TMI Blog2021 (10) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... not consider the stock kept at Pragati Warehouse ii). Survey team wrongly analyzed the stock of Channa as stock of Channi which was actually recorded in the regular books of account as stock of Channa which was kept at Narmada Valley Warehouse . iii). Revenue authorities not providing the basis of valuation of physical stock to the assessee, thus denying the principles of natural justice. iv). Revenue failed to bring any instance of bogus purchase made by the assessee. v). No cogent/positive/incriminating material was found during search/survey to support the alleged addition. Find no infirmity in the finding of Ld. CIT(A) and the same stands confirmed. Accordingly all the grounds raised by the revenue are dismissed. - IT(SS)A No.248/Ind/2019, CO No.10/Ind/2020 (Arising out of IT(SS)A No.248/Ind/2019) - - - Dated:- 13-10-2021 - Hon ble Rajpal Yadav, Vice President And Shri Manish Borad, Accountant Member For the Revenue : Shri S.S. Mantri, CIT-DR For the Respondent : Shri Girish Agrawal Ms. Nisha Lahoti, ARs ORDER PER MANISH BORAD, A.M The above captioned appeal filed at the instance of the Revenue Cross Objection b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their search. 4. On the facts and in the circumstances of the case and in law, Ld. AO erred in making the addition and passing the impugned assessment order under section 143(3) which ought to have been passed under section 153C r.w.s. 143(3), more particularly when provisions of section 292C applies on person from whom the seized material is found in the possession or control of, in the course of a search under section 132 or survey under section 133A and not the other person. 5. The appellant further craves leave to add, amend or modify any of the grounds of appeal. 2. At the outset, Ld. Counsel for the assessee requested for not pressing C.O.No.10/Ind/2020. The revenue did not opposed this request. Therefore, Cross Objection No.10/Ind/2020 raised by the assessee are dismissed as not pressed. Now we take up revenue s appeal in IT(SS)ANo.248/Ind/2019. 3. Brief facts of the case as culled out from the records are that the assessee is a partnership firm engaged in the business of trading in food grains and pulses. The firm came into existence on 26.12.2014. Search/survey operation were carried out on 05.10.2015 at business premises of the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a conclusion that the additions made by the ld. AO were under deem fiction without having any cogent/positive/incriminating evidence on record. 5. Now revenue is in appeal before this Tribunal. Ld. DR vehemently argued supporting the order of Ld. AO and also filed a paper book dated 01.04.2021 containing pages 1 to 47. 6. Per contra Ld. counsel for the assessee apart from placing reliance on the finding of Ld. CIT(A) also referred to the following written submission placed before us: 1. Assessee is a partnership firm and is one of the group concerns of Dudani Group at Pipariya (MP). Assessee is engaged in the business of food grains since 26.12.2014. AY 2015-16 is the first year of the assessee wherein returned income has been accepted as assessed u/s 143(3) rws 153C. Second year is AY 2016-17 which is under appeal before your Honours. 2. A search was conducted u/s 132 on the Dudani group on 05.10.2015. A survey action was also conducted on the premises of the assessee during the same time. Statement of Shri Manoharlal Dudani was recorded on 07.10.2015 u/s 132(4) at the office premises of M/s. Mahesh Traders of which he is a partner. Shri Manoharlal Dudani d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as undisclosed investment by the Ld. AO u/s 69B 52,01,496 10. Summary of stock as on date of survey 05.10.2015 as per books of accounts of the assessee and alleged stock inventories prepared by the survey team during the course of survey is as follows:- Sr. No. Particulars Stock as per books of accounts (Rs.) Physical stock claimed by department (Rs.) Difference (Rs.) 1.a Bardana 6,81,135 1,36,000 (5,45,135) 1.b Chana 2,29,12,223 36,98,200 (1,92,14,023) 1.c Dhaan 6,19,375 - (6,19,375) 1.d Moong 9,15,678 - (9,15,678) Total # 2,51,28,411 38 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO states that there are no separate annexure available with him except for what is stated in the Question 10 of the statement of Shri Manoharlal Dudani. [PB 58, Para 2(iii)] 15. Ld. AO in his remand report has stated that there are no documents related to valuation of the stock or any trading account available on record. [PB 58 and Page 15 of CIT(A)] 16. It is a categorical finding of Ld. CIT(A) that the hand written stock inventory prepared by the department is erroneous. Bare perusal of this hand written stock inventory sheet shows that the columns with heading Rate and Total Value are left blank. Also, there is no totalling for any of the column to give the overall quantification. [ PB 59 - 61 and Page 16, last line of CIT(A)] 17. Books of account of assessee are audited and the same have not been rejected by the Ld. AO. [CIT(A) Page 9, top 3 lines] 18. Trading accounts of the assessee contain quantitative details of each grain type (jin). Each item of Stock category as per books is verifiable from the daily stock registers maintained by the assessee as well as from the sale and purchase registers maintained by the assessee. All these were f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made by the Ld. AO by giving fact based finding that: a. no trading account statement is on record of the AO on the basis of which alleged additions have been made. [Page 17 Para 4.1.3 of CIT(A)] b. it is truth that no specific enquiry was carried out by AO from Mandi Parishad and other sellers from whom the appellant has purchased the grains and other jins. [Page 17 Para 4.1.4 of CIT(A)] c. AO as failed to bring in light any of the instance showing bogus purchase made by the appellant. [Page 17 Para 4.1.4 of CIT(A)] d. Additions made by the AO are simply on guess work and imagination. [Page 17 Para 4.1.5 of CIT(A)] e. Shri Manoharlal Dudani in his sworn statement recorded on oath has clearly stated the difference in stock is on account of stock kept at other godowns, however, the search party did not consider his words worthy and the AO also relied solely to the findings of the search party without giving a single thought to the fact that Shri Manoharlal Dudani has explained the reasons for difference in stock. [Page 17 Para 4.1.5 of CIT(A)] 28. Ld. CIT(A) held that the AO was not justified in making additions on his whims and fancies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survey team and the same is follows: Sr. No. Particulars Stock as per books of accounts (Rs.) Physical stock claimed by department (Rs.) Difference (Rs.) 1.a Bardana 6,81,135 1,36,000 (5,45,135) 1.b Chana 2,29,12,223 36,98,200 (1,92,14,023) 1.c Dhaan 6,19,375 - (6,19,375) 1.d Moong 9,15,678 - (9,15,678) Total # 2,51,28,411 38,34,200 (2,12,94,211) 2. Chana Dal 3,51,29,555 4,26,95,804 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made by the AO. Therefore, the AO vide letter dated 05.03.2019 was specifically required to provide photocopies of the desired documents(as mentioned above) on the basis of which various additions have been made to the income of the appellant. The AO vide letter dated 29.04.2019 has stated as under:- 2. In this case, the AO of the appellant has called for the following documents through CIT(A)-IJL Bhopal from this office related to AY 2016-17 in above mentioned case. The CIT(A)-IJL Bhopal has asked following information's, point wise reply of which is as under:- i) Copy of the inventory sheets (handwritten) of stock taking prepared during survey isa ttached with this letter. No other documents related to the inventory of stock is available in this office. ii) There is no copy of the trading account from 0110412015 to 06/10/2015 available in the seized material impounded from the premises of assessee firm. However, question no 10 itself mentions that the trading account for the period of 0110412015 to 06/10/2015 was prepared on the basis of firm's books of account and being presented before you as annexure '?Sf' and 'Tf and same is part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n stock should not be treated as his undisclosed investment in his firm. Shri Dudani in reply to Q.No 10 has clearly stated that his stock of 'chana', 'tiwda', 'soyabean', 'dhaan' and 'chana daal' are also kept at Pragati Warehouse and this is the main reason for shortage of stock. Further, vide Question No 12, he was required to explain that a stock of₹ 52,01,496/- of 'chunni ' was found in Narmada Vally Warehouse in the name of Mis Sai Industries, however, no such stock is found in books of accounts of firm. In reply Shri Manohar Dudani stated that 'chunni' is a form of 'channa' and is included in stock of channa in books of firm. On perusal of statement of Shri Manohar Dudani it is evidently clear that the search party were aware of details of Pragati Warehouse where stock of appellant firm was stored, however, the AO also overlooked this vital fact during the course of assessment proceedings. If the stock kept at Pragati Warehouse and Mandi Warehouse was physically examined, the actual position of stock of the appellant firm would come to light and only then any justified addition could have been made. Nevert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on one who deny the existence of the fact. The AO has failed to discharge his onus of proof especially when addition has been made under deeming fiction . In view of this lacuna on the part of AO, impugned addition is legally not sustainable. 4.1.5 Apart from the above, the additions made by the AO are simply on guess work and imagination. It is also Qsettled law that AO cannot make any addition merely on basis of suspicion, however strong it may be. The AO is not justified in presuming certain facts without having anything to corroborate. Hon'ble Supreme Court in the case of Dhakeshwari Cotton Mills Ltd. vis CIT (1954) 26 ITR 775 (SC) has held that although strict rules of evidence Act do not apply to income tax proceedings, still assessment cannot be made on the basis of imagination and guess work. It has been held in the case of Umacharan Saha Bros co. vis CIT 37 ITR 21 (SC) that suspicion, however strong cannot take place of evidence. Similar views have been expressed by Apex court in the case of Dhiraj Lal Girdharilal vis CIT (1954) 26 ITR 736 (SC). Shri Manohar Dudani in his sworn statement recorded on oath has clearly stated that the difference in stock is on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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