2022 (11) TMI 1080 - AT - Income Tax
Addition for unaccounted stock - difference in the stock - unaccounted sales - As submitted no difference in the stock and the alleged 914 bags were actually received during the period 09/11/2013 to 12/11/2013 - CIT(A) confirmed the addition mainly on the ground that if the assessee had necessary evidence, he ought to have appealed the action of the survey team which the assessee failed to do and has paid the penalty stating that he did so solely to buy peace of mind - HELD THAT:- Before both the lower authorities, the assessee failed to file any documentary evidence in support of the said 914 bags. CIT(A) confirmed the addition mainly on the ground that if the assessee had necessary evidence, he ought to have appealed the action of the survey team which the assessee failed to do and has paid the penalty stating that he did so solely to buy peace of mind. We find that there is actually shortage of stock because in the stock register, 2203 bags are appearing and as per the physical stock statement 1289 bags were found. So, there is actually shortage of stock of 914 bags and which was treated as unaccounted sales on which the Department of Trade & Taxes, Government of NCT of Delhi, has levied the tax/penalty. Now so far as the first contention of the assessee that there was no variation of stock and the total addition made by the Assessing Officer is liable to be deleted, the option left is to send the documents filed before us to the lower authorities for necessary examination/verification. When this was proposed to the ld. Counsel for the assessee, he preferred to rely on his alternate plea raised in Additional Ground No. 5. Thus, Ground Nos. 1 to 4 and additional Ground Nos. 1 to 4 are dismissed.
Gross profit element on such undisclosed sales should have been subjected to tax - As considering the judicial precedents wherein it has been held that in case of undisclosed/unaccounted sales, addition could be made only in respect of the profit element. We find that the in the case of CIT vs. Hariram Bhambani [2015 (2) TMI 907 - BOMBAY HIGH COURT] considering similar case, where survey was conducted u/s 133A of the Act and unaccounted sales were found and thereafter accepted in the statement recorded.
We find that the same are squarely applicable in the facts of the instant case and the assessee having disclosed the gross profit rate of 17.20%, we are inclined to hold that the addition should be sustained only to the extent of ₹17,26,108/-, which is 17.20% of the alleged sum. We, therefore, allow the additional ground no. 5 raised by the assessee and sustain the addition to ₹17,26,108/-. The assessee gets relief of ₹83,09,401/-.