TMI Blog2018 (3) TMI 1651X X X X Extracts X X X X X X X X Extracts X X X X ..... ock shown in books of accounts and in statement furnished to banking authorities could not be treated as undisclosed investment. - Decided in favor of assessee. - ITA. No: 2573 & 2623/AHD/2013 - - - Dated:- 23-3-2018 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER SHRI S. S. GODARA, JUDICIAL MEMBER Appellant by : Shri S.N. Soparkar with P.M. Mehta Respondent by: Smt. Aparna Agarwal CIT/DR with Shri Prasoon Kabra, Sr. D.R. ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA Nos. 2573 2623/Ahd/2013 are cross appeals by the Assessee and the Revenue preferred against the order of the Ld. CIT(A)-XX, Ahmedabad dated 29.08.2013 pertaining to A.Y. 2009-10. 2. Both these appeals were heard together and are disposed of by this common order for the sake of convenience and brevity. 3. We will first take up Assessee's appeal in ITA No. 2573/Ahd/2013. 4. Grievance raised vide ground nos. 1 to 4 relate to the addition sustained by the ld. CIT(A) on account of additions made in respect of the discrepancy found in the stock at the time of survey amounting to ₹ 1,59,22,356/-. 5. At this point, we would like to mention that the revenue is also in appeal in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k statements submitted before the bank is inflated in value and quite often in quantity also so as to ensure that the credit limit is maintained. It was pleaded that no addition can be made on this ground unless the stock in the books is found to be unreliable. It was further explained that during the course of the survey operations, physical verification of the stock was shown and no excess stock was found. Discrepancy noted in the stock as per the books was explained and the same was accepted by the A.O. 8. Copy of the written submissions along with the related documentary evidences were forwarded by the ld. CIT(A) to the A.O. calling for his comments. The A.O. submitted his remand report and the relevant portion of the same read as under:- During the course of survey proceedings, discrepancies in the quantity and the value of stock as per books and as per stock statement submitted with the banker of the assessee (i.e. Punjab National bank) -were found. In this regard, the assessee -was asked to explain the discrepancies during the course of survey proceedings by the Q. No.8 of the statement recorded during the course of survey. However, the assessee did not explain discr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire additions have been made solely on the ground that the stock shown to the bankers was higher than the stock shown in the books of accounts. It is the say of the ld. counsel that on the date of survey, no discrepancy was found insofar as physical stock and the book stock. The entire addition has been made only on the difference of the stock in the stock statement and the book stock. Ld. Counsel heavily relied upon the judgments of the Jurisdictional High Court of Gujarat in the case of Riddhi Steel and Tubes (P.) Ltd. 220 Taxmann.com 148, in the case of Vrundavan Roller Floor Mill, 72 Taxmann.com 250, in the case of Nanglia Impex 229 Taxmann.com 460 and in the case of Veerdip Rollers Pvt. Ltd. 323 ITR 341. The ld.cousel concluded by stating that the Hon'ble Jurisdictional High Court in these judgments have considered similar issue and has deleted the additions. Per contra, the ld. D.R. strongly supported the findings of the A.O. 12. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that there was no difference found in the physical stock and the book stock on the date of survey. There is also no dispute that the ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appeal filed by the Assessee is partly allowed. Coming to the Revenue's appeal in ITA No. 2623/Ahd/2013 18. Ground no. 2 relates to the deletion of the addition of ₹ 7,48,27,432/-. 19. The underlying facts in this issue relates to the discrepancies in purchase and sales figures as per books of accounts and as per figurers mentioned in the letter head of Janam Steel Alloys. The discrepancies as noted by the A.O. are as under:- PURCHASES:- Month As per books - Rs. As per letter head of Janam Steel Alloys Difference -Rs. April-08 59171660.80 69458642.81 C 10286982.01 May-08 37467399.00 72886295.81 35418896.81 June-08 76336541.00 103176018.81 26839477.81 July-08 57611526.00 77167804.81 19556278.81 Aug-08 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition to this creditors and debtors as claimed by the assessee. 23. After considering the fact and the submissions, the ld. CIT(A) verified all the details submitted in the paper book on test check basis and verified with the balances that of sundry creditors and debtors narrated as purchase and sales respectively in the impounded paper. The ld. CIT(A) was convinced that the details noted on impounded paper were in fact debtors and creditors and accordingly directed the A.O. to delete the addition of ₹ 7.48 crores. 24. Before us, the ld. D.R. strongly supported the findings of the A.O. and the ld. counsel for the assessee reiterated what has been stated before the lower authorities. 25. We have given a thoughtful consideration to the orders of the authorities below qua the issue. There is no dispute that during the course of the survey . A.Y. 2009-10 proceedings, the assessee was confronted with the notings found in the impounded letter pad and at that very moment, the assessee explained the contents of the notings. The relevant part of the statement read as under:- Q.10 Today during the survey proceedings conducted at your premises, the details of the Books of Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... state that I have written down the details of the purchases and sales, as per the details written down on the letter head of M/s. Janam Steel Alloys. In fact, there are no details of purchases and sales but in reality, they are sundry debtors and sundry creditors, which fact is being told to your four your information please. 26. During the course of the assessment proceedings, the assessee once again explained the nature of entries and it can be safely concluded that the explanation given at the time of the assessment proceedings was not an afterthought as the same was explained at the time of survey operations also. If the explanation of the assessee is considered in the light of the relevant documentary evidences, there remains no doubt the entries do not pertain to purchase and sale but are creditors and debtors of the assessee. The First Appellate Authority, as mentioned elsewhere, has tallied the entries with the copies of the ledger accounts of the debtors and creditors and the ld. D.R. could not point out any factual error in the findings of the ld. CIT(A). Therefore, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground no. 2 is according ..... X X X X Extracts X X X X X X X X Extracts X X X X
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