TMI Blog2015 (8) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... erned, the AO has not made any inquiry to verify the veracity of explanation. The partner of firm claims to be his capital introduced into firm’s account. So far as assessee-firm is concerned, it has an explanation although same is subject to further verification on the part of AO. The Revenue has not placed any material suggesting the explanation of assessee being false. Under these facts, we do not see any reason to interfere with the order of ld.CIT(A), same is hereby upheld - Decided against revenue. Addition on account of unaccounted excess stock - CIT(A) deleted the addition - Held that:- Undisputedly, the assessee retracted from the statement recorded during the survey proceedings and offered explanation towards disclosure of ₹ 43,35,039/- out of total disclosure of ₹ 70,02,520/-. The explanation so offered was not accepted by the AO on the ground that purchase bill of ₹ 28,09,862/- and accounts were produced on 24/12/2009 when further verification was impossible due to time constraint. The ld.CIT(A) deleted the addition on the ground that the AO has not found any defects in the books of accounts maintained by the assessee. We do not agree with the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and in law, the Id. CIT (A) has erred in deleting the addition of ₹ 28,09,862/- made on account of unaccounted excess stock admitted by the assessee during the course of survey proceedings despite the fact that the unaccounted stock was not found recorded in the assessee s regular books of accounts at the time of survey. 4. On the facts and in the circumstances of the case and in law, the Id. CIT (A) has erred in deleting the addition of ₹ 43,35,039/- by accepting the explanations of the assessee on the retractions without appreciating the fact that the assessee firm had filed the explanations/details of such retractions only on 24/12/2009 with the mala-fide intention of preventing the A.O. from making any indepth inquiries as the assessment was getting barred by limitation on 31/12/2009. 5. It is therefore, prayed that the order of the ld.CIT(A) be set aside and the Assessing Officer s order be restored. 2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ) was framed vide order dated 24/12/2009, thereby the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the kind consideration of your honours. 1. The appellant is a partnership firm engaged in the business of manufacturing and trading of diamonds. 2. The year under consideration is A.Y. 2007-2008. 3. The subject submission is filed against the appeal filed by the department on the following grounds: the learned AO has erred in making addition of ₹ 43,35,039/- towards income disclosed in survey, inspite of the fact that the appellant had made partial retraction out of the aggregate disclosure of ₹ 70,02,520/- in survey. That on facts and circumstances of the case, the learned AO has erred in making the impugned addition on following grounds, totally disregarding the submissions along with relevant documentary evidences filed by the appellant during the course of assessment proceedings. Grounds for making the addition Amount (in₹) Cash found to be 'in excess of cash as per the cash book completed upto few days before the date of survey 6,26,577 Unaccounted investment in the residential house property of the partners 8,98,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T AT Mumbai) Copy of the said judgements is enclosed herewith in Annexure-2 for the .immediate reference of your honours. 7.Prayer: In the light of above submissions and judicial pronouncement, we most respectfully and humbly request your honour to accept the order as passed by the learned CIT.(A)-V, Surat and to pass suitable direction taking sympathetic and judicious view in the subject matter. 5.1. We find that the ld.CIT(A) deleted the addition by observing as under:- DECISION: 6.1. I have gone through the assessment order and the detailed submissions of the appellant as made above. I do not agree with the reasons given by the A.O. while making addition on account of excess cash found and unaccounted investment made in partners houses, due to the following reasons: i. The A.O. has mentioned that satakhat was not found during the survey nor it was pointed out by the assessee during the survey. In my opinion, this is not a cogent reason to make addition because the papers may or may not be found during the survey but when produced later on, the matter of genuineness of such papers should be looked into which is important. The A.O. has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arties who gave advance to the partner of the assessee-firm. Admittedly, the AO has not made any enquiry from the parties who has given advances to the partner of the assessee who claimed to have been received advance in cash. The ld.CIT(A) deleted the addition on the basis that the AO has filed to ascertain the genuineness of the agreement. The ld.CIT(A) also observed that there is no legal bar in purchasing or selling of property in cash. The ld.CIT(A) was of the view that the source being cash belonging to one of the partners Shri Shantial G.Kakadia (receipt from six parties with whom agreement for sale of his property was made), the A.O. should not have added this amount to the firm s total income. There is no dispute with regard to the fact that one of the partners of the assessee-firm has owned up the excess cash found during the course of survey subsequent to survey action. It is also not in dispute another partner surrendered the same as undisclosed income during the course of survey. Subsequently, the other partner retracted from his statement and claimed that the excess cash found was in fact capital introduced by other partner. The source of excess cash and unexplained e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons (2008) 300 ITR 157 (Mad.) 3. DC(IT vs. M/s.Premsons ITA No.4698/Mum/2006. 6.1. We have heard the ld.Sr.DR, perused the material available on record and gone through the orders of the authorities below as well as the written submissions of the assessee. We find that the ld.CIT(A) deleted the addition by observing as under:- 6.2. So far as addition on account of unaccounted stock of ₹ 28,09,862/- (retracted amount) is concerned the appellant has reasonably been able to explain/justify the retraction made by way of bringing the fact that one of the purchase bills was remained to be accounted for in the books of accounts. The A.O. instead of verifying this claim of the appellant, has emphasized on the other not so significant facts like the purchase bill was not found during the course of survey, the bill is for rough diamond whereas excess good was rough and semi polished diamond, there is difference between the bill value and the value confirmed in the statement during the survey etc. I do not agree with the A.O.s action who solely relied on such facts instead of verifying the veracity of the claim of the appellant with the books of accounts of the appellant. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation offered for retracted amount is acceptable. So far as introduction of capital by one of the partners is concerned, that we have already adjudicated in ground numbers 1 2(supra). The reliance placed by the assessee on the judgement of Hon ble Supreme Court rendered in the case of Sargam Cinema vs. CIT reported at (2011) 241 CTR 179(SC) is totally misplaced and, hence, is not applicable on the facts of the present case. The Hon ble Apex Court under the peculiarity of facts of that case had held that a categorical finding is recorded by the Tribunal that the books were never rejected. In the circumstances, reliance placed on the report of the DVO was misconceived. After considering the totality of facts, we set aside the order fo the ld.CIT(A) on this ground and restore this issue to the file of AO for decision afresh. The AO would verify the claim of the assessee that one of the purchase bill was not entered into the accounts on the date of survey and the same was recorded subsequently. The AO would also verify the genuineness of purchase bill by making necessary inquiry. Needless to say that the AO would grant sufficient opportunity to the assessee. Thus, this ground of Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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