TMI Blog2012 (1) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer on account of stock short found during the course of survey. The consequential ground is in respect of charging of interest u/s. 234B and 234C of the Income Tax Act. 3. The brief facts of the case are that the assessee is engaged in the business of manufacturing machinery as per the specification of the purchaser. A survey u/s. 133A was carried out on 19-1-2006.During the course of survey physical stock found was ₹ 1,09,36,951/- whereas stock as per books was₹ 1,30,74,000/-.There was a short of stock of ₹ 21,37,049/-. A statement was recorded on 19-1-2006. The assessee in reply to question No.11 stated that at present the stock in the premises had not been accounted till today towards which he undertook to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed the order of the Assessing Officer. 5. The Ld. A.R. submitted that the AO has made the addition merely on the basis of statement of Shri Dharamshi B. Shah which was recorded at the time of survey at mid-night at 2 O clock. Mr. Shah is a senior citizen of an advance age of 74 years. He was physically as well as mentally exhausted, therefore, the statement recorded under such circumstances cannot be relied upon. However, the assessee in the subsequent statement clearly stated that the survey party did not take into account a stock of pipes and round bar worth ₹ 14.5 lacs and stock wheel and gear assembly worth ₹ 7 lacs lying in the open yard. The Ld. AR submitted that the assessee maintained regular books of account. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it is stated that while recording statement during the course of search and seizure and survey operations no attempt should be made to obtain confession as to the undisclosed income. Apart from above it has also been noticed that the AO has applied profit rate on shortage of the stock without examining the correct fact whether the assessee has sold raw material out of books or the assessee has sold manufactured items due to which shortage of a stock was there. Without examining such fact, merely on the basis of statement given at the time of survey which has been retracted by furnishing evidence and reconciliation we are of the considered view that under such circumstances the addition by applying profit rate on shortage of a stock canno ..... X X X X Extracts X X X X X X X X Extracts X X X X
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