TMI Blog2022 (11) TMI 1080X X X X Extracts X X X X X X X X Extracts X X X X ..... ctually shortage of stock of 914 bags and which was treated as unaccounted sales on which the Department of Trade Taxes, Government of NCT of Delhi, has levied the tax/penalty. Now so far as the first contention of the assessee that there was no variation of stock and the total addition made by the Assessing Officer is liable to be deleted, the option left is to send the documents filed before us to the lower authorities for necessary examination/verification. When this was proposed to the ld. Counsel for the assessee, he preferred to rely on his alternate plea raised in Additional Ground No. 5. Thus, Ground Nos. 1 to 4 and additional Ground Nos. 1 to 4 are dismissed. Gross profit element on such undisclosed sales should have been subjected to tax - As considering the judicial precedents wherein it has been held that in case of undisclosed/unaccounted sales, addition could be made only in respect of the profit element. We find that the in the case of CIT vs. Hariram Bhambani [ 2015 (2) TMI 907 - BOMBAY HIGH COURT] considering similar case, where survey was conducted u/s 133A of the Act and unaccounted sales were found and thereafter accepted in the statement recorded. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted by the assessee as shall be evident from the fact that the said sum was not offered in the return of income filed for the relevant assessment year. 2. That on the facts and circumstances of the case, the learned CIT(A) erred in not appreciating the fact that the alleged discrepancy in stock was never accepted by the assessee and the tax and penalty assessed by VATO (Enforcement), New Delhi was paid only to buy peace. 3. That on the facts and circumstances of the case, the learned CIT(A) erred in placing sole reliance upon the erroneous assessment documents raised by the Team of Enforcement, Branch -1, Department of Trade Taxes, Government of NCT of Delhi, during survey under the DVAT Act, 2004, on which the Ld40 t00 placed complete reliance, when the assessee had already reconciled the difference in stock of biri as found in the godown and as obtained from stock statement maintained at the sales office. 4. That on the facts and circumstances of the case, the learned CIT(A) erred in sustaining the addition of alleged undisclosed stock and cash of Rs. 1,00,35,509/- without appreciating the fact that the difference in stock statement as obtained from godown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws and the issue cannot be decided merely on the basis of written submissions and since no documents or evidence have been produced to establish that the impugned stock was part of the regular books, there is no basis to interfere with the findings of the assessing officer. 6. Aggrieved, the assessee is in appeal before the Tribunal challenging the finding of the ld. CIT(A) confirming the addition for undisclosed/unaccounted stock amounting to ₹ 1,00,35,509/- and sustaining the addition of ₹ 4 lakhs on account of payment of interest on demand VAT. The assessee has also raised additional grounds taking an alternate plea that the alleged addition is towards the shortage of stock and, therefore, the addition could only be made to the extent of profit on such unaccounted stock. 7. The ld. Counsel for the assessee, made two fold contentions. Firstly it is submitted that there was no variation in the stock. The process followed by the assessee is that, when the stock is received from West Bengal to Delhi sales office, firstly the invoice-wise/date -wise entry are made in the stock register maintained both manually and in the computer systems. Thereafter the bags are unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, the issue may be restored to the lower authorities for necessary examination and verification. 10. We have heard the rival contentions and perused the record placed before us. The addition for unaccounted stock at ₹ 1,00,35,509/- and disallowance of interest/VAT penalty of ₹ 4 lakhs, is challenged before us. 11. As regards the addition for stock of ₹ 1,00,35,509/-, we find that there was a survey conducted on 13/11/2012 at the assessee s Delhi office by the Department of Trade Taxes, Government of NCT of Delhi. As per the stock register maintained at the sales office, there were 2203 bags in the stock. As per the physical stock statement prepared by the survey team 1289 bags were found. A shortage of 914 bags was detected and unaccounted stock was valued at ₹ 1,00,35,509/-was determined and the assessee paid the penalty/tax on the said sum. The ld. Assessing Officer, has confirmed this addition in the scrutiny proceedings and the same was confirmed by the ld. CIT(A) also. 12. In the first fold of contention, it is submitted by the ld. Counsel for the assessee that there was no difference in the stock and the alleged 914 bags were actually rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y unexplained expenditure in this case. In any view of the matter, the CIT(A) and Tribunal have came to the concurrent finding that the purchases have been recorded and only some of the sales are unaccounted. Thus, in the above view, both the authorities held that it is not the entire sales consideration which is to be brought to tax but only the profit attributable on the total unrecorded sales consideration which alone can be subject to income tax. The view taken by the authorities is a reasonable and a possible view. No substantial question of law arises. [emphasis supplied] 12.2. Similar view has been taken by the Hon ble Gujarat High Court in the case of CIT vs. Samir Synthetics Mill (supra) CIT vs. Gurubachhan Singh J. Juneja (supra). 13. Considering these judicial precedents, we find that the same are squarely applicable in the facts of the instant case and the assessee having disclosed the gross profit rate of 17.20%, we are inclined to hold that the addition should be sustained only to the extent of ₹17,26,108/-, which is 17.20% of the alleged sum. We, therefore, allow the additional ground no. 5 raised by the assessee and sustain the addition to ₹17, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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