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 Attachment on Cash Credit of Assessee under GST Act: Delhi HC directs Bank to Comply Instructions to Vacate
 Income Tax Addition Made Towards Unsubstantiated Share Capital Is Eligible For Section 80-IC Deduction: Delhi High Court

Sarvjit Singh, Prop. M/s. Rajendra Fashions, 34/72, Punjabi Bagh (West), New Delhi 110 026 Vs. DCIT, Circle 25(1), New Delhi
November, 11th 2014
                (DELHI BENCH `G ', NEW DELHI)

                        I.T.A. No.2744 /Del/2007
                        Assessment year : 2004-05
Sarvjit Singh,                      Vs.         DCIT, Circle 25(1),
Prop. M/s. Rajendra Fashions,                   New Delhi
34/72, Punjabi Bagh (West),
New Delhi ­ 110 026
           (Appellant)                     (Respondent)

                   Appellant by :      Shri V.P. Gupta, Adv.
                   Respondent by :     Shri BRR Kumar, Sr. DR



      This is an appeal filed by the assessee against the order of Ld. CIT(A)
dated 08.03.2007. The assessee has taken 15 grounds of appeal which are
not in accordance with the rules and the same are descriptive in nature.
However, the crux of grounds of appeal is the confirmation of addition made
by the A.O. of Rs.40,52,433/- by Ld. CIT(A) on account of difference in
value of closing stock as per books of account and as per physical inventory
prepared by survey team at the time of survey as on 25.02.2004.
2.    At the outset, the Ld. A.R. submitted that on similar facts and
circumstances in the case of M/s. Rajendra Enterprises where the assessee is
a partner, the matter was remitted back by ITAT vide its order dated
11.03.2013. Therefore, in the interest of justice, this matter may also be
remitted back to the file of A.O. for readjudication.
                                      2                ITA No.2744/Del/2007

3.     Regarding merits of the case, the Ld. A.R. explained that addition was
made on the basis of physical stock as on the date of survey on 25.02.2004,
and the difference was surrendered at the time of search but the statement
was retracted on 01.03.2004. The assessee had prepared revised trading
account. It was submitted that in fact, there was no difference in stock as the
difference had occurred due to the fact that the assessee had not entered
some bills in the books of account and stock of which was already included
in the physical list.
4.     The Ld. D.R. on the other hand submitted that the addition was not
only made on account of statement but in fact there was difference in the
physical stock and stock as per books of account. Therefore, Ld. CIT(A)
had rightly confirmed the action of the A.O.
5.     We have heard rival parties and have gone through the material placed
on record.     We find that the assessee had surrendered an amount of
Rs.40,52,433/- while recording his statement on oath at the time of survey
on 25.02.2004. However on 01.03.2004 itself, the assessee had filed a letter
with the Additional Commissioner, Income tax wherein he had retracted his
statement and had also filed a revised trading account and it was submitted
that the assessee had not made any purchases after 25.02.2004 and export
sale amounting to Rs.39.70 lacs between the period 26.02.2004 to
31.03.2004 was made out of stock as on 25.02.2004. The assessee had
further explained to Ld. CIT(A) that there were certain bills which were not
entered in the books of account as the same were lying with the stores
personnel for verification and therefore, after entering the same in the books
of account, there was no difference in the stock and hence, the addition was
not justified. However, Ld. CIT(A) did not agree with the contention of the
                                      3                ITA No.2744/Del/2007

assessee and upheld the addition observing that the assessee had himself
surrendered at the time of survey and there was considerable delay in
retraction of statement. We further find that in the case of M/s. Rajender
Enterprises, in which the assessee himself is a partner, a similar addition was
made and the Tribunal, vide its order dated 01.03.2013 had remitted the
issue back to A.O. by observing as under:
      "6.1 However, in the returns for the' concerned assessment year
      2004-05 the above amounts were not offered for taxation. These were
      added by the Assessing Officer in the assessment proceedings as the
      income of the assessee. Before the Ld. Commissioner of Income Tax
      (A) assessee submitted various submissions. Ld. Commissioner of
      Income Tax (A) called for remand report in this connection. After
      considering' the submissions in this regard, the Ld. Commissioner of
      Income Tax (A) opined that addition on account of excess stock,
      sample development charges and dyeing charges could not be
      sustained as the assessee has explained the facts in this regard.
      However, Ld. Commissioner of Income Tax (A) noted that Assessing
      Officer has not made any effort, either during the assessment
      proceedings or remand proceedings, to make independent inquiries
      from the above mentioned parties namely M/s Girnar Hosiery works,
      M/s Gudiya Enterprises and Dham Dyeing -and Bleaching Mills.
      Furthermore, Ld. Commissioner of Income Tax (A) deleted the
      additions holding that assessee has duly explained all the facts and
      the above discrepancies have been taken into account while preparing
      the books of accounts at the end of the financial year."

6.    We find that in this case also, the assessee had taken the same
arguments that certain bills were not entered in the books of account at the
time of survey and therefore if the same were included in the books of
account, there was no difference in the physical stock and the stock as per
books of account. However, the A.O. and Ld. CIT(A) did not agree with
this contention of the assessee and also did not carry out any enquiry
regarding these purchases. Therefore, in the interest of substantial justice,
                                      4               ITA No.2744/Del/2007

we are of the opinion that the case may be remitted to the A.O. for re-
adjudication who after going through the purchase bills submitted by the
assessee will arrive at the decision regarding the genuineness and
correctness of the same. Therefore, we order accordingly. Needless to say
that necessary opportunity will be given to the assessee.
7.    In view of the above, appeal of the assessee is allowed for statistical
8.    Order pronounced in the open court on 31sst Oct., 2014.

      Sd./-                                                 Sd./-
 (I. C. SUDHIR )                                   (T.S. KAPOOR)
JUDICIAL MEMBER                               ACCOUNTANT MEMBER
Date: 31st Oct., 2014


Copy forwarded to:-
   1. The appellant
   2. The respondent
   3. The CIT
   4. The CIT (A)-, New Delhi.
   5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi.
True copy.
                                                    By Order

                                                            (ITAT, New Delhi).
                                   5             ITA No.2744/Del/2007

S.No.              Details                Date   Initials Designation
  1   Draft dictated on                    28/10           Sr. PS/PS
  2   Draft placed before author        29,30/10           Sr. PS/PS
      Draft proposed & placed before
  3                                                          JM/AM
      the Second Member
      Draft discussed/approved by
  4                                                          AM/AM
      Second Member
      Approved Draft comes to the
  5                                                        Sr. PS/PS
      Sr. PS/PS
  6   Kept for pronouncement                               Sr. PS/PS
  7   File sent to Bench Clerk                             Sr. PS/PS
      Date on which the file goes to
      Head Clerk
  9   Date on which file goes to A.R.
 10   Date of Dispatch of order
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