9911796707
TMI Blog2014 (1) TMI 1890X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- deserves to be deleted. 2. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in sustaining an addition of Rs. 27,45,862/- on account of inflation in the purchases arbitrarily, without considering the vital evidences in the shape of statements. Thus the addition of Rs. 27,45,862/- deserves to be deleted. ( No separate addition made and addition has been telescoped with the addition sustained in GOA No. 1 above). 3. On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in upholding an addition of Rs. 4,00,000/- made on account of unexplained investment in renovation of office premises simply on the basis of surrender obtained during survey arbitrarily. 3.1 That the Ld. CIT(A) has further erred in ignoring the fact that the premises is on rent and minor repair were done which are properly accounted for an other fixtures are separately debited under respective heads. Hence the addition of Rs. 4,00,000/- so made deserves to be deleted. 3.2 That the Ld. CIT(A) has failed to appreciate the fact that the A.O. has not brought on record a single instance of expenses incurred on office renovation which was not accounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arefully perused the entire record. The facts of the case in brief are that the assessee company derives its income from manufacturing and trading in Pure Ghee in the brand names of"Binola and Diary Fresh'. For assessment year 2008-09, the assessee company filed its return of income on 30-09-2008 declaring its income at Nil. However, the assessment was completed u/s 143(3) of the I.T. Act, 1961 ('the Act' for short) at a total income of Rs. 3,39,40,466/-. The income of the assessee has been computed as under:- Income from business Net from as per balance sheet Add (as per computation sheet) Rs. (-) 5632971/- Depreciation disallowed Rs. 735319/- Disallowed u/s 37 Rs. 183041 Rs. 918360/- Addition as discussed above i. Disallowance out of Telephone expenses as discussed above Rs. 66439/- ii. Delayed PF and ESI Rs. 72157/- Rs. 138596/- --------------------- Total (A) Rs. (-) 4576015/- Income from other sources Addition as discussed above Rs. (-) 4576015/- i. Excess undisclosed stock of Rs. 2,01,89,800/- &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) 254 CTR 229. 3.2 To contradict the above, ld. DR stated that the Revenue authorities have powers to record the statement even during survey proceedings and that any admission made during survey proceedings is justified. 3.3 After considering the rival submissions, we have found that the impugned addition is solely based on admission made by the Director Shri Hem Raj Jain, recorded on oath during survey proceedings. We have gone through the relevant portion of this statement also. The submissions of the ld. AR that any statement recorded during survey proceedings conducted u/s 133A of the Act has no evidentiary value is found to be a correct position of law. The Hon'ble Apex Court has clearly laid down this principle in the case of CIT vs. Khader Khan (supra). This Bench has clearly spelt out this issue in favour of the assessee vide para 3.4 of its order in the case of M/s. Unique Art Age vs. ACIT (supra). For ready reference, we extract para 3.4 as under:- "3.4 .......After considering the above submissions vis-a-vis the referred to portions of the records, we are of the considered opinion that the impugned statement recorded u/s 133A of the Act and that too on oath do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncy in the stock found during survey and to support this version, the ld. AR has submitted written submission which is being extracted verbatim as under:- ''That a survey operation in this case was carried out u/s 133A of The Income Tax Act, 1961 at the business premises of the assessee and during the course of survey it was informed to the directors of the appellant company that the entire stock stated to have been taken physically and available was quantified by the survey team and accordingly excess stock was worked out and a surrendered towards the excess stock was obtained from the directors of the appellant company in their statements recorded on oath, though actually there was no excess stock available with the assessee. The details of the stock as per books and physically quantified by the survey team during the course of survey is tabulated as under:- Name of Item Qty. as per books Qty. as per survey team Difference Rat e Excess stock in Value Milk Cream 12,774.00 Kg 42,074.00 Kg 29,300.00 Kg 93 Rs. 27,24,900 Butter 29,700.00 Kg 72,900.00 Kg 43,200.00 Kg 110 Rs. 47,52,000 Butter in process - 4,930.00 Kg 4,930.00Kg 110 Rs. 5,42,300 G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ania and the statements as recorded deserves to be viewed by taking into consideration the entire set of facts. The stock stated to be found in the business premises is an impossible quantity which could be stored in the available area which continues to be remain so as it existed on the date of survey and could thus be verified even after survey and a proposal was made to the department during the assessment proceedings, but Ld. AO never paid any attention on such a request because it would have brought the truth to surface. During the course of assessment proceeding a report of the technical expert was also submitted before Ld. AO (APB 101-105) wherein it has categorically been stated that the maximum quantity which could be stored in the godown (cold storage) of the assessee is only of 94000 Kg. as against which survey team has quantified the physical stock of raw material i.e. Butter and Milk Cream at 114974 Kgs. It is further submitted that the raw material being perishable in nature it could not be stored in open area and it is compulsorily to be kept under the specific temperature created in the cold storage only. It is further submitted that the inventory sheet prepared d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of the assessee recorded u/s 133A it would be evident that the statement recorded are nothing more than the written papers signed by the assessee and are the "obtained statements" signed on dotted lines. Shri Hemraj Jain has made surrender of Rs. 4,00,14,980/- on various issues as undisclosed income of the assessee company without in any manner consulting with the other director or without linking or referring the books of accounts maintained in the normal course of business. After the survey, assessment proceeding was first opportunity available to the assessee, when he could have pointed out any irregularity in the survey proceedings and further the assessee has retracted the statement at the time of filing of return of income wherein the income admitted during the course of survey was not included in the income declared, thus the statements of the assessee recorded during the survey on oath deserves to be ignored and excluded which have been made the sole basis for making such a huge additions. 2. The Ld. AO as well as Ld. CIT (A) have not given any finding about the irregularities pointed out by the assessee in the survey. The survey team stated to quantified stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w hours.... That being so, the finding of excess stock being found during the course of search operation had been given by the authorities below on grossly inadequate material. That finding would not be sustained even under the parameters of income tax assessment proceedings not bound by technical rules of evidence. Therefore, the additions made by the authorities below, on the alleged excess stock, shortage of stock physically found during the course of search proceedings in all the appeals were directed to be deleted." It is further submitted that the assessee is maintaining regular books of accounts consisting of cash book, ledger, bank statements and vouchers for expenses. The accounts of the assessee have been audited by a firm of Chartered Accountant who have not reported any defects in the maintenance of accounts. The purchases and sales of the assessee are fully vouched and backed by necessary evidence and no defects of whatsoever nature has been pointed out and assessee is in a regular practice of physically verifying the stock so as to get rid of any possible leakage which is duly supported by day to day stock register. In the circumstance, it is submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issions on this issue and after relying on the relevant decisions thereto, we are of the considered opinion that difference in stock is not real. The survey party has quantified the stock of around 2,48,000 kg of butter and ghee on the same day which is humanly impossible on same day. The AO has assumed and presumed that difference in quantity of raw material i.e. Butter and Milk cream of 20,974 kg on account of maximum quantity could be storage of 94,000 kg and physically stock quantified by the survey team at 1,14,974 kg was due to the fact that quantity of butter was in process. This fact has been ignored by the authorities below because when the AO himself quantified the butter in process at 4,930 kg then how the same could be at 20,974 kg . Further, we are satisfied that inventory sheet prepared during the course of survey was not provided to the assessee despite repeated requests made by it. Moreover, the AO has accepted the declared results and has not invoked the provision of Section 145(3) of the Act. The AO has not found any material defect in the books of account. Accordingly, the impugned addition on merits is also not sustainable and the same is deleted. Thus Ground N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material and production thereof. It has also maintained the quantity of input of raw material vis-a-vis the out put of the finished goods. The method of accounting and mode and manner of recording the quantity consumed and production thereof has regularly been followed since inception. This method of accounting has not been doubted by the AO. The purchases of raw material are duly supported by the purchase vouchers and sale vouchers. These purchases / sales are subjected to check by the Sales Tax Authority. The quality of production is also supervised under 'Agmark' license. It is not the case of the Revenue that production process and standard for input of raw material has not been properly followed. Thus in these circumstances, the production of finished gods and sales thereof on the consumption of raw material cannot be doubted when the AO has himself accepted the trading results. We are also in agreement with the submission of the ld. AR that the assessee has maintained day to day consumption and production records, based on which necessary details of the raw material consumed and production thereof is as under:- Particulars A.Y. 2007-08 A.Y. 2008-09 Consumption of Cream & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad purchased certain computers and those are also recorded in its books of account and also appear in the statement of fixed assets. It was asserted that the director of the assessee company Shri Hem Raj Jain made this surrender without referring to the books of account in this regard. Howver, the AO as well as the ld. CIT(A) were not convinced and that is why this ground has been raked up before us. 5.3 After considering the rival submissions, we have found that the impugned amounts deserves to be deleted. Both the authorities below have ignored the fact that this addition is also based on simply the surrender made by the director of the assessee company which stands disproved with the help of existing evidence. The assessee has filed all the necessary details of the expenditure incurred alongwith copy of ledger account of repairs and maintenance and copy of ledger account of fixed assets. These papers are also enclosed in the assessee's paper book filed before us. The AO has not pointed out any defect in the same. Therefore, without bringing any contrary material to substantiate the admissions made by the director of the assessee company and that too during the course of sur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, we order to delete this addition from the hands of the assessee and allow the Ground No. 5 of the assessee. 8.1 The Ground No. 4 of the Revenue's appeal relates to deletion of addition of Rs. 25.00 lacs which was made by the AO by holding the receipt of share capital of this amount as unaccounted income of the assessee company and the ld. CIT(A) has deleted this addition. 8.2 We have heard both the parties and perused the material available on record. Both the parties have reiterated their earlier stands. To understand the position of share applicants and their identity, following chart is relevant. S.No. Name Address PAN Amount 1. Sneh Textile Pvt. Ltd. 4-G-8, New Hosing Board, Shastri Nagar, Bhilwara AABCS9863K 5,00,000/- 2. Shiv Ganga Suiting Pvt. Ltd. Tarbon ka Mohalla, Mandowari Bazar, Post Mandal, Bhilwara AAHCS9088J 2,00,000/- 3. Laxmi Synthetic & Packaging Pvt. Ltd. 6, Chandanwad, Circuit House, Shahi Baugh, Ahmedabad, Gujarat AAACL2689K 5,00,000/- 4. Jamuna Synthetic Pvt. Ltd. Udyog Bhawan opp. Higher Sec. School, Bhilwara AABCJ3150C 5,00,000/- 5. Visaka Synthetic Pvt. Ltd. 202, Kedia Shopping Center, Opp. Railway Station, Malad West, Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
