Addition for cash found short at the time of survey deleted by the ITAT. In the absence of any other evidence regarding the user of such cash, it should be considered as utilized for purchasing goods found in excess of book stock.
ABCAUS Case Law Citation:
ABCAUS 2392 (2018) 07 ITAT
The instant appeal was preferred by the assessee against the order of Commissioner of Income Tax (Appeals) in sustaining addition for cash found short during survey u/s 133A of the Income tax Act, 1961 (the Act).
A survey was conducted u/s 133A of the Act on the assessee’s premises. During the course of survey proceedings, cash in hand was found short, i.e. no cash in hand was found as against the cash balance as per cash book/books of accounts on the date of survey.
When confronted, the assessee stated that the difference would be reconciled after consulting with other partner. On no response from the assessee, a statement of partner was recorded wherein admitted that he was unable to explain the difference in cash and therefore, he voluntarily declared the same as additional income over and above the normal income of the assessee firm.
Accordingly, the AO made an addition to the income of cash found short on the date of survey.
The Commissioner of Income Tax (Appeals) confirmed the same.
The Tribunal noted that on the date of survey, stock was found in excess of book stock and the cash was found short as compared to cash balance as per cash book. The AO has noted that the assessee firm had declared additional income for the excess stock whereas no additional income was declared in respect of short cash found of and therefore, the AO made addition of cash found short.
The Tribunal was unable to understand the basis of making this addition and opined in the absence of any other evidence regarding the user of such cash available as per cash book but not found physically at the time of survey, the same should have been considered as utilized for purchasing goods which was found in excess of book stock and therefore, even in respect of excess book stock, extra income to be declared or added could have been reduced to the extent of short cash found. The ITAT held that no addition was called for in respect of short cash found at the time of survey and deleted the same.
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