TaxTMI 
TaxTMI 
2013 (11) TMI 1665
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....Rs. 16,760/-. The case was selected for scrutiny and thereafter the assessment was framed u/s 143(3) vide order dated 23.11.2006 and the total income was determined at Rs. 57,85,560/-. Aggrieved by the order of AO Assessee carried the matter before CIT(A). CIT(A) vide order dated 16.11.2012 allowed the appeal of the assessee. Aggrieved by the order of CIT(A), the Revenue is now in appeal before us and has raised the following grounds: 1. On the facts and circumstances of the case and in law, the ld. CIT(A)-I, Surat has erred in deleting the addition of Rs. 52,50,000/- made on account of unexplained purchases without appreciating the fact that there is a discrepancy between the stock shown in the books of account and stock shown in the sta....
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....eflected in the closing stock or the sales, it can be concluded that Assessee has also sold the stock and not recorded in its books of accounts. He accordingly worked out the profit from such sales at 10% and made addition of Rs. 5,25,000/- on account of profit on suppression of sales. Aggreived by the order of AO, Assessee carried the matter before CIT(A). CIT(A) deleted the addition by holding as under: 4. I have carefully considered the Assessment Order and submission filed by the appellant. The Assessing Officer has observed that appellant has shown grey stock of Rs. 52,50,000/- of 2,50,000 meters in stock statement submitted to the Bank for the period June 2003 to September 2003 whereas no such stock was shown in books of Account. It ....
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....tock maintained by it and its Books of Account are audited by independent Chartered Accountant, addition made by Assessing Officer is uncalled for. On careful consideration of entire details submitted by appellant, it is observed that stock statements submitted by appellant to the Bank for the month June 2003 to November, 2003 show the stock of grey and processed cloth. The Assessing Officer has compared the quantity of grey shown in the month of June 2003 to October 2003 and compared the same with book stock during the relevant period and observed that appellant has shown higher quantity of grey in stock statements submitted to the Bank, which is nothing but unexplained purchase in the hands of appellant. It is an undisputed fact that app....
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....stock submitted to Bank appellant has shown higher book stock hence addition made by Assessing Officer making partial comparison of grey cloth is not justified. Even the appellant has shown the processed stock in the Books of Account for Rs. 91.76 lacs in the month of June and July 2003, Rs. 97.74 lacs in August 2003 and Rs. 91.76 lacs in September and October 2003 but has shown substantially lower stock in stock statement submitted to the Bank which suggests that stock statement submitted to Bank is incorrect, as no prudent businessman would submit lower stock to Bank as it will ultimately affect credit limit of loan. During the course of Assessment Proceedings appellant has submitted the details regarding opening stock, purchases made by....
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....pon cannot be applied in present case and if it is applied it is in favor of the assessee as stock in books is more than stock in statement submitted to the bank. The Hon. Delhi ITAT in case of CIT vs. Jyoti Woolen Mills limited 125 TTJ 810 has held as under: "...Held that the credit facility was extended by the bank to the assessee against the hypothecation of stock and the valuation of the stock declared to the bank was higher than the actual stock available in the books of account and this inflation of the stock was done by the assessee to obtain higher credit limit from the bank. The Assessing Officer had not brought on record any evidence to show that the assessee was in fact in possession of higher quantity of stock. Therefore, on m....
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....on for unexplained purchase of Rs. 52,50,000 and consequential addition of Rs. 5,25,000 by estimating profit therefore both the additions made by Assessing Officer are deleted. In the result, both grounds of appeal filed by appellant are allowed. 5. Aggrieved by the order of CIT(A), Revenue is now in appeal before us. 6. Before us, the DR pointed to the findings and observations of AO and thus supported the order of AO. The Id.A.R. on the other hand submitted that the Assessee deals in two type of fabrics namely grey cloth and processed cloth. In the stock statement submitted to the bank, due to clerical mistake which was unintentional, the quantity of the stock was interchanged and further the stock stated to the bank was Rs. 66.69 lacs ....