DCIT, New Delhi V. M/s. Aman Marble Traders, Gurgaon

ITA 4734/DEL/2012

• Counselvise Citation: 473420114 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Assessment record; Retraction
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A , NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 4734/DEL/2012 ASSESSMENT YEAR : 2009-10 DCIT, CIRCLE 31(1), VS. M/S. AMAN MARBLE TRADERS, NEW DELHI ANSAL BHAWAN, K.G. MARG, NEW DELHI. GIR / PAN:AAAFA7825M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI Y. KAKKAR, DR RESPONDENT BY : SHRI SALIL AGARWAL ADV. SHRI SANJEEV JAIN, CA SHRI SHAILENDRA GUPTA, CA ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LD. CIT(A) DATED 21.06.2012. THE REVENUE IS AGGRIEVED WITH TH E ACTION OF LD. CIT(A) BY WHICH HE HAD DELETED THE ADDITION OF RS.54,40,43 6/- MADE BY A.O. ON ACCOUNT OF SURRENDER MADE BY ASSESSEE ON ACCOUNT OF DIFFERENCE BETWEEN PHYSICAL STOCK FOUND AT THE TIME OF SURVEY AND STO CK AS PER BOOKS OF ACCOUNTS . THE REVENUE HAS FILED REVISED GROUNDS O F APPEAL WHEREIN IT HAS FURTHER TAKEN A FURTHER GROUND THAT RETRACTION MADE BY ASSESSEE AFTER A PERIOD OF 6 MONTHS WAS NOTHING BUT AN AFTERTHOUGHT TO REDU CE TAX LIABILITY. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY OP ERATION U/S 133A WAS CONDUCTED AT THE PREMISES OF ASSESSEE ON 01.10.2008 AND WAS CONCLUDED ON 02.10.2008. DURING SURVEY OPERATION, A COMPLETE LI ST OF STOCK LYING AT THE 2 ITA NO.4734/DEL/2012 TWO PREMISES OF THE ASSESSEE WERE PREPARED AND IT W AS VALUED WITH THE HELP OF ASSESSEE. VALUE OF STOCKS AS ON THE DATE OF SUR VEY ON THE BASIS OF BOOKS OF ACCOUNTS WAS ALSO CALCULATED BY APPLYING GROSS P ROFIT RATIO OF THE EARLIER YEAR. THE SURVEY TEAM FOUND THAT THERE WAS DIFFERE NCE OF RS.83,06,867/- BETWEEN PHYSICAL STOCK AND STOCK AS PER BOOKS. THE REFORE, ASSESSEE WAS ASKED TO EXPLAIN THE DIFFERENCE. THE ASSESSEE WAS UNABLE TO EXPLAIN THE DIFFERENCE AND, THEREFORE, IT OFFERED THE AMOUNT OF DIFFERENCE OF RS.83,06,867/- AS INCOME DURING THE PREVIOUS YEAR. THE SURVEY TEAM ALSO FOUND THE DIFFERENCE IN PHYSICAL CASH AND CASH AS P ER BOOKS OF ACCOUNTS AND IT BEING UNEXPLAINED, THE ASSESSEE OFFERED FOR TAXA TION THE DIFFERENCE OF CASH AMOUNTING TO RS.17,62,608/-. HOWEVER, IN THE RET URN OF INCOME FILED BY ASSESSEE, THE ASSESSEE DECLARED ADDITIONAL INCOME O F RS.46,19,039/- ONLY CONSISTING OF CASH SURRENDER OF RS.17,62,608/- AND REST OF RS.28,45,443/- ON ACCOUNT OF DIFFERENCE IN STOCK. THE A.O. OBSERVED THAT THE ASSESSEE HAD SURRENDERED AN AMOUNT OF RS.83,06,867/- ON ACCOUNT OF DIFFERENCE IN STOCK, THEREFORE, THE ASSESSEE WAS SHOW CAUSED AS TO WHY N OT THE DIFFERENCE IN AMOUNT OFFERED AND AMOUNT SURRENDERED ON ACCOUNT OF STOCK AT THE TIME OF SURVEY BE NOT TREATED AS ADDITIONAL INCOME OF ASSES SEE. THE ASSESSEE VIDE LETTER DATED 19.12.2011 SUBMITTED THAT DIFFERENCE I N STOCK WAS DUE TO DIFFERENT METHOD OF VALUATION AND IT FURTHER SUBMIT TED THAT IT HAS BEEN FOLLOWING FIFO METHOD AND FURTHER THERE WERE CERTAI N CLERICAL MISTAKES WHICH HAVE BEEN RECTIFIED AND, THEREFORE THE EXACT DIFFERENCE ON ACCOUNT OF STOCK WAS ONLY RS.28,45,443/- AND NOT RS.83,06,867/ -. HOWEVER THE A.O. HELD THAT VALUATION OF STOCK WAS DONE IN THE PRESEN CE OF THE ASSESSEE AND ASSESSEE HAD ITSELF ACCEPTED THE SURRENDER AND THE EXPLANATION GIVEN BY ASSESSEE IS ONLY AN AFTERTHOUGHT AND, THEREFORE, HE MADE ADDITION OF RS.54,50,436/- REPRESENTING DIFFERENCE BETWEEN THE VALUE OF STOCK ORIGINALLY 3 ITA NO.4734/DEL/2012 SURRENDERED DURING SURVEY AND THAT OFFERED IN ITS R ETURN OF INCOME. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD. CIT (A) AND MADE VARIOUS SUBMISSIONS. LD. CIT(A), ON THE BASIS OF VARIOUS S UBMISSIONS, DELETED THE ADDITION BY HOLDING AS UNDER: 6. I HAVE PERUSED THE ORDER OF THE ASSESSING OFFIC ER DATED 29.12.2011, WRITTEN SUBMISSIONS FILED BY THE AR OF THE APPELLANT AND CONSIDERED THE FACTS OF THE CASE. IN THE COURSE OF THE APPELLATE PROCEEDINGS, I ALSO PERUSED THE ASSESSMENT RECORD A ND THE SURVEY FOLDER CONTAINING THE SURVEY PROCEEDINGS AND THE SU BMISSIONS MADE BY THE APPELLANT IN ITS LETTER DATED 31.3.2009 FILE D BEFORE THE ASSESSING OFFICER SUBSEQUENT TO THE SURVEY OPERATION. THE APP ELLANT IN THIS LETTER DATED 31.3.2009, EXPLAINED IN DETAIL THE VALUATION THE STOCK POSITION AS ON THE DATE OF SURVEY AND THE STOCK POSITION AFT ER RECONCILIATION AND CORRECTION OF ERRORS. THEREFORE, IT IS IMPORTANT TO REPRODUCE THE SUBMISSIONS OF THE APPELLANT MADE IN THIS LETTER DA TED 31.3.2009 BELOW: 1. THAT SURVEY U/S 133A TOOK PLACE ON 01.10.2008. B OOKS OF ACCOUNTS, STOCK REGISTER AND OTHER DOCUMENTS WERE E XAMINED DURING SURVEY. PHYSICAL CASH WAS COUNTED. PHYSICAL STOCK I NVENTORY WAS PREPARED. THE RESULT OF STOCK VERIFICATION AND CASH VERIFICATION WAS FOUND AS UNDER: A. STOCK POSITION (AS ON 01.10.2008 AS PER SURVEY) PHYSICAL STOCK TAKEN AND VALUED RS.2,12,13,048/- STOCK AS PER BOOKS/STOCK REGISTER RS.1.29.06.182/ - DIFFERENCE BEING EXCESS STOCK FOUND RS.83,06,866/ - B. CASH POSITION (AS ON 01.10.2008) PHYSICAL CASH FOUND RS.23,96,400/- AS PER CASH BOOK RS.6,33,792/- DIFFERENCE BEING EXCESS CASH FOUND RS.1762608/- THE ABOVE EXCESS STOCK AND EXCESS CASH WAS SURRENDE RED VIDE STATEMENT DT 1.10.2008 2. THAT NOW, IN THE END OF MARCH 2009, THE BOOKS AN D STOCK REGISTER ETC. HAS BEEN RECONCILED FOR THE PURPOSE OF CALCULA TING THE PAYMENT OF LAST DUE INSTALLMENT OF ADVANCE TAX OF A. Y 2009-20 10. DURING THE COURSE OF RECONCILIATION, CERTAIN ERRORS HAVE BEEN NOTICED. ON CORRECTION OF SUCH ERRORS, THE STOCK POSITION AS ON DATE OF SURVEY I.E. 01.10.2008 STANDS RECALCULATED AS UNDER: CORRECT STOCK POSITION AS ON 01.10.2008: 4 ITA NO.4734/DEL/2012 PHYSICAL STOCK RS.1,61,66,131/- STOCK AS PER BOOKS/STOCK REGISTER RS.1,33,09,700/- DIFFERENCE BEING EXCESS STOCK RS.28, 56,431/- A CHART SHOWING THE DETAILS OF THE STOCK POSITION A S TAKEN AT THE TIME OF THE SURVEY VIS-A-VIS AS CORRECTED IS ATTACHED. THE DIFFERENCE IN QUANTITY AND THE VALUATION AT THE TIME OF SURVEY V IS-AVIS AS CORRECTED ARE GIVEN IN SUCCEEDING PARAGRAPHS. 3. DETAILS. EXPLANATIONS AND EVIDENCES OF DIFFERENC ES. A. THE QUANTITY OF PHYSICAL STOCK FOUND AT THE TIME OF THE SURVEY VIS-A-VIS AS PER CORRECTED DETAILS IS THE SAME. THU S IT NEED NO EXPLANATION. B. IN CORRECTED PHYSICAL STOCK, THE SAME RATES HAVE BEEN TAKEN AS HAS ADOPTED IN THE DETAILS OF CORRECTED ACTUAL STOC K. C. DIFFERENCE IN QUANTITY AS PER BOOKS AT THE TIME OF SURVEY VIS-A-VIS CORRECTED AS PER BOOKS STONE AS PER SURVEY, PHYSICAL QUANTITY AS PER BOOKS WAS 6 3017.41 SQ. FT., HOWEVER, CORRECTED QUANTITY IS 64084.47 SQ. FT. THE WORKING OF CORRECT QUANTITY ALONG WITH SUPPORTED DOCUMENTS ARE ATTACHE D. (AL TO A8) MARBLE AS PER SURVEY, PHYSICAL QUANTITY AS PER BOOKS WAS 5 6874.84 SQ. FT., HOWEVER CORRECTED QUANTITY IS 80487.39 SQ. FT. THE WORKING OF CORRECT QUANTITY ALONG WITH SUPPORTED DOCUMENTS ARE ATTACHE D. SUPER MARBLE A AS PER SURVEY, PHYSICAL QUANTITY AS PER BOOKS WAS 1 5233.11 SQ. FT; HOWEVER, CORRECTED QUANTITY IS 18399.78 SQ. FT. THE WORKING OF CORRECT QUANTITY ALONG WITH SUPPORTED DOCUMENTS ARE ATTACHE D. MARBLE A AS PER SURVEY, PHYSICAL QUANTITY AS PER BOOKS WAS 7 950.26 SQ. FT; HOWEVER, CORRECTED QUANTITY IS 4446.58 SQ. FT. THE WORKING OF CORRECT QUANTITY ALONG WITH SUPPORTED DOCUMENTS ARE ATTACHE D. DIFFERENCE IN RATES: THE SURVEY TEAM HAS ADOPTED THE RATES FOR VALUING T HE PHYSICAL STOCK ON THE BASIS OF LAST BILLS OF PURCHASE OF RELEVANT ITEMS, EXCEPT FOR ONE ITEM NAMELY 'SUPER MARBLE A'. IN THIS ITEM ,THE LAS T PURCHASE BILL IS @ RS.140/- PER SQ.FT, HOWEVER IT HAS BEEN NOTICED THA T THE RATE OF THIS ITEM HAS BEEN ADOPTED @ RS.198/- PER SQ FT .THERE I S NO BASIS FOR ADOPTING THIS RATE OF R5.198/-. RATHER, THE RATES A DOPTED FOR OTHER ITEMS ON THE BASIS OF LAST PURCHASE BILL IS ALSO IN CORRECT. IT IS INCORRECT METHOD OF VALUATION OF STOCK. THE ASSESSEE HAD BEEN MAINTAINING DAY 5 ITA NO.4734/DEL/2012 TO DAY STOCK REGISTER WHICH WAS DULY EXAMINED BY TH E SURVEY PARTY. THE STOCK REGISTER IS MAINTAINED ON FIFO METHOD. TH E COST OF THE BALANCE STOCK AT ANY POINT OF TIME IS CALCULATED ON THE BASIS OF AVERAGE COST OF THE STOCK AVAILABLE AT THAT POINT O F TIME. NOW THE RATE FOR THE STOCK AS PER BOOKS AT THE TIME OF SURVEY WAS TAKEN AS CALCULATED IN THE STOCK REGISTER ON THE BASIC OF AVERAGE COST OF STOCK AVAILABLE COUPLED WITH FIFO METHOD. THUS, THE RATES GIVEN AS PER THE STOCK REGISTER WERE THE CORRECT RATES TO BE APPLIED FOR THE STOCK AVAILABLE AT THE TIME OF SURVEY. HOWEVER, THE RATES IN THE STOCK REGISTER AS ON THE DATE OF SURVEY WERE OBVIOUSLY CALCULATED ON THE BASIS OF DATA FEEDED IN THE STOCK REGISTER. NOW IN ABOVE PARAGRAPHS, IT HAS BEEN EXPLAINED WITH EVIDENCES THAT THERE WAS CERTAIN CLERICAL FEEDING ERRORS IN THE ST OCK REGISTER WHICH EXISTED AT THE TIME OF SURVEY. THESE ERRORS NOW STA ND CORRECTED, AS EXPLAINED ABOVE, ON ACCOUNT OF WHICH, THE ACTUAL ST OCK AS PER THE BOOKS AT TIME OF SURVEY ALSO STAND MARGINALLY CHANG ED, AS PER CHART AND DETAILED ATTACHED. NOW ON CORRECTING THESE ERRORS, APART FROM CORRECTI ON IN STOCK FIGURES AS PER BOOKS, CHANGED, MARGINALLY THE COST PRICE OF THE ITEM ALSO. THIS CHANGE IN THE RATES IS CONSEQUENTIAL AND OBVIOUS AN D IS MANIFEST FROM THE CORRECTED STOCK REGISTER ALSO WHICH IS AVAILABL E FOR YOUR VERIFICATION. FURTHER, THE CHANGES ARE VERY APPARENT AND FULLY VE RIFIABLE WITH REFERENCE TO THE STOCK REGISTER AS MAINTAINED AT TH E TIME OF THE SURVEY, AS IT STANDS AFTER CORRECTION AND WITH REFERENCE TO RELEVANT SALES ,PURCHASE BILLS ETC. 4. THUS IN SUBSTANCE THE CHANGE IN THE STOCK POSITI ON CAN BE SUMMARIZED AS UNDER: - PHYSICAL QUANTITY OF THE STOCK FOUND AT THE TIME OF SURVEY REMAIN UNCHANGED. - THE QUANTITY NOTICED AS PER STOCK REGISTER UNDERG OES MINOR CHANGES ON ACCOUNT OF SOME WRONG FEEDING ERRORS IN THE COMP UTERIZED STOCK REGISTER. ON CORRECTING THESE ERRORS, CONSEQUENTIAL CHANGES HAVE COME. ALL CORRECTION ARE FULLY VERIFIABLE WITH REFE RENCE TO OLD STOCK REGISTER, CORRECTED STOCK REGISTER AND RELEVANT SAL E BILLS, WHICH WERE INCORRECTLY FEEDED IN THE STOCK REGISTER. THE RATES ADOPTED IN THE STOCK AS PER BOOKS HAVE GO NE MINOR CHANGES ON ACCOUNT OF ACCOUNT OF CORRECTION OF WRONG FEELIN GS. IT IS ALSO A CONSEQUENTIAL CHANGE ON ACCOUNT OF CARRYING OUT THE CORRECTION. THE METHOD OF VALUATION IS AVERAGE COST PRICE COUPLED W ITH FIFO METHOD. 6 ITA NO.4734/DEL/2012 THE RATES ADOPTED BY SURVEY PARTY FOR THE PHYSICAL STOCK ARE ABSOLUTELY WRONG. THE SURVEY PARTY, IN SIX CASES, A DOPTED THE RATES AS PER LAST PURCHASE BILL AND FOR ONE ITEM NAMELY ' SUPER MARBLE A' ADOPTED AS RS 198/- PER SQ. FT. AGA INST RS 140/- PER SQ. FT. AS PER THE LAST BILL. AS PER THE CORRECT ME THOD, ALWAYS APPLIED BY THE ASSESSEE, THE RATES SHOULD BE THE AVERAGE COST PRICE COUPLED WITH FIFO METHOD FOR THE STOCK AVAILABLE AT ANY POINT OF TIME. THUS, FOR CALCULATING THE VALUE OF PHYSICAL STOCK, WE HAVE APPLIED THE AVERAGE COST COUPLED WITH FIFO METHOD. 5) THAT IN VIEW OF ABOVE I THE DIFFERENCE IN THE ST OCK AT THE TIME OF THE SURVEY CALCULATES AS EXCESS STOCK OF RS 28, 56, 431/- AND EXCESS CASH OF RS 17.62,608/- I.E TOTAL DIFFERENCE OF RS 4 6,19,039/- 6) THAT IN VIEW OF ABOVE FACTS, IT IS SUBMITTED THA T THE FIGURE OF RS 1,00,69,475/ - AS WORKED OUT ON 01.10.2008 AT THE T IME OF THE SURVEY, CORRECTLY SHOULD BE ONLY RS 46,19,039 /: .ACCORDINGLY, IT IS REQUESTED AND SUBMITTED THAT TH E SURRENDER FIGURE OF RS 1,00,69,475/- IN THE STATEMENT DT 01.10.2008 BE PLEASE CORRECTED AS RS 46,19,039/-. IN RESULT, THE SURRENDERED AMOUNT ON ACCOUNT OF STO CK AND CASH FOR A. Y 2009-2010 IS ONLY RS 46,19,039/- 7) THAT WE HAVE ALREADY PAID TAXES AS UNDER:- RS 20,000/- AS ADVANCE TAX IN SEPT. 08 RS 8,00,000 AS ADVANCE TAX ON 06.10.2008 RS 8,00,000 AS ADVANCE TAX ON 20.10.2008 RS 4,00,000/- AS ADVANCE TAX ON DEE 08 RS.20,20,000/- TOTAL I FIND THAT THE ABOVE SUBMISSIONS OF THE APPELLANT IN LETTER DATED 31.3.2009 WERE COMPLETELY IGNORED BY THE ASSESSING OFFICER FOR NO REASONS WHILE FRAMING THE ASSESSMENT. THE APPELLANT EXPLAINED THE VARIATION IN STOCK SUPPORTED BY ITS STOCK REGISTER, PURCHASE BILLS, SALE REGISTER AND RECONCILIATION IN RESPECT OF EACH AND EVERY ITEM OF STOCK INVENTORY DRAWN AT THE TIME OF SURVEY. ON THE BASIS OF RECONCILIATION, AND DUE TO RECTIFICATION IN DAY TO DAY STOCK REGIST ER, THE APPELLANT SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE COR RECT AMOUNT OF ADDITIONAL INCOME REQUIRED TO BE ADDED WOULD BE ONL Y RS.46,19,038/- AND NOT RS.1,00,69,415/-. IT WAS ALSO STATED THAT T HE AMOUNT OF RS.46, 19,038/- INCLUDED THE AMOUNT OF RS.28,56,431/- BEIN G THE DIFFERENCE IN STOCK AND RS.17,64,607/- BEING EXCESS CASH FOUND AT THE TIME OF SURVEY. THESE SUBMISSIONS WERE MADE ON THE LAST DAY OF THE IMMEDIATE 7 ITA NO.4734/DEL/2012 PRECEDING YEAR MUCH BEFORE THE RETURN OF INCOME WAS DUE TO BE FILED BY THE APPELLANT. EVEN DURING THE ASSESSMENT PROCEE DINGS, THE ASSESSING OFFICER HAS NOT POINTED OUT TO ANY DISCRE PANCY OR INCORRECT- FIGURES FROM THE BOOKS OF ACCOUNTS CONTRARY TO WHAT THE APPELLANT SUBMITTED VIDE HIS LETTER DATED 31.3.2009. 6.1 IN THE PRESENT CASE, THE APPELLANT RELIED ON TH E DECISION OF THE HON'BLE DELHI COURT IN THE CASE OF CIT VS. DHINGRA METAL WORKS (2010) 328 ITR 384 AND THE DECISION OF THE HONBLE ITAT, MUMBAI BENCH '0' IN THE CASE OF ACIT VS. CHAWLA BROS. (P) LTD., CENTRAL CIRCLE-X, MUMBAI. IN THE CASE OF DHINGRA METAL WORK S, THE HON'BLE DELHI HIGH COURT HAS HELD THAT THE MATERIAL COLLECT ED AND THE STATEMENT RECORDED DURING THE SURVEY U/S 133A WAS N OT A CONCLUSIVE PIECE OF EVIDENCE ITSELF. IT WAS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT AND THAT DI SCREPANCY IN STOCK WAS RECONCILED AS IT WAS A MISTAKE. SINCE THE ASSES SEE HAS BEEN ABLE TO EXPLAIN THE DISCREPANCY FOUND DURING THE COURSE OF SURVEY BY PRODUCING RELEVANT EVIDENCE, THE ASSESSING OFFICER COULD NOT HAVE MADE THE ADDITION SOLELY ON THE BASIS OF THE STATEM ENT MADE ON BEHALF OF THE ASSESSEE DURING THE COURSE OF THE SURVEY. IN THE CASE OF CHAWLA BROS. (P) LTD., A SURVEY WAS CONDUCTED AT THE BUSIN ESS PREMISES OF THE ASSESSEE. PURSUANT TO THE SURVEY PROCEEDINGS, THE R EVENUE AUTHORITY MADE CERTAIN ADDITIONS TO ASSESSEE'S TAXABLE INCOME ON ACCOUNT OF VARIATION IN CLOSING STOCK. IN VIEW OF THE FACT, TH AT THE ASSESSEE HAS RECONCILED THE DIFFERENCES WITH REASONS AND SINCE T HE REVENUE AUTHORITY DID NOT POINT OUT ANYTHING CONTRARY, THEN THE RECONCILIATION WAS SAID TO BE CORRECT. 6.2 IN THE LIGHT OF THE ABOVE DECISIONS AND IN VIEW OF THE FACTS OF THE PRESENT CASE, I HOLD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.54,50,436/- AS UNDISCLOSE D INCOME OF THE APPELLANT. THEREFORE, THE ADDITION OF RS.54,50,436/ - IS ACCORDINGLY DELETED. 3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. AT THE OUTSET, LD. D.R. SUBMITTED THAT IT IS A C ASE OF RETRACTION FROM SURRENDER MADE DURING SURVEY AND RETRACTION HAS BEE N MADE AFTER A PERIOD OF 6 MONTHS WHICH IS A LONG PERIOD AND THEREFORE ASSES SEE HAD TRIED TO EVADE 8 ITA NO.4734/DEL/2012 TAXES, WHICH IS AN AFTERTHOUGHT. SHE FURTHER SUBMI TTED THAT THE ASSESSEE ITSELF HAD AGREED FOR THE SURRENDER AND STOCK INVENTORY WA S PREPARED WITH HIS HELP AND THERE WAS NO COERCION OR PRESSURE ON THE ASSESS EE, AS RECORDED BY PARTNER OF FIRM AS RECORDED IN THE STATEMENT RECORD ED AT THE TIME OF SURVEY AND REFERRED TO Q.15 OF THE STATEMENT. IN THIS RES PECT, OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 59 WHERE PART OF STATEME NT RECORDED WAS PLACED. LD. D.R. FURTHER ARGUED THAT LD. CIT(A) HAD ALLOWED RELIEF TO THE ASSESSEE HOLDING THAT ASSESSEE WAS FOLLOWING FIFO METHOD BUT HE HAS JUST ACCEPTED THE CONTENTION OF ASSESSEE WITHOUT VERIFYING AS TO WHETHER IN THE EARLIER YEARS ALSO, THE ASSESSEE WAS ALSO FOLLOWING FIFO METHOD O R NOT. LD. D.R. INVITED OUR ATTENTION TO PAPER BOOK PAGE 262 TO 278 WHERE C OPIES OF BREAK-UP OF OPENING STOCK IN RESPECT OF MARBLE AND SUPER MARBLE WAS PLACED AND IN THIS RESPECT, LD. D.R. SUBMITTED THAT THE VALUE OF OPENI NG STOCK DOES NOT REFLECT, THAT, THE SAME WAS ALSO VALUED ON FIFO BASIS. ARGU ING FURTHER, THE LD. D.R. SUBMITTED THAT THE CASH WAS ALSO FOUND EXCESS FOR W HICH ASSESSEE HAS NOT CONTESTED AND HAS NOT EXPLAINED THE SOURCE WHICH IT SELF IMPLIES THAT CASH MUST HAVE BEEN GENERATED FROM THE BUSINESS OPERATIO N AND THEREFORE, THERE WAS DEFINITELY DIFFERENCE IN STOCK AS OTHERWISE, WI THOUT DIFFERENCE IN STOCK, THERE CANNOT BE ANY DIFFERENCE IN CASH. IN VIEW OF ABOVE ARGUMENT, LD. D.R. SUBMITTED THAT THIS CASE NEEDS TO BE READJUDICATED BY LD. CIT(A) AS LD. CIT(A) HAS ONLY RECORDED SUBMISSIONS OF THE ASSESSE E AND HAS ALLOWED RELIEF WITHOUT GIVING ANY SPECIFIC FINDINGS. 5. LD. A.R. ON THE OTHER HAND SUBMITTED THAT THOUGH THE ASSESSEE HAD STATED THAT THE AMOUNT WAS SURRENDERED WITHOUT COER CION OR PRESSURE, YET, IT CANNOT BE DENIED THAT UNDER THE CIRCUMSTANCES OF SU RVEY, ONE DEFINITELY MAKES ANY STATEMENT UNDER PRESSURE AND MOREOVER, IT WAS SUBMITTED THAT IT WAS NOT RETRACTION BUT A REWORKING OF STOCK FOUND A T THE TIME OF SURVEY ON 9 ITA NO.4734/DEL/2012 THE BASIS OF ACTUAL PURCHASE RATES AND ON THE BASIS OF CERTAIN RECTIFICATION IN THE CALCULATION OF STOCK WHICH WAS SUPPORTED BY PUR CHASE BILLS SALE BILLS AND STOCK REGISTERS. HE FURTHER ARGUED THAT THE ASSES SEE HAD NOT MADE ANY CHANGE IN THE QUANTITATIVE STOCK POSITION AS FOUND AT THE TIME OF SURVEY AND IT WAS ONLY DUE TO WRONG RECORDING OF CERTAIN ENTRIES IN THE STOCK REGISTER AND, THEREFORE, AFTER RECTIFICATION OF ABOVE, THE CORREC T STOCK VALUATION WAS DONE WHICH WAS SUBMITTED TO A.O. ON 31.03.2009 MUCH BEFO RE FILING OF RETURN OF INCOME AND EACH AND EVERY ITEM WAS RECONCILED ALONG WITH DOCUMENTARY EVIDENCES. CITING AN EXAMPLE REGARDING WRONG RECOR DING OF ENTRIES IN STOCK REGISTER, LD. A.R. INVITED OUR ATTENTION TO PAPER B OOK PAGE 74 WHERE A COPY OF INVOICE DATED 28.08.2008 WAS PLACED. LD. A.R. I NVITED OUR ATTENTION TO QUANTITY OF MARBLE RECORDED IN SQ. MTRS. AS 60.50 I N THE BILL AND SUBMITTED THAT THIS QUANTITY WAS REQUIRED TO BE CONVERTED INT O SQ. FT. FOR RECORDING IN THE STOCK REGISTER BUT IT WAS WRONGLY RECORDED WITHOUT CONVERSION. IN SUPPORT, HE INVITED OUR ATTENTION TO PAPER BOOK PAGE 72 WHER E THE SAID ENTRY WAS RECORDED AS 60.50 SQ. FT WITHOUT CONVERSION INTO SQ . FT. LD. A.R. SUBMITTED THAT THE ENTRIES RECORDED IN STOCK REGISTER AS PLAC ED AT PAPER BOOK 72 WERE SQ. FT AND 60.50 ALSO WAS RECORDED AS SQ. FT, WHICH WAS ACTUALLY 60.50 SQ. MTRS, WHICH SHOULD HAVE BEEN CONVERTED BUT COULD NOT BE C ONVERTED. FURTHER INVITING OUR ATTENTION TO THE COPY OF RECONCILIATIO N OF STOCK PLACED AT PAPER BOOK PAGE 71, LD. A.R. SUBMITTED THAT FOR ARRIVING AT CORRECT VALUATION OF STOCK, RECTIFICATION WAS REQUIRED TO BE MADE AND TH ESE MISTAKES CAME INTO THE KNOWLEDGE OF ASSESSEE WHEN ACCOUNTS WERE BEING FINA LIZED FOR THE PURPOSE OF DETERMINATION OF ADVANCE TAX. FURTHER, INVITING OUR ATTENTION TO PAPER BOOK PAGE 75, LD. A.R. SUBMITTED THAT IN BILL NO.01 34, THE SALE OF QUANTITY MENTIONED IN STOCK REGISTER WAS 470 SQ. FT WHEREAS THE ACTUAL QUANTITY WAS ONLY 70 SQ. FT AS IS APPARENT FROM COPY OF SALE REG ISTER PLACED AT PAPER BOOK 10 ITA NO.4734/DEL/2012 PAGE 76. SIMILARLY, IT WAS SUBMITTED THAT THE QUAN TITY OF SALE BILL NO.328 AS PLACED AT PAPER BOOK PAGE 77, THE QUANTITY ENTERED IN THE STOCK REGISTER WAS 96 SQ. FT. WHEREAS AS PER SALE REGISTER PLACED AT P APER BOOK PAGE 78, IT WAS 66 SQ. FT. IN THIS WAY, LD. A.R. SUBMITTED THAT RE CTIFICATIONS WERE REQUIRED TO BE MADE TO ARRIVE AT THE CORRECT VALUATION OF STOCK AND, THEREFORE, IT WAS SUBMITTED THAT BEFORE FILING OF RETURN OF INCOME TH E EXACT POSITION WAS SENT TO A.O. VIDE LETTER DATED 31.03.2009 PLACED AT PAPE R BOOK PAGE 67 TO 108 WHEREIN FULL EXPLANATION WAS PROVIDED TO A.O. ALONG WITH ALL DOCUMENTARY EVIDENCE. IT WAS SUBMITTED THAT AGAIN DURING ASSE SSMENT PROCEEDINGS, THE ASSESSEE HAD FURNISHED THE SAME EXPLANATION VIDE LE TTER DATED 19.12.2011 PLACED AT PAPER BOOK PAGES 109-134 AND A.O. WITHOUT MAKING ANY COMMENTS ON THESE SUBMISSIONS, MADE THE ADDITION WH ICH WAS NOT JUSTIFIED AND, THEREFORE, LD. CIT(A) AFTER CONSIDERING ALL EX PLANATION OF THE ASSESSEE, HAD GIVEN RELIEF TO THE ASSESSEE. HE SUBMITTED THA T THE A.O. DID NOT REJECT THE BOOKS OF ACCOUNTS AND THEREFORE WITHOUT REJECTI ON OF BOOKS OF ACCOUNTS, ADDITION WAS NOT LEGAL. 6. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT THOUGH ASSESSEE HAD SURREN DERED FOR THE DIFFERENCE IN STOCK AS PER PHYSICAL STOCK AND STOCK AS PER BOO KS OF ACCOUNT BUT LATER ON WHILE FINALIZING ITS ACCOUNTS, THE ASSESSEE NOTED C ERTAIN MISTAKES IN THE RECORDING OF CERTAIN TRANSACTIONS, THEREFORE, HE PR EPARED A RECONCILIATION STATEMENT AND SUBMITTED THE RECONCILED STATEMENT AL ONG WITH THE EXPLANATION AND ALL DOCUMENTARY EVIDENCES TO THE A.O. VIDE LETT ER DATED 31.03.2009. THE A.O. DID NOT COMMENT UPON SUCH EXPLANATIONS. MOREO VER, AGAIN DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD SUBMITTED THE SAME EXPLANATION TO WHICH ALSO A.O. FAILED TO OFFER ANY COMMENTS. IT W AS THE DUTY OF A.O. TO VERIFY THE EXPLANATIONS GIVEN BY ASSESSEE AND SHOUL D HAVE FOUND FAULT IN THE 11 ITA NO.4734/DEL/2012 RECONCILIATION BEFORE MAKING ADDITION. WE FURTHER FIND THAT THERE WAS NO CHANGE IN THE QUANTITATIVE STOCK AS ON DATE OF SURV EY AND AS PER BOOKS OF ACCOUNTS ON THE DATE OF SURVEY. THE DIFFERENCE IN QUANTITIES HAD OCCURRED ONLY DUE TO WRONG RECORDING OF CERTAIN TRANSACTIONS AND THE RECONCILIATION WAS SUPPORTED BY DOCUMENTARY EVIDENCES. THE SUBMIS SION OF CORRECT CALCULATION OF STOCK ON THE BASIS OF DOCUMENTARY EV IDENCE AND EXPLANATION CANNOT BE TERMED AS RETRACTION AS IT IS IN THE COMM ON KNOWLEDGE THAT DURING SURVEY OPERATIONS IN A LIMITED PERIOD OF TIME, EXAC T STOCK CANNOT BE CALCULATED SPECIFICALLY IN A CASE LIKE THIS WHERE D IFFERENT QUALITIES AND DIFFERENT PRODUCTS WERE DEALT BY THE ASSESSEE. THE REFORE, THE ACTION OF ASSESSEE IN SUBMITTING RECTIFIED POSITION OF STOCK WAS JUSTIFIED AND THEREFORE, ACTION OF LD. CIT(A) IN GIVING RELIEF TO THE ASSESS EE IS JUSTIFIED SPECIFICALLY IN VIEW OF THE FACT THAT A.O. INSTEAD OF VERIFYING THE CLAIM JUST IGNORED IT. IN VIEW OF ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). 7. THEREFORE,, APPEAL FILED BY REVENUE IS DISMISSED . 8. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DEC., 2014. SD./- SD./- ( I. C. SUDHIR) (T.S. KAPOOR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 23 RD DEC., 2014 SP COPY FORWARDED TO:- THE APPELLANT THE RESPONDENT THE CIT THE CIT (A)-, NEW DELHI. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). 12 ITA NO.4734/DEL/2012 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 19/12/2014 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 22,23,23,23 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 23/12 JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 23/12/2 014 AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 23/12 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 23/12 SR. PS/PS 7 FILE SENT TO BENCH CLERK 23/12/2014 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER