ITAT deleted Addit'ns as assessee mistakenly submitted figure of cl. stock.
ITAT deleted Addit'ns as assessee mistakenly submitted figure of cl. stock.
Assessee was wholesaler of medicine. AO in assessment after concluding closing stock added sum as undisclosed investment in stock. On appeal CIT(A) confirmed it. On appeal ITAT deleted the addition holding, assessee made mistake inadvertently by submitting figure of closing stock as on 1st March, as against actual figure of closing stock. Thus, assessee reconciled figure of closing stock & no addition on account of undisclosed stock can be made.-000059
Brief facts:
1. Assessee is a wholesaler of medicines and total turnover of assessee during the year was at Rs. 3,19,10,213 and closing stock was at Rs. 30,60,896.
2. The gross profit disclosed by the assessee was at Rs. 19,47,472 i.e., @ 6.10 per cent.
3. The AO examined the book stock and found that as on 28th Feb., 2005 (sic— 2006), the closing stock is at Rs. 39,61,159 and AO taking the same as opening stock of 1st March, 2006 and considering the disclosed purchases and sales for month of March, 2006 arrived at the closing stock as on 31st March, 2006 at Rs. 63,05,709.
4. Accordingly, the difference in closing stock being closing stock as declared as per books at Rs. 30,60,896 and closing stock as estimated by AO at Rs. 63,05,709 added sum of Rs. 32,44,813 as undisclosed investment in stock.
5. On appeal, CIT (A) confirmed the addition.
On appeal ITAT held as under:
6. The assessee made mistake inadvertently by submitting the figure of closing stock as on 1st March, 2006 at Rs. 39,61,159 as against actual figure of the closing stock as per the books of account of Rs. 13,19,983 as on 1st March, 2006.
7. Court found that ssessee explained that this mistake occurred only due to the fact that these figures are relating to inflation of stock for availing credit facilities i.e., enhancement of credit limit with SBI Baguihati branch from Rs. 20 lakhs to 30 lakhs by reconciling the figure as given in the above chart at para 4 of this order.
8. Thus, In view of the facts and circumstances of the case, Court viewed that the assessee has reconciled the figure of closing stock and no addition on account of undisclosed stock can be made. Hence, deleted the addition and allowed the appeal of assessee.
Case Reference-Squar Concern v. Income-tax Officer
IN THE ITAT KOLKATA BENCH 'A'
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