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TMI Blog2020 (11) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2012- 13) a survey u/s 133A of the Act was conducted at the business premises of the assessee on 24.01.2012. Some discrepancies were noted and excess stock was found. During survey the assessee failed to give any explanation for the excess cash of Rs. 9,67,687/- and excess physical stock at Rs. 1,91,20,210/-. The assessee agreed to disclose undisclosed income of Rs. 2,00,87,897/- in the income tax return. Return of income was filed on 30.9.2012 at Rs. 76,96,446/-. Case selected for scrutiny under CASS followed by serving of notices u/s 143(2) and 142(1) of the Act. Various information were called for. Ld A.O after considering the written submission of the assessee made disallowance of interest at Rs. 5,58,623/- and disallowance of contract payment of Rs. 1,86,000/- was made. As regards the survey proceedings though the assessee had shown undisclosed income at Rs. 2,00,87,897/- in the Profit & Loss account under the head other income, Ld. A.O noticed some discrepancies in stock records, unaccounted sales and completed the assessment after making addition of Rs. 2,16,10,195/- on account of excess stock over and above the excess stock of Rs. 1,91,20,210/- surrendered by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excess bales is approx 351 Qtl. The value of such bales is worked out at Rs. 47,37,447/-, which was to be included in physical stock." 5.That the above finding of the Id. AO is factually not correct. The cotton bales of lot No. 139, lot No. 144 and Lot No. 143 were issued out of stock on 24.01.2012 but the invoices were raised on 25.01.2012, because of ongoing survey. The following evidence have been filed as under:- Lot No 139 Particulars Paper Book Page No Invoice No 163 dt 25.01.2012 Page No 39 Gate Pass No 467 dated 24.01.2012 Page No 40 Toll Kanta of 24.01.2012 Page No 56, Sr. No. Form 49 of MP Commercial Tax Dept dated 25.01.2012 Page 57 & 58 Lot No 144 Particulars Paper Book Page No Invoice No 165 dt 25.01.2012 Page No 41 Gate Pass No 466 dated 24.01.2012 Page No 42 Toll Kanta of 24.01.2012 Page No 56, Sr. No. Form 49 of MP Commercial Tax Dept dated 25.01.2012 Page 59 & 60 Lot No 143 Particulars Paper Book Page No Invoice No 164 dt 25.01.2012 Page No 43 Gate Pass No 465 dated 24.01.2012 Page No 44 Toll Kanta of 24.01.2012 Page No 56, Sr. No. Form 49 of MP Commercial Tax Dept dated 25.01.2012 Page 61 & 62 6. That from the above details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition three years later. 16.That the original gate passes number 465,466 and 467 were seized by the Id. AO during the course of assessment and they are with the Income Tax Department. 17.That the Income Tax survey team was at factory premises till 06:00 a.m. on 25th January, 2012 and at Rishabh Agrotech Pvt Ltd., the other concern of the family till afternoon of 25th January, 2012. One may easily conclude that if the trucks were not in factory premises it was not practical that any dispatches on 25th January, 2012 could be made. 18.That the Id. AO has failed to appreciate the facts of above in correct perspective and has wrongly added Rs. 47,37,477/-, 19.That the Id. CIT(A) has rightly deleted the addition of Rs. 47,37,477 I-as discussed on Page No. 8 of his order. 20. That the order of the Id. CIT(A) may please be confirmed. Addition for stock available at Phulambari, Aurangabad at Rs. 55,05,835/- 21.That the Id. AO has on Page No. 9 and Page No. 10 of his order made an addition. of Rs. 55,05,835/ - on account of purchases from M/s Pragati Cotton Phulambari Dist Aurangabad. The amount of Rs. 55,05,835/- is arrived at by reducing the sales of Rs. 17,22,355/- from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A by the ld. AO. Invoices considered by ld. AO in Annexure A which are after the survey period are as under:- Date Party B. No Lot No. Type Qty Rate Amount (In Rs.) Correct Invoice No. Paper Book Page No. VAT and CST (In Rs.) 19.01.2012 Sri Ramdev Agencies 158 135 Sale 160.05 13328.88 21,33,287 164 43 1,06,664 20.01.2012 Sri Ramdev Agencies 159 136 Sale 159.60 13328.88 21,27,289 165 41 1,06,364 20.01.2012 Sri Ramdev Agencies 160 137 Sale 158.95 13328.88 21,18,625 166 53 1,05,931 21.01.2012 Ankur Txtiles 161 138 Sale 169.30 13357 22,61,340 167 54 45,227 22.01.2012 Ankur Textiles 162 142 Sale 166.70 13357 22,26,612 168 55 44,532 Total 1,08,67,153 4,08,718 30.That the above sales amount of Rs.l,08,67,153/- are excluding VAT and CST of Rs. 4,08,718/-. If the VAT and CST amount is included then the total will be Rs. 1,12,75,871/-. 31.That there are other mistakes in the said Annexure A such as wrong lot number etc. The total sales taken by the ld.AO of Rs. 34,19,60,852/- is not correct. 32.That the trading account has been worked out by the Id. AO o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of Ld. CIT(A) deleting the addition of Rs. 2,16,10,195/- is mentioned below:- Ground No.3:- Through this ground of appeal the appellant has challenged the addition of Rs. 2,16,10,195/- on account of difference in stock. The AO has worked out the difference in stock amounting to Rs. 2,16.10,105/-. The AO made the addition that cotton bales amounting to Rs. 47,37,447/- has, not been included in the stock. The AO also concluded that cotton bales amounting to Rs. 55,05,835/- which, were lying at PhulalT1bari has not been included in stock. The AO recasted the trading account and made the addition of Rs. 1,13,66,913/-. Cotton Bales: Rs. 47 ,371447/- The AO made the addition of Rs. 47,37,447/- on the ground that bales of 'lot No. 139, 143 and 144 have not been included in the stock. The AO is not justified in concluding now that the stocks or above bales were not included in the stock. The above bales are loaded in the trucks and trucks were in the factory premises itself. The gate pass shows that trucks were standing in the factory premises at the time of survey. The date of gate pass is 24.01.2012 whereas in the date of bill is 25.01.2012. It is highly unlikely to conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncing figure. The appellant is maintaining books of account and same has been audited u/s 44AB of the I.T. Act. The AO is not justified in recalculating the value of additional stock as on date of the survey again by preparing recasted trading account. Therefore, the addition made by the AO amounting to Rs. 2,16,10,195/- is Deleted. 'The appeal on this ground is Allowed. 8. From perusal of the above finding of Ld. CIT(A) we find that he after referring to the relevant facts of the case arrived to this conclusion. To examine the same we will take up the three parts of the addition one by one. 9. As regards addition for excess stock of cotton bales at Rs. 47,37,447/- we observe that as per the Ld. A.O lot No. 139 to 141, lot No. 143 to 147 were not sold and out of the 8 lots 7 having 100 bales in each lot and 60 bales in lot No. 147. So the assessee have possessed 760 bales of cotton. At the time of survey only 547 bales were found which shows that balance bales were 213 bales which were available with the assessee but were placed somewhere else. Ld. A.O accordingly computed the excess stock at 351 Quintal and valued at Rs. 47,37,447/-. We however find that the cotton bales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er heard before method for recasting the trading account computing the closing stock as balancing figure even when the revenue authorities have taken the physical stock at the time of survey on 24.01.2012. In the impugned assessment order trading account has been recasted wherein the closing stock is taken at Rs. 5,63,50,087/- as on 24.1.2012. Now on the same day the book stock of the assessee at Rs. 6,77,17,000/- which was examined by the survey team. On the very same day physical stock taken and valued by the survey team is at Rs. 8,68,37,210/- so there are three figures of closing stock. Moving further in the assessment year Ld. A.O has referred to some mismatch in the sales figure mentioning that if the sales bill of cotton bales from 1.4.2012 to 24.1.2012 are totalled, the same would come to Rs. 34,19,60,852/-. However the assessee in its pre survey period trading account has shown the sales of cotton bales at Rs. 33,05,93,939/-. Based on these figures Ld. A.O computed the difference at Rs. 1,13,66,913/- and treated it as undisclosed sales. This finding of Ld. A.O is not correct as per the accounting treatment given by him in the assessment order because if the closing figure ..... X X X X Extracts X X X X X X X X Extracts X X X X
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