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2018 (8) TMI 1623 - AT - Income TaxUndervaluation of closing stock - survey operation u/s 133A(1) - Held that:- We direct the assessee to submit reconciliation statement before the ld AO, showing reconciliation between stock shown in the profit and loss account and stock shown in computer and we also direct the AO to examine the reconciliation and adjudicate the issue in accordance with law, therefore, we allow this issue raised by the assessee for statistical purposes. Addition on account of overstated S/Creditors and Advance from parties in computing the total income of the assessee - Held that:- Sundry debtors consist of Credit balance when advance from customers is received, normally to whom credit sales is made. The nomenclature of debtors is given when the transaction is of sales. Therefore, there are two ledgers of Sundry debtors which is being maintained by the assessee. Sundry Creditors consists of Normal trading in scrap purchase which is a credit purchase. When purchase is through auction, then the assessee makes advances,but the purchases are kept under nomenclature of sundry creditors in accounting package, therefore there are two ledgers of Sundry creditors appearing in assessee's books. We note that A.O. had called for the books of account and other details. As a result of survey the accounts maintained in tally was found showing two ledgers of Sundry debtors indicating advance from customers and credit sales. Similarly,two ledgers of sundry creditors were maintained containing advance payment for purchase and credit purchase. We note that assessee has himself pointed out the difference in the appellate proceedings, stating that if the total debit balance and credit balance is added up, the only difference as appearing in the accounts impounded during Survey and as filed in the return of income is difference in Sundry creditor of ₹ 2,28,193/- and ₹ 2,20,000/- on account of Advance from parties. Therefore, addition made on account of overstated of liability was restricted by ld CIT(A) to the tune of Rs ₹ 4,48,000/- (Rounded off amount) ( ₹ 2,28,193 + ₹ 2,20,000). Before us, the ld Counsel filed paper book to explain the said difference, but we note that said difference, could not be explained properly. So far, this issue is concerned, Ld. Counsel failed to controvert the findings of ld CIT(A). Moreover, during the appellate proceedings, the assessee had himself admitted before the ld CIT(A) about the said difference that these differences would exist.
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