SURESH KUMAR,MUGHALSARAI vs. ITO, WARD - 3(3), CHANDAULI

This appeal by the assessee is directed against the order dated 2nd May, 2019 of CIT(A) for the assessment year 2012-13. The assessee has raised the following grounds:

The only issue arises in this appeal of the assessee is regarding the confirmation of addition made by the AO on account of undisclosed sale due to re- casting of the closing stock by the AO. The assessee is an individual and engaged in trading of coal in the name of style of M/S. Suresh Coal Traders. The assessee filed his return of income on 31st October, 2013 declaring total income @ 6,73,160/-.During the scrutiny assessment, the AO noted that the assessee has shown closing stock as on 31st March, 2013 @ 25,94,568/-. The AO asked the assessee to file the details of the stock, method of valuation. In response the assessee filed the reply along with the purchase register and sale of coal. From the entries of purchase and sale the AO noted that there was no sale after 23rd March, 2013. Therefore, the figure of closing stock as shown by the assessee was not matching with the purchase of coal made on 23rd March and 24th, March, 2013. Accordingly, the AO has made an addition of the differential amount of Rs. 6,49,996/- being undisclosed sale. The assessee challenged the action of the AO before the CIT(A) but could not succeed.

Before the Tribunal the Ld. AR of the assessee has submitted that the assessee has produced all the details of purchase and sales as per the stock register and month- wise inward and outward quantities of coal. The assessee has shown the closing stock on 31st March, 2013 at 537.830 PMT. The value of the closing stock as per the rate of purchase comes to Rs. 27,28,691/-, which was shown by the assessee after deduction of VAT and TCS and the net amount comes to Rs. 26,050,674/-. The assessee also furnished the details of purchase and sales of coal as well as closing stock balance, at the end of the year which is not disputed by the AO. The addition is made on the basis of assumption that the purchase made on 24th March, 2013 remain unsolved. /2019 Asstt. Year-2013-14 4. Thus, the Ld. AR has submitted that without considering the relevant details as furnished by the assessee before the AO as well CIT(A), the addition was made which is not sustainable. Thus, the Ld. AR has submitted the addition made by the AO is liable to be deleted. He has referred to the monthly summary of inventories of coal containing the inward quantity and value as well as outward quantity and value and remaining quantity and value of closing balance. Thus, the Ld. AR has given more thrust on the monthly summary of the inward, outward and closing balance of coal. 5. On the other hand, the Ld. DR has submitted that the CIT(A) has considered the issue and also called for a remand report from the AO and after verifying the relevant facts, it was found that the assessee has failed to reconcile the difference of purchase and sales made on 23rd to 24th of March, 2013. He has relied upon the order of the CIT(A). 6. I have considered the rival submissions as well as relevant material on record. The AO has made the addition on account of unaccounted sale by calculating the closing stock based on the purchase made on 23rd and 24th of March, 2013 and last sale made by the assessee on 23rd March, 2013. Thus, the AO arrived at a higher amount of closing stock of Rs. 32,44,565/- as against the closing stock shown by the assessee of Rs. 25,94,568/. The difference amount of Rs. 6,49,996/- was treated by the AO as undisclosed sale. Thus, it is apparent from the assessment order that the addition was made by the AO solely on the basis of the entries of purchase and sales on 23rd and 24th March, 2013 but without considering the quantitative details of month-wise summary of inward and outward quantity of coal as well as closing balance of each month, which is also converted into the value by applying the prevailing rate of purchase the entries of purchase and sales may be shown in the books in variation of a day before or later but the actual quantity purchase by the assessee and the actual quantity sold by the assessee are required to be considered to arrive at the correct figure of closing stock of coal. The assessee produced the month-wise summary of purchase and sales as well as the closing balance of coal /2019 Asstt. Year-2013-14 which were neither considered by the AO nor by the CIT(A). Though the CIT(A) called for a remand report however, the AO took the same stand as it was taken in the assessment order. Therefore, the relevant details of the purchase and sales of the entire quantity during the year was not examined by the authorities below. 7. In the facts and circumstances of the case and in the interest of justice, the matter is remanded to the record of the AO for proper verification of the details of the total purchase and sales during the year and then determine the closing stock based on the total quantity of purchase and sales as well as opening stock. Needless to say, the assessee be granted the appropriate opportunity of hearing before passing the fresh order.

In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 25.01.2022 through video conferencing.