9911796707
TMI Blog2022 (9) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... s including contra confirmation, PAN, address was not provided. 3. The Id CIT(A) has erred in law and in facts in deleting the addition of stock of Rs.6,29,89,149/- despite the fad that assessee failed to substantiate its stand. The Id.CIT(A) has erred in law and in facts in deleting the difference in closing stock of Rs. 2,23,50,000/- by ignoring that the assessee had not furnished the requisite details to the AO. 4. Ld CIT(A) has erred in law and in facts in deleting the addition of unexplained cash of Rs. 18,81,497/- by ignoring that the assessee had not furnished the requisite details to the AO. 5. The Id C1T(A) has erred in law and in facts in ignoring that assessee was noncompliant before the AO during the assessment proceedings as is evident from the assessment order, and that assessee had not appeared before the CIT(A) and thus the benefit of doubt could not be granted not being borne out of evidences. 6. It is, therefore, prayed that the order of Id. CIT(A) may be set aside and that of the Assessing Officer be restored. 3. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowances of excessive employee benefit expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployees to whom salary was paid in the earlier year viz a viz in the year under consideration, placed on pages 10/12 of the paper book. 9. We have heard the rival contentions of both the parties and perused the materials available on record. We find that the AO has disallowed 40% of employees benefit expenses, being excessive, on adhoc basis for the reason that the turnover of the assessee has decreased whereas employee benefit expenses has been doubled up as compared to immediate previous assessment year. The AO also alleged that no return and audit report was filed for the last two immediate previous assessment year being A.Y. 2014-15 and 2015-16 and details such as list of employee, their monthly salary and details of hiring of new employee were not provided. However the learned CIT(A) while deleting the addition made by the AO found that the assessee has furnished details of salary, therefore he provided benefit of doubt to the assessee. 9.1 On perusal of the order of the AO, we note that it was alleged therein that the assessee has not furnished the details of the employees along with the salary. But we find that the assessee has furnished the necessary details about the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in deleting the addition by the AO for Rs. 17,02,736/- being unexplained loan and advances. 11. The assessee in the year under consideration has made new advances of Rs. 17,12,736/- to the following parties: Sr.No. Name of Party Amount given Rs. 1. Narendra Gravure Pvt Ltd. 11,00,000 2. BC India SME Assets 6,02,736 3. Anmol Developers 10,000 11.1 As per the assessee, these advances were given in the course of the business. However, the AO found that no contra confirmation and PAN were provided of the parties. The address in case of one party namely M/s BC India SME Assets was not complete. 11.2 Likewise, there was no other transaction except for making the payment of Rs. 11 lacs during the year in case of M/s Narendra Gravure Pvt Ltd. despite there was already opening advance of Rs. 24 lakh. 11.3 Therefore, the claim that the advances were in nature of trade advance was not supported by the corroborative material. Accordingly the AO treated the advance of Rs. 17,02,736/- given to parties namely Narendra Gravure Pvt Ltd for Rs. 11 lakh and BC India SME Assets for Rs. 6,02,736/- as income of the assessee. 12. The aggrieved assessee carried the matter bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.1 Be that as it may be, we find from the submission of the assessee made before the learned CIT-A that these advances were made in the course of the business which were adjusted in the later years. To this effect, we note that the assessee has filed the copies of the ledger of the parties along with the payment vouchers which are placed on pages 13 to 16 of the paper book. The genuineness of these documents were nowhere doubted by the authorities below. Even at the time of hearing, the learned DR appearing on behalf of the Revenue has not brought anything on record contrary to the finding of the learned CIT-A. Hence we do not find any infirmity in the order of the learned CIT-A and therefore we uphold the same. Thus the ground of appeal of the revenue is hereby dismissed. 17. The next issue raised by the Revenue is that learned CIT (A) erred in deleting the addition of Rs. 6,29,89,149/- and 2,23,50,00/- made on account of difference in the opening stock and closing stock. 18. The AO during the assessment proceedings observed that the assessee has shown opening stock of Rs. 6,29,89,149/- whereas as no return and tax audit report furnished for the last 2 immediate preceding ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found that details such as LR No. & date, PO No & date, Company stamp, receipt of goods by the assessee etc were not appearing. Similarly on sale bill dated 03-03-2016 furnished in support of valuation of closing stock detail such TIN no. of customer, LR detail, PO detail etc were blank. The AO further found that the assessee is dealing different type of aluminum paper foil/coated material but no detail of quantity wise purchase, sale and inventory was provided. The assessee itself submitted that different type of material and goods were sold and purchased at different price varying between Rs. 420 to Rs. 165. Therefore the valuation of the closing stock @ 180 per kg based on bill issued in 03-03-2016 on one item cannot be accepted. Thus AO valued the closing stock @ 285 per kg being average purchase price and made addition of differential amount of Rs. 2,23,50,000/- only. Thus, the AO in aggregate made an addition of Rs. 6,29,89,149.00 and 2,23,50,000.00 to the total income of the assessee. 19. The aggrieved assessee preferred an appeal before learned CIT(A). 20. The assessee before the learned CIT(A) submitted there was no specific query raised during assessment proceeding wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rival contentions of both the parties and perused the materials available on record. From the preceding discussion, we note that it is the accounting practice that the closing stock of one year becomes the opening stock of the subsequent year. In the present case, the opening stock was shown by the assessee at Rs. 6,29,89,149/- which was treated by the AO at Rupees nil. The view of the AO was based on the fact that the assessee has not filed any income tax return for the 2 assessment years immediately preceding the assessment year in dispute. Thus, the closing stock of the previous year was not available with the revenue authority. If the opening stock for the year under consideration is taken at NIL then the corresponding closing stock should also be taken at nil which would lead to no difference of the income declared by the assessee except shifting the profit from one year to another year. The opening stock of the current year cannot be disturbed without disturbing the closing stock of the immediate preceding assessment year. However, from the preceding discussion we do not find any whisper suggesting that closing stock of the immediate preceding assessment year was not prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of furnishing the sale bill dated 03-03-2016 placed on record has justified that the market value stands at Rs.180 per kg only. However, it is not incorrect to hold that the assessee has been dealing in different types of aluminum paper foil and coated materials which are sold and purchased at different prices. As such the assessee has not furnished the details of the quantity wise stock of different types of material which were lying as on 31 March 2016. According to the learned AO the particular rate applicable to a particular material cannot be applied to all the materials which are having different price range. The contention of the AO may be correct. But on perusal of the sales register filed by the assessee we note that the assessee has sold different products are different rate. Most of the products were sold at a price less than 180 except on 3 of the occasions the price was charged by the assessee Rs. 412 of its product. Thus from these details, it is transpired that the assessee has not taken any price in the valuation of the closing stock based on artificial figure. Thus, details filed by the assessee for valuing the closing stock cannot be rejected in arbitrary manner. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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