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2009 (1) TMI 856 - AT - Income TaxAddition on undisclosed income - Rejection of books of account - survey action u/s.133A - difference in the amount surrendered by the assessee during the course of survey and the amount shown in the return of income. The main issue is about the deletion of addition of ₹ 28 85 lakhs which was made by the Assessing Officer on the ground that the assessee had not offered such amount in the return of income even though it was admitted at the time of survey. HELD THAT:- In our considered opinion the books of account of the assessee cannot be held to be properly maintained in view of the fact that the survey transpired the discrepancy in the stock as per the books of account and that found on physical verification. The books of account are said to be properly maintained when correct income can be deduced there from. It is not only the arithmetical inaccuracy in the books of account which would call for the resorting to the provisions of section 145(3). Obviously in the face of the fact that the stock physically found was not tallying with the books of account, in our considered opinion it cannot be said that the books were properly maintained. We therefore, overturn the finding given by the ld. CIT (A) on this issue. Going by the verdict of the two Hon'ble High Courts i.e. Paul Mathew & Sons vs. CIT [2003 (2) TMI 25 - KERALA HIGH COURT], CIT Vs. S. Khader Khan Son [2007 (7) TMI 182 - MADRAS HIGH COURT] and the position reaffirmed by the CBDT through its Circular, it becomes abundantly clear that no addition can be made or sustained simply on the basis of statement recorded at the time of Survey’ search. In order to make an addition on the basis of surrender during search or survey, it is sine qua non that there should be some other material to co-relate the undisclosed income with such statement. We find that only to the extent of ₹ 21.14 lakhs, there is a material to co-relate with the admission, representing the excess stock found at the lime of survey. Evidently the surrender made by the assessee at the time of survey to that extent and offered for taxation in the return of income is in order - But insofar as the amount in dispute to the tune of ₹ 28.85 lakhs is concerned we observe that such surrender was specifically made "Towards any other discrepancy", There is no mention in the assessment order of any such discrepancy found as a result of survey throwing light on the undisclosed income. Even the ld D.R. could not point out any material showing the existence of undisclosed income earned by the assessee which was unearthed during the course of survey. There is nothing on record which could co-relate such additional income offered by the assessee during the course of survey with any other discrepancy. Under these circumstances we are of the considered opinion that there is no basis for sustaining the addition in question. In the light of the foregoing discussion, we hold that the view taken by CIT (A) is unimpeachable, which is hereby upheld. In the result, the appeal is dismissed.
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