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TMI Blog2024 (8) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... stock in trade difference u/s. 69C of the Act purely on surmises and suspicion manner, without there being any supporting evidence to justify additions - even the AO did not have the benefit of relevant workings of stock difference arrived at during the course of search by the Investigation Wing. AO has completely erred in making additions towards difference in stock in trade as unexplained expenditure u/s. 69C - Decided in favour of assessee. - Honourable Mr. Justice R.Suresh Kumar And Honourable Mr.Justice C. Saravanan For the Appellant : Mr.R.Karthik For the Respondent : None JUDGMENT C. SARAVANAN, J. In this appeal, the appellant has raised following questions of law as substantial questions of law:- i. In the facts and circumstances of the case, whether the ITAT has erred in directing to delete the addition of Rs. 25,00,000/- towards bogus purchase? ii. In the facts and circumstances of the case, whether the finding of the ITAT that the amount of cash payments of Rs. 25,00,000/- on account of bill trading is out of cash withdrawn from bank account and hence the source is explained, is contrary to the facts on record, as such cash withdrawn is not recorded in the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Tax Payable : 4,61,61,488/- LESS: 140A : 1,78,62,850/- Balance payable : 2,82,98,640/- This should be paid as per demand notice enclosed. Penalty u/s 271AAA initiated separately. 4. The Assessee had taken up the issue in appeal before the Appellate Commissioner, who by order dated 28.01.2021 in ITA.No.186/CIT(A)-18/2010-2011 rejected the assessee's appeal. 5. In the course of the proceedings before the Commissioner of Income-Tax (Appeals), a Remand Report was called for from the assessee, pursuant to an order dated 17.02.2012. The Remand Report No.AAAFT2536L/A.Y.2009-2010/ACIT/CC-1(1)/CHENNAI dated 20.11.2020 was also thereafter submitted to the Additional CIT, Central Range 1, Chennai. 6. As far as the Remand Report No.AAAFT2536L/A.Y.2009- 2010/ACIT/CC-1(1)/CHENNAI dated 20.11.2020 is concerned, it reads as under:- Issue 3: Unexplained expenditure u/s 69C towards difference in purchases of Rs. 5,69,68,520/- : i. In respect of the issue of unexplained purchases, the assessee vide para 12 of the written submissions stated that the assessee is not aware of the data set out at page 5 of the assessment order. The date mentioned in page 5 of the assessment order is reproduced as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard, the assessee vide para 7(ii) of its letter dated 31.08.2010 filed during the course of the assessment proceedings, had stated that the opening stock figure as on 01.04.2008 was adopted at Rs. 7,58,61,222/- as against the value of the closing stock as on 31.03.2008 of Rs. 12.04 Crores disclosed in the ROI filed for the A.Y. 2008- 09. Further, the assessee stated that the value of the opening stock as on 01.04.2008 would be revised basing on the seized material and that on the same basis, the value of closing stock as on 31.03.2009 would also be revised. (A copy of the letter dated 31.08.2010 of the assessee is enclosed herewith for ready reference as per the Annexure-3). iv. Further, it is submitted that during the course of the assessment proceedings, the assessee vide letter dated 30.12.2010 stated that it is not possible for the assessee to comment on this issue unless source of information is given to the assessee. However, the assessee filed two trading accounts for the periods from 01.04.2008 to 20.10.2008 and from 21.10.2008 to 31.03.2009 showing details of purchases, instead of furnishing trading accounts for the required periods 01.04.2008 to 16.10.2008 (Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Appellate Tribunal by the respondent/assessee, the Appellate Tribunal held that the respondent/assessee has filed a reconciliation explaining total purchases including purchase of capital goods and purchase returns and tallied with purchases recorded in the books of accounts of the assessee, which has been reproduced in reply filed to remand report of the Assessing Officer and same is available at page 64 of the ld. CIT(A) order. 8. The Appellate Tribunal has further held that even the Assessing Officer did not have the benefit of relevant workings of stock difference arrived at during the course of search by the Investigation Wing and that the Assessing Officer has completely erred in making additions towards difference in stock in trade as unexplained expenditure u/s. 69C of the Act. 9. Under these circumstances, the Assessing Officer was directed to delete the additions made towards difference in stock in trade u/s. 69C of the Act. Paragraphs 16 and 17 of the Appellate Tribunal Order reads as follows:- 16. We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The sole basis for the Assessing Officer to make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in reconciliation submitted before the ld. CIT(A). From the above, it appear that there is no difference in purchases considered by the Assessing Officer and the assessee for above periods. But, the Assessing Officer has worked out difference of Rs. 5,69,68,520/-, by comparing net purchases declared by the assessee for the period 01.04.2008 to 31.03.2009, amounting to Rs. 50,93,75,389/- to the total purchases worked out by the Assessing Officer at Rs. 56,63,44,300/- without any details as to what is the opening stock, closing stock, purchase returns and purchase of capital goods, as considered by the assessee in its reconciliation. From the above, it is clear that as alleged by the assessee there is no basis for the working of difference computed by the Assessing Officer towards stock in trade and this fact has been further strengthened by a letter written by ACIT, Central Circle-1(1), to the CIT(A) on 16.04.2015, where the Assessing Officer categorically admitted that there is no details available with regard to stock difference worked out by the Investigation Wing and further he has written a letter to the Investigation Wing to clarify the basis for adopting stock di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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