9911796707
TMI Blog2025 (1) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... 47,574/- made by the AO without appreciating the fact that the expenditure had been incurred in cash and the provisions of sec 40A(3) is applicable to the facts of the case. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 33,26,574/- made by the AO being recoveries from farmers without appreciating the fact that the assessee had not filed any documentary evidence to prove the utilization of the recoveries made from the farmers and how the same is reflected in the books of accounts. 4. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 37,47,574/- being unexplained expenditure u/s 69C, recoveries from farmers of Rs. 33,26,574/-, sale of cotton seed & bags of Rs. 4,58,000/- and Rs. 20,800/- respectively as they were covered by the disclosure of Rs. 50,00,000/- without appreciating the fact that the assessee had not submitted the basis of the disclosure of Rs. 50,00,000/- either during the search, post search or the assessment proceedings. 5. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in accepting the reconciliation submitted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,63,972 v. Recovery from Farmers not recorded in books of accounts Rs. 33,26,574 vi. Cash received not accounted in books of accounts Rs. 2,50,00,000 vii. Cash received not recorded in Books Rs. 4,58,000 viii. Kutchha Sale of Deoiled Cake Rs. 20,800 Total of Additions made Rs. 8,39,16,920 Assessed Total Income Rs. 11,29,73,020 4. The learned CIT(A) confirmed the addition of Rs. 2,50,00,000, while deleting / reducing the balance additions against which the Revenue has preferred the impugned appeal before Tribunal. 5. Before us, Shri Sandipkumar Salunke, the learned Departmental Representative ("the learned D.R.") appearing for the Revenue strongly supported the order of the Assessing Officer and assailing the impugned order passed by the learned CIT(A) submitted that the learned CIT(A) erred in deleting / reducing the additions made on account of unexplained payments under section 69C, erred in deleting the addition on account of excess stock and recalculating the same to the extent of gross profit on alleged deficit stock, and further erred in deleting other additions without appreciating the fact that the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer during the search without any basis as the assessee has not filed any documents for the said valuation, the learned CIT(A) has reduced the value of the stock at Parbhani of Rs. 1,82,77,000 twice. The learned D.R., while concluding his arguments prayed that the order of the learned CIT(A) be set aside and the order of the Assessing Officer be restored. 8. Advocate, Shri Kapil Hirani, learned Counsel appearing for the assessee, at the very outset, vehemently submitted that pursuant to search, additional income of Rs. 1.25 crore was declared and out of which Rs. 75 crore were declared under the head "Miscellaneous Income" in audited financial statements and Rs. 50 crore was declared in the computation of income. He pointed out that, without prejudice to the arguments on the merits of the various additions made, which he sought to argue to merits as well, this additional surrender encapsulates the miscellaneous additions made by the Assessing Officer much less additions totalling to Rs. 37,47,574 (Rs. 31,90,320 + Rs. 5,27,067 + Rs. 30,187) as well as other additions, as the surrender without propelled by any incriminating evidence can sufficiently cover these additions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he copies of ledgers of various expenses as well as statement on page 30 summarising the expenses added by the Assessing Officer and which can correlate to the expenses debited in the books of accounts which are reflecting in the ledgers enclosed therein. 15. A bare perusal of the chart as well as the ledgers it is seen that the ledgers do contain the transactions as mentioned in the chart and which have been considered by the Assessing Officer to be unexplained expenditure and as such we find force in the argument of the assessee that the said expenditures are duly reflected in the books of accounts of the assessee and as such cannot be considered to be unexplained expenditure so as to form the basis of any addition much less addition under section 69C as wrongly made by the Assessing Officer. 16. That with respect to the amount of Rs. 14,88,174, it is seen that the assessee has given a detailed working of amounts added by the Assessing Officer as unexplained expenditure, but which are already reflecting in the books of accounts of the assessee as is clear from the perusal of the workings at Page-70 to 73 and copies of ledgers at Page-74 to 86 of the submission before the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee as unexplained expenditure as wrongly done by the Assessing Officer. 20. In this regard, it is important to mention here that nowhere it is conclusively proved that the assessee has in fact made the payments to the labourers and the explanation so provided by the assessee seems very possible as it is common practice that the agriculturist/farmers who bring their produce to the assessee are required to pay the unloading charges to the labourers and without there being any conclusive evidence to prove that the amount was in fact paid by the Assessee we are of the considered view that the said addition has rightly been deleted by the learned CIT(A). 21. That with respect to the addition of Rs. 30,187, is the submission of the assessee that the said amount pertains to personal expenses of the directors and accordingly no addition can be made in the hands of the assessee and further that the contention of the assessee that this is an individual expenditure of the directors not being denied nor there is anything on record to prove that the contention of the assessee is incorrect, the addition made deserves to be deleted. On a conspectus of the facts and considering that there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. Addition of Rs. 33,26,574 on account of alleged recovery from farmers not recorded in the books of accounts (S.No.v. of Chart 1 above) - sustainability thereof. 26. The learned D.R. strongly supported the order of the Assessing Officer and submitted that the learned CIT(A) erred in not appreciating the facts properly and deleting the impugned addition. 27. The learned Counsel for the assessee, on the other hand, strongly supported the order of the learned CIT(A) and further submitted that firstly there is no basis for arriving at the calculation of Rs. 33,26,574. 28. Without prejudice, the learned Counsel for the assessee submitted that the impugned amount pertains primarily to unloading charges paid by the agriculturist to the labour towards unloading charges and it is not an amount which has been recovered by assessee so as to form the basis of any addition in the hands of the assessee as has illegally been done in the present case. 29. It is the submission of the learned Counsel for the assessee that these charges are directly paid by the agriculturist to the unloading labour without any recourse to the Assessee and as such it cannot be held that the said amounts were pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of accounts Rs. 33,26,574 Rs. 70,74,148 Less : Explained by Assessee a. Accounted for in books - Rs. 586500 b. Personal Expenses of Directors - Rs. 30187 c. Payments directly by Farmers - Rs. 1642713 ---------------- Rs. 2259400 Rs. -22,59,400 Balance 48,14,748 CIT(A) has held that this balance of Rs. 48,14,748 is covered by income declared of Rs. 50,00,000 in the computation of income and consequently the addition was deleted. 35. It is very important to mention here that the Assessee pursuant to the search declared additional income of Rs. 1,25,00,000 (Rs. 50,00,000 + Rs. 75,00,000) which has also been duly reflected in the books of accounts and the computation of income of the assessee and the Assessee has duly paid the necessary income tax thereon. 36. We have given a thoughtful consideration to the arguments made by the rival parties and perused the material available on record. Apart from our findings on merits as mentioned hereinabove we are also in agreement with the logical analysis of telescoping the additional surrender without any specific incriminating evidences against the additions made by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the action u/s 132 in the factory premises of M/s. Shrigopal Rameshkumar Sales Pvt. Ltd., Mohali & Prabhani the action physical stock position found is as under:- Sr. no. Location Commodity Name Stock Amount (Rs. ) 1. Factory Premises at Mohali 83C 18,98,74,349 2. Factory Premises Parbhani Cotton Bales 1,24,50,000 3. Cotton Seeds 2,21,000 Raw Cotton 56,06,000 Total 20,81,51,349 During the course u/s 132(1) at M/s Shri Bhagirath Textile Ltd., Mohali, statement of Shri Rajeev Dubey CEO of M/s Shri Bhagirath Textile Ltd. was taken. In reply to question no.15, he has stated the stock of M/s Shrigopal Rameshkumar Sales Pvt. Ltd. at warehouse of M/s Shri Bhagirath Textile Ltd., Mohali. Sr. no. Location Commodity Name Stock Amount (Rs. ) 3. Ware house of M/s. Shri Bhagirath Textile Ltd. Mohali (As stated by Shri Rajeev Dubey, CEO of M/s. Shri Bhagirath Textile Ltd. in reply to Question no.15) Cotton Bales 1200 1,79,00,000 Cotton Bales 4393 6,89,00,000 Total 8,68,00,000 During the course of assessment proceedings, information u/s 133( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of Parbhani is part of trading Division and it is included in the closing stock of Rs. 44580545/- of Trading Division of M/s Shrigopal Rameshkumar Sales Pvt. Ltd. As per reply filed on 27.12.2016 statement of reconciliation is stated to be enclosed in pages 15 to 19. However, no such reconciliation has been submitted. The assessee has not submitted bills/Vouchers in support of trading books stock claimed at Rs. 7,95,04,621/-. In view of this stock position is computed as under:- 1. Physical stock at Mohali Rs. 18,98,74,349 2. Factory premises at Parbhani Rs. 1,82,77,000 3. At ware house (SBTL) Rs. 8,68,00,000 Stock at Nanded (NBHC) (95505 x 100.295 x 5/6) Rs. 79,82,228 4. Less stock of SRSPL counted in SBTL Rs. (-)8,68,00,000 5. Total Stock Rs. 30,29,33,577 Less: 1. Stock as per books (Ginning stock) Rs. 20,69,89,060 Rs. 25,15,69,605 2. Trading stock Rs. 4,45,80,545 Total Rs. 25,15,69,605 Excess Stock Rs. 5,13,69,972 In view of this, excess stock over & above the recorded stock computed at Rs. 5,13,63,972/- is added to the taxable income of the assessee. Penalty proceedings u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the heap of cotton and not by weighment. Therefore there would be little variation in estimate Item no.2 830 Bales, Raw cotton and seed at Parbhani Ginning valued (This is also shown as separate stock than trading - also so shown in Para Six of Asst Order) Rs. 1,82,77,000/- No Dispute. But it is held to be covered in Head Office Stock. This is incorrect and without any basis and without opportunity. Whereas in the statement recorded in to question No. 69 (1) it is held to be separate stock. See Pages 90 to 92. Item no.3 5593 Bales were found at SBTL Warehouse- valued Rs. 8,68,00,000/- 5593 Bales stock found at SBTL Warehouse is ok. Out of this stock, stock of Ginning Division Mohali is 1300 bales which Assessee valued at 1.71,14,711/-. This is accepted situation. Remaining bales i.e. (A) (5593-1300)4293 Bales (Stock at SBTL of Trading Division) (B) and Parbhani Ginning Stock with National Bulk Handling corp also accepted by AO 500 Bales (C) Rejected Stock of bales lying with different 37 Bales 4830 Bales Thus it is clear that as far as bales tally is conceded, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 30,29,33,577 5. Less: 1. Stock as per books (Ginning stock) Rs. 20,69,89,060 Rs. 25,15,69,605 2. Trading stock Rs. 4,45,80,545 Total Rs. 25,15,69,605 Excess Stock Rs. 5,13,63,972 7.2.3 I have gone through the assessment order, the grounds of appeal, submission made by the appellant, books of account and the reply of remand report submitted by the AO. I find substantial force in the submission made by the appellant as they are backed by relevant supporting evidence. The AO has arrived at figure of Rs. 5,13,63,972/- by not considering the following: i) Stock of Rs. 1,82,77,000/- found at factory premises of Parbani are entered in the books of account have not been considered while reducing the stock of appellant as per books of account. Further the value of trading stock should not be taken as Rs. 4,45,80,545/- but should be taken as Rs. 7,95,04,621/-- The appellant submitted that there is no dispute as per the quantity of stock of appellant concerned which constitutes 4830 bales. The same was valued by AO at Rs. 4,45,80,545/- instead of actual value at Rs. 7,95,04,621/-. The appellant has also submitted details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order, the remand report, appellant submission and the books of account are as under: "SHRIGOPAL RAMESHKUMAR SALES PVT. LTD. Stock Position Comparison AS PER Assessing Officer: 1. Physical Stock at Mohali (As per inventory) Page-88 of Paper Book 1834 Bales as per Panchanama Valued Rs. 18,98,74,349 2. Factory Premises of Parbhani (As per inventory Page-89 (Panchanama) of the Paper Book - 830 Bales Valued at) Rs. 1,82,73,250 3. At SBTL Warehouse (Trading Stock & Ginning pledge with National Bulk handing Corporation lying in SBTL godown 5593 bales Valued) Rs. 8,68,00,000 4. Stock at Valued (National Bulk handing Corp - 500 bales Valued at) Rs. 79,82,228 Rs. 30,29,33,577 AS PER ASSESSEE RECORD: Bales Value LESS: (A) 1. Stock at Ginning Factory Mohali 2. Stock of Ginning (Kept in SBTL Warehouse (Item no.3 above) 5593 Bales - Ginning Mill Stock - 1300 bales) Rs. 20,69,89,060 (B) Stock at Factory Premises Parbhani 830 Rs. 1,82,77,000 (C) Trading H.O. Stock:- 5593 Bales (Item no.3 above (-) 1300 Bales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k found at factory premises at Parbhani amount of Rs. 1,82,77,000, are duly entered in the books of accounts but have not been considered by the Assessing Officer while reducing the stock of the assessee as per the books of accounts which is patently erroneous and a visible error. 47. This fact has satisfactorily and substantially been proven by the assessee and which has further categorically been recorded by the learned CIT(A) at Point-(i) of Para-7.2.3 of the learned CIT(A) order. This fact remains unrefuted. It is seen that the Assessing Officer while calculating the alleged excess stock and summarising the additions made at Page-10 of the assessment order added an amount of Rs. 1,82,77,000, being the actual stock found at Parbhani but has not reduced the said amount by reducing the value of stock as per books of accounts which definitely appears to be a fallacy and the credit of which deserved to have been correctly given as rightly argued by the learned Counsel for the assessee. 48. The other point of contention as raised by the learned Counsel for the assessee pertaining to the issue of discrepancies in stock solely relates to the valuation of stock by the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the fact was submitted before the learned CIT(A) as well. The learned Counsel for the assessee invited our attention to Page-99 to 107 of the submission made before the learned CIT(A) forming part of Paper Book on record wherein the assessee has furnished detailed reply before the Investigation Wing explaining various issues including but not limited to the valuation of stock which has been explained at Page-100 of the Paper Book containing the submission made before the learned CIT(A). It is seen that even before the Investigation Wing the assessee has categorically submitted that the correct valuation of the stock is Rs. 7,95,04,621 and not Rs. 4,45,80,545. Attention is also invited to page 108 of the submission before learned CIT(A) wherein the assessee has given a comparative analysis of the variation in stock explaining in detail the reason for variation between the valuation of stock as per the Assessing Officer at Rs. 4,45,80,545 and Rs. 7,95,04,621. Attention was invited to Page-103 as well wherein quantitative reconciliation has been given which forms part of the submission made before the investigation wing on 07/04/2015, wherein categorically it is submitted that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see itself and found at the office premise of the assessee. It is worthwhile to mention that the unapproved purchases have already been considered by assessee in this trading account and thus the claim of assessee that unapproved purchases were not included in the working of stock as per books of account is factually incorrect. It is further worthwhile to mention that this issue of unapproved purchases was raised by assessee in his submission dated 07.04.2015which was almost 2 months after the date of survey i.c. 12.02.2015 and hence it is nothing but an afterthought. It is also worthwhile to mention that the assessee had not raised this theory during the survey when the facts could have been verified there itself. Further the assessee has stated that the department could have verified the facts from the data backup. In this regard, it is worthwhile to mention that the theory of unapproved purchase has been propounded by the assessee and not the department and hence the onus was on assessee to support his proposition by producing the time-stamped evidences from the ERP which was always available with the assessee. Producing the so-called list of unapproved bills without t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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