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Income Tax Appellate Tribunal, BANGALORE BENCH ‘SMC-C’, BANGALORE
Before: SHRI A.K. GARODIA, ACCOUNANT MEMBER
O R D E R PER A. K. GARODIA, A.M.: This appeal is filed by the assessee and it is directed against the ex parte order of CIT (A) – Davangere dated 27.11.2018 for A. Y. 2013 – 14.
The assessee has raised as many as 7 grounds. In course of hearing, it was submitted by the learned AR of the assessee that only Ground No. 3 is pressed and remaining grounds are not pressed. Accordingly, all grounds except Ground No. 3 are rejected as not pressed and I reproduce Ground No. 3 which is to be decided. This reads as under:-
3. The learned Commissioner of Income tax (Appeals) erred in holding the stock difference worked out at the time of survey u/s 133A of the Act dated 03.07.2013 relates to the Assessment Year 2013 – 14 rejecting the appellant’s contention, any addition that could be made is only for the assessment year 2014 – 15 and not for the Assessment Year 2013 – 14.
Relevant facts in brief are that the AO has noted in Para 3 of the assessment order that a survey u/s 133A was conducted in the present case on 03.07.2013. Thereafter, in Para 4 of the assessment order, the AO noted that in course of scrutiny assessment proceedings, the assessee was asked to explain or reconcile the stock difference for the amount of Rs. 41,31,760/- found during the course of survey. Some explanation was filed stating that some stock of Rs.
30,66,500/- was lying at branch office but the AO accepted the explanation to the extent of its 30% i.e. Rs. 919,950/- and made addition of Rs. 32,11,810/-. From these facts, it is seen that the difference in stock was found in survey conducted on 03.07.2013 for which the relevant assessment year is A. Y. 2014 – 15 and the stock found is short of book stock and not in excess of book stock because the shortage in stock only can be explained by the existence of some tock at branch office.
Learned AR of the assessee submitted that no addition on account of stock difference found at the time of survey as on 03.07.2013 can be made in the present year and addition if any, can be made in A. Y. 2014 – 15. She also submitted that in respect of shortage of stock, addition can be made only to the extent of Gross profit on such shortage of stock and not to the extent of entire shortage. Learned DR of the revenue supported the order of AO & CIT (A).
I have considered the rival submissions. I find that in view of these two undisputed facts that the difference in stock was found during the course of survey on 03.07.2013 and secondly, such difference is by way of short stock found as compared to book stock on the date of survey, I find force in the submissions of the learned AR of the assessee that addition can be made in the facts of the present case in A. Y. 2014 – 15 and such addition in respect of shortage of stock can be made only to the extent of Gross profit on such shortage of stock and not to the extent of entire shortage. Hence, in the present year, I delete the addition but as a consequence, I direct the AO to examine and decide this issue in A. Y. 2014 – 15. The AO in that year should pass the necessary order as per law in view of above discussion after providing adequate opportunity of being heard to the assessee. 6. In the result, the appeal of the assessee is allowed in the terms indicated above. Order pronounced in the open court on the date mentioned on the caption page.