BABUSONA MANDAL,BARDHAMAN vs. DCIT,CIR-1, BARDHAMAN, BURDWAN

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ITA 749/KOL/2023Status: DisposedITAT Kolkata12 October 2023AY 2015-165 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the addition for suppressed stock was based on conjectures without considering evidence like stock registers and purchase bills. Similarly, the addition for publicity expenses was incorrect as the assessee had incurred them as per supplier schemes and received reimbursement.

What were the facts?

The assessee, engaged in liquor trading, had additions made to his income for unexplained investments and unrecorded publicity expenses. The Assessing Officer estimated suppressed stock value and added it, and also added reimbursed publicity expenses, which the CIT(A) confirmed.

What were the issues?

Whether the addition for unexplained investments due to suppressed stock was justified, and whether reimbursed publicity expenses incurred for business purposes could be added to income.

Which sections of the Income-tax Act were involved?

Section 69B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA

Before: SRI RAJESH KUMAR

order

: October 12th, 2023 ORDER

Per Rajesh Kumar, Accountant Member:

1.

This is an appeal preferred by the assessee against the order of Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] dated 14.07.2023 for the Assessment Year (in short ‘AY’) 2015-16.

2.

The assessee has raised the following ground of appeal: “1. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to confirm the addition made by the AO of Rs. 14,66,622/- on account of unexplained investments u/s 69B of the I.T.A. No.: 749/KOL/2023 Assessment Year: 2015-16 Babusona Mondal. Act is contrary to the material evidences of record and the addition is arbitrary, excessive and illegal.

2. That on the facts and in the circumstances of the case the action of the Ld. CIT(A) to confirm the addition made by the AO of Rs. 11,00,120/- on account of publicity expenses not accounted for in the receipt sides of the books is contrary to the material evidences of record and the addition is arbitrary, excessive and illegal.

3. That the order of the Ld. CIT(A) confirming the action of the A.O. is arbitrary, excessive and illegal.

4. That the above grounds of appeal will be argued in details at the time of hearing and the appellant craves leaves to submit additional grounds of appeal if any and or alter, vary, modify or rectify the statement of facts and grounds of appeal at or before the time of hearing.

3. The issue raised in ground no. 1 is against the confirmation of addition of Rs. 14,66,622/- by Ld. CIT(A) as made by the Assessing Officer (in short ld. 'AO') on account of unexplained investment U/s 69B of the Act.

4.

The facts in brief are that the assessee is engaged in the business of liquor trading and during the year filed the return of income on 29.09.2015 declaring total income of Rs. 17,34,910/-. The case of the assessee was selected for scrutiny under CASS and statutory notices were duly issued and served upon the assessee. The AO during the course of assessment proceedings observed from the sale bills and sale ledger that sales were not properly accounted for. In para ‘3.2’ the AO noted that some sales were accounted for on earlier dates whereas the earlier dates were accounted for on the subsequent dates however there was no instance of non-recording of sales by the assessee. Thereafter the AO has calculated the supressed value in the stocks by taking a I.T.A. No.: 749/KOL/2023 Assessment Year: 2015-16 Babusona Mondal. few items at Rs. 29,33,243/- on the basis of information furnished by the assessee and estimated the suppression in the value of stock at 50% of the total supressed value of stocks at Rs. 14,66,622/- and added the same to the income of the assessee. In the appellate proceedings Ld. CIT(A) simply affirmed the order of the AO on the same reasoning.

5.

After hearing the rival contentions and perusing the material on record, we find that the assessee is dealing in liquor which is an excisable item and passes through various checks and scrutinies by the Excise Department. We note that the assessee has maintained stock register recording therein opening stocks, purchases, sales and closing stocks including item-wise identification of each brand. Similarly, the assessee has maintained the excise register also. Both these were produced before us and were test checked by us. We observe from the assessment order that the AO while taking a few items out of the total items calculated the suppression in the value of stock at Rs. 29,33,243/- and calculated the understatement of closing stock at 50% of the suppressed stock value without any basis and without any reasoning. In our opinion, the addition made by the AO is purely based upon conjectures and surmises as the AO has failed to taken note of the evidences filed by the assessee before the AO in the form of purchase bills, stock register etc. and also the fact that the wastage and breakage sustained by the assessee in the ordinary course of business. Under these circumstances, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to

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