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Income Tax Appellate Tribunal, : ‘D’ BENCH, KOLKATA
Before: Shri M. Balaganesh & Shri S.S.Viswanethra Ravi
The above appeal by the Revenue is against the order dt. 31- 08-2016 of the CIT-A, 7, Kolkata for the A.Y 2012-13.
The only issue is to be decided as to whether the CIT-A justified in deleting the impugned addition made by the AO on account of unexplained investment amounting to Rs. 2,10,57,012/- in the facts and circumstances of the case.
The brief facts of the case that the assessee is a firm and engaged in the business of wholesale of fertilizers & seeds. A survey u/s. 133A of the Act was conducted on 23-03-2012. During such operation, physical inventory of stock was found and valued at Rs. 4,93,53,247/-. According to AO, one of the partners of the assessee, Sri Samir Kumar Mishra admitted that the stock was to the tune of Rs. 4,93,53,247/- by Q. No. 14 of the statement. Thereafter, the assessee firm filed its return of income for the A.Y under consideration on 30-03-2013 declaring total income of Rs. 28,16,300/-. Notices u/s. 143(2) and 142(1) of the Act were issued and in response to which, the AR representing the assessee appeared and furnished various details i.e books of account, bills and vouchers in support of its return. According to AO, the value of stock as on 31- 03-2012 was of Rs. 7,34,69,616/- and was shown by assessee in its books of account of Rs. 9,45,26,628/-. In explanation, the assessee submitted that some mistakes have been occurred during the survey in making physical inventory and computed the value of closing stock at Rs. 4,83,02, 547/- instead of Rs. 4,93,53,247/-. The AO did not accept the submissions of assessee and added the difference amount of Rs. 2,10,57,012/- (Rs.9,45,26,620 – Rs. 7,34,69,619) under the head unexplained investment in stock found from difference between books of account and inventory found during the survey respectively vide his order dt. 19-03-2015 passed u/s. 143(3) of the Act.
The assessee preferred an appeal before the CIT-A. Before him the assessee contended another statement on 4-4-2012 was recorded, wherein the assessee stated that the stock ‘may be increased’ and further submitted that assessee maintained stock register, which is certified by the Pr. Agricultural Officer, Govt. of W.B. by due physical verification and further submits that gross profit during the year is similar to gross profit of earlier years and the same has been accepted in the past.
The CIT-A considering the above deleted the addition by observing as under:- Findings of the CIT(A):- 3.1.3 “It is seen that other that the inventory statement at the time of survey, the assessing officer has not adduced any other evidences in support of the discrepancy in stock found at the time of survey. More so, since the appellant has in the statement recorded after 12 days from the date of survey stated that the figure of stock may be increased. Further, the AO has not found any defect in the books of accounts of the appellant nor has found any evidence of unaccounted sales during the course of survey. Also it is the fact that the appellant is maintaining stock of pesticides in the stock register which is certified by the State Government Authority. In view of the above, I am of the opinion that preponderance of probability suggests that appellant’s explanation are plausible and therefore, the addition on account of unexplained investment in stock needs to be deleted. “
Before us the ld. DR relied on the order of the AO. He also submits that during survey operation one of the partners of the assessee, Sri Samir Kumar Mishra admitted that the stock was to the tune of Rs. 4,93,53,247/- in response to Q. No. 14 of the statement. He also admitted the difference as on 31-03-2012 between physical inventory before the survey team and the books of account. The AO verified all the details. The AO observed the purchase and sales to an extent of Rs.2,76,17,021/- and Rs. 35,72,610/- respectively after the survey. The assessee stated that some mistakes have been occurred during the survey in making physical inventory, but no explanation to that effect was given. Thus, the CIT-A arbitrarily deleted the addition and the AO has rightly made the impugned addition. He relied on the order of the AO.
On the other hand, the ld. AR reiterated his same submissions made before the CIT-A. He relied on the order of the CIT-A and prayed to dismiss the ground of appeal raised by the revenue.
8. Heard the rival parties and perused the record. We find that the statement recorded on 23-03-2012 placed at page 31-35 of the paper book, wherein it is clear that one of the partners of the assessee stated in response to Q. No. 14 that the stock as recorded from two godowns and business premises is approximately valued at Rs. 4,93,53,247/-. Whereas another statement stated to have been recorded on 4-4-2012, placed at pages 25-30 of the paper book, wherein the assessee answered the Q. No. 11 that “stock may be increased and will be informed when the A/cs will be prepared.“ We find at pages 104-149 the stock register certified by the Principal of Agriculture Officer, Govt. of West Bengal after physical verification. We also find that the assessee filed the explanation sheets pages at 86-93 of the paper book before the AO & CIT-A. The CIT-A examined the first statement recorded on 23-03-2012 and second statement on 4-4-2012 together with stock register duly certified by the Principal of Agriculture Officer, Govt. of West Bengal and found satisfied that there was no difference as per physical inventory done by the survey team and as per books of account. The AO did not find any defect and discrepancy with regard to stock register / books of account. Maintaining stock of pesticides is also certified by the State Govt. Authority. We find force in the submissions of assessee. Therefore, the CIT-A was justified in deleting the addition made by the AO and we uphold the same. Thus, ground raised by the revenue is dismissed.
In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 19-06-2018