9911796707
TMI Blog2018 (3) TMI 1651X X X X Extracts X X X X X X X X Extracts X X X X ..... ven by the ld. CIT(A) to the extent of Rs. 1,39,75,599/-. 6. Briefly stated the underlying facts in issue relates to the survey operation conducted in the business premises of the assessee on 11/12.09.2008. During the course of the survey proceedings, the survey parties found stock statements which were submitted by the assessee to its banker, Punjab National Bank. The stock as per book was compared with the stock mentioned in these stock statements and it was found that there was a discrepancy of Rs. 1,59,22,356/-. The assessee was asked to explain the difference. It was explained that due to the change in accounting software, the shortage entry of preceding years was not picked up resulting overstatement of stock as per books of accounts. It was explained that the closing stock as per the books of accounts is carried forward from preceding years without booking of the shortage of earlier years and also . A.Y. 2009-10 for the periods up to the date of survey. The reconciliation statement was also filed. The reply of the assessee did not find any favour with the A.O. who made the addition of Rs. 1,59,22,356/- by making the following observations:- (i) The discrepancies between s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks and as per the statement submitted with its banker satisfactorily. During the Assessment proceedings the assessee furnished the explanation that the accountant has not passed the entry of shortage proceeding assessment year for F.Y. 2006-07 & F.Y. 2007-08 (Refer statement of Kaushikbhai d Patel). The accounting software was changed during the year with data where in shortage entry of preceding years not picked up resulting overstatement of stock as per books of account. Accordingly, the closing stock as per the books of account was carried forward form preceding years -without booking of shortage of earlier years and also for the periods up to the date of survey. There were discrepancies between stock as per the statement submitted to the bank in terms of quantity and value. Therefore, the addition ofRs.1,59,22,356/- was made. The assessee itself admits in the submission before your honour in the petition vide Para 4.1 that there is no dispute that the stock reflected in the bank statement and stock as per books of account of the appellant differ. The A. O. had rightly disallowed the stock difference as per books of accounts and the statement received from bank. The Relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement filed with the bankers and the book stock. Surprisingly, the copies of the stock statements filed with the bankers found at the time of survey pertained to the months of April to August where as the survey took place on 11/12 September. This means that no stock statement pertaining to the month of September was found. There is no denying that the stock statements given to the banks always show value of stock on the higher side. This is done to safeguard the cash credit limits availed by the businessman from the banks. The difference found in the such statements and the books of accounts cannot be added. The Hon'ble High Court of Gujarat in the judgments referred to hereinabove have taken a consistent view that were Assessing Officer made addition to income of assessee on plea that there was difference in quantity and value of stock shown in books of accounts vis-à-vis as shown to bank, impugned addition are not justified. The Hon'ble High Court has further stated that where inflated statement was furnished to banking authorities for availing of higher credit, difference of stock shown in books of accounts and in statement furnished to banking authorities co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21.00 106185401.26 43313280.26 Aug-08 53495301.00 107827690.26 54332389.26 Total 312639874.00 508165547.30 195525673.30 20. The assessee was asked to explain why the difference of Rs. 7.48 crores should not be added. The assessee filed a detailed reply explaining that due to the error in the software, the summary of sales and purchase generated was erroneous. It was explained that this fact was explained at the time of survey itself. The contention of the assessee did not find any favour with the A.O. who proceeded by making addition of Rs. 7,48,27,432/-. 21. Assessee carried the matter before the ld. CIT(A) and once again contended that due to the erroneous software, the details of sundry creditors and sundry debtors were shown as purchases and sales. Assessee filed complete ledger accounts of the purchases and the sales and explained that the total of the debit amount found in the letter head pertained to the sales and the total of the credit amount found in the letter head pertained to the purchase. 22. The submissions and the details so furnished were forwarded by the ld. CIT(A) to the A.O. calling for a remand report. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -08 42911178.00 90537876.26 47626698.26 June-08 88037671.00 118134106.26 30096435.26 July-08 62872121.00 106185401.26 43313280.26 Aug-08 53495301.00 107827690.26 54332389.26 Total 312639874.00 508165547.30 195525673.30 In context to the above details, you are being asked that there comes a difference of Rs. 12,06,98,240.76 in purchases and of Rs. 195525673.30 in sales. What is your explanation for the same? A.10.In context to the above referred question, I have to state that I have written down the details of the purchases and sales, as per the details written down on the letter head of M/s. Janam Steel & Alloys. In fact, there are no details of purchases and sales but in reality, they are sundry debtors and sundry creditors, which fact is being told to your four your information please. 26. During the course of the assessment proceedings, the assessee once again explained the nature of entries and it can be safely concluded that the explanation given at the time of the assessment proceedings was not an afterthought as the same was explained at the time of survey operations also. If the explanation of the assessee is consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the assessee reiterated what has been stated before the lower authorities. 32. We have given a thoughtful consideration to the orders of the authorities below qua the issue. During the course of the survey proceedings, the assessee was asked to explain the pocket diary marked A-1 and in his reply the assessee categorically stated that the said diary does not belong to the assessee but the same belongs to Shri Rajubhai Patel. We find that Shri Rajesh Patel in his letter addressed to the ACIT Circle-2 dated 15.09.2008 which is exhibited at pages 364 to 366 of the paper book has categorically stated that at the time of survey, he was present at the preemies of the assessee and the said diary was impounded from him. Exhibits 361 to 363 of the paper book contain the affidavit of Shri Patel and in his affidavit once again Shri Patel admitted that the said diary belongs to him and not to the assessee. In our considered opinion, once the ownership of the diary has been established to be that with Shri Raju Patel then we do not find any logic in treating the notings in the diary belonging to the assessee. Considering the facts in totality, we decline to interfere with the finding ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
