Maa Sarda Mini Rice Mills, Burdwan V. ACIT, Circle-2, Burdwan

ITA 2244/KOL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5605 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 30-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 131; 133A

Judgement Text

आयकर अपील य अ धकरण, कोलकाता पीठ ‘सी’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA ी राजपाल यादव,उपा य (कोलकाता े ) एवं ी राजेश क ु मार, लेखा सद य के सम [Before Shri Rajpal Yadav, Vice-President (KZ)& Shri Rajesh Kumar, Accountant Member ] I.T.A. No. 2244/Kol/2019 Assessment Year : 2015-16 Maa Sarada Mini Rice Mills (PAN: AADFM 8051 C) Vs. ACIT, Circle-2, Burdwan Appellant / (अपीलाथ!) Respondent / ("#यथ!) Date of Hearing / स ु नवाई क& 'त(थ 05.09.2022 Date of Pronouncement / आदेश उ*घोषणा क& 'त(थ 19.09.2022 For the Appellant / आदेश उ*घोषणा क& 'त(थ Shri Amit Agarwal, Advocate For the Respondent / राज व क& ओर से Smt. Ranu Biswas, Addl. CITDR ORDER/ आदेश Per Shri Rajesh Kumar, AM: This is the appeal preferred by the assessee against the order of the Commissioner of Income Tax(Appeals)-Burdwan [hereinafter referred to as ‘Ld. CIT(A)’] dated 23.07.2019 for the assessment year 2015-16. 2. The issue raised in ground no. 1 is general in nature and does not require any adjudication. 3. The issue raised in ground no. 2 raised by the assessee is against the order of Ld. CIT(A) confirming the addition of Rs. 1,11,99,948/- by the Ld. CIT(A) as made 2 ITA No. 2244/Kol/2019 AY: 2015-16 Maa Sarada Mini Rice Mills by the AO on account of excess stock found during the course of survey conducted on the assessee. 4. Facts in brief are that the assessee filed its return of income on 09.09.2015 declaring total income of Rs. 1,31,40,130/-. The case of the assessee was selected for scrutiny and statutory notices were duly issued and served on the assessee. Pertinent to mention that during the relevant financial year, a survey u/s 133A of the Act was conducted on the business premises of the assessee at Bhanderdihi, Burdwan on 28.01.2015. During the course of survey, a physical verification of stocks of paddy, rice and bran was carried out in order to ascertain the actual stocks at the business premises. Upon comparison of physical inventories found with the inventories/stocks as per books of accounts maintained by the assessee, the survey team noted that the assessee has huge in discrepancies in the stock of three items as under: Quantity in quintals Item As per Books of Accounts(Qtls) Physical Verification(Qtls) Discrepency(Qtls) Paddy 944 5110 4166 Rice 2800 4743 1943 Bran 15 149 134 Thereafter the statement of Shri Ashok Kumar Hazra Chowdhury (AKHC) was recorded u/s 131 of the Act and he agreed that there was an excess stocks to the above extent. The said excess stocks were valued at Rs. 1,11,99,948/- as under: Excess stock during the course of survey Item Quantity Rate (Rs)/Qtls Value (Rs.) Paddy 4166 qtls 1560/- 64,98,640/- Rice 1943 qtls 2316/- 44,99,988/- Bran 134 qtls 1500/- 2,01,000/- Total 1,11,99,948/- 3 ITA No. 2244/Kol/2019 AY: 2015-16 Maa Sarada Mini Rice Mills According to the AO, the said stocks were not shown by the assesse as undisclosed investments in the income tax return over and above the regular stocks and as such the said undisclosed stocks have not been offered to tax. Finally the books of account of the assessee were rejected by the AO and the value of stocks as found excess during the course of survey was added to the income of the assesse in the assessment framed. 5. In the appellate proceedings, the Ld. CIT(A) has confirmed the order of AO reasoning that the assessee could not substantiate with evidences as to how the excess stocks found during the course of survey u/s 133A have been accounted in the income tax return and offered to tax. 6. After hearing the rival submissions and perusing the material on record including also qualitative details furnished before us by the assessee, we observe that the stocks as on 28.01.2015 as per the audited books of account were exactly the same as were found during the course of survey i.e. paddy 5110 quintal, Rice 4743 quintal and bran 149 quintal meaning thereby that these excess stocks were found to be duly accounted for in the books of account maintained by the assessee. Thus we note that it is only after recording that excess stocks in books of account, the final inventories as on 31.03.2015 were arrived at and accordingly valued. We also note from the tax audit report furnished by the assessee that due to this accounting of excess stocks, the GP rate of the assessee has gone up from 3.27% to 5.88% whereas net profit swelled from 3.02% to 5.71%. We also find that the assessee has categorically submitted before the ld CIT(A) that the excess stocks as found in the survey have duly been incorporated in the audited financial reports/accounts as on 31.03.2015 due to which the gross profit and net profit have gone up substantially. We note that the ld CIT(A) has reproduced the reply of the assessee to this effect on page no. 5 para 7 in the appellate order. Therefore in our considered view the excess stocks stood offered to tax automatically once they are accounted for in the books of accounts as the final inventories were arrived at after taking these excess stocks into accounts. Therefore we are not in agreement with the conclusion of both the 4 ITA No. 2244/Kol/2019 AY: 2015-16 Maa Sarada Mini Rice Mills authorities below on this issue. Considering quantitative details of stocks, books of accounts of the assessee and tax audit report placed before us, we hold that the assessee has duly accounted for the excess stocks found during survey in the books of account which has resulted into higher GP and NP going up from 3.27% to 5.88% and 3.02% to 5.71% respectively vis-a-vis the preceding financial year. Under these facts and circumstances, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete this addition. The ground no.2 raised by the assessee is allowed. 7. Since we have allowed ground no. 2 in favour of the assessee, the issue raised in ground no. 3 which is without prejudice and needs no adjudication. 8. In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 19 th September, 2022 Sd/- Sd/- (Rajpal Yadav /राजपाल यादव) (Rajesh Kumar/राजेश क ु मार) Vice-President/ उपा य Accountant Member/लेखा सद य Dated: 19 th September, 2022 SB, Sr. PS Copy of the order forwarded to: 1. Appellant- Maa Sarda Mini Rice Mills, Vill & P.O.-Bhanderdihi, Dist- Burdwan-713426 2. Respondent – ACIT, Circle-2, Burdwan 3. The CIT(A)- Burdwan (Sent Through E-mail) 4. Pr. CIT- Kolkata 5. DR, Kolkata Benches, Kolkata (sent through e-mail) True Copy By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata