TMI Blog2019 (9) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... rthi Ramesh Babu [ 2017 (12) TMI 577 - ITAT VISAKHAPATNAM] . Therefore, respectfully following the view taken by Hon ble High Court and the ITAT, we hold that there is no reason for making the addition on stock difference or understatement of sundry debtors, hence, we set aside the order of the Ld.CIT(A) and delete the addition made by the AO. - Decided in favour of assessee. - S.A.No.57/Viz/2019, I.T.A. No.112/Viz/2019. I.T.A.No.112/Viz/2019 - - - Dated:- 25-9-2019 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Appellant : Shri C.Subrahmanyam, AR For the Respondent : Shri V.Appala Raju, DR ORDER PER SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER : Delay : In this case there was a delay of 11 days in filing the appeal. The assessee filed condonation petition and submitted that he met with an accident and indisposed due to hospitalization. After hearing both the parties, we condone the delay and admit the appeal. This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-9, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purchase bills for income tax purpose and the stocks declared to the bank was slightly over valued for the purpose of availing better credit facilities. Similarly, the sundry debtors were correctly grouped and declared in the books of accounts and to the bank for loan purposes other non trade debts were also included thereby increasing the position of sundry debtors. However he submitted that there was no change in the position of overall debtors declared in the Balance Sheet. Referring to page No.6 of the paper book, the assessee explained that it had submitted the stock statement for ₹ 1.80 crores to the bank as on 31.03.2019 and declared the sundry debtors balances of ₹ 69,35,805/-. Referring to page No.7 of the paper book, the Ld.AR submitted the details of stocks declared to the bank with quantity and unit rate adopted for valuing the stock as follows : Sl.No. Name Quantity Unit Rate Value 1. AC sheets (in mtrs.) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... = ₹ 4,06,838/2673 = ₹ 152.20 Total value of closing stock = 2673*₹ 152.20 = ₹ 4,06,838/- (ii) Iron Quantity : 178429 (Closing Stock) Valuation : Bill Date Quantity (in Kgs) Bill Amount (Rs.) 29.03.2014 23960 10,30,280 27.03.2014 2880 1,25,075 25.03.2014 5450 2,39,337 24.03.2014 17190 7,55,308 21.03.2014 10100 4,42,410 11.03.2014 24212 10,24,608 10.03.2014 1810 80,157 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. Name of the Debtor Less than 60 days Above 60 days Amount (Rs.) Amount (Rs.) 1. Abjeeth Constuctions (Ongole) 1,14,785 2. A.Sudhakar Rao Contractor 1,08,613 3. Pace Institute of Technology Sciences 2,59,656 4. Pendyala Venkateswarlu (Uppugundur) 1,97,490 5. S.A.Rajak Traders, Martur 2,50,720 6. Varalakshmi Steels Cements (Kaligiri) 1,02,710 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non trade were more than debtors declared to the bank. Thus argued that merely because the stocks were overvalued for the purpose of bank loan or the financial/non trade debts were included in the statement given to bank with incorrect grouping the AO cannot make the addition and accordingly requested to delete the addition made by the AO. 5. On the other hand, the Ld.DR relied on the order of the Ld.CIT(A) and the decision of Hon ble High Court of Calcutta in the case of Binod Kumar Agarwala (supra) and argued that the AO has rightly made the addition taking the basis from the statements submitted to the bank, hence requested to uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee. 6. We have heard both the parties and perused the material placed on record. As per the purchase bills placed in the paper book the correct value of closing stock works out to ₹ 89,68,749/- which the assessee accounted in the books of account and the financial statements. The assessee has furnished the details of quantities and also relevant bills in the paper book which was not disputed by the department. It is established by the assessee that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was with regard to declaration of incorrect figures in the balance sheet duly audited by the qualified Chartered Accountant. In the cited case, the assessee had submitted one balance sheet to the bank and another balance sheet to the department duly audited whereas in the assessee s case, the assessee had established the correctness of the closing stock as well as the balance of sundry debtors with the relevant bills and the entries in the books of accounts. Therefore, the case law relied upon by the Ld.CIT(A) has no application in this case. The assessee relied on the decision of Hon ble jurisdictional High Court of Andhra Pradesh in the case of CIT-6, Hyderabad Vs. Sri Taraka Jewellers in ITTA No.274 of 2013 dated 25.07.2013, wherein, Hon ble High Court held that no addition is called for solely on account of difference in the value of stock submitted to the bank and the value of stocks shown in the accounts submitted for assessment. For the sake of clarity and convenience, we extract relevant part of the order of the Hon ble High Court of Andhra Pradesh which reads as under : Upon reading of the suggested questions of law, it appears the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and consistent with the view taken by the ITAT and various High Courts, we hold that the A.O. has not made out a case for making an addition referable to unaccounted stock as well as determining the profit on the alleged sale of such unaccounted stock. Under the circumstances, we uphold the order passed by the Ld.CIT(A). 15. Similarly, with regard to the estimate of gross profit, there cannot be any uniform basis for estimating gross profit. There is no dispute with regard to the fact that there were deficiencies in the maintenance of books of accounts. When the A.O. as well as CIT(A) agreed on this issue, it may not be proper to substitute the case of the A.O. by an Appellate Authority, without any cogent reasons. Since the A.O. followed an acceptable basis such as averaging the 3 years profit rate, we are of the view that the order of the Ld. CIT(A) on this aspect deserves to be modified and we uphold the order of the A.O. of estimating the average rate of 36.85%. The order of the Ld.CIT(A) is modified accordingly. 6.2. We have gone through other case laws referred by the assessee in the paper book as under. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
