TMI Blog2005 (5) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... pectacles, spectacle frames and cases, and ophthalmic lenses. As far as assessee is concerned, its head office at 425, Kalbadevi Road, Mumbai, was covered by the search operation, whereas its factory premises at 3/2, Sakinabai Industrial Estate, Bhayander(W), was surveyed under s. 133A of the IT Act. In the course of search and survey operation, stock was found at both the said premises. Assessee filed return of income under s. 158BC of IT Act on 25th June, 1999, showing undisclosed income of Rs. 2,35,080. Along with the return of income, the assessee furnished a stock reconciliation statement where it was pointed out that in both the premises, certain items of stock were taken in excess whereas some items were recorded less in the stock in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturing activity. The AO rejected the contention of assessee and added a sum of Rs. 29,70,743 representing the shortage in physical stock, which the AO concluded, was sold outside the books of account and, therefore, unaccounted sales. In p. 5 of his order, the AO has noted that, there is no dispute about the stocktaking done at any premises. except at the factory premises at Bhayander. The assessee's explanation regarding shortage in physical stock of Rs. 29,70,743 was rejected by the AO on grounds (i) to (ix) which are narrated at pp.3 to 5 of the order of CIT(A). On the basis of AO held that stock of raw material worth Rs. 29,70,743 which was not found in the course of search and which was reflected in the books of account was sold outs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of flair of his influence and control. This almirah had imported raw material and was under the control of partner of firm deputed to look after the factory. In such a situation, he would not be in knowledge of what was contained in shop No.5 at Himparvati Society. In any case, it was the duty of survey party to check up all the premises. The manager did not hide anything from survey party and it was he who volunteered the information regarding existence of two shops in Himparvati Society. In fact, the survey party failed to ask a basic question as to whether any stock was kept in any other place apart from what AO found within the factory. This question should have been asked to the manager when his statement was recorded. Moreover, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvey party and made available to AO to analyse. A perusal of books of acc9unt inventorised by survey party at the factory as well as by search party at head office shows that such records have duly been maintained by assessee. Even more curiously is the AO's association (sic) if the almirah in which imported goods were kept and so keys were not available with manager to be opened after obtaining keys from partners. There is no reason why survey party could not get premises at Himparvati Society if it were used. Another point raised by AO is that silence maintained by assessee after search only because to quote. CIT(A) failed to understand logic behind these reasonings. It was not assessee's duty to identify loopholes in its own organization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of making the addition in question. We find that the said manager has clarified the situation by way of affidavit placed at p. 30 of the paper book filed by the assessee before the Tribunal. It is settled legal position that contents of the affidavit should not be rejected without providing the opportunity of cross-examination to deponent or assessee as the case may be, as held by Hon'ble Gujarat High Court in Glass Line Equipment Co. vs. CIT (2001) 170 CTR (Guj) 470 : (2002) 253 ITR 454 (Guj). So, the AO is not justified in rejecting the clarification given by manager by way of affidavit. We are also of the view that raiding party was not justified to reach to the conclusion that there was no stock at Himparvati Society though they were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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