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TMI Blog2022 (4) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... has challenged the deletion of stock out of total addition made by the AO u/s 69 whereas the assessee has challenged the part confirmation of addition by the CIT(A) - HELD THAT:- After hearing the rival contentions and perusing the facts on record including the reconciliation statement filed by the assessee reconciling the stock as taken by the survey team and as per the books of the assessee before the AO and the Ld. CIT(A), we note that there were several infirmities/mistakes committed by the survey team while doing stock taking physically. From the perusal of reconciliation statement , it is apparent that the assessee has explained the stock differences minutely. It shows that the survey team even has omitted the stock to the extent of ₹ 36,80,834.34 whole the calculating excess stocks by committing various mistakes such as double accounting of stocks, wrong application of rate and various other reasons. Non of the authorities below has pointed out as to how the stock reconciled by the assessee is not correct. We, therefore, are inclined to accept the assessee s contention that the difference in stock inventory is only to the tune of ₹ 3,81,063.09/-. Accordingly w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has failed to prove the identity, creditworthiness of the investors and genuineness of the transactions and accordingly a show cause notice was issued as to why the same should not be treated unexplained cash credit u/s 68 of the Act. Further the AO has issued show cause notice to the assessee in respect of share application money received from Sabya Sachin Ghuwalewala HUF of ₹ 59,50,000/- and accordingly the show cause was given to the assessee as to why the same should not be treated as unexplained cash credit u/s 68 of the Act. The assessee replied the show cause notice furnishing various information such as PAN, Addresses, confirmations and also proofs of identity, creditworthiness of the parties and further stating that these parties are mostly directors or their relatives and not outside parties. It was submitted that no money has been received from unknown sources. However, the AO rejected the contentions of the assessee and treated this amount as unexplained cash credit as the assessee has failed to prove the identity, creditworthiness of the investors and genuineness of the transactions for the reason that these were circuitous rotation of funds by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and allowed the appeal by following various judicial decisions. The Ld. D.R. ,on the other hand, relied on the assessment e order and submitted that the bare filing of documents do not prove genuineness of the transactions as these transactions are of ambiguous nature as first money was returned and again brought back in to the assessee company in the form of share application money. 7. Having gone through the facts on record and order cited below we find that the assessee has returned the unsecured loans outstanding to various parties who happened to be the directors of the assessee company or their close relatives and thereafter the money so repaid was brought back in the form of share application in the assessee company converting the same into the share capital and share premium. We note that the assessee has filed all the documents/evidences relating to these investors in the form of names, addresses, ITRs, PANs and confirmation etc. before the AO which were duly matching with the documents filed by these investors before the AO in response to notices issued to these parties by the AO u/s 133(6) of the Act. In our opinion, the order of Ld. CIT(A) has dealt with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of purchase rate which resulted in discrepancy of ₹ 4,10,726.75/-. The discrepancy of ₹ 10,10,970/- has resulted from the sale made but not entered in the books of accounts. The assessee the stock discrepancies as found by the survey team except ₹ 3,81,063.09 which remained unreconciled and needs to be added to the income in place of ₹ 61,85,981/-. The said reply of the assessee was not found tenable by the AO and the entire amount of stock discrepancy of ₹ 61,85,981/- was added to the income of the assessee. 10. In the appellate proceeding the Ld. CIT(A) partly allowed the appeal of the assessee by observing as under: I have considered the submission of the appellant and perused the relevant assessment records. The AO in the assessment order had added back stock difference amounting to ₹ 61,85,981/-. During the course of survey, the survey team had inventorised stock at ₹ 2,93,70,253/-. The stocks reflected in the books of account was only ₹ 2,31,84,272/-. The A/R of the appellant in; his. submission hag objected to the stock inventory on the grounds that the wrong rate has been taken, stock had been doubled counted of wrong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the assessee has challenged the part confirmation of addition on account of excess stock found during the survey at ₹ 38,00,000/- which is wrong as it should have been only ₹ 3,54,838/-. 12. The Ld. A.R. on the other hand strongly controverted the arguments of the Ld. D.R. by submitting that the stocks were duly reconciled by the assessee copy of which is placed at page 255 to 257 of the PB. The Ld. A.R. drew our attention to the fact that even in the inventory taken by the survey team the stock finished goods of ₹ 36,80,834.34 was left to be considered in the stock whereas several other wrong entries/double entries or application of sale rate in place of purchase rate . The Ld. A.R. submitted that the discrepancies in the stock were only to the tune of ₹ 3,81,063.09/- and therefore the same may kindly be affirmed in place of ₹ 38,00,000/- as sustained by the Ld. CIT(A). 13. After hearing the rival contentions and perusing the facts on record including the reconciliation statement filed by the assessee reconciling the stock as taken by the survey team and as per the books of the assessee before the AO and the Ld. CIT(A), we note that there were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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