I.T.O WD - 1,NADIA., NADIA vs. M/S J.N . TELELINK, NADIA

The Ld. CIT(A) erred in granting relief to the assessee for Rs.54,22,883/- without giving cogent reason when the assessee failed to explain discrepancy between the stock hypothecated to bank and the stock as per books.”

We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO has made reverse calculation taking the stock as on 07.02.2008 the date on which the assessee has given closing stock to the bank at Rs.66,74,338/-. We find from the facts of the case that the assessee in fact had not purchased Mobile Sets in excess of Rs.9,61,52,972.21 as reflected in the audited balance sheet and all other records of for the year ended on 31st March, 2008 and nothing has been established with recorded evidences that the assessee was actually and physically in possession of a huge stock of Rs. 66,74,338.00 specifically on 07.02.2008 and therefore to have proceeded on that basis in framing the assessment order without facts. He did not attach any importance to the fact that the bank did not carry out any physical verification of stock as on 07.02.2008 and purchase and sales of goods from 01.04.2007 to 07.02.2008 and therefore the figure submitted before the Branch Manager, SBI, Krishnagar Branch was merely a hypothetical and imaginary which was resorted to solely for the purpose of obtaining a higher overdraft which is a practice line in business circles and has no impact in computing the income of any assessee. We are of the view that it is not practicable that Mobile sets worth of Rs.66,74,338.00 ( as on 07.02.2008), and Mobile sets worth Rs. 68,93,159.00 (as on 31.03.2008) could not have been purchased and sold on as computed by the AO. We are also of the view that the fact and very specific Trading modus- operandi of purchase & sales of Mobile sets clearly establishes that no mobile set can be purchased by any dealer/person without valid documents like proper Tax Invoices from Registered dealers and distributors holding VAT (Value Added Tax) Registration Certificates under the Value Added Tax Act, 2003 issued by the Directorate of Commercial Taxes, Govt. of West Bengal. Even the Branch Manager, SBI, Krishnagar Branch was not summoned to make a positive enquiry and to obtain confirmation from him whether the said manager has physically verified the mobile sets or whether he has accepted an imaginary, fictitious stock figure from the assessee as on 07.02.2008. But from the perusal of assessment order nothing is evident that the AO made an effective enquiry in this regard, on the other hand he abruptly jumped to the conclusion that the assessee was actually in possession of closing stock of Rs. 68,93,159.00 as on 31.03.2008 which clearly proves the fact that AO did not apply his mind before making the addition of Rs. 54,22,883.00 under the head undisclosed investment u/s 69B of the Act. We find that the AO has not verified the ledger account of purchases of mobile sets with the statement of purchase available from various companies from whom the purchases were made. The principal companies have already sent the statements of their sales to assessee and AO has not verified the same with the purchase account of the assessee. Furthermore, the AO has accepted the sales figure disclosed by assessee at Rs.9,56,61,000/-, which were disclosed to Sales Tax Authorities. The assessee has also produced complete sale vouchers and purchase vouchers filed with the sales tax return for the FY 2007-08 relating to AY 2008-09 i.e. the present assessment year. In view of these facts we are of the view that no addition can be made based on stock statement given to bank and by making a reverse calculation of stock after applying GP particularly when complete details are available before the for examination i.e. the stock register, bills and vouchers of purchase and sales and also complete books of account i.e. cash book and ledger. We find no infirmity in the order of CIT(A) and hence, the same is confirmed. This issue of revenue’s appeal is dismissed.

Cross Objection of assessee is in support of the order of CIT(A), hence the same is dismissed being infructuous.

In the result, both the appeal of revenue and cross objection of assessee is dismissed. Order is pronounced in the open court on 11.05.2016 (M. Balaganesh) Judicial Member

Appellant – ITO, ward-1, `Nadia.

Respondent- M/s. J. N. Telelink, C/o Sushil Debnath, Tegari Para, Ramdas Nandy Lane, Nabadwip, Nadia-741302

CIT(A) , Kolkata

CIT , Kolkata

DR, Kolkata Benches, Kolkata /, By order, Asstt.