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2018 (11) TMI 1433 - AT - Income TaxAddition on account of stock difference found during survey - Held that - We find that the CIT (A) has analyzed the items wise details of stock difference worked out by the AO and submission made by the assessee. CIT (A) has called for a remand report from the AO. AO vide his remand report dated 18.01.2010 has verified the contentions of the assessee and same stands re-examined by the CIT (A) and found to be correct. CIT (A) has deleted the addition made by the AO based on remand report of the AO. Hence Revenue should not have any grievance now as the decision of CIT (A) is based on verification carried out by the AO during the course of remand report proceedings. We have gone through the remand report as well as the order of CIT (A) and found that the CIT (A) has confirmed the items of stock around Rs. 25 lakhs which were not reconciled by the assessee and deleted the addition of those items which stood reconciled and stand verified by the AO. Addition on account of difference in cash not explained during survey - Held that - We find that the assessee has explained that cash was found short as it was given to various parties as advance on the date of survey which remained to be entered in to cashbook and it was accounted for next day. We further are of the view that no addition can be made on account of shortage of cash. Therefore we do not find any infirmity in the order of CIT (A) accordingly same is upheld. This grounds of appeal is therefore dismissed.
Issues Involved:
1. Deletion of addition on account of stock difference found during survey. 2. Deletion of addition on account of difference in cash not explained during survey. Issue-Wise Detailed Analysis: 1. Deletion of addition on account of stock difference found during survey: The Revenue's appeal challenges the deletion of an addition of Rs. 58,54,592 made by the AO due to stock differences found during a survey on 20.09.2005. The AO initially found a stock difference of Rs. 83,98,469, which the assessee did not reflect in their return of income. The CIT (A) remanded the matter to the AO, who verified the explanations provided by the assessee. The CIT (A) found that several items of stock were correctly accounted for by the assessee, including: - Ranjit Vegetable Ghee: The AO verified that 1612 tins were accounted for, against an excess of 292 tins. - Tulsi Vanaspati Tin: The AO verified the production of 574 tins, settling the issue of 532 excess tins. - BIB/TP Tins: Addition of Rs. 1,35,975 was sustained due to the inability to explain the excess stock of 259 tins. - Krispi Vanaspati: Addition of Rs. 4,13,580 was confirmed due to unexplained shortage. - Ranjit Gold Coin Vanaspati: Addition of Rs. 73,440 was deleted after verification. - Vanaspati Pouches: Addition of Rs. 41,850 was deleted, as the AO erroneously considered 1-litre pouches as ½ kg pouches. - Ground Nut Oil: Addition was restricted to Rs. 38,700 from Rs. 1,21,025 after accounting for dispatched tins. - Ground Nut Oil Cake: Addition of Rs. 4,17,800 was confirmed due to weight discrepancies. - RBD Palm Oil: Addition of Rs. 33,54,913 was deleted after verifying the transfer of stock to ghee production. - Imported Soyabean Oil: Addition was restricted to Rs. 6,19,454 from Rs. 10,62,066 after verifying production. - Degum Soya Oil: Addition of Rs. 4,67,266 was deleted after verifying inward receipts. - Crude Palm Oil: Addition of Rs. 52,91,354 was deleted due to miscalculation of tank calibration. - Vegetable Ghee: Addition of Rs. 20,437 was confirmed. - Tins of Rs. 6,79,089: Addition was restricted to Rs. 22,048 after accounting for received tins. The Tribunal upheld the CIT (A)'s decision, noting that the CIT (A) had judiciously analyzed the stock differences and relied on the AO's remand report, which verified the assessee's explanations. The Tribunal found no reason to interfere with the CIT (A)'s order, dismissing the Revenue's appeal on this ground. 2. Deletion of addition on account of difference in cash not explained during survey: The AO made an addition of Rs. 1,07,840 due to a difference between the cash found physically during the survey and the cash recorded in the books. The CIT (A) observed that the cash in hand as per the books was Rs. 2,83,034, while the physical cash was Rs. 1,75,197, resulting in a shortage of Rs. 1,07,840. The assessee explained that the cash was given as advance to parties on the survey date but recorded subsequently. The CIT (A) found no evidence from the AO to disprove this explanation and deleted the addition. The Tribunal upheld the CIT (A)'s decision, agreeing that no addition should be made for the shortage of cash, as the assessee's explanation was plausible and not disproven by the AO. The Revenue's appeal on this ground was also dismissed. Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the CIT (A)'s deletion of additions related to stock differences and cash shortage, as the CIT (A)'s decisions were based on verified facts and judicious analysis. The order was pronounced in the open court on 26.11.2018.
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