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TMI Blog2015 (8) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the name of its related concern - Held that:- Commissioner of Income-tax (Appeals) has correctly noted the fact that once it is a case of sale then even if the amount has not been received it cannot be construed as a case of diversion of funds. In any case one of the partner of M/s. Vibhor Sood and Bros., i.e., Smt. Kiran Sood has also given a loan of ₹ 10 lakhs to the assessee-firm.Therefore, we find nothing wrong with the order of the learned Commissioner of Income-tax (Appeals) and we confirm the same.- Decided against revenue. - ITA No. 813/Chd/2014 - - - Dated:- 10-2-2015 - For the Appellant : Shri S.K. Mittal For the Respondent : Shri Sudhir Sehgal ORDER T. R. Sood (Accountant Member).- The appeal filed by the Revenue is directed against the order dated July 15, 2014 of the Commissioner of Income-tax (Appeals)-II, Ludhiana. 2. In this appeal, the assessee has raised the following grounds : 1. (a) That the learned Commissioner of Income-tax (Appeals)-II, Ludhiana, has erred in law as well as on facts in deleting the addition of ₹ 13,06,946 made by the Assessing Officer under section 69 of the Income-tax Act, 1961 on account of unex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee on estimated basis cannot be relied on. Further, the gross profit in this year was better than earlier year. Further, reliance was also placed on the various case law including CIT v. Sidhu Rice and General Mills [2006] 281 ITR 428 (P H). 5. It was also pointed out that decision of B. T. Steels Ltd. v. CIT [2010] 328 ITR 471 (P H) was distinguishable because in that case bank had verified the stock which is not a fact in the present case. 6. The learned Commissioner of Income-tax (Appeals) after examining these submissions found force in the same and deleted the addition. 7. Before us the learned Departmental representative strongly relied on the order of the Assessing Officer. He further submitted that details of stock were furnished by the assessee himself during the assessment proceedings and now the assessee cannot say that the same were on estimate basis. 8. On the other hand learned counsel for the assessee reiterated the submissions made before the Commissioner of Income-tax (Appeals). He further submitted that stock statement given to the bank cannot be basis of making addition under section 69 because in such statement stock is generally valued at h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was computed by reducing the gross profit out of total sales and this cost of sales was reduced from the stock to estimate the closing stock at the end of each month. It is apparent from the aforesaid two documents that neither of these two documents reflected the actual physical stock of the appellant at any point of time. The statements pertaining to month-wise stock are estimated statements as is the statement given to the bank. In view of the fact that the month-wise stock statement filed by the appellant before the Assessing Officer was prepared on the basis of figures of purchase, sale and gross profit and in view of the fact that no defect has been pointed out by the Assessing Officer regarding the purchases and sales shown by the appellant, the stock statement furnished by the appellant to the Assessing Officer cannot be held to be incorrect. 3.7 Moreover, the stock statement referred to by the Assessing Officer pertained to the month of September 2007. No difference has been pointed out by the Assessing Officer pertaining to the stock statement for the month of March 2008. 3.8 In view of the aforementioned facts, the Assessing Officer was not justified in holding th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been pointed out by the Assessing Officer pertaining to the stock statement for the month of March 2008. In view of the fact that the month-wise stock statement filed by the appellant before the Assessing Officer was prepared on the basis of figures of purchase, sale and gross profit and not by taking actual physical inventory, and in view of the fact that no defect has been pointed out by the Assess ing Officer regarding the purchases and sales shown by the appellant, I agree with the appellant's contention that the appellant's case is more comparable to the facts of the case of Chauhan Papers Pvt. Ltd. I. T. A. No. 358 of 2006 dated October 12, 2006 (hon'ble High Court of Punjab Haryana). 3.10 Keeping in view the aforesaid facts and legal position the addition made by the Assessing Officer is deleted. This ground of appeal is allowed. 10. In our opinion the learned Commissioner of Income-tax (Appeals) has correctly decided the issue because the Assessing Officer has not brought on record whether stock as shown by the bank on September 30, 2007 was same as shown in the stock register by the assessee. If the assessee had filed only an estimated stock befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer. 15. On the other hand learned counsel for the assessee reiterated the submissions made before the Assessing Officer and the Commissioner of Income-tax (Appeals). He also referred to pages 1 to 4 of the paper book which is copy of the account and pointed out that all the amounts represent sales made by the assessee. Certain payments have also been made to that party and there it is a pure business transaction, hence there was no justification for proportionate disallowance of the interest. 16. After considering the rival submissions we find that this issue has been adjudicated by the learned Commissioner of Income-tax (Appeals) vide paras 5.3 and 5.4, which are as under : 5.3 I have carefully considered the submissions. It is an undisputed fact on record that the amount of ₹ 8,58,383 represents the debit balance in the name of M/s. Vibhor Sood and Ors., the proprietary concern of Smt. Kiran Sood. The appellant has contended that this debit balance was on account of regular purchase and sale transactions with this proprietary concern made during the assessment year 2006-07 and assessment year 2007-08. There is nothing in the assessment order to suggest t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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