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This appeal is preferred by the Revenue against the order of ld. Commissioner of Income Tax (Appeals), Burdwan dated 30.08.2016.
2. The main issue as raised by the Revenue in Grounds No. 1 to 6 relates to the deletion by the ld. CIT(Appeals) of the addition of Rs.1,86,98,218/- made by the Assessing Officer on account of excess stock of paddy allegedly found during the course of survey.
3. The assessee in the present case is a partnership firm, which is engaged in the business of running a Rice Mill. A survey under section 133A of the Income Tax Act, 1961 was carried out at the business premises of the assessee at Vill. & P.O. Mandalgram, Dist. Burdwan on 03.02.2011. After the survey, the return of income for the year under consideration was filed by the assessee on 29.09.2011 declaring total income of Rs.6,92,511/-. During the course of survey, the stock of paddy, etc. was physically verified by the Survey Team and discrepancies noticed therein were reported as under:-
Since the income on account of discrepancies in stock found during the course of survey representing excess stock was not offered by the assessee in the return of income filed for the year under consideration, the Assessing Officer required the assessee to offer its explanation in the matter. In reply, the method adopted by the Survey Team for physical verification of stock was challenged by the assessee by pointing out various deficiencies and anomalies. The average weight of paddy bags taken by the Survey Team while calculating the quantity of stock of paddy, as found during the course of survey, was also disputed by the assessee. The assessee also produced a certificate from a Chartered Engineer claiming that the capacity of its godown was only limited to store 55,000 bags of 60 Kgs. each.
4. The submissions made by the assessee were not found acceptable by the Assessing Officer and rejecting the same, he made an addition of Rs.1,86,98,218/- to the total income of the assessee on account of excess stock found during the course of survey on the basis of the following findings/observations recorded by him:-
“To sum up, assesse's plea could not be accepted as (i) during the course of survey the stock of paddy had been taken in presence of Sri Achintya Kesh, one of the partners of the firm with the help of his staff. (ii) During the course of survey as well as at the time of deposition they never put any objection regarding the number of paddy bags stacked. (iii) The purchase memo impounded during the course of survey vide TRM-l to TRM- 49 simply states purchase of paddy of
120 Qntls, 90 Qntls. Etc all in rounded off numeric i.e. without any fraction. So question of paddy bags of figures like 42kg, 45kg etc are assesse's cooked up story and not supported by the purchase memos. (iv) during the course of survey no such document were found in the Mill premises from where it could be ascertain that paddy bags of various weight have been purchased. (v)assesse's submission on taking the weight of the bags of 42 Kg, 45 Kg. & 50 Kg. is bereft of evidence which are nothing but surm se when caught up in the hand of the Revenue at survey. (vi) during the survey when authorised officer asked to make new stacks of paddy of various weights serially Sri Achintya Kesh had denied with remark "I don't think t is a feasible solution"(vii) from the registers (I, II, III, IV) impounded no fractional figure of either purchase of paddy or milling of the same could be found. (viii) Assessee also failed to state how they have accounted the fractional weight of paddy(apart from 60 Kg Bags) at the time of purchase as well as at the time of milling no such evidence of fractional counting were detected at the time of survey nor produced by the assessee during he course of hearing. (ix) During the course of survey assessee has stated that there were 50Kgs & 60Kgs bag but at the time of scrutiny proceedings assessee has stated that the bags were 42 Kg, 45 Kg & 50 Kg which are the outcome of the after-thought realising the consequence of the revenue. Assessee's statement were selfcontradictory denying the actual figure of the closing stock. Every time he was making a flip-flop statement without any proper documentation. Assessee had submitted a certificate from Mr. Tarak Nath Ghosh, Chartered Engineer who had signed on certificate on 18.03.2014 certifying the capacity of the godown at only 55,000 bags each of weight 60 kg. The report does not reflect the additional space between two godowns & the milling lawn. If we take as per assessee's contention of 45 kg average weight of each paddy bag the total weight becomes 55,000 x 45 kg i.e. 24,750 Qntls. But as per assessee's submission dated 18.03.2014 the rice mill has 36,000 Qntls of rice (i.e.8,000 bag x 45kg + 54,000 bag x 60kg.) so therefore capacity of 55,000 bags of rice of 60Kgs is again another fabrication. Moreover, the report of the chartered engineer signed on 18.03.2014 which is almost 3 years 1 month later from the date of survey and during the period who ascertain that there was no alteration of the size of godowns. Therefore, I decline to accept the above report