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Income Tax Appellate Tribunal, AHMEDABAD BENCHES (SMC
Before: SHRI KUL BHARAT
O R D E R PER KUL BHARAT, J.M: This appeal by the assessee is directed against order of the CIT(A)-V, Baroda dated 7.5.2014 pertaining to the assessment year 2008-09. The assessee has raised following grounds of appeal:
M/s. Baladiwala Brothers, Baroda 1. The CIT(A) has erred both in law and in fact in upholding addition of Rs.16,80,000/- made by the Assessing Officer alleged as excess stock found during the course of survey which is erroneous both on point of law and on point of fact.
Your appellant fur4ther submits that he has been maintaining regular and proper books of accounts which are audited u/s 44AB of the Act and that provisions of Sales tax/Vat Tax applies and that those authorities have not made by adverse remark to the books of accounts, stock maintained etc. and the Assessing officer have not rejected books u/s 145 of the Act therefore the CIT(A) ought to have deleted the addition.
3. The assessing officer had fully relied on the statement recorded during Survey and that since he has failed independently to arrive at alleged difference in the stock the CIT(A) ought to have deleted such addition made by the Assessing Officer. It is therefore submitted that relief claimed above be allowed and the order of the Assessing Officer be modified accordingly. 2. The only effective ground is against sustaining addition of Rs.16,80,000/-. The facts giving rise to the present appeal are that the assessee filed its return of income declaring total income at Rs.9,56,940/-. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called as ‘the Act’). The case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Act was framed vide order dated 20.12.2010. It is observed by the assessing officer that a survey operation M/s. Baladiwala Brothers, Baroda was carried out on 27.2.2008 at the business premises of the assessee. During the course of survey, an unaccounted/unexplained cash of Rs.3,55,000/- and unaccounted/unexplained excess stock of Rs.16,85,000/- was found. During the course of survey proceedings, a statement on oath u/s 133A of the Act was recorded, wherein the assessee admitted the discrepancy of cash and stock. The A.O. made addition in respect of the excess stock of Rs.16,80,000/-. Aggrieved against this action of the A.O., the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions dismissed the appeal and sustained addition so made by the A.O. Now the assessee is in present appeal. Ld. Counsel for the assessee Shri M.K. Patel vehemently argued that the authorities below were not justified in not accepting explanation of the assessee and making addition/sustaining the same. Ld. Counsel submitted that the A.O. has not disbelieved the accounts as M/s. Baladiwala Brothers, Baroda the accounts have not been rejected. He further submitted that the entire addition has been made on the basis of a statement recorded during the course of survey. He contended that the law is well settled that the statement recorded during the course of survey would have no evidentiary value and as such, such statement should not only be the basis for addition. Ld. Counsel further submitted that the A.O. has not brought on record any material in support of the statement recorded during the course of survey. Ld. Counsel further submitted that the assessee was not in a proper frame of mind. He was tired and was not in a position to state the facts correctly. Further, when the accounts were seen, it was found that the assessee has wrongly admitted the excess stock. In fact, the alleged unaccounted stock was duly accounted by evidence and as contemplated under the accounting principles, the cost of such stock is liable to be deducted and only profit, if M/s. Baladiwala Brothers, Baroda at all is liable to added, which has not been done by the A.O., which has resulted in double addition. It was further submitted that the purchases are duly supported by the evidences merely because at the time of survey, such stock remained to be unrecorded, which was in fact recorded in the stock register after reconciling the available evidences. Therefore, he submitted that under the facts of the present case, the addition was not warranted.
Per contra, Ld. D.R. Shri N.K. Goel opposed the submissions and supported the orders of the authorities below. Ld. Counsel submitted that it was incumbent upon the assessee to reconcile the stock and prove with material evidences which the assessee failed to do during the course of survey. He submitted that the entire submission of the assessee is after thought. The assessee should have stated in the statement about the source of purchases. It was further submitted that it is mandatory under the law that M/s. Baladiwala Brothers, Baroda assessee would record stocks as available with him. He submitted that failure on the part of the assessee would certainly draw adverse inference against the assessee.
I have considered the rival submissions and perused the materials available on record. The basis of making addition is the statement recorded during the course of survey. Ld. Counsel for the assessee has taken me through the statement so recorded. It is stated that the whole purchases have been through banking channels. In support of this, he has drew my attention to the paper book where stock summary is enclosed. The assessee has also drew my attention to the paper book pages 155 and 156 to 184 to contend that sale and purchases are duly reconciled. There is no anomaly in the accounts so placed. Considering the fact that the assesse has demonstrated that purchases were made through banking channels and have been recorded in the books of accounts, the revenue has not brought any M/s. Baladiwala Brothers, Baroda contrary material on record. Under these undisputed facts, the A.O. is hereby directed to delete the addition of Rs.16,80,000/- as made in respect of the excess stock. However, the addition in respect of net profit @ 2% is sustained on this addition.
In the result, the appeal filed by the assessee in for the A.Y. 2008-09 is partly allowed.
Order was pronounced in the open court on 17 .09.2019.