INCOME TAX ACT, 1961

Section 133A

Survey - Addition to income - Difference in stock noticed during survey - Assessee duly reconciled discrepancy with positive material

Survey under section 133A was carried out at business premises of assessee on 3-5-2005 and certain books of account and loose papers were found and impounded by survey party. During the course of survey, statement of assessee was recorded and assessee admitted unexplained investment in stock but did not declare the same in return of income. AO made addition on that count. Assessee's case was that books of account of assessee at the time of survey on 3-3-2005 were retrned till 15-1-2005 and no opportunity to recast trading account was given and on the basis of variation in physical stock as on 3-3-2005 and as per books as on 15-1-2005 assessee under ignorance declared additional income as unexplained investment in stock in fact sales of the udad has been taken into account but purchases were not considered which was recorded subsequently. Held: Survey statement recorded under section 133A could not be a strong piece of evidence in case assessee was in a position to reconcile discrepancy with positive material. In the instant case, difference in stock noticed during survey was subsequently reconciled by assessee after drawing a fresh trading account and no specific defect in such reconciliation was pointed out by AO. Under these facts, AO was not justified in making addition.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2005-06

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