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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 ..... tified. Addition for unaccounted stock available at Phulambari, Aurangabad - During the perusal of the sales/invoices recorded by the Ld. A.O forming part of the assessment order, details of invoices issued from Aurangabad directly to the parties at Tamil Nadu, sales tax returns filed by the assessee, we are satisfied with the details filed by the assessee that against the quantity of goods purchased from Pragati Cotton, Phulambari equivalent quantity of goods were sold to other parties at Tamil Nadu and Maharashtra, though at loss due to poor market conditions but the quantity of goods purchased matches the quantity of goods sold from Aurangabad. Since the revenue authorities failed to prove anything contrary to the fact that there is no mismatch of quantity of goods purchased and sold at Aurangabad, the action of Ld. A.O making addition for the alleged stock at ₹ 55,05,835/- lying at Aurangabad is not justified. Ld. CIT(A) has rightly appreciated the facts and deleted the addition, which thus needs no interference from our end. Excess stock on account of recasted trading account - A.O has adopted the never heard before method for recasting the trading account comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... noted and excess stock was found. During survey the assessee failed to give any explanation for the excess cash of ₹ 9,67,687/- and excess physical stock at ₹ 1,91,20,210/-. The assessee agreed to disclose undisclosed income of ₹ 2,00,87,897/- in the income tax return. Return of income was filed on 30.9.2012 at ₹ 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 ₹ 5,58,623/- and disallowance of contract payment of ₹ 1,86,000/- was made. As regards the survey proceedings though the assessee had shown undisclosed income at ₹ 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 ₹ 2,16,10,195/- on account of excess stock over and above the excess stock of ₹ 1,91,20,210/- surrendered by the assessee during the survey proceedings. Income assessed at ₹ 3,00,51,264/-. 4. Aggrieved assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 140 100 3 141 100 4 143 100 5 144 100 6 145 100 7 146 100 8 147 60 Total 760 However at the time of survey the no. of bales found were 547 only. It shows that balance 213 bales were available with the assessee but the same were placed somewhere else therefore the survey party could take physical stock of the same. The total quantity of such excess bales is approx 351 Qtl. The value of such bales is worked out at ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 8,68,37,210/- as physically verified by the survey party. 9.That with the same understanding as of the survey team, the partner of assessee firm also confirmed the physical stock as taken by the survey team. 10.That the stock of ₹ 6,77,17,000/- as appearing in books of assessee on 24.01.2012 was arrived at after reducing the stock of Lot No. 139, Lot No. 144 and Lot No. 143. 11.That the difference between the physical stock of ₹ 8,68,37,210/ - and book stock of ₹ 6,77,17,000/- being ₹ 1,91,20,210/- was surrendered by the assessee during the survey proceedings. 12.That the total amount of ₹ 2,00,87,897/-(stock of ₹ 1,91,20,210/- and cash of ₹ 9,67,687/-) was surrendered. 13.That the surrendered amount of ₹ 2,00,87,897/- was included as Other Income of ₹ 2,18,68,620/- in Profit Loss A/c which is at Page 51 of paper book. 14.That the assessment was completed by the Id. AO on 31.03.2015. The dispatches were made on 25.01.2012 which is also proved by the truck numbers appearing on above documents including Form 49 generated from web site of Government of Madhya Pradesh, Commercial Tax Department 15.That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.08.2011 09.08.2011 32, 33 and 34 16A 09.08.2011 M/s Sai Jayajothi Co. Ltd 13,70,669 15428 15427 09.08.2011 09.08.2011 35, 36 and 37 16 28.07.2011 Shri Rajendrsa Fibres Add-BabraPhata Taluka, Aurangabad, Maharashtra 17,22,355 Local delivery 38 Total 44,70,646 24.That the ld. AO has considered these sale invoices when he worked out the sale from 01.04.2011 to 24.01.2012 as per Annexure A of his order. However, he has failed to consider that these sales were effected while arriving at difference of ₹ 55,05,835/-. 25.That the Id. CIT(A) at Page no. 8 and Page No. 9 of his order has rightly deleted the above addition. 26. That the order of the Id. CIT(A) may please be confirmed. ' Excess stock on account of recasted trading account: ₹ 1,13,66,913/- 27.That the Id. AO has considered the sum of ₹ 1,13,66,913/- as sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 4,08,718/-. If the VAT and CST amount is included then the total will be ₹ 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 ₹ 34,19,60,852/- is not correct. 32.That the trading account has been worked out by the Id. AO on Page No. 9 of his order. The closing stock is taken as balancing figure of ₹ 5,63,50,087/- The ld. AO has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evidences, succeeded in satisfying Ld. CIT(A) that the Ld. A.O was not justified in making the alleged addition of excess stock. The relevant finding of Ld. CIT(A) deleting the addition of ₹ 2,16,10,195/- is mentioned below:- Ground No.3:- Through this ground of appeal the appellant has challenged the addition of ₹ 2,16,10,195/- on account of difference in stock. The AO has worked out the difference in stock amounting to ₹ 2,16.10,105/-. The AO made the addition that cotton bales amounting to ₹ 47,37,447/- has, not been included in the stock. The AO also concluded that cotton bales amounting to ₹ 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 ₹ 1,13,66,913/-. Cotton Bales: ₹ 47 ,371447/- The AO made the addition of ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing stock at ₹ 5,63,50,087/- as balancing figure. When the department has carried out of survey and verified each and every items, they remains no scope for drawing the recasted trading account by putting the balancing 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 ₹ 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 ₹ 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 whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,835/- lying at Aurangabad is not justified. Ld. CIT(A) has rightly appreciated the facts and deleted the addition, which thus needs no interference from our end. 11. As regards excess stock on account of recasted trading account at ₹ 1,13,66,913/- Ld. A.O has adopted the never 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 ₹ 5,63,50,087/- as on 24.1.2012. Now on the same day the book stock of the assessee at ₹ 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 ₹ 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 ₹ 34,19,60,852/-. However the assessee in its pre survey period trading account has sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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