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2016 (5) TMI 622

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..... ct, 1961 (hereinafter referred to as the Act ). 2. The only issue to be decided in this appeal is as to whether a sum of ₹ 83,45,740/- which according to Learned AO is an undisclosed stock found during survey u/s 133A of the Act could be added in Asst Year 2007-08 in the facts and circumstances of the case. 3. The brief facts of this issue are that assessee is a partnership-firm running a jewellery shop at the Salt Lake City, Kolkata. The assessee maintained regular Books of Account, including the Stock Book, under Mercantile System of Accounting, which were audited u/s 44AB of the Act. We find that before proceeding to deal with the grounds taken in the appeal for Asst Year 2007-08, it would be useful to refer to some facts in the succeeding Financial Year 2007-08 ( relevant to assessment year 2008-09 ), as the same have close bearing to the issues involved in the instant appeal. In the succeeding Financial Year 2007-08, Survey u/s.133-A of the I. T. Act was carried out on 18-03-2008 at the assessee's shop at Salt Lake. In course of the said Survey, some Exercise Books and Computer Printouts were impounded and inventorised as twelve items marked with Identificatio .....

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..... with reference to the Books of Account etc. for the year under appeal, and the Authorised Representative was asked to explain the contents of the following Exercise Books/records: (i) Alleged Gold Ornaments Stock Book 11 marked as BBD - 2 ; (ii) Red Cover Exercise Book marked as BBD - 5 ; and (iii) Bunch of Computer Printouts for the Financial Year 2006-07, collectively marked as BBD-10. At the hearing on 27-11-2009, the Authorised Representative explained the contents of the aforesaid Exhibits. In regard to the alleged Gold Ornaments Stock Book, marked as BBD - 2, it was inter alia explained that the said Book was started for keeping control over the stock displayed in the show-case at the assessee's show-room at Salt Lake. The idea for maintaining the said Book was mooted for exercising better control over the goods displayed in the show-case, as the same used to be under control of the salesmen during business hours. This Book was thus designed to serve as a memoranda record for internal control purposes only. On the final date of hearing on 14-12-2009, the Authorised Representative of the assessee appeared and furnished some details of revenue expenses as cal .....

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..... exure A to the written submission. For the reply to the other limb of the allegation that the entries in BBD-2, excluding on three pages, related to the Financial Year 2006-07, it was stated that reference may kindly be made to what has been submitted under next point hereinafter. 4.2. Version of the Learned AO - All the entries in the register excluding those at pages 89,90 99 , show that the entry dates are relevant to the Financial Year 2006- 07. It was argued that as has been stated hereinbefore, the Learned AO made extensive examination of the impounded books and records, including the Book BBD-2. On such examination , the Learned AO inter alia alleged that all the entries in the said Book, excluding those on pages 89, 90 99, related to the Financial Year 2006-07. For driving home this allegation, he has noted the contents of the said Book BBD-2 on pages 2, 3, 4 5 of the impugned assessment order. The assessee proceeds to deal with the said notings in the following lines. The Book BBD-2, with written pages from 1 to 119, has four columns, namely, Entry Date , Item code , Weight and Date of Delivery . It was argued that the Entry Date column of t .....

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..... n pages Serially no. 1 to 119 . Sd/- D.C.I.T 18-03-08 Circle-50, Kol. Sd/- K.Dutt 18-03-08 Benud Behari Dutt. In reply, the assessee submitted that the said noting on the cover page of the Book BBD-2 was made in course of the Survey on 18-03-2008, at the insistence of the then Learned AO as would be envisaged on a bare look at it. It was explained that had the said Register been for the financial year 2006-07 alone, there could not have been any entry of dates falling in the Financial Year 2007-08 and 2008-09 as admitted by the Learned AO in the impugned order, and pointed out herein before. The attention of the Learned CITA was also drawn to the entries at Pages 1, 2, 14, 16, 19, 21, 22, 31, 32, 34, 53, 54, 55, 89, 90, 99, of the said Stock Book, where the entries in BBD-2 do not bear any date whatsoever (i.e. dates left blank), it cannot be conclusively inferred by any stretch of imagination that those entries related to the Financial Year 2006-07 alone. Unfortunately the Learned AO drew this unwarranted inference for making an arbitrary addition of ₹ 83,45,740/- to Assessee's total income, allegedly on account of undisclosed stock for the Finan .....

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..... ial evidences to support his allegation that the Book BBD-2 ( excepting three pages ) was for the Financial Year 2006-07 and in this regard he has cited the noting on the cover page of the said Book as the circumstantial evidence. It was explained that the noting on the cover page of the Book BBD-2 has no evidentiary value whatsoever as it was not originally there, and was so made at the instance of the then Learned AO. This matter has been dealt with in detail in the preceding paragraphs hereinbefore. It was further submitted that the circumstances prevailing at all material times were that during the Survey on 18-03-2008, full inventory of stock was prepared by the Survey Party with the help of a Registered Valuer and the excess stock, not recorded in the regular Books of Account, was declared by the assessee as representing his income for the assessment year 2008-09. It was further submitted that on weighing the aforesaid circumstantial evidences in their proper perspective, it would be kindly appreciated that after offering the undisclosed trading stock for taxation for the immediately succeeding assessment year 2008-09 and paying tax on it, there could not have been any fur .....

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..... ng to the year of survey i.e Asst Year 2008-09 , for which year, the assessee had made offered a sum of ₹ 1.80 crores at the time of survey followed by filing of return and paid taxes thereon. Hence there cannot be any separate addition based on the document BBD /2 either in Asst Year 2007-08 or in Asst Year 2008-09 as it is already part and parcel of disclosure made in the sum of ₹ 1.80 crores. In response to this, the Learned DR vehemently supported the order of the Learned AO by referring to relevant pages of the assessment order and with reference to the impounded document BBD /2 . 6. We have heard the rival submissions and perused the materials available on record including the impounded document BBD /2 enclosed in the paper book filed by the assessee. It is not in dispute that the said document contained certain dates pertaining to financial year 2006-07 and 2007-08. The assessment year under appeal is Asst Year 2007-08. It is not in dispute that the assessee having stated that the said document is memoranda register had come forward to offer a sum of ₹ 2,12,400/- for the Asst Year 2007-08 based on dates found in the entries pertaining to financial year 2 .....

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..... indeed offered a sum of ₹ 1.80 crores on the date of survey towards difference in physical stock and book stock when he was confronted with the difference in grams of jewellery by the survey party. We find that the survey party had prepared the following documents as Inventory of books of accounts on the date of survey on 18.3.2008:- ANNEXURE- A Inventory of books of accounts Inventory of books of accounts found from the premises of M/s.Benud Behari Dutta of B.E 103, Sector-I, Salt Lake City, Kolkata-700 064 during survey operation U/s. 133A of Income Tax Act 1961 on 18-03-08 and are impounded/not impounded Sl. No. Description Identification mark 1. Green Covered Exercise book BBD-1 2. one binding Register of Gold ornaments Stock Book BBD-2 3. one exercise book BBD-3 4. one black cover exercise book BBD-4 5. one Bind .....

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..... Gold (24 CT) NIL 765.490 (-)765.490 Diamond 115.520 ct 21.700 ct 93. 82ct Gold ornaments 152.000 gms NIL 152.000 gms Please explain why the above discrepancies will not be treated as undisclosed investment in stock. Ans: The above mentioned difference in weight is our undisclosed income of current Accounting Year 2007-08 which I have voluntarily disclosed before you on your arrival on which I am ready to pay advance tax on or before 31.3.2008. 6.3. We find that pursuant to reply given to Question No. 14, the assessee had offered the difference in stocks of jewellery to the tune of ₹ 1.80 crores in Asst Year 2008- 09 and had proved his bonafide by offering the same in the return filed for Asst Year 2008-09 without retracting the statement and paid taxes thereon. 6.4. In view of the aforesaid facts and circumstances, we find that the stock difference is duly explained by the assessee by offering the sum of ₹ 1.80 cror .....

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