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TMI Blog2019 (8) TMI 637X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases have been grouped under schedule L. Both these schedules find place on the debit side of the profit and loss account. Therefore, overstating one schedule by certain amount and understating another schedule by the matching amount will not alter the figure of total expenses claimed or debited in the profit and loss account. It is not the case of the assessing officer that the purchases booked by the appellant under trading purchase are bogus or that the raw material consumption for manufacturing is excessive when considered quantitatively. The mistake of transferring the quantity from purchase to consumption without giving a matching effect in monetary terms is a bona fide mistake. Since increase in trading purchases and the reduction in amount of raw materials consumption is occurring on the debit side of the profit and loss account therefore it does not have any cascading effect on the overall expenses claimed or debited in profit and loss account and therefore this mistake, in our considered opinion, is a bona fide and there is no loss to the revenue. In a case, if any bona fide mistake is being committed by an assessee and there is no loss to the revenue . In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own in the audit report while finalising the same. Thus A.O. issued show-cause notice dated 18/03/2005 reading as under: On going through the case records and details filed during the course of assessment proceedings it is noticed that the point number-13 of schedule-P of Audit Report, the total cloth purchase has been shown at 152911 metres valuing at ₹ 111395957- whereas while furnishing the details of trading sales and purchases during the financial year 2001-02 the trading sales and purchases are shown as under: Purchase Sales Mts. Amount Mts. Amount 152911 3761895 152911 3945064 Value of goods Value of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turing sales are presented in a consolidated figure. Hence such discrepancy is not manifested. List of such 544173 mtrs valuing ₹ 14074249/- is filed. Please note that transfer of purchase mtrs of trading and sales mtrs of trading has no relevance. We hope the above reconciliation will meet with your requirement. 5. However without appreciating the substance of the reply dated 22/03/2005 that even if the value of ₹ 7377700/- is not transferred from trading account to manufacturing account there would not have any effect on financial results i.e. on profit and loss account, he reduced the loss by ₹ 7377700/-. Even if the effect have been given Schedule K of the audited accounts Raw Material consumption would have been ₹ 1869013627- + ₹ 7377700A aggregating ₹ 194279062/-and Trading Purchase in Schedule L would be reduced by ₹ 7377700/- i.e. Trading Purchase would have been ₹ 11139595 - ₹ 7377700/- = ₹ 3761895/-. Hence it would be revenue neutral. 6. The addition was made merely on the ground that the audit report does not mention of such transfer of ₹ 271968 mtrs of clot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LD CIT (A) XI Ahmedabad has erred in law and on facts in deleting addition of ₹ 7377700/- being made by the A.O. on account of closing stock 12. Hon'ble Ahmedabad Bench D of Income Tax Appellate Tribunal in Appeal No. ITA269/AHD/2006 adjudicated the appeal of the Revenue on 20/11/2009 narrating the contents of the order of assessing officer circle-5 dated 22/03/2005 and held vide para 11 as under: Having heard both the sides, we have carefully gone through the orders of authorities below and the relevant material placed on record, it Is pertinent to note that the bills and vouchers which the A.O. is stated in the assessment order were not examined by the Learned Commissioner of Income Tax (Appeals), it is also not known whether before the Learned Commissioner of Income Tax (Appeals) the 'assessee has produced copies of accounts showing transfer entries of the goods so that one examine whether it was a case of bonafide mistake. Keeping in view the facts and circumstances of the case. We found considerable force in the submission made by the Id. D.R. that the Learned Commissioner of Income Tax (Appeals) ought to have ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of the assessee's accounts. On receipt of the above the A.O. was directed to re-adjudicate the additions of ₹ 7377700/- afresh in accordance with law. 15. However, despite furnishing the details as directed by Hon'ble ITAT Bench D the learned DCIT, Circle-5 reduced the loss of ₹ 7377700/- from the loss returned by the assessee at ₹ 1,85,06,246/- without appreciating the following facts on record mentioned in the order of CIT (Appeals) XVI dated 09/11/2005 copy filed vide Annexure. 3.1.6. ultimatly there is no impact on P L A/c. It is also pointed out that the cloth rate was arrived at ₹ 72.98 was wrong. The quantity of cloth of 271968, if included to 152911 mtrs the value per metre would be ₹ 26.22 Ps. 3.2 I have perused the submission and the details produced before me by the A.R. of the appellant. I have also perused the observations of the assessing officer in the assessment order. After verifying the trading account and P L A/c. I am of the view that the value of the grey cloth purchased is very much in stock of ₹ 11646747/- instead of purchases. The cloth value of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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