Income Tax Appellate Tribunal - Bangalore
M/S Khapre Shutters, Hubbali vs The Income Tax Officer Ward-1(4), Hubli on 28 June, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
"SMC-A" BENCH : BANGALORE
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND
SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER
ITA No.1722/Bang/2018
Assessment Year :2014-15
M/s. Khapare Shutters,
B-29, Industrial Estate, The Income Tax Officer,
Gokul Road, Vs. Ward - 1 (4),
Hubli - 580 030. Hubli.
PAN: AACFK0396H
APPELLANT RESPONDENT
Appellant by : Shri H.N. Khincha, CA
Respondent by : Shri Tshering Ongda, JCIT
Date of hearing : 26.06.2018
Date of Pronouncement : 28.06.2018
ORDER
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A), Hubballi dated 19.03.2018 for Assessment Year 2014-15.
2. The grounds raised by the assessee are as under.
"1. The learned Assessing Officer had erred in passing the order in the manner passed by him and the learned Commissioner of Income Tax (Appeals) has erred in partially confirming the same. The impugned order to the extent confirmed by the CIT(A) being bad in law is required to be quashed.
2.1 In any case and without further prejudice the Assessing Officer had erred in adding an amount of Rs.1,82,527/- cash difference found during the course of survey as income.
2.2 The authorities below have erred in holding that the shortage of cash which could not be explained on the da of survey to be the appellants income.
2.3 During the course of hearing, the authorized representative had requested for telescoping the shortage of cash to excess stock found which was not agreed by the authorities below. 2.4 In any case, the addition made is without basis and is confirmed on the ground that it is a afterthought.
3. The appellant denies the liability to pay interest u/s 234B & C of ITA No. 1722/Bang/2018 Page 2 of 4 the IT Act. The interest having been levied erroneously is to be deleted.
4. In view of the above and other grounds to be adduced at the time of hearing, it is requested that the impugned order be quashed or at least the addition as made/confirmed by treating the shortage of cash as income be deleted and interest levied also be deleted."
3. It was submitted by ld. AR of assessee that in para no. 5 on page nos. 2 & 3 of the assessment order, it is noted by the AO that the survey was conducted u/s. 133A of IT Act on the assessee's premises on 19.12.2013 and during the course of survey proceedings, it was noted that cash balance as per books of accounts on the date of survey was found Rs. 1,82,527/- whereas no cash was found on the date of survey. He submitted that AO has made addition of this short cash found on the date of survey which is not justified and therefore, it should be deleted. The ld. DR of revenue supported the orders of authorities below.
4. We have considered the rival submissions. First of all, we reproduce paras 5 and 5.1 from the assessment order which are as under.
"Survey proceedings u/s. 133A of the I T Act, 1961
5. Survey u/s. 133A of the Income Tax Act, 1961 was carried out in the case of the assessee firm M/s. Khapare Shutters B-29, 1st Gate, Industrial Estate, Gokul Road, Hubballi on 19.12.2013. During the course of survey proceedings, stock verification was carried out at the business premise wherein, the physical stock inventorised was at Rs. 57,63,631/- whereas the value of stock as per books was Rs. 33,52,763/- resulting in an excess stock of Rs. 24,10,868/-. In addition to this, cash balance as per books of account as on the date of survey was found to be Rs. 1,82,527/- whereas, no cash was found on the date of survey. When confronted, the assessee stated that the difference would be reconciled after consulting with other partner. As there was no response from the assessee, Statement of Shri. Ravi Krishnaji Khapare brother of Shri. Shrikant K Khapare partner - M/s. Khapare Shutters was recorded on 24.12.2013, wherein he had admitted that he is unable to explain the difference in cash of Rs. 1,82,527/- and therefore, he has voluntarily declared a sum of Rs. 1,82,527/- as additional income over and above the normal income of the assessee firm for the financial year 2013-14 relevant to the assessment year 2014-15. Further, with regard to the excess stock noticed, he has stated that one purchase bill for Rs. 9,52,000/-was not accounted for on the date of survey. However, to avoid protracted litigation and co-operate with the department, I offer the difference of Rs. 24,10,868/- as additional stock of the firm apart from the normal income of the firm for the F Y 2013-14 relevant to the assessment year ITA No. 1722/Bang/2018 Page 3 of 4 2014-15.
5.1 Survey declaration : - On verification of the return of income along with schedules for the A Y 2014-15 along with profit & loss account and balance sheet, it is noticed that the assessee firm has declared additional income of Rs. 24,20,000/- in the P & L account whereas, cash in hand of Rs. 1,82,527/- has not been offered for the A Y 2014-15. This was put forth to the assessee's authorized representative for which the A/R has agreed vide order sheet entry dated 21.12.016. [Penalty Proceedings initiated u/s. 271(1)(c) for concealing the particulars of income]."
5. From the above paras, we find that on the date of survey, stock was found in excess of book stock to the extent of Rs. 24,10,868/- and the cash was found short as compared to cash balance as per cash book to the extent of Rs. 1,82,527/-. The AO has noted that the assessee firm has declared additional income of Rs. 24.20 Lakhs in the P&L account whereas no additional income was declared in respect of short cash found of Rs. 1,82,527/- and therefore, the AO made addition of short cash found of Rs. 1,82,527/-. We fail to understand the basis of making this addition. In fact, in the absence of any other evidence regarding the user of such cash available as per cash book but not found physically at the time of survey, the same should have been considered as utilized for purchasing goods which was found in excess of book stock and therefore, even in respect of excess book stock, extra income to be declared or added could have been reduced to the extent of short cash found. But it is seen that the assessee has declared total amount of excess stock found as additional income. Be that as it may but in our considered opinion, no addition is called for in respect of short cash found at the time of survey in the facts and circumstances of the present case and hence, we delete the same.
6. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODIA) Judicial Member Accountant Member Bangalore, Dated, the 28th June, 2018. /MS/ ITA No. 1722/Bang/2018 Page 4 of 4 Copy to: 1. Appellant 4. CIT(A) 2. Respondent 5. DR, ITAT, Bangalore 3. CIT 6. Guard file By order Senior Private Secretary, Income Tax Appellate Tribunal, Bangalore.