Briefly stated facts are that the assessee firm is engaged in the business of hardware, machinery and clearing handling agent in Midnapore, West Bengal. The assessee has maintained complete books of account and all the transactions are recorded in the books of account in regular course of business. A survey u/s. 133A of the Act was conducted on 5th and 6th September, 2008 at the business premises of the assessee by the department. During the course of survey, stock inventory of the assessee’s stock was prepared and according to the same, the total stock found during the course of survey i.e. on physical stock taking was Rs.1,08,72,271/-. The AO while framing assessment u/s. 143(3) of the act, in view of the survey material, noted that the stock as per books of account i.e. Rs.1,08,72,721/- is the same stock, which was found during the course of survey amounting to Rs.1,08,72 ,271/-. The assessee has also produced stock registers, purchase bills and cash book and other books of account. The AO has recorded the finding qua that as under:
“In respect of stocks of Rs. 1,08,72,271/-, the assessee was asked similarly to reconcile the same with stock register by producing stock register on the date of survey and to produce corresponding purchase bills and sales memos in respect of those commodities vide this office letter No. JCIT/Mid/R-1/11-12/142(1) dated 20.12.11 along with notice u/s. 142(1) dated 20.12.11. The assessee produced stock register, purchase bills and cash book and other books of accounts. Stock of Rs. 1,08,72,271/- found and inventorised in the course of survey was reconciled with stock register as well as corresponding purchase bills produced.”
But the AO was of the view that in respect to 526 items valuing at Rs.21,72,083/- the assessee could not produce purchase bills and according to him, the source of acquisition of these purchases is unexplained. Hence, he invoking the provisions of section 69C of the Act made addition on account of unexplained expenditure for stock. Aggrieved, assessee preferred appeal before CIT(A), who on identical reasoning confirmed the addition and dismissed the ground raised by the assessee by observing in para 6.1 as under:
“6.1 The Ld. A/R submitted that the items listed during survey was more than two thousand containing therein number of items with measurement, rate etc. and this list was not possible to be prepared without consulting relevant bills & vouchers. The AO has put his efforts to find out the genuinity of purchase of each and every item from the list prepared during survey operation. The value of items against which proper bills & vouchers were found or produced, the AO allowed the same. However, in respect of the impugned 526 items, after through scrutiny and compare, the AO did not find any supporting bills or vouchers, nor the appellant was able to produce the same during assessment proceedings. During appellate proceedings too, the position remained the same. Therefore, once there were no supporting bills & vouchers to authenticate the purchases claimed to have been made by the appellant from declared source, provisions of sec. 69C of the Act clearly attract in respect of such type of transaction and the expenditure shall be deemed to be the income of the appellant for the relevant year. In that view of the matter, the AO has rightly disallowed the expenditure of Rs.21,72,083/- u/s. 69C of the Act and added the same to the appellant’s total income. The addition is, therefore, upheld. This ground of the appellant is dismissed.”
Aggrieved, now assessee is in second appeal before Tribunal.
We have heard rival submissions and gone through facts and circumstances of the From the observation of the AO, as mentioned in the assessment order that the stock as per books of account i.e. recorded in stock register is at Rs.1,08,72,271/-, which is reconciled with the stock found physically during the course of survey at Rs. 1,08,72,271/-. There is no difference in items as recorded in the books of account and as found during the course of survey and there is no difference in value as well. Only premise of the AO for making addition is that assessee could not produce purchase bills for a sum of Rs.21,72,083/- having 526 items. We find that the items are properly recorded means the assessee has explained the source of acquisition i.e. from its books of account being payment for purchases were made and which were inventorised in the stock register. Hence, this cannot be unaccounted. The only flaw in the assessee’s case is that it is not having supported by purchase bills. But that cannot be the reason for making addition u/s. 69C of the Act for the reason that the assessee has already incurred expenditure, which is explained in the books of account of the assessee. Accordingly, we are of the considered view that in case this addition is made that will tantamount to double addition of the same items, which is impermissible in law. Hence, we delete the addition and allow this issue of assessee’s appeal. Appeal of assessee is partly allowed.