TMI Blog2015 (7) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... cal exercise. We find that the assessee maintaining the stock and production registers as per the guidelines of FCI, which are Form No.I to IV. The registers are regularly checked by FCI for the reasons that 40% of the production would have been sold to FCI as per Government order. The AO should have verified the closing stock in view of stock register maintained for the purposes of FCI. Even otherwise, this stock inventory of the magnitude of 43,447.20 quintals is impossible to be weighed and determine the closing stock within the time-limit of 12 hours, which was the period during which the Survey Party stayed in the business premises of the assessee. From the finding of survey, it is clear that weighing is not done but only counting of bags or inventory of bags is taken by the Survey Party counting the number of bags in the stacks. We find that the FCI Inspector has signed the stock register as on 31.03.2010 by mentioning the 5700 quintals of paddy, whereas the AO determined the stock as 43,347.20 quintals. The assessee has maintained stock register in Form No I, II, III & IV under DCF&S/FCI guideline as maintained by the Rice Mill. Neither AO nor CIT(A) has cross-verified t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence as per the assessee. During the assessment proceedings the Ld. A.O. failed to supply the copy of the said documents. So the entire survey is bad in law as there are erroneous observations and non-supply of documents on the part of the Ld. A. O. 6. For that the assessee in the letter dated 11/12/2012 filed his objection for excess valuation of the stock as on 24/03/2010. 7. For that during the appeal preceding the A/R of the assessee produced the total area of the stock room with the verification report of the FCI Oriental bank. But the Ld. Appellate authority did not consider the fact passed the order. 8. For that during the survey preceding no other evidence was found, such as 'undisclosed bank statement, cash book and purchase bill to support the excess purchase. Only the method of calculation is duly supported the survey report. So the calculations of excess purchase of ₹ 3, 85, 01, 830/- is unjustified. 3. Briefly stated facts are that a survey u/s. 133 of the Act was carried out on the business premises of the assessee on 24.03.2010. The assessee firm is engaged in the business of rice milling. The assessee has disclosed purcha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less: Sale during 25.03.2010 to 31.03.2010 140.00 Closing Stock as on 31.03.2010 3174.85 Closing Stock as on 31.03.2010 3756.00 Excess Stock of Rice = (3756.00 3174.00) = 581.15 Quintal Determination of Closing Stock of Rice Bran (in Quintal) As per Audited Account As per Survey Findings Opening Stock as on 01.04.2009 45.00 Stock on the date of survey 24.03.2010 146.00 Add: Production during the year 1780.01 Add: Purchase during 25.03.2010 to 31.03.2010 10.00 Total 1825.01 Total 156.00 Less: Sale during the year 1714.53 Less: Sale during 25.03.2010 to 31.03.2010 NIL Closing Stock as on 31.03.2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unaccounted stock. 21. In regard to FCI inspection, the fact that Assessing Officer has conducted a physical verification and prepared an inventory. The report of Assessing Officer is as under: The second point is regarding the books maintained by the assessee under D.C.F. S/FCI guideline-Registers in Form-I, II,III and IV are maintained by the Rice Mills under D.C.F. S/FCI guideline. As seen in the above point that there were different stocks noted, by the assessee firm itself, in the Form Registers (Register-IV) and in Paddy stock register SRM-5, as evident from survey statement (question no.8) However, for assessment purpose the stock considered are as per physical stock found for different items in the premises of the assessee on the day of survey. No reasons are adduced as to why FCI inspector has to prevail over the physical verification made by Assessing Officer The manner and effort put in such certification by FCI is a fact not established by assessee. It is not proved that FCI inspector did take stock and no in mechanical manner where inspectors visit godown after another for periodic checking. Further the stock taken by Assessing Officer is lega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on in documents like SRM-5 is permitted under section 133A(3)(i). Hence every evidence obtained by Assessing Officer is one that is legally obtained. 25. In regard to alleged confession, the remedy is available in form of retraction subject to fulfilling certain conditions spelt out in judicial decisions spelt out in paragraph 13 of this order. The matter is discussed in paragraph 13 of this order. The appellant hold that filing a return of income with book results tantamount to retraction and for this he relies on line 2 of CBDT instruction. Line 2 highlights the background of issue of instruction and not that filing of return of income in variation with statement tantamount to retraction. In fact the instruction is intended to discourage disclose of additional income not based on evidences. In the instant case there is no disclosure of additional income. Only permissible acts highlighted I preceding paragraph has been conducted by Assessing Officer. Hence the contents of F.No.286/2/2003-IT(Inv) is not applicable in the context of the case. It is added here that the Assessing Office who (A) had conducted survey, (B) recorded statement of 06.11.012 and completed assessment an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Explanation 1 to section 251 reads in disposing of an appeal, the Commissioner (Appeals) may consider and decide any matter arising out of the proceedings in which the order appealed against was passed, notwithstanding that such matter was not raised before the Commissioner (Appeals) by the appellant. The argument raised by appellant in this regard is also not accepted. 30. In the course of hearing on 20.08.20104, new evidence was filed. This is a copy of stock statement given before Oriental Bank of Commerce and is to justify the stock balance reported in Balance Sheet. This evidence comes in par with the nature of evidence with regard to FCI inspection relied on by appellant and a decision on the same is already made. As matter of fairness evidence on FCI was admitted and adjudicated. The statement given Oriental Bank of Commerce was in possession of assessee even during assessment proceedings, not produced. As no justification exists to be covered under rule 46A the evidence is ordinarily inadmissible. However the same is found to be a self-declaration and again no there is o entry of any independent verification. Therefore, even if admitted, the same does not help app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate of survey. The Ld. Counsel for the assessee before us clarified that the AO noted a fact that stock was not merely in godown but was in open temporary shed also. But he contested that this much stock cannot be weighed within one day because survey was concluded on that very date i.e. on 24.03.2010. Ld. Counsel for the assessee also produced a physical verification report as prepared by FCI while inspecting the stock of paddy. We find that the AO has never denied that the sales are not out of these unaccounted purchases. The sales made are accepted as it is. Once the sales are accepted, the entire undisclosed purchases cannot be added for computing the income of the assessee except by applying a profit rate i.e. gross profit as declared by assessee in regular books of account or the gross profit declared by other concerns in the similar trade. In view of the above facts and circumstances and particularly when the books of accounts were not produced by the assessee before the AO, the book results cannot be accepted and the same are to be rejected. In any case, the computation method of the AO for determining undisclosed purchases is taken through mathematical exercise. We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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