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2019 (8) TMI 637 - ITAT AHMEDABADAddition on account of variation in purchase of cloth not shown in the audit report - bona fide mistake - mistake furnishing bills and vouchers in support of the claim that there was a mistake transferring the quantity from purchase to consumption without giving a matching effect n monetary and has revenue neutral effect - HELD THAT:- As during the current year the appellant had transferred the stock of 271968 mtr of grey cloth from trading account to manufacturing account of raw materials for consumption. The mistake that has occurred is that while transferring the grey cloth from trading purchase account to raw materials consumption account, the value in monetary terms was not transferred. In effect the raw materials for real consumption account was understated in monetary terms by a figure of ₹ 73,77,7007-whereas the purchase of finished goods, while correct quantitatively, was overstated in monetary terms by an amount of ₹ 73,77,700/-. The raw material consumption purchases have been grouped under schedule K and the purchase of finished goods under trading purchases have been grouped under schedule L. Both these schedules find place on the debit side of the profit and loss account. Therefore, overstating one schedule by certain amount and understating another schedule by the matching amount will not alter the figure of total expenses claimed or debited in the profit and loss account. It is not the case of the assessing officer that the purchases booked by the appellant under trading purchase are bogus or that the raw material consumption for manufacturing is excessive when considered quantitatively. The mistake of transferring the quantity from purchase to consumption without giving a matching effect in monetary terms is a bona fide mistake. Since increase in trading purchases and the reduction in amount of raw materials consumption is occurring on the debit side of the profit and loss account therefore it does not have any cascading effect on the overall expenses claimed or debited in profit and loss account and therefore this mistake, in our considered opinion, is a bona fide and there is no loss to the revenue. In a case, if any bona fide mistake is being committed by an assessee and there is no loss to the revenue . In that case, in our considered opinion, addition cannot be made. Therefore, we hold that ld. CIT(A) has passed reasoned and detailed order and it does not require any kind of interference at our end. - Decided against revenue.
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