ACIT, CORPORATE CIRCLE-1(2), BHUBANESWAR vs. M/S. SWOSTI PREMIUM LIMITED, BHUBANESWAR

आयकर अपीऱीय अधिकरण, कटक न्यायपीठ,कटक IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI N.S.SAINI, AM & SHRI PAVAN KUMAR GADALE, JM आयकर अपीऱ सं./ITA No.91/CTK/2017 (नििाारण वषा / Assessment Year : 2012-2013) ACIT, Corporate Circle-1(2), Vs. M/s Swosti Premium Ltd., Bhubaneswar P-1, Jayadev Vihar, Bhubaneswar स्थायी लेखा सं./ PAN No. : AADCS 8693 K (अपीऱाथी /Appellant) (प्रत्यथी / Respondent) .. राजस्व की ओर से /Revenue by : Shri D.K.Pradhan, DR निर्ाारिती की ओर से /Assessee by : Shri Sumanta Kumar Nayak, AR सुनवाई की तारीख / Date of Hearing : 22/03/2018 घोषणा की तारीख/Date of Pronouncement 23/03/2018 आदेश / O R D E R Per Shri Pavan Kumar Gadale, JM: The Revenue has filed this appeal against the order of CIT(A)-1, Bhubaneswar dated 02.11.2016 on the following grounds of appeal:- 1. On the facts and circumstances of the case, the ld. CIT(A) is not justified in law as well as on facts in deleting the addition of Rs.17,03,000/- on account of Difference in closing stock. 2. On the facts and circumstances of the case, the ld. CIT(A) is not justified in law as well as facts in deleting the addition of Rs.2,06,26,000/- on account of difference in sundry debtors. 2. Brief facts of the case are that the assessee is engaged in the business of lodging, boarding and restaurant and filed return of income on 19.03.2015 by disclosing total income at Nil for the assessment year 2012-2013. Subsequently the case was selected for scrutiny and notices u/s.143(2) & 142(1) were issued to the assessee. In compliance, ld. AR of the assessee appeared from time to time along with relevant documents. The AO found that in the inventories disclosed under the head current assets, loans and advances in schedule 5 of the balance sheet closing

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stock of food, beverages, consumables and spare and others of Rs.1,64,34,000/- has been shown. Enquiries u/s.133(6) of the I.T.Act from the Indian Overseas bank, Bhubaneswar Main Branch, Kharavel Nagar, Bhubaneswar were made and the bank vide letter dt.17.03.2015 have disclosed that the value of stock as on 31.03.2012 declared by he assessee to them at Rs.1,81,37,000/-. In the light of the above the AO added the difference of Rs.17,03,000/- of closing stock to the income of the assessee. The AO further found that similar discrepancy in the figures of debtors which as per the balance sheet was disclosed at Rs.4,94,86,000/- and that as per the Indian Overseas Bank’s above referred letter dated 17.03.2015 stood at Rs.2,88,60,000/-. Accordingly, on the basis of reasons described above, the AO added the differential figures of Rs.2,06,26,000/- to the total income of the assessee and assessed the total income of the assessee at Nil and passed the order u/s.143(3) of the Act dated 19.03.2015. 3. Aggrieved by the order of CIT(A), the assessee filed an appeal before the CIT(A). In the appellate proceeding, the assessee argued the grounds and reiterated the submissions made before the AO. In respect of the issue which is in dispute ld. CIT(A) considered the findings of AO and also submissions made by the assessee. The contention of the assessee that the assessee is submitting the stock statement of every month to the bank on or before 10th on next month which is unaudited and at the time of finalization of accounts it was found that some consumption entries were not passed and the same was passed later on before

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finalization of accounts. Therefore, the figure as compared to the audited balance sheet is correct figure. Ld. CIT(A) having considered the findings of AO and reconciliation statements which was filed before the AO during the assessment proceedings, has convinced that the closing stock shown in the audited accounts, cannot be rejected because some other figure was submitted to the bank in fulfilment of the terms of loan obtained from them and assessee’s contention that certain adjustments were omitted to be made while filing the statement before the bank is found to be correct, therefore, the CIT(A) has deleted the addition made by the AO on account of suppression of stock. Similarly, the CIT(A) also considered the ground of difference in sundry debtors to the tune of Rs.2,06,26,000/-. The CIT(A) has made observation on the findings of AO and also written submission of the assessee. The CIT(A) has observed that assessee’s contention that by showing more debtors, it has disclosed more income and no adverse conclusion can be drawn only because the amount of debtors shown to the bank is less than that disclosed in the accounts and the CIT(A) has accepted the same. As per the CIT(A) no addition can be made for disclosing a higher figure of debtors in the balance sheet than disclosed to the bank. Therefore, he deleted the addition of Rs.2,06,26,000/-. 4. Aggrieved by the order of CIT(A), the Revenue is in appeal before the Tribunal. 5. Before us, the ld. DR on the disputed issue submitted that the CIT(A) has erred in deleting the addition without considering the fact that both accounts are maintained by the assessee himself. The DR submitted

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that during the course of assessment proceedings the assessee has not filed reconciliation statement. The CIT(A) has made a categorical finding that the AO has made a wrong decision in making addition as the debtors as per the audited balance sheet is higher side than compare to the letter dated 17.03.2015 issued by the Indian Overseas Bank and prayed for allow of appeal of Revenue. 6. Per Contra, ld. AR relied on the order of CIT(A) and also submitted financial statements. 7. We have heard rival submissions and perused the material available on record. We find that for obtaining loan the assessee has disclosed the value of stock as on 31.03.2012 at Rs.1,81,37,000/- whereas the stock as per the balance sheet demonstrated before us by the ld. AR is for Rs.1,64,34,000/-. We are of the opinion that audited books of accounts have been considered by the AO and CIT(A) the CIT(A) also made observation that certain reconciliation has to be made by the assessee, and, therefore, difference in stock cannot be added, we are therefore, not inclined to interfere with the order of CIT(A) in this regard. Similarly, in the case of sundry debtors, the AR of the assessee demonstrated before us that the Schedule of debtors mentioned at Note- 14 of the balance sheet where the debtors are disclosed at Rs.4,94,86,000/-, whereas the assessee has filed letter dated 17.03.2015 from the Indian Overseas Bank for obtaining the loan and disclosed the value of debtors at Rs.2,88,60,000/-, and the AO made addition. The CIT(A) has given a prudent observation that no addition can be made for

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disclosing a higher figure of debtors in the balance sheet than disclosed to the bank. Therefore, we agree with the contention of the CIT(A) in this regard and upheld the order of CIT(A) and dismiss the appeal of Revenue. 8. In the result, appeal of the Revenue is dismissed. Order pronounced in the open court on this 23/03/2018. Sd/- Sd/- (N. S. SAINI) (PAVAN KUMAR GADALE) ऱेखा सदस्य / ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनांक Dated 23/03/2018 प्र.कु.मि/PKM, Senior Private Secretary आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant- ACIT, Corporate Circle-1(2), Bhubaneswar प्रत्यथी / The Respondent- 2. M/s Swosti Premium Ltd., P-1, Jayadev Vihar,Bhubaneswar आयकि आयुक्त(अपील) / The CIT(A), 3. आयकर आयुक्त / CIT 4. निभागीय प्रनतनिनर्, आयकि अपीलीय अनर्किण, कटक / DR, ITAT, Cuttack 5. गार्ड फाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यापपत प्रतत //True Copy// (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack