TMI Blog2021 (12) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... t possess any evidentiary value in the eyes of Law. If the assessee would be doing transactions of such high magnitude of unaccounted purchase/sales, the same would have been easily corroborated through aforesaid tangible evidences. But the Revenue couldn't bring such evidences even on account of extensive search undertaken because no such transactions were conducted by the assessee. Therefore, we are of the view that the addition made on the basis of overvalued stock in Consignment memos prepared for getting Insurance claims requires to be deleted as books of accounts found were found genuine and no corroborative evidence were brought on record. We are of the view that the ld. CIT(A) has rightly appreciated the facts and reached to the justified conclusion in the light of the relevant judicial pronouncements. Even before us, the Revenue could not controvert the findings of the ld. CIT(A) by bringing any tangible or contrary evidence on record. Therefore, we confirm the findings recorded by the ld. CIT(A) on this issue. Accordingly, ground nos. 1 2 raised by the Revenue are dismissed. Addition being @25% Travelling expenses conveyance expenses - AO made this addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving that the disallowance was on higher side without appreciating the fact that the assessee had carried out various pleasure trips and personal trips to foreign destination with his family members, and has also made various not fully explained purchases on personal count; which are apparent from the documents seized from the assessee s premises. 2. Facts, in brief, with regard to ground nos.1 2 on the issue of deletion of the addition of ₹ 2,58,59,522/- made by the Assessing Officer on account of unexplained investment, are that the assessee is engaged in the business of trading of Jewellery and for promoting the sales, the assessee has been doing practice of taking part in various trade shows, exhibitions and fairs in different cities. During search and seizure proceedings, certain loose papers in the form of Consignment memos, issued for the exhibition purpose which was in turn for the purpose of insurance, were seized by the Revenue. The AO had compared these consignment memos with value of stock as per books. The difference arising on such comparison was then added as unexplained investment in stock u/s 69 of the Act for the A.Y. 2014-15 under consideration. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the assessment year 2014-15 under consideration, the Assessing Officer made addition of ₹ 2,58,59,522/- on account of unexplained investment in stock u/s 69 of the Income Tax Act as narrated above. We find that for promoting the sales, the assessee is in practice of taking part in various trade shows, exhibitions and fairs in different cities and during search and seizure proceedings, certain loose papers in the form of Consignment memos, issued for the exhibition purpose which was in turn for the purpose of insurance, were seized by the Revenue. The AO had compared these consignment memos with value of stock as per books and the difference arising on such comparison was then added as unexplained investment in stock u/s 69 of the Act for the A.Y. 2014-15 under consideration. We find that in the post search statements u/s 131(1A) of the Act, the assessee was asked about the difference. The relevant portion of such statements is reproduced hereunder: From the perusal of the above, it is obvious that the amount mentioned in consignment memo for taking stock to Exhibition was inflated almost 2 times for the purpose of insurance as in case of theft/damage of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ispute. The factum of insurance cover is also a matter of fact and based on business The goods were sent for exhibition to different cities is not in dispute. The factum of insurance cover is also a matter of fact and based on business requirement. It is also well known that in theft cases, Insurance companies do not pay the entire insured amount on some technical pretext or the other. In the unexpected event of theft, the payment by Insurance companies could be as low as 50% of the insured money. On the date of search no significant stock discrepancy was found except for a shortage of stock of ₹ 9,35,088/- for the A.Y 2017- 18 on which 25% profit has been duly offered in the return filed u/s 139. Further, the addition made is not based on any tangible evidence and is totally based on loose paper seized by the department in the form of consignment memo for Exhibition Purpose. The same is evident from the Assessment order. The relevant portion is reproduced as under.- During the search proceedings, some loose papers were found and seized which were related to MlS Interstar where the stock of ₹ 5,25,00,000/- was displayed in some exhibition by shri Ankit Kimtee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income sought to be taxed is within the taxing provisions and there was in fact income, are propositions which are well settled by the Supreme Court in the case of Parimisetti Seetharamamma v. CIT [1965) 57 lTR 532 which reiterates these propositions. HIGH COURT OF RAJASTHAN , JODHPUR BENCH in case of Commissioner of Income-tax v. Relaxo Footwear [2002] 123 TAXMAN 322 (RAJ.) Head Note - Section J 43 of the Income-tax Act, 1961 - Assessment _ Addition to income - Assessment year 1992-93 .. Tribunal on. examination of books of account found that true position of stock was rightly reflected in books of account of appellant and stock statement submitted to bank was deliberately inflated only to get higher limit of credit from bank - Tribunal, therefore. deleted addition made to income on bas is of stock statement submitted to bank - Whether finding of Tribunal was a finding of fact and required no interference - Held, yes. High Court of Gujrat in CIT v. Arrow Exim (P.) Ltd. [2010] 230 CTR (Guj.) 293 has held that Where though there was discrepancy between stock as per books of account and that shown in statement given to bank allegedly to obtain higher credit facilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issible in absence of other supportive evidence. The addition was, therefore, deleted Hon'ble ITAT Indore in the case of ACIT vs M/s. Fairdeal Marwar Garage Ltd. (2019) 34 ITJ 521 (Trib. - Indore) HELD The assessing officer failed to corroborate the material find during the course of survey with the transactions carried out by the appellant. In the given facts and circumstances of the case) we find no infirmity in the finding of fact given by Ld. CIT(A) and thus dismiss Grounds No. 1 to 15 of the Revenue's appeal. In CIT vs Lalit Bhasin [2007] 290 ITR 245 (Delhi) it was held that the assessing officer arrived at a conclusion, primarily on imaginative basis and conjecture rather than on the basis of any record or books of account. The Tribunal had found that here was no evidence of unexplained investment, the deletion of addition was justified Nirmal Fashions (P) Ltd. v. DCIT, (2008) 25 SOT 387 (Kol) wherein it was held - Since papers/documents seized on search were found to be, untenable and contrary to other evidence on record, impugned additions made on the basis of said papers was not justified The Hon'ble High Court of Delhi in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... form of consignment memo for Exhibition Purpose. Further, there are no corroborative evidences in the hands of Revenue to substantiate the allegations of unaccounted purchase. During search proceedings there were no evidences found in the form of unaccounted purchase bills or unaccounted sales or list of suppliers from whom unaccounted purchases made or payments made for such alleged unaccounted purchase etc. In the absence of such corroborative evidence, the loose paper seized (Consignment Memo) is nothing but a dumb document and do not possess any evidentiary value in the eyes of Law. If the assessee would be doing transactions of such high magnitude of unaccounted purchase/sales, the same would have been easily corroborated through aforesaid tangible evidences. But the Revenue couldn't bring such evidences even on account of extensive search undertaken because no such transactions were conducted by the assessee. Therefore, we are of the view that the addition made on the basis of overvalued stock in Consignment memos prepared for getting Insurance claims requires to be deleted as books of accounts found were found genuine and no corroborative evidence were brought on record. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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