INCOME TAX ACT, 1961

Section 143

Assessment - Addition to income - Difference in sales duly explained -

Assessee-company was engaged in business of iron ore (fiber) trade. AO noticed that there was discrepancy between value of total sales as shown in profit & loss account and the value of total sales as shown in month wise sales statement. He found that the value shown in the profit and loss account was less than the value as shown in the month wise sales statement. Therefore, the AO concluded that the assessee suppressed the sales to evade tax, and accordingly, the same was added back with returned income of the assessee. Further, CIT (A) confirmed such addition stating that assessee failed to file confirmation from the party and also failed to produce any supporting evidence during the assessment proceedings. Held: The difference in value of total sales as shown in profit & loss account and the value of total sales as shown in month wise sales statement was on account of temporary advance received from a party, which due to wrong setting in computer had been inadvertently entered into the stock register. That, in no way affected the profit & loss account as the said amount was returned during the year. What triggered the AO's suspicion, by which he had taken the said receipt as suppressed sales, was that the said amount was wrongly entered into stock register under 'Outward Column'. Further, it was duly explained to the AO that the same was entered into the stock register because of the wrong setting of accounts in the computer system. Further, the assessee also produced the bank statement and the ledger copy of the party, but ignoring all the evidences produced before him, the AO treated the said amount as suppressed sales, which was completely unjustified. Hence, the addition made on account of suppressed sales was deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2014-15

INCOME TAX ACT, 1961

Section 37(1)

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