TMI Blog2018 (10) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... ct ought to have contested at the time of survey by the directors. He should have not admitted working of the excess stock and objected the calculations made by the department. Subsequently, it cannot be stated that cotton was having water contents on account of rain etc. There should be a specific circumstances or specific reply. This is missing. We do not find any merit in the first fold of contention. The assessee is having excess stock of ₹ 58,02,095/-. This value of excess stock should suffer tax. Second question is, whether by inclusion of this stock in the value of the closing stock, the assessee has recognized income offered by it or not. AO without looking into the reply of the assessee extracted separately made addition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the assessee is that the ld.CIT(A) has erred in confirming addition of ₹ 58,02,095/-, which was added by the AO with the aid of section 69C of the Income Tax Act, 1961. 3. Brief facts of the case are that the assessee at the relevant time was engaged in the business of manufacturing of cotton wool, cottonseeds, oil and allied products. A survey under section 133A of the Income Tax Act was carried out at the business premises of the assessee on 18.1.2012. The assessee has filed its return of income electronically for assessment year 2012-13 on 28.9.2012 declaring total income at ₹ 10,39,970/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) of the Act was issued and served ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted first fold contention raised by the assessee. Thereafter, he made addition of ₹ 58,02,095/-. Finding recorded by the AO reads as under: 6. Respectfully, considering the reply of the assessee, however the same is not and acceptable. In para 1 assessee is stated as under It is categorically submitted that no evidence of whatsoever nature was found in the course of survey evidencing incurring of any expenditure to acquire alleged excess stock on the basis of which your assessee agreed and admitted additional income of ₹ 58,02,095/- in the course of survey. During the course of survey in the presence of representative of the assessee stock was taken and assessee has provided details of stock as per its Books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee on 19.01.2012 is not affected the facts of stock difference found on 18.01.2012. Considering, the above referred facts, whereas assessee is failed to prove genuineness of stock holding on 18.01.2012, view taken by assessee for weight loss /increase is immaterial and not tenable and accepted. Therefore, the reply of the assessee is rejected on various issues. 7. Considering the above referred facts, value of excess stock of ₹ 58,02,095/-as determined during the course of survey proceedings and accepted by the Director of the company as unaccounted income in addition to its regular income and ready to pay and paid taxes thereon. However, assessee has declared income of ₹ 10,39790/- in its return of income without offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee also. He further contended that such details have noticed by the ld.CIT(A) on page no.11 of the impugned order. 6. We have duly considered rival submissions and gone through the record carefully. We deem it appropriate to take note of the reply given by the assessee on his second fold of submissions. Reply reads as under: After taking into account the above explanation, auditors both under the provisions of Companies Act, 1956 as well as Income-tax Act, 1961 were satisfied that assessee has not made any unaccounted investment in procuring stock items which were found to be excess on the date of survey by survey party. Accordingly no accounting effect was given in quantity records as well as in financial records for the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a specific circumstances or specific reply. This is missing. Therefore, we do not find any merit in the first fold of contention. The assessee is having excess stock of ₹ 58,02,095/-. This value of excess stock should suffer tax. Second question is, whether by inclusion of this stock in the value of the closing stock, the assessee has recognized income offered by it or not. The AO without looking into the reply of the assessee extracted (supra) separately made addition. Therefore, in the given facts and circumstances, we deem it appropriate to remit this issue to the file of the AO to consider the above reply of the assessee. It is to be ascertained that excess stock found at the time of survey valued at ₹ 58,02,095/- should s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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