9911796707
TMI Blog2023 (10) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for the relevant period. In view of above, no further addition is required to be made and any further amend will result into double taxation. Accordingly, ground no. 3 of assessee is allowed. Addition on account of excess stock found during the survey and surrendered as income under the head Undisclosed Income - As argued same being declared as income by way of profit/part of taxable income, there is no case of any further addition - HELD THAT:- We are in agreement with the contention of ld. AR that in absence of stock register it cannot be presumed that entire stock inventorised by the survey team was unaccounted stock and there must be some accounted stock also on the date of survey which was included by the survey team in the inventory prepared on the date of survey. Consequently, we are inclined to hold that even the GP rate declared by the assessee and accepted by the Department i.e. 3.45% turnover is an appropriate and undisputed bench mark for making reverse calculation to ascertain closing stock on the date of survey as on 19.02.2014 or on the date of end of financial period i.e. 31.03.2014. As per trading account discernable from the audited balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and surrendered as income under the head Undisclosed Income and same being declared as income by way of profit/part of taxable income, there is no case of any further addition. (ii) That impugned addition was on illegal and arbitrary basis and resulted in double addition in respect of very same amount and as such same is not sustainable. 3. The learned counsel of assessee submitted that the assessee does not want to press ground no. 2 hence the same is dismissed as not pressed. Ground no. 1 is of general in nature. 4. Apropos ground no. 3 the ld. counsel submitted that the ld. CIT(A) has confirmed the addition of Rs. 7,76,500/- without proper appreciation of facts ignoring the very vital fact that excess cash found as a result of survey has duly been accounted for as sales and treated as revenue receipt, there is thus no justification for addition in respect of very same amount. The ld. counsel vehemently pointed out that impugned addition was on illegal and arbitrary basis and resulted in double addition in respect of very same amount and as such same is not sustainable. Therefore he submitted that addition may kindly be deleted. 5. The ld. counsel also submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961. During assessment proceedings and also during the present appeal proceedings the appellant has not disputed the fact that there was excess cash of Rs. 7,76,550/- at the time of survey. The. Appellant, when required by the survey team to explain excess cash offered the same for taxation for AY 2014-15. This fact is also not disputed by the Appellant. It is seen from the return of income that the Appellant has not declared the above excess cash in the return of income as additional income as offered for taxation by the Appellant himself during survey. During assessment proceedings, the Appellant was required to explain why excess cash be not added in the returned income. The Appellant explained vide letter dated 21.12.2016 that the surrendered amount of cash has been included in the sales after the date of survey and, therefore, the income is accounted for as sales in the post survey period. The Assessing Officer took a view that the above explanation is not acceptable as the Appellant should have shown this excess cash as income by separately crediting in the capital account. The Appellant by recording sales in post survey period has introduced his cash in the books and sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales as per trading account prepared on the date of survey had to be announced by the amount of excess cash found. On the other hand, we clearly note that the assessee has shown the excess cash amount as sales on the date of survey i.e. 19.02.2014 which reveals the fact of inclusion of impugned amount in the sales shown by the assessee at the end of financial period and thus said amount, included as sales in the books on the date of survey, clearly show that the same was part of sales declared by the assessee for the relevant period. In view of above, no further addition is required to be made and any further amend will result into double taxation. Accordingly, ground no. 3 of assessee is allowed. Ground no. 4 of assessee 9. The ld. counsel submitted that the CIT(A) has erred in confirming the addition of Rs 72,23,450/- made on account of excess stock found during the survey and surrendered as income under the head Undisclosed Income and same being declared as income by way of profit/part of taxable income, there is no case of any further addition. He further pointed out that the impugned addition was on illegal and arbitrary basis and resulted in double addition in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry to accounting and taxation principles. 5.5 We have furnished a calculation of stock as per books as on the date of survey on the basis of Gross profit rate of 3.45% (actual GP rate for the year under consideration) and the figure of closing stock arrives at Rs. 1,20,92,162/- which clearly covers the physical stock of Rs. 72,23,450/- . In these circumstances, there is no case of any excess stock and the very basis of allegation of excess stock is misconceived. It may be clarified that during survey, there was no evidence of any unaccounted purchase or sales. 5.6 In any case, it has been a consistent stand of the appellant before the lower authorities that the value of stock so found is based on the books of account and forms part of the sales so made post survey and as such the impugned addition is of duplicating nature since the profit element of such stock is already subjected to tax. 5.7 It is worth mentioning that the total sales even at the date of survey was more than Rs. 52 crores and as such the presumption of Nil stock is not only fallacious but without any basis and contrary to facts. Moreover, apparent ignorance of stock maintained at cold storage which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttings vide PB Pg 91-98. The complete detail of item-wise and party-wise wastage is enclosed at PB Pg 99-121 which is purely on actual basis. The assessing officer has merely commented on the increased wastage without disputing the factual aspect and business model of the appellant and as such the observation regarding wastage is unwarranted and out of context. 5.12 In the light of above submission, it is submitted that there is no case of any excess stock and the impugned addition has no legs to stand and may kindly be deleted. 10. Replying to the above, the ld. Senior DR supported the orders of the authorities below and submitted that the ld. CIT(A) by taking a balancing and justified approach deleted the addition on the basis of GP rate adopted by the assessee. However he was quite correct and justified in upholding the addition on account of undisclosed excess stock found during the course of survey operation u/s. 133A of the Act carried on 19.02.2014 on the business premises of the assessee. He further submitted that the assessee was not able to explain the reasons for the difference in the physical stock actually found and stock worked out on the basis of trading acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition by observing that the appellant could not explain the basis of excess stock. He also noted that the explanation of the appellant on the treatment of excess stock the Assessing Officer gave finding that the assessee adjusted the excess stock claiming huge quantity of wastage for which no supporting evidences were provided the ld. CIT(A) after considering the trading account of pre-survey period and post-survey period and consolidated trading account for whole financial period, find that the explanation of the assessee does not dispute the fact that there was excess stock found at the time of survey and if that fact is not disputed by the appellant the addition on account of excess stock need to be required to be made in the hands of assessee. The ld. CIT(A) also went on to hold that in absence of stock registered maintained by the appellant the claim of appellant that the income of post survey period includes the excess stock found during the course of survey, is not supported by any material or evidence on record and thus, income from pre-survey period required to be enhanced by the amount of excess stock found during the survey. 14. It is not in dispute that during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of survey which was included by the survey team in the inventory prepared on the date of survey. Consequently, we are inclined to hold that even the GP rate declared by the assessee and accepted by the Department i.e. 3.45% turnover is an appropriate and undisputed bench mark for making reverse calculation to ascertain closing stock on the date of survey as on 19.02.2014 or on the date of end of financial period i.e. 31.03.2014. Since the bench mark GP rate of 3.45% is arising from the audited books of accounts and balance sheet of assessee and it is also pertinent to mention that the assessee has not maintained stock register and wastage register, therefore, we deem it proper to ascertain closing stock on the date of end of financial period. As per trading account discernable from the audited balance sheet of assessee which has not been disputed by the ld. Senior DR the closing stock comes to Rs. 26,90,788/- by taking gross profit rate @3.45%. considering the undisputed fact that the survey team has taken entire inventory of stock as undisclosed stock without providing credit of any accounted stock which is not acceptable even for a person ordinary prudent that the person u ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
