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2020 (11) TMI 311 - AT - Income TaxAddition on account of excess stock - discrepancies in stock records, unaccounted sales - Excess stock over and above the excess stock surrendered by the assessee during the survey proceedings - CIT-A deleted addition - HELD THAT:- As regards addition for excess stock of cotton bales cotton bales of lot No. 139, 143 and 144 were issued out of stock on 24.1.2012. Gate passes and weighing slip of toll kanta supporting the fact that the cotton of lot No.139, 143 and 144 outwarded from stock records were loaded in trucks for dispatch. However the invoices No. 163, 164 and 165 were issued for lot No. 139, 143 and 144 respectively on 25.1.2012. Thus we are satisfied with the documentary evidence that the alleged stock of cotton bales were part of book stock and they were issued out of stock on 24.1.2012 and were sold through the invoices issued on 25.1.2012. Physical stock was taken by the revenue authorities on the date of survey. Thus the action of the Ld. A.O making the addition for the unaccounted stock of cotton bales is not justified. Addition for unaccounted stock available at Phulambari, Aurangabad - During the perusal of the sales/invoices recorded by the Ld. A.O forming part of the assessment order, details of invoices issued from Aurangabad directly to the parties at Tamil Nadu, sales tax returns filed by the assessee, we are satisfied with the details filed by the assessee that against the quantity of goods purchased from Pragati Cotton, Phulambari equivalent quantity of goods were sold to other parties at Tamil Nadu and Maharashtra, though at loss due to poor market conditions but the quantity of goods purchased matches the quantity of goods sold from Aurangabad. Since the revenue authorities failed to prove anything contrary to the fact that there is no mismatch of quantity of goods purchased and sold at Aurangabad, the action of Ld. A.O making addition for the alleged stock at ₹ 55,05,835/- lying at Aurangabad is not justified. Ld. CIT(A) has rightly appreciated the facts and deleted the addition, which thus needs no interference from our end. Excess stock on account of recasted trading account - A.O has adopted the never heard before method for recasting the trading account computing the closing stock as balancing figure even when the revenue authorities have taken the physical stock at the time of survey on 24.01.2012. Since the figure of unrecorded sales and the figure of recasted closing stock by the Ld. A.O totals to ₹ 6,77,17,000/- and duly matches with the closing stock shown in the books of accounts, this observation of the Ld. A.O of the alleged unrecorded sales is devoid of any merit. Further the excess stock i.e. over and above at ₹ 6,77,17,000/- computed by the survey team at ₹ 1,91,20,210/- has already been offered to tax as undisclosed income in the profit and loss account. The fact that 5 sales bills totalling to ₹ 1,12,75,871/- were wrongly added by the Ld. A.O in the pre survey sale period is proved with the details placed on record showing invoice No. 164 to 168 were ₹ 1,08,67,153/- and VAT and CST of ₹ 4,08,718/- are levied there on. We thus in the given facts and circumstances of the case find no inconsistency in the finding of Ld. CIT(A) deleting the addition of unrecorded sale at ₹ 1,13,66,913/-. CIT(A) has rightly deleted the addition made by the Ld. A.O on account of excess stock. - Decided in favour of assessee.
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