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TMI Blog2021 (10) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged stock inventories prepared by the survey team. CIT(A) deleted the impugned additions on appreciating the following facts:- i). Survey team did not consider the stock kept at Pragati Warehouse ii). Survey team wrongly analyzed the stock of Channa as stock of Channi which was actually recorded in the regular books of account as stock of Channa which was kept at Narmada Valley Warehouse . iii). Revenue authorities not providing the basis of valuation of physical stock to the assessee, thus denying the principles of natural justice. iv). Revenue failed to bring any instance of bogus purchase made by the assessee. v). No cogent/positive/incriminating material was found during search/survey to support the alleged addition. Find no infirmity in the finding of Ld. CIT(A) and the same stands confirmed. Accordingly all the grounds raised by the revenue are dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the case and in law, Ld. AO erred in making the addition and passing the impugned assessment order under section 143(3) which ought to have been passed under section 153C r.w.s. 143(3), more particularly when provisions of section 292C applies on person from whom the seized material is found in the possession or control of, in the course of a search under section 132 or survey under section 133A and not the other person. 5. The appellant further craves leave to add, amend or modify any of the grounds of appeal. 2. At the outset, Ld. Counsel for the assessee requested for not pressing C.O.No.10/Ind/2020. The revenue did not opposed this request. Therefore, Cross Objection No.10/Ind/2020 raised by the assessee are dismissed as not pressed. Now we take up revenue's appeal in IT(SS)ANo.248/Ind/2019. 3. Brief facts of the case as culled out from the records are that the assessee is a partnership firm engaged in the business of trading in food grains and pulses. The firm came into existence on 26.12.2014. Search/survey operation were carried out on 05.10.2015 at business premises of the assessee firm as well as on the premises of other concerns/business associates. Statement o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing reliance on the finding of Ld. CIT(A) also referred to the following written submission placed before us: 1. Assessee is a partnership firm and is one of the group concerns of Dudani Group at Pipariya (MP). Assessee is engaged in the business of food grains since 26.12.2014. AY 2015-16 is the first year of the assessee wherein returned income has been accepted as assessed u/s 143(3) rws 153C. Second year is AY 2016-17 which is under appeal before your Honours. 2. A search was conducted u/s 132 on the Dudani group on 05.10.2015. A survey action was also conducted on the premises of the assessee during the same time. Statement of Shri Manoharlal Dudani was recorded on 07.10.2015 u/s 132(4) at the office premises of M/s. Mahesh Traders of which he is a partner. Shri Manoharlal Dudani did not admit about excess or shortage of stock. [PB 62] 3. Smt. Sandhya Dudani, Smt. Chandni Dudani and Shri Ram Aswani are the partners in the assessee firm. This is a fact stated by Shri Manoharlal Dudani in his statement u/s 132(4). [PB 64] 4. Notices u/s 153C was issued by the Ld. AO on 15.11.2016. It is submitted that the assessment framed u/s 153C r.w.s 143(3) is erroneous as there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75,66,249 3. "Chaani/Chunni" - 52,01,496 52,01,496 # Ld. AO wrongly took the figure of 2,14,30,211 instead of 2,12,94,211 11. During assessment, very specific submission was made to the Ld. AO vide letter dated 01.12.2017 filed under acknowledgement on 04.12.2017 that [PB 74] - a. Stock was not taken in the presence of the assessee or its authorized representative. b. Copy of inventory sheets of the stock taking has not been supplied. c. Basis of calculation of excess stock and short stock in terms of quantity and value be communicated so as to enable the assessee to submit the correct details. Another request letter was filed as a reminder on 27.12.2017 under sealed acknowledgment. [PB 75] 12. A very specific request was made before Ld. CIT(A) also to give appropriate directions to the Ld. AO to make available all the relevant documents and material which will enable the assessee to make its comprehensive submission. [PB 73] 13. Even on several and repeated requests by the assessee and direction by Ld. CIT(A) during remand proceedings, the basis of valuation of stock has not been presented by the Ld. AO by making available copies of inventory sheets for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the survey that some stock of assessee was kept at Pragati Warehouse which was not taken into consideration at the time of physical verification during survey proceedings. Accordingly, inventory prepared by the survey team is erroneous. [AO page 9, Ans. to Q. No. 10] 22. In regard to alleged excess stock of "Channi" for ₹ 52,01,496 found during the survey proceedings, it is alleged by the Ld. AO that there was some stock of "Channi" found in the name of the assessee at Narmada Valley Warehouse and the same was not recorded in its books. Consequently addition of ₹ 52,01,496 has been made. 23. It was stated clearly stated during the survey that the same is actually stock of "Channa" and has been included in the stock of "Channa" in the books of accounts of the assessee. [AO Page 10 Ans. To Q. No. 12] 24. Ld. CIT(A) verified the same and has deleted the entire addition of ₹ 52,01,496. [Page 17 of CIT(A)] 25. In respect of addition made towards undisclosed investment in the stock of "Channa Dal" by the assesse of ₹ 75,66,249, the basis of valuation of such amount was not provided to the assessee by the Ld. AO even after repeated requests and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bhagat Ambica v. CIT [1959] 37 ITR 288 (SC) Considering the above facts, circumstances of the case, submissions made, documents on record, factual statements in the remand report about non-availability of material documents and judicial precedents, appeal of the Department ought to be dismissed. 7. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions referred and relied by the Ld. counsel for the assessee. We observe that the search was conducted on Dudani Group on 05.10.2015 u/s 132 of the Act. A survey action was also conducted on the assessee firm premises. Physical stock was done by the survey team. Additions were made by the ld. AO on the basis of inventories of stock and trading account prepared by survey team which were allegedly different from the amounts as per books of accounts maintained by the assessee. Ld. AO made following additions which were all connected to the stock items: Ground No. Particulars Amount (Rs.) 1. Alleged excess stock of Chana Dal treated as undisclosed investment by the Ld. AO u/s 69B 75,66,250 2. Alleged less stock of various items treated as bogus purchase by the Ld. AO u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO are purely imaginative. Further, the appellant in support of its claim has stated that no inventory was prepared for the items lying in the Warehouse and mandi godowns and therefore, allegations of the AO are incorrect and without any supportive cogent material or positive evidence. 4.1.2 I have considered the facts of the case, plea raised by the appellant and findings of the AO. The appellant during the course of appellate proceedings requested to provide copies of inventory sheets, trading accounts, statement of Shri Manohar Dudani and documents collected from Krishi Upaj Mandi, Pipariya on the basis of which additions were made by the AO. Therefore, the AO vide letter dated 05.03.2019 was specifically required to provide photocopies of the desired documents(as mentioned above) on the basis of which various additions have been made to the income of the appellant. The AO vide letter dated 29.04.2019 has stated as under:- 2. In this case, the AO of the appellant has called for the following documents through CIT(A)-IJL Bhopal from this office related to AY 2016-17 in above mentioned case. The CIT(A)-IJL Bhopal has asked following information's, point wise reply of whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 915678 Shri Manohar Dudani was required to explain the difference in stock and was also required to explain why the difference in stock should not be treated as his undisclosed investment in his firm. Shri Dudani in reply to Q.No 10 has clearly stated that his stock of 'chana', 'tiwda', 'soyabean', 'dhaan' and 'chana daal' are also kept at Pragati Warehouse and this is the main reason for shortage of stock. Further, vide Question No 12, he was required to explain that a stock of₹ 52,01,496/- of 'chunni ' was found in Narmada Vally Warehouse in the name of Mis Sai Industries, however, no such stock is found in books of accounts of firm. In reply Shri Manohar Dudani stated that 'chunni' is a form of 'channa' and is included in stock of channa in books of firm. On perusal of statement of Shri Manohar Dudani it is evidently clear that the search party were aware of details of Pragati Warehouse where stock of appellant firm was stored, however, the AO also overlooked this vital fact during the course of assessment proceedings. If the stock kept at Pragati Warehouse and Mandi Warehouse was physically examined, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilarly as per doctrine of common law "incumbit probation qui digit non qui negat" i.e. burden lies upon one who avenges and not upon one who deny the existence of the fact. The AO has failed to discharge his onus of proof especially when addition has been made under "deeming fiction". In view of this lacuna on the part of AO, impugned addition is legally not sustainable. 4.1.5 Apart from the above, the additions made by the AO are simply on guess work and imagination. It is also Qsettled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. vis CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha & Bros co. vis CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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