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TMI Blog2019 (9) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... the alleged excess stock found during the course of survey was not sustainable. - Decided against revenue Addition on account of excess stock of gunny bags - CIT-A restricted the addition - HELD THAT:- After taking into consideration the opening stock, the purchases made by the assessee and the quantity of gunny bags used during the year under consideration, the stock of gunny bags available with the assessee was found to be 15,481 by the ld. CIT(Appeals). On the basis of this working, the difference in gunny bags found during the course of survey was determined at 3,479 by the ld. CIT(Appeals) and the addition made by the Assessing Officer on this issue was restricted by the ld. CIT(Appeals) to ₹ 97,412/- calculated at the rate of ₹ 28/- per gunny bag. Keeping in view all these facts and figures given by the ld. CIT(Appeals), which have remained undisputed by the ld. D.R., we find no infirmity in the impugned order of the ld. CIT(Appeals) on this issue - Decided against revenue. Addition on account of capital introduction by the partners of the assessee-firm - gifts in question given to the partners - HELD THAT:- It is observed that the gifts in question giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,92,511/-. During the course of survey, the stock of paddy, etc. was physically verified by the Survey Team and discrepancies noticed therein were reported as under:- Sl. No. Item As per statutory Registers Stock physically found Discrepancies A. Paddy 37,400 Qts. 53,602.80 Qts. 16202.80 Qts. B Rice 512 Qts. 1,000.00 Qts. 488.00 Qts. C. Broken Rice NIL 53.00 Qts. 53.00 Qts. D. Rice Bran NIL 50.00 Qts. 50.00 Qts. E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey when authorised officer asked to make new stacks of paddy of various weights serially Sri Achintya Kesh had denied with remark I don't think it is a feasible solution (vii) from the registers (I, II, III, IV) impounded no fractional figure of either purchase of paddy or milling of the same could be found. (viii) Assessee also failed to state how they have accounted the fractional weight of paddy(apart from 60 Kg Bags) at the time of purchase as well as at the time of milling no such evidence of fractional counting were detected at the time of survey nor produced by the assessee during the course of hearing. (ix) During the course of survey assessee has stated that there were 50Kgs 60Kgs bag but at the time of scrutiny proceedings assessee has stated that the bags were 42 Kg, 45 Kg 50 Kg which are the outcome of the after-thought realising the consequence of the revenue. Assessee's statement were selfcontradictory denying the actual figure of the closing stock. Every time he was making a flip-flop statement without any proper documentation. Assessee had submitted a certificate from Mr. Tarak Nath Ghosh, Chartered Engineer who had signed on certificate on 18.03.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 488 quintal and 53 respectively totalling to 541 quintal. Yield of production of rice as shown by you is 68%. Thus therefore, excess stock of rice of 541 quintal reveals the fact that the excess stock of rice of 541 quintal was produced from milling of 541 X 100/68 = 795.58 quintal of paddy. Excess stock of rice bran found = 50 quintal Rate of production of rice bran = 5%. Thus the excess stock of rice bran was yielded by milling paddy of 50 X 100/5 = 1000 quintal of paddy. Therefore, undisclosed milling of paddy for yielding rice and bran are 795.58 qts. and 1000 quintal respectively. Considering the value of rice and bran, the case lower of the two i.e. 795.58 quintal of paddy is taken as undisclosed purchase for production of undisclosed rice. Therefore, total undisclosed paddy becomes 16998.38 quintal (16202.80quintal + 795.58 quintal). The value of undisclosed paddy @ 1100/- per quintal becomes Rs.l,86,98,218/- is the assessee's undisclosed income by way of investments towards undisclosed purchase of paddy. 5. The addition made by the Assessing Officer on account of the alleged excess stock found d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth Opening stock Purchased Total Processed Closing Stock April 30060 19800 49860 13320 36540 May 36540 21420 57960 17100 40860 June 40860 9180 50040 9540 40500 July 40500 11160 51660 11160 40500 Aug. 40500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of the appellant. In the absence of any such defect and without rejecting the book results of the appellant, it is difficult to sustain an addition based solely on the survey results that appear to be very unreliable as discussed above. The position of paddy stocks as per books has been shown to be as discussed earlier in this order. I can find no infirmity with the position of procurement of paddy from the registers shown. It is amply clear that the material produced by the appellant shows that the position of stock as on the date of survey was correctly reflected in the books and no defect was found in the registers or books of the appellant, making the difference on account of the survey unsustainable for the reasons discussed above. The addition, therefore, on account of difference in stock is unsustainable and is accordingly deleted . 6. The ld. D.R. submitted that the stocks lying in the godown of the assessee were physically verified by the Survey Team in the presence of one of the partners of the assessee-firm and there was no material objection raised on behalf of the assessee in respect of the method followed by the Survey Tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y vide letter dated 04.02.2011 but the same were not properly appreciated by the Assessing Officer. The ld. CIT(Appeals), however, appreciated the same in the right perspective and keeping in view that the case of the assessee was duly supported by a certificate given by the Chartered Engineer to establish the maximum storage capacity of the godown of the assessee, he rightly held that the procedure adopted by the Survey Team for physical verification of stock was unreliable. Moreover, the ld. CIT(Appeals) also analysed the quantitative details of paddy furnished by the assessee and found on such analysis that the position of stock as on the date of survey was correctly reflected in the books of account of the assessee. He also noted that no material defect was pointed out by the Assessing Officer either in the books of account of the assessee or the stock register regularly maintained by the assessee and held that in the absence of any such defect and without rejecting the book result of the assessee, the addition made by the Assessing Officer on account of the alleged excess stock found during the course of survey was not sustainable. Keeping in view all these facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 60-15,481) x 28]. It is this amount that stands confirmed, the rest being deleted . 11. We have heard the arguments of both the sides on this issue and also perused the relevant material available on record. It is observed that even though no separate register was maintained by the assessee for the inventory of gunny bags, the opening stock of these bags as declared by the assessee as on 01.04.2010 was 6,281. After taking into consideration the said opening stock, the purchases made by the assessee and the quantity of gunny bags used during the year under consideration, the stock of gunny bags available with the assessee was found to be 15,481 by the ld. CIT(Appeals). On the basis of this working, the difference in gunny bags found during the course of survey was determined at 3,479 by the ld. CIT(Appeals) and the addition made by the Assessing Officer on this issue was restricted by the ld. CIT(Appeals) to ₹ 97,412/- calculated at the rate of ₹ 28/- per gunny bag. Keeping in view all these facts and figures given by the ld. CIT(Appeals), which have remained undisputed by the ld. D.R., we find no infirmity in the impugned order of the ld. CIT(Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the gifts given by them to the respective partners. Keeping in view all the facts of the case, the Assessing Officer held that the gifts claimed to be given by the said donors were not genuine and the amount of such gifts aggregating to ₹ 23,89,500/- was added by him to the total income of the assessee. 14. The addition of ₹ 23,89,500/- made by the Assessing Officer on account of unexplained capital contribution by the partners was challenged by the assessee-firm in the appeal filed before the ld. CIT(Appeals) and after considering the submissions made by the assessee, the remand report submitted by the Assessing Officer as well as the other material available on record, the ld. CIT(Appeals) restricted the addition of ₹ 23,89,500/- made by the assessee on this issue to ₹ 2,21,756/- for the following reasons given in his impugned order:- I have examined the entire issue along with the material on record The Issue here is that of the source of the funds that have been made available to the partners of the appellant firm These have been claimed to be from gifts provided by the mothers of the partners, who in turn claimed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion letters were also furnished during appeal proceedings. These have not been objected tc' by the AO and can accordingly be accepted. d. S. Jewelers: n this case also, the managers had received the 133(6) notices and promised to confirm the transactions. This confirmation was provided on 27.5.2016 by the office of the officer conducting remand proceedings. Copies of the confirmation letters were also furnished during appeal proceedings. These have not been objected to by the AO and can accordingly be accepted. e. As regards, the purchaser of gold named, Akhoy Kumar Dutta and sons, the AO during remand proceedings, has not found it necessary to conduct inquiries after the confirmation letters furnished in this case to him, from the said party. Since nothing adverse has been found on record even after the conducting of remand proceedings, the bona fides of the transaction can hardly be doubted. The same is therefore accepted. In conclusion, it is found that the only transaction that does not stand proved by the appellant is that of the sale of gold to Hiralal and sons. This transaction has not been proved by the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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