TMI Blog2015 (12) TMI 1686X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. Undisclosed business income - addition by the AO by artificially calculating the figures of stock - Held that:- The survey was conducted on 10.3.2008. There was no excess quantity of stock found physically in the business premises of the Assessee. The stock statement given to the bank is dated 29.2.2008. This stock statement was obviously incorrect as it was not in tune with the physical stock with the Assessee. In such circumstances the plea of the Assessee that the statement of stock given to the bank showed inflated figures and was only for the purpose of availing credit facility from the bank stands established. Therefore the impugned addition ought to have been deleted by the CIT(A). - ITA No. 1436/Kol/2011 - - - Dated:- 2-12-2015 - Waseem Ahmed (Accountant Member) And N. V. Vasudevan (Judicial Member) For the Appellant : S. M. Surana, Advocate D. K. Sen, Advocate For the Respondent : Sarbari Mukherjee, JCIT, Sr. DR ORDER N. V. Vasudevan (Judicial Member) This is an appeal by the Assessee against the order dated 26.9.2011 of CIT(A) Durgapur, relating to AY 2008-09. 2. Ground No.1 raised by the Assessee in his appeal is general in na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Powder, 50 kg. each packet, @ 2200/- per Quintal Rs.14300/- Total Rs.466300/- The aforesaid purchases were not recorded in the books of accounts of the Assessee. In the course of assessment proceedings the Assessee took a stand that the invoices were pro-forma invoices and the transactions did not actually happen. The Assessee also pointed out that the delivery challans did not bear the signature of the Assessee acknowledging delivery of goods. 4. The AO did not accept the plea of the Assessee and he held as follows: The submission of the AR is not at all acceptable. The assessee had issued the authorization letter to the deriver to take the delivery of goods from the supplier, Truck No. also mentioned therein. Photo copies of the relevant portion of authorization letter issued to the driver to take delivery of goods, delivery challan and Purchase invoice/bills/cash/credit memos have been placed on record. It is crystal clear that assessee has purchased goods of worth ₹ 466300/- during the F.Y. 2007-08. In light ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding non receipt of goods from the supplier and that the invoices were only pro-forma invoices, the AO ought to have examined the suppliers to find out the truth or otherwise of the claim made by the Assessee. The mere presence of authorization letter to truck drivers would not in our view prove the case of the revenue. Each of the 4 invoices are accompanied by delivery challan and in three of the delivery challans i.e., except the delivery challan M/S.Narayani Traders dated 24.7.2007 for ₹ 1,02,000/- none of the delivery challan evidence acknowledgement of having taken delivery of goods. Since delivery of goods under delivery challan dated 24.7.2007 for ₹ 1,02,000 is acknowledged and since the AO has presumed that these goods were sold by the Assessee, we are of the view that 5% G.P. on the value of the purchases alone should be added, as pleaded by the learned counsel for the Assessee before us. In respect of the other three purchases the addition is directed to be deleted as there is no evidence of the purchases having actually been completed by the Assessee. Ground No.2 3 are thus partly allowed. 8. Ground No.4 5 raised by the Assessee reads as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the AO, the assessee had declared closing stock at ₹ 35,36,937/- in his return of income. He was of the view that the difference of ₹ 54,22,619/- [ ₹ 89,59,556 ₹ 35,36,937] in the closing stock should be added to the total income of the Assessee. 10. The AO called upon the assessee to explain the aforesaid discrepancy. The submission of the A.R. was that the figure of stock lying with the banker as on 29.02.2008 ought not have been taken as the starting point for computing value of closing stock because the said figure given to the bank was not correct and was only for the purpose of availing of bank credit stock is always shown at higher figure. 11. The AO did not accept the above explanation put forward in respect of the aforesaid discrepancy. He was of the view that in the light of the facts and circumstances, discrepancy of closing stock worth ₹ 54,22,619/- was not disclosed by the assessee in his books of accounts for the A.Y. 2008-09. Therefore, the aforesaid discrepancy stock of ₹ 54,22,619/- was treated as undisclosed stock and was added to the total income of the assessee under the had Business Income for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. The learned DR relied on the order of the AO/CIT(A). 16. We have given a careful consideration to the rival submissions. It is not in dispute before us that at the time of survey physical verification of stock was made and it tallied with the stock as per books of accounts maintained by the Assessee. The survey was conducted on 10.3.2008. There was no excess quantity of stock found physically in the business premises of the Assessee. The stock statement given to the bank is dated 29.2.2008. This stock statement was obviously incorrect as it was not in tune with the physical stock with the Assessee. In such circumstances the plea of the Assessee that the statement of stock given to the bank showed inflated figures and was only for the purpose of availing credit facility from the bank stands established. Therefore the impugned addition ought to have been deleted by the CIT(A). In the decisions cited by the learned counsel for the Assessee before us it has been held that stock statement given to the bank is not final and that if the Assessee proves that the stock statement given to the bank showed inflated figures of stock to get better credit facility than no addition can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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