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TMI Blog2019 (1) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... n when the assessee was given appropriate opportunity of being heard.? (ii) Whether on the facts and circumstances of the case, the Ld.CIT(A) was right in granting relief to the assessee when even the basic requirement of the Section 271AAA is not fulfilled i.e. The assessee failed to elaborate the manner in which the undisclosed income was derived?. 3. The assessee company is engaged in the business of manufacturing of glass syringes, disposable syringes and needles. In this case, search and seizure operation u/s 132(1) of the Act was carried out at the business premises of the assessee on 15.12.2010. Notice u/s 142(1) of the Act was issued on 21.10.2011. In response, the assessee filed its return on 23.12.2011 declaring income of Rs. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the course of lifting of restraint from the bed room of Sh. Rajiv Nath, Joint MD, on 22/12/2010, various documents relating to inventory were found and seized. The said pages were duly explained by Sh. Rajiv Nath in his statement recorded on 22/12/2010. It was explained that there is a difference in value of inventory including WIP to the extent of Rs. 8 crores which was surrendered. The manner in which such income was derived was explained that this difference is due to the fact that various items of finished goods were shown below the cost treating it as net sale value whereas the actual carrying cost was higher. The manner was also substantiated by explaining that page no. 44 and 45 of Annexure A-l represent the stock statement for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was accepted. The Ld. AR submitted that the assessee admitted the undisclosed business income of Rs. 8 crores during the statement u/s 132(4) and has also specified the manner in which such income has been derived as explained in para 2 above. A specific reference to section 271AAA was also made while surrendering Rs. 8 crores. The manner in which undisclosed income of Rs. 8 crore was derived is clearly substantiated by the computation in the seized documents themselves which has been accepted by the Assessing Officer. The tax alongwith interest has also been paid on 20/12/2010 and 11/1/2011 as detailed in the computation of income enclosed herewith. The Ld. AR submitted that Income Tax Act does not provide any specific format for disclosi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hom stock was purchased are provided and the mode of payment like cash etc. is indicated. He has also questioned as to who were the buyers. Obviously the buyer of undervalued stock was the assessee itself and that is why it has surrendered the undisclosed income. The Ld. AR submitted that the observation of the Assessing Officer is beyond the scope of IT Act because firstly, no such question was asked by the Authorized Officer and secondly, section 271AAA does not lay down any such conditions. However, the names and addresses of the persons from whom stock was purchased are already recorded in the books of accounts because there is not even a single item of undisclosed purchase. It is a case of under valuation of closing stock and not undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k statement for the same day. Rs. 8 crores were surrendered on account of valuation difference in stock u/s 132(4) read with section 271AAA and requested the authorized officer to make it part and parcel of overall disclosure of Rs. 11 crores made by him in his statement recorded on oath on 16/12/2010. Subsequently, bifurcation of Rs. 11 crore was also provided vide letter dated 22/12/2010, i.e. the day of conclusion of search in which Shri Rajiv Nath surrendered Rs. 8 crore on account of valuation of stock in the company. Post dated cheques were handed over in respect of the tax due on the surrendered amount at the time conclusion of the search on 22/12/2010 as mentioned in the bifurcation letter of even date. The assessee surrendered Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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