No Addition Can Be Made U/s 69 If Difference In Stock Found During Survey And As Recorded In Books Stands Reconciled: New Delhi ITAT
Pankaj Bajpai
13 March 2024 5:15 PM IST
Finding that no defects were pointed out and the books of accounts have been accepted, the New Delhi ITAT ruled that the assessee having given the explanation which was plausible explanation which stands verified in inquiry by the Assessing Officer, the same cannot be rejected arbitrarily by indulging into surmises.The Bench of Dr. B.R.R Kumar (Accountant Member) and Yogesh Kumar US...
Finding that no defects were pointed out and the books of accounts have been accepted, the New Delhi ITAT ruled that the assessee having given the explanation which was plausible explanation which stands verified in inquiry by the Assessing Officer, the same cannot be rejected arbitrarily by indulging into surmises.
The Bench of Dr. B.R.R Kumar (Accountant Member) and Yogesh Kumar US (Judicial Member) observed that “when the difference in physical stock found during survey and as recorded in the books is duly reconciled by the assessee and supporting evidences have also been furnished before the Assessing Officer & CIT(A) in which no defect or discrepancy whatsoever has been pointed out by the Assessing Officer or CIT(A), no addition is called for”. (Para 18)
As per the brief facts of the case, the assessee firm is engaged in sale & purchase of gold jewellery. A survey operation was carried out at the assessee's business premises, wherein excess stock of Rs.6,13,75,028/- was found. The partner of the assessee firm failed to explain that difference. Thereafter, the AO issued notices u/s 133(6) to three parties, who duly acknowledged the purchase of goods and their delivery. Thereafter, the AO made an addition of Rs.6,13,75,028/- on account of unexplained investments u/s 69 of the Act.
The Bench noted that each party has duly acknowledged the delay in delivery of goods and all the payments for sale of such goods were received via banking channels.
Moreover, the Bench noted that the Assessing Officer himself had conducted independent inquiry from each of the parties by sending notice u/s 133(6) to them and despite confirmations received from each of them, the additions were made by the AO.
The Bench also pointed out that no incriminating documents were found during survey and there was no evidence of any sale or purchases outside the books of accounts.
Therefore, the Bench concluded that merely because some differences were found in stock during survey would not indicate any automatic addition be made in the hands of the assessee when assessee has duly reconciled the differences with necessary evidences and neither the AO nor CIT (A) has pointed out any defects or discrepancies in the reconciliation submitted by assessee or the documents and evidences furnished by the assessee.
Hence, the ITAT allowed the assessee's appeal and addition made by the AO of Rs. 6,13,75,028 /- on account of excess stock found during the course of survey is directed to be deleted.
Counsel for Appellant/ Assessee: Ved Jain & Supriya Mehta
Counsel for Respondent/ Revenue: Amit Katoch
Case Title: Ultimate Creations verses ACIT
Case Number: ITA No. 1590/Del/2021
