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2015 (4) TMI 185 - AT - Income TaxAddition to income - difference in closing stock - AO observed that the assessee had raised loan from Punjab National Bank, Bathinda and closing stock of the firm as on March 31, 2009 as per audited balance sheet was ₹ 17,50,000 but the same was reported to the bank at ₹ 1,69,17,000 in the stock statement submitted to the bank on March 30/31, 2009 - Held that:- Stock declared before the bank is for the purpose of raising the loan. The assessee has submitted his stock statement as on March 30, 2009 at ₹ 1,69,17,000 whereas as on March 31, 2009 it was ₹ 17,50,000 and the difference of ₹ 1,66,13,401 was booked as sales on March 31, 2009. The assessee submitted the stock statement as on March 31, 2009 showing stock at ₹ 17,50,000. The assessee also submitted an additional evidence and the explanation under rule 46A before the CIT (Appeals) which was rejected since the same was not furnished before the Assessing Officer. The reconciliation statement has not been accepted by the CIT(Appeals) for the reason since the same was not produced before the Assessing Officer. At the outset, this is not the cogent reason as mentioned by the CIT(Appeals) that something has been not produced before the Assessing Officer that cannot be produced before the learned Commissioner of Income-tax (Appeals). Therefore, the CIT(Appeals) has not acted strictly in accordance with the provisions of rule 46A of the Income-tax Rules, 1962. Even if the reconciliation statement has not been accepted, can any statement on account of, i.e., balance-sheet or profit and loss can be read in part, the answer is "no" . Since any document or statement has to be read in toto in settled ratio. The assessee's explanation submitted before the learned Commissioner of Income-tax (Appeals) as an additional evidence which in fact is on record that the assessee has transferred ₹ 1,66,13,401 to sales account out of the stock as on March 31, 2009. The learned Commissioner of Income-tax (Appeals) without any reason has rejected the said explanation. Something must remain, i.e., either the closing stock at the close of the year and if it is not there then there has to be the sales as claimed by the assessee. If the closing stock of ₹ 1,69,17,000 is accepted by the CIT (Appeals) then accordingly the sales to the extent of ₹ 1,66,13,401 has to be reduced which the CIT(Appeals) has not taken care of. Whereas, on the other hand, the sales are not in doubt before any of the authorities below as they have been accepted by both the authorities below. Once the sales have been accepted which includes the sales of ₹ 1,66,13,401 booked on March 31, 2009 by the CIT(Appeals), there is no possibility of the stock to be at ₹ 1,69,17,000 as at March 31, 2009. It has to be ₹ 17,50,000 which is there as per audited accounts. This is a simple accounting, which the CIT(Appeals) could not understand. No addition on this account could be made by the Assessing Officer and accordingly, we reverse the order of the CIT(Appeals). In this respect, we rely upon the decision of CIT v. Punjab Rice and General Mills [2003 (4) TMI 52 - PUNJAB AND HARYANA High Court] where it has been held that the assessee has submitted satisfactory explanation for the discrepancies between the stock statement to the bank and to the Income-tax Department, the Tribunal is justified in deleting the addition. - Decided in favour of assessee.
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