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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya
O R D E R Per Shri Shamim Yahya (AM) :-
This appeal by the assessee is directed against the order of learned Commissioner of Income Tax (Appeals)-38 dated 26.06.2019 and pertains to assessment year 2016-17. The issue raised is that ld.CIT(A) erred in confirming the AO’s order and confirming the addition of Rs. 17,03,483/-.
Brief facts of the case are that this appeal was selected for limited scrutiny. In order to verify the stock, AO asked to the assessee to submit purchase details. The same was not submitted. AO issued notice u/s. 133(6) to the Manager of Kurla Sahakari Bank Ltd. to submit the copy of stock taken by banking authority, since the AO was having OD of the bank. Noting that the as per bank statement furnished by the bank authority, closing and opening stock figures were given, AO worked out the G.P and N.P on those figures. He held that during the year assessee has declared net profit of Rs. 6,83,450/- as against that worked out by him at Rs. 23,86,938/-. Hence, difference of Rs. 17,03,488/- was proposed to be added. Assesse has given stock statement with the bank in order to avail the credit facility, various submissions were given for the proposition that stock figures as per the bank stock statement was not audited one. Despite noting detailed submission and case laws referred, the ld.CIT(A) proceeded to confirm the additions. In the several case laws noted by the Ld.CIT(A), it was held that stock statement given to bank ipso-facto cannot be basis for additions, but Ld.CIT(A) distinguished the same mechanically. It is undisputed that the stock statement given to bank was unaudited. There is nothing on record to suggest that the stock statement given to bank was verified by the bank officials. The AO has not found anything wrong in the books of the accounts of the assessee. There is not at all any rejection of books and records. Hence, by merely substituting the stock figures, AO cannot make any addition based upon whims and fancies. The decisions of Hon’ble Madras High court in the case of CIT vs. A.T.Swamy 241 ITR 863 and Hon’ble Delhi High court in the case of CIT vs Prem singh and company 163 ITR 434 in this regard referred ‘before the Ld.CIT(A) are fully applicable on the facts of this case. Hence, in the background aforesaid discussions and precedents, I set aside the orders of the authorities below and delete the additions.
In the result, appeal by the assessee stands allowed.