TaxTMI 
TaxTMI 
2021 (2) TMI 1057
X X X X Extracts X X X X
X X X X Extracts X X X X
....-19 dated 25.02.2019 for the Assessment Year (A.Y.) 2014-15with the delay of 30 days. The Assessing Officer (AO) has filed the condonation petition submitting that there was delay in filing the appeal due to administrative reasons and election duties. The Ld.AR has not objected for condoning the delay. After considering the submission of the Ld.DR and the petition the delay is condoned and the appeal is admitted. 1.1. Cross objections are filed by assessee in support of the order of the Ld.CIT(A). 2. All the grounds of appeal are related to deletion of addition made by the Assessing Officer (AO) u/s 69B of the Act amounting to Rs. 2,39,17,297/- relating to difference in sundry debtors. Brief facts of the case are that the assessee is a P....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e further stated before the Ld.CIT(A) that it is a prevalent practice among all the business community to inflate the stock and debtors to get additional loan limits. He, therefore, requested to delete the addition. The Ld.CIT(A) deleted the addition made by the AO placing reliance on the order of this Tribunal in the case of ACIT Vs. Thatvarthi Ramesh Babu vide Appeal No.28/Viz/2015, dt.08.12.2017, wherein, similar issue of unaccounted stock was involved. 4. Against the order of the CIT(A), the revenue is in appeal before this Tribunal. During the appeal hearing, the Ld.DR submitted that the Ld.CIT(A) without making any enquiries allowed the appeal, though there were discrepancies in debtors statement submitted to the bank and the balance....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from the bank has no relevance for making the assessment, hence, argued that there is no case for the department to make the addition. The Ld.AR submitted that that the decision of ITAT in the case of Thatavarthi Ramesh Babu (supra) is squarely applicable in the assessee's case and hence, argued that no interference is called for the in the order of the Ld.CIT(A) and accordingly requested to dismiss the appeal of the revenue. 6. We have heard both the parties and perused the material placed on record. The Ld.DR has argued that assessee has furnished the additional evidence i.e. confirmations from the debtors before the CIT(A) and the Ld.CIT (A) allowed the appeal without giving opportunity to the assessee as provided under Rule 46A of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee and the list of sundry debtors as per the books. The AO had obtained the list of debtors from the Karur Vysya bank and viewed that the difference between the list of debtors submitted to the bank and the list of debtors outstanding in the books of accounts under the head 'debtors' would be taxable u/s 69B of the Act, without verification and supporting evidence, which is incorrect proposition. Having obtained the list of sundry debtors from the Karur Vysya Bank, if the AO had any suspicion, he ought to have made necessary verifications and confronted the difference if any with the assessee to make logical conclusion. In the instant case, no exercise or no effort was made by the AO to elicit the correctness of the sundry debtors bal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....case is squarely covered by the decision of this Tribunal relied upon by the Ld.CIT(A) in the case of Thatvarthi Ramesh Babu (supra). Similar issue of addition on account of difference in stock was considered by the Hon'ble Madras high court in [2002] 125 Taxman 233 (Madras)Commissioner of Income-tax. v.N. Swamy and observed as under: "4. We find it a little difficult to agree with those observations. The assessee's income is to be assessed by the ITO on the basis of the material which is required to be considered for the purpose of assessment and ordinarily not on the basis of the statement which the assessee may have given to a third party unless there is material to corroborate that statement of the assessee given to a third party,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court, the question which is raised in the present appeal is required to be answered in favour of the assessee. We are not giving further elaborate reasons for the same as in the case of Riddhi Steel and Tubes (supra) it is held by this Court that only on account of inflated statements furnished to the banking authorities for the purpose of availing of larger credit facilities, no addition can be made if there appears to be a difference between the stock shown in the books of account and the statement furnished to the banking authorities. Similar view has been taken by this Court in Tax Appeal No. 1371 of 2006 vide decision rendered on 12.12.2014. 7.1. It is a settled law that only on account of inflated statements furnished to the bankin....