9911796707
TMI Blog2017 (7) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... ly excessive. 4. That in the facts and circumstances of the case, the Id. Commissioner of Income Tax (Appeals) gravelly erred in sustaining the addition of Rs. 25000/- out of total addition of Rs. 50,000/- made by the Id. Assessing Officer on account of personal use of vehicle and telephone." 3. At the outset it may be stated that Ground No.4 raised by the assessee was not pressed before us and the same is therefore treated as dismissed. 4. Ground Nos.2 &3 raised by the assessee relate to the addition on account of difference in stock, upheld by the CIT(A). 5. Brief Facts relating to the issue are that the assessee is engaged in the trading of readymade garments. Search was conducted on the assessee on 28.11.2007. During the course of search operation, inventory of stock was prepared and total value of stock found was Rs. 1,88,09,898/-, whereas as per books of account the stock on the date of search was Rs. 2,79,75,096/-. Thus, the actual stock found was less by Rs. 91,65,198/-. In the statement recorded during the course of search, the assessee expressed his inability to explain the difference but on 30.11.2007 i.e. two days after the search, the assessee surrendered the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traction from the disclosure were rejected and addition of GP @ 26% on unaccounted stock of Rs. 91,65,198/- amounting to Rs. 23.92 lacs was made to the income of the assessee. 8. The matter was carried in appeal before the Ld. CIT (Appeals), who vide his order dated 12.03.2013 upheld the order of the Assessing Officer. 9. Before us, the learned counsel for the assessee reiterated the submissions made before the Ld. CIT (Appeals). 10. The Ld. DR, on the other hand, stated that since no evidence of exercise of coercion or undue pressure has been brought on record the arguments of the assessee cannot be accepted. The Ld. DR stated that the fact that retraction took place 11 months after the surrender itself, makes the retraction invalid. The Ld. DR relied upon the following case laws in support of its above contentions : a) Navdeep Dhingra Vs. CIT, 56 TAxmann.com 75 (P&H) b) B.Kishore Kumar Vs. DCIT 52 Taxmann.com 449 (Mad) c) B.Kishore Kumar Vs. DCIT 62 Taxmann.com 215 (SC) 11. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. 12. The first issue before us is whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s), we find gave detailed findings for rejecting the surrender as follows : "4.2 I have considered the submissions of the assessee and the impugned order. During the search operation the physical stock found was Rs. 1,88,09,898/- as against Rs. 2,79,75,096/- as per books. The stock found short to the extent of Rs. 91,65,198/-could not be explained by the assessee. Consequently vide letter dated 30-11-2007 the assessee inter alia surrendered the difference in stock as arising out of sales outside the books of account and on applying GP rate of 26%, the Gross profit was worked out at Rs. 23,921acs. However the AO noticed that the additional income surrendered was not included in the return of income filed. During the course of assessment proceedings a letter dated 16 12-2009 was filed explaining the retraction as obtained under pressure besides contending that there were discrepancies in stock inventoried during the search proceedings viz. calculation error of Rs. 4,34,931/- and wrong application of the price-rates. 1t was further contended that the assessee was mentally preoccupied with a family dispute. These contentions were rejected. It is the case of the assessee that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, assessee should prove threat or coercion. Neither any such proof has been given nor can there be a threat or coercion when the surrender was made two days after the search by way of a letter. The arguments for retractment stands disproved as discussed above. Furthermore the delay by eleven months further weakens the case of the assessee in view of the decision of Guwahati High Court in the case of M/s Greenview Restaurant (v) ACIT, 263 ITR 169. On the issue of the G.P. rate applied of 26%, the assessee had submitted that the ratio fluctuates depending upon market trend etc and that the rate was too excessive. No further substantiation has been made to contest with proof the application of the GP rate of 26%. Needless to say the assessee has also been unsuccessful in disproving the position of six of the bills discussed above. Thus, considering the facts and circumstances of the case, 1 am inclined to uphold the addition made by the AO. The assessee fails on this ground." 18. We are in agreement with the Ld. CIT (Appeals) that the reason given by the assessee for retracting the surrender, that it was forced and made under coercion, was baseless. No evidence of any threat or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the past history of the assessee, we find merit. The GP rate shown by the assessee in different years tabulated at page 5 of the Ld. CIT (Appeals) is as follows : A.Y. Sales G.P. G.P. Rate 2002-03 28,975,231 /- Rs. 50.47.095/- 17.42% 2003-04 3,51,74,7 68/- Rs. 60,61,737 /- 17.23% 2004-05 3,53,82,810 /- Rs. 68,45,093 /- 19.35% 2005-06 3,63,63,847 /- Rs. 79,48,231/- 21.86% 2006-07 3,59, 09,981 /- Rs. 96,38,919 /- 26.56% 2007-08 4,17, 44,280 /- Rs. 92,1 6,392 /- 22% 22. Further GP rate of the current year is 22%. All these facts have not been controverted by the Revenue. What emerges from the above is that the average GP rate of the assessee is 20.48%. The Revenue has given no reason for adopting the GP rate of the immediately preceding year only i.e. 26% and we find no reason to adopt the same particularly considering the fact that the average GP rate of the preceding years comes to 20.48% and further GP rate accepted in this year is undeniably 22%. In such circumstances, we hold, it would be fair and reasonable to adopt the GP rate of the current year i.e. 22% for the purpose of calculating stock as per Books on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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