VIJAY KUMAR JAIN vs. INCOME TAX OFFICER WARD 2(2),

Briefly stated facts, as culled out from the record, are that a survey under Section 133A of the Act was carried out at the business premises of the assessee on 05.11.2009. Certain discrepancies were noticed. Assessee offered excess cash of Rs.3,24,753/- and excess stock of Rs.16,77,602/- as undisclosed income. In total assessee made a disclosure of Rs.20 lakhs towards excess cash and excess stock. Thereafter, notice under Section 148 of the Act was issued as the assessee had not filed the return of income. In compliance thereto, return was filed on 09.11.2011. During the course of assessment proceedings, learned Assessing Officer examined the trading accounts prepared by the assessee for pre-survey and post-survey period, purchase and sales made thereafter and also observed that assessee sold the entire stock and furniture of the shop at Rs.16 lakhs. Financial statements

Aggrieved, the assessee preferred appeal before the ld. CIT(A) and partly succeeded. During the course of appellate proceedings, assessee conceded to not to challenge the addition of Rs.20 lakhs made by the Assessing Officer towards excess stock and excess cash found during the course of survey. Now, the assessee is in appeal before us by raising following grounds:-

From perusal of the above grounds, we find that the assessee is aggrieved with the addition on account of sale of stock and furniture as well as ld. CIT(A)’s not considering the loss of Rs.7,61,922/- incurred by the assessee. Assessee has also challenged the addition of Rs.20 lakhs in the place of the working given by the assessee calculating income of Rs.14,89,731/-. Learned Counsel for the assessee reiterated the submission made before the lower authorities and also added that the assessee accepted to offer Rs.20 lakhs for tax, but this amount includes the excess stock as well as excess cash. However, the assessee in due course of business sold the total stock and furniture of the shop and incurred a loss of Rs.7,61,922/- which both

We have heard the rival contentions and perused the record available before us. We find that during the course of survey operation under Section 133A of the Act assessee surrendered Rs.20 lakhs which, inter alia, included unexplained cash of Rs.3,24,753/- and remaining amount Rs.16,77,602/- for excess stock. We observe that assessee did not file the return of income in the due course as required under Section 139 of the Act. It was only after the issuance of notice u/s 148 of the Act that the assessee filed the return and paid self assessment tax of Rs.52,340/-. In the records placed before us, not a single document shows the computation of income and financial statements prepared by the assessee. However, other related details of the transactions of sale of stock and furniture as well as details of trading account of pre-survey and post-survey period are available – on the basis of which we are adjudicating the issues raised in this appeal.

It is not disputed at the end of the assessee, which is duly accepted by the ld. Counsel, that a sum of Rs.20 lakhs is to be offered for tax and the assessee is ready to pay the taxes thereon. The point of dispute is in relation to the estimated profits computed by the Assessing Officer on the sale of stock and furniture by taking the basis that a prudent businessman cannot sell the goods at a loss of Rs.7,61,922/- . Learned Assessing Officer rejected the books of accounts and applied the net profit rate disclosed by the assessee in the pre-survey period on the alleged sales. We find that the assessee while preparing the return, on one hand surrendered the income of Rs.20 lakhs by adding it to the closing stock and on the other hand claimed the gross loss on the sale of total stock in hand. It is pertinent to note that assessee has himself accepted in the submissions made before both the

In the result, appeal of the assessee is partly allowed.