Joginder Singh, J.M. - (1.) THIS is an appeal by assesseea registered firm pertaining to the assessment year 1991-92 aggrieved by an addition of Rs. 1,05,400 as unexplained stock and another addition of Rs. 15,015 as income from business on own account.
(2.) There was a survey under section 133A of the Income Tax Act on 27-12-1990, during the course of which an excess stock of the value of Rs. 1,05,400 was found in the shop and the managing partner, Shri Gangadhar Matpathi, who was present, at the time of survey, agreed to offer the stock as as income for the assessment year 1991-92. A letter was issued to the assessee bringing out the above facts. It was claimed that the stock found during the survey included goods that arrived on the day of survey. In para 4 of the assessment order, the assessing officer has made note of the stock as per stock register, stock found on physical verification, excess found and receipts or arrivals. When confronted with the above excess stock, the authorised representative of the assessee and also the partner, agree for the addition as income for the assessment year under appeal and the assessing officer, accordingly, completed the assessment adding the sum of Rs. 1,05,400. Challenging the above addition the assessee went in appeal to the Commissioner (Appeals). The Commissioner (Appeals) confirmed the addition with the following observation : "I have considered the facts and merits of the case. In this case, excess stock was detected at the time of the survey and the managing partner agreed about the existence of excess stock and had offered the excess stock to tax. The return was filed after about two years of the date on which the survey under section 133A was carried out. Clearly, the appellant has not shown this amount as income in the return. The appellant has changed his mind on reconsideration and has tried to avoid the payment of tax on the undisclosed income detected at the time of survey. The explanation filed by the appellant before the assessing officer is general in nature and remains unsubstantiated. At the time of hearing, the appellant's representative expressed his inability to give any further explanation or produce any further evidence. By adding this amount, the assessing officer has done what the appellant desired at the time of survey and the addition has been made in respect of the undisclosed stock as quantified and certified by the appellant at the time of survey."
(3.) AGGRIEVED by the above, the assessee is in further appeal before us. The learned counsel for the assessee filed before us a paper book containing copy of the appraisal report on survey conducted under section 133A(1); copy of the sworn statement of the managing partner Shri Gangadhar Mathpathi; copy of the letter dated 30-3-1992, from the assessing officer; copy of the statement of total income, profit and loss account and copy of the intimation under section 143(1)(a). The learned counsel for the assessee contended that the addition is totally unwarranted and is made without any justification. It is pointed out that return has been filed by the assessee. The assessee also maintains a register of stock. It was pointed out that the unexplained stock found at the time of survey operation represented additional stock which had arrived during the day of survey which had not been taken into account in the stock register. It is not correct to say that no stock arrived on the day of survey. It is also contended that the partner Shri Gangadhar Mathpati only knew the local language and is not at all conversant with English except that he can sign in English. The statement was recorded in English and the managing partner was asked to sign which he did without knowing what he was supposed to have stated in the statement. Attention was invited to the answer to question No. 2 of Gangadhar Mathpati at page 4 of the paper book wherein to the question "Please state the nature of your business" the partner has replied "We are having business of commission agency only for the foodgrain and pulses, etc." He also drew our attention to answer given by the managing partner to question No. 5 at page 5 of the paper book. Particular attention was invited to question No. 6 and the answer given by the managing partner wherein it is stated, by way of answer "We have accounted the earlier stock of the assessees in our books and also there is no stock available with us pertaining to assessees outside the books". The learned counsel for the assessee also contended that the stock was received from the constituents only and did not belong to the assessee. It is also pointed out that the assessing officer has also admitted that the assessee is a commission agent. The addition, the learned counsel argued, is liable to be deleted.;