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TMI Blog2015 (12) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... ein following grounds have been taken by the Revenue:- 1. The Ld.CIT(A) has erred in law and on facts in holding that the loose papers, based on which the addition was made is not relating to the assessee company as the same was found at the premises of H.S Sarna and not in the company's premises, ignoring that the Shri S.S.Sarna the main person of the assessee group has voluntarily made a disclosure of Rs. 44,40,000/- in the statement recorded u/s 132(4) dated 26.02.2007 on account of discrepancies found in the loose paper files seized. 2. The Ld.CIT(A) has erred in law and on facts in holding that the assessment of income only on the basis of statement, without considering the evidence found in the survey is not justified, ignoring that the assesse has neither filed any retraction note nor filed any submission rebutting the action of the Assessing Officer . 3. The Ld.CIT(A) has erred in law and on facts in not appreciating the ratio laid down in the judgment of the Hon'ble High Court of Kerala in the case of V.Kunhambu & Sons(1996) 219 ITR 235, wherein the Hon'ble High court has held that voluntary statement made by the assessee, under 132(4) with reference to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmissions of the assessee partly allowed the appeal, thereby restricted the addition to the extent of Rs. 12,19,203/-. Aggrieved by the order of the ld.CIT(A), the Revenue is further in appeal before us. 4. The ld.Sr.DR submitted that the ld.CIT(A) was not justified in deleting the addition. He submitted that, in this case, a survey action was conducted in the business premises of the assessee along with search action u/s.132 of the Act in the case of Sarna group of Vapi on 23/01/2007. During the course of search, S/Shri H.S.Sarna and S.S.Sarna have made disclosure of Rs. 85.5 lakhs each for S.S.Sarna Group and H.S.Sarna Group making a total disclosure of Rs. 1.71 crores in both the groups. The ld.Sr.DR submitted that as per the bifurcation of disclosure of Rs. 85.5 lakhs made by Shri H.S.Sarna, the main person of H.S.Sarna group, he has made disclosure of Rs. 36.10 lakhs in his individual case and Rs. 5,20,036/- in the partnership firm M/s.S.S. Enterprise and Rs. 44,19,964/- in the case of M/s.Sarna Chemicals Pvt.Ltd., which includes Rs. 15 lakhs disclosed in respect of stock difference and an amount of Rs. 29,19,964/- for covering the discrepancies found in the loose-papers sei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er considering the submissions of the assessee rejected the appeal and sustained the penalty. Now, the assessee is in further appeal before this Tribunal. 5.3. The ld.counsel for the assessee submitted that under the facts of the present case, the penalty is not justified. The AO had made addition on the basis of estimation of GP. The ld.counsel for the assessee submitted that during the course of survey, the stock difference, if any, was duly reconciled. The ld.counsel for the assessee submitted that the assessee is engaged in the business of manufacturing and also subjected to Central Excise Act. The ld.counsel for the assessee submitted that the assessee is maintaining the records as required under the Central Excise Act. The Central Excise Authorities have not given any adverse remarks. The ld.counsel for the assessee further submitted that the penalty on the addition made on the basis of estimation cannot be sustained. 5.4. On the contrary, the ld.Sr.DR supported the order of the Authorities below and opposed the submission made by the ld.counsel for the assessee. He submitted that the authorities have given a finding that the stock discrepancy were noticed due to sales out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled any retraction note nor filed any submission rebutting the action of the Assessing Officer . 2. The Ld.CIT(A) has erred in law and on facts in not appreciating the ratio laid down in the judgment of the Hon'ble High Court of Kerala in the case of V.Kunhambu & Sons(1996) 219 ITR 235, wherein the Hon'ble High court has held that voluntary statement made by the assessee, under 132(4) with reference to the search and seizure, there is no reason why the Assessing Officer should not make use of it, if it is not obtained by coercion or intimidation. 3. The Ld.CIT(A) has erred in law and on facts in ignoring the ratio of the following case laws while deciding to delete the additions based on the disclosure of the assessee which was not retracted by the assessee. Decision of Hon,ble ITAT,Ahd in the case of Nilesh C Shah Vs ACIT (2007) ; Bombay High Court in the case of Rameshchandra and Co.Vs CIT(1987) 168 ITR 375 Thiru John Vs Returning Officer,AIR 1977 (SC)1724 Surjit SinghChhabra(l 997) ISCC 508,509(SC) Hon,ble Supreme Court in Pulangode Rubber Produce Co Ltd Vs State of Kerala(1973)91ITR18 Hotel Kiran Vs ACIT (1971) 82 ITR 453(Pune) Council of Institute of Char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial as per physical count is on "as is basis" which contains moisture, which leads to weight difference. The ld.CIT(A) further stated that the submission of the assessee is verifiable from the entries made in the stock register, excise register and invoices, which the AO has refused to verify during the course of assessment proceedings on the ground that the assessee has not explained the same at the time of survey. The ld.Sr.DR submitted that a survey action was conducted in the business premises of the assessee along with search action u/s.132 of the Act in the case of Sarna group of Vapi on 23/01/2007. During the course of search, the main person of these group, S/Shri H.S.Sarna and S.S.Sarna have made disclosure of Rs. 85.5 lakhs each for S.S.Sarna Group and H.S.Sarna group making a total disclosure of Rs. 1.71 corres in both the groups. The ld.Sr.DR submitted that the contention of the ld.CIT(A) that the stock difference in stock is mainly on account of moisture and its purity is not acceptable since the same was never raised while taking the stock during the course of survey nor in the course of assessment proceedings. The ld.Sr.DR submitted that as per the bifurcation fo d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. In respect of NASA test check, in invoice No.170 dtd. 4/8/2006, the real weight is 1470 kg @ Rs. 590/- per kg. amounting to Rs. 38,67,300/-. On the Invoice itself, the net weight is 2700 kg. and real weight is 1470 kg. and the same amount appears in the stock register. 4.3. In OPSAMIDE, on test check, in Invoice No.ARE/R- 149/2006-07 dtd. 21/08/2006, the real weight is 4483 kg. @ Rs. 330.90 per kg., total amounting to Rs. 14,83,425/-, the real weight is 4483 kg. and net weight is 4800 kg. On the stock register, real weight is written as 4483 kg. similar is the case of MABS. Therefore, the appellant's submission is acceptable. The submission of the appellant supported by the evidences and entries in the registers and sales invoices cannot be rejected and ignored merely on the ground that the same were not submitted at the time of survey. Therefore, the addition in respect of excess stock of finished product in the case of MABS Rs. 1,27,500/-, OPSAMIDE Rs. 68,200/-, NAPSA Rs. 6,32,100/- and NASA Rs. 3,78,600/-, is not justified and it is deleted and the appellant is allowed relief of Rs. 12,06,400/-. 4.4. However, in respect of CLPPD, there is no mention of such nature in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the submissions as were made before the ld.CIT(A). The ld.counsel for the assessee submitted that the books of account of the assessee are duly audited. The accounts are subjected to the inspection of the Central Excise. The assessee is maintaining statutory excise records. 11. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the assessee had given explanation which is recorded by the ld.CIT(A) in para-2.2 of his order is as under:- "2.2. The learned AR appearing on behalf of appellant has further filed following written submission dated 29th March-2012:- "3. We enclose herewith Xerox copy of statement of discrepancies in inventory found during the course of survey Under Section 133A of the Income Tax Act, 1961 at the factory premises of Supreet Chemicals Private Limited. The major two items for which additions to total income is confirmed by the Learned Commissioner of Income Tax (Appeals), are being highlighted for your ready reference. 4. In respect of excess stock of CLPPD of Rs. 8,08,200/-, excess quantity determined by the Learned Assistant Commissioner of Income Tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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