BISWANATH SAHA,KOLKATA vs. ITO, WD-52(4), KOLKATA, KOLKATA

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ITA 785/KOL/2014Status: DisposedITAT Kolkata11 December 2015AY 2009-20102 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that no addition can be made solely on the ground that the closing stock declared to the bank was higher to avail better credit. This decision followed a High Court judgment affirmed by the Supreme Court.

What were the facts?

The Assessing Officer (AO) added the difference in closing stock declared to the bank versus the books of account to the assessee's total income. The CIT(A) confirmed this addition.

What were the issues?

Whether the addition on account of a higher closing stock declared to the bank for credit purposes, without any quantitative difference, is justified.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, “SMC” “C” BENCH: KOLKATA

Before: Shri Mahavir Singh, JM]

Hearing: 07.12.2015Pronounced: 11.12.2015

For the Appellant: Shri Soumitra Chowdhury, Advocate For the Respondent: Shri Rajendra Prasad, JCIT, Sr. DR ORDER

This appeal by assessee is arising out of order of CIT(A)-XXXIII, Kolkata vide Appeal No. 235/CIT(A)-XXXIII/ITO Ward-52(4),Kol/11-12 dated 24.01.2014. Assessment was framed by ITO, Wd-52(4), Kolkata u/s. 143(3)/CASS of the Income- tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Year 2009-10 vide his order dated 29.12.2011.

2.

At the outset, ld. Counsel for the assessee stated that he is only contesting the addition confirmed by CIT(A) in respect to difference in closing stock i.e. the closing stock submitted to bank and that as per the books of account of the assessee at Rs.6,01,073/-.

3.

I have heard rival submissions and gone through facts and circumstances of the case. I find from the assessment record that the AO noted that the assessee has taken bank overdraft from Indian Bank, which reflects that the closing stock declared to the bank is at Rs.17,58,562/- as compared to the final accounts at Rs.11,57,489/-. According to AO, there is difference in closing stock i.e. higher closing stock declared to the bank at Rs.6,01,073/- and accordingly, he added the same to the total income of the assessee by treating the same it as unexplained. The CIT(A) also confirmed the same. After hearing rival submissions, when a query was put to Ld. Sr. DR, whether there is any quantitative difference in stock, he stated that the assessee is in the trading of elastic tape and it is not known whether there is a difference in quantitative stock or qualitative stock i.e. the value. Ld. Counsel for the assessee filed complete Balance

2 Biswanath Saha AY 2009-10 Sheet before us and stated that there is no quantitative difference in the bank statement and he relied on the decision in the case of CIT Vs. Veerdip Rollers Pvt. Ltd.323 ITR 341 (Gujarat). In the said case the Hon’ble High Court held that no addition can be made on the ground that the statement submitted by the assessee to the bank was at higher value to avail of better credit from the bank and that there is no justification in making any addition. Against this judgment, the department went to the Hon’ble Supreme Court and the special leave petition against this judgment was dismissed (2008) 307 ITR (St.) 3. It is also significant that the aforesaid judgment of Hon’ble Gujarat High Court was rendered after considering the case of CIT Vs. Dhansiram Agarwal 201 ITR 192 (Gauhati) relied upon by the A.O. Therefore, following the ratio laid down in the case of Veerdip Rollers Pvt. Ltd. cited supra which has been affirmed by the Hon’ble Supreme Court, it is held that the Assessing Officer was not justified in making the addition. Accordingly, this issue is squarely covered by the decision in the case of Veerdip Rollers Pvt. Ltd., supra and hence, I delete the addition and allow this issue of assessee’s appeal.

4.

In the result, appeal of assessee is allowed.

5.

Order is pronounced in the open court on 11.12.2015 Sd/- (Mahavir Singh) Judicial Member

Dated : 11th December, 2015 Jd.(Sr.P.S.) Copy of the order forwarded to:

1. 1. APPELLANT – Shri Biwanath Saha, Lala Bagan, Bidhangarh, Santoshpur, Kolkata-700066. 2 Respondent – ITO, Wd-52(4), Kolkata.

3. The CIT(A), Kolkata 4. CIT , Kolkata 5. DR, Kolkata Benches, Kolkata

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