TMI Blog2019 (10) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... y Shri Kuldeep Kumar (Salesman), Shri Manish Sharma (Salesman), Shri Dalip (Peon) and Shri Sahil Goel and there was one Driver for Vehicle No. 3443, which is evident from the details furnished by the assessee before the A.O. and the Ld. CIT(A) i.e; copies of the ledger account which are placed at page no. 22 23 of the assessee s paper book. In our opinion the disallowance made by the A.O. and sustained by the CIT(A) on this basis that only two persons were stated to be employed in the statement during the course of search was not justified particularly when the assessee mentioned the names of the persons who were regularly employed, in its ledger account. In the present case, the books were accepted by the A.O., therefore, when the books of accounts were accepted which clearly show the name of the persons to whom monthly salary was paid total of which for the year under consideration was at ₹ 3,46,000/- then the disallowance made by the A.O. and sustained by the Ld. CIT(A) was not justified. Accordingly the same is deleted. - ITA NO. 1489/Chd/2018 - - - Dated:- 22-10-2019 - Shri. N.K. Saini, VP And Shri , Sanjay Garg, JM For the Assessee : Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 30/09/2019 set aside these issues back to the file of the A.O. for fresh adjudication, copy of the aforesaid order dt. 30/09/2019 was furnished which is placed on record. 5. In her rival submissions the Ld. CIT DR could not controvert the aforesaid contention of the Ld. Counsel for the Assessee. 6. We have considered the submissions of both the parties and perused the material available on the record. It is noticed that the identical issues having similar facts were involved in the preceding year in ITA No. 1488/Chd/2018 wherein also the assessee furnished the additional evidences under Rule 29 of the ITAT Rule 1963 as have been furnished for the year under consideration vide application dt. 27/08/2019. In the preceding year the issues had been decided vide order dt. 30/09/2019 by this Bench of ITAT and the relevant findings have been given in para 3 to 5 which read as under : 3. At the outset, the Ld. Counsel for the assessee has invited our attention to the application filed by the assessee for admission of additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rules 1963. It has been pleaded that after passi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 47,35,406/-, so, there was shortage of ₹ 5,64,441/-. He asked the assessee to show cause as to why the difference may not be treated on account of its sale outside of the books of accounts and addition of Gross Profit may not be made. In response the assessee submitted as under: 2. The assessee is dealing in G.P. G.C. Sheet and G.I. Pipe. The stock taking on the date of search was not conducted by actual weighment. It will not be out of place to mention that the sectional weight varies with the thickness of the sheet. The Authorized Officer during search estimated the stock on the basis of pieces and by adopting round figures of the cost. 3. The assessee submit that there is no difference in the stocks. The difference in stock is due to estimation only, which is bound to be there on the adoption of round figures rather than the actual. During search, Shri Nitin Goel stated that the discrepancy will be explained later on. But on such explanation was called for from him. We have stated above that the stock was only estimated and there is bound to be margin of error in such inventory based on estimation, so the differ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rked out by applying G.P. Rate. It is the actual stock as per physical count which can only be considered. But it has not been done and the method has been wrongly applied. 10. The Ld. CIT(A) however confirmed the addition made by the A.O. by observing that the shortage of stock had been worked out by the A.O. in the assessment order and thereafter GP Rate had been applied as shown by the assessee. 11. Now the assessee is in appeal. 12. Ld. Counsel for the Assessee reiterated the submissions made before the authorities below and further submitted that the addition has been made only on estimate basis and even the stock was worked out on estimate basis and that there was no difference in the physical quantity, therefore, the addition made by the A.O. and sustained by the Ld. CIT(A) was not justified. The reliance was placed on the following case laws: CIT Vs. Anil Kumar And Company (2016) 386 ITR 0702 (Karnataka) CIT Vs. K.S. Bhatia (2004) 269 ITR 0577 (P H) CIT-II Vs. M/s Navbharat Export in ITA 212/2013 221/2013 order dt. 05/05/2015 (Delhi) Lalit Cloth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. However, the A.O. was of the view that the explanation of the Assessee was an afterthought and that no other evidence like wages register, or attendance register was produced. He also pointed out that Shri Chaman had joined recently. He, accepted the salary paid to him for three months amounting to ₹ 15,000/-. The A.O. also pointed out that the salary of ₹ 78,000/- was paid to Shri Manish Sharma. He, therefore allowed salary of ₹ 93,000/- ( ₹ 15000 + ₹ 78000 ) out of total salary of ₹ 3,79,000/- and made the addition of ₹ 2,86,000/- (₹ 3,79,000/- (-) ₹ 93,000/-). 18. Being aggrieved the assessee carried the matter to the Ld. CIT(A) and submitted as under: 4. Addition of₹ 2.86.000/- on account of Salary In this regard, it is submitted that during the course of survey only 2 employees were present in the morning, when the Authorized Officer ask Sh. Nitin Goel, he only meant that we have 2 employees present in the firm at the time of survey and the salary of only these 2 employees was stated which is as per the books of the assessee. The Ld. A.O. has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material available on the record. It is noticed that the assessee was having four employees namely Shri Kuldeep Kumar (Salesman), Shri Manish Sharma (Salesman), Shri Dalip (Peon) and Shri Sahil Goel and there was one Driver for Vehicle No. 3443, which is evident from the details furnished by the assessee before the A.O. and the Ld. CIT(A) i.e; copies of the ledger account which are placed at page no. 22 23 of the assessee s paper book. In our opinion the disallowance made by the A.O. and sustained by the Ld. CIT(A) on this basis that only two persons were stated to be employed in the statement during the course of search was not justified particularly when the assessee mentioned the names of the persons who were regularly employed, in its ledger account. In the present case, the books were accepted by the A.O., therefore, when the books of accounts were accepted which clearly show the name of the persons to whom monthly salary was paid total of which for the year under consideration was at ₹ 3,46,000/- then the disallowance made by the A.O. and sustained by the Ld. CIT(A) was not justified. Accordingly the same is deleted. 24. In the result, appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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