9911796707
TMI Blog2013 (6) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... uring survey. 2. The CIT (A) ought to have confirmed the addition made towards excess stock of Rs.11,98,865/- admitted by the assessee during the course of survey. 3. The CIT (A) ought to have sustained both the additions since the disclosed additional income of Rs.12 lakhs was added separately by reducing it from the sales figure while working out gross profit addition." 3. Briefly the facts are the assessee, an individual is engaged in the business of trading in ready-made garments and textiles. A survey was conducted in the case of the assessee u/s 133A of the Act on 27-10-2005. In the impugned assessment year, the assessee filed her return of income declaring total income of Rs.20,17,119/-. The assessee has been subjected to survey action, her case was selected for scrutiny assessment by issuance of notice u/s 143(2) of the Act. In response to notice, the assessee produced her books of accounts and all other documents. The Assessing Officer after examining the books of accounts and other documents as well as the result of the survey operation in the business premises of M/s Sona Children Wear, the proprietary concern of the assessee and noted on physical inventory of stock t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order, the remand report and all the facts on record. I find that the following points are noteworthy: i. There was a stock discrepancy found during the course of survey under section 133A of the Act. This excess stock amounting to Rs.11,98,865/-was declared by the appellant as unaccounted stock and this stock was duly incorporated in the books of account. ii. From the point of view of accounting, once the excess stock is incorporated in the books, it will reflect as closing stock immediately. This will increase the profit of the assessee. This is precisely the accounting treatment which the appellant has given and there is nothing incongruous about it. iii. Further, for the purposes of comparison of gross profit or any other items, it is important to compare 'like' terms with other like terms. In other words, for comparing gross profit, all the items in the trading account should be taken into account for various years. If gross profit without closing stocks is to be compared, then the Assessing Officer must remove closing stocks from the trading accounts in all the three years in order to compare the gross profit. However, if we remove closing stocks from the tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that only due to the survey, the excess stock came to light otherwise the assessee would have not disclosed the same. It was therefore submitted that the addition made by the Assessing Officer was justified. 6. The learned authorised representative for the assessee , on the other hand, strongly supporting the order of the CIT (A) submitted that without rejecting the books of accounts, the Assessing Officer cannot make any addition on adhoc basis by estimating the gross profit. It was further submitted that the assessee having already incorporated the excess stock in its books of account and declared it, any further addition on account of unaccounted stock would amount to double addition. In support of his contention, the learned authorised representative for the assessee relied upon the decision of Income-tax Appellate Tribunal, Hyderabad Bench in case of M/s Varalakshmi Granite (P) Ltd., (ITA Nos. 1435 to 1438/Hyd/2010) dated 28-6-2012. 7. We have heard rival contentions and perused the material on record. Undisputedly, the assessee maintains books of accounts which were produced before the Assessing Officer during the course of assessment proceedings. It is also a fact on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both the deposits and withdrawals more particularly of an amount of Rs.20 lakhs with its source. The assessee submitted that the amount of Rs.20 lakhs was received from M/s. Maphar Constructions on 3-2- 2006. The Assessing Officer however did not accept the contention of the assessee by observing that no evidence with regard to the receipt from the aforesaid amount from M/s Maphar Constructions was submitted before him. He accordingly made addition of the amount of Rs.20 lakhs. The assessee being aggrieved of the addition so made preferred an appeal before the CIT (A). 13. In course of hearing before the CIT (A), the assessee submitted a confirmation letter from the creditor wherein all the details with regard to said creditor like name, address, PAN, details of transactions were mentioned. The CIT (A) called for a remand report from the Assessing Officer on the additional evidence. The Assessing Officer however without considering the additional evidence submitted the remand report justifying the addition of Rs.20 lakhs. The CIT (A) on considering the evidence produced before him and also the fact that the Assessing Officer had not properly considered the additional evidence prod ..... X X X X Extracts X X X X X X X X Extracts X X X X
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