TMI Blog2016 (9) TMI 1291X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 26-9-2016 - Kul Bharat ( Judicial Member) And Vikram Singh Yadav (Accountant Member) For the Assessee : Subhash Porwal (CA) For the Revenue : R. A. Varma (Addl. CIT ) ORDER Vikram Singh Yadav (Accountant Member) This is an appeal filed by the assessee against the order of Ld. CIT(A), Ajmer dated 27.01.2015 wherein the assessee has taken following grounds of appeal: That under the facts and circumstances of the case the ld. CIT(A), Ajmer has erred in sustaining additions of ₹ 44,05,090/- for unexplained investment in excess stock without going into merit of facts and evidences. 2. Brief facts of the case are that a survey in terms of section 133A was carried out at the assessee s premises on 03.02.2011 and stock was physically verified difference of ₹ 50,03,032.00 was identified in physical stock as compared to stock as per books and brought to tax as unexplained investment in stock. The assessee carried the matter in appeal before the ld CIT(A). Taking into consideration the fact that the assessee himself had offered the profit of ₹ 5,98,212.00 @ 11.70% on unrecorded sales of ₹ 51,18,054.00 noted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for valuation; however the rates were never referred for valuation as per bills only memory based rates were intimated; the actual valuation should be as per COST . Accordingly after replacing the COST as basis of physical inventory; based on purchases bills the actual value of physical inventory should be ₹ 19,27,685.00 (Details as per sheet enclosed; (Page 81 Hard Wood Silly, Aam Wood Chiran Bamboo Wood) thus the physical stock was overvalued by ₹ 35,08,865.00 [5436550.00 (value as per survey sheet of 3 items for cost variation) 1927685.00 revised value of physical stock as per COST ]; (c) Thus if both the aforesaid para (a) (b) factors are considered; as based on evidences the book stock (as per records) would be ₹ 30,51,998.00 (Rs. 16,95,184.00 being stock as per records as per survey team + ₹ 13,56,814.00 being purchases unposted in books at time of survey). Similarly final value of physical inventory should be taken ₹ 31,89,351.00 = (66,98,216.00 (total actual physical stock value) 35,08,865.00 (stock of 3 items over valued)) at the most the variation/difference in stock would be only ₹ 1,37,353.00 = (31,89,351.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no evidentiary value and any admission made during such statement cannot be made basis of addition. Further in the decision in Pullangode Rubber Produce Co. Ltd. V/s State of Kerala (1973) 91 ITR 18; the Apex court held that an admission is extremely an important piece of evidence, but it cannot be said that this is conclusive and it is open to the person who made the admission to show that it is incorrect. Similar views have been held in case of Dr. S.C. Gupta V/s CIT (2001) 248 ITR 782 (Allahabad High Court) Paul Mathews And Sons V/s CIT (2003) 263 ITR 101. 2.3 The ld AR further submitted that alternatively, it is worthwhile to note that at year ended on 31.03.2011 the whole closing stock is NIL e.g. the stock as on 03.02.2011 as per physical has since been sold; if higher valuation is considered of opening stock as on 03.02.2011 than there is a TRADING LOSS since A.O. has accepted the book results hence the BALANCING LOSS as incurred should be set off from such addition since A.O. has accepted the sales records. 3. Having considered the submissions of the appellant, we now refer to decision of ld CIT(A). Based on above facts evidences the Ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd he was asked as to where are the primary bills and vouchers for preparing the cash book. However he has stated that he does not have any evidence based on which the cash book will be completed. From this, it is apparent that no such claim was made by the assessee that there are any purchase bills or transport expenses which are to be entered in the books of accounts. Further no such bills and bills and vouchers which have been submitted during the assessment were found at the time of survey. The assessee s claim that assessee has claimed that assessee had made the URD purchases and expenses thereon of ₹ 6,57,645.00 however no such bills have been put on record by the assessee. Further assessee has claimed that purchases of ₹ 10,89,385.00 and transport expenses thereon of ₹ 1,34,000.00 were all made from a single party i.e. Mahalaxmi Traders, Biswan, Sitapur. All these bills are in handwriting of single person. No such bills were found at the time of survey. The assessee has not maintained any stock of register. As such the claim of the assessee regarding the unentered bills expenses is not acceptable. In view of above discussion, the assessee s claim of u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t have been rejected u/s. 145(3) of the Income Tax Act, 1961. In view of above discussion, the addition made by the A.O. on account of unaccounted stock of ₹ 50,03,302.00 is confirmed. However the assessee himself had offered the profit of ₹ 5,98,212.00 @ 11.70% on unrecorded sales noted in the loose papers found during survey of ₹ 51,18,054.00 so the set off of the same may be given as assessee had claimed that such profits earned have been invested in the excess stock itself as noted in the assessment order on page 10. As such, the assessee is allowed set off of ₹ 5,98,212.00 and balance addition to the extent of ₹ 44,05,090.00 is confirmed. 4. In response to ld CIT(A) observations and findings, the ld. AR has submitted that the Ld. CIT(A) has not considered the following aspects: (a) Records e.g. cash book, ledger etc were incomplete at the time of survey it was made clear to survey team also; whereas reply to Q.No. 8 of statements of manager Ankur Arora That the bills or vouchers yet to be entered in the books . (b) Further these statements/replies were for physical cash and incomplete records , there was nothing about unposted bi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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