DEPUTY COMMISSIONER OF INCOME TAX, KHANDWA vs. SHRI SANDEEP KUMAR MUNDRA. PROP.M/S S.K. ENTERPRISES, BURHANPUR

arising out of the order u/s 143(3) dated 20.03.2017 framed by ACIT, Khandwa.

The Revenue has raised following grounds in the case of Shri Sudhir Kumar Mundra in ITA No.510/Ind/2017:

“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has failed to appreciate the facts and as per statement recorded from the assessee dated 20.12.2012, the assessee has surrendered the additional income voluntarily i.e. Rs.73,61,364/- which is the difference in stock found during the course of survey.

2. Whether on the facts and in the circumstances of the case, Ld.. CIT (A) has failed to appreciate facts that the stock was taken in the presence of the authorized person of the assessee and the stock of goods was inventorised during the survey and it was found that stock shown in the books of accounts is very low as compared to physical stock taken as on date of survey.

3. Whether on the facts and in the circumstances of the case, Ld.. CIT (A) has failed to consider that the assessee has not shown or incorporated the total excess stock of Rs. 73,61,364/- in total income in the consideration year.

4. Whether on the facts and in the circumstances of the case, Ld.. CIT(A) was justified in not calling for remand report from AO, on the evidences submitted in appeal which is against the principle of natural justice.

Sudhir & Sandeep Kumar Mundra

5. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal.

The Revenue has raised following grounds in the case of Shri Sandeep Kumar Mundra in :

“1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has failed to appreciate the facts and as per statement recorded from the assessee dated 20.12.2012, the assessee has surrendered the additional income voluntarily i.e. Rs.90,88,142/- which is the difference in stock found during the course of survey.

2. Whether on the facts and in the circumstances of the case, Ld.. CIT (A) has failed to appreciate facts that the stock was taken in the presence of the authorized person of the assessee and the stock of goods was inventorised during the survey and it was found that stock shown in the books of accounts is very low as compared to physical stock taken as on date of survey.

3. Whether on the facts and in the circumstances of the case, Ld.. CIT (A) has failed to consider that the assessee has not shown or incorporated the total excess stock of Rs. 90,88,142/- in total income in the consideration year.

4. Whether on the facts and in the circumstances of the case, Ld.. CIT(A) was justified in not calling for remand report from AO, on the evidences submitted in appeal which is against the principle of natural justice.

5. The appellant craves leave to add to or deduct from or otherwise amend the above grounds of appeal

2. From perusal of the grounds raised in both these appeals, we find that common issue relating to addition for excess stock found during the course of survey has been raised by the revenue. As the issues raised are common both these cases were heard together and are being disposed of by this Sudhir & Sandeep Kumar Mundra common order for the sake of convenience and brevity.

Sudhir & Sandeep Kumar Mundra During the course of assessment proceedings the assessee was confronted for not declaring the excess stock of Rs. 73,61,364/- to which assessee made detailed reply along with necessary details and reconciliation of stock in books as on the date of survey, claiming that the difference between the physical stock and book stock was only at Rs.17,37,075/- as some of the purchase bills and expenses were not entered in the books of account available on the date of survey. Submissions of the assessee could not convince the assessing officer and he completed the assessment making addition of Rs.73,61,364/- towards excess stock any minor addition towards unaccounted FDR interest of Rs.64,630/-. Income assessed at Rs.1,08,07,650/-.

5. Aggrieved assessee preferred an appeal before the ld. CIT(A) challenging the addition of Rs.73,61,364/- and succeeded as Ld. CIT(A) after examining the details as well 5

Sudhir & Sandeep Kumar Mundra as the reconciliation statement deleted the addition.

6. Now the revenue is in appeal before the Tribunal.

8. Per contra Ld. counsel for the assessee relied on the finding of the Ld. CIT(A) and following written submission:

S.No. Particulars Amount as per Amount as per Difference declaration actual audited calculation 1 Physical stock 1,12,41,701/- 1,12,41,701/- Nil as on the date of survey 2 Stock as per 21,43,262/- 95,00,796/- 75,57,534/- books of accounts 3 90,98,439/- 17,40,905/- 73,57,534/- Excessive

Sudhir & Sandeep Kumar Mundra stock on the date of survey (1-2)

4. The assessee filed the following information with the ld. AO during the course of assessment to explain the difference :-

S. Documents Filed with the ld. AO Page No of the No. Paper Book 1 Letter to AO explaining in detail the reasons for the differences 1.1 Page No 78 to 79 of Statements of Assessee on the date of Vol. I survey 1.2 Page No 80 to 80 of Vol. I Trading Account on the date of survey 1.3 Page No 81 to 81 of Vol. I Copy of Audited Capital Account 1.4 Page No 82 to 91 of Vol. I Copy of Sales Tax Returns 1.5 Page No 92 to 92 of Copy of P&L Account up to date of Vol. I survey 1.6 Page No 93 to 97 of Comparative Chart showing GP & NP Vol. I with reasons of differences 1.7 Page No 98 to 98 of Valuation of closing stock on date of Vol. I survey 1.8 Page No 99 to 100 of Quantitative details of stock on date of Vol. I survey 1.9 Page No 93 to 97 of Comparative Chart of GP & NP for last 3 Vol. I years

Sudhir & Sandeep Kumar Mundra

“The reply submitted by the assessee is not accepted because stock was taken in presence of the authorised person of the assessee and on the basis of physical stock taken, assessee surrendered additional income voluntarily. Therefore, excess stock of Rs. 73,61,364/- which is not shown by the assessee is added in total income of the assessee

7. The ld. CIT(A) has recorded in para 3.12 of his order at page no 7 of his order as under: - “3.12 The A.O. could not find any discrepancy in the claim of appellant which is quite apparent from his Assessment Order also as the AO has discussed only the physical stock which in fact is not a matter of dispute at all. However, he summarily rejected the claim of appellant without even discussing in the assessment order the claim of stock as per books of accounts submitted by the appellant. It is the duty of the AO being a quasi judicial authority to examine and verify the documents so submitted by the assessee during the course of assessment proceedings and if he finds them not tenable, then he is under an obligation to pass a speaking order mentioning the specific reasons for not accepting the claim of the assessee. The AO in this case has failed to do so.”

S.No. Name of documents Page No 1. Written submission dated 06.03.2017 Page No 137 to 141 of Vol. II Enclosures to written submission dated 06.03.2017 1A For Purchase of Cloth Copy of Cloth Purchase Account Page 142 to Page 468 in Vol. III Copy of Purchase Bills Copy of Ledger Account of Parties For Purchase of Yarn 1B Page No 469 to Sudhir & Sandeep Kumar Mundra

Copy of Yarn Purchase Account 624 in Vol.III Copy of Purchase Bills Copy of Ledger Account of Parties 1C For Sizing Charges Page No 625 to Copy of Sizing Charges Account 796 in Vol. IV Copy of bills raised for sizing charges For Weaving Charges 1D Copy of weaving charges (Job) Account Page No 797 to Copy of Bills raised for weaving charges 1007 in Vol. V Copy of Weaving Charges Expenses Account 1E For Other Expenses Copy of KakhanaChokidari Expenses Account with vouchers Copy of BeemBharai Expenses Account with vouchers Copy of Charkha soot Kandi Bharai Page No 1008 to Expenses Account with vouchers 1103 in Vol. VI Copy of Machinery Repairing Expenses Account with vouchers Copy of Electric bill Expenses Account with copy of bills Copy of Soot Kandi Bharai Expenses Account with vouchers 2. Written submission dated 20.03.2017 Page No 1104 to 1107 in Vol. VII Enclosures to written submission dated 20.03.2017 2A Details of payments made fort total purchase up to the date of survey Page No 1108 to Sudhir & Sandeep Kumar Mundra

20.12.2012 1147 in Vol. VII 2B Details of payment made for purchases in two parts i.e., post & pre survey period 2C Copy of bilties for purchases made out of MP

Survey u/s 133A of the Act was conducted on 20.12.2012 and during the course of survey itself physical stock was inventorized and it was found to be excess at Rs.90,98,439/- in comparison to the stock as per books of accounts on the date of survey. During the course of Sudhir & Sandeep Kumar Mundra assessment proceedings assessee on the strength of reconciliation of statement surrendered only sum of Rs.17,40,905/- towards the excess stock. The addition of Rs.73,61,364/- was deleted by Ld. CIT(A) observing as follows:

3.4 I have carefully gone through all the above documents as well as the reasons cited by the AO to make the addition. The AO has given the following reason for making the addition:- "Stock was taken in presence of the authorized person of the assessee and on the basis of physical stock taken, assessee surrendered additional income voluntarily." 3.5 However, the fact of the case is that the appellant has duly accepted the physical stock taken by the department and in fact there is no dispute on the quantity, rates and calculation thereof. 3.6 The physical stock taken as on the date of survey was at Rs.l,12,41,701/- which is not at all disputed by the appellant however the stock in hand as per books of account was subsequently corrected which resulted in short declaration. 3.7 The summary of declaration is clearly depicted in the following chart: per Amoun t as S. Particular Amount Difference No. s as declarati actual audite per calculation 1 Physical 1,12,41,701 1,12,41,701 Nil stock as /- /- on th dat of surve Stock as pe 21,43,26 95,00,796/- 73,57,534 2 books of r 2/- /- accounts 3 Excessi stoc 90,98,43 17,40,905/- 73,57,534 ve k 9/- /- on th dat of survey (1- 2)

Sudhir & Sandeep Kumar Mundra

3.8 As discussed above the appellant has not disputed the stock found on the date of survey however, as per his submission due to incomplete books of accounts, the stock in hand as per books of accounts on the date of survey was shown at Rs. 21,43,262/_. 3.9 After correcting the books of accounts, the stock in hand as per books of account as on the date of Survey was at Rs. 95,00,796/ _ and thus the difference calculated on the date of Survey was reduced substantially. 3.10 After correcting books of accounts, the appellant found that only yarn of RS.17,37, 075/- was unaccounted and thus he has submitted that he voluntarily declared the same and accounted for this amount of RS.17,37,075/- in his books of accounts. 3.11 The appellant also submitted the following documents to substantiate its claim which were also produce before the AO in reply to his show cause notice:- i) Copy of Sales Tax Returns. ii) Copy of Trading Account for the period 01.04.12 to 20.12.12. iii) Comparative Statement of Trading Account. iv) Detailed Valuation of Closing Stock. v) Month wise Quantitative Statement. vi) Comparative Statement of Gross Profit. 3.12 The A.O. could not found any discrepancy In the claim of appellant which is quite apparent from his Assessment Order also as the AO has discussed only the physical stock which in fact is not a matter of dispute at all. However, he Summarily rejected the claim of appellant without even discussing in the assessment order the claim of stock as per books of accounts submitted by the appellant. It is the duty of the AO being a quasi judicial authority to examine and verify the documents so submitted by the assessee during the Course of assessment proceedings and if he finds them not tenable, then he is under an obligation to pass a speaking order mentioning the specific reasons for not accepting the claim of the assessee. The AO in this case has failed to do so. 3.13 The appellant was asked vide order sheet dated 31. 0 1. 2017 to give the details of item wise and bill wise differences in purchases, sizing charges, weaving charges and other direct expenses including the details of payment made by the appellant and also the TDS details. The appellant vide its reply dated 06.03.2017 submitted the follOwing reply/details:-

Sudhir & Sandeep Kumar Mundra

"With reference to the above matter and in continuation to Our earlier submission and as instructed by your honour, it is respectfully submitted as under for your honours kind consideration: A) Purchases: 1) That please refer our reply dated 31st January 2017, wherein at Annexure "B- 21 ". wherein chart showing Gross Profit and Net Profit was submitted. In this chart comparative statement of items appearing in Trading Account was submitted for Trading Account as on date of survey and actual audited Trading Account. The Details of purchases are reproduce herebelow: on Particulars As the As per Audited of Difference Surveil (Rs.) Account (Rs.) (Rs.) Purchases 3,97,25,190 5,21,26,167 1,24,00,977

2) a) That the following documents are submitted for your honours ready reference to substantiate purchase of cloth:

S. No. Particulars 1 Copu o{Cloth Purchase Account 2 Copy of Purchases Bill 3 Copy of ledger account of parties That the same are marked as Annexure "A-1" to "A-327" b) That further following documents are submitted for your honours ready reference to substantiate purchase of yarn. S. No. Particulars 1 Copy of Yarn Purchase Account 2 Copy of Purchases Bill 3 Copy of ledger account of parties

That the same are marked as Annexure "A-328" to "A-483" 3)That the details of mode of payment is also appearing on the copy of account itself. All the purchases are duly supported by bills and also by sales tax returns. B) Sizing Charges

Sudhir & Sandeep Kumar Mundra

1) That the details of sizing charges appearing at Annexure "B-21 " of our reply dated 31.01.2017

As on the As per Book Difference Survey of Particular of Account (Rs.) Sizina 7,70,685 10,29,089 2,58,404 2) That the following documents are submitted for your honours ready reference to substantitate sizing charges: S. No. Particulars 1 Copy of Sizing Charges Account 2 Copy of Bills raised for sizing charges

That the same are marked as Annexure "B-1" to "B-1 72" 3)That the details of mode of payment is also appearing on the copy of bill itself All the sizing charges are duly supported by bills and the assessee has duly deducted TDS on payment of process charges. C) Weaving Charges 1) That the details of weaving charges appearing at Annexure "B- 21" of our reply dated 31.01.2017 Particulars As on the As per Audited of Difference Surveil fRs.) Account (Rs.) fRs.} Weaving 7,72,566 31,11,805 23,39,239 Charaes 2) That the following documents are submitted for your honours ready reference to substantiate weaving charges:

S.No. Particulars 1 Copy of weaving charges (Job) Account 2 Copy of bills raised for weaving charges 3 Copy of weaving charges expenses account That the same are marked as Annexure C-1 to C-212 3. That the details of mode of payment is also appearing on the copy of bill itself all the other expenses are duly supported by bills and vouchers.

Sudhir & Sandeep Kumar Mundra

C. Other Expenses 1. That the details of weaving charges appearing at Annexure B-21 of our reply dated 31.01.2017 are reproduced hereunder:- Particulars As on the date As per Audited Difference (Rs.) of survey (Rs.) books of account (Rs.) Other Nil 5,01,931 5,01,931 expenses 2) That the following documents are submitted for your honours ready reference to substantiate other expense: S. No. Particulars 1 Copy of Kakhana Chokidari Expenses Account with vouchers 2 Copy of Beem Bharai Expenses Account with 3 Copy of Charkha soot Kandi Bharai Expenses 4 Copy of Machinery Repairinq Expenses Account 5 Copy of Electric bill Expenses Account with copy of .. 6 Copy of Soot Kandi Bharai Expenses Account with 3) That the all the above expenses are incurred genuinely for business purposes only which are evident from the bills and vouchers. " 3.14 These details were duly examined and were before the AO also. The appellant was further asked vide order sheet dated 08.03.2017 as to give details and to explain as to how much purchases out of the difference of Rs. 1,24,00,977 / - was paid by cheque before the date of survey. The appellant was also asked to produce other documents to prove the difference. The appellant vide its reply dated 20.03.2017 submitted the details which are reproduced as below:- 1)"That your honour is kindly requested to please refer point No. 2 of our submission dated 06.03.2017 wherein the documents for purchases of cloth and yam were submitted. 2) That as instructed by your honour, please find enclosed herewith details of payment made for total purchases up to the date of survey i.e. 20.12.2012. The same is marked as Annexure "A-I" to "A-8". 3) That the payments made for purchases were segregated in two parts i.e. for post survey period and pre-survey period and summarized into a separate statement and marked as Annexure "B-1.

Sudhir & Sandeep Kumar Mundra b) That the payments made for purchases of pre-survey period made in post survey period is very negligible and related to normal course of business and even all the payments were made by cheques only. c) That out of the total purchases of pre-survey period claimed by the assessee at Rs. 52126167/-, the assessee has paid a sum of Rs. 4,70,60,869/- during pre-survey period only. 5)a) That the yam is purchased from dealers located outside Madhya Pradesh b)That the same comes into territory of MP after verification from various check post by MP State Sales Tax Department. C) That the "C" Form No. is duly mentioned on the copies of purchase bill submitted with your honour. d) That the purchases made from out of MP comes through transporters under transport bilties. e) That we are enclosing herewith few copy of bilties for purchases made out of MP for your honours verification. The same is marked as Annexure "C-1" to "C-24". f) That as evident from the copies of bilties, the assessee has duly purchases the goods and made payments to the parites. 6)a) That the assessee has submitted following to substantiate the claim of purchases· S. No. Date of Documents Submitted 1 CCopy of Purchase Account 06.03.2017 2 06.03.2017 CCopy of Purchases Bill 3 06.03.2017 CCopy of Ledqer account ofoarties 4 17.03.2016 to Ld. CCopy of Sales Tax Returns 5 17. 03.2016 to Month wise Quantitative 6 Ld. AD. statement of Stock 17.03.2016 to Ld. Closina Stock Valuation 7 Enclosed with this Details of paument made to 8 Enclosed with this Copies of Bilties b) That thus the assessee has submitted complete details to substantiate the claim of purchases. 7) That as evident from the above, the assessee has rightly calculated his business income which is summarily rejected by the Ld. AG. without appreciating the fact that the assessee all the requisite details which is subject to Audit u/ s 44AB of the Income 16

Sudhir & Sandeep Kumar Mundra

Tax Act and therefore your honour is kindly requested to quash the addition. " 3.15 After examining all the details and the documents so produced, it was seen that the payments for most of the purchases during pre survey period were made during pre- survey period only. Also, the C form with regard to purchases from dealers outside M.P. and the bilties of the transporters substantiate the appellants claim. These facts and documents were very much before the AO also but the AO summarily rejected all such documents and made the addition without assigning any reason for not accepting these documentary evidences so submitted by the appellant during the course of assessment proceedings in reply to the show cause given by the AO. As has been mentioned earlier also, he only mentioned about the physical stock which was never a matter of dispute. 3.16 Further, it has been held under various judicial pronouncements that amount declared during the survey proceedings are not conclusive. In the decision in Pullangode Rubber Produce CO, Ltd. v. State of Kerala (1973) 91 ITR 18 (SC), the apex court held that an admission is an extremely important piece of the evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. 3.17 The jurisdictional bench of ITAT had held in the case of Urmila Agrawal v / s Asstt. CIT 24 IT J 785 that "Assessee made surrender during survey- however, assessee did not offer the same in the Return- A.O. made addition for amount surrendered in survey- HELD statement recorded during survey was not based on any material found during survey- Statement cannot be legally acted upon against the assessee when assessee retracts the same - Addition is liable to / be deleted. 3.18 Thus, after due verification of the claim made by the appellant through all the document submitted by him, it is clear that the position of the stock as per books of accounts was not correctly worked out on the day of the survey and the AO made the addition by summarily rejecting the claim made by the appellant without even assigning reasons for rejecting the same. Further, the appellant has duly substantiated its claim through various documents, evidences so submitted discussed above

Sudhir & Sandeep Kumar Mundra which were also submitted before the AO. Such addition made cannot be sustained and is hereby deleted. This ground of appeal is allowed. 10. The above finding on facts given by the Ld. CIT(A) has not been controverted by the Ld. Departmental Representative (DR) by placing any adverse material on record. The Ld. CIT(A) has considered the purchases of Yarn, sizing charges, weaving charges, other expenses as well as various details of purchase which were not accounted at the point of time when survey was conducted, though, the transactions have taken place but were not be entered in the regular books of accounts.

Sudhir & Sandeep Kumar Mundra which left over only sum of Rs.17,37,075/- as excess stock which has already been offered to tax. The assessee has nowhere disputed the value of physical stock as on the date of survey and in support of the stock as per books of accounts on the date of survey claimed at Rs.95,00,796/-, the assessee has successfully demonstrated the correctness of this figure with the support of Sales Tax Returns, audited Trading Account, Comparative statement of Trading Account, detailed valuation of closing stock, Month wise quantitative statement, comparative statement of Gross Profit and no error has been found in these details by the Ld. CIT(A).

Sudhir & Sandeep Kumar Mundra date of survey. No interference is therefore called in the finding of Ld. CIT(A) and we affirm the same.

Now we take up in ITANo.511/Ind/2017 in the case of Sandeep Kumar Mundra Prop. M/s. S.K. enterprises.

per books of accounts on the date of survey stood at

2.4 I have carefully gone through all the above documents as well as the reasons cited by the AO to make the addition. The AO has given the following reason for making the addition:- "Stock was taken in presence of the authorized person of the assessee and on the basis of physical stock taken, assessee surrendered additional income voluntarily." 2.5 However, the fact of the case is that the appellant has duly accepted the physical stock taken by the department and in fact there is no dispute on the quantity, rates and calculation thereof. 2.6 The physical stock taken as on the date of survey was at Rs.1,08,47,166/- which is not at all disputed by the appellant however the stock in hand as per books of account was subsequently corrected which resulted in short declaration. 2.7 The summary of declaration is clearly depicted in the following chart: t Partic Amo p Amoun Difference ulars unt as per 21

Sudhir & Sandeep Kumar Mundra decla a audit calculatio Physical 1,08,47,1 1,08,47,1 Nil stock as 66/- 66/- s St 17,5 1,08,45,8 90,86,796/- b o 9,02 20/- accou Exce s 90,8 1,346/- 90,86,796/- ssiv 8,14 surve 2.8 As discussed above the appellant has not disputed the stock found on the date of survey however, as per his submission due to incomplete books of accounts, the stock in hand as per books of accounts on the date of survey was shown at Rs. 17,59,024/-. 2.9 After correcting the books of accounts, the stock in hand as per books of account as on the date of Survey was at Rs.1,08,45,820/-and thus the difference calculated on the date of Survey was reduced substantially. 2.10 After correcting books of accounts, the appellant found that was no shortage in stock as he had not considered the correct amount of stock as per books on the date of survey. 2.11 The appellant also submitted the following documents to substantiate its claim which were also produce before the AO in reply to his show cause notice:- i) Copy of Sales Tax Returns. ii) Copy of Trading Account for the period 01.04.12 to 20.12.12. iii) Comparative Statement of Trading Account. iv) Detailed Valuation of Closing Stock. v) Month wise Quantitative Statement. vi) Comparative Statement of Gross Profit. 2.12 The A.O. could not found any discrepancy In the claim of appellant which is quite apparent from his Assessment Order also as the AO has discussed only the physical stock which in fact is not a matter of dispute at all. However, he Summarily rejected the claim of appellant without even discussing in the assessment order the claim of stock as per books of accounts submitted by the appellant. It is the duty of the AO being a quasi judicial authority to examine and verify the documents

Sudhir & Sandeep Kumar Mundra so submitted by the assessee during the Course of assessment proceedings and if he finds them not tenable, then he is under an obligation to pass a speaking order mentioning the specific reasons for not accepting the claim of the assessee. The AO in this case has failed to do so. 2.13 The appellant was asked vide order sheet dated 31.01.2017 to give the details of item wise and bill wise differences in purchases, sizing charges, weaving charges and other direct expenses including the details of payment made by the appellant and also the TDS details. The appellant vide its reply dated 06.03.2017 submitted the following reply/details:- "With reference to the above matter and in continuation to Our earlier submission and as instructed by your honour, it is respectfully submitted as under for your honours kind consideration: A) Purchases: 1) That please refer our reply dated 31st January 2017, wherein at Annexure "B- 21 ". wherein chart showing Gross Profit and Net Profit was submitted. In this chart comparative statement of items appearing in Trading Account was submitted for Trading Account as on date of survey and actual audited Trading Account. The Details of purchases are reproduce here below: on Partic As As per Differ Surveil Account (Rs.) Purcha 2,37,56,0 7,98,11 2,45,54,183 ses 66 7 2) a) That the following documents are submitted for your honours ready reference to substantiate purchase of cloth:

S. No. Particulars 1 Copu o{Cloth Purchase Account 2 Copy of Purchases Bill 3 Copy of ledger account of parties That the same are marked as Annexure "A-1" to "A-151"

Sudhir & Sandeep Kumar Mundra b) That further following documents are submitted for your honours ready reference to substantiate purchase of yarn. S. No. Particulars 1 Copy of Yarn Purchase Account 2 Copy of Purchases Bill 3 Copy of ledger account of parties

That the same are marked as Annexure "A-152" to "A-254" 4)That the details of mode of payment is also appearing on the copy of account itself. All the purchases are duly supported by bills and also by sales tax returns. B) Process Charges 1) That the details of sizing charges appearing at Annexure "B-21 " of our reply dated 31.01.2017

As on As per B Differ Part of of (Rs.) Sizina 55,94,46 61,49,05 5,54,5 2) That the following documents are submitted for your honours ready reference to substantiate sizing charges: S. No. Particulars 1 Copy of Sizing Charges Account 2 Copy of Bills raised for processing charges

That the same are marked as Annexure "B-1" to "B-830" 4)That the details of mode of payment is also appearing on the copy of bill itself All the sizing charges are duly supported by bills and the assessee has duly deducted TDS on payment of process charges. C) Weaving Charges 1) That the details of weaving charges appearing at Annexure "B- 21" of our reply dated 31.01.2017 are reproduced hereunder:

Partic As on As per Difference Surveil Account ofRs.}

Sudhir & Sandeep Kumar Mundra

Weavin 7,32,155 44,32,798 37,00,643 Charae g 2) That the following documents are submitted for your honours ready reference to substantiate weaving charges:

S.No. Particulars 1 Copy of weaving charges (Job) Account 2 Copy of bills raised for weaving charges That the same are marked as Annexure C-1 to C-301 3. That the details of mode of payment is also appearing on the copy of bill itself all the other expenses are duly supported by bills and vouchers. 2.14 These details were duly examined and were before the AO also. The appellant was further asked vide order sheet dated 08.03.2017 as to give details of payment done before the date of survey. The appellant was also asked to produce other documents to prove the difference. The appellant vide its reply dated 20.03.2017 submitted the details which are reproduced as below:- 1)"That your honour is kindly requested to please refer point No. 2 of our submission dated 06.03.2017 wherein the documents for purchases of cloth and yam were submitted. 2) That as instructed by your honour, please find enclosed herewith details of payment made for total purchases up to the date of survey i.e. 20.12.2012. The same is marked as Annexure "A-I" to "A-8". 3) That the payments made for purchases were segregated in two parts i.e. for post survey period and pre-survey period and summarized into a separate statement and marked as Annexure "B-1. 4 a) That as evident from statement that payments made for most of the purchases during pre survey period were made during pre survey period only. b) That the payments made for purchases of pre-survey period made in post survey period is very negligible and related to normal course of business and even all the payments were made by cheques only. c) That out of the total purchases of pre-survey period claimed by the 25

Sudhir & Sandeep Kumar Mundra assessee at Rs. 2,45,54,183/-, the assessee has paid a sum of Rs. 2,33,91,109/- during pre-survey period only. 5)a) That the yam is purchased from dealers located outside Madhya Pradesh b)That the same comes into territory of MP after verification from various check post by MP State Sales Tax Department. C) That the "C" Form No. is duly mentioned on the copies of purchase bill submitted with your honour. d) That the purchases made from out of MP comes through transporters under transport bilties. e) That we are enclosing herewith few copy of bilties for purchases made out of MP for your honours verification. The same is marked as Annexure "C-1" to "C-24". f) That as evident from the copies of bilties, the assessee has duly purchases the goods and made payments to the parites. 6)a) That the assessee has submitted following to substantiate the claim of purchases· S. Date of Documents Submitted 1 06.03.2017 Copy of Purchase Account 2 06.03.2017 Copy of Purchases Bill 3 06.03.2017 Copy of Ledqer account 4 17.03.2016 to Copy of Sales Tax Returns 5 17. 03.2016 Month wise Quantitative to Ld. AD. 6 statement of Stock 17.03.2016 to Closina Stock Valuation 7 Enclosed with Details of paument made to 8 Enclosed with Copies of Bilties b) That thus the assessee has submitted complete details to substantiate the claim of purchases. 7) That as evident from the above, the assessee has rightly calculated his business income which is summarily rejected by the Ld. AG. without appreciating the fact that the assessee all the requisite details which is subject to Audit u/ s 44AB of the Income Tax Act and therefore your honour is kindly requested to quash the addition. " 2.15 After examining all the details and the documents so produced, it was seen that the payments for most of the 26

Sudhir & Sandeep Kumar Mundra purchases during pre survey period were made during pre- survey period only. Also, the C form with regard to purchases from dealers outside M.P. and the bilties of the transporters substantiate the appellants claim. These facts and documents were very much before the AO also but the AO summarily rejected all such documents and made the addition without assigning any reason for not accepting these documentary evidences so submitted by the appellant during the course of assessment proceedings in reply to the show cause given by the AO. As has been mentioned earlier also, he only mentioned about the physical stock which was never a matter of dispute. 2.16 Further, it has been held under various judicial pronouncements that amount declared during the survey proceedings are not conclusive. In the decision in Pullangode Rubber Produce CO, Ltd. v. State of Kerala (1973) 91 ITR 18 (SC), the apex court held that an admission is an extremely important piece of the evidence but it cannot be said that it is conclusive and it is open to the person who made the admission to show that it is incorrect. 2.17 The jurisdictional bench of ITAT had held in the case of Urmila Agrawal v / s Asstt. CIT 24 IT J 785 that "Assessee made surrender during survey- however, assessee did not offer the same in the Return- A.O. made addition for amount surrendered in survey- HELD statement recorded during survey was not based on any material found during survey- Statement cannot be legally acted upon against the assessee when assessee retracts the same - Addition is liable to / be deleted. 3.18 Thus, after due verification of the claim made by the appellant through all the document submitted by him, it is clear that the position of the stock as per books of accounts was not correctly worked out on the day of the survey and the AO made the addition by summarily rejecting the claim made by the appellant without even assigning reasons for rejecting the same. Further, the appellant has duly substantiated its claim through various documents, evidences so submitted discussed above which were also submitted before the AO. Such addition made cannot be sustained and is hereby deleted. This ground of appeal is allowed.

Sudhir & Sandeep Kumar Mundra

material to rebut his finding. We, therefore, in the given facts and circumstances in the case and applying the consistent approach as was applied by us in the case of Shri

Sudhir Kumar Mundar, find that the amount of stock as

per books of accounts as on the date of survey was actually

Rs.1,08,45,820/- and not Rs.17,59,024/- and thus alleged difference of Rs.90,86,796/- has been duly explained by the assessee by placing various details on record. We, therefore, find no reason to interfere in the finding of the Ld. CIT(A) deleting the addition of Rs.90,86,796/- and the same is affirmed.

dismissed and Ground no.5 is general in nature, needs no adjudication. Accordingly, appeal of the revenue in the case of Sandeep Kumar Mundar for A.Y. 2013-14 stands 28

Sudhir & Sandeep Kumar Mundra dismissed.

510/Ind/2017 & ITANo.511/Ind/2017 are dismissed.

The order pronounced in the open Court on 08.02.2019.