9911796707
TMI Blog1982 (8) TMI 105X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 1977, search and seizure under s. 132 (1) of the IT Act was carried out on the business premises of the firm during which the ground and first floor of the business premises with one godown fronting the said business premises and five other godowns situated at the Post Office Road in Ambala City belonging to the assessee-firm were searched and stock inventory was prepared in respect of the goods lying in the business premises on both the floors and six godowns, with the help of one of the partners Sh. Dewan Chand whose statement was also recorded then. According to the inventory made at the time of search and seizure, stocks were worked out at Rs. 6,15,311.In the course of assessment proceedings for year 1978-79, closing stock upto t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsearched. The said godown was in tenancy of the assessee of over 30 years. The CIT(A) put Dewan Chand, partner, again in the witness box and finding it as a fact that there was an unsearched godown No. 9840 granting benefit of doubt to the assessee covering the submissions made by the assessee counsel before him, made the following observations in para 3 of his order: "3. Sh. D.K. Gupta, advocate, who appeared on behalf of the appellant, contended that the only basis given by the ITO in support of the addition of Rs. 50,988 is the discrepancy found by the search party between the position of stock as per books of A/c and the position of stock as per the inventory of the search party. He reiterated before me the contentions of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 6th July, 1977. His deposition before me on 8th Jan., 1981 leg his earlier deposition dt. 6th July 1977 was most unsatisfactory as he took considerable time in replying the question No. 9. However, the false deposition of Sh. Dewan Chand on 20th April, 1977 and 6th July, 1977 does not take away the uncontroverted fact that the appellant's godown No. 9840 was not searched by the raid party and that it could have contained stocks which were the subject-matter of the controversy. Sh. S.L. Khanna, ITO, who was present, vehemently contended that the appellant has not been able to prove that the stock worth Rs. 3,39,520 were lying on 20th April, 1977 in godown No. 9840. "He, therefore contended that in these circumstances the discrepancy has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er stock register and for this discrepancy the assessee had not explanation to make. Finding these two defects, he came to the conclusion that the stock register of steel pipes kept by the assessee suffered from many mistakes and as such did not have any evidentiary value. He also observed that on total turnover of Rs. 18,65,866 in the steel tubes the profit disclosed was 3.2 per cent against 5.5 per cent disclosed in the immediately preceding year on total turnover of Rs. 3,86,275. Taking into consideration all these circumstances, according to the CIT(A) an addition of Rs. 20,000 was called for to the results shown, In short, he sustained the addition of Rs. 20,000 instead of Rs. 50,928 made by the ITO as per directions of the IAC on diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition made by the CIT(A) should have been restricted to Rs. 3,340 being the price of 2000 ft. of half an inch pipe in respect of alleged under-valuation of stock and some amount in respect of discrepancies in quantity of 4" steel pipe account. 5. The ld. Deptl. Rep., on the other hand, mainly relied on the order of the ITO and submitted that once Dewan Chand had stated on oath at the time of search and seizure that the assessee firm owned only business premises on ground and first follows and six godowns it could not lie in the mouth of Dewan Chand again to come forward with disclosure of seventh godown which, as observed by the ITO, was nothing but an after-thought. In respect of the Revenue's appeal, he vehemently argued that the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imilar quantification of amount has not been made but the difference is of about 300" and on that account an addition of Rs. 2,660 would have met the ends of justice. In other words, we sustain the addition of Rs. 6,000 instead of Rs. 20,000 made by the CIT(A) because while making the addition of Rs. 20,000 what has also weighed with the CIT(A) is G.P. rate of 3.2 per cent disclosed during the year under consideration as compared to 5.5 per cent disclosed in the immediately preceding year. We are unable to agree with this observation of the CIT(A) while making the addition because it cannot be ignored that during the year under consideration the turnover amounted to Rs. 18,85,866 when 3.2 per cent G.P. rate was disclosed whereas in the imme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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