Sukumar Solvent Pvt. Ltd. Vs ACIT (ITAT Kolkata)
The Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has allowed the appeal of Sukumar Solvent Pvt. Ltd., a company engaged in rice bran and oil refinery, thereby significantly reducing additions made by the Assessing Officer (AO) for the Assessment Year 2011-12. The appeal was filed against the order of the Ld. CIT(A), which had sustained two key additions: Rs.53,94,245/- on account of excess stock found during a survey under Section 133A, and Rs.4,30,000/- for non-deduction of TDS on freight charges.
The first part of the dispute centered on the treatment of the excess stock. While the AO made a blanket addition of the entire value of the stock, the Ld. CIT(A) upheld the addition but, in doing so, accepted the assessee’s argument that the excess stock was part of its regular business income. The assessee’s counsel argued before the ITAT that, based on this, only the profit element embedded in the stock should be brought to tax, not the entire value. Citing a long-standing judicial principle, the Tribunal agreed. To resolve the dispute and in line with the assessee’s offer, the ITAT applied a 12% profit rate to the excess stock, reducing the addition from the full value of Rs.53,94,245/- to a mere Rs.6,47,310/-. The Tribunal’s decision reaffirms that when undisclosed stock is seamlessly integrated with regular business, only the income derived from it is taxable.
