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TMI Blog2023 (4) TMI 489X X X X Extracts X X X X X X X X Extracts X X X X ..... ear to be reasonable. As we have noted above, the quantum of closing stock was reflected in the books of account of the assessee. When such closing stock is reflected in the books of account, assessing officer was not justified in holding that assessee had made investments, which are not recorded in the books of account. There is no material on record to justify such a finding. The closing stock disclosed by the assessee cannot be said to be investment of the assessee in the form of closing stock not reflected in the books of account. Therefore, such addition made by the assessing officer and affirmed by the Tribunal cannot be sustained. Investment in house property- Before the CIT(A), assessing officer did not produce any valuation report. As a matter of fact, CIT(A) had observed that assessing officer could very well had obtained a report from the departmental valuation cell to arrive at the correct figure of investment in house property. Before the Tribunal, the departmental representative filed extracts from the valuation report. From a reading of the order of the Tribunal, it is not discernible as to how such extracts could have been filed before the Tribunal that too ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e status of an individual carrying on the business of sale of electronic goods. For the assessment year 1996-97, assessee filed return of income on 17.03.1997 admitting income of Rs.2,43,320.00. Assessing officer, in the course of the assessment proceedings, noticed that as per the statement filed by the assessee along with the return of income, the closing stock was quantified at Rs.26,25,634.00 whereas assessing officer worked out the closing stock as on 31.03.1996 at Rs.19,34,758.00. It was found that assessee had admitted excess stock of Rs.6,90,876.00. Explanation given by the assessee was found to be not satisfactory. Assessing officer therefore presumed that assessee had invested income from undisclosed sources and accordingly added Rs.6,90,876.00 to the income of the assessee. 5. Insofar investment in house property is concerned, assessing officer noted that there was a survey under Section 133A of the Act at the premises of the assessee. Assessee could not explain properly the source of the vouchers found at the time of survey. According to the assessing officer, an amount of Rs.6,50,734.00 was found to be unexplained investment in house property. Accordingly, the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as follows: The first ground in this appeal is towards difference in stock. During the course of assessment proceedings, the AO found that the closing stock admitted by the appellant was Rs.26,25,634.00. In this regard, the assessee was asked to produce the closing stock inventories and the stock books. The assessee denied having maintained any stock registers. Further, the AO observed that when compared with the stock admitted and the stock found at the time of survey and worked out the stock as per these inventories, the assessee has admitted excess stock of Rs.6,90,876.00. As per the AO, since the assessee was unable to explain the sources for the excess stock admitted in the return of income, when compared with the stock inventory taken and reworked out till 31.03.1998, it is to be presumed that the assessee has invested income from undisclosed sources in the form of stock which is to be assessed. Accordingly, the AO has added the difference of Rs.6,90,876.00. During the course of hearing, it is stated that the appellant has admitted the value of the closing stock to be Rs.26,25,634.00. The AO on the other hand arrived at the value of the stock at Rs.19,34,758.00. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the value of the investments may be deemed to be the income of the assessee in such financial year. 16. As we have noted above, the quantum of closing stock was reflected in the books of account of the assessee. When such closing stock is reflected in the books of account, assessing officer was not justified in holding that assessee had made investments, which are not recorded in the books of account. There is no material on record to justify such a finding. The closing stock disclosed by the assessee cannot be said to be investment of the assessee in the form of closing stock not reflected in the books of account. Therefore, such addition made by the assessing officer and affirmed by the Tribunal cannot be sustained. 17. This brings us to the next issue of investment in house property. We have already noticed the addition made by the assessing officer under this head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessing officer in making the addition in this regard. Hence, I am of the view that this addition also needs to be deleted. The AO is accordingly directed to delete the above addition. 18. Thus, according to CIT(A), assessing officer found certain papers in the course of survey amounting to Rs.6,50,734.00, which according to the assessing officer were unexplained investment in the construction of the house by the assessee. CIT(A) noted that assessee had borrowed a sum of Rs.3.5 lakhs from State Bank of Hyderabad, Adilabad branch for the purpose of construction of the building. Further, assessee had also declared an amount of Rs.3 lakhs under the VDIS i.e., Voluntary Disclosure of Income Scheme. That apart, income of Rs.3 lakhs derived from the year 1992- 93 to 1994-95 was utilised in the construction of the building. Assessee also offered an additional income of Rs.1.5 lakh as income for the assessment year under consideration. Thus, according to the CIT(A), assessee was able to explain the source for about Rs.8 lakhs, which was more than the figure of Rs.6,50,734.00. CIT(A) accepted the explanation of the assessee to an extent of Rs.8 lakhs i.e., (1) by way of borrowing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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