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46. During the course of survey carried out at the various business premises of the assessee on 02-12-2005, the trial balance and other statements generated from computers were impounded by the Department. The figures reflected in the said statement representing computer data and the corresponding figures reflected in the balance sheet and profit & loss account filed by the assessee along with its return of income were found to be different by the AO. On the basis of these differences, the AO made various additions to the total income of the assessee rejecting the explanation of the assessee in respect to the said differences which mainly was that the data available on the computer at the time of search was corrupted due to damage caused by the flood in the month of July, 2005 and the same, therefore, was not reliable for making any addition to its total income. As per the statement generated from accounting package used by the assessee to maintain computerized accounts, total quantity of closing stock as on 31-03-2005 was 5097 units whereas the assessee had shown a closing stock of 1698 units as per the balance sheet. The value of this difference in stock worked out at Rs.5,35,37,649/- was treated by the AO as sales made by the assessee outside the books of account. Similarly the difference in the figure of sales as reflected in computer printout and as shown by the assessee in its profit & loss account filed along with the return of income was added by the AO to the total income of the assessee to the extent of Rs.5,79,84,663/- treating it as sales suppressed by the assessee. On the basis of impounded computerized statements as well as the details given by the Special Auditor on the basis of statements generated by them from the computer of the assessee, the AO noted that there were 176 items which were received by the assessee free of cost and were not recorded in its stock register. The AO held that these items would have been sold by the assessee outside the books of account and value thereof taken at Rs.27,72,176/- was added by him to the total income of the 25 ITA NOS. 5352 & 5948/Mum/08 Sony Mony Electronics Ltd.

assessee. The AO also compared and verified the figures of purchases reflected in the computerized statements impounded during the course of survey with the figures of purchases declared by the assessee in its final accounts filed along with the return of income. On such verification, he found a difference of Rs.1,39,76,130/- which was treated by him as purchases inflated by the assessee and the same was also added to the total income of the assessee. There was also a difference found in the monthwise cash balance reflected in the computerized statements and the accounts of the assessee. Since the explanation offered by the assessee in respect of these differences was not found acceptable by the AO, the total difference aggregating to Rs.1,09,16,154/- was added by the AO to the total income of the assessee. Accordingly, total additions of Rs.9,62,59,581/- were made by the AO to the total income of the assessee on the basis of computer generated statements impounded during the course of survey as well as the report of the Special Auditor.

28 ITA NOS. 5352 & 5948/Mum/08 Sony Mony Electronics Ltd.

49. The learned counsel for the assessee submitted that there was no basis for the trading addition made by the AO and sustained by the learned CIT(Appeals). He submitted that huge additions to the gross profit declared by the assessee were made by the AO relying on the computer data generated from computers during the course of survey as well as subsequently by the Special Auditors. He submitted that the said data was not reliable since the computer disk was corrupted as a result of damage due to flood and this position pointed out by the assessee by putting forth various contradictions and inconsistencies in the figures reflected in computer data was accepted by the learned CIT(Appeals). He contended that the learned CIT(Appeals), however, made the estimation of sales relying on the said computer data and sustained the trading addition made by the AO by applying higher GP rate of 11.5% on the basis of higher GP rate declared by the assessee in assessment year 2007-08 i.e. after a gap of two years. He submitted that the GP rate of 9.84% shown by the assessee in the year under consideration was higher than the GP rate declared by it in the earlier years and there was no reason for the learned CIT(Appeals) to apply a higher GP rate. He contended that since the financial data available on the computer was not reliable, the profit shown by the assessee in the audited financial statements filed along with the return of income should have been accepted and no trading addition should have been made on this issue.

51. We have considered the rival submissions and also perused the relevant material on record. It is observed that various additions to the traditions results of the assessee company were made by the AO on the basis of trial balance and other documents generated from the computers of the assessee during the course of survey as well as the report of Special Auditor which was also based on the data generated from the computers of the assessee. The said data relied upon by the AO was claimed to be not reliable by the assessee on the ground that the same represented distorted figures as the computer system was corrupted due to damage caused to it because of flood. In order to support and substantiate this claim, various discrepancies and inconsistencies in the figures reflected in different statements generated from computers were pointed out by the assessee. As pointed out by the assessee, Annexure 7 and 8 being print outs taken by the survey party showed net profit of Rs.7,25,4,077/- whereas trial balance extracted from the computer showed a net profit of Rs.8,87,96,976/-. Annexure 7 which was balance sheet of the assessee showed negative 30 ITA NOS. 5352 & 5948/Mum/08 Sony Mony Electronics Ltd.