TMI Blog2005 (10) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 4. Because the learned Assessing Officer was not justified in reducing the alleged un-explained purchases for the earlier financial year 1999-2000 from the working of stock at the time of survey during financial year 2000-01 relevant to the year under appeal which is based on fully explained verified and accepted purchases and sales for the period up to the date of survey." 3. The relevant facts of the case, as are culled out from the impugned order are that at the business premises of the assessee, survey under section 133A was carried out on 23-6-2000. During the survey, stock of 7,76,357 was found at the shop. At the time of survey, the value of the stock at the residence was estimated at Rs. 7,50,000. Subsequently, the valuation of stock at the residence was carried out and it was worked out at Rs. 9,68,043. Accordingly, the total value of the stock came to Rs. 17,44,400. On 27-6-2000, the books of account and certain other documents were impounded under section 131 of the Income-tax Act. The Assessing Officer required the assessee to explain the source of stock found at the time of survey. In response to this, the assessee filed a letter dated 16-2-2004 showing that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tock for the year under consideration. 4. On 17-2-2004, the statement of Shri Ajay Maheshwari partner was also recorded, who further explained the details submitted vide letter dated 16-2-2004. It was submitted that the purchases recorded for 1998-99 were taken into account to work out the closing stock for 31-3-1999 and thus, this became the opening stock of 2000-01 assessment year (1999-2000 F.Y.). It was clarified that these purchases related to F.Y. 1998-99, but were wrongly entered in F.Y. 1999-2000 by the Accountant. It was stated that the purchases were largely made from S. Chand Co. New Delhi amounting to Rs. 1,22,485 and other renowned Publishers. However, since they were not found entered in the ledger, the assessee was required to explain the same. Thereafter, the assessee vide another letter dated 25-2-2004 and statement of the said partner was again recorded. 5. However, the Assessing Officer was of the view that the assessee has prepared fresh books of account in the preceding assessment year, which were different from the books of account impounded under section 131 and the details submitted by the assessee were based on these fresh books of account. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f two partners namely : 1.Sh. Ajay Maheshwari. 2.Shri Amit Maheshwari. There were survey proceedings at the business premises of assessee on 23rd June, 2000. During the course of survey the stocks were inventorised and statement of Shri Bankey Behari Maheshwari, father of the partners was recorded and certain incomplete books of account and other documents were impounded. During the course of survey stock of Rs. 7,76,357 (calculated at printed MRP) was found and the stock lying at the residence of Shri Bankey Behari Maheshwari were also inventorised which was estimated at Rs. 7,50,000. Subsequently, this stock was valued at Rs. 9,68,043 and as such the total stock at shop and residence aggregated to Rs. 17,44,400 which has wrongly been stated by the Assessing Officer as Rs. 17,47,400 at page 4 of the order, which working unexplained stock. Further in the impounded books the Assessing Officer identified an entry of Rs. 50,000 stated to be the opening stock generated by credit to the account of Shri Bankey Behari Maheshwari. The Assessing Officer has further stated that as per return filed by the assessee for financial year 1999-2000 (Assessment year 2000-01) the opening s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the assessee reiterated at length the submissions made before the Assessing Officer and the CIT(A). Attention was invited to letter-dated 16-2-2004 addressed to the Assessing Officer placed at the paper book, wherein at para 2, background of the case was addressed by the assessee. For ready reference, the same is being reproduced : "That at the outset it is brought to your notice that assessee was advised not to maintain books of account and to file return of income availing provisions of section 44AF of the Act. That it was advised after careful thought and after perusal of accounts prepared up to few days of May, 2000 which contains certain mistakes on part of the accountant who use to prepare the accounts." 11. Inviting attention to page 2 para 5 of the said detailed explanation, before the Assessing Officer, it was emphasized that the fact of purchase in the month of March, 2000 in view of the assessee s season starting from April, had also been brought to the notice of the Assessing Officer. For ready reference, the same is being reproduced here under : "In reply to your honour s query Nos. 2 4, it is submitted that for assessment year 2000-01 return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were certain mistakes committed by the accountant. It was reiterated that the fact that necessary document in support of the purchases in the earlier year were available before the department have been given no credence. For the said contention letter dated 16-2-2004 before the Assessing Officer wherein the Bills, copies of accounts in the books of the publishers and assessee s books were again emphasized. 13. Referring to Annexure-C page 5 of the reply given to the Assessing Officer, in the course of the assessment proceedings, it was submitted that the assessee had submitted that credit purchases from 8-3-1999 to 31-3-1999 had been made by the assessee since the season of selling books to the students starts from April onward and these purchases are supported by their bills, bill Nos., the dates and exact amount, wherein even the specific names of the text books etc. are found mentioned. Inviting attention to the same it was submitted that the books worth Rs. 6,91,394 had been purchased on credit from renowned publication houses, i.e., Bharti Bhawan, New Delhi, Frank Brother s Co. New Delhi, Modem publications, New Delhi, Oxford University Press, New Delhi, S. Chand Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted, was a valid return and no reason for ignoring the same has been given by the department. Reliance placed upon the books of account on the date of survey, wherein admittedly, a lot of entries were not made and therein various mistakes were committed by the Accountant, was assailed receipt of advice by the assessee that it could file the return under section 44AF, the department, it was argued yet again, has given no reason to reject the evidence placed of credit purchase etc. from outside unconnected publishing houses, which are supported by documentation not only of the assessee but also the dates, bill numbers, factum of credit purchases wherein complete details of number of text books, their cost etc. are given. Thus, the challenge was posed to the fact that in the year under consideration, the tax authorities were not justified in fidgeting with the closing stock of the earlier assessment year, in respect of which, the return had been filed. 14. The learned D.R. on the other hand, relied upon the orders of the tax authorities. It was his submission that in the facts of the case, the books of account relied upon by the assessee subsequent to the survey should n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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