Appeal allowed by ITAT Kolkata on purchase disallowance due to alleged overstatement

The ITAT Kolkata allowed the appeal, overturning the disallowance of purchases amounting to Rs. 9,06,200/- due to alleged overstatement. The ITAT found that the inclusion of transportation charges in the purchase cost was reconciled with other expenses, aligning the total purchases with the audited trading account figures. Emphasizing the need for accurate reconciliation and providing necessary details during assessment, the ITAT concluded there was no overstatement, setting aside the decision of the ld. CIT(A) and deleting the disallowance.

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Issues:
Appeal against disallowance of purchases amounting to Rs. 9,06,200/- based on alleged overstatement of purchases made by the assessee.

Analysis:
The appeal filed by the assessee challenges the disallowance of Rs. 9,06,200/- sustained by the ld. CIT(A) due to alleged overstatement of purchases made by the assessee. The assessment for AY 2013-14 initially accepted the returned income of Rs. 8,20,589/-, but a revisionary power u/s 263 was invoked by the ld. CIT(A) upon noticing an alleged overstatement of purchases amounting to Rs. 9,06,200/-. Subsequently, the ld. AO re-assessed the income at Rs. 17,75,625/- after disallowing the said amount since the assessee did not appear during the assessment proceedings.

The assessee contended that there was no overstatement of purchases, emphasizing that it was a matter of reconciliation. The transportation charges of Rs. 9,12,800/- were included in the purchase cost, and after adjusting for other expenses, the total purchases matched the figure disclosed in the trading account. Despite the arguments, the ld. CIT(A) confirmed the disallowance due to the absence of submissions from the assessee.

Upon review, the ITAT Kolkata found that the audited books of account were furnished, demonstrating the inclusion of transportation charges in the purchase cost. The reconciliation revealed that after adjusting for expenses, the total purchases aligned with the figures in the audited trading account. Consequently, the ITAT concluded that there was no overstatement of purchases and set aside the decision of the ld. CIT(A), thereby deleting the disallowance of Rs. 9,06,200/-.

In conclusion, the ITAT Kolkata allowed the appeal of the assessee, emphasizing the importance of proper reconciliation in determining the accuracy of purchase figures and highlighting the significance of providing necessary details during assessment proceedings to avoid unwarranted disallowances.

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