TMI Blog2018 (2) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... not put their signatures on the inventory of stock prepared by the survey team. Now, with the help of simple denial, they cannot say that excess stock was not found.- Decided against assessee Addition u/s 40(a)(ia) - Held that:- Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd [2015 (9) TMI 79 - DELHI HIGH COURT] if the recipients have paid the taxes on the receipts on which TDS was not deducted, then, no disallowance be made in the hands of payer with the help of Section 40(a)(ia) of the Act. On due consideration of this contention, we deem it appropriate to set aside this issue to the file of the Assessing Officer. The learned Assessing Officer shall verify as to whether M/s. Nirala Roadways has included ₹ 52,730/- in their taxable receipts and, if it was included, then, no disallowance to be made. We make it more specific that the Assessing Officer shall issue summons to M/s. Nirala Roadways for verifying this fact Penalty u/s 271(1)(c) - excess stock in search - Held that:- As discussed in the quantum appeal, was found at the premises of the assessee during the course of survey. The partners had put signatures on the inventory prepared by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive in nature. In brief, their grievance is that the learned CIT(A) has erred in confirming the addition of ₹ 25,01,025/- and ₹ 25,00,525/- in the case of M/s. H S Steel and M/s. Volga Steel respectively. 3. The brief facts of the case are that both the assessees are engaged in wholesale trading of iron sheets. They have filed their returns of income for Assessment Year 2008-09 on 28.09.2008 and 21.11.2008, declaring total income at ₹ 1,24,650/- and ₹ 2,10,050/-, in the case of M/s. H S Steel and M/s. Volga Steel respectively. A survey under section 133A of the Act was conducted at the business premises of the assessees on 27.02.2008. During the course of survey, inventory of stock was prepared after physical verification. The value of the stock was worked out at ₹ 45,36,120/- in the case of M/s. H S Steel and ₹ 43,25,880/- in the case of M/s. Volga Steel; whereas in the books of accounts, the assessees have accounted stock at ₹ 20,35,105/- in the case of M/s. H S Steel and ₹ 18,25,355/- in the case of M/s. Volga Steel. Thus, there was excess stock of ₹ 25,01,015/- and ₹ 25,00,525/- in the case of M/s. H S Steel and M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on ble Madras High Court (supra) and observed that the additions are not being made on the basis of admission of income by the partners in their statement under Section 133A of the Incometax Act; rather, the additions are based on recovery of excess physical stock admitted by the partners and not retracted. 7. We have duly considered the rival contentions and gone through the record carefully. A perusal of inventory of stock would indicate that the stock statement was prepared after physical verification. The partners have put their signatures after verifying the correctness of the stock statement. The assessee is simply denying about the availability of excess physical stock at the time of survey. They are harping upon the purchase bills and sales bills and entries made in the stock register. It is pertinent to observe that the surveys and searches are the last resorts with the Revenue to verify the actual position on the spot. The allegation against the assessee(s) is that they were not accounting total purchases in their books. That is why excess physical stock was available on a particular day when the survey was carried out. These allegations cannot be refuted by merely jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lp of Section 40(a)(ia) of the Income-tax Act. The learned Counsel for the assessee, at the very outset, submitted that recipients must have accounted these receipts in their taxable income and as per the latest decision of the Hon ble Delhi High Court in the case of CIT Vs. Ansal Land Mark Township (P) Ltd, if the recipients have paid the taxes on the receipts on which TDS was not deducted, then, no disallowance be made in the hands of payer with the help of Section 40(a)(ia) of the Act. On due consideration of this contention, we deem it appropriate to set aside this issue to the file of the Assessing Officer. The learned Assessing Officer shall verify as to whether M/s. Nirala Roadways has included ₹ 52,730/- in their taxable receipts and, if it was included, then, no disallowance to be made. We make it more specific that the Assessing Officer shall issue summons to M/s. Nirala Roadways for verifying this fact. The assessee shall supply address of M/s. Nirala Roadways to the Assessing Officer. Accordingly, this ground of appeal is partly allowed. 13. In the result, ITA No.2621/Ahd/2012 is partly allowed. 14. Now we take up ITA Nos. 3038 3037/Ahd/2015. In the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon the order of the Assessing Officer. 21. We have considered the rival contentions and gone through the record carefully. 22. Section 271(1)(c) of the Act has a direct bearing on the controversy and, therefore, it is salutary upon us to take note of the relevant provisions of section 271(1)(c) along with Explanation 1 which read as under: 271. Failure to furnish returns, comply with notices, concealment of income, etc. ( 1). If the Assessing Officer or the Commissioner (Appeals) or the CIT in the course of any proceedings under this Act, is satisfied that any person ( a) and (b)******** ( c) has concealed the particulars of his income or furnished inaccurate particulars of such income. He may direct that such person shall pay by way of penalty. ( i) and (Income-tax Officer,)******** ( iii) in the cases referred to in Clause (c) or Clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefit the furnishing of inaccurate particulars of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide and that the assessee had disclosed all the facts relating to the same and material to the computation of the total income. Under first situation, the deeming fiction would come to playa if the assessee failed to give any explanation with respect to any fact material to the computation of total income or by action of the Assessing Officer or the Learned CIT(Appeals) by giving a categorical finding to the effect that explanation given by the assessee is false. In the second situation, the deeming fiction would come to play by the failure of the assessee to substantiate his explanation in respect of any fact material to the computation of total income and in addition to this the assessee is not able to prove that such explanation was given bona fide and all the facts relating to the same and material to the computation of the total income have been disclosed by the assessee. These two situations provided in Explanation 1 appended to section 271(1)(c) makes it clear that that when this deeming fiction comes into play in the above two situations then the related addition or disallowance in computing the total income of the assessee, for the purpose of section 271(1)(c) would be dee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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