ITAT Amritsar upholds CIT(A) decision on addition under section 69 - Misstated stock figures not undervaluation

The ITAT Amritsar upheld the CIT(A) decision to delete the addition of Rs. 10,07,595 made by the AO under section 69 of the Income-tax Act, 1961. The dispute stemmed from misstated stock figures to secure credit facilities, not undervaluation of closing stock. The ITAT dismissed the Revenue's appeal, affirming that no addition under section 69 was warranted.

---

---

Issues involved: Appeal by Revenue against CIT(A) order u/s 69 for assessment year 2007-08.

Summary:
The Revenue appealed against the CIT(A) order which deleted an addition made by the AO u/s 69 of the Income-tax Act, 1961. The dispute arose from the mis-statement of stock figures by the assessee to its bankers for credit facility. The AO added Rs. 10,07,595 as unexplained investment due to the vast variation in stock quantity. However, the CIT(A) observed that the mis-statement was for securing overdraft limits and not for undervaluing closing stock. Citing various court decisions, the CIT(A) concluded that no addition under section 69 was justified. The ITAT upheld the CIT(A) decision, dismissing all grounds of appeal raised by the Revenue.

In detail, the assessee showed business income from dealing in Gujarat Ambuja Cement and truck plying. The assessee pledged bags of cement to a bank for a cash credit facility. Discrepancies in stock valuation led to the addition by the AO u/s 69. The CIT(A) noted the mis-statement to bankers for credit purposes but found no evidence of undervaluation in the books. Relying on court decisions, the CIT(A) deleted the addition.

The ITAT considered the facts and contentions, emphasizing the mis-statement to bankers for credit, not for undervaluing stock. No defects in purchases or sales were found. Referring to court decisions, the ITAT upheld the CIT(A) decision to delete the addition under section 69. The appeal by the Revenue was dismissed.

The order was pronounced on 8th May, 2012, by the Appellate Tribunal ITAT Amritsar, with Sh. H.S. Sidhu and Sh. B.P. Jain as members, Sh. Amrik Chand representing the Petitioner, and Sh. Padam Bahl representing the Respondent.

---