ITAT directs reassessment to avoid double taxation of stock difference.

The Income Tax Appellate Tribunal (ITAT) set aside the Commissioner of Income Tax (Appeals)' decision and directed the Assessing Officer to verify the claim of the assessee regarding the stock difference already being taxed in the previous assessment year. If verified, the addition made for the year in question would lead to double taxation and should be removed. The ITAT allowed the appeal for statistical purposes, ordering a reevaluation by the Assessing Officer.

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Issues involved:
Addition made on account of alleged difference in stock found during survey.

Detailed Analysis:

1. Background and Facts:
The appeal was filed by the assessee against the order of the Commissioner of Income Tax (Appeals) regarding the addition made by the Assessing Officer and sustained by the Commissioner on account of the alleged difference in stock found during a survey. The assessee, an individual engaged in trading Marble and Granite, had a stock difference of Rs. 24,50,000 during a survey conducted under section 133A of the Income Tax Act.

2. Assessing Officer's Decision:
The Assessing Officer treated the excess stock found during the survey as explained and made an addition of Rs. 24,50,000 to the total income of the assessee for the relevant assessment year. The assessee contended that the stock difference pertained to the previous year and was already taxed in the assessment year 2014-15.

3. Appeal to CIT(Appeals):
The assessee appealed to the Commissioner of Income Tax (Appeals) arguing that the addition made by the Assessing Officer was not sustainable as the stock difference was already accounted for in the previous assessment year. The appellant provided detailed explanations and submissions regarding the treatment of the stock difference and its tax implications for the relevant years.

4. Decision of CIT(Appeals):
The Commissioner of Income Tax (Appeals) partially confirmed the addition made by the Assessing Officer, stating that the stock discrepancy was not properly explained and that there was manipulation of accounts for the previous assessment year. The Commissioner upheld a part of the addition but reduced it by Rs. 1,76,948.

5. Appeal to ITAT:
Aggrieved by the decision of the Commissioner of Income Tax (Appeals), the assessee appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT heard arguments from both sides and observed that the claim made by the assessee regarding the stock difference being already offered as income for the previous year required verification. The ITAT decided to send the matter back to the Assessing Officer for verification and fresh decision.

6. ITAT's Decision:
The ITAT set aside the decision of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer to verify the claim of the assessee regarding the stock difference being already taxed in the previous assessment year. If the claim is found to be correct, the addition made in the year under consideration would amount to double taxation and should be deleted.

7. Conclusion:
The ITAT allowed the appeal of the assessee for statistical purposes and ordered the matter to be reconsidered by the Assessing Officer after verifying the claim of the assessee regarding the stock difference already being taxed in the previous assessment year. The decision was pronounced in an open court on March 20, 2020.

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