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TMI Blog2025 (1) TMI 1482X X X X Extracts X X X X X X X X Extracts X X X X ..... d out without considering the submission of the assessee and apparently the cash sales have been included as part of the total sales and have also been added u/s 68 therefore, the treatment given to the transactions by the Ld. AO does not appear to be in consonance with the accounting principles.
As the sales were treated as unexplained cash credit, they ought to have been reduced from the sales shown in the profit and loss account and the profit and loss account should have been recast to arrive at the total income of the assessee. Hence, the order of the Ld. CIT(A) is set aside with the above observations and the Ld. CIT(A) is directed to examine the profit and loss account and provide another opportunity to the assessee to make his submission on the income enhanced, which shall be considered before making any enhancement or upholding the addition made by the Ld. AO. The assessee had included the excess stock as part of his income and at the same time has denied the disclosure on account of excess stock made. Appeal filed by the assessee is allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal after condoning the delay considering the circumstances stated in the petition. It is further stated that the assessee had to leave for Karimganj for executing an affidavit as the affidavit is part of the application for condonation of delay. Copy of the affidavit has also been enclosed stating the facts of illness and other details. 2.1. We have considered the application for condonation of delay and the accompanying affidavit and we find that there was sufficient cause for the delay in filing the appeal and the delay is neither mala fide nor has granted any undue benefit to the assessee. Hence, in view of the facts and circumstances of the case, the delay in filing the appeal is hereby condoned and the appeal is admitted for adjudication. 3. The assessee is in appeal before this Tribunal raising the following grounds of appeal: "1. For that the Ld. Commissioner of Income Tax (Appeals), Shillong is not justified in dismissing the grounds taken by the Appellant before the Ld. Commissioner of Income Tax (Appeals) regarding addition of Rs.67,00,043/- under the head cash credit for the Assessment Year 2014-15 in the case of the Appellant. 2. For that the Ld. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rs. 3,00,000/- as advance tax. The return of income was filed disclosing total income at Rs. 87,96,788/- including the additional income of Rs. 75,00,000/- as admitted by the assessee during the course of survey proceedings. However, during the course of assessment proceedings, the assessee explained that the cash seized was taken out of the cash in hand of Rs. 80,58,353.50/- as on 29.07.2013 and the assessee submitted that he had disclosed the cash amount of Rs. 73,00,000/- during the course of survey operation and denied that he had disclosed Rs. 75,00,000/- on account of any stock discrepancy. It was submitted before the Ld. AO that there is no mention or signature of the Officers involved in this alleged disclosure as per the stock discrepancy sheet signed by the assessee on 12.08.2013. The assessee also objected to the stock valuation. The Ld. AO considered the submissions made and added a sum of Rs. 67,00,043/- as unexplained cash credit as the sales of Rs. 67,00,043/- on 29.07.2013 remained unexplained. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who enhanced the income by Rs. 7,99,957/- and the appeal was dismissed. Aggrieved wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee u/s 68 of the Act. The Ld. DR also drew our attention to paras 4.2 and 4.3 of the order of the Ld. CIT(A) and it was mentioned that the appeal was decided on two sets of written submissions already filed. The relevant paragraphs of the order of the Ld. CIT(A) are extracted as under: "4.2 Appellant vehemently assailed the decision taken by the AO. In the written submission dated 21.06.2017, the A/R stated that impression given by the AO that cash book was prepared on afterthought was totally wrong. AO's contention that sales of Rs.67,00,043/- was unsustainable, is totally wrong. Cash Book was there and Memos were also available. Assessee was not obliged to maintain complete details of his customers. There were substantial sales on 29.07.2013 because that was nearing the Muslim (who constituted large per cent of population of Karimganj) Festival of Jamal-ul-vida' which fell on 02.08.2013. Assuming even that the sales shown in cash book were bogus, assessee had already disclosed a sum of Rs.73 lakhs on account of cash found. A/R also stated that the stock taking during survey was not done by technically competent people. The survey team which took the stock had no te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was shown. During the course of assessment proceeding, you claimed that the disclosed income was out of cash found from your possession. However, the AO took the view that the returned income of Rs.87,96,788/- included income of Rs. 75,00,000/- which was disclosed due to stock discrepancy. Besides that, AO added Rs.67,00,043/- to the income on account of unaccounted cash. 3. In the ground of appeal as well as in subsequent submission, you have stated that the disclosed income was out of cash found in your possession and that further addition of Rs.67,00,043/- was not called for. If this line of argument is accepted the stock discrepancy of Rs. 75,00,000/- remained unexplained. Accepting your claim that the disclosure made in the return of income was out of cash found will lead to addition of Rs. 75,00,000/- on account of stock discrepancy. This will result into enhancement of addition from Rs.67,00,043/- to Rs. 75,00,000/- 4. You are given opportunity to explain reason as to why your income should not be enhanced accordingly as you have claimed that disclosure was out of cash found from your possession. 5. Your explanation should reach me within 30 days of receipt of this le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failed to prove with factual details that survey finding was wrong. Assessee, if he was maintaining records properly, must be having figures of sales and purchases. He must be having the details of stock available with him. If records were proper and correct," there is no reason why the assessee cannot repel the contents of survey findings with facts and figures. It is also seen that assessee had disclosed Rs.75,00,000 some days after the survey action. This lends further credence to the view that the survey finding is correct after all. Considering the above discussion, the survey finding and disclosure based on that cannot be discarded in absence of compelling contrary facts. Unless assessee himself come out with full reconciliation of stock position on the date of survey. I have no reason to disbelieve the finding of survey party. Therefore, the three grounds are dismissed. Income is enhanced by (Rs.75,00,000-Rs.67,00,043) Rs.7,99,957/-. Appeal is dismissed." 7. We have heard the Ld. DR. Although the assessee has taken 5 grounds of appeal but ground nos. 1, 2 & 3 relate to confirmation of addition by the Ld. CIT(A) at Rs.67,00,043/- and ground no. 4 relates to enhancemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the assessee. The assessee was found to be in possession of cash of Rs. 73.25 lakh out of which Rs. 73,00,000/- was seized and the stock of Rs. 75,00,000/- has been considered for enhancement of the income. Thus, there appears to be incorrect appreciation of facts as both the sales as well as the closing stock shown by the assessee in the profit and loss account have been considered for upholding the addition of Rs. 67,00,043/- made by the Ld. AO which has been further enhanced by Rs.7,99,957/- by the Ld. CIT(A) in the absence of any reply received from the assessee. Since the enhancement of income has been carried out without considering the submission of the assessee and apparently the cash sales have been included as part of the total sales and have also been added u/s 68 of the Act, therefore, the treatment given to the transactions by the Ld. AO does not appear to be in consonance with the accounting principles. As the sales were treated as unexplained cash credit, they ought to have been reduced from the sales shown in the profit and loss account and the profit and loss account should have been recast to arrive at the total income of the assessee. Hence, after consideri ..... 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