SANTRAM ATUMAL MURJANI vs. DEPUTY COMMISSSIONER OF INCOME-TAX ,,

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-2, Aurangabad dated 10.08.2016 for the assessment year 2007-08 as per grounds of appeal on record.

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& Poonam Cloth Emporium respectively and derives income from the said

business. The assessee filed return of income declaring total income of

Rs.7,97,020/-. The said return was accompanied with audit report u/s.44AB

of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) with

computation of income, profit and loss account and Balance Sheet as its

enclosures. The said return was duly processed on 07.02.2008. The case was

selected for scrutiny as per the latest norms laid down by the Board and

accordingly, notices u/s.143(2) and 142(1) were issued to the assessee along

with questionnaire. The assessment was completed u/s. 143(3) of the Act

with the assessed income at Rs.18,63,900/- by making various additions

/disallowances as appearing in the assessment order. That during the course

of assessment proceedings, the Assessing Officer observed as follows:

“4. During the course of assessment proceedings, it was noticed by the assessing officer that the assessee had adopted figure of purchases at Rs.30,29,318/- instead of Rs.25,95,507/- which was taken in the tentative trading account submitted during the course of survey action in respect of Poonam Cloth Emporium. It was found that the assessee had worked out the excess stock of Rs.1,64,090/- only instead of Rs.5,97,901/- as worked out in the course of survey. The assessing officer gave credit for Rs.2,02,585/-, which was the total of those bills which were numbered and stamped by the survey party . but not considered in totaling of the purchases as on the date of survey. The assessee also produced purchase bills of Rs.2,97,884/- and stated that these bills were available at the survey premises on the date of survey but had not been considered for working on the excess stock in the course of survey action. The assessing officer verified the bills produced by the assessee and found that the survey party had not numbered or stamped the bills which were now being produced. He also noted that the assessee had not pointed out this fact of the survey party during the course of survey action and had not brought this fact to the notice of the Assessing Officer or any other higher authority within a reasonable period after the date of survey action or even before filing of the return of income. It was noted by the assessing officer that the assessee had not submitted any evidence that the purchase bills were available at the time of survey action. He also noted that the payment against these purchases bills was shown in cash. Further, the tentative trading account and inventory of stock prepared by the survey party has been verified by the assessee during the course of survey and had also been certified as correct by the assessee. It was on the basis of the working of the excess stock and inventory of the stock certified by the assessee during the course of survey proceedings that the additional Income on account of excess stock was declared by the assessee. Therefore he rejected the contention of the AR of the assessee that these purchase bills were available in the business

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premises of the time of survey and that they should be considered for the purposes of working out the real profits of the assessee. 5. Similarly, in respect of purchases of Poonam Readymade Stores, it was contended by the AR of the assessee that the survey party had not considered cloth purchase to the tune of Rs.4,56,846/- during the course of survey. The assessing officer noted that the survey party had not inventorised the books of account for the year under consideration which was maintained on the computer. The AR of the assessee also accepted that these facts are not brought to the notice of the concerned authority at the time of surveyor within reasonable period after the date of survey. It was noted by the assessing officer that the assessee had not proved that these purchase bills were available at the business premises or recorded in the books of accounts at the time of survey action. It was further noted by the assessing officer that the tentative trading account was prepared on the basis of information given by the assessee. It was also noted that the inventory-of stock prepared by the survey party had been verified and found to be correct and certified as such by the assessee. It was stated that it was on the basis of such certified inventory and purchases, the assessee had disclosed the additional income. Hence he did not accept the contention of the assessee that some amount of purchases were remained to be taken into account during the course of survey and he did not accept the contention made by the AR of the assessee that purchases have been recorded less by Rs.4,56,848/- during the course of survey.”

preferred appeal before the Ld. CIT(Appeals). The assessee has placed

submissions before the Ld. CIT(Appeals) and considering the same along with

facts of the case and assessment order, the Ld. CIT(Appeals) has observed

and held as under:

“10. I have considered the submissions made by the assessee and gone through the records and evidences which have not been submitted and which were claimed to have been submitted even at the time of assessment proceedings, First and foremost it needs to be stated that the assessing officer has given credit for the amounts which were recorded in the inventory prepared by the survey party but arithmetical mistakes had crept in inasmuch as the total was incorrectly done. Therefore, there is no incongruity in the action of the assessing officer in addressing to the concerns of the assessee as far as totalling error is concerned. However, it is only in respect of those items which are claimed by the assessee to have existed at the time of survey and for which credit was not given at the time of assessment proceedings that the entire matter hinges around. The contention of the assessee is that credit should also be given for the alleged purchases which were either recorded in the computer or for which bills were available at the time of survey. In this respect it has to be noted that the assessee has already certified that the tentative trading account prepared by the survey party is correct. The assessee knew that he was maintaining his books on Tally system in the computers. If that was so then it was his duty to remind the attention of

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the survey party to this fact. If the purchases were recorded on computer, no one had prevented the assessee from bringing the fact to the notice of the survey party. The same action could have been taken in respect of the purchase bills which were allegedly not recorded by the survey party. Nothing had also prevented the assessee from bringing these lacunae to the notice of the assessing officer or the higher authorities and the department after the survey was over. Under these circumstances, it cannot be stated that the evidences produced by the assessee at the time of assessment proceedings were contemporaneous. Merely production of some purchase bills will not be sufficient to prove that the existed at the time of survey. If the bills were available, the same should have been written in the accounts and the assessee should have brought it to the notice of the survey party by printing the necessary accounts from the computer and producing the same. If these bills were available at the time of survey the nothing had prevented the assessee from producing it immediately at the time of surveyor subsequently in post- survey proceedings. The assessee has also stated that it has produced the ledger of VRL transport in support of his contention that goods were purchased during this period. The copy of ledger has been shown to me also. There is nothing from the account which can co-relate it with any of the purchase bills. It may be noted that the assessee is not only purchasing ready-made goods but is also purchasing items of cloth. It is necessary on the part of the assessee link the lorry receipts (which incidentally have not been produced) with the bills in order to prove that certain purchases of the pre-survey period had remained to be taken into account by the survey party. If the purchases were made during pre-survey period, as alleged, then to prove the same, the assessee should have at least tried to co-relate them with some of the sales made during that period. The assessee has not done so. If there was an error on the part of the survey party as alleged by the assessee then he should have brought the same to the notice of the ITO who had led the survey party immediately after the survey was over or within a reasonable period. This was the responsibility of the assessee who had nothing to lose by bringing out the facts in front of the assessing officer. Instead, the assessee chose to remain silent and made the claim only in assessment proceedings. In any event, the assessee has been unable to bring out any evidence in support of his claim that purchase bill of the impugned amount had remained to be taken into consideration at the time of survey proceedings. He has been unable to prove the contemporary nature of the purchase bill. Therefore, the production of purchase bills at a later date can only be categorised as an afterthought 'which cannot be relied upon for the purposes of giving credit and explaining the closing stock of the assessee, especially when the assessee had certified that the tentative trading account prepared at the time of survey was correct and true. In view of the reasons given above, I hold that there is no infirmity in the action of the assessing officer in rejecting the claim of alleged purchases.”

circumstances in this case and also have given considerable thought to

the findings of the Ld. CIT(Appeals). The facts on record demonstrate first

and foremost that the Assessing Officer has given credit for the amounts

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which were recorded in the inventory prepared by the survey party. However,

it is in respect of those items which are claimed by the assessee to have

existed at the time of survey and for which credit was not given at the time of

assessment proceedings that the entire matter hinges around. The contention

of the assessee is that credit should also be given for the alleged purchases

which were either recorded in the computer or for which bills were available

at the time of survey. In this respect it has to be noted that the assessee has

already certified that the tentative trading account prepared by the survey

party is correct. The assessee knew that he was maintaining his books on

Tally system in the computers. If that was so then it was his duty to remind

the attention of the survey party to this fact. If the purchases were recorded

on computer, no one had prevented the assessee from bringing the fact to the

notice of the survey party. The same action could have been taken in respect

of the purchase bills which were allegedly not recorded by the survey party.

Nothing had also prevented the assessee from bringing these lacunae to the

notice of the assessing officer or the higher authorities and the department

after the survey was over. Under these circumstances, it cannot be stated

that the evidences produced by the assessee at the time of assessment

proceedings were contemporaneous. Merely production of some purchase

bills will not be sufficient to prove that they existed at the time of survey. If

the bills were available, the same should have been written in the accounts

and the assessee should have brought it to the notice of the survey party by

printing the necessary accounts from the computer and producing the same.

That further, the facts demonstrate that the Ld. CIT(Appeals) has also

perused the copy of the ledger and there is nothing from account which can

correlate it with any of the purchases bills. The assessee could have also

linked the lorry receipts (which incidentally have not been produced) with the

bills in order to prove that certain purchases of the pre-survey period had

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remained to be taken into account by the survey party. The assessee in this case alleged that these purchases bills were not taken into account by survey party. However, no evidence has been provided either before us or before the Revenue Authority to demonstrate that these purchases bills were presented at the time of survey and that these purchases were done by the assessee prior to the survey. Merely production of purchase bills at later date does not justify the claim of the assessee. We do not find any infirmity with the findings of the Ld. CIT(Appeals) which is thereby upheld.

In the result, appeal of the assessee is dismissed. 5. Order pronounced on 19th day of March, 2019. Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 19th March, 2019. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals)-2, Aurangabad. 4. The Pr. CIT-2, Aurangabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, 5. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

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Date 1 Draft dictated on 19.03.2019 Sr.PS/PS 2 Draft placed before author 19.03.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order