Deputy Commissioner of Income Tax, Khandwa V. Shri Sudhir Kumar Mundra. Prop. M/s Sudhir Trading Co., Burhanpur

ITA 510/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4610 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2013-2014
• Appeal Filed On: 19-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Principle of natural justice; TDS
• Section: 143(3); 142(1); 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE I KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.510/IND/2017 ASSESSMENT YEAR: 2013-14 DCIT, KHANDWA / VS. SHRI SUDHIR KUMAR MUNDRA. PROP. M/S. SUDHIR TRADING CO., JAMALPURA, ( REVENUE ) ( RESPONDENT ) PAN: ACVPM3934G ITA NO.511/IND/2017 ASSESSMENT YEAR: 2013-14 DCIT, KHANDWA / VS. SHRI SANDEEP KUMAR MUNDRA . PROP. M/S. S. K. ENTERPRISES, AMAGIRD, KALABAGH, BURHANPUR (REVENUE) (RESPONDENT) PAN: ABTPM8551C APPELLANT BY SHRI RAJIV JAIN SR. DR REVENUE BY SHRI MANOJ FADNIS, CA DATE OF HEARING: 26.12.2018 DATE OF PRONOUNCEMENT: 08.02.2019 O R D E R SUDHIR & SANDEEP KUMAR MUNDRA 2 PER MANISH BORAD. THESE TWO APPEALS FILED AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2013-14 ARE DIRECTED AGAI NST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-II (IN SHORT LD.CIT(A)], INDORE DATED 03.04.2017 WH ICH ARE 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 O F SHRI SUDHIR KUMAR MUNDRA IN ITA NO.510/IND/2017: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND AS PER STATE MENT RECORDED FROM THE ASSESSEE DATED 20.12.2012, THE ASSESSEE HAS SURREND ERED 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 TH E CASE, LD.. CIT (A) HAS FAILED TO APPRECIATE FACTS THAT TH E STOCK WAS TAKEN IN THE PRESENCE OF THE AUTHORIZED PERSON OF T HE ASSESSEE AND THE STOCK OF GOODS WAS INVENTORISED DURING THE SURVEY AND IT WAS FOUND THAT STOCK SHOWN IN THE BOOKS OF ACCOU NTS 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 ASSESS EE 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 A GAINST THE PRINCIPLE OF NATURAL JUSTICE. SUDHIR & SANDEEP KUMAR MUNDRA 3 5. THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT F ROM OR OTHERWISE AMEND THE ABOVE GROUNDS OF APPEAL. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THE CASE O F SHRI SANDEEP KUMAR MUNDRA IN ITA NO.511/IND/2017: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND AS PER STATE MENT RECORDED FROM THE ASSESSEE DATED 20.12.2012, THE ASSESSEE HAS SURREND ERED 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 TH E CASE, LD.. CIT (A) HAS FAILED TO APPRECIATE FACTS THAT TH E STOCK WAS TAKEN IN THE PRESENCE OF THE AUTHORIZED PERSON OF T HE ASSESSEE AND THE STOCK OF GOODS WAS INVENTORISED DURING THE SURVEY AND IT WAS FOUND THAT STOCK SHOWN IN THE BOOKS OF ACCOU NTS 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 ASSESS EE 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 A GAINST THE PRINCIPLE OF NATURAL JUSTICE. 5. THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT F ROM 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 EXC ESS STOCK FOUND DURING THE COURSE OF SURVEY HAS BEEN RAIS ED BY THE REVENUE. AS THE ISSUES RAISED ARE COMMON BOTH THE SE CASES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SUDHIR & SANDEEP KUMAR MUNDRA 4 COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. FOR THE PURPOSE OF ADJUDICATION WE WILL TAKE UP TH E FACTS OF SHRI SUDHIR KUMAR MUNDRA PROP. M/S SUDHIR TRADING CO. IN ITANO.510/IND/2017 FOR A.Y. 2013-14. 4. BRIEF FACTS AS CULLED OUT FROM THE RECORDS ARE THAT THE SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 20.12.20 12 AT THE BUSINESS PREMISES OF THE ASSESSEE AND DIFFERENCE OF PHYSICAL STOCK VIZ-A-VIZ BOOK STOCK OF RS.90,98,439/- WAS VOLUNTARILY SURRENDERED DURING THE COURSE OF SURVEY PROCEEDINGS. SUBSEQUENTLY, E-RETURN OF INCOME WAS FIL ED ON 01.10.2013 DECLARING TAXABLE INCOME OF RS.33,81,660/- FROM THE BUSINESS OF TRADING OF POWER LOOM & CLOTH. IN T HE COMPUTATION OF INCOME UNDISCLOSED INCOME OF RS.17,37,075/- WAS SHOWN ON ACCOUNT OF EXCESS STOCK. CASE SELECTED FOR SCRUTINY AND NECESSARY NOTICES U/S 143(2 ) & 142(1) OF THE ACT WERE DULY SERVED UPON THE ASSESSEE . SUDHIR & SANDEEP KUMAR MUNDRA 5 DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSES SEE 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 B OOKS 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 EXPEN SES 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 F DR 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 W ELL SUDHIR & SANDEEP KUMAR MUNDRA 6 AS THE RECONCILIATION STATEMENT DELETED THE ADDITION. 6. NOW THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 7. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDER OF ASSESSING OFFICER. 8. PER CONTRA LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FINDING OF THE LD. CIT(A) AND FOLLOWING WRITTEN SUBM ISSION: 1. SURVEY U/S 133A OF THE I.T. ACT, WAS CONDUCTED AT T HE PREMISES OF THE ASSESSEE ON 20.12.2012. DURING THE SURVEY THE ASSES SEE DECLARED A SUM OF RS 90,98,439/- BEING THE DIFFERENCE BETWEEN THE ACTUAL STOCK ON THE DATE OF SURVEY AND THE STOCK AS PER THE BOOKS O N THAT DATE. 2. AFTER THE SURVEY PROCEEDINGS WERE COMPLETED, THE AS SESSEE COMPLETED HIS BOOKS OF ACCOUNTS AND DETERMINED THAT THE DIFFE RENCE BETWEEN THE ACTUAL STOCK AND THE STOCK AS PER THE BOOKS AS ON 2 0.12.2012 WAS ONLY RS. 17,40,905/-. ACCORDINGLY, IN THE RETURN OF INCO ME HE OFFERED ONLY RS. 17,40,905/- ON ACCOUNT OF THE STOCK DIFFERENCE. 3. THE SUMMARY OF THE DIFFERENCE IS AS UNDER :- S.NO. PARTICULARS AMOUNT AS PER DECLARATION AMOUNT AS PER ACTUAL AUDITED CALCULATION DIFFERENCE 1 PHYSICAL STOCK AS ON THE DATE OF SURVEY 1,12,41,701/- 1,12,41,701/- NIL 2 STOCK AS PER BOOKS OF ACCOUNTS 21,43,262/- 95,00,796/- 75,57,534/- 3 EXCESSIVE 90,98,439/- 17,40,905/- 73,57,534/- SUDHIR & SANDEEP KUMAR MUNDRA 7 STOCK ON THE DATE OF SURVEY (1-2) 4. THE ASSESSEE FILED THE FOLLOWING INFORMATION WITH T HE LD. AO DURING THE COURSE OF ASSESSMENT TO EXPLAIN THE DIFFERENCE :- S. NO. DOCUMENTS FILED WITH THE LD. AO PAGE NO OF THE PAPER BOOK 1 LETTER TO AO EXPLAINING IN DETAIL THE REASONS FOR THE DIFFERENCES 1.1 STATEMENTS OF ASSESSEE ON THE DATE OF SURVEY PAGE NO 78 TO 79 OF VOL. I 1.2 TRADING ACCOUNT ON THE DATE OF SURVEY PAGE NO 80 TO 80 OF VOL. I 1.3 COPY OF AUDITED CAPITAL ACCOUNT PAGE NO 81 TO 81 OF VOL. I 1.4 COPY OF SALES TAX RETURNS PAGE NO 82 TO 91 OF VOL. I 1.5 COPY OF P&L ACCOUNT UP TO DATE OF SURVEY PAGE NO 92 TO 92 OF VOL. I 1.6 COMPARATIVE CHART SHOWING GP & NP WITH REASONS OF DIFFERENCES PAGE NO 93 TO 97 OF VOL. I 1.7 VALUATION OF CLOSING STOCK ON DATE OF SURVEY PAGE NO 98 TO 98 OF VOL. I 1.8 QUANTITATIVE DETAILS OF STOCK ON DATE OF SURVEY PAGE NO 99 TO 100 OF VOL. I 1.9 COMPARATIVE CHART OF GP & NP FOR LAST 3 YEARS PAGE NO 93 TO 97 OF VOL. I 5. ON THE BASIS OF THE ABOVE, IT WAS CONTENDED BEFORE THE LD. AO THAT THE DIFFERENCE IN THE STOCK AS ON 20.12.2012 WAS ONLY D UE TO PROVISIONAL ACCOUNTS PREPARED ON THAT DATE. AFTER ACCOUNTING FO R THE PURCHASES OF RAW MATERIAL, THE CORRECT STOCK AS PER THE BOOKS WA S RS 95,00,796/-. SUDHIR & SANDEEP KUMAR MUNDRA 8 6. THE LD. AO HAS REPRODUCED THE SUBMISSIONS OF THE AS SESSEE FROM PAGE 3 TO 5 OF HIS ORDER BUT HAS NOT CONSIDERED THEM. HE H AS RECORDED THE FOLLOWING FINDING ON PAGE 5 OF HIS ORDER :- THE REPLY SUBMITTED BY THE ASSESSEE IS NOT ACCEPTE D BECAUSE STOCK WAS TAKEN IN PRESENCE OF THE AUTHORISED PERSON OF THE A SSESSEE AND ON THE BASIS OF PHYSICAL STOCK TAKEN, ASSESSEE SURRENDERED ADDITIONAL INCOME VOLUNTARILY. THEREFORE, EXCESS STOCK OF RS. 73,61,3 64/- WHICH IS NOT SHOWN BY THE ASSESSEE IS ADDED IN TOTAL INCOME OF T HE ASSESSEE 7. THE LD. CIT(A) HAS RECORDED IN PARA 3.12 OF HIS ORD ER AT PAGE NO 7 OF HIS ORDER AS UNDER: - 3.12 THE A.O. COULD NOT FIND ANY DISCREPANCY IN THE CLAI M OF APPELLANT WHICH IS QUITE APPARENT FROM HIS ASSESSMENT ORDER A LSO 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 O F STOCK AS PER BOOKS OF ACCOUNTS SUBMITTED BY THE APPELLANT. IT IS THE D UTY OF THE AO BEING A QUASI JUDICIAL AUTHORITY TO EXAMINE AND VERIFY THE DOCUMENTS SO SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSE SSMENT 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 FAIL ED TO DO SO. 8. THE LD. CIT(A) ASKED FOR FURTHER CLARIFICATIONS WHI CH WERE PROVIDED TO HIM AS UNDER: - 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 PAGE 142 TO PAGE 468 IN VOL. III COPY OF CLOTH PURCHASE ACCOUNT COPY OF PURCHASE BILLS COPY OF LEDGER ACCOUNT OF PARTIES 1B FOR PURCHASE OF YARN PAGE NO 469 TO SUDHIR & SANDEEP KUMAR MUNDRA 9 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 796 IN VOL. IV COPY OF SIZING CHARGES ACCOUNT COPY OF BILLS RAISED FOR SIZING CHARGES 1D FOR WEAVING CHARGES PAGE NO 797 TO 1007 IN VOL. V COPY OF WEAVING CHARGES (JOB) ACCOUNT COPY OF BILLS RAISED FOR WEAVING CHARGES COPY OF WEAVING CHARGES EXPENSES ACCOUNT 1E FOR OTHER EXPENSES PAGE NO 1008 TO 1103 IN VOL. VI COPY OF KAKHANACHOKIDARI EXPENSES ACCOUNT WITH VOUCHERS COPY OF BEEMBHARAI EXPENSES ACCOUNT WITH VOUCHERS COPY OF CHARKHA SOOT KANDI BHARAI EXPENSES ACCOUNT WITH VOUCHERS 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 10 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 9. THE LD. CIT(A) HAS AFTER CONSIDERING ALL THE ABOVE DOCUMENTS HAS ALLOWED THE APPEAL AS RECORDED IN PARA 3.15 AND 3.16 AT PAG E 10 OF HIS ORDER. 10. RELIANCE IS PLACED ON THE FOLLOWING DECISIONS :- 1. PULLANGODE RUBBER PRODUCE CO, LTD. V. STATE OF KERA LA (1973) 91 ITR 18 (SC) 2. URMILA AGRAWAL V. ASSISTANT COMMISSIONER OF INCOME TAX (2014) 24 ITJ 785 (TRIB. INDORE) 3. ASSISTANT COMMISSIONER OF INCOME TAX V. SMT. USHA RANI TALLA [2010] 6 ITR (T) 37 (DELHI) 4. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIR CLE, AGRA V. MAYA TRADING CO. [2013] 34 TAXMANN.COM 144 (AGRA - TRIB.) 9. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE RE CORD PLACED BEFORE US. SOLE GRIEVANCE OF THE REVENUE, RELAT ES TO THE ADDITION OF RS. 73,61,364/- DELETED BY THE LD. C IT(A). SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 20.12.20 12 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 BOO KS OF ACCOUNTS ON THE DATE OF SURVEY. DURING THE COURSE OF SUDHIR & SANDEEP KUMAR MUNDRA 11 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 DOC UMENTS AS WELL AS THE REASONS CITED BY THE AO TO MAKE THE ADD ITION. THE AO HAS GIVEN THE FOLLOWING REASON FOR MAKING THE AD DITION:- '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 APPEL LANT HAS DULY ACCEPTED THE PHYSICAL STOCK TAKEN BY THE DEPARTMENT AND IN FACT THERE IS NO DISPUTE ON THE QUANTITY, RATES AND CALC ULATION THEREOF. 3.6 THE PHYSICAL STOCK TAKEN AS ON THE DATE OF SURV EY WAS AT RS.L,12,41,701/- WHICH IS NOT AT ALL DISPUTED BY TH E APPELLANT HOWEVER THE STOCK IN HAND AS PER BOOKS OF ACCOUNT W AS SUBSEQUENTLY CORRECTED WHICH RESULTED IN SHORT DECL ARATION. 3.7 THE SUMMARY OF DECLARATION IS CLEARLY DEPICTED IN THE FOLLOWING CHART: S. PARTICULAR S AMOUNT AS PER AMOUN T AS PER DIFFERENCE NO. DECLARATI ACTUAL AUDITE CALCULATION 1 PHYSICAL STOCK AS 1,12,41,701 / - 1,12,41,701 / - NIL ON TH DAT OF SURVE 2 STOCK AS PE R 21,43,26 2/ - 95,00,796/- 73,57,534 / - BOOKS OF ACCOUNTS 3 EXCESSI VE STOC K 90,98,43 9/ - 17,40,905/- 73,57,534 / - ON TH DAT OF SURVEY (1- 2) SUDHIR & SANDEEP KUMAR MUNDRA 12 3.8 AS DISCUSSED ABOVE THE APPELLANT HAS NOT DISPUT ED THE STOCK FOUND ON THE DATE OF SURVEY HOWEVER, AS PER HIS SUB MISSION 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 STO CK IN HAND AS PER BOOKS OF ACCOUNT AS ON THE DATE OF SURVEY WAS A T 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 APPELL ANT 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 DOC UMENTS TO SUBSTANTIATE ITS CLAIM WHICH WERE ALSO PRODUCE BEFO RE THE AO IN REPLY TO HIS SHOW CAUSE NOTICE:- I) COPY OF SALES TAX RETURNS. II) COPY OF TRADING ACCOUNT FOR THE PERIOD 0 1.04.12 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 ASSESSME NT ORDER ALSO AS THE AO HAS DISCUSSED ONLY THE PHYSICAL STOC K WHICH IN FACT IS NOT A MATTER OF DISPUTE AT ALL. HOWEVER, HE SUMMARILY REJECTED THE CLAIM OF APPELLANT WITHOUT EVEN DISCUS SING IN THE ASSESSMENT ORDER THE CLAIM OF STOCK AS PER BOOKS OF ACCOUNTS SUBMITTED BY THE APPELLANT. IT IS THE DUTY OF THE A O BEING A QUASI JUDICIAL AUTHORITY TO EXAMINE AND VERIFY THE DOCUME NTS 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 OTHE R DIRECT EXPENSES INCLUDING THE DETAILS OF PAYMENT MADE BY T HE APPELLANT AND ALSO THE TDS DETAILS. THE APPELLANT VIDE ITS RE PLY DATED 06.03.2017 SUBMITTED THE FOLLOWING REPLY/DETAILS:- SUDHIR & SANDEEP KUMAR MUNDRA 13 'WITH REFERENCE TO THE ABOVE MATTER AND IN CONTINUA TION 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 31 ST JANUARY 2017, WHEREIN AT ANNEXURE 'B- 21 '. WHEREIN CHART SHOWING GROSS PROFIT AND NET PROFIT WAS SUBMITTED. IN THIS CHART COMPARATIVE STAT EMENT OF ITEMS APPEARING IN TRADING ACCOUNT WAS SUBMITTED FOR TRADIN G ACCOUNT AS ON DATE OF SURVEY AND ACTUAL AUDITED TRADING ACCOUNT. THE DETAILS OF PURCHASES ARE REPRODUCE HEREBELOW: PARTICULARS AS ON 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 FO R 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 F OR 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 SUPPOR TED BY BILLS AND ALSO BY SALES TAX RETURNS. B) SIZING CHARGES SUDHIR & SANDEEP KUMAR MUNDRA 14 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 PARTICULAR OF SURVEY 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 SUPPO RTED 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 Y OUR HONOURS READY REFERENCE TO SUBSTANTIATE WEAVING CHARG ES: 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 APPE ARING ON THE COPY OF BILL ITSELF ALL THE OTHER EXPENSES ARE DULY SUPPORTED BY BILLS AND VOUCHERS. SUDHIR & SANDEEP KUMAR MUNDRA 15 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 OF SURVEY (RS.) AS PER AUDITED BOOKS OF ACCOUNT (RS.) DIFFERENCE (RS.) OTHER EXPENSES NIL 5,01,931 5,01,931 2) THAT THE FOLLOWING DOCUMENTS ARE SUBMITTED FOR Y OUR 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 GENU INELY FOR BUSINESS PURPOSES ONLY WHICH ARE EVIDENT FROM THE BILLS AND VOU CHERS. ' 3.14 THESE DETAILS WERE DULY EXAMINED AND WERE BEFO RE THE AO ALSO. THE APPELLANT WAS FURTHER ASKED VIDE ORDER SH EET 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 DIFFE RENCE. 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 E NCLOSED 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 SEGREG ATED 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 16 B) THAT THE PAYMENTS MADE FOR PURCHASES OF PRE-SURV EY PERIOD MADE IN POST SURVEY PERIOD IS VERY NEGLIGIBLE AND RELATED TO NORMAL COURSE OF BUSINESS AND EVEN ALL THE PAYMENTS WERE MADE BY CHEQ UES ONLY. C) THAT OUT OF THE TOTAL PURCHASES OF PRE-SURVEY PER IOD 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 VE RIFICATION FROM VARIOUS CHECK POST BY MP STATE SALES TAX DEPARTMENT. C) THAT THE 'C' FORM NO. IS DULY MENTIONED ON THE C OPIES OF PURCHASE BILL SUBMITTED WITH YOUR HONOUR. D) THAT THE PURCHASES MADE FROM OUT OF MP COMES THR OUGH 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 S AME IS MARKED AS ANNEXURE 'C-1' TO 'C-24'. F) THAT AS EVIDENT FROM THE COPIES OF BILTIES, THE ASS ESSEE HAS DULY PURCHASES THE GOODS AND MADE PAYMENTS TO THE PARITE S. 6)A) THAT THE ASSESSEE HAS SUBMITTED FOLLOWING TO SUBSTANTIATE THE CLAIM OF PURCHASES S. NO. DATE OF DOCUMENTS SUBMIT TED 1 06.03.2017 C COPY OF PURCHASE ACCOUNT 2 06.03.2017 C COPY OF PURCHASES BILL 3 06.03.2017 C COPY OF LEDQER ACCOUNT OFOARTIES 4 17.03.2016 TO LD. C COPY OF SALES TAX RETURNS 5 17. 03.2016 TO LD. AD. MONTH WISE QUANTITATIVE STATEMENT OF STOCK 6 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 D ETAILS TO SUBSTANTIATE THE CLAIM OF PURCHASES. 7) THAT AS EVIDENT FROM THE ABOVE, THE ASSESSEE HAS RIGHTLY CALCULATED HIS BUSINESS INCOME WHICH IS SUMMARILY R EJECTED 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 SUDHIR & SANDEEP KUMAR MUNDRA 17 TAX ACT AND THEREFORE YOUR HONOUR IS KINDLY REQUESTED TO QUASH THE ADDITION. ' 3.15 AFTER EXAMINING ALL THE DETAILS AND THE DOCUME NTS 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 TR ANSPORTERS SUBSTANTIATE THE APPELLANTS CLAIM. THESE FACTS AND DOCUMENTS WERE VERY MUCH BEFORE THE AO ALSO BUT THE AO SUMMAR ILY REJECTED ALL SUCH DOCUMENTS AND MADE THE ADDITION W ITHOUT ASSIGNING ANY REASON FOR NOT ACCEPTING THESE DOCUME NTARY EVIDENCES SO SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN REPLY TO THE SHOW CAUSE G IVEN BY THE AO. AS HAS BEEN MENTIONED EARLIER ALSO, HE ONLY MEN TIONED ABOUT THE PHYSICAL STOCK WHICH WAS NEVER A MATTER O F DISPUTE. 3.16 FURTHER, IT HAS BEEN HELD UNDER VARIOUS JUDICI AL PRONOUNCEMENTS THAT AMOUNT DECLARED DURING THE SURV EY PROCEEDINGS ARE NOT CONCLUSIVE. IN THE DECISION IN PULLANGODE RUBBER PRODUCE CO, LTD. V. STATE OF KERALA (1973) 9 1 ITR 18 (SC), THE APEX COURT HELD THAT AN ADMISSION IS AN E XTREMELY IMPORTANT PIECE OF THE EVIDENCE BUT IT CANNOT BE SA ID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE TH E ADMISSION TO SHOW THAT IT IS INCORRECT. 3.17 THE JURISDICTIONAL BENCH OF ITAT HAD HELD IN T HE 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 AMOU NT SURRENDERED IN SURVEY- HELD STATEMENT RECORDED DURI NG SURVEY WAS NOT BASED ON ANY MATERIAL FOUND DURING SURVEY- STATEMENT CANNOT BE LEGALLY AC TED UPON AGAINST THE ASSESSEE WHEN ASSESSEE RETRACTS THE SAM E - 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 ACCO UNTS WAS NOT CORRECTLY WORKED OUT ON THE DAY OF THE SURVEY AND T HE AO MADE THE ADDITION BY SUMMARILY REJECTING THE CLAIM MADE BY THE APPELLANT WITHOUT EVEN ASSIGNING REASONS FOR REJECT ING THE SAME. FURTHER, THE APPELLANT HAS DULY SUBSTANTIATED ITS C LAIM THROUGH VARIOUS DOCUMENTS, EVIDENCES SO SUBMITTED DISCUSSED ABOVE SUDHIR & SANDEEP KUMAR MUNDRA 18 WHICH WERE ALSO SUBMITTED BEFORE THE AO. SUCH ADDIT ION MADE CANNOT BE SUSTAINED AND IS HEREBY DELETED. THIS GRO UND 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 O F 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 CONDUCT ED, THOUGH, THE TRANSACTIONS HAVE TAKEN PLACE BUT WERE NOT BE ENTERED IN THE REGULAR BOOKS OF ACCOUNTS. 11. WE FIND THAT PHYSICAL STOCK AS ON THE DATE OF SURVE Y WAS RS.1,12,41,701/- AND THE STOCK AS PER THE BOOKS OF ACCOUNTS WAS RS.21,43,262/- WHICH GAVE RISE TO THE WO RKING OF EXCESSIVE STOCK OF RS.90,98,439/-. THEREAFTER, W HEN BOOKS OF ACCOUNTS WERE COMPLETED AND AUDITED THE STO CK AS ON THE DATE OF SURVEY WAS CALCULATED AT RS.95,00,796/- SUDHIR & SANDEEP KUMAR MUNDRA 19 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 O F ACCOUNTS ON THE DATE OF SURVEY CLAIMED AT RS.95,00,796/ -, THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THE CORRECT NESS OF THIS FIGURE WITH THE SUPPORT OF SALES TAX RETURNS , AUDITED TRADING ACCOUNT, COMPARATIVE STATEMENT OF TRADING ACCOUNT, DETAILED VALUATION OF CLOSING STOCK, MONTH WI SE QUANTITATIVE STATEMENT, COMPARATIVE STATEMENT OF GROSS PROFIT AND NO ERROR HAS BEEN FOUND IN THESE DETAILS BY THE LD. CIT(A). 12. WE, THEREFORE, IN THE GIVEN FACTS AND IN THE CIRCUMSTANCES AND THE FACTUAL MATRIX OF THE CASE BEFORE U S, ARE OF THE CONSIDERED VIEW THAT LD. CIT(A) MADE NO ERR OR IN DELETING THE ADDITION OF RS.73,61,364/- BY TAKING THE BASIS OF CORRECTNESS OF STOCK AS PER BOOKS OF ACCOUNTS AS ON THE SUDHIR & SANDEEP KUMAR MUNDRA 20 DATE OF SURVEY. NO INTERFERENCE IS THEREFORE CALLED I N THE FINDING OF LD. CIT(A) AND WE AFFIRM THE SAME. 13. GROUND NOS. 1, 2, 3 & 4 OF REVENUES APPEAL STANDS DISMISSED AND GROUND NO.5 WHICH IS GENERAL IN NATURE, NEEDS NO ADJUDICATION. ACCORDINGLY APPEAL OF REVENUE I N THE CASE OF SUDHIR KUMAR MUNDRA FOR A.Y. 2013-14 STANDS DISMISSED. NOW WE TAKE UP IN ITANO.511/IND/2017 IN THE CASE OF SANDEEP KUMAR MUNDRA PROP. M/S. S.K. ENTERPRISES. 14. BOTH THE PARTIES HAVE AGREED BEFORE US THAT THE REL EVANT FACTS AS WELL AS THE ISSUE REMAINS THE SAME WHICH ARISES OUT OF SURVEY U/S 133A OF THE ACT CONDUCTED ON 20.12.20 12. 15. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED TH E RECORD PLACED BEFORE US. WE FIND THAT THE PHYSICAL STOCK AS ON THE DATE OF SURVEY WAS VALUED AT RS. 1,08,47,166/- AND STOCK AS PER BOOKS OF ACCOUNTS ON THE DATE OF SURVEY STOOD AT SUDHIR & SANDEEP KUMAR MUNDRA 21 RS.17,59,024/-. EXCESS STOCK ON THE DATE OF SURVEY W AS ACCEPTED BY THE ASSESSEE AT RS.90,88,142/- WHICH WAS SUBSEQUENTLY SHOWN ONLY AT RS.1,346/- IN THE REGULAR RETURN OF INCOME. THOUGH THE ASSESSEE MADE DETAILED SUBMISSIONS BEFORE ASSESSING OFFICER BUT COULD NOT AV OID THE ADDITION OF RS.90,86,796/- AGAINST WHICH THE ASSESSEE C AME IN APPEAL BEFORE THE LD. CIT(A) WHO DELETED THE ADDITI ON AFTER IN DEPTH EXAMINATION OF FACTS OBSERVING AS FOLLOWS: 2.4 I HAVE CAREFULLY GONE THROUGH ALL THE ABOVE DOC UMENTS AS WELL AS THE REASONS CITED BY THE AO TO MAKE THE ADD ITION. THE AO HAS GIVEN THE FOLLOWING REASON FOR MAKING THE AD DITION:- 'STOCK WAS TAKEN IN PRESENCE OF THE AUTHORIZED PERSO N 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 APPEL LANT HAS DULY ACCEPTED THE PHYSICAL STOCK TAKEN BY THE DEPARTMENT AND IN FACT THERE IS NO DISPUTE ON THE QUANTITY, RATES AND CALC ULATION THEREOF. 2.6 THE PHYSICAL STOCK TAKEN AS ON THE DATE OF SURV EY WAS AT RS.1,08,47,166/- WHICH IS NOT AT ALL DISPUTED BY TH E APPELLANT HOWEVER THE STOCK IN HAND AS PER BOOKS OF ACCOUNT W AS SUBSEQUENTLY CORRECTED WHICH RESULTED IN SHORT DECL ARATION. 2.7 THE SUMMARY OF DECLARATION IS CLEARLY DEPICTED IN THE FOLLOWING CHART: PARTIC ULARS AMO UNT P AMOUN T AS PER DIFFERENCE SUDHIR & SANDEEP KUMAR MUNDRA 22 DECLA A AUDIT CALCULATIO PHYSICAL STOCK AS 1,08,47,1 66/ - 1,08,47,1 66/ - NIL S ST O 17,5 9,02 1,08,45,8 20/ - 90,86,796/- B ACCOU EXCE SSIV S 90,8 8, 14 1,346/- 90,86,796/- SURVE 2.8 AS DISCUSSED ABOVE THE APPELLANT HAS NOT DISPUT ED THE STOCK FOUND ON THE DATE OF SURVEY HOWEVER, AS PER HIS SUB MISSION DUE TO INCOMPLETE BOOKS OF ACCOUNTS, THE STOCK IN H AND 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 STO CK IN HAND AS PER BOOKS OF ACCOUNT AS ON THE DATE OF SURVEY WAS A T 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 APPELL ANT FOUND THAT WAS NO SHORTAGE IN STOCK AS HE HAD NOT CONSIDERED T HE CORRECT AMOUNT OF STOCK AS PER BOOKS ON THE DATE OF SURVEY. 2.11 THE APPELLANT ALSO SUBMITTED THE FOLLOWING DOC UMENTS TO SUBSTANTIATE ITS CLAIM WHICH WERE ALSO PRODUCE BEFO RE THE AO IN REPLY TO HIS SHOW CAUSE NOTICE:- I) COPY OF SALES TAX RETURNS. II) COPY OF TRADING ACCOUNT FOR THE PERIOD 0 1.04.12 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 ASSESSME NT ORDER ALSO AS THE AO HAS DISCUSSED ONLY THE PHYSICAL STOC K WHICH IN FACT IS NOT A MATTER OF DISPUTE AT ALL. HOWEVER, HE SUMMARILY REJECTED THE CLAIM OF APPELLANT WITHOUT EVEN DISCUS SING IN THE ASSESSMENT ORDER THE CLAIM OF STOCK AS PER BOOKS OF ACCOUNTS SUBMITTED BY THE APPELLANT. IT IS THE DUTY OF THE A O BEING A QUASI JUDICIAL AUTHORITY TO EXAMINE AND VERIFY THE DOCUMENTS SUDHIR & SANDEEP KUMAR MUNDRA 23 SO SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND IF HE FINDS THEM NOT TEN ABLE, 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 BIL L WISE DIFFERENCES IN PURCHASES, SIZING CHARGES, WEAVING C HARGES 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 CONTINUA TION 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 31 ST JANUARY 2017, WHEREIN AT ANNEXURE 'B- 21 '. WHEREIN CHART SHOWING GROSS PROFIT AND NET PROFIT WAS SUBMITTED. IN THIS CHART COMPARATIVE STATEMENT O F ITEMS APPEARING IN TRADING ACCOUNT WAS SUBMITTED FOR TRADIN G ACCOUNT AS ON DATE OF SURVEY AND ACTUAL AUDITED TRADING ACCOUNT. THE DETAILS OF PURCHASES ARE REPRODUCE HERE BELOW: PARTIC AS ON AS PER DIFFER SURVEIL ACCOUNT (RS.) PURCHA SES 2,37,56,0 66 2,45,54,183 7,98,11 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 24 B) THAT FURTHER FOLLOWING DOCUMENTS ARE SUBMITTED F OR 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 SUPPORTE D 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 Y OUR 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 SUPPORT ED 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 HERE UNDER: PARTIC AS ON A S PER DIFFERENCE SURVEIL ACCOUNT O FRS.} SUDHIR & SANDEEP KUMAR MUNDRA 25 WEAVIN G 7,32,155 44,32,798 37,00,643 CHARAE 2) THAT THE FOLLOWING DOCUMENTS ARE SUBMITTED FOR Y OUR HONOURS READY REFERENCE TO SUBSTANTIATE WEAVING CHARG ES: 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 APPE ARING 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 BEFO RE THE AO ALSO. THE APPELLANT WAS FURTHER ASKED VIDE ORDER SH EET DATED 08.03.2017 AS TO GIVE DETAILS OF PAYMENT DONE BEFOR E THE DATE OF SURVEY. THE APPELLANT WAS ALSO ASKED TO PRODUCE OTH ER DOCUMENTS TO PROVE THE DIFFERENCE. THE APPELLANT VI DE ITS REPLY DATED 20.03.2017 SUBMITTED THE DETAILS WHICH ARE RE PRODUCED 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 E NCLOSED 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 SEGREG ATED IN TWO PARTS I.E. FOR POST SURVEY PERIOD AND PRE-SURVEY PERIOD AN D SUMMARIZED INTO A SEPARATE STATEMENT AND MARKED AS ANNEXURE 'B-1. 4 A) THAT AS EVIDENT FROM STATEMENT THAT PAYMENTS M ADE 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-SURV EY PERIOD MADE IN POST SURVEY PERIOD IS VERY NEGLIGIBLE AND RELATED TO NORMAL COURSE OF BUSINESS AND EVEN ALL THE PAYMENTS WERE MADE BY CHEQ UES ONLY. C) THAT OUT OF THE TOTAL PURCHASES OF PRE-SURVEY PER IOD CLAIMED BY THE SUDHIR & SANDEEP KUMAR MUNDRA 26 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 VE RIFICATION FROM VARIOUS CHECK POST BY MP STATE SALES TAX DEPARTMENT. C) THAT THE 'C' FORM NO. IS DULY MENTIONED ON THE CO PIES OF PURCHASE BILL SUBMITTED WITH YOUR HONOUR. D) THAT THE PURCHASES MADE FROM OUT OF MP COMES THR OUGH 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 S AME IS MARKED AS ANNEXURE 'C-1' TO 'C-24'. F) THAT AS EVIDENT FROM THE COPIES OF BILTIES, THE ASS ESSEE HAS DULY PURCHASES THE GOODS AND MADE PAYMENTS TO THE PARITE S. 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 TO LD. AD. MONTH WISE QUANTITATIVE STATEMENT OF STOCK 6 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 D ETAILS TO SUBSTANTIATE THE CLAIM OF PURCHASES. 7) THAT AS EVIDENT FROM THE ABOVE, THE ASSESSEE HAS RIGHTLY CALCULATED HIS BUSINESS INCOME WHICH IS SUMMARILY R EJECTED 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 DOCUME NTS SO PRODUCED, IT WAS SEEN THAT THE PAYMENTS FOR MOST OF THE SUDHIR & SANDEEP KUMAR MUNDRA 27 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 TR ANSPORTERS SUBSTANTIATE THE APPELLANTS CLAIM. THESE FACTS AND DOCUMENTS WERE VERY MUCH BEFORE THE AO ALSO BUT THE AO SUMMAR ILY REJECTED ALL SUCH DOCUMENTS AND MADE THE ADDITION W ITHOUT ASSIGNING ANY REASON FOR NOT ACCEPTING THESE DOCUME NTARY EVIDENCES SO SUBMITTED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN REPLY TO THE SHOW CAUSE G IVEN BY THE AO. AS HAS BEEN MENTIONED EARLIER ALSO, HE ONLY MEN TIONED ABOUT THE PHYSICAL STOCK WHICH WAS NEVER A MATTER O F DISPUTE. 2.16 FURTHER, IT HAS BEEN HELD UNDER VARIOUS JUDICI AL PRONOUNCEMENTS THAT AMOUNT DECLARED DURING THE SURV EY PROCEEDINGS ARE NOT CONCLUSIVE. IN THE DECISION IN PULLANGODE RUBBER PRODUCE CO, LTD. V. STATE OF KERALA (1973) 9 1 ITR 18 (SC), THE APEX COURT HELD THAT AN ADMISSION IS AN E XTREMELY IMPORTANT PIECE OF THE EVIDENCE BUT IT CANNOT BE SA ID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE TH E ADMISSION TO SHOW THAT IT IS INCORRECT. 2.17 THE JURISDICTIONAL BENCH OF ITAT HAD HELD IN T HE 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 AMOU NT SURRENDERED IN SURVEY- HELD STATEMENT RECORDED DURI NG SURVEY WAS NOT BASED ON ANY MATERIAL FOUND DURING S URVEY- STATEMENT CANNOT BE LEGALLY ACTED UPON AGAINST THE ASSESSEE WHEN ASSESSEE RETRACTS THE SAME - ADDITION IS LIABL E 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 ACCO UNTS WAS NOT CORRECTLY WORKED OUT ON THE DAY OF THE SURVEY AND T HE AO MADE THE ADDITION BY SUMMARILY REJECTING THE CLAIM MADE BY THE APPELLANT WITHOUT EVEN ASSIGNING REASONS FOR REJECT ING THE SAME. FURTHER, THE APPELLANT HAS DULY SUBSTANTIATED ITS C LAIM THROUGH VARIOUS DOCUMENTS, EVIDENCES SO SUBMITTED DISCUSSED ABOVE WHICH WERE ALSO SUBMITTED BEFORE THE AO. SUCH ADDIT ION MADE CANNOT BE SUSTAINED AND IS HEREBY DELETED. THIS GRO UND OF APPEAL IS ALLOWED. SUDHIR & SANDEEP KUMAR MUNDRA 28 16. THE ABOVE FINDING ON FACT GIVEN BY THE LD. CIT(A ) HAS NOT BEEN CONTROVERTED BY THE LD. DR BY PLACING ANY CONTR ARY 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 ACTU ALLY RS.1,08,45,820/- AND NOT RS.17,59,024/- AND THUS ALLE GED DIFFERENCE OF RS.90,86,796/- HAS BEEN DULY EXPLAINED BY THE ASSESSEE BY PLACING VARIOUS DETAILS ON RECORD. WE, THE REFORE, 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. 17. GROUND NOS. 1,2,3 & 4 OF REVENUES APPEAL STANDS 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 SUDHIR & SANDEEP KUMAR MUNDRA 29 DISMISSED. 18. IN THE RESULT, BOTH THE REVENUES APPEALS IN ITAN O. 510/IND/2017 & ITANO.511/IND/2017 ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 08.02.20 19. SD/- ( KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 8 TH FEBRUARY, 2019 PATEL/PS COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE