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2015 (12) TMI 1282 - ITAT DELHI

2015 (12) TMI 1282 - ITAT DELHI - TMI - Addition on account of excess stock found during the course of survey - CIT(A) deleted the addition - Held that:- As agreeing with the view of the Learned CIT(Appeals) that once the surrender during survey was retracted immediately, then it was incumbent upon the Assessing Officer to provide to the assessee the inventory showing the alleged difference in stock and if no such inventory is provided to the assessee then it is not only a violation or principle .....

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following the due process of law and principles of natural justice. The Assessing Officer either in the assessment order or in the remand report, has not revealed the procedure adopted for physically verifying the stock. Keeping these material aspects of the case, Learned CIT(Appeals) has rightly deleted the addition - Decided in favour of assessee - ITA No. 903/Del/2014, Cross Objection No. 225/Del/2015 - Dated:- 2-11-2015 - SHRI I.C. SUDHIR: HON BLE JUDICIAL MEMBER For The Assessee : S/Sh. ML .....

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ng the addition of ₹ 3,60,132 made by the A.O. on account of short stock found during the course of survey without examining and adjudicating upon the merits of the case. iii) Whether CIT(A) has erred in law and facts as well in not invoking the provisions of sec. 250(4) of the Income-tax Act, 1961 which empowers the Learned CIT(Appeals) to conduct further enquiry on the issues involved in this case. iv) (a) The order of the CIT(A) is erroneous and not tenable in law and on facts. (b) The .....

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urse of survey, the survey team verified the stock of the assessee and found discrepancy. On the basis of the same, the Assessing Officer worked out the excess stock at ₹ 13,76,673 and shortage of stock of ₹ 3,60,132. The survey team had also recorded the statement of Shri Pramod Jain, Director of the assessee company and on the query raised regarding discrepancy found in the stock. He had surrendered an amount of ₹ 13,76,676 as his undisclosed income for the financial year 200 .....

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and ₹ 3,60,132 as undisclosed income of the assessee and added the same in the total income. Being satisfied with the explanation of the assessee, the Learned CIT(Appeals) has deleted the additions in question which has been impugned by the Revenue in the present appeal. 4. In support of the ground, the Learned Senior DR has basically placed reliance on the assessment order. She submitted that surrender was made by the assessee during the course of survey voluntarily and without appreciati .....

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29.4.2008, the assessee vide letter dated 30.4.2008 had withdrawn the surrendered amount with copy of the said letter to Director General of Investigation stating therein that due to mental pressure and duress, Mr. Pramod Jain, the Director of the Co. had signed to pay taxes on surrendered amount. Again, vide letter dated 18.7.2008 in response to the notice issued by the DIT(Inv.), the assessee reiterated the earlier stand taken by it vide letter dated 30.6.2008, the assessee had made a request .....

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y premises, work in progress inside and outside the plant but inspite of depositing of requisite amount with PRO, CR Building, New Delhi, the same was not provided to the assessee. It was submitted that the director of the assessee company was under tension on the date of survey and his statement was recorded in duress and when he was told that there is a difference in stock then to buy peace with the department, he surrendered the above stated amount. Regarding the verification of stock, assess .....

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furnish rejoinder thereto, which was complied with. Discussing all these aspects in details, the Learned CIT(Appeals) has come to the following finding: 9.8. Even on merit the addition is not sustainable for the reasons. Firstly, it is not made known by the Assessing Officer as to how stock as per books has been worked out, whether appellant had closed the accounts and worked out the stock or simply G.P. rate was applied to find out the stock on a particular day. In absence of expiration of pro .....

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n that if actual expenditure or investment incurred by the appellant is ore than the expenditure or investment recorded in the books then the surplus expenditure or investment will be treated as appellant s income in absence of any satisfactory explanation. They do not lay down the proposition that if actual investment or expenditure is less then what is recorded in the books then still the appellant has to explain the difference within the meaning of those sections. As a matter of fact these tw .....

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material collected during survey is not confronted to the assessee, it can be deemed as not existing and therefore, no addition can be made on the basis of statement alone which is retracted. Thirdly, the Assessing Officer has not pointed out either in the assessment order or in the remand report what was the procedure adopted for physical verifying the stock. In view of this no addition so made by the Assessing Officer can be sustained. This view is also supported by Hon'ble Delhi High Cou .....

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