the declared profit of 4.22%. He observed that freight and travel expenses have been booked in post survey period and salary expenses booked in the post survey period was almost double of the pre-survey period. Considering these facts, he observed that the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,84,074/-. If these apparent mistakes appear in the extracts of P/L Ale obtained from the computer then this piece of paper cannot be taken cognizance thereof and has to be discarded. It has been my case all along that I do not maintain any stock register. Past records available with you may be looked into along with the Tax Audit Reports and at Para No.9 of the Tax Audit Report obtained in Form No 3 CD you will find that there is no mention by the Auditor about having examined the stock register. The inventory of the stock found as on the date of the Survey has been done by the Survey party and the value of the same is recorded at ₹ 34, 71,533/-. I would request you to kindly refer to question No. 6 of my statement recorded wherein I have been asked to explain the discrepancy/difference in the closing stock as physically found and shown in the P/L A/c (though not specifically stated by it refers to extract drawn from the computer )as on date - The question further goes to state that the inventory of stock of goods is taken with active support of staff members and also have queried me as to whether I am satisfied with the method of inventory of closing stock of goods foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elling and Salary and Bonus, it is submitted as under:- (i) Freight charges of ₹ 1,33,591/- has been incurred by me during the year. Ledger A/c is enclosed. It is not understood as to how the same is not appearing in the extract of the computerized P/L A/c. Ledger A/c copy of the Freight charges is enclosed. (ii) Travelling A/c is appearing in the computerized P/L A/c at the bottom at ₹ 1 3,39,751/-. (iii) Salary & Bonus claimed at Rs.I6,43,918/- includes ₹ 4,50,000/- appearing under the head retainer ship, merged with Salary & Bonus, and provision of Bonus as well as the leave pay etc. made on 31st of march. (iv) There is as such no excess claim on account of aforesaid expenditures as stated by you." 4.1. The authorized representative of the assessee filed a letter dated 26.3.2013 furnishing the following explanation:- "The explanation submitted by the assessee covers all the points raised by you and also explains the reasons for non-acceptance of the extract drawn from the computer. After having had the benefit of discussions with you, 1 had advised the assessee to prepare a statement of purchases and sales made, bill to bill, so as to arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 58,32,590/-. However, the assessee has shown the value of closing stock as ₹ 54,26,130/- in the books in support of return. Hence, there is a difference of ₹ 406460/- which is unaccounted for. Hence, it is not the question of gross profit ratios but unaccounted sales., The assessee has accepted there was no stock register maintained as such. Based on the above, it is understood that books in support of return does not present a true and correct picture of accounts. By taking plea of corrupt data, the assessee is trying to conceal some purchases and sales which are not accounted for in the books. It is also to be understood as to how only one data is corrupt while rest others do not show much difference. Hence, the arguments of the assessee are not acceptable. The books in support of return are neither complete nor correct. Hence, the books are rejected u/s 145(3) of the I.T.Act,1961 and profit is re- estimated as with an assumption that neither purchases nor sales have occurred in post-survey period. 4.5 The profit is re-estimated as under: Profit as per books on date of survey Rs.21847252/- Less: Opening Stock Rs.3343562/- Less: Purchases not entered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of ₹ 11,64,422/- had been reported in the books of account and thereby, the difference of ₹ 23,61,057/- should have been added to the closing stock. The closing stock was valued at ₹ 34,71,533/- on the date of survey, thereby, the value of closing stock should have been at ₹ 58,32,590/-. However, the appellant had shown the value of closing stock at ₹ 54,26,130/- in the books in support of return of income. This shows that difference in figures of closing stock at ₹ 4,06,460/- represents the unaccounted closing stock, thereby, the AO rejected the books of account u/s 145(3) of the Act and estimated the profit at Rs.l,36,01,550/-. Since, a profit of ₹ 34,84,074/- had already been shown by the appellant in the return of income, further profit of Rs.l,01,17,483/- was added to the total income as unaccounted net profit. After going through the fact and circumstances of the case and submission of the appellant as well as also perusal of the assessment order passed by the AO, I find that if at all working of the AO is accepted based on the profit calculated on computer sheet found during the course of survey action then also the figures of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We have gone through the paper book of the assessee comprising of the following:- 7.1. We find from the physical inventory of stock valuation of electrical goods as done by the survey party, the stock value was determined at ₹ 34,71,533/- which are enclosed in pages 30 to 57 of the paper book. We find from the computerized trial balance (enclosed in pages 58 to 59 of paper book) for the period 1.4.2009 to 30.3.2010 ( date of survey is 30.3.2010) impounded on the date of survey, contained the following items :- 'Difference in Opening Trial' - ₹ 20,87,378.71 'Difference in Trial Balance' - ₹ 23,61,973.02 7.2. Similarly we find from the computerized profit and loss account for the period 1.4.2009 to 30.3.2010 and balance sheet as on 30.3.2010 which were impounded on the date of survey (enclosed in pages 60 to 62 of paper book) , contained the following items :- In Profit and Loss Account 'Gross Profit Brought Down' - ₹ 16,42,505.27 Closing Stock (P/L) - ₹ 1,52,97,868.79 Net Profit - ₹ 2,18,47,252.21 In Balance Sheet Reserves & Surplus - Profit and Loss Account - ₹ 2,18,46,440.21 Investments Capital Investment - Rs ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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