TMI Blog2024 (3) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by assessee or the documents and evidences furnished by the assessee. Addition made on account of excess stock found during the course of survey is directed to be deleted. Assessee appeal allowed. - Dr. B. R. R. Kumar, Accountant Member And Sh. Yogesh Kumar US, Judicial Member For the Assessee : Sh. Ved Jain, Adv. And Ms. Supriya Mehta, CA For the Revenue : Sh. Amit Katoch, Sr. DR ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: The present appeal has been filed by the assessee against the order of ld. CIT(A)-23, New Delhi dated 31.08.2021. 2. Following grounds have been raised by the assessee: 1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. 2. (i)On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 6,13,75,028/- made by the AO on account of excess stock found during the course of survey holding the same as unexplained investments under section 69 read with the section 115BBE of the Income Tax Act. (ii) That the abovesaid addition has been confirmed ignoring the detailed submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued and vide Q.36 (PB Pg. 43), the assessee was show caused as to why addition of Rs. 6,13,75,028/- not be made on account of unexplained/ unaccounted stock in the hands of the assessee firm. 6. The assessee submitted that: i. The stock comprising of 30 Kg gold bar approximately was sold on the day before survey and out of which approximately 20 Kg gold bar was undelivered to some of the parties which was kept aside in the premises of the assessee firm. The assessee had prepared all the sale invoices on 28.11.2016 however the goods could not be delivered on the same day and such undelivered goods were kept aside in the premises of the assessee. ii. Moreover, the survey was initiated on 29.11.2016 and got concluded on 30.11.2016, therefore the assessee firm was not in position to deliver the goods to respective parties during this tenure of survey proceedings. iii. However these goods were delivered to the respective parties post survey and copies of acknowledgement of goods by the receiving parties were also duly furnished. A copy of invoices of all the undelivered goods along with the acknowledgement of receiving parties is placed at PB Pg. 53-56. iv. Further, a copy of ledger ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer. 11. During the course of appellant proceedings, assessee reiterated its replies and explained that the difference was on account of goods pertaining to certain parties remaining undelivered and a copy of reconciliation was duly submitted before the AO. It was also submitted by the assessee that neither any defect or discrepancy was pointed out in such evidences furnished by the assessee nor any adverse material was brought on record by the AO to rebut the explanation of the assessee. It was submitted that the AO himself had conducted an independent inquiry from the respective parties and those parties duly submitted their responses acknowledging the delay in delivery of such goods. The addition was made solely on the basis of statement of Sh. Sanjay Malhotra recorded during the course of survey proceedings without bringing any corroborative material on record. It was argued that the assessee has duly reconciled the difference in value of closing stock found during the course of survey and as recorded in the books of accounts of the assessee. Nothing contrary was pointed out by the AO or CIT(A) to demonstrate that any anomaly or defect existed in the reconciliation furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cording of statement of Sh. Sanjay Malhotra as the statement of Sh. Sanjay Malhotra was recorded on 29.11.2016 30.11.2016 and not on 10.03.2017. Therefore, the reasoning given by the ld. CIT(A) that assessee has reaffirmed after 3 months for rejecting the explanation of the assessee for difference in stock is incorrect and against the facts and hence not sustainable. It is important to point out no incriminating documents were found during survey. There was no evidence of any sale or purchases outside the books of accounts. The books of accounts with all purchases and sales invoices were available during survey. The contention of the Revenue that it is an afterthought is incorrect, keeping the fact that payment from these parties have been received in bank account as is evident from PB Pg. 98 99 where these payments are credited in the Bank A/c. The sale invoices are dated 28.11.2016 and were duly recorded. Each of these parties on cross verification by the AO has confirmed that they have made the payment, invoices have been issued and delivery against invoices was recorded on 1st 2nd December 2016. 18. The assessee having given the explanation which was plausible explanation which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected the said reconciliation and explanation so offered along with documentary supporting documentation for the reason that the same was not offered during the course of survey. To our mind, given that the survey was conducted during the middle of the financial year, it is quite likely that there could be some timing mis-match in terms of receipt of physical stock and entries made in the books of accounts and thereafter, once the entries are made in the books of accounts, and necessary reconciliation prepared and submitted, the same should have been examined by the AO and cannot be dismissed summarily. The Id. CIT(A) is also of the same view that the said action of the AO is not justified and where the assessee is able to show with evidence that admission made during survey was mistaken, the same should be examined on merits. The Id. CIT(A) has thereafter examined the reconciliation statement and has held that the assessee has only partly been able to substantiate the differences and reconciliation so submitted. We have also gone through the reconciliation statement and find that the assessee has reasonable explained the differences in the stock with its explanation and support ..... X X X X Extracts X X X X X X X X Extracts X X X X
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