Suspicion cannot sustain stock addition when audited records, invoices, and excise documents reconcile the sales and consumption figures.

An addition for alleged inflated production cost and suppressed closing stock was held unsustainable where the audited sales and consumption figures were reconcilable and the assessee had sold components and spares, including inputs removed as such in after-sales service. Supporting invoices and excise records were available, and the Assessing Officer brought no material to show double claiming of the same material or unreliability of the books and stock records. As the addition rested only on suspicion and not on any established discrepancy in the documentary record, the deletion by the Commissioner of Income-tax (Appeals) was upheld in favour of the assessee.

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Issues: Whether the addition made on account of alleged inflated cost of production and suppressed closing stock, based on the treatment of raw material sold as such, was justified.

Analysis: The sales and consumption figures in the audited accounts and the notes to the financial statements were found to be reconcilable. The record showed that the assessee had sold components and spares, including inputs removed as such in the course of providing after-sales services, and had maintained supporting invoices and excise records. The Assessing Officer did not bring any material to show that the same material had been wrongly claimed twice or that the books and stock records were unreliable. The addition rested only on suspicion and was not supported by any discrepancy in the books or the documents produced.

Conclusion: The addition was not sustainable and the deletion made by the Commissioner of Income-tax (Appeals) was upheld in favour of the assessee.

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