2021 (10) TMI 683 - AT - Income Tax

Addition on account of difference of stock value - CIT-A deleted the addition as no valid basis of making the addition further, the alleged difference will also cannot be said to be undisclosed income - HELD THAT - We do not find any infirmity in the order of the Ld. CIT(A) on this issue. We find an identical issue had come up before the Tribunal in assessee s own case in the immediately succeeding A.Y. 2014-2015 2019 (8) TMI 292 - ITAT DELHI - We uphold the order of the Ld. CIT(A) on this issue and the ground of appeal number.1 raised by the Revenue on this issue is dismissed. Addition on account of difference in cash statement given to the bank and as per books of account - CIT(A) deleted the addition on the ground that addition made by the A.O. is not based on any valid evidence and merely based on the statement given to the bank which is a third party evidence - HELD THAT - Since the Ld. CIT(A) while deleting the addition has relied upon the decision of Commissioner of Income Tax vs., Sidhu Rice and General Mills 2004 (7) TMI 12 - PUNJAB AND HARYANA HIGH COURT therefore, in the absence of any contrary material brought to our notice against the decision of the Hon ble jurisdictional High Court relied upon by the Ld. CIT(A), we do not find any infirmity in his order deleting the addition. Accordingly, ground of appeal number 2 raised by the Revenue is dismissed. Addition of low house hold withdrawals - addition towards house hold expenses is very low keeping in view the rising of price day by day and the minimum expenses required for sustaining the family - CIT-A deleted the addition - HELD THAT - As stated earlier, the family of the assessee consists of self and his wife and the two children are earning separately and are residing in Pune and Chandigarh respectively. The assessee also owns ancestral agricultural land of about 10 acres and the income from agriculture is also used for meeting the house hold expenses. Apart from the above, the assessee is staying in his own house in a small town. Therefore, in the absence of any evidence before the A.O. to show that the assessee has incurred any extravagant expenditure for maintaining a lavish life style or has performed any marriage function etc., estimating the addition on presumption and surmises, in our opinion, is not sustainable in Law. In view of the above discussion and respectfully following the decision of the Tribunal in assessee s own case in the succeeding assessment year 2019 (8) TMI 292 - ITAT DELHI - we uphold the order of the Ld. CIT(A) on this issue - Decided against revenue.

Summary

Issues Involved:
1. Difference in stock value as per bank statement and books of accounts.
2. Difference in cash in hand as per bank statement and books of accounts.
3. Low household withdrawals.

Issue-wise Detailed Analysis:

1. Difference in Stock Value:
The Assessing Officer (AO) noted a discrepancy between the stock value declared to the bank and the stock value as per the books of accounts as on 31.03.2013, amounting to ?2,19,65,351/-. The assessee argued that the stock statements submitted to the bank were on an estimated basis and not actual, due to the nature of the business involving government-controlled items like fertilizers and chemicals. The CIT(A) found the AO's addition unjustified, citing that the books of accounts were audited and accepted by the AO and the stock statement as on 31.03.2013 matched the books of accounts. The CIT(A) relied on the judgment of the Punjab & Haryana High Court in CIT v. Sidhu Rice and General Mills and the Madras High Court in Commissioner Of Income-Tax vs N. Swamy, which held that additions based solely on statements to third parties without substantial evidence of undisclosed income are invalid. The Tribunal upheld the CIT(A)'s order, noting that the AO had not rejected the books of accounts and the stock statement submitted to the bank was not verified for actual discrepancies.

2. Difference in Cash in Hand:
The AO observed a difference of ?9,04,506/- between the cash in hand as per the bank statement and the books of accounts. The assessee explained that the cash statement to the bank was on an estimated basis to maintain the bank facility. The CIT(A) deleted the addition, stating that the AO's addition was based on third-party evidence without valid basis. The Tribunal upheld this decision, citing the jurisdictional High Court's ruling in Sidhu Rice and General Mills, which emphasized that statements to third parties cannot be the sole basis for additions without corroborative evidence.

3. Low Household Withdrawals:
The AO added ?2,47,990/- to the assessee's income, considering the household withdrawals of ?1,12,010/- as insufficient. The assessee contended that the amount was adequate for his family, which included only himself and his wife, with two earning sons living separately. The CIT(A) deleted the addition, noting that the family resided in their own house in a small city, had agricultural income, and the AO had no evidence of extravagant expenses. The Tribunal affirmed the CIT(A)'s decision, referencing a similar case in the succeeding assessment year where the Tribunal had dismissed the Revenue's appeal on identical grounds.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s order on all three issues. The Tribunal emphasized the importance of corroborative evidence and consistency in judicial decisions, aligning with previous rulings and the principle that additions cannot be made based on estimates or third-party statements without substantial evidence. The order was pronounced on 14.10.2021.