9911796707
TMI Blog2023 (3) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... he following revised grounds of appeal before us: "Revised Gr. No. 1: "1. On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in sustaining addition of Rs. 16,09,385 on count of excess stock found on survey u/s. 133A 'only on the basis of survey statement recorded on oath, when the assessee has (/ explained/ reconciled it before the Ld. AO/ Ld. CIT(A), more so, correct valuation of physical stock found as on 3-3-11 comes to Rs. 19,62,148, instead of Rs. 35,64,385 as incorrectly valued by survey team on tag price printed on stock items; hence, addition of Rs. 16,09,385 is liable to be deleted." Revised Gr No. 2: "2. On the facts and circumstances of the case and in law, ld. CIT(A) has erred in sustaining addition of Rs. 3,40,009 on count of excess cash found on survey u/s. 133A only on the basis of survey statement recorded on oath, when the assessee has duly explained/ reconciled it before the ld. AO/ ld. CIT(A), hence; addition of Rs. 3,40,009 is liable to be deleted." Also the assessee has raised an additional ground of appeal which reads as under: Additional Gr. No. 1 "1. On the facts and circumstances of the case and in law, assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of unaudited accounts and incomplete information it was submitted by the assessee, viz. (i) that purchases of certain goods had remained unrecorded as the corresponding purchase bills were received after the culmination of the survey proceedings ; (ii) that certain direct expenses were not recorded at the time of survey proceedings; (iii) that the sale figure adopted by the survey officials in the tentative trading account was inclusive of VAT while for those recorded in the books of accounts was exclusive of VAT; (iv). the value of closing stock was wrongly arrived at by the survey officials on the basis of a novel method, i.e, applying the GP rate of 9% of the preceding year to the value of sales (upto the date of survey) and taking the balancing figure in the trading stock as the value of "closing stock" (as on the date of survey); and (v) the discrepancy as regards the excess cash was for the reason that the books of account were incomplete as on the date of survey. It was the claim of the assessee that as the discrepancies as regards the excess stock and cash were reconciled by the assessee after the culmination of survey proceedings and the books of accounts were got a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e forth with any evidence to support her claim that though some goods were actually received and formed part of her stock at the time of the survey proceedings but the corresponding bills were recorded after culmination of the said proceedings. 8.1 Apropos the claim of the assessee that there was no discrepancy with respect to cash found in the course of survey proceedings, the CIT(Appeals) was of the view that as her said claim was not based on any supporting evidence, therefore, the same did not merit acceptance. Referring to the purchase bills which were filed by the assessee as additional evidence before him, it was observed by the CIT(Appeals) that the assessee had not only failed to produce the said bills before the A.O, but also the same having been received by her after conclusion of survey proceedings could not be entertained. Also negating the claim of the assessee that the survey officials had highly pitched the value of stock, it was observed by the CIT(Appeals) that though the assessee had filed before him a comparative stock statement which revealed the value against each item that was taken by the survey team as against that taken by the assessee but the very basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 480 (SC) as an Income Tax Officer under section 133A is not empowered to examine any person on oath, therefore, any admission made in a statement recorded during the course of survey proceedings could not form a basis for making any addition. Also reliance was placed by the Ld. AR on the judgment of the Hon'ble High Court of Kerala in the case of Paul Mathews & Sons vs Commissioner of Income Tax (2003) 263 ITR 101 (Ker.), wherein it was observed by the Hon'ble High Court that though Section 133A of the Act enables an Income Tax authority to record statement of any person which may be useful in the course of the said proceedings but the same does not authorize him for taking any sworn statement. It was submitted by the ld. A.R that the Hon'ble High Court had observed that a statement recorded u/s 133A of the Act is not to be given any evidentiary value because the officer recording such statement is not authorized to administer oath and take any sworn statement which alone has evidentiary value in the eyes of law. Also, the Ld. AR had drawn support from the order of the ITAT, Raipur Bench in the case of Tikam Das Jivnani Vs. Assistant Commissioner of Income Tax, ITA No. 28/RPR/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of survey proceedings, which in the statement recorded u/s. 133A of the Act was agreed to be disclosed as her additional income for the year under consideration, therefore, the A.O. had rightly made the addition of the said respective amounts. Rebutting the claim of the Ld. AR that the statement u/s. 133A of the Act was retracted by the assessee for the reason that the same was recorded under a confused state of mind, the Ld. DR submitted that the very fact that the additional income of Rs. 10 lac towards unexplained investment that was disclosed as additional income in the same statement was offered by the assessee for tax in the return of income in itself falsified her said claim. 12. We have heard the ld. authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. 13. We have given a thoughtful consideration to the issue in hand, and are principally in agreement with the claim of the Ld. A.R that as Section 133A does not empower any Income-tax Officer to examine any per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inter alia, for the reason that the sale figure adopted by survey officials in the tentative trading account (inclusive of VAT) was Rs. 1,15,03,582/-, while for that recorded in the audited books of accounts of the assessee (exclusive of VAT) was Rs. 1,00,90,862/-, which, thus, had resulted to the impugned discrepancy of Rs. 14,12,720/-. Although at the first blush the aforesaid explanation of the assessee as regards the difference in the sales on 03.03.2011, i.e., as recorded in its audited trading accounts as against those taken in the tentative trading account that was prepared in the course of proceedings u/s. 133A of the Act appeared to be very convincing but the factual position remained otherwise. We, say so, for the reason that a perusal of the audit report issued by the Chartered Accountant u/s. 44AB of the Act reveals that the auditor had at Sr. No. 21 of his report stated as under: *State whether sales tax, customs duty, excise duty or any other indirect tax, levy, cess, impost, etc. is passed through the profit and loss account VAT collected on sales, directly credited to payable account On a perusal of the aforesaid fact, it transpires beyond doubt that sales were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a considered view that as observed by the lower authorities, and, rightly so, the assessee had in the garb of reconciliation of the excess stock sought to nullify the disclosure of additional income towards discrepancies in stock that had emerged in the course of survey proceedings. Also we find substance in the claim of the Ld. DR that retraction of the statement of the assessee in the course of the survey proceedings was merely based on an afterthought. We, say so, for the reason that though it is the claim of the assessee on one hand that as the impugned statement in the course of the survey proceedings was recorded under confused state of mind, while for at the same time she had in her return of income admitted the additional income of Rs. 10 lac towards unexplained investment that was disclosed in the same statement. 16. In so far the claim of the Ld. AR that the impugned variance in the value of the closing stock as had been arrived at by survey officials on the basis of tentative trading account prepared on 03.03.2011 as against that found available on the basis of physical stock taking was, inter alia, attributable to the reasons that purchase of Rs. 3,29,702/- had remai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on survey u/s. 133A only on the basis of survey statement recorded on oath, when the assessee has explained/ reconciled it before the ld AO/ ld CIT(A), more so, correct valuation of physical stock found as on 3-3-11 comes to Rs. 90,40,256, instead of Rs. 1,20,57,398 as incorrectly valued by survey team on tag price printed on stock items; hence, addition of Rs. 25,32,398 is liable to be deleted." "2. On the facts and circumstances of the case and in law, ld CIT(A) has erred in sustaining addition of Rs. 6,03,109 on count of excess cash found on survey u/s133A only on the basis of survey statement recorded on oath, when the assessee has duly explained/ reconciled it before the ld AO/ ld CIT(A), hence, addition of Rs. 6,03,109 is liable to be deleted." 22. Succinctly stated, the assesee who is engaged in the business of trading of car accessories was on 03.03.2011 subjected to survey proceedings u/s. 133A of the Act. The assessee filed her return of income for the year under consideration i.e. A.Y. 2011-12 on 30.01.2012, declaring an income of Rs. 15,43,870/-. Subsequently, the case of the assessee was selected for scrutiny assessment u/s. 143(2) of the Act. 23. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit 2,48,687 GP (5.8%) 28,98,271 Total 6,20,53,449 Total 6,20,53,449 Audited trading account for the year ended 31-3-11 ( i.e., from 1-4-10 to 31-3-11) Opening stock (1-4-10) 1,09,82,356 Sales 5,30,08,122 Purchases 4,83,04,244 Direct Income Nil (Rs. 11,33,994 transferred to P & L account) Entry tax 3,52,279 Closing stock(31-3-11) 1,00,22,310 Motor Profit 3,18,669 GP (5.8%) 30,72,884 Total 6,30,30,432 Total 6,30,30,432 On the basis of the aforesaid facts, it was the claim of the assessee that as the impugned disclosure of excess stock/cash was based on incorrect facts, thus, the same was not offered for tax in the return of income. However, the A.O. did not find favour with the aforesaid explanation of the assessee. Referring to the re-casted audited trading account of the assessee (up to 03.03.2011) as against that prepared on the basis of incomplete books in the course of survey proceedings i.e. on 03.03.2011, it was observed by the A.O. that the assessee had failed to come forth with any concrete explanation to establish her aforesaid claim. The A.O. was further of the view that the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 29. Apropos the claim of the assessee as regards the impugned variance in the value of closing stock that was found on the basis of physical stock taking in the course of survey proceeding conducted on her on 03.03.2011 as against that reflected in her books of account, we find that she had, inter alia, claimed that the same was for the reason that the value of the "opening stock" i.e. on 01.04.2010 was wrongly taken by survey officials in the tentative trading account that was compiled on the basis of incomplete books of account on 03.03.2011 at Rs. 75,16,539/- as against the actual amount of Rs. 1,09,82,356/-. It was submitted by the Ld. AR that the aforesaid incorrect figure of "opening stock" i.e. 01.04.2010 of Rs. 75,16,539/- was adopted by the survey officials on the basis of rough financial statements of the assessee for the period 01.04.2010 to 28.02.2011 that were found in the course of survey proceedings, Page 62 of APB. It was submitted by the Ld. AR that the "closing stock" as on 31.03.2010 was Rs. 1,09,82,356/-(supra). The Ld. A.R in order to buttress his aforesaid claim had taken us through the audited trading account of the assessee on 31.03.2010 wherein his afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On a perusal of the records, we find that the "opening stock" on 01.04.2010 had admittedly been adopted by the survey officials while preparing the tentative trading account on the basis of the "Profit & loss account" for the period 01.04.2010 to 28.02.2011 that was found in the course of survey proceedings, Page 62 of APB. It is the claim of the Ld. AR that the aforesaid rough "Profit & loss account" could not have been acted upon for drawing adverse inferences in the hands of the assessee. As observed by us hereinabove, the Ld. AR in order to substantiate his claim that the aforesaid "Profit & loss account" (supra) referred to a set of incorrect figures had carried out a conjoint reading of the same a/w. tentative trading account as was prepared by survey officials on 03.03.2011, and had drawn support from the variance in the figures of purchases and sales therein mentioned. Also, the Ld. AR had taken us through the audited trading account of the assessee for the immediately preceding year i.e. F.Y.2009-10, wherein the "closing stock" as on 31.03.2010 was reflected at Rs. 1,09,82,356/-. Although we cannot remain oblivion to the fact that the aforesaid audited trading account for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompiling of the tentative trading account on the date of survey i.e 03.03.2011, i.e, by applying of an ad-hoc GP rate to the sales (recorded) of the assessee upto the date of survey and taking the "closing stock" as the balancing figure. The aforesaid methodology in our considered view militates against the basic principles of accountancy. Our aforesaid view is fortified by the judgment of the Hon'ble High Court of Punjab & Haryana in the case of CIT, Patiala Vs. Bhalla Brothers, Gali Mahian, Ludhiana (1981) 10 Tax Law Review 45 (P&H). The Hon'ble High Court in its aforesaid order had approved the order of the Tribunal, which had, inter alia, held as under: "The addition of Rs. 6,470/- (on the basis of figures before us addition would be only Rs. 5,952/-) is based on the ground that stock to this extent was not available in the months of August and September, and yet the assessee disclosed sales. The allegation is that this stock was purchased from some money outside the books of account. The basis for making the calculation of the aforesaid amount is fallacious. The calculation for each month have been made on an assumption that the gross profit rate was constant at 34.14% in ea ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
