PREM INDUSTRIES,RANCHI vs. ACIT,CIRCLE-3, RANCHI

The assessee has raised the following common grounds of appeal for the AY 2015-16:-

Brief facts of the case are that the assessee is a partnership firm and whole sale dealers in sanitary ware, pipes & fittings. Survey proceedings were carried out u/s. 133A of the Act on 18-11-2014. Certain discrepancies including excess stock was found. Thereafter, the assessee filed ITR(Income Tax Return) on 30-09-2015 for the AY 2015- 16 declaring income at Rs. 68,05,870/-, which included an amount of Rs.60 lacs admitted as undisclosed income on account of excess stock found during the course of survey. After the case being selected for scrutiny followed by serving of valid notices u/s. 143(2) & 142(1) of the Act the ld. AO carried out the assessment proceedings. Further the submissions were filed reconciling the excess stock qua surrender of stock shown in the ITR(Income Tax Return), which was mainly on account of not considering some of the purchases made before 18-11- 2014. The ld. AO considered the submissions of the assessee but did not find it to be acceptable and made addition of Rs. 91,81,013/- towards unaccounted investments made in stock u/s. 69 of the Act. The ld. AO also enquired about sundry creditors balance of Rs.3,58,03,103/-. Letters were sent u/s. 133(6) of the Act but since the case was getting time barred only few confirmations were received. After considering the same for the remaining balance of Rs. 2,56,59,658/- the ld. AO made addition towards unexplained credit at Rs. 2,56,59,658/-. Income assessed at Rs. 4,16,46,541/-.

Aggrieved, the assessee preferred appeal before ld. CIT(A), but failed to succeed. 5. Aggrieved, now the assessee is in appeal before this Tribunal challenging the addition(s) confirmed by the ld. CIT(A). 6. The Ld. Counsel for the assessee referred to the detailed paper book containing various details including purchase invoices not considered during the course of survey, details of sundry creditors and their confirmations. It was submitted that the ld. CIT(A) did not consider these details filed during the course of appellate proceedings. 7. On the other hand, the Ld. Departmental Representative vehemently argued supporting the orders of both the lower authorities. 8. We have heard the rival contentions and perused the records placed before us. The assessee has raised two rounds of appeal in which ground no. 1 relates to addition for difference in stock determined at Rs. 91,81,313/- during the survey and second ground relates to unexplained creditors at Rs. 2,56,59,658/-. Before adverting to the fact of the case we first would like to go through the findings of the ld. CIT(A) on the two issues raised before us which reads as follows:-

Regarding the addition of Rs.91,81,313/- the excess stock the ld. CIT(A) observed as under:- “6.3 As can be seen from the above, the addition has been made on account of difference in stock after confronting the Appellant during the Survey proceedings u/s. 133A as well as during the appellate proceedings. The Authorised Representative furnished the written submission and tried to explain the difference in stock. The contention of the Authorised Representative is not acceptable as it appears to be after thought and the Appellant ought to have come out with this position with respect to stock during the statutory Survey proceedings as well as the assessment proceedings. The Appellant itself admitted Rs. 60,00,000/- as the additional income on account stock difference although the total stock difference was Rs. 1,51,81,313/-. There is no basis at all for the admission of only Rs. 60,00,000/- out of Rs. 1,51,81,313/-. In view of these reasons, I do not find any reason to interfere with the findings of the Assessing Officer. Therefore, the addition of Rs. 91,81,313/- is hereby confirmed. Accordingly, this of appeal is dismissed”.

As regards the addition for unexplained sundry creditors of Rs.2,56,59,658/- the findings of the ld. CIT(A) are as under:- “7.3 As can be seen from the above, the addition has been made on account of enquiries from sundry creditors and thereafter wherever the confirmation is not received, the Assessing Officer has taken adverse inference and added Rs. 2,56,59,658/-. During the appellate proceedings, the Authorised Representative has furnished certain evidences which are separately dealt with in Para 5 above. As stated therein, these new evidences are not admitted. As the third party have not confirmed the balance before the Assessing Officer during the assessment proceedings, this goes to suggest that the liabilities have either ceased or have been remitted by the creditors. Therefore, as per the provisions of Section 41(1) the Assessing Officer was justified in making the addition Rs. 2,56,59,658/-. In view of these reasons, I do not find any reason to interfere with the findings of the Assessing Officer. Therefore, the addition of Rs. 2,56,59,658/- is hereby confirmed. Accordingly this ground of appeal is dismissed.”