Mahavir Transmission Ltd Vs DCIT (ITAT Delhi)
ITAT Delhi held that addition towards excess stock merely on the basis of recorded statements and without any corroborative evidence of unaccounted sales is untenable in law. Accordingly, addition deleted.
Facts- A search was carried out at the premises of the assessee on 23.03.2021. During the course of the search, an inventory of the stock was prepared by the Authorized Officer on 24.03.2021. The said inventory is quoted by the AO in the Assessment Order at Pages 3 onwards. The AO determined the excess stock after comparing it with the books stock. While making the addition, the AO has also relied on the statement of Sh. Subhash Singh, General Manager of the company and Sh. Akshat Jain, Director of the company. CIT(A) affirmed the action of AO.
Conclusion- Held that the Assessing Officer has not disputed the details and reconciliation submitted by the assessee including the quantity analysis in this regard. The addition made by the AO and sustained by the ld. CIT(A) are due to the misinterpretation of the accounting system of finished goods and solely based on the statements recorded without any corroborative evidence of unaccounted sales. It is important to point out that nothing incriminating regarding any purchase or sales outside the books of accounts was found. Hence, the addition made on account of excess stock cannot be sustained.
