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| The Tax Publishers2020 TaxPub(DT) 3218 (Del-Trib) INCOME TAX ACT, 1961
Section 69A
As there was no evidence brought on record by Revenue to suggest that assessee made investment in its stock outside the books of account, the addition made under section 69A on account of unexplained investment in stock would not be sustainable.
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Income from undisclosed sources - Addition under section 69A - Difference in value of stock as per books and value of stock given in statement to bank - Unexplained investment in stock--No investment in stock being made outside books of account
During course of scrutiny assessment proceedings in case of assessee-company, AO called for stock details as on 31-3-2011 from bank. Those details were confronted to the assessee and the assessee was asked to reconcile the discrepancies in the stock position shown to the bank over that reflected in books of account. Assessee explained that the value of stock and spares was given to the bank on estimated basis and it included all items of machinery, repair and maintenance, rolls, dyes, etc., which were otherwise included in plant and machinery for balance sheet purposes. However, rejecting the explanation of the assessee, the AO treated the difference in value of stock as per bank statement and as reflected in books of account as unexplained investment in stock and made addition under section 69A. Held: AO did not point out any defect in books of account and entire assessment was based upon the difference in value of stock as per books and value of stock given in statement to the bank. Further, it was not the case of the Revenue that the assessee did not account for certain purchases and was having excess stock than what was shown in its books of account. Further, the stock of stores and spares, which had been shown to the bank were reflected in the books of account under the head 'Plant and Machinery' as the same were capitalized and therefore, the same could not have been found in the closing stock shown in the books of account. Moreover, the AO did not deny that the assessee capitalized stock of stores and spares to the plant and machinery. Further, there was no evidence brought on record to suggest that the assessee made investment in its stock outside the books of account and accordingly, the addition made under section 69A would not be sustainable.
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2011-12
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